Dallas Texans Soccer Club et al v. Major League Soccer Players Union et al

MOTION to Dismiss for Lack of Jurisdiction

E.D. Tex.November 3, 2016

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS SHERMAN DIVISION DALLAS TEXANS SOCCER CLUB; ) CROSSFIRE FOUNDATION, INC.; ) and SOCKERS FC CHICAGO, LLC, ) ) Plaintiffs, ) ) v. ) ) Case No. 4:16-cv-00464-ALM MAJOR LEAGUE SOCCER PLAYERS ) UNION; CLINT DEMPSEY; DEANDRE ) YEDLIN; MICHAEL BRADLEY; and all ) those similarly situated, ) ) Defendants. ) ______________________________________ ) MOTION OF DEFENDANT MAJOR LEAGUE SOCCER PLAYERS UNION TO DISMISS FOR LACK OF PERSONAL JURISDICTION Major League Soccer Players Union (“Players Union”) moves to dismiss this action pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. As set forth below, the complaint should be dismissed because this Court does not have personal jurisdiction over the Players Union. FACTS ALLEGED IN THE COMPLAINT The plaintiffs in this action are three youth soccer clubs located in the United States. Complaint (“Compl.”) ¶¶ 1-3. Each club is associated with the United States Soccer Federation (“USSF”), which is a member of the Federation Internationale de Football Association (“FIFA”), headquartered in Zurich, Switzerland. (Compl. ¶ 14) FIFA’s rules provide for the payment to youth soccer clubs of fees, called training compensation and Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 1 of 20 PageID #: 209 2 solidarity contributions, arising out of certain international player transactions. Training compensation is due when an amateur player trained in one country, and signs his first professional contract with a club in a different country. (Id. ¶ 18) A solidarity contribution is due when a player is transferred from a team in one national association to a team in another. (Id. ¶ 17) The payment is made by professional soccer clubs. (Id. ¶¶ 10, 17-18) Disputes over the payment of training compensation and solidarity contributions are resolved by FIFA’s Dispute Resolution Chamber (“DRC”), which meets in Zurich. (Compl. ¶ 19) The plaintiff clubs have initiated administrative proceedings before the DRC seeking either solidarity contributions or training compensation in connection with the transfer or signing of players trained by those clubs. (Id. ¶¶ 20-27) The plaintiff clubs have also been meeting in Chicago, Illinois with the USSF, professional soccer leagues in the United States, and others with the goal of establishing a system of fees arising out of domestic U.S. player transactions that would reward youth soccer clubs in the United States. (Compl. ¶¶ 11, 29) The complaint alleges that, at a May 2016 meeting in Illinois, a representative of the Players Union argued that, if the DRC were to award either training compensation or solidarity contributions to the plaintiff clubs, any effort to enforce those awards would violate federal antitrust law, as would any agreement to require the payment of similar fees arising out of domestic player transactions. (Compl. ¶ 30) According to the complaint, the plaintiffs were informed by a third party that the Players Union had also threatened to file an antitrust lawsuit against the plaintiffs, the USSF, and others, if the DRC awarded either training compensation or solidarity contributions to the plaintiff clubs. (Id. ¶ 31) Plaintiffs Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 2 of 20 PageID #: 210 3 contend it is the alleged threat of litigation by the Players Union that gives rise to this action. (Id. ¶¶ 9, 32-33) The complaint names as defendants not only the Players Union but also three professional soccer players (hereafter “Player Defendants”) who are sued as individuals and representatives of two classes: (1) a class of all U.S. soccer players whose signing or transfer could require payment of training compensation or a solidarity contribution under current FIFA rules; and (2) a class of all other U.S. soccer players whose domestic signing or transfer might require payment of fees similar to training compensation or solidarity contributions under rules that the USSF might someday adopt. (Compl. ¶¶ 5, 35) The Players Union’s principal place of business is in Maryland. (Compl. ¶ 4) The complaint alleges that this Court has personal jurisdiction over the Players Union solely because “its representatives engage in sufficient contacts with the State of Texas such that the [Players Union] should reasonably anticipate being hauled into court there.” (Id. ¶ 8) The complaint does not allege that this Court has personal jurisdiction over Player Defendants, or that any of the Player Defendants play for teams in Texas. (Id. ¶¶ 5, 8) Plaintiffs are seeking a declaratory judgment that their receipt of training compensation or solidarity contributions resulting from international player transactions would not violate federal antitrust laws and that those antitrust laws would also permit the implementation of a similar system of training compensation and solidarity contributions for domestic U.S. player transactions. (Compl. ¶¶ 32-33, 66, 72, Prayer) Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 3 of 20 PageID #: 211 4 ARGUMENT A federal district court can assert personal jurisdiction over a defendant only if that defendant is amenable to service of process. Federal Rule of Civil Procedure 4(k)(1)(A) provides that service of a summons establishes the court’s jurisdiction over any person “who is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located.” Fed. R. Civ. P. (4)(k)(1)(A). Accordingly, this Court can exercise personal jurisdiction over the Players Union only if the Players Union could be subjected to the jurisdiction of a Texas state court. Moreover, the plaintiff bears the burden of establishing the court has personal jurisdiction, and must make a prima facie showing of jurisdiction. Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 211 (5th Cir. 2016). The Players Union is an unincorporated association with its principal place of business in Maryland. (Compl. ¶ 4; Foose Dec. ¶ 3)1 The only alleged basis for personal jurisdiction is that the Players Union represents players assigned to teams in Texas, and that it has “representatives who play at MLS Club FC Dallas.” (Compl. ¶¶ 4, 8) As set forth below, those allegations are insufficient to establish personal jurisdiction over the Players Union. To establish personal jurisdiction over a nonresident, the plaintiffs must establish facts that satisfy the Texas long-arm statute and the Due Process clause of the Fourteenth Amendment. Int'l Energy Ventures Mgmt., L.L.C., 818 F.3d at 212. “Because the Texas 1 The declaration of the Players Union’s Executive Director, Bob Foose, is filed with this motion. Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 4 of 20 PageID #: 212 5 long-arm statute extends as far as constitutional due process permits,” the only inquiry is whether exercising personal jurisdiction over the Players Union in Texas would be consistent with due process. Id. Courts have recognized two categories of personal jurisdiction, each with its own due process analysis: (1) general jurisdiction, which arises out of the relationship between the entity over which personal jurisdiction is alleged and the forum state; and (2) specific jurisdiction, which arises out of the forum state’s relationship with the case or controversy. E.g., Daimler AG v. Bauman, 134 S. Ct. 746, 754 (2014). The plaintiffs have not - and cannot - demonstrate either general or specific jurisdiction over the Players Union. I. THE PLAINTIFFS CANNOT ESTABLISH THAT THIS COURT HAS GENERAL JURISDICTION OVER THE PLAYERS UNION General jurisdiction may be established only where the entity’s “affiliations with the State are so ‘continuous and systematic’ as to render them essentially at home in the forum State.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2851 (2011). As a result, “[f]or an individual, the paradigm forum for the exercise of general jurisdiction is the individual's domicile; for a corporation, it is an equivalent place, one in which the corporation is fairly regarded as at home.” Id. at 2853-54. The Supreme Court has left open the possibility of finding general jurisdiction over an out-of-state defendant, but only in an “exceptional case.” Daimler, 134 S. Ct. at 761 n.19. See also Whitener v. Pliva, Inc., 2015 U.S. App. LEXIS 5774, at *6 (5th Cir. 2015) (per curiam) (not designated for publication) (“[A]s the Supreme Court has held and this court has recently recognized, it is the ‘exceptional case’ in which ‘a [nonresident] Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 5 of 20 PageID #: 213 6 corporation’s operations . . . may be so substantial and of such a nature as to render the corporation’ subject to general jurisdiction ‘in that State.’”). As shown below, the Players Union’s occasional contacts with Texas do not create an “exceptional case” where Texas is essentially home for the Players Union. Although the defendants in Daimler and Goodyear were corporations, those decisions’ “reasoning was based on an analogy to general jurisdiction over individuals, and there is no reason to invent a different test for general jurisdiction depending on whether the defendant is an individual, a corporation, or another entity.” Waldman v. Palestine Liberation Org., 2016 U.S. App. LEXIS 16089, at *28-29 (2d Cir. 2016) (emphasis added) (holding Daimler applies to unincorporated associations). See also Livnat v. Palestinian Authority, 82 F. Supp. 3d 19, 28-29 (D.C. Cir. 2015) (there is no reason to believe Daimler’s “essentially at home” standard does not apply to unincorporated organizations); Graham v. Dyncorp Intern., Inc., 973 F. Supp. 2d 698, 703-05 (S.D. Tex. 2013) (applying Goodyear’s general jurisdiction principles to a Limited Liability Company); Sung-Ho Hwang v. Grace Rd. Church, 2016 U.S. Dist. LEXIS 32824, at *11, n.5 (E.D.N.Y. 2016) (noting Daimler would foreclose finding general jurisdiction over non-resident church); Cloud v. Van Ness, 2015 U.S. Dist. LEXIS 156123, at *7-8 (E.D. Cal. 2015) (applying Goodyear to find California did not have general jurisdiction over church). Accordingly, Goodyear and Daimler’s “at home” test applies equally to the Players Union, as it would to a corporation. Plaintiffs allege that the Players Union “has ongoing contacts and regularly conducts business” in Texas. (Compl. ¶ 4) Even if this allegation were enough to show continuous Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 6 of 20 PageID #: 214 7 and systematic