St. Louis Reg'l Convention & Sports Complex Auth. v. Nat'l Football League

• Court: Missouri Court of Appeals
• Writing for the Court: Philip M. Hess, Judge
• Citation: St. Louis Reg'l Convention & Sports Complex Auth. v. Nat'l Football League, 581 S.W.3d 608 (Mo. App. 2019)
• Decision Date: 16 April 2019
• Docket Number: No. ED 106282-01,ED 106282-01
• Parties: ST. LOUIS REGIONAL CONVENTION and Sports Complex Authority, et al., Respondents, v. NATIONAL FOOTBALL LEAGUE, et al., and the Rams Football Company, LLC and E. Stanley Kroenke, Appellants.

581 S.W.3d 608

ST. LOUIS REGIONAL CONVENTION and Sports Complex Authority, et al., Respondents,

v.NATIONAL FOOTBALL LEAGUE, et al., and the Rams Football Company, LLC and E. Stanley Kroenke, Appellants.

No. ED 106282-01

Missouri Court of Appeals, Eastern District, DIVISION TWO.

Filed: April 16, 2019

Application for Transfer Denied September 3, 2019

FOR APPELLANT: Robert T. Haar, Lisa A. Pake, Jozef J. Kopchick, Haar & Woods, LLP, 1010 Market Street, Suite 1620, St. Louis, Missouri 63101.

FOR RESPONDENT: Robert D. Blitz, Blitz, Bardgett & Deutsch, L.C., 120 South Central Avenue, Suite 1650, Clayton, Missouri 63105, Christopher O. Bauman, Blitz, Bardgett & Deutsch, L.C., 120 South Central Avenue, Suite 1500, Clayton, Missouri 63105, Edward L. Dowd, Jr., Michelle Nasser, Dowd Bennett, LLP, 7733 Forsyth Blvd., Suite 1900, St. Louis, Missouri 63105.

Philip M. Hess, Judge

Introduction

The St. Louis Regional Convention and Sports Complex Authority (the "RSA"), the City of St. Louis (the "City"), and St. Louis County (the "County") (collectively "Plaintiffs") sued The Rams Football Company, LLC ("Rams"), the National Football League ("NFL"), through its thirty-two member clubs, and the clubs' owners, including E. Stanley Kroenke ("Kroenke"), the Rams' owner (collectively "Defendants"), alleging five counts arising out of the Rams' 2016 relocation from St. Louis to Los Angeles. Plaintiffs sued based on their alleged status as third-party beneficiaries of the NFL’s "Policy and Procedures for Proposed Franchise Relocations" (the "NFL Policy"). The Rams and Kroenke moved to compel arbitration, arguing the "NFL Franchise Relocation Agreement" (the "1995 Relocation Agreement") and the "Amended and Restated St. Louis NFL Lease" (the "1995 Lease") entered in 1995 when the Rams relocated from the Los Angeles market to St. Louis compelled arbitration because those contracts contain mandatory arbitration provisions and Plaintiffs' claims "touch matters" covered by those contracts. The trial court denied the Rams and Kroenke’s motion to compel.

The Rams and Kroenke ("Appellants") appeal that decision. On Point I, Appellants argue the American Arbitration Association Rule 7(a) had been incorporated by reference into the contract’s arbitration clause by "the most applicable then existing rules of the American Arbitration Association," provided "clear and unmistakable" evidence of the parties' contractual intent in 1995 to delegate exclusive jurisdiction to an arbitrator to determine arbitrability of this dispute. On Point II, Appellants contend Plaintiffs and Appellants' dispute touches matters covered by the 1995 Lease and 1995 Relocation Agreement containing mandatory broad arbitration clauses and therefore Plaintiffs' claims must be arbitrated. On Point III, Appellants contend Kroenke, an agent of the Rams, may invoke the arbitration provisions in the 1995 Lease and 1995 Relocation Agreement because an agent of a signatory to an arbitration clause may invoke arbitration against another signatory.

Because we conclude an AAA arbitration rule first appearing in 2003 could not provide "clear and unmistakable" evidence of the parties' affirmative contractual intent in 1995 for an arbitrator to have exclusive jurisdiction to decide arbitrability as required under State ex rel. Pinkerton v. Fahnestock , 531 S.W.3d 36, 42 (Mo. banc 2017), and because we find there is no arbitration agreement applicable to Plaintiffs' claims, we affirm.

Factual and Procedural Background

A. The NFL Constitution and Bylaws

Article 4.3 of the NFL Constitution and Bylaws requires an affirmative vote of three-fourths of its member clubs before a club may transfer its franchise or playing site to a different city. Article 4.3 confirms that each club’s primary obligation to the NFL and to all other member clubs is to advance the interests of the NFL in its home city. Article 4.3 also confirms that no club has an "entitlement" to relocate simply because it perceives an opportunity for enhanced club revenues in another location. Relocation under Article 4.3 may be available, however, if a club’s viability in its home city is threatened by circumstances that cannot be remedied by diligent efforts of the club working with the NFL, or if compelling NFL interests warrant a franchise relocation.

