All-out Blitz: The Rams won the Super Bowl, but St. Louis won the Settlement
Photo Source: Thank You (22 Millions+) views, SoFi Stadium, Flickr (March 18, 2021) (CC BY 2.0).
By: Ryan Thomas* Posted: 04/22/2022
The Los Angeles Rams (“Rams”) capped the long National Football League (“NFL”) season with a Super Bowl victory at home in SoFi Stadium.[1] Only the second team in NFL history to claim victory at home, the distinction was especially meaningful for the team's owner, Stan Kroenke.[2] He financed the construction of the five-billion-dollar stadium himself after the Rams moved to Los Angeles.[3]
However, while the Rams players were facing challenges related to the football season, Kroenke was facing a challenge off the field.[4] He was in the midst of a contentious legal battle brought by the city of St. Louis.[5] The battle began after Kroenke moved the Rams from St. Louis to Los Angeles before the 2016 NFL season.[6]
Warming Up with the Backstory
In 2015, there was a strong movement to place NFL franchises in Los Angeles.[7] NFL owners reviewed several plans to place a team in Los Angeles during their annual owner’s meeting that year.[8] By the end of that meeting, the NFL owners were ready to authorize the Rams’ to move from St. Louis to Los Angeles.[9] As a contributing factor, St. Louis had recently elected to change its lease agreement for the stadium used by the Rams, which was to run until 2025, to a year-to-year deal.[10] This change meant the Rams could decide not renew the contract at any point and leave within the year.[11] However, after the Rams moved to Los Angeles in 2016, St. Louis filed a lawsuit for damages the city says were caused by the team moving.[12] The original complaint alleged five counts against the defendants, which consisted of all NFL teams and their owners.[13]
Learn the Rules and Follow the Rule Book
One of the significant issues raised by St. Louis was the NFL’s failure to follow its own rules.[14] The NFL has a set of rules it adopted for guidance on when a team wants to relocate.[15] St. Louis claimed that the rule adopted for relocation and agreed upon by the NFL and its teams created a contract that allowed St. Louis to become a beneficiary of the agreement.[16] The complaint outlined the specific language that St. Louis felt was not followed during the relocation process.[17] Finally, a committee of six NFL owners, who were to review all potential bids and potential teams to move to Los Angeles, decided they did not support the Rams’ move.[18] When the decision was brought before the whole body of owners, the first vote failed to garner the required three-quarters vote.[19] On the second vote, they secured enough votes to authorize the move for the Rams.[20]
Under the law, a third-party beneficiary of a contract usually does not have a claim to enforce that contract.[21] However, in the case of the NFL’s deal with its teams, an intended beneficiary can enforce the deal, even if they are not an official party to the contract.[22] St. Louis argued that the NFL intended to confer benefits onto the cities and regions that hosted the teams when they created the rules for relocation.[23] Arguing in this fashion created the ability for St. Louis to raise claims enforcing the rules the NFL has set in place for its teams to relocate.[24]
Practice Makes Perfect But Always Negotiate in Good Faith
St. Louis also accused the Rams of not negotiating in good faith.[25] St. Louis claimed the Rams and Kroenke made claims that “were false . . . and were never corrected . . . .”[26] St. Louis believed the Rams had every intention of relocating early in the process and failed to disclose this desire throughout their negotiations.[27] They pointed to comments made by a former Rams coach and statements made by the Chief Operating Officer and Executive Vice President of Football Operations about a conversation he had with Kroenke after Kroenke visited the land where SoFi stadium is now built.[28]
