The Landis Lawsuit: A Conversation

The Vice Presidential debate is over and my brain is mush from listening to Joe Biden and Sarah Palin go back and forth. I was thinking of writing something about Floyd Landis’ lawsuit, now that the actual filing is a matter of public record. Instead, I’m going to postpone that for a day or two.

Judge Bill Hue is out in California, visiting TBV, who is recovering from his injuries. With luck, TBV will be sprung from the hospital in the near future. Bill asked me to post the following, which is from a conversation between himself and a fellow lawyer named Ken, who goes by the name of DirtRoadie on the rec.bicycles.racing forum. Any errors in editing or formatting are my own, due to a condition known as “brain dead on a keyboard”. 🙂

And so, the conversation begins…

“Let me expound briefly on what I think I know about the arbitration procedures involved.

Arbitration is, by its very essence, contractual.  There must be an agreement to arbitrate. That agreement controls the details of the arbitration,  the procedures, the rules, the location, etc. It can even allow non-judicial appeals of an arbitration award (discussed further below).

While arbitration substitutes as the “trial” and decision-making portion of a legal proceeding, enforcement of a resulting arbitration award is still dependent upon the authority of a court of competent jurisdiction.

In Floyd’s case there is apparently some underlying document signed by Floyd which contains the arbitration provisions. That may be a standard UCI, USAC or USADA document relating to a racing license. (Anybody know?)

There is not any one particular (i.e. “official”) means of arbitration, but there are agencies regularly engaged in offering arbitration services and usually the arbitration agreement will specify such an agency.

These agencies typically operate under their own established rules and would be expected to comply with such rules.

In the US,  the most commonly used of these agencies is the American Arbitration Association (who heard  Floyd’s initial case). CAS/TAS is  another such agency that offers both “ordinary” arbitration services and “appeals” (see http://www.tas-cas.org/rules).

CAS  heard Floyd’s “appeal,” although that was really just a “do-over” of the AAA proceeding.

Some background:

• http://www.tas-cas.org/en/20questions.asp/4-3-230-1010-4-1-1/5-0-1010-13-0-0/, and
• http://www.tas-cas.org/history

CAS  is a private agency and enforcement of its “authority” is still dependent on applicable law (and authority of a court)  despite its own misleading suggestions that it is essentially a judicial body.

Although the CAS is ostensibly located in Switzerland and the statements about appeals from the CAS are probably accurate for cases conducted in Switzerland, Swiss law does not apply in the US. Floyd and USADA are located in the US and the arbitration was conducted in the US. The applicable law in the USA is the Federal Arbitration Act. (FAA) 9 USC § 1 et seq

So what might appear to be jurisdictional issues are probably red herrings.

The CAS (or any other agency) only becomes an appellate body by virtue of the terms of an arbitration agreement which may specify a non-judicial appeal process.

The second arbitration (CAS) which  took place in Floyd’s case is an example of this. However, even the second arbitration is still just an arbitration and any attempt to confirm, vacate or modify the resulting award (in the US) is subject to the strict provisions of the FAA. The parties cannot  by agreement, change the scope of available judicial review of an arbitration award.  Kyocera Corp. v. Prudential-Bache Trade Services, Inc., 341 F.3d 987 (9th Cir. 08/29/2003)

In other words, the Federal Arbitration Act  fully controls (and limits) what issues can or cannot be raised when an arbitration award is being challenged.

And USADA might also be expected to respond to Floyd’s motion by seeking confirmation of the award (unless they decide to use the leverage of just ignoring Floyd until he coughs up $100K)

There can be little question that US Federal Courts have subject matter jurisdiction and I am assuming that Floyd’s attorneys would not have been foolish enough to pick the wrong one for personal jurisdiction.
However, while they have made numerous claims regarding the propriety of jurisdiction/venue, they have not stated that the present Court is the one specified in the arbitration agreement (and there may be no Court mentioned there).

I fully expect that we will be seeing a ruling on the merits of the motion.  However I am less optimistic about Floyd’s likelihood of succeeding in any meaningful manner.

On the single issue of costs, including attorney’s fees, the CAS rules state:

R64.5 The arbitral award shall determine which party shall bear the arbitration costs or in which proportion the parties shall share them. As a general rule, the award shall grant the prevailing party a contribution towards its legal fees and other expenses incurred in connection with the proceedings and, in particular, the costs of witnesses and interpreters. When granting such contribution, the Panel shall take into account the outcome of the proceedings, as well as the conduct and the financial resources of the parties.

That would seem to seriously undermine Floyd’s challenge to the monetary portion of the award as being contrary to the applicable rules.

Ken”

“Bill and David –

I need to add a very significant modification to what I provided before,  but it probably clarifies why other decisions may have denied jurisdiction in similar situations.

Federal jurisdiction is not a slam dunk as it would appear to be under the plain language of the FAA, but still applies in Floyd’s case.

The following comes from Garrett v. Lynch, 7 F.3d 882 (9th Cir.1993) where the Court dismissed a petition to vacate an arbitration award :

The Supreme Court has consistently held that federal courts may hear claims under the Act only when there is an independent basis for federal jurisdiction. In Moses H. Cone Memorial Hospital v. Mercury Construction Corp.,460 U.S. 1, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1982), the Court recently reiterated the Act’s unusual jurisdictional requirements:

The Arbitration Act is something of an anomaly in the field of federal-court jurisdiction. It creates a body of federal substantive law establishing and regulating the duty to honor an agreement to arbitrate, yet it does not create any independent federal-question jurisdiction . . . . There must be diversity of citizenship or some other independent basis for federal jurisdiction.

