OAKLAND RAIDERS v. NATIONAL FOOTBALL LEAGUE

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Court of Appeal, Sixth District, California.

OAKLAND RAIDERS, Plaintiff and Respondent, v. NATIONAL FOOTBALL LEAGUE, et al., Defendants and Appellants.

No. H018270.

Decided: January 28, 1999

Ruby & Schofield and Allen J. Ruby, San Jose;  Mccutchen, Doyle, Brown & Enersen, James L. Hunt, San Francisco, James P. Kleinberg, Palo Alto, Dale E. Barnes, Jr. and Cecily Talbert, San Francisco, for Defendants and Appellants. Howard, Rice, Nemerovski, Canady, Falk & Rabkin, Kenneth G. Hausman, Annette L. Hurst, David M. Middler, Sue A. Krenek Alioto Law Firm and Joseph M. Alioto, San Francisco, Jeffrey E. Birren, Alameda, for Plaintiff and Respondent.

The Oakland Raiders (hereafter, Raiders) football club has sued the National Football League (hereafter, NFL), 16 NFL clubs,1 and many other NFL-related persons and entities,2 generally alleging that NFL leadership has been marked by abuse of power, neglect of duties, mismanagement, discriminatory rule enforcement, inappropriate favoritism, and back room deal-making which has resulted in damage to the Raiders.   The NFL and club defendants filed a petition to compel arbitration of the 14th, 21st, and 22d causes of action of the third amended and supplemental complaint.   The trial court denied the petition on the basis that no written agreement to arbitrate applied to the circumstances.   The NFL and clubs appeal from the order.   We affirm.

SCOPE OF REVIEW

 The parties agree that this case is governed by the Federal Arbitration Act (9 U.S.C.A. § 1 et seq.;   hereafter, the Act).   “ ‘Generally, under the Act, arbitration is strongly favored, and “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration․”  [Citations.]’  [Citation.]  California also has a ‘ “strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution.” ’  [Citation.]  The California Supreme Court has ‘warned against “procedural gamesmanship” aimed at undermining the advantages of arbitration.  [Citation.]’  [Citation.]”  (Brookwood v. Bank of America (1996) 45 Cal.App.4th 1667, 1671, 53 Cal.Rptr.2d 515.)   Together with this strong policy favoring arbitration, however, our courts also recognize that the right to pursue claims in a judicial forum is a substantial one not lightly to be deemed waived.   Because the parties to an arbitration agreement surrender this substantial right, the general policy favoring arbitration cannot substitute for an express agreement to arbitrate.   (Marsch v. Williams (1994) 23 Cal.App.4th 250, 254, 28 Cal.Rptr.2d 398.)

 “Under both federal and state law, the threshold question presented by a petition to compel arbitration is whether there is an agreement to arbitrate.   The United States Supreme Court has stated that ‘․ the first task of a court asked to compel arbitration of a dispute is to determine whether the parties agreed to arbitrate that dispute.’  [Citation.]  Similarly, under California law, ‘ “[a]rbitration is recognized as a matter of contract, and a party cannot be forced to arbitrate something in the absence of an agreement to do so.” ’  [Citations.]  [¶] The question of whether the parties agreed to arbitrate is answered by applying state contract law even when it is alleged that the agreement is covered by the [Act].” (Cheng-Canindin v. Renaissance Hotel Associates (1996) 50 Cal.App.4th 676, 683, 57 Cal.Rptr.2d 867.)

 “Whether an arbitration agreement applies to a controversy is a question of law to which the appellate court applies its independent judgment where no conflicting extrinsic evidence in aid of interpretation was introduced in the trial court.”  (Brookwood v. Bank of America, supra, 45 Cal.App.4th at p. 1670, 53 Cal.Rptr.2d 515.)   If extrinsic evidence in aid of interpretation was introduced, to the extent that there is a conflict in such extrinsic evidence or in factual inferences which may be drawn therefrom the trial court's resolution of the conflict will be upheld if it is supported by substantial evidence.  (Patterson v. ITT Consumer Financial Corp. (1993) 14 Cal.App.4th 1659, 1663, 18 Cal.Rptr.2d 563.)

