Lead Opinion
Opinion
The Oakland Raiders (Raiders), a member club of an unincorporated association known as the National Football League (NFL or League), sued the NFL and its commissioner, Paul Tagliabue. The Raiders alleged that the NFL and Tagliabue (collectively, defendants) took various actions that were discriminatory towards the Raiders and placed it at a competitive disadvantage vis-a-vis other member clubs. One legal theory that the Raiders advanced was breach of fiduciary duty. Defendants argued that this claim was without merit for a variety of reasons, including the absence of legal duty, and the requirement that courts abstain from involving themselves in disputes involving private voluntary associations. The court below, citing both reasons, agreed with defendants and granted summary adjudication. The Raiders appealed.
PROCEDURAL HISTORY
The Raiders filed a fourth amended and supplemental complaint (complaint), consisting of 22 causes of action and 99 pages (excluding exhibits). The complaint’s second cause of action — the only claim at issue in this appeal — asserted that the NFL and/or Tagliabue breached their fiduciary duties to the Raiders.
Broadly speaking, the complaint alleged that the Raiders was discriminated against and treated unfavorably as compared with the other member clubs.
In November 1998, defendants filed a motion for summary adjudication of the second cause of action of the complaint, denominated as “motion no. 5.” The Raiders opposed this motion; its opposition consisted of more than 2600 pages. After the court heard extensive argument, on December 17, 1998, it granted summary adjudication as to the second cause of action.
Three months later, the Raiders attacked the order granting summary adjudication by filing a motion for new trial, a motion for reconsideration, and an alternative motion to amend the complaint. The court (1) denied the Raiders’ motion for reconsideration, (2) denied without prejudice the motion for new trial, and (3) denied the motion for leave to amend.
After intervening proceedings — including appellate proceedings in Oakland Raiders, supra,
The Raiders filed a notice of appeal on October 31, 2003. The appeal from the judgment was filed timely (Cal. Rules of Court, rule 2(a)(1)), and is a proper subject for appellate review. (Code Civ. Proc., § 437c, subd. (m); see also Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2005) f 10:384, p. 10-122.12 [order granting summary judg
DISCUSSION
I. Standard of Review
“The purpose of the law of summary judgment is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co. (2001)
“A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (Code Civ. Proc., § 437c, subd. (f)(1).) Similar to summary judgment, the moving party’s burden on summary adjudication is to establish evidentiary facts sufficient to prove or disprove the elements of a claim or defense. (Id., § 437c, subds. (c), (f).)
The moving party “bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law.” (Aguilar, supra,
In performing an independent review of the granting of summary judgment, we conduct the same procedure employed by the trial court. We examine (1) the pleadings to determine the elements of the claim, (2) the motion to determine if it establishes facts justifying judgment in the moving party’s favor, and (3) the opposition — assuming movant has met its initial burden — to “decide whether the opposing party has demonstrated the existence of a triable, material fact issue. [Citation.]” (Chavez v. Carpenter, supra, 91 Cal.App.4th at p. 1438; see also Burroughs v. Precision Airmotive Corp. (2000)
II. Issues on Appeal
The Raiders asserts that the trial court erred in granting summary adjudication of the claim for breach of fiduciary duty. These claims of error are as follows:
1. The court erred in concluding that neither the NFL nor Tagliabue owed fiduciary duties to the Raiders.
2. The court erroneously applied the abstention doctrine of California Dental Assn. v. American Dental Assn. (1979)
3. The court concluded incorrectly that the claim was barred due to the Raiders’ failure to exhaust internal remedies within the NFL.
We will address below the Raiders’ first, second, and fourth contentions.