Id., 460 U.S. at 25 n.32 (1982). Accord Southland Corp. v. Keating, 465 U.S. 1, 15 n.9, 79 L. Ed. 2d 1, 104 S. Ct. 852 (1983). Several Ninth Circuit decisions have interpreted the Act in a similar fashion. See, e.g., Pacific Reinsurance Management Corp. v. Ohio Reinsurance Corp.,935 F.2d 1019, 1021 (9th Cir. 1991); Kehr v. Smith Barney, Harris Upham & Co., 736 F.2d 1283, 1287 (9th Cir. 1984); General Atomic Co. v. United Nuclear Corp., 655 F.2d 968, 969 (9th Cir. 1981), cert. denied, 455 U.S. 948, 71 L. Ed. 2d 662, 102 S. Ct. 1449 (1982

So while Floyd has accurately alleged “diversity” jurisdiction and can meet the threshold “amount in controversy” requirement, that might not be available to others..

Bill wrote:

“In Floyd’s case there is apparently some underlying document signed by Floyd which contains the arbitration provisions. That may be a standard UCI, USAC or USADA document relating to a racing license. (Anybody know?) ”

It is, in fact, his signing of the back of his USA Cycling License, that submits the issue to arbitration. Of course, no signing, no license and no living. It is hardly arm’s length but that matter has been resolved against the athlete more than once.

I was not really focusing on the nature of the document so much as the provisions which have been agreed to by signing. Because of the contractual nature of the arbitration proceeding those provisions (if any) may be crucial to understanding some of the very basic elements of whether the proceeding was properly conducted. Although it does not appear that Floyd’s motion makes much reference to breach of rules. Although it does disconcertingly seem to ignore things such as R64.5 below.

“Floyd and USADA are located in the US and the arbitration was conducted in the US.The applicable law in the USA is the Federal Arbitration Act. (FAA) 9 USC § 1 et seq So what might appear to be jurisdictional issues are probably red herrings.”

Interesting. Young’s first statement was that the issue will fail due to lack of jurisdiction, like Gatlin. In Gatlin, the judge was for lack of a better term, supefied that the arbitration system would so violate the American ADA and thus fail to protect the rights of the athlete but later yielded due to lack of jurisdiction.

OK, you made me dig on this one.  The Gatlin case is readily distinguishable. It was not based upon the simple issue of confirming or vacating an arbitration award. It involved (1) authority provided exclusively to the USOC by statute and  (2) a finding that Gatlin was not challenging the arbitration procedure but the substance of the decision of the CAS.   Even the USOC argued “The very essence of arbitration is that judicial review is all but eliminated, save for narrow grounds for vacatur, such as are set forth in New York Convention or under the Federal Arbitration Act” (emphasis added).  Floyd’s motion, in contrast, is  focused on the fairness of his CAS proceeding and uses the FAA standards as a roadmap. Bottom line – I still don’t think Floyd is faced with any significant jurisdictional issues although my reasons have changed somewhat. I don’t think Young has the full picture and even he seems to be confused about dismissal of a motion for lack of jurisdiction versus denial based upon the merits.

” However, even the second arbitration is still just an arbitration and any attempt to confirm, vacate or modify the resulting award (in the US) is subject to the strict provisions of the FAA.”

I think you have something here because it is the enforcement of the award which is at issue as it relates to the $100,000 issue.

I think this becomes more of a practical matter. First, I doubt that  USADA is normally concerned with collecting monetary awards or would normally need to have an arbitration award reduced to judgment by confirmation.

In Floyd’s case, until  the arbitration award is invalidated  they just sit back and wait for Floyd to seek reinstatement and demand $100K just as they would demand normal license fees.  Yes, they may forego the option of pursuing Floyd for payment in the event that he does NOT seek reinstatement, but I expect they would view the $100K as money well spent to discourage anyone else from challenging them.

And who knows how long  Floyd’s present action may  take,  especially with a jury demand.

“R64.5 The arbitral award shall determine which party shall bear the arbitration costs or in which proportion the parties shall share them. As a general rule, the award shall grant the prevailing party a contribution towards its legal fees and other expenses incurred in connection with the proceedings and, in particular, the costs of witnesses and interpreters. When granting such contribution, the Panel shall take into account the outcome of the proceedings, as well as the conduct and the financial resources of the parties. ”

The point Landis’ attorneys make about the “unfairness” of the process used to determine this issue may fail because there is no specified procedure in the WADA Code/CAS Rules for the arbitrators to determine the issue. They can do what they want and if they don’t, the president can.

Yes, in other words, “unfair” by whose standards and what rules?

It might be informative to others to move our discussion to TBV, as there are a few frequent contributors who are also lawyers.

“Yes although I will probably run out of input fairly quickly. I am obviously far behind you in the details of Floyd’s case and anti-doping cases in general. In Floyd’s case I just had enough knowledge to know where to look.

Wasn’t I the one who said “I have no idea whether I will have any comment?” I don’t know what I was thinking..

Ken”