 “ ‘The fundamental canon of interpreting written instruments is the ascertainment of the intent of the parties.  [Citations.]  As a rule, the language of an instrument must govern its interpretation if the language is clear and explicit.’  [Citation.]”  (Brookwood v. Bank of America, supra, 45 Cal.App.4th at pp. 1670-1671, 53 Cal.Rptr.2d 515.)

BACKGROUND

This matter arises from the complex web of for-profit and nonprofit organizations which carry out the business of the NFL, an unincorporated nonprofit association of 30 football clubs, including the Raiders.   The causes of action at issue involve defendant NFLP, the for-profit merchandising arm of the NFL. NFLP is a California corporation owned entirely and in equal shares by the clubs.   It is managed by Tagliabue pursuant to an NFL resolution.   It was not a moving party below, nor is it an appellant here.

The Raiders generally allege that Tagliabue has wrongfully used his position to control a majority of the clubs so that his management of the web cannot be evaluated by independent business judgment.   For example, the Raiders claim that Tagliabue permits certain clubs to operate in violation of the NFL's constitution and appoints certain clubs to key committees;  in return for these favors, so the argument goes, the clubs give Tagliabue unquestioned allegiance and obedience.   The other side of this coin, according to the Raiders, is that Tagliabue uses his control to treat it adversely because of antagonism stemming, in part, from nine years of litigation between the Raiders and NFL during the 1980's.

The Raiders' 14th cause of action is against NFLP alone.   It seeks damages for breach of contract.   It alleges that (1) an exclusive license agreement between NFLP and the Raiders gives the Raiders the nonexclusive right to use its intellectual property for local advertising on the sidelines during games, and (2) since 1993, NFLP has breached the contract by refusing to allow the Raiders to wear merchandise on the sidelines other than merchandise created by Nike.

The Raiders' 21st cause of action is against the NFL, Tagliabue, and NFLP. It seeks injunctive relief for trademark dilution pursuant to Business and Professions Code section 14330.   It alleges that (1) the Raiders own a California registered design mark (shield enclosing a man's head in a helmet with crossed swords;  eyepatch on the man's face);  (2) the “pirate aspects” of the design mark (eyepatch and crossed swords) has become associated with the Raiders;  (3) the Raiders have acquired a secondary meaning in pirate-related representations in association with professional football and professional football merchandise;  and (4) the defendants' approval of a skull and crossed swords trademark for the Tampa Bay Buccaneers and a black and silver shield mark for the Carolina Panthers has diluted the uniqueness of the Raiders' mark.

The Raiders' 22d cause of action is against the NFL, Tagliabue, and NFLP. It seeks injunctive relief for trade dress dilution pursuant to Business and Professions Code section 14330.   It alleges that (1) the Raiders have developed a distinctive trade dress (silver and black football uniforms);  (2) the dress has acquired a secondary meaning in association with professional football and professional football merchandise;  (3) the defendants' approval of silver and black uniforms for the Tampa Bay Buccaneers and Carolina Panthers and the merchandising of those uniforms have diluted the uniqueness of the Raiders' dress.

Concerning the 21st and 22d causes of action, the complaint asks that defendants be enjoined from (1) permitting the Tampa Bay Buccaneers and Carolina Panthers to dilute the Raiders' mark;  (2) entering into merchandising contracts relative to the Tampa Bay logo;  and (3) permitting any club that has uniforms or marks that infringe on the Raiders' marks to play football games in California.

The NFL is governed by a document entitled “National Football League Constitution and Bylaws.”   The NFL and clubs rely upon three provisions of this document to support their claim.

The first provision is section 8.3(a).   The provision states that the Commissioner shall have full, complete, and final jurisdiction and authority to arbitrate “Any dispute involving two or more members of the League․”

The second provision is section 8.14(B).   This provision states that the Commissioner “shall have the power to hear and determine disputes between clubs in respect to any matter certified to by him by either or both of the clubs;  he shall also have the power to settle and determine any controversy between two clubs which, in the opinion of the Commissioner, involves or affects League policy.”