We start with a recitation of some of the basic principles of the law of fiduciary duty. “[A] fiduciary relationship is a recognized legal relationship such as guardian and ward, trustee and beneficiary, principal and agent, or attorney and client [citation].” (Richelle L. v. Roman Catholic Archbishop (2003)
Our Supreme Court has acknowledged that it is difficult to enunciate the precise elements required to show the existence of a fiduciary relationship. (Children’s Television, supra,
Fiduciary duties arise as a matter of law “in certain technical, legal relationships.” (GAB Business, supra,
In numerous cases, however, California courts have rejected attempts to extend fiduciary obligations to relationships where the imposition of such an affirmative duty is unwarranted. For instance, no fiduciary relationship was found to exist as between the following: (1) an attorney and his cocounsel under the theory that the farmer’s malpractice in handling of a mutual client’s case caused damage to cocounsel in the loss of fees (Beck v. Wecht (2002)
Many of the cases rejecting breach of fiduciary duty claims have been based (at least in part) upon the principle, as enunciated in Waverly Productions, Inc. v. RKO General, Inc. (1963)
B. Whether Fiduciary Relationship Existed as a Matter of Law
We first examine whether there was a fiduciary relationship between defendants and the Raiders as a matter of law. More precisely — since we are reviewing a disposition after summary adjudication — we must determine from the papers filed in connection with the summary adjudication motion whether there was a triable issue of fact as to the existence of a fiduciary relationship, by virtue of the nature of the business relationship between the Raiders and defendants.
As the Ninth Circuit Court of Appeals has previously recognized, “[t]he NFL is [a] unique business organization.” (Los Angeles Memorial Coliseum Com’n v. N.F.L. (9th Cir. 1984)
The Raiders relies extensively on Jones, supra,
Most notably, the discussion of fiduciary duties in Jones was premised on the existence of a corporation, controlling shareholders, and minority shareholders. No such organizational structure is presented in the instant appeal. To the contrary, it is without dispute that the NFL is an unincorporated not-for-profit association of 31 (now 32) member clubs. Indeed, we acknowledged this organizational status in a prior appeal by the Raiders. (See Oakland Raiders, supra,
Even were we to ignore this glaring distinction, the claim here is that the organization (the NFL), not its majority members (or purported “majority shareholders”), owes the Raiders fiduciary duties. Jones is thus inapposite on this basis as well.
Moreover, we find the entire rationale of Jones to have no application to the facts of this case. In Jones, the Supreme Court addressed the inherent unfairness of majority shareholders of a for-profit corporation using their dominant position to further their own interests at the expense of minority shareholders. Here, the Raiders’ claim is that the nonprofit organization itself (and its commissioner) acted in a manner that was prejudicial to the Raiders. This contention is a far cry from the corporate abuse that the Supreme Court addressed in Jones, namely, controlling shareholders misusing their position of dominance for their personal benefit and to the detriment of minority shareholders.
The Raiders’ reliance upon Cohen v. Kite Hill Community Assn. (1983)
There are at least two significant reasons that prevent us from concluding that Cohen supports the Raiders’ position. In the first instance, the nature of the entity in Cohen was entirely different. The homeowners’ association that the court found to owe fiduciary duties to its members was a nonprofit corporation, not an unincorporated association as is the case with the NFL. The Raiders’ attempts to trivialize this issue notwithstanding, this distinction is a significant one. As a nonprofit corporation, there were fiduciary obligations imposed by statute upon the officers and directors of the homeowners’ association; “Directors of nonprofit corporations such as the Association are fiduciaries who are required to exercise their powers in accordance with the duties imposed by the Corporations Code. [Citation.]” (Frances T. v. Village Green Owners Assn. (1986)
Second, homeowners’ associations, as the Cohen court noted, perform “public-service functions” (Cohen, supra,
The Raiders also cites two cases involving pension plan retirement funds. In Hittle v. Santa Barbara County Employees Retirement Assn. (1985)
Further, the mere fact that the entities in Hittle and Masters were both associations — as is the case here with the NFL — is immaterial. It was the nature of the relationship between the parties as trustee-beneficiary that resulted in a finding of a fiduciary relationship in both Hittle and Masters. No such form of relationship exists here as between defendants and the Raiders.
The Raiders has cited no cases — and we are aware of none — in which it has been held as a blanket proposition that a voluntary unincorporated association and/or its leadership owes fiduciary duties to its members. A voluntary association, although it has some attributes of a legal entity, is not the equivalent of a corporation. (See 3 Ballantine & Sterling, Cal. Corporation Laws (4th ed. 1992) § 424.01, p. 19-566 (rel. 81-5/02); see also 9 Witkin, Summary of Cal. Law (9th ed. 1989) Corporations, § 45, pp. 553-554.) Neither Hittle nor Masters rests on the principle that an unincorporated association and/or its leaders stand in a fiduciary relationship with respect to its members under all circumstances. We decline to reach that conclusion here. (See Hussey, supra,
Finally, we reject the Raiders’ intimation that a fiduciary relationship exists between it and the defendants because of an alleged joint venture.
