PGA Tour-LIV Golf Ruling Boosts Odds of a Settlement

It’s sometimes said in golf that one should “play the course, not your opponent.”

As a new ruling in the LIV Golf v. PGA Tour litigation highlights, the same is not true in court.

More from Sportico.com

U.S. Magistrate Judge Susan van Keulen recently held that the PGA Tour can move forward with subpoenas to a crucial “non-party”: Yasir Othman Al-Rumayyan, the governor of the Public Investment Fund of the Kingdom of Saudi Arabia (PIF). The move could incentivize LIV—which PIF funds—to explore a litigation settlement that leaves both golf leagues competing on the grass rather than in court.

The 58-page ruling was issued on Feb. 9 under seal, and a redacted version became available last week.

The PGA Tour demands that Al-Rumayyan, who holds the rank of “minister” in Saudi Arabia and who court documents reference by the honorific “His Excellency,” testify at depositions at the New York offices of PGA Tour attorneys and that he and PIF turn over sensitive documents. Those documents might include emails, texts, memoranda and other materials related to the solicitation of golfers to join LIV (including discussions with agents) and pursuits of current or former PGA Tour employees. The PGA Tour also seeks materials pertaining to: “money and other benefits” provided to past or current PGA Tour members; how PIF owns and controls LIV; LIV’s strategic plans and financial projections; and LIV’s dealings with advertisers and broadcasters.

As the PGA Tour sees it, Al-Rumayyan and PIF are crucial to the case, which centers on how two rival golf leagues compete and whether either—or possibly both—has run afoul of the law in trying to one-up the other. The litigation began last August when Phil Mickelson and 10 other golfers sued the PGA Tour. Since then, LIV golfers have joined and left the lawsuit and LIV itself is now a plaintiff. The PGA Tour—whose legal team includes Elliot Peters, a former federal prosecutor who successfully defended Lance Armstrong against False Claims Act allegations—also swung back, counterclaiming LIV for tortious interference with player contracts.

The PGA Tour insists that it would be sensible to question individuals who are responsible for the ownership and control of LIV. The PGA Tour argues that “with the backing of PIF, LIV has the luxury of operating at a loss for as long as it needs to accomplish its goals.” It also asserts that LIV has “limitless” funding to pay golfers and its actual objective is to further the interest of the Saudi Arabian government and PIF.”

But PIF insists the subpoenas are unnecessary, overinclusive and pertain to confidential documents and proprietary data of Saudi Arabia’s government. With assets in a bevy of U.S. public companies including Meta and Walmart, PIF warns that a troubling precedent would be set if a foreign fund could be compelled by subpoena whenever any of its portfolio companies is a party to an American litigation. PIF also asserts that the nature of Al-Rumayyan’s travel and dealings in the U.S. do not warrant that he sit for a deposition in New York, and that forcing him to participate in such discovery would pose significant diplomatic consequences for him and unjustly prejudice PIF.

Central to the legal disagreement is how this federal court in California should apply the Foreign Sovereign Immunities Act (FSIA). While adults can generally be subpoenaed whenever they possess knowledge or documents relevant to a litigation, FSIA makes foreign governments and leaders immune from lawsuits under certain conditions. Of relevance here, when a government official or entity is engaged in a related “commercial activity”—as distinguished from the administration of government affairs or the carrying out of ministerial duties—it can usually be subject to a subpoena.

Judge van Keulen found the PGA Tour’s arguments more persuasive. She wrote, “it is plain that PIF is not a mere investor in LIV; it is the moving force behind the founding, funding, oversight, and operation of LIV.” From that lens, van Keulen reasoned, PIF and LIV are deeply intertwined in ways central to the litigation. “PIF’s actions,” she added “are indisputably the type of actions by which a party engages in trade and traffic or commerce.”

The judge also determined that Al-Rumayyan is an appropriate person for the PGA Tour to question under oath. The PGA Tour and LIV dispute his precise role and titles, with Al-Rumayyan conceding he is chairman of LIV Golf Investments, a technically different entity from LIV Golf, but disputing he holds other positions. Regardless of his nominal title, van Keulen concluded, Al-Rumayyan is operationally impactful.

She also seemed to question the accuracy of Al-Rumayyan portraying a LIV Golf tournament in New Jersey he attended last year as a mere “social event” and his downplaying of attending Super Bowl LVI (2022) to promote LIV Golf’s ambitions as not meeting a technical definition of “transacting business.”

“In any event,” she wrote, “Mr. Al-Rumayyan was personally involved in and himself carried out many of PIF’s activities in connection with the establishment, funding, oversight, and operation of LIV.”

If Al-Rumayyan refuses to comply with the subpoena, he could complicate his ability under U.S. immigration law to enter and travel in the country, among other potential sanctions. PIF, which has about $676 billion in assets, has conceded in court documents that Al-Rumayyan “sometimes” travels to the U.S. and Al-Rumayyan has stated he is a “frequent visitor to the U.S.—New York, Miami, and San Francisco.”

PIF and Al-Rumayyan can petition the district court judge, Beth Lasbon Freeman, to review van Keulen’s order. Last August, Freeman sided with the PGA Tour in a petition by three LIV golfers for a restraining order. She identified a conceptual hurdle for LIV in the litigation. LIV golfers simultaneously maintain LIV is superior to the PGA Tour but also insist the PGA Tour is an illegal monopsony, meaning it possesses so much control over where elite pro golfers can sell their services that it inflicts harm to economic competition. If LIV, which has offered higher compensation and other benefits, is “better,” one might reason LIV should be able to credibly compete.

A jury trial is currently set for Jan. 8, 2024, but the odds of a settlement happening before then seem high. Neither side likely wants to expose its executives to questioning under oath about what they regard as private business dealings or risk some of its partners, including media companies and broadcasters, being questioned too. A settlement would extinguish subpoenas and other aspects of pretrial discovery. While they might detest each other, both leagues appear to have the financial wherewithal and popularity to coexist and succeed.

Best of Sportico.com

Click here to read the full article.


Source

mypresscity

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
Close

Adblock Detected

If you enjoy our content, please support our site by disabling your adblocker. We depend on ad revenue to keep creating quality content for you to enjoy.