The third provision is section 19.9(D)(ii).   Section 19.9(D) states that “No club shall have the right to make changes in its club colors and/or in the designs of its team helmets or uniforms except in accordance with [paragraphs (i) and (ii) ].”   Paragraph (i) requires that a club desiring to make changes must give written notice and details thereof to the league before September 1 of the year prior to the change and obtain league approval by December 1. Paragraph (ii) allows that “should such change, in the opinion of the Commissioner, result in any conflict with the club colors and/or helmet and uniform designs of any other club, and the clubs involved are unable to agree upon a method of solving such conflict, the Commissioner shall have the right to designate the club colors and/or the designs of the team helmet or uniforms to be used by the affected clubs in such season.”

DISCUSSION

 We summarily dispose of appellants' arguments insofar as they pertain to the 14th cause of action.   That cause of action is a straight breach of contract claim against defendant NFLP. NFLP is a corporate and therefore distinct legal entity.   It was not a moving party below, and it is not an appellant.   It is the only party defendant under the 14th cause of action.   Appellants, not being parties to the 14th cause of action, simply had no standing below to argue that the 14th cause of action is subject to an arbitration agreement.  (Estate of Hart (1984) 165 Cal.App.3d 392, 396 fn. 2, 209 Cal.Rptr. 272, [“ ‘A party must assert his own legal rights and interest and cannot rest his claim to relief on the rights or interests of third parties.’ ”].) They similarly have no standing as “aggrieved” parties to appeal from the trial court's denial of their motion insofar as the 14th cause of action is concerned.  (Rebney v. Wells Fargo Bank (1990) 220 Cal.App.3d 1117, 1128, 269 Cal.Rptr. 844 [Appellants “may not assert error that injuriously affected only nonappealing coparties.”] )

Appellants argue that NFLP is only a nominal defendant.   They claim that the sidelines rights issue was something decided by the clubs with which the Raiders simply disagree.   They urge that the clubs' rights are no less aggrieved because the Raiders have not named the clubs as defendants.

Appellants may be correct.   But if the root allegation of the 14th cause of action is true (there is a contract between NFLP and the Raiders regarding sidelines rights), the clubs chose to entrust their rights to NFLP. And if that allegation is untrue (the sidelines rights belong to the clubs directly), NFLP will prevail on the merits.   In either case, the cause of action is against NFLP and appellants are purporting to claim a right to arbitrate on behalf of NFLP.

The 21st and 22d causes of action are brought under the following provision of the Trademark Law (Bus. & Prof.Code, § 14200 et seq.):  “Likelihood of injury to business reputation or of dilution of the distinctive quality of a mark registered under this chapter, or a mark valid at common law, or a trade name valid at common law, shall be a ground for injunctive relief notwithstanding the absence of competition between the parties or the absence of confusion as to the source of goods or services.”  (Bus. & Prof.Code, § 14330.)

Preliminarily, we observe that, like their relation to the 14th cause of action, the club appellants are not party defendants to the 21st and 22d causes of action.   They therefore have no standing whatsoever.

The parties extensively debate whether the arbitration provisions encompass the causes of action for trademark dilution.   According to the NFL, the dispute is between the Raiders on the one hand and the Tampa Bay Buccaneers and Carolina Panthers on the other hand;  this dispute is clearly one “ involving two or more members of the League” that is arbitrable by Tagliabue pursuant to the NFL Constitution and By-laws.   According to the Raiders, the dispute is between the Raiders on the one hand and the named defendants on the other hand;  the dispute centers upon NFL's, Tagliabue's, and NFLP's approval of the allegedly diluting trademarks and only indirectly affects the clubs.   The Raiders add that the arbitration provision is unenforceable because it does not require a third party decision maker and allow a mechanism for ensuring neutrality with respect to the rendering of the decision.  (Cheng-Canindin v. Renaissance Hotel Associates, supra, 50 Cal.App.4th at pp. 684, 687-688, 57 Cal.Rptr.2d 867.)

 We find dispositive, however, the Raiders' argument that the arbitration provision cannot be construed to encompass the 21st and 22d causes of action because (1) the causes of action seek injunctive relief, and (2) an arbitrator has no power to grant injunctive relief.