B. The NFL’s Relocation Policy

In 1984, under the NFL Constitution and Bylaws, the NFL adopted the NFL Policy. The NFL Policy sets forth the policies and procedures that apply to any proposed transfer of a club’s home territory. The NFL Policy states that because the NFL favors stable team-community relations, clubs are obligated to work diligently and in good faith to obtain and to maintain suitable stadium facilities in their home city, and to operate in a manner that maximizes fan support in their current home community.

The NFL Policy requires a club to submit a proposal for transfer to the NFL before it may transfer its franchise or playing site outside its current home city. The club must give the Commissioner of the NFL written notice of its proposed transfer and a "statement of reasons" to support the proposed transfer. The NFL Policy provides that the Commissioner will evaluate the proposed transfer and report to the members. Following the Commissioner’s report, the proposal is presented to the members for a vote. In considering a proposed relocation, the clubs may consider several factors, but must address the degree to which the club has engaged in good faith negotiations, and enlisted the NFL to assist in such negotiations, with persons about terms and conditions under which the club would remain in its current home city and afforded that community a reasonable amount of time to address proposals.

The NFL Policy states that if a club’s proposal to relocate to a new home territory is approved, the relocating club will ordinarily be expected to pay a transfer fee to the NFL. The transfer fee will compensate other member clubs of the NFL for losing the opportunity appropriated by the relocating club and the enhancement in the value of the franchise resulting from the move. The NFL Policy has no arbitration provision.

C. The Rams' 1995 Relocation From the Los Angeles Market to St. Louis

In 1995, the Rams submitted a proposal to relocate their home playing site from Anaheim to St. Louis. Upon NFL approval, the Rams relocated to St. Louis effective with the 1995 NFL season. As a part of that relocation, the Rams, the Regional Convention and Visitors Commission ("CVC"), and the St. Louis NFL Corporation ("SLNFL") entered into the 1995 Lease. Section 25 of the 1995 Lease contained an arbitration provision stating:

Any controversy, dispute or claim between or among any of the parties hereto (and/or any of those consenting hereto pursuant to the Consents to Assignment (other than the City, County or SLMFC, which may only bring an action or against which an action may only be brought in United States Federal District Court for the Eastern District of Missouri, with the right to jury waived) ) to this Amended Lease, related to this Amended Lease, including, without limitation, any claim arising out of, in connection with, or in relation to the interpretation, performance or breach of this Amended Lease (including any determination of whether the "First Tier" or "First Class" standard provided in Section 1.3 of Annex 1 to this Amended Lease has been met) shall be settled by arbitration conducted before three arbitrators in St. Louis, Missouri, in accordance with the most applicable then existing rules of the American Arbitration Association (or its successor or in the absence of a successor, an institution or organization offering similar services), and judgment upon any award rendered by the arbitrator may be entered by any federal or state court having jurisdiction thereof. Such arbitration shall be the exclusive dispute resolution mechanism....

The Rams, the CVC, the RSA, Fans, Inc., and the SLNFL also entered into the 1995 Relocation Agreement.¹ The 1995 Relocation Agreement contained an arbitration provision stating:

Any controversy, dispute or claim between or among any of the parties hereto related to this Relocation Agreement, including without limitation, any claim arising out of, in connection with, or in relation to the interpretation, performance or breach of this Relocation Agreement shall be settled by arbitration as set forth or as otherwise provided in Section 25 or the Amended Lease.

D. The Rams' 2016 Relocation From St. Louis to Los Angeles

In January 2016, the Rams submitted a proposed relocation application to relocate from St. Louis to Los Angeles and a statement of reasons in support to the NFL. On January 12, 2016, the club owners voted to allow the relocation of the Rams from St. Louis to Los Angeles.² The Rams terminated the 1995 Lease and relocated to Los Angeles effective with the 2017 NFL season.

E. Plaintiffs' Suit

Plaintiffs filed this suit as result of the Rams' 2016 relocation. Plaintiffs alleged Defendants violated the obligations and standards governing team relocations by seeking and approving the relocation of the Rams from St. Louis to Los Angeles, despite Defendants' failure to satisfy the obligations imposed by the NFL Policy. Plaintiffs alleged that in reliance on Defendants' obligations imposed by the NFL Policy they took action to develop and finance a new stadium complex to keep the Rams in St. Louis. The suit alleges five counts: (1) breach of contract, specifically breaches of the NFL Policy’s obligation of diligence and good faith against all Defendants, based on Plaintiffs status as third-party beneficiaries of the NFL Policy; (2) unjust enrichment against all Defendants for violating the NFL Policy and relocating to Los Angeles, resulting in the Rams alleged $ 550 million relocation fee payment to the other Defendants and the Rams' alleged increased franchise value; (3) fraudulent misrepresentation against Appellants based upon alleged false and...