contact, it would be insufficient to establish general jurisdiction. “Daimler makes clear that general jurisdiction is only present when a defendant not only has continuous and systematic contacts with the forum state, but also has these kinds of contacts to such an extent that they render it essentially at home in that state. . . . That is, continuous and systematic contacts, taken alone, are not enough to confer general jurisdiction over a defendant - such a formulation of the test is ‘unacceptably grasping.’” Searcy v. Parex Res., Inc., 2016 Tex. LEXIS 500, at *27 (Tex. 2016) (citing Daimler, 134 S. Ct. at 760-61). The Players Union’s offices are in Bethesda, Maryland where all of its employees report and work. (Foose Dec. ¶ 3) The Players Union does not have any offices in Texas, own or lease any real or personal property in Texas, or maintain a bank account in Texas. (Id. ¶¶ 4-5) None of the Players Union’s employees are located in Texas. (Id. ¶ 6) The Players Union is governed by a seven-member Executive Board, and no Executive Board member plays for a team located in Texas. (Id. ¶ 10) The Players Union’s only collective bargaining agreement is with Major League Soccer, L.L.C. and MLS Canada UP (together “MLS”), and not with any individual Texas team. (Foose Dec. ¶ 2) Since the Players Union became the collective bargaining representative, no collective bargaining negotiation session, grievance meeting, or arbitration has ever taken place in Texas. (Id. ¶ 17) Due to MLS’ independent decisions (see infra pp. 11-13), the Players Union does have limited contacts with Texas. Of the twenty teams in MLS and 588 players in the bargaining unit represented by the Players Union, two teams consisting of 58 players are Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 7 of 20 PageID #: 215 8 in Texas. (Foose Dec. ¶¶ 7, 9) Next year, there will be two more non-Texas teams playing in MLS, increasing the size of the bargaining unit represented by the Players Union to approximately 644 members. (Id. ¶ 8) In addition to the seven-member Executive Board, the Players Union has an elected Player Representative from each MLS team. Therefore, two of the twenty elected representatives play for MLS teams located in Texas. (Id. ¶ 10) Employees of the Players Union meet with members from every team. (Id. ¶ 11) These meetings occasionally take place at the locations of the members’ teams. (Id. ¶¶ 11-13) Over the last five years, the Players Union has held a total of three meetings in Texas; once with the members playing for the Houston Dynamo, and twice with the members playing for FC Dallas. (Id. ¶¶ 12-13) The Players Union has also met with those teams in other states. (Id. ¶¶ 11-13) The bargaining unit represented by the Players Union consists of players employed by MLS and assigned to teams located across the United States and Canada. When the Players Union’s contacts with Texas are viewed in light of the “activities in their entirety, nationwide and worldwide,” Daimler, 134 S. Ct. at 762, n.20, only a small percentage of the Players Union’s total activity occurs in Texas. This is far from the substantial, continuous, and systematic contacts needed to be essentially at home. There are MLS teams in the following states and provinces: California, Colorado, District of Columbia, Florida, Illinois, Kansas, Massachusetts, New Jersey, New York, Ohio, Oregon, Pennsylvania, Texas, Utah, Washington, as well as Ontario, Quebec, and British Columbia, Canada. If the Players Union were subject to all-purpose jurisdiction in every location it had members, “‘at home’ would be synonymous with ‘doing business,’” Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 8 of 20 PageID #: 216 9 a proposition expressly rejected in Daimler. 134 S. Ct. at 762, n.20. Furthermore, an organization occasionally sending its employees to Texas is insufficient to establish general jurisdiction. E.g. Bowles v. Ranger Land Sys., Inc., 2013 U.S. App. LEXIS 12027, at *321- 22 (5th Cir. 2013); Helicopteros Nacionales De Columbia v. Hall, 466 U.S. 408, 418 (1984). Courts in the Fifth Circuit have echoed the stringent limitations on general jurisdiction set forth in Goodyear and Daimler. See e.g., Monkton Ins. Servs., Ltd. v. Ritter, 768 F.3d 429, 432 (5th Cir. 2014) (“It is, therefore, incredibly difficult to establish general jurisdiction in a forum other than the place of incorporation or principal place of business.”); Due’s Wrecker Serv. v. Metro Tow Trucks (Canada), Ltd., 2016 U.S. Dist. LEXIS 128129, at *7 (E.D. Tex. 2016) (denying discovery for general jurisdiction because plaintiff “has not proffered any of the other ‘paradigm bases’ for the ‘incredibly difficult’ task of establishing general jurisdiction.”). In Patterson v. Aker Sols, Inc., 826 F.3d 231, 235 (5th Cir. 2016), the Fifth Circuit recently set Perkins v. Benguet Consol. Mining Co., 342 U.S. 437 (1952) - the only modern era case in which the Supreme Court has found general jurisdiction over a defendant - as “the benchmark of the ‘exceptional case’ where it would be appropriate to exercise general jurisdiction” over an out-of-state defendant. The court in Patterson detailed just how extensive the defendant’s contacts had been in Perkins: The corporation’s contacts with Ohio