We conclude therefore that the relationship between the Raiders, on the one hand, and the NFL and Tagliabue, on the other hand, is not one under which a fiduciary relationship exists as a matter of law. The Raiders’ contentions notwithstanding, we see no reasoned basis for finding such a fiduciary relationship by extending the holdings in such cases as Jones, supra
C. Whether Defendants Undertook Fiduciary Responsibilities
We now review whether, irrespective of the absence of fiduciary duty imposed by law, the NFL and Tagliabue undertook fiduciary responsibilities to the Raiders by agreement. After such review, we find quite the opposite to be true.
As we noted in the prior appeal: “The NFL is governed by a constitution that generally requires a three-quarters vote for action. The chief executive
Thus, the NFL and its member clubs are controlled by the following principle: “ ‘[T]he rights and duties of the members as between themselves and in their relation to [a private voluntary] association, in all matters affecting its internal government and the management of its affairs, are measured by the terms of [its] constitution and bylaws.’ [Citation.]” (California Dental, supra,
Even the most cursory review of the NFL constitution discloses the enormous power vested in the commissioner with respect to the business operations of the League and its member clubs. As a blanket proposition, the member clubs agreed that “[t]hey, and each of them, shall be bound by and will observe all decisions of the [c]ommissioner of the League in all matters within his jurisdiction.” Further, each member club agreed to a broad release of, among others, the NFL and the commissioner in connection with any official acts taken on behalf of the NFL.
The commissioner’s authority under the NFL constitution ranges from very broad issues to matters that the uninformed might consider minutiae.
The more mundane (but nonetheless significant) powers of the commissioner specified in the NFL constitution include: (1) deciding appropriate penalties in the event of player tampering; (2) approval of a member club’s hiring of any coach, or administrative/supervisory employee; (3) approval of a member club’s contract for the telecast or broadcast of its games (including the sponsorship for such games); (4) the sale of all radio and television and film rights for conference championship games and the Super Bowl; (5) control over conference championship and Super Bowl games; (6) preparing and modifying game schedules; (7) presiding over player drafts and resolving disputes arising out of the drafts; (8) approval of player trades; (9) suspension of players for violations of the NFL constitution, player contract, NFL rule, or club rule; and (10) investigation of a member club’s placement of players on “Reserve/Injured,” “Reserve,” or “Reserve/Suspended” status, and (where
It is clear from a comprehensive review of the NFL constitution that neither the NFL nor Tagliabue undertook the role of a fiduciary towards any particular member club, including the Raiders. To the contrary, the expansive powers of the commissioner delineated in the NFL constitution strongly demonstrate the absence of such a fiduciary relationship. As noted, a fiduciary must give “priority to the best interest of the beneficiary.” (Children’s Television, supra,
There is a vast array of potential circumstances under which the commissioner may take action that is adverse to a particular member club (such as the Raiders). Under the NFL constitution, the commissioner could act in a manner potentially adverse to the Raiders, inter alla, by: (1) arbitrating a dispute between the Raiders and a coach, player, other employee, or other member club; (2) interpreting or enforcing the NFL constitution in a manner incongruent with the Raiders’ position; (3) disapproving a Raiders player contract or the proposed hiring of a Raiders coach, administrative, or supervisory employee; (4) disapproving a player trade proposed by the Raiders; or (5) resolving a player draft dispute adversely to the Raiders. Further, as we have noted, the commissioner’s disciplinary powers under the NFL constitution are very extensive (see fn. 17, ante)-, those powers include the commissioner being able to discipline any Raiders’ owner, player, coach, or employee, to discipline the Raiders where the club improperly assigned a player to a particular status, and to assess penalties against the Raiders for player tampering. We can readily imagine numerous scenarios where the NFL and its commissioner might take action involving a member club such as the Raiders — either through disciplinary action or other action authorized under the NFL constitution — that would leave the club without the services of a talented coach, player, or other employee.
There are thus numerous circumstances where the NFL and its commissioner would be contractually obligated to take action adverse to the Raiders. In such cases, the NFL and the commissioner would be acting in the best interests of the League but certainly not in the Raiders’ best interests.
