83 Cal.App.5th 458
Cal. Ct. App.2022Background
- After the Raiders announced and pursued a move from Oakland to Las Vegas, the City of Oakland sued the NFL and its clubs alleging the League violated the NFL Constitution and its Relocation Policy by failing to follow required procedures and by negotiating in bad faith.
- The Relocation Policy (adopted and amended after a Ninth Circuit antitrust decision and negotiations with the U.S. Conference of Mayors) sets 12 objective factors for relocation consideration and preserves member clubs’ business judgment and a three‑fourths vote requirement to approve relocations.
- Oakland claimed third‑party beneficiary status to enforce the Policy, and pleaded (1) breach of contract as a third‑party beneficiary, (2) breach of the implied covenant of good faith and fair dealing, and (3) unjust enrichment.
- The trial court sustained the defendants’ demurrer to all causes of action without leave to amend and entered judgment for the defendants. Oakland appealed.
- The Court of Appeal reviewed de novo, held Oakland satisfied only the first two Goonewardene elements (probable benefit and a motivating purpose to benefit cities) but could not satisfy the third (permitting third‑party enforcement would contradict the contract objectives and parties’ expectations).
- The court affirmed dismissal of the contract and implied covenant claims for lack of third‑party beneficiary standing and affirmed dismissal of the unjust enrichment claim because Oakland cannot show a superior legal or equitable right to the disputed benefits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Oakland is a third‑party beneficiary entitled to enforce the NFL Constitution/Relocation Policy | Oakland: the Policy and Joint Statement with the U.S. Conference of Mayors show a motivating purpose to benefit host cities, so it can sue as a third‑party beneficiary | Defendants: Policy protects League and clubs, preserves clubs’ business judgment, and does not create enforceable rights for cities | Oakland met elements (likely benefit and motivating purpose) but failed the Goonewardene third element; no third‑party enforcement consistent with contract objectives or parties’ expectations — no standing to sue for breach of contract; dismissal affirmed |
| Whether Oakland can state a claim for breach of the implied covenant of good faith and fair dealing | Oakland: defendants considered relocation factors in bad faith and thus breached the covenant | Defendants: covenant cannot be breached by conduct permitted by the contract; Oakland has no contract with defendants | Because Oakland is not a third‑party beneficiary, no contractual relationship exists and the implied covenant claim fails — dismissal affirmed |
| Whether Oakland stated a claim for unjust enrichment (restitution for the relocation fee and franchise value increase) | Oakland: defendants were unjustly enriched by the Raiders’ increased franchise value and relocation fee after the move | Defendants: no cause of action in California called unjust enrichment in this context; Oakland conferred no benefit or lacks superior legal/equitable right to funds | Even assuming a restitution theory applies, Oakland cannot show a better legal or equitable right to the increased franchise value or relocation fee under governing law; unjust enrichment claim fails — dismissal affirmed |
Key Cases Cited
- Goonewardene v. ADP, LLC, 6 Cal.5th 817 (Cal. 2019) (articulated three‑part test for third‑party beneficiary enforcement)
- Los Angeles Memorial Coliseum Comm. v. National Football League, 726 F.2d 1381 (9th Cir. 1984) (antitrust decision that prompted adoption of relocation procedures)
- Oakland Raiders v. National Football League, 41 Cal.4th 624 (Cal. 2007) (background on the Raiders and NFL governance)
- Martinez v. Socoma Companies, Inc., 11 Cal.3d 394 (Cal. 1974) (third‑party beneficiary analysis considering contract nature and surrounding circumstances)
- Ghirardo v. Antonioli, 14 Cal.4th 39 (Cal. 1996) (restitution/unjust enrichment principles)
- De Havilland v. FX Networks, LLC, 21 Cal.App.5th 845 (Cal. Ct. App. 2018) (California courts do not recognize a standalone cause titled "unjust enrichment")