included: maintaining an office, keeping company files there, corresponding from Ohio about business and employees, paying salaries to the company’s president and two secretaries, maintaining company bank accounts, using an Ohio bank as a transfer agent for stock of the company, holding several directors’ meetings, managing Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 9 of 20 PageID #: 217 10 company policies concerning rehabilitation of company property in the Philippines, and sending funds to pay for projects in the Philippines. Id. at 235. “Using Perkins as the benchmark of the ‘exceptional case’ where it is appropriate to exercise general jurisdiction over [an entity] outside of its principal place of business,” Patterson, 826 F.3d at 235, the Players Union’s contacts with Texas fall far short. As stated, the Players Union has no presence in Texas other than having less than ten percent of the bargaining unit it represents assigned to play for teams located in Texas, and occasionally sending employees to Texas to meet with its members. Those contacts fall well short of the “benchmark” of the “exceptional case.” Instead, the Players Union’s minimal contacts are analogous to those where courts have found that the contacts were not substantial enough to establish general jurisdiction. See Graham v. Dyncorp Intern., Inc., 973 F. Supp. 2d 698, 703-05 (S.D. Tex. 2013) (holding Texas did not have general jurisdiction over L.L.C. that had entered into $155 million worth of contracts and had 154 employees in Texas, because those activities constituted a small percentage of their total operation); Johnston v. Multidata Systems Intern. Corp., 523 F. 3d 602, 613-14 (5th Cir. 2008) (selling millions of dollars’ worth of products in Texas over last five years does not establish general jurisdiction because “neither the total amount of sales nor the percentage of annual sales is substantial or regular enough to create a general presence in Texas.”); Searcy v. Parex Res., Inc., 2016 Tex. LEXIS 500, at *41-43 (Tex. 2016) (fact that corporation’s operations were “managed and controlled” from Texas by parent-company, does not establish general jurisdiction); Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 10 of 20 PageID #: 218 11 Central Freight Lines, Inc. v. APA Transport Corp., 322 F.3d 376, 381 (5th Cir. 2003) (“Even if [Defendant]’s contacts with the state of Texas have been, in some sense, ‘continuous and systematic,’ [Defendant]’s activities, in toto, are clearly not substantial enough to justify subjecting [Defendant] to suit . . . on a theory of general personal jurisdiction.”). A. The Limited Contacts the Players Union has with Texas are not from the Players Union Purposefully Availing itself with Texas Whether analyzing general or specific personal jurisdiction, the required minimum contacts must arise from contacts the defendant made itself that it purposefully directed at the forum state. Stuart v. Spademan, 772 F.2d 1185, 1190-91 (5th Cir. 1985); Helicopteros, 466 U.S. at 416-17 (the general jurisdiction analysis is limited to the defendant’s conduct directed at the forum state); Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-76 (1985) (specific jurisdiction requires that the injury resulted from the defendant’s conduct that was purposefully directed at the forum state). A party does not purposefully avail itself of the forum state if its contacts are the result of mere happenstance or from the independent decisions and actions of other parties. Although a small percentage of the Players Union’s members are assigned to teams in Texas, the fact that the Players Union has contacts with those members is a result of mere happenstance and fully in the control of third-parties. Thus, though these contacts are not enough to make the Players Union at home in Texas, even if they were, they should not be considered. Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 11 of 20 PageID #: 219 12 The Players Union’s only collective bargaining agreement is with MLS. (Foose Dec. ¶¶ 2, 17) Except in very limited situations, the players have no contractual say over what team they are assigned to, and can be traded to another MLS team without the consent of the player or the Players Union. (Id. ¶ 15) Nor does the Players Union or its members have control over where MLS teams are located. The decision to have teams based in Texas is the decision of MLS. (Id. ¶ 16) MLS has the ability to create new teams in new locations. For example, two teams will be added next year in Georgia and Minnesota. (Id. ¶ 8) The Players Union will gain new members in those states solely from the unilateral activity of third-parties. Likewise, MLS teams can relocate to a new state, without the consent of the players or the Players Union. For example, in 2005, a team in San Jose moved to Texas and became the Houston Dynamo. (Id. ¶ 16) The Players Union gained new contacts with Texas solely from independent actions by third-parties. It is fortuitous that some of the players happen to be located in Texas. In an analogous case, the Texas Supreme Court found that a foreign defendant did not have sufficient minimum contacts because it did not purposefully avail itself of Texas when it entered into a contract with a Bermuda company that had substantial operations in Texas. Searcy, 2016 Tex. LEXIS 500, at *27-38. It did not matter that the defendant knew the Bermuda company had operations in Texas, or that much of the contract was negotiated with executives located in Texas. The Court found the substance of the contract was not about Texas, and that the Bermuda company’s “coincidental presence” in Texas did not establish minimum contacts. Id. Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 12 of 20 PageID #: 220 13 Likewise, the Players Union has a contract with MLS, and MLS happens to have member teams located in Texas. If the teams currently based in Texas were to move, the Players Union would have no contacts with Texas, while its relationship with its members and MLS would not change. Because the Players Union’s contacts with Texas are fortuitous, it has not purposefully availed itself of Texas to establish ‘minimum contacts.’ Furthermore, the Players Union’s contacts in Texas result from independent decisions made by third-parties. Davis v. Billick, 2002 U.S. Dist. LEXIS 11504, at *15 (N.D. Tex. 2002) (Professional football team’s various trips to attend league meetings is not “a systematic contact with Texas, since [defendant] only attends because the NFL has made an independent decision to locate meetings in Texas.”). Here, the contacts do not arise from the Players Union, or even its members’ independent decisions. Rather, the contacts arise from third-parties’ independent decisions, and the control those parties exercise over the members of the Players Union. Because the Players Union’s contacts are the result of mere happenstance and the decisions of third-parties, the Players Union has not purposefully availed itself of Texas. Accordingly, the Players Union is not essentially at home in Texas - a jurisdiction in which it should not reasonably anticipate being haled into court to defend a suit regarding matters completely unrelated to Texas. The Players Union is based in Maryland, and has not purposefully availed itself of Texas in such a substantial, continuous, and systematic way, that Texas could be fairly regarded as its home. Therefore, this is not an “exceptional case” where the Players Union is subject to the general jurisdiction of a foreign forum. Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 13 of 20 PageID #: 221 14 II. THE PLAINTIFFS CANNOT ESTABLISH THAT THIS COURT HAS SPECIFIC JURISDICTION OVER THE PLAYERS UNION The plaintiffs have not alleged any facts that would give rise to specific jurisdiction over the Players Union. For specific jurisdiction to exist “the defendant’s suit-related conduct must create a substantial connection with the forum State.” Walden v. Fiore, 134 S. Ct. 1115, 1122-23 (2014) (emphasis added). See also Goodyear, 131 S. Ct. at 2851 (specific jurisdiction is case-limited jurisdiction). Specific jurisdiction cannot be based on forum contacts that are “random, fortuitous or attenuated . . . .” Burger King Corp., 471 U.S. at 475. Therefore, to establish specific jurisdiction, a plaintiff must show “minimum contacts by the defendant purposefully directed at the forum state” and “a nexus between the defendant’s contacts and the plaintiff’s claims.” ITL Intern., Inc. v. Constenla, SA, 669 F.3d 493, 498 (5th Cir. 2012). Plaintiffs have failed to show that the Players Union purposefully availed itself of the State of Texas, much less in connection with this lawsuit. This action is a declaratory judgment action in which the plaintiffs ask this Court to declare that the collection of solidarity fees and training compensation (“fees”) upon the international transfer of players, and the implementation of fees for domestic player transactions, would not violate antitrust laws. (Compl. ¶¶ 32-33, 66, 72, Prayer) The basis for plaintiffs’ declaratory judgment action are alleged statements made by the Players Union’s Executive Director, Bob Foose, and a representative of MLS. (Id. ¶¶ 30-31, 51, 56-57) Plaintiffs allege that Foose asserted that it would be a violation of antitrust laws for plaintiffs to enforce an award of fees, and that a representative of MLS stated that the Players Union and affected Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 14 of 20 PageID #: 222 15 members threatened to bring an antitrust action upon any of the plaintiffs receiving an award of fees. (Id.) The meetings at which those statements were allegedly made occurred in Chicago, Illinois. (Id. ¶ 29) In Walden, 134 S. Ct. 1115, the defendant committed tortious conduct in Georgia against the plaintiffs. The defendant knew that the plaintiffs resided in Nevada, and that by submitting a false affidavit, it was foreseeable that harm would result in Nevada. Nevertheless, the Court held that Nevada lacked minimum contacts necessary to establish specific jurisdiction. Id. at 1124-26. The Court emphasized that the “‘minimum contacts’ analysis looks to the defendant’s contacts with the forum State itself, not the defendant’s contacts with persons who reside there.” Id. at 1122. Likewise, the plaintiffs allege that the threat of suit giving rise to this litigation occurred in Chicago, Illinois, and that if a lawsuit was brought, the outcome of the lawsuit could affect a Texas youth club’s ability to