Likewise, we find no merit to the argument that Tagliabue was the Raiders’ fiduciary because he signed a 1996 settlement agreement as commissioner of the NFL on the League’s behalf and on behalf of the NFL’s member clubs. This lone matter does not, of itself, constitute an agreement on Tagliabue’s part to act as agent for the Raiders. (See Southern Pacific Thrift & Loan Assn. v. Savings Assn. Mortgage Co. (1999)
For all of the above reasons, we conclude that there was no fiduciary relationship between defendants and the Raiders arising either as a result of agreement or by operation of law. Accordingly, the court below properly granted summary adjudication of the second cause of action.
IV. Applicability of Abstention Doctrine Under California Dental
The Raiders contends that the trial court also erred by concluding that it was required to abstain from this intra-association dispute under
We disagree. The abstention doctrine as enunciated by the Supreme Court in California Dental applies to the Raiders’ claim here. Thus, even were there triable issues as to the existence of a fiduciary relationship between defendants and the Raiders — and, as we have concluded in part III, ante, there were none — summary adjudication of this claim under the abstention doctrine of California Dental was nonetheless proper.
The Raiders’ argument represents a second attempt to convince this court that abstention under California Dental applies only to a narrow range of intra-association disputes. In Oakland Raiders, supra,
In this appeal, the Raiders asserts that the abstention doctrine, as enunciated by the Supreme Court in California Dental, is limited to disputes involving voluntary associations’ noncompliance with their own bylaws. Once again, the Raiders — in this second appeal — misconstrues California Dental.
In California Dental, the state dental society expelled a member dentist after hearing, concluding that he had violated both its code of ethics and those of the national society of which the state society was a constituent. (California Dental, supra,
The court went on to identify action that plainly contravenes the unambiguous language of an association’s bylaws as a particular instance in which judicial intervention would be appropriate, i.e., because such action would constitute “ ‘ “an abuse of discretion, and a clear, unreasonable and arbitrary invasion of [the party’s] private rights.” ’ [Citation.]” (California Dental, supra,
To reiterate, “the case language [of California Dental] applies broadly.” (Oakland Raiders, supra,
This conclusion is consistent with other cases that have followed California Dental. (See Berke v. Tri Realtors (1989)
In this instance, the trial court properly held that it was barred by the abstention doctrine from resolving the dispute between the Raiders and defendants. Ignoring for the moment that the Raiders’ breach of fiduciary duty claim is not viable as a matter of law (see pt. Ill, ante), the underlying basis for the claim is not one for an asserted breach of the NFL constitution. The court correctly concluded — after a discussion in its order of each alleged act that the Raiders claimed constituted breaches of fiduciary duty — that the Raiders had not shown any evidence of a violation of a clear and unambiguous provision of the NFL constitution. Indeed, the Raiders admits that its claim is “not for breach of the NFL’s bylaws.” Further, the Raiders’ opposition to defendants’ summary adjudication motion presented no facts that demonstrated “ 1 “an abuse of discretion, and a clear, unreasonable and arbitrary invasion of [the Raiders’] private rights.” ’ ” (California Dental, supra,
In short, the court correctly construed and applied the abstention doctrine of California Dental. We observe that the rationale of abstention from intra-association disputes applies with particular force in this instance. Given the unique and specialized nature of this association’s business — the operation of a professional football league — there is significant danger that judicial intervention in such disputes will have the undesired and unintended effect of
V. The Raiders’ Additional Claims
A. Background and Parties’ Contentions
In its summary adjudication ruling, the court noted that the Raiders’ opposition included contentions that Tagliabue “breached fiduciary duties by (1) deliberately depriving [t]he Raiders of its right to participate in League affairs concerning the LTIP [executive compensation program] ;[
As part of its postmotion challenge to the summary adjudication ruling, the Raiders requested that, in the alternative to granting its motion for new trial, the Raiders be allowed to amend its complaint to allege the Additional Claims as part of its second cause of action. The proposed amendment would have added a sentence at the beginning of the second cause of action that incorporated by reference each paragraph of the remaining claims of the complaint (the third through 22d causes of action). The court denied the motion to amend, concluding, inter alla, that the Additional Claims would be barred under the California Dental abstention doctrine.