In connection to this idea of negotiating in good faith are counts three and four of St. Louis’s complaint.[29] In Missouri, to prove a fraudulent misrepresentation, a person needs to prove (1) a material and false statement, (2) that the speaker knew the statement was false, (3) that the speaker knew or should have known the person hearing the statement would have acted on the false information, (4) that the person hearing it was unaware that the information was false, (5) that the person relied on the information and should have been expected to rely on the information, and (6) damages that stem from that reliance.[30] St. Louis argued, based on the surrounding circumstances and the comments made, it was evident the Rams did not intend to negotiate in good faith and fraudulently induced them to commit more resources in an attempt to secure a long-term stadium agreement.[31]
St. Louis Did All They Could
While St. Louis pointed out how the NFL and the Rams failed St. Louis, they also outlined all they did to keep the Rams in St. Louis.[32] They provided millions in renovations to the stadium the Rams were considering, and they provided a new development proposal to the Rams and the league.[33] This also included providing an additional $100 million in financing to help pay for the new stadium plan, which the NFL requested.[34] St. Louis felt they relied on the relocation policy to help guide their decisions on negotiating with the Rams and the NFL.[35]
The Last Yard
St. Louis outlined damages, calculated based on a combination of the appreciation in value of the Rams’s post move, the fee the Rams paid to the NFL, and the amusement, ticket, property, and sales taxes lost.[36] The NFL and the Rams filed multiple motions, including a motion to dismiss and a motion to move the suit to another venue, all of which were all denied.[37] These all set up a trial date that would have begun sometime in January of 2022, just before the Super Bowl.[38] In an apparent attempt to end this four-year-long litigation, the Rams and the NFL settled with St. Louis for seven-hundred and ninety million dollars.[39] This lawsuit shows a potential option for future cities that lose an NFL team to recover some of the losses incurred in negotiations.[40] However, cities in a similar situation will have to consider their specific circumstances—St. Louis’s case had facts that allowed for a more aggressive approach, which worked in their favor for a successful recovery.[41]
*Staff Writer, Jeffrey S. Moorad Sports Law Journal, J.D. Candidate, May 2023, Villanova University Charles Widger School of Law
[1] See Dan Lyons, Rams Celebrate Super Bowl Victory with Short Parade Route Wednesday, Sports Illustrated (Feb. 16, 2022), https://www.si.com/extra-mustard/2022/02/16/rams-parade-los-angeles-route-usc-coliseum-short-one-mile-crowd (describing planned parade route for Rams after winning Super Bowl).
[2] See Shanna McCarriston, What Are the Odds That a Home Super Bowl Happens for Third Straight Year? Here Are the Cardinals Odds to Win, CBS (Feb. 15, 2022), https://www.cbssports.com/nfl/news/what-are-the-odds-that-a-home-super-bowl-happens-for-third-straight-year-here-are-the-cardinals-odds-to-win/ (stating Buccaneers won at home in 2020 Super Bowl); see also Jay Paris, Costly SoFi Stadium Gets a Financial Handout from NFL, Forbes (May 20, 2020), https://www.forbes.com/sites/jayparis/2020/05/20/costly-sofi-stadium-gets-a-financial-handout-from-nfl/?sh=62a04f145e38 (“Kroenke is financially responsible for the $5 billion SoFi Stadium, the signature building in his sports and entertainment complex stretching over nearly 300 acres, in nearby Inglewood, Calif.”).
[3] See Dan Bernstein, Inside SoFi Stadium: Cost, Capacity & More to Know About Los Angeles Rams & Chargers New Home, Sporting News (Sept. 13, 2020), https://www.sportingnews.com/us/nfl/news/sofi-stadium-rams-chargers-cost-capacity/xu152vdlei9c11ury9lohdr56 (pegging cost of stadium at over five billion dollars); see also Kyra Vandiver, Why the Rams Moved to Los Angeles, Explained, SBNation (Feb. 13, 2022), https://www.sbnation.com/2022/2/13/22914704/why-rams-moved-to-los-angeles (stating Rams moved in 2016).
[4] See Ken Belson, N.F.L. to Settle Lawsuit Over Rams’ Relocation for $790 Million, N.Y. Times (Nov. 24, 2021), https://www.nytimes.com/2021/11/24/sports/football/nfl-st-louis-rams-relocation.html (discussing settlement of lawsuit by Rams).
