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ChampionsWorld, LLC v. United States Soccer Federation

May 4, 2007

CHAMPIONSWORLD, LLC, PLAINTIFF,
v.
UNITED STATES SOCCER FEDERATION, INC., MAJOR LEAGUE SOCCER, LLC AND DOES 1 THROUGH 10, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Hon. Harry D. Leinenweber

MEMORANDUM OPINION AND ORDER

Before the Court are the Motions by Defendants United States Soccer Federation (hereinafter, the "USSF") and Major League Soccer (hereinafter, "MLS") to Stay or Dismiss the claims against them pursuant the Federal Arbitration Act (the "FAA"), 9 U.S.C. §§ 1 et seq. For reasons that follow, Defendants' Motions are granted.

I. BACKGROUND

At issue is the arbitrability of a dispute over the arrangement and promotion of international professional men's soccer matches played on U.S. soil. Plaintiff ChampionsWorld (hereinafter, "ChampionsWorld") is a defunct promoter of such soccer matches. Defendant USSF is an association recognized by soccer's international governing body, the Fédération Internationale de Football Association (the "FIFA"), as the entity responsible for regulating men's soccer in the United States.

Defendant MLS, for its part, is the premier professional soccer league in the United States.

On May 2, 2006, ChampionsWorld sued Defendants in the Southern District of New York (which later transferred the case to this district), alleging violations of RICO, the Sherman Act, and related state laws. ChampionsWorld's claims derive from a series of "match agreements" it entered into with USSF between 2001 and 2005. Under these agreements, USSF agreed to sanction soccer matches arranged by ChampionsWorld, and ChampionsWorld agreed to pay USSF a "sanctioning fee." ChampionsWorld alleges that USSF wrongly arrogated the authority to extract such sanctioning fees by falsely holding itself out to be the exclusive governing body of men's professional soccer in the United States and by threatening to report ChampionsWorld to FIFA as a "promoter in bad standing." Such a designation, according to ChampionsWorld, would have effectively destroyed its business because FIFA would not permit international soccer teams to play matches arranged by such promoters. ChampionsWorld further claims that MLS conspired with USSF to give MLS favored treatment with regard to its match promotions. ChampionsWorld alleges that, through such anticompetitive, fraudulent, and extortionate acts, Defendants caused ChampionsWorld severe financial harm ultimately leading to bankruptcy.

ChampionsWorld's claims are potentially subject to two different dispute resolution agreements. One arises from FIFA regulations agreed to by ChampionsWorld's CEO, Charles Stillitano ("Stillitano"). In brief, FIFA requires any person arranging international professional men's soccer matches to be a licensed "match agent." Pursuant to this directive, in 2004, Stillitano submitted to FIFA a written "match agent license application." As part of the application, Stillitano declared that he was familiar with, and unconditionally accepted, FIFA's "Match Agent Regulations" ("MARs"). Article 22 of the MARs addresses dispute resolution, providing: "[i]n the event of a dispute between a match agent and a national association, . . . the complaint shall be submitted to the FIFA Players' Status Committee for consideration and resolution." The MARs also provide for appeal of FIFA's arbitration decisions to the independent Court of Arbitration for Sport (the "CAS").

The second pertinent dispute resolution agreement appears in the ChampionsWorld-USSF match agreements. They contain the following forum selection clause:

The parties hereby consent to the exclusive jurisdiction of the courts of the State of Illinois in connection with any action or proceeding arising out of or relating to the Agreement. In addition, it is expressly agreed that any judicial action or proceeding relating to this Agreement shall be brought in the Federal or State courts which cover Chicago, Illinois.

The match agreements also provide that each such agreement constitutes the entire agreement between the parties, superceding any prior understandings between the parties, and that the terms of the sanctioning agreements can only be altered by written agreement between USSF and ChampionsWorld.

II. DISCUSSION

Defendants' Motions turn on the interplay between each of the two above-quoted dispute resolution agreements and the federal statute governing commercial arbitration. That statute, the Federal Arbitration Act (the "FAA"), establishes the validity, irrevocability, and enforceability of commercial arbitration agreements. See 9 U.S.C. § 2. The FAA requires a District Court to stay litigation upon the application of one of the parties if any issue involved in the suit is referable to arbitration. See 9 U.S.C. § 3.

Generally, a commercial dispute is referable to arbitration whenever the underlying contract contains an arbitration clause. 9 U.S.C. § 2. Where the relevant contract contains a broad arbitration provision, the Act precludes litigation "unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute." Welborn Clinic v. MedQuist, Inc., 301 F.3d 634, 639 (7th Cir. 2002). The FAA thus embodies a strong federal policy in favor of arbitration. See Moses H. Cone Memorial Hosp. v. Mercury Const. Corp., 460 U.S. 1, 22 (1983). At the same time, though, "[a]rbitration is contractual by nature -- 'a party cannot be required to submit to arbitration any dispute which he has not agreed to so submit.'" Zurich American Ins. Co. v. Watts Industries, Inc., 417 F.3d 682, 687 (7th Cir. 2005) (citation omitted).

A. Applicable Law

Federal law, through the FAA and the Supremacy Clause of the U.S. Constitution, generally controls questions of arbitrability. See Moses, 460 U.S. at 24. But, as noted above, the FAA only applies where there has been an agreement to arbitrate, and "[w]hen deciding whether the parties agreed to arbitrate a certain matter . . . , courts generally . . . should apply ordinary state-law principles that govern the formation of contracts." First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995).

Aspects of this dispute could fall under such state contract law. Certain of ChampionsWorld's arguments arguably question the very existence an of agreement to arbitrate between these parties. This could be said, for example, of ChampionsWorld's contention that it is not bound by Stillitano's license application, as well as its argument ...


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