On May 4, 2015, Erie County New York Supreme Court Judge Timothy J. Drury issued a decision in the ongoing lawsuit concerning the classification of Buffalo Jills cheerleaders as “independent contractors,” rather than employees. Earlier this year, Judge Drury granted Plaintiffs leave to amend their complaint to add the National Football League’s (“NFL” or “the League") as a defendant. Today, the Court denied the League’s motion to be dismissed from the case.
In response to the decision, one of the Plaintiffs' attorneys, Christopher Marlborough, of the Marlborough Law Firm, P.C. stated,
We are extremely pleased with the Court’s decision. Both the Buffalo Bills and the NFL have argued that they have no responsibility for the classification of the Jills as independent contractors. In today’s decision, the Court made it clear that it is looking at all parties who may have participated in the alleged scheme to misclassify the Jills.
We are looking forward to finding out what the NFL knew about the classification of the Jills and when they knew it. In the process, we will learn about what role, if any, the NFL played in the destruction of the historic NFL Cheerleader’s Association, the first and only NFL cheerleaders’ labor union that was formed by members of the Jills in 1995 and forced to disband a year later.
The NFL’s role in the alleged wage theft scheme came to light after Defendant Buffalo Bills produced a series of contracts with several co-defendants classifying the Jills as independent contractors and providing that they would not be paid for working Buffalo Bills home games. Several of those contracts required and received the express written approval of NFL Commissioner Roger Goodell.
The complaint at issue in today’s decision asserted three claims against the NFL: 1) aiding and abetting common law fraud; 2) unjust enrichment; and 3) quantum meruit. Judge Drury denied the League’s motion to dismiss each of those claims.
Aiding and Abetting Common Law Fraud
With respect to the aiding and abetting fraud claim, the Court found that Plaintiffs satisfied the pleading requirements. First, Judge Drury noted that Plaintiffs made allegations concerning the underlying fraud of misclassifying the Jills as independent contractors.
Second, Judge Drury found that Plaintiffs properly pled that the NFL had actual knowledge of the alleged fraud. In his decision, he specified:
The Plaintiffs have alleged in the Second Amended Complaint that because the National Labor Relations Board had determined that the Jills were employees and not independent contractors in 1995, the NFL and Commissioner Goodell had actual knowledge that the Jills were being misclassified by the Bills as independent contractors. The Plaintiffs have alleged that Commissioner Goodell was a high level executive with the NFL in 1995 and thereafter when the union was destroyed.
The Court determined that dismissal on this basis is premature, stating “there are many witnesses with relevant testimony as to what the NFL about the Jills employment status, and when the League knew it, that the Plaintiffs have not had an opportunity to depose.”
The Court also rejected affidavits from Mr. Goodell and the NFL’s Senior Counsel contradicting Plaintiffs' allegations of actual knowledge. Judge Drury referred to the affidavits as “obviously self serving." He noted that Goodell and the League’s Senior Counsel ”represent an entity, as Plaintiffs have argued, that has a history of lockouts.”
Third, Plaintiffs properly alleged that the NFL provided “substantial assistance” to the Bills' alleged scheme to misclassify the Jills. The Court cited Oster v. Kirschner (77 AD3d 51) for the principal that “affirmative approval of contracts containing fraudulent representations can satisfy the substantial assistance requirement.” The Court noted that the requirement was satisfied in the Jills case based on “the Plaintiffs’ allegations concerning the NFL’s approval of the two contracts between the Bills and Citadel, which encompass the conduct of the Jills squad.”
Finally, the Court rejected the NFL’s argument that the statute of limitations had expired on claims concerning the earlier of the two contracts. The Court applied the discovery rule for fraud claims, which sets the statute of limitations at the later of six years from the time of the fraud or two years from the date the fraud could reasonably have been discovered. See CPLR 213. The Court held that the “two year period began with the disclosure of the two agreements in 2014.”
Judge Drury also found that Plaintiffs properly pled an unjust enrichment claim by stating that the NFL was enriched at the cheerleaders’ expense and that principles of equity and good conscience would favor Plaintiffs if their allegations are proven true.
First, the court, noted that the complaint provided sufficient detail about the benefits that the NFL receives from the Jills’ labor. In response to Defendants’ motion, Plaintiffs also provided additional details about the Jills work in furtherance of the NFL’s international expansion efforts in Canada and Mexico; its breast cancer awareness campaign; media productions; and other NFL events. While the NFL's claim that its involvement in the Jills’ activities was “too attenuated” to sustain a cause of action for unjust enrichment, the Court stated that the league’s alleged role in approving the two contracts provides “a complete answer” to that claim.
Second, Judge Drury recognized that the NFL did not make any argument about the principles and equity and good conscience. He noted, “the NFL is not contesting the last element of the cause of action given the disparity in worth between the Jills cheerleaders and it.”
The Court also found that Plaintiffs had stated a cause of action for the equitable claim of quantum meruit. The Court recognized the longstanding rule that contractual privity is not required to state a claim for quantum meruit. The Court also recognized that where the enforceability of a contract is questionable, the existence of the purported contract will not preclude a claim for quantum meruit. Judge Drury found that the contract was questionable in this case because “the classification [of the Jills as independent contractors] is suspect."
If you have any questions about this decision or want to discuss how worker misclassification contributes to the American Wage Theft Crisis, please contact Christopher Marlborough, Esq. at (212) 991- 8960.