[5] See Andrew Brandt, Business of Football: The NFL is Losing its Lawsuit Against St. Louis, But Has Been in Situations Like This Before, Sports Illustrated (Oct. 13, 2021), https://www.si.com/nfl/2021/10/13/business-of-football-understanding-st-lous-rams-lawsuit#:~:text=The%20basis%20of%20the%20suit%2C%20from%20my%20reading%2C,with%20their%20own%20relocation%20policy%20guidelines%20%28the%20%E2%80%9CPolicy%E2%80%9D%29. (“At this point, the St. Louis lawyers are beating the NFL’s Lawyers.”).
[6] See id. (“St. Louis sued as well, and to this point, it has had more success than Oakland.”).
[7] See id. (discussing two proposals to get teams to L.A.).
[8] See id. (discussing NFL meeting in 2015 that reviewed proposals).
[9] See Belson, supra note 4 (“Yet in January 2016, the entire cohort of league owners voted 30-2 to let the Rams move to Los Angeles.”).
[10] See Brandt, supra note 5 (“It was noted that in 2015, the St. Louis lease in the Edward Jones Dome had converted to a year-to-year proposition after it was not considered among the top 25% of NFL stadiums.”); see also Rams Notify St. Louis They’ll go Year-to-Year on Dome Lease, USA Today (Jan. 26, 2015) https://www.usatoday.com/story/sports/nfl/2015/01/26/rams-notify-st-louis-theyll-go-year-to-year-on-dome-lease/22370667/ (stating stadium had little chance to be in top 25% because 22 stadiums had been built after Ram’s stadium).
[11] See Brandt, supra note 5 (describing stadium contract terms as making “[S]t. Louis a free agent . . . .”); see also Sam Farmer, Rams and St. Louis Far Apart on Renovating Stadium, Los Angeles Times (Jan. 5, 2015) (“[A]llow[ing] the Rams to convert the remainder of their lease to a year-to-year agreement.”).
[12] See Ken Belson, St. Louis Sues N.F.L. Over Rams’ Departure, N.Y. Times (Apr. 12, 2017), https://www.nytimes.com/2017/04/12/sports/football/st-louis-nfl-lawsuit-rams-relocation.html (stating St. Louis filed fifty-two page complaint).
[13] See Complaint at 36-51, St. Louis Reg’l Convention and Sports Complex Auth., et al. v. Nat’l Football League et al., No. 1722-CC00976, 2017 WL 1423439 (filed Apr. 12, 2017) [hereinafter Complaint] (alleging breach of contract against all named defendants; unjust enrichment against all named defendants; fraudulent misrepresentation against Rams, against Kroenke; fraudulent misrepresentation against all named defendants; tortious interference with business expectancy against all named defendants except Rams).
[14] See id. at 37-38 (“The Rams, the NFL, its member teams, and their owners did not comply with the Relocation Policy set out above.”).
[15] See id. at 24 (“In 1984, the NFL adopted the ‘Policy and Procedure for Proposed Franchise Relocations’ (hereafter the ‘Relocation Policy’ or ‘Policy’), pursuant to Article 8.5 of the NFL Constitution and Bylaws, which vests the Commissioner with the authority to establish policy and procedure with respect to the provisions of the Constitution and Bylaws and any enforcement thereof.”).
[16] See id. at 37 (“The benefits to Plaintiffs and others set out in the Relocation Policy promulgated pursuant to the Constitution and Bylaws are not incidental.”).