receive fees. (Compl. ¶¶ 29-33) The plaintiffs do not allege that any threats of litigation were made in Texas or that the Players Union threatened to file a suit in Texas. In fact, the plaintiffs allege that the Players Union’s statements were mostly directed at Plaintiff Crossfire Foundation, Inc., a Washington nonprofit. (Id. ¶¶ 2, 51) Merely alleging the Players Union made a statement in Illinois threatening litigation against multiple parties, and that the outcome of the litigation could affect the ability of a youth club in Texas to receive money from a third-party, falls well short of showing this suit arises from activities directed at Texas. Moreover, the plaintiffs’ use of a hearsay statement as the only evidence of the Players Union threatening litigation demonstrates that the Players Union never even directed the alleged suit-related conduct at Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 15 of 20 PageID #: 223 16 the plaintiffs, let alone Texas. (Id. ¶¶ 31, 56) Only actions taken by the defendant, not the plaintiff or a third-party, can establish minimum contacts. Walden, 134 S. Ct. at 1122. Moreover, plaintiffs’ alleged claims of fees involving the transfer of players are not related to the State of Texas, or the actions of the Players Union. Any such fees collected would be based solely on the actions of the plaintiffs and other third-parties.2 The contracts that plaintiffs claim give rise to the fees are contracts between MLS and international teams. (Compl. ¶¶ 20-27) The Players Union is not a party to those agreements. (Foose Dec. ¶ 14) Thus, the only alleged suit-related conduct by the Players Union is the alleged threat of litigation, which was not directed at Texas. Accordingly, the plaintiffs have failed to establish that Texas can assert specific personal jurisdiction over the Players Union. III. ASSERTING JURISDICTION OVER THE PLAYERS UNION WOULD BE INCONSISTENT WITH TRADITIONAL NOTIONS OF FAIR PLAY AND SUBSTANTIAL JUSTICE Even if the Plaintiffs could establish that the Players Union has sufficient minimum contacts with Texas, due process also requires that asserting personal jurisdiction over the Players Union would not offend “traditional notions of fair play and substantial justice.” Johnston v. Multidata Systems Intern. Corp., 523 F.3d 602, 615 (5th Cir. 2008). Determining whether jurisdiction over the Players Union would be consistent with fair play and substantial justice is assessed by weighing five factors: 2 Specifically, the collection of the fees would arise from (1) the rules of FIFA located in Zurich, Switzerland (Compl. ¶ 9); (2) the pending decision by the DRC of FIFA, sitting in Zurich, in the plaintiffs’ administrative suit (Id. ¶ 10); (3) the enforcement of the rules and decision by USSF, located in Chicago (Id. ¶ 15); and/or (4) the payment of fees by soccer clubs, not soccer players. (Id. ¶¶ 17-18). Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 16 of 20 PageID #: 224 17 (1) [T]he burden on the nonresident defendant of having to defend itself in the forum; (2) the interests of the forum state in the case; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system's interest in the most efficient resolution of controversies; and (5) the shared interests of the states in furthering fundamental social policies. Central Freight Lines, Inc. v. APA Transport Corp., 322 F.3d 376, 384 (5th Cir. 2003). The burden placed on the Players Union if jurisdiction were exercised would be significant. The Players Union is based in Maryland. (Foose Dec. ¶ 3) “Where defendant is called upon to defend the litigation in a forum having no relationship to the controversy there is a real burden on the defendant.” Follette v. Clairol, Inc., 829 F. Supp. 840, 845 (W.D. La. 1993). Moreover, the plaintiffs’ interest in obtaining fast and efficient relief by filing a suit against the Players Union in Texas is insignificant. The plaintiffs have not established the imminent harm from which they need fast and efficient relief. If the harm is their inability to collect fees, the plaintiffs have not alleged a potential antitrust suit would prevent them from doing so,3 or that they would be prejudiced if a lawsuit occurred after they collected fees, rather than before. Texas does not have a strong interest in adjudicating the claim. The case does not arise out of Texas law. (Compl. ¶ 6) None of the relevant facts or injuries occurred in Texas. It is alleged that one plaintiff resides in Texas. (Id. ¶ 1) But Texas’ interest is, for 3 In fact, the plaintiffs appear to claim that a potential antitrust lawsuit would not bar them from seeking to enforce an award, absent their voluntary decision. (Compl. ¶ 34) Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 17 of 20 PageID #: 225 18 example, still less than that of Massachusetts’, where there is an existing consent order on the matter. (See Defendants’ Motion to Change Venue). The plaintiffs’ diminished interest in seeking relief in Texas against the Players Union, the undue burden on the judicial system, and Texas’ minimal interest in adjudicating the claim, indicate that even if the Players Union did have sufficient contact with Texas - which plaintiffs have failed to establish - it would offend traditional notions of fair play and substantial justice to assert jurisdiction over them. Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 18 of 20 PageID #: 226 19 CONCLUSION For the foregoing reasons, the plaintiffs’ complaint against the Players Union must be dismissed pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure for lack of personal jurisdiction. /s/ Jonathan D. Newman Robert D. Kurnick Jonathan D. Newman* Sherman, Dunn, Cohen, Leifer & Yellig, P.C. 900 Seventh Street, N.W., Suite 1000 Washington, D.C. 20001 Tel: (202) 785-9300 Fax: (202) 775-1950 Email: kurnick@shermandunn.com newman@shermandunn.com /s/ Patrick M. Flynn___________ Patrick M. Flynn (Texas Bar No. 07199200) Patrick M. Flynn, P.C 1225 North loop West, Suite 1000 Houston, Texas 77008 Tel: (713) 861-6163 Fax: (713) 961-5566 Email: pat@pmfpc.com Attorneys for MLS Players Union * Lead Attorney Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 19 of 20 PageID #: 227 20 CERTIFICATE OF SERVICE I hereby certify that on November 3, 2016, I electronically filed the foregoing Motion of the Major League Soccer Players Union to Dismiss for Lack of Personal Jurisdiction. Notice of this filing will be sent to all attorneys of record by operation of the Court’s electronic filing system. /s/ Jonathan D. Newman_________ Jonathan D. Newman Case 4:16-cv-00464-ALM Document 11 Filed 11/03/16 Page 20 of 20 PageID #: 228 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS SHERMAN DIVISION DALLAS TEXANS SOCCER CLUB, CROSSFIRE FOUNDATION, INC, and SOCKERS FC CHICAGO, LLC, Plaintiffs, v. MAJOR LEAGUE SOCCER PLAYERS UNION, CLINT DEMPSEY, DEANDRE YEDLIN, MICHAEL BRADLEY, and all Those similarly situated, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 4:16-cv-00464-ALM DECLARATION OF BOB FOOSE I, BOB FOOSE, do hereby declare and say: 1. I am the Executive Director of the Major League Soccer Players Union ("Players Union"). I have personal knowledge of the facts set forth in this declaration. 2. The Players Union is a labor organization and unincorporated association. It is party to a collective bargaining agreement with Major League Soccer, L.L.C. and MLS Canada LP (together "MLS") pursuant to which it is recognized by MLS as the exclusive bargaining representative of all present and future players employed as such in MLS. That is the only collective bargaining agreement to which the Players Union is signatory, and the bargaining unit covered by that agreement is the only unit the Players Union represents. Case 4:16-cv-00464-ALM Document 11-1 Filed 11/03/16 Page 1 of 6 PageID #: 229 3. The Players Union's offices are in Bethesda, Maryland where all of the employees of the Players Union report and work. 4. The Players Union does not have any offices in the State of Texas, nor does it own or lease any real or personal propetty in the State of Texas. 5. The Players Union does not maintain a bank account in Texas. 6. No employee of the Players Union works from Texas, although employees of the Players Union may, at times, travel to Texas for work-related activities, as set forth in paragraph nos. 11, 12 and 13. 7. There are currently twenty (20) teams playing in MLS and there are approximately 588 players in the bargaining unit covered by the Players Union's collective bargaining agreement with MLS. 8. In 2017, the number of teams in MLS will expand to twenty-two (22) with expansion teams added in Atlanta, Georgia and Minneapolis, Minnesota. The addition of those teams is expected to increase the size of the bargaining unit represented by the Players Union to approximately 644. 9. There are currently two MLS teams playing in the State of Texas: FC Dallas and the Houston Dynamo. There are currently 59 players in the bargaining unit represented by the Players Union who are employed by MLS and are assigned to play for either of those teams. 10. The Players Union is governed by a seven-member Executive Board, consisting of active members of the Players Union. No Executive Board member plays for a team located in the State of Texas. The Players Union also has an elected Player Case 4:16-cv-00464-ALM Document 11-1 Filed 11/03/16 Page 2 of 6 PageID #: 230 Representative for each team in MLS. Therefore, of the Players Union's twenty Player Representatives, two play for MLS teams located in the State of Texas. 11. Prior to this year, staff members of the Players Union typically met with members of the bargaining unit two times during a year: (i) once during pre-season, which meetings typically occurred at pre-season training camps and/or tournaments located in Arizona, Florida, Oregon and/or South Carolina, but such meetings at times also took place at a team's home location; and (ii) once if and when a patiicular team was near the Players Union's offices in Bethesda, Maryland because the team was competing in a game at DC United, an MLS team located in Washington, D.C. Starting this year, the Players Union added a third meeting at each team's home location during the MLS regular season. Thus, prior to 2016, meetings with members of the Houston Dynamo and/or FC Dallas would take place at most once per year in the State of Texas if the pre- season meeting was held in the State of Texas. But if either team's pre-season meeting with the Players Union was held outside of