The Raiders asserts that these rulings were erroneous for several reasons. In sum, the Raiders argues: (1) the Additional Claims were pleaded and properly before the court; (2) even if they were not technically pleaded, the substance of the Additional Claims constituted an immaterial variance from the complaint and should have been considered under Code of Civil Procedure section 470;
Defendants respond with a myriad of assertions. As is relevant to our discussion here, defendants argue that the Additional Claims were not pleaded, and they were, in any event, not viable. As to the latter position, defendants assert that the Additional Claims were without merit because: (1) they were barred (as the trial court found) under the California Dental abstention doctrine; (2) the Raiders, as a matter of law, could not assert a claim for breach of fiduciary duty against the NFL or Tagliabue; and (3) they were, in fact, derivative claims that could not be asserted by the Raiders as a
We conclude that there was no error. The Additional Claims were not properly before the court when it considered the summary adjudication motion and, in any event, the court properly concluded that the Additional Claims were not viable.
B. Whether Additional Claims Were Pleaded
As we have recently reiterated, the pleadings set the boundaries of the issues to be resolved at summary judgment. (Knapp v. Doherty (2004)
In this instance, we readily conclude that the Additional Claims were beyond the scope of the second cause of action of the complaint. Significantly, the second cause of action contains approximately three pages of text alleging specific actions by defendants that the Raiders claims constitute
C. Whether Additional Claims Were Viable 1. Application of California Dental abstention doctrine
As noted, the court did not limit its rejection of the Additional Claims to the Raiders’ failure to plead them in the second cause of action. Instead, the court determined — assuming arguendo that the Additional Claims were properly before it — that those claims were likewise barred under the abstention doctrine of California Dental, supra,
The Raiders’ argument on this question is essentially a repetition of its position that the court’s application of the abstention doctrine to the second cause of action (as pleaded) was an unwarranted extension of California
2. Existence of fiduciary relationship
We have concluded in part III, ante, that no fiduciary relationship between the Raiders and defendants existed as a matter of law. Accordingly, irrespective of whether the claim was based on the allegations of the second cause of action or on the Additional Claims, the Raiders’ breach of fiduciary duty claim was not viable. Thus, the court could have properly granted summary adjudication on this basis as well, even after considering the Additional Claims.
3. Derivative or direct claim
Defendants argue that the Raiders’ breach of fiduciary duty cause of action founded on the Additional Claims was also not maintainable because it was a derivative rather than a direct claim. The Raiders (defendants assert) could not bring the Additional Claims as part of an individual cause of action. We conclude that the Additional Claims were derivative in nature.
As the Supreme Court has explained: “A shareholder’s derivative suit seeks to recover for the benefit of the corporation and its whole body of shareholders when injury is caused to the corporation that may not otherwise be redressed because of failure of the corporation to act. Thus, ‘the action is derivative, i.e., in the corporate right, if the gravamen of the complaint is injury to the corporation, or to the whole body of its stock and property without any severance or distribution among individual holders, or it seeks to recover assets for the corporation or to prevent the dissipation of its assets.’ [Citations.]” (Jones, supra,
Thus, in Nelson v. Anderson (1999)
It is clear in this instance that the Additional Claims — even assuming they were otherwise viable — were derivative in nature. The claim related to the LTIP was that its implementation was “orchestrated” by Tagliabue (among others) and that it was “an unauthorized compensation program” resulting in “millions of dollars in unauthorized payouts to Tagliabue and other NFL executives over the course of several years.” The Raiders’ own pleading demonstrated that the LTIP obligations — as well as any claimed damages arising from the “unauthorized [LTIP] program” — were those of the NFL and NFL-affiliated companies.
Similarly, the Raiders alleged that the damages related to the formation and operation of the new World League of American Football (through the NFLE) were those of the NFL and NFL-affiliated companies. The alleged wrongful conduct resulted in the “wrongful diversion of NFL revenues belonging to the NFL member clubs to finance the creation and operation of the new World League.” The damages were alleged to have been “lost opportunity” damages “in an amount equal to the substantial monetary losses from World League activities.”