[17] See id. at 33 (“[The NFL f]ailed to require the Rams to meet its ‘primary obligation ... to advance the interests of the League in its home territory’ including ‘maximizing fan support;’ Allowed relocation when the Rams’s ‘viability in its home territory’ was not ‘threatened;’ Failed to require the Rams to ‘work diligently and in good faith to obtain and to maintain suitable stadium facilities in their home territory;’ Failed to provide the notice of relocation, statement of reasons, and accompanying material to the RSA or home market in a timely fashion to allow Plaintiffs to respond adequately to the ‘proposed transfer;’ Failed to have any notice of relocation published in newspapers of general circulation; and Failed to require the Rams to address ‘specifically’ ‘each of the factors’ identified in the Relocation Policy.”).
[18] See id. at 34 (“On January 12, 2016, the six-owner NFL committee on Los Angeles opportunities voted 5-1 for a relocation plan other than the plan for the Rams to relocate to Los Angeles.”).
[19] See id. (“Hours later, during an initial vote, the Owner Defendants failed to arrive at the necessary 24 votes by which the Rams could relocate to Los Angeles.”).
[20] See id. (“Just a short time later, during another vote, the Owner Defendants voted to allow the relocation of the Rams to Los Angeles despite the fact that Defendants made little or no attempt to follow the NFL Relocation Policy.”); see also Ken Belson, Rams Moving to Los Angeles Area, and Chargers Could Join Them, N.Y. Times (Jan. 12, 2016), https://www.nytimes.com/2016/01/13/sports/football/rams-moving-to-los-angeles-area-and-chargers-could-join-later.html (stating final vote was 30-2).
[21] See Restatement (Second) of Contracts § 315 (Am. L. Inst. 1981) (“An incidental beneficiary acquires by virtue of the promise no right against the promisor or the promisee.”).
[22] See id. § 305(1) (“Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either (a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or (b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.”).
[23] See Complaint, supra note 13, at 37 (“The statement that, ‘clubs are obligated to work diligently and in good faith to obtain and maintain suitable stadium facilities in their home territories and to operate in a manner that maximizes fan support in their current home community’ is a provision that by its terms is intended to benefit home communities such as Plaintiffs herein. The benefits to Plaintiffs and others set out in the Relocation Policy promulgated pursuant to the Constitution and Bylaws are not incidental.”).
[24] See id. at 37-38 (“The Rams breached its contractual obligation of diligence and good faith to the detriment of the RSA, the City, and the County as third party beneficiaries as set out above. The Rams, the NFL, its member teams, and their owners did not comply with the Relocation Policy set out above.”).
[25] See id. at 31 (“During the same time period, instead of performing its primary obligation ‘to work diligently and in good faith to obtain and maintain suitable stadium facilities in their home territories, and to operate in a manner that maximizes fan support in their current home community,’ the Rams franchise and its owner announced new plans for a stadium in Inglewood, California, moved Rams practices to California, and took other actions inconsistent with the club’s obligations to Plaintiffs, the local community, and others.”).
[26] See id. at 28-30 (outlining ten statements made by people associated with Rams that St. Louis felt were false).
[27] See id. at 44 (“At no point prior to the Rams’s submission of its relocation petition did the Rams disclose their secret intention to move the team to Los Angeles.”).
[28] See id. at 42 (“In a December 2016 interview, former Rams coach Jeff Fisher acknowledged that he was aware during his interview process in January 2012 that the Rams planned to move to Los Angeles after the lease expired in St. Louis. Thus, no later than 2011, the Rams and Mr. Kroenke intended to move the Rams to Los Angeles. Similarly, in a January 2016 interview, Mr. Demoff admitted that Mr. Kroenke, who inspected the California property in the summer of 2013, called him before he bought the site and told him that the location was ‘an unbelievable site’ for a football stadium. Mr. Demoff stated that this call from Mr. Kroenke was one of the ‘moments in your life you never forget.’”).
[29] See id. at 41-47 (discussing alleged fraudulent misrepresentations made by NFL, Rams, Kroenke).