 The NFL complains that this issue was not raised below and the Raiders failed to raise it in its opening brief (the Raiders raised the issue via letter filed one day before appellants' reply brief was due).  “ ‘As a general rule issues not raised in the trial court cannot be raised for the first time on appeal.’  [Citation.]  Appellate courts, however, have made exceptions to this rule where ‘the facts are not disputed and the issue merely raises a new question of law.’  [Citation.]”  (Estate of Layton (1996) 44 Cal.App.4th 1337, 1340, fn. 4, 52 Cal.Rptr.2d 251.) Here, the facts are not disputed and the new issue is simply one of law.   Moreover, this case has not yet been tried and the issue is procedural in any event;  thus, determination of the new issue does not affect any substantive rights.   In addition, we allowed the NFL to file a letter responsive to the Raiders' letter.3

A private arbitrator is not empowered to award injunctive relief.   This follows from the interplay of a constitutional provision, several statutes, and case authority.

The superior court has equity jurisdiction to issue permanent injunctions.   (Cal. Const., art.   VI, § 10 [“Superior courts have original jurisdiction in all other causes except those given by statute to other trial courts.”];   Code Civ. Proc., § 86, subd. (a)(8) [giving municipal courts jurisdiction to issue only temporary restraining orders and preliminary injunctions].)

The injunctive remedy is fundamentally different from other forms of equitable relief in that permanent injunctions require the superior court's supervision and power to enforce.  (Sontag Chain Stores Co. v. Superior Court (1941) 18 Cal.2d 92, 94-95, 113 P.2d 689.)   Though the Supreme Court has recognized the need to allow arbitrators to exercise broad equitable powers in fashioning a remedy, it has not addressed whether an arbitrator may issue an injunction.  (See Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 36 Cal.Rptr.2d 581, 885 P.2d 994.)

The arbitration statutes themselves implicitly recognize that arbitrators do not have the power to issue, supervise, and enforce injunctions.   For example, Code of Civil Procedure section 1281.8, subdivision (b), requires a party who is subject to arbitration and seeking a temporary restraining order or preliminary injunction to apply to the court, not the arbitrator.4

In Marsch v. Williams, supra, 23 Cal.App.4th 238, 28 Cal.Rptr.2d 402, the court applied Code of Civil Procedure section 1281.8 to hold that an arbitration panel had no authority to appoint a receiver.   There, a three-member arbitration panel found that Williams had breached a fiduciary duty.   It appointed one of its members as a receiver to supervise the sale of disputed property and the dissolution of a partnership.   The trial court confirmed the arbitration award and entered judgment.   Marsch appealed, arguing that he, rather than the receiver, should have been given possession of the assets.   The court observed:  “Arbitrators do not have the power to provide all the remedies which are available from the superior court.  [Citations.]”  (Id. at p. 245, 28 Cal.Rptr.2d 402.)   It noted that there exists no statutory authority empowering an arbitrator to appoint a receiver.  (Id. at pp. 245-246, 28 Cal.Rptr.2d 402.)   And it found Code of Civil Procedure section 1281.8, subdivision (b) significant because it provides that a party to an arbitration is to apply to the superior court for provisional remedies, which are defined to include the appointment of a receiver.  (Id. at p. 246, 28 Cal.Rptr.2d 402.)

The Marsch court went on to hold that the power to appoint receivers is unique and that the parties may not extend that power to arbitrators by agreement absent legislative action.  (Marsch v. Williams, supra, 23 Cal.App.4th at p. 246, 28 Cal.Rptr.2d 402.)   It reasoned:  “[T]he importance of the trial court's role in supervising a receiver cannot be understated.   ‘The receiver is but the hand of the court, to aid it in preserving and managing the property involved in the suit for the benefit of those to whom it may ultimately be determined to belong.’  [Citations.]  ‘[A] receiver is an agent of the court, not of the parties, and the receivership estate consisting of property which is properly in his hands is under the control and continuous supervision of the court.’  [Citation.]  Given the continuing nature of a receiver's duties and the court's supervision, any addition to the type of tribunals empowered to appoint and supervise receivers would represent a fairly profound change in our receivership law.”  (Id. at p. 248, 28 Cal.Rptr.2d 402.)