the State of Texas, there would have been no meeting in the State of Texas with the members of the team during that year. 12. In the last five years, none of the Players Union's pre-season meetings with the players assigned to the Houston Dynamo have been in the State of Texas. Instead, they have been in Orlando, Florida (2012); Charleston, S.C. (2013 and 2014); and Tucson, Arizona (2016). No pre-season meetings with any teams were held in 2015 due to collective bargaining negotiations that year. Accordingly, to the best of my knowledge, over the last five years, the Players Union has held one meeting with the Case 4:16-cv-00464-ALM Document 11-1 Filed 11/03/16 Page 3 of 6 PageID #: 231 players assigned to the Houston Dynamo in the State of Texas. That meeting was held this year during the 2016 regular season. 13. In the last five years, one of the Players Union's pre-season meetings with the players assigned to FC Dallas was held in the State of Texas. That meeting was held during the 2016 pre-season. Prior to that, the pre-season meetings for FC Dallas players were held in Orlando, Florida (2012 and 2014); and Portland, Oregon (2013). As stated above, no pre-season meetings were held with any teams in 2015 due to collective bargaining negotiations that year. Accordingly, to the best of my knowledge, over the last five years, the Players Union has held two meetings with players assigned to FC Dallas in the State of Texas. Those meetings took place in 2016: one during the MLS. pre-season, and one during the regular season. 14. The Players Union is not a party to, and does not negotiate, agreements pursuant to which players are transferred into or out of MLS to a team in a different league. For example, the Players Union was not a party to any agreement pursuant to which the transfers referenced in paragraphs 20, 22, 24, and 26 of the Complaint in this case were conducted. 15. With the limited exception of when a player is a free agent under the collective bargaining agreement between the Players Union and MLS, players employed by MLS do not have a contractual say over which team they play for, although on extremely rare occasions, a player may be able to negotiate a provision in his contract pursuant to which he cannot be traded to another team. Unless the player has such a Case 4:16-cv-00464-ALM Document 11-1 Filed 11/03/16 Page 4 of 6 PageID #: 232 provision, he can be traded to play for any club within MLS at any time and without his consent. 16. Neither the Players Union nor the players in MLS determine in which cities and states MLS teams are located and MLS players perform their jobs. In fact, a team may, without the consent of the Players Union or the players, re-locate from one city to another. For example, in December of 2005, the MLS team in San Jose, California relocated to Houston and became the Houston Dynamo in the 2006 MLS season. A new team later expanded to San Jose in 2008. When the San Jose team relocated to Houston in 2005, the players under contract and assigned to San Jose were required to move from San Jose to Houston. 17. The Players Union's collective bargaining agreement with MLS took effect on February 1, 2015 and expires on January 31, 2020. It is the third collective bargaining agreement between the Players Union and MLS. No negotiations over any of those agreements took place in the State of Texas. Similarly, no grievance meeting or arbitration between the Players Union and MLS has ever taken place in the State of Texas. 18. The Players Union's connection to the State of Texas is limited to its representation of the players referenced in paragraph no. 9. The Players Union has no other connection to the State of Texas. 19. The plaintiff never personally served the Players Union. Instead, the Players Union waived service of summons without waiving any objection to personal jurisdiction or to venue. Case 4:16-cv-00464-ALM Document 11-1 Filed 11/03/16 Page 5 of 6 PageID #: 233 I declare under penalty of perjury that the foregoing is true and correct. Executed on October 28, 2016. Bob Foose Case 4:16-cv-00464-ALM Document 11-1 Filed 11/03/16 Page 6 of 6 PageID #: 234 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS SHERMAN DIVISION DALLAS TEXANS SOCCER CLUB; ) CROSSFIRE FOUNDATION, INC.; ) and SOCKERS FC CHICAGO, LLC, ) ) Plaintiffs, ) ) v. ) ) Case No. 4:16-cv-00464-ALM MAJOR LEAGUE SOCCER PLAYERS ) UNION; CLINT DEMPSEY; DEANDRE ) YEDLIN; MICHAEL BRADLEY; and all ) those similarly situated, ) ) Defendants. ) ______________________________________ ) ORDER ON DEFENDANT MAJOR LEAGUE SOCCER PLAYERS UNION’S MOTION TO DISMISS Pending before this Court is the Motion of Defendant Major League Players Union (“Players Union”) to dismiss for lack of personal jurisdiction. Upon consideration of the Players Union’s Motion, the Responses thereto, the applicable law and arguments of counsel, the Court has determined that the Motion should be granted. It is therefore, ORDERED that the Players Union’s Motion to Dismiss for Lack of Personal Jurisdiction be, and hereby is, GRANTED and all claims against them are hereby Case 4:16-cv-00464-ALM Document 11-2 Filed 11/03/16 Page 1 of 2 PageID #: 235 dismissed. Case 4:16-cv-00464-ALM Document 11-2 Filed 11/03/16 Page 2 of 2 PageID #: 236