[30] See CADCO, Inc. v. Fleetwood Enters., 220 S.W.3d 426, 436 (Mo. Ct. App. 2007) (“The elements of fraudulent misrepresentation are: 1) a false material representation; 2) the speaker's knowledge of the falsity of the misrepresentation or ignorance of the truth; 3) the speaker's intent that the hearer act upon the misrepresentation in a manner reasonably contemplated; 4) the hearer's ignorance of the falsity of the misrepresentation; 5) the hearer's reliance on its truth; 6) the hearer's right to rely thereon; and 7) the hearer’s consequent and proximately caused damages.”) (citing Mprove v. KLT Telecom, Inc., 135 S.W.3d 481, 489-90 (Mo. Ct. App. 2004)).
[31] See Complaint, supra note 13, at 37 (“Plaintiffs were involved in a series of business transactions with the Rams and Mr. Kroenke. When parties are involved in business transactions, a party is under a duty to correct prior statements that are no longer truthful, and the Rams or Mr. Kroenke never corrected any of the statements set forth above. The Rams’s and Mr. Kroenke’s plans to relocate rendered the prior statements misleading. Plaintiffs could not have learned of the Defendants’ intentions by the exercise of due diligence. Similarly, the Rams and Mr. Kroenke had knowledge of their plans and intentions; this knowledge was peculiarly within the knowledge of the Rams and Mr. Kroenke; and Plaintiffs could not have discovered these plans through ordinary diligence.”).
[32] See id. at 34-35 (outlining facts showing St. Louis attempting to comply with requests made).
[33] See id. at 27 (spending $30 million to renovate old stadiums, fields, scoreboards).
[34] See id. at 34 (“Then, the NFL demanded another $100 million from Plaintiffs, which Plaintiffs agreed to provide.”).
[35] See id. at 45 (“Plaintiffs relied on the supposed truth of the representations and, in fact, spent considerable time and money financing and working on a new stadium complex plan, as the Rams and Mr. Kroenke intended for them to do and encouraged them to do.”).
[36] See id. at 35-36 (outlining roughly $1.350 billion in total damages).
[37] See Curtis Crabtree, Judge Dismisses Motions Seeking to End St. Louis Lawsuit Against Rams, NFL, PFT (Dec. 28, 2017), https://profootballtalk.nbcsports.com/2017/12/28/judge-dismisses-motions-seeking-to-end-st-louis-lawsuit-against-rams-nfl/ (describing presiding judge denying motion by defendants to dismiss); Joel Currier, Missouri Appeals Court Rejects Bid by Rams, NFL to Move Lawsuit Out of St. Louis, St. Louis Post-Dispatch (Nov. 3. 2021), https://www.stltoday.com/news/local/crime-and-courts/missouri-appeals-court-rejects-bid-by-rams-nfl-to-move-lawsuit-out-of-st-louis/article_dec7f03b-657f-516c-8ef7-c6d44d93263c.html (describing judge denying motion to change venue).
[38] See Bill Shaikin, How St. Louis is Beating the NFL in Court and May Win Billions After Losing the Rams, L.A. Times (Nov. 23, 2021), https://www.latimes.com/sports/rams/story/2021-11-23/rams-nfl-st-louis-lawsuit (“[A]s a longshot lawsuit heads toward trial in January . . . .”).
[39] See Belson, supra note 4 (“The N.F.L. has agreed to pay the city and county of St. Louis $790 million to settle a four-year dispute over whether the league broke its own relocation guidelines to pave the way for the Rams to move to Los Angeles in 2016, according to two people who spoke on condition of anonymity.”).
[40] See id. (“The league fought the lawsuit because it did not want to set a settlement precedent or open the door for an adverse ruling that would invite other cities in the future to sue the league after their teams’ departures.”). But see Shaikin, supra note 38 (describing lawsuit brought by Oakland using similar arguments as St. Louis but was dismissed).
[41] See Complaint, supra note 13, at 24-36 (describing NFL apparently ignoring its own rules, explaining comments made on timeline showing early desire to move team).