 This reasoning applies with equal force to the provisional remedy of injunctive relief.   An arbitrator simply has no power to issue injunctions given the statutory placement of such power in the courts and the supervisory and enforcement obligations attendant to injunctions.   Reinforcing this conclusion is the statutory recognition that an arbitrator has no power to issue provisional remedies.

Though Marsch reasoned that the parties could not contract to extend injunctive powers to an arbitrator, Luster v. Collins (1993) 15 Cal.App.4th 1338, 19 Cal.Rptr.2d 215, supposed that parties could stipulate to give an arbitrator powers to enforce an arbitration judgment.  Luster observed:  “We are unaware of any legal impediment precluding the parties from agreeing the arbitrator could concurrently impose economic sanctions to effect performance of the award.”  (Id. at p. 1349, 19 Cal.Rptr.2d 215.)   In this case, however, the arbitration provisions do not confer upon the arbitrator the power to issue injunctive relief.   We therefore need not address whether parties can contract to allow an arbitrator to issue, supervise, and enforce an injunction.

The NFL urges that a party can waive private rights and remedies that, as here, do not raise issues of public policy.   Thus, it is contended, even if an arbitrator could not award injunctive relief, a party asserting private rights, such as the Raiders, must nonetheless abide by its agreement to arbitrate such claims, regardless of whether the party sought injunctive relief.

The NFL's analysis is erroneous.   Given that an arbitrator has no power to issue injunctions, any waiver of the Raiders' private rights means, in context, that the Raiders agreed to confer injunctive powers upon the arbitrator.   As we have observed, there is no such agreement in this case.

The NFL finally urges that this case is governed by the Act. According to the NFL, the Act requires arbitration of this dispute and preempts California law to the extent that California law would lead to a different result.

However, the Act does not require arbitration of this dispute unless there is an agreement which provides for it.   In order for the agreement to so provide, the agreement must confer upon the arbitrator the power to issue injunctions.   The NFL cites no federal authority to the contrary.

DISPOSITION

The order re petition to compel arbitration and motion to stay action is affirmed.

FOOTNOTES

1.   The club defendants are:  B & B Holdings, Inc. (Arizona Cardinals);  The Five Smiths, Inc. (Atlanta Falcons);  Buffalo Bills, Inc.;   Chicago Bears Football Club, Inc.;   Baltimore Ravens Football Club, Inc., formerly known as Cleveland Browns Football Co.;   PDB Sports, Inc. (Denver Broncos);  Houston Oilers, Inc.;   Kansas City Chiefs Football Club, Inc.;   Minnesota Vikings Football Club, Inc.;   New Orleans Louisiana Saints, L.P.;   New York Football Giants, Inc.;   New York Jets Football Club, Inc.;   Pittsburgh Steelers Sports, Inc.;   Pro-Football, Inc. (Washington Redskins);  San Francisco Forty-Niners, Ltd.;   and Seattle Seahawks, Inc.

2.   The person or entity defendants are:  NFL Commissioner Paul Tagliabue;  NFL President Neil Austrian;  National Football League Properties, Inc. (hereafter, NFLP);  The World League of American Football;  The World League of American Football, Inc.;   The World League of American Football, L.P.;   National Football League Enterprises, L.P.;   National Football League Enterprises, Inc.;   and Management Compensation Group.

3.   The Raiders' letter was provoked by Broughton v. Cigna Healthplans (1998) 65 Cal.App.4th 314, 76 Cal.Rptr.2d 431.   The Supreme Court granted review of the case on September 30, 1998 (S072583), without directing that the case remain published.   The case is therefore not citable.  (Cal. Rules of Court, rules 976(b), 977.)

4.   “A party to an arbitration agreement may file in the court in the county in which an arbitration proceeding is pending, or if an arbitration proceeding has not commenced, in any proper court, an application for a provisional remedy [defined to include attachments, writs of possession, preliminary injunctions, temporary restraining orders, and receivers] in connection with an arbitrable controversy, but only upon the ground that the award to which the applicant may be entitled may be rendered ineffectual without provisional relief․”  (Code Civ. Proc., § 1281.8, subd. (b).)

PREMO, J.

COTTLE, P.J., and ELIA, J., concur.