The court properly determined that the Additional Claims were not viable because the abstention doctrine of California Dental applied. As we have seen, the Additional Claims were also not maintainable because of the absence of a fiduciary relationship and because the claims were derivative in nature. Accordingly, since the court correctly held that the proposed Additional Claims were without merit, it properly granted summary adjudication. (See Mills v. Forestex Co. (2003)
D. The Motion to Amend
The court denied the Raiders leave to amend, inter alla, on the ground that the court — just as was the case with the second cause of action as pleaded— would be required under California Dental to abstain from adjudicating the Additional Claims. Since the court correctly determined that the Additional Claims that the Raiders wished to include in the second cause of action were without merit, it was not required to grant leave to amend; under the circumstances, this would have been an idle act. (Mills v. Forestex Co., supra,
Defendants argue further that leave to amend could have been refused because the proposed pleading was a sham. While the court below did not express such reasoning, we agree that it would have been proper to
The proposed amendment here sought to incorporate by reference into the Raiders’ second cause of action for breach of fiduciary duty each and every one of the 239 paragraphs of the third through 22d causes of action. This “shotgun” approach notwithstanding, it is readily apparent — from the Raiders’ motion for new trial and alternative motion to amend — that the focus of the proposed amendment was the allegations in the fifth, sixth, 10th, and 11th causes of action. The fifth and sixth causes of action concerned alleged mismanagement in the formation and operation of the NFLE and resultant monetary losses from World League activities. The 10th and 11th causes of action claimed breach of fiduciary duty and fraudulent conduct in connection with establishing the LTIR Significantly, each of these four causes of action was a derivative claim and was among the claims embraced in the prior appeal. (See Oakland Raiders, supra,
Thus, the proposed amendment presented a muddle of contradictory allegations. Through the proposed incorporation of the four derivative causes of action into the individual (second) cause of action for breach of fiduciary duty, the Raiders made inconsistent claims. Since derivative and individual claims “are mutually exclusive” (Friedman, Cal. Practice Guide: Corporations, supra, ][ 6:598, p. 6-127), the Raiders could not allege that the claims it previously asserted were derivative had inexplicably become direct claims.
Moreover, to the extent that the Raiders’ proposed amendment sought to incorporate into the second cause of action the four derivative claims mentioned, this court has previously decided those claims. We affirmed the court’s prior summary adjudication of those claims in a manner adverse to the Raiders on the grounds that (1) the California Dental abstention doctrine applied, and (2) the Raiders made no factual showing that it was exempt from making demand upon the NFL’s governing board as a prerequisite to initiating the derivative claims. (See Oakland Raiders, supra, 93 Cal.App.4th
We conclude that the trial court properly rejected the Additional Claims, both because they were not pleaded, and because they were without merit as a matter of law. Summary adjudication was thus proper and the court did not abuse its discretion by denying leave to amend. (See Rakestraw v. California Physicians’ Service (2000)
DISPOSITION
There were no triable issues of material fact concerning the second cause of action for breach of fiduciary duty. Accordingly, the court properly granted defendants’ summary adjudication motion. The judgment is afBrmed.
Rushing, P. J., and Elia, J., concurred.
Notes
The case has a lengthy procedural history that dates back over nine years. Part of that history is detailed in this court’s prior opinion arising out of an appeal by the Raiders from the dismissal of claims against parties other than the NFL and Tagliabue. (See Oakland Raiders v. National Football League (2001)
We use the name “Raiders” in reference to the business entity (NFL club member); thus, its association with singular verbs is appropriate.
The complaint alleged that defendants denied Davis and his family permission to buy the Oakland Athletics baseball team. It is undisputed, however, that Tagliabue had nothing to do with that matter, and that it was the former NFL commissioner, Pete Rozelle, who made the decision regarding Davis’s potential ownership of the baseball team in 1979. (Tagliabue did not become NFL commissioner until 1989.)
The trial court disposed of six defense summary adjudication motions in its December 1998 ruling. As we have noted, only the motion concerning the second cause of action is at issue in this appeal.
The court denied the new trial motion without prejudice on the ground that it was premature because there was no judgment or appealable order from which a new trial motion could be brought under Code of Civil Procedure section 656 et seq. (See Gilberd v. AC Transit (1995)
We conclude below that the Raiders’ breach of fiduciary duty claim was barred as a matter of law for two reasons: (1) the absence of fiduciary duty owed by defendants to the Raiders; and (2) the abstention doctrine of California Dental applies. Accordingly, we need not, and do not decide the further question of whether summary adjudication was also proper because the Raiders failed to exhaust internal NFL remedies. (See Hiser v. Bell Helicopter Textron Inc. (2003)
We acknowledge that a fiduciary duty may arise out of a confidential relationship that is not one that is considered a legally recognized fiduciary relationship. (See Richelle L. v. Roman Catholic Archbishop, supra, 106 Cal.App.4th at pp. 271-273.) No such claim of a confidential relationship is presented here by the Raiders, and none is presented in the record before us.
“An agent is a fiduciary with respect to matters within the scope of his agency.” (Rest.2d Agency, § 13.) As such, the agent is required “to act primarily for the benefit of another in matters connected with his undertaking" and has “the duty [to his principal] to account for profits arising out of the employment, the duty not to act as, or on account of, an adverse party without the principal’s consent, the duty not to compete with the principal on his own account or for another in matters relating to the subject matter of the agency, and the duty to deal fairly with the principal in all transactions between them.” (Rest.2d Agency, § 13, com. a, p. 58; see also Cross v. Bonded Adjustment Bureau (1996)
Although an insurer has special obligations of good faith towards its insured, an insurer is not a “true fiduciary” with respect to its insured. (Love v. Fire Ins. Exchange, supra, 221 Cal.App.3d at pp. 1147-1149.)
The Raiders attaches great importance to the fact that over one year before the summary adjudication motion, the trial court overruled defendants’ demurrer to the Raiders’ complaint, thereby rejecting defendants’ assertion that they owed no fiduciary duty to the Raiders as a matter of law. Unlike its consideration of the demurrer, the court at the later summary adjudication motion considered a significant amount of evidence. Even had the issues in the demurrer been identical to the later summary adjudication motion, however, summary judgment/adjudication motions are law and motion proceedings entirely distinct from an attack on a pleading by demurrer. Therefore, it was proper for the trial court to decide the fiduciary duty claim on summary adjudication differently from its prior disposition of the claim on demurrer. (See Community Memorial Hospital v. County of Ventura (1996)
The Raiders’ claim notwithstanding, Dietz v. American Dental Ass’n. (E.D. Mich. 1979)
Defendants argue at some length that no joint venture exists with respect to the NFL and its member clubs. The extent to which the Raiders contends that the NFL is a joint venture and thus owes the Raiders fiduciary duties is not entirely clear to us. While the Raiders makes a fleeting reference in its opening brief to “joint venture vis-a-vis their individual members,” no such argument appears in its reply. It is clear, in any event, that there is no joint venture
Although not controlling to our reasoning here, we note with interest that in Los Angeles Memorial Coliseum Com’n v. N.F.L., supra,
The release reads in relevant part: “[The member clubs, as well as each club’s owners, officers, directors, shareholders and partners], and each of them, to the fullest extent permitted by law, release and indemnify the [c]ommissioner, the League and every employee thereof. . . from and against any and all claims, demands, suits or other proceedings, whether for damages or otherwise, which they .. . may at any time have or assert in connection with or by reason of any action taken or not taken by the released/indemnified parties in their official capacities on behalf of the League or any committee thereof.”
For instance, the commissioner under certain circumstances must approve the colors of uniforms worn by visiting teams.
Section 8.3 of the NFL constitution reads: “The Commissioner shall have full, complete, and final jurisdiction and authority to arbitrate: Q] (a) Any dispute involving two or more members of the League, or involving two or more holders of an ownership interest in a member club of the League, certified to him by any of the disputants. Q] (b) Any dispute between any player, coach and/or other employee of any member of the League (or any combination thereof) and any member club or clubs. H] (c) Any dispute between or among players, coaches, and/or other employees of any member club or clubs of the League, other than disputes unrelated to and outside the course and scope of the employment of such disputants within the League. []Q (d) Any dispute between a player and any official of the League. H] (e) Any dispute involving a member or members in the League, or any players or employees of the members or the League, or any combination thereof, that in the opinion of the [c]ommissioner constitutes conduct detrimental to the best interests of the League or professional football.”
The commissioner’s disciplinary powers under the NFL constitution are extremely significant. The commissioner may suspend and/or impose a fine of up to $500,000, and/or may cancel the person’s contract with the NFL or club member. The commissioner is empowered to take such action, after notice and hearing, where the commissioner decides that the person “has either violated the [NFL constitution] . . . , or has been or is guilty of conduct detrimental to the welfare of the League or professional football.” The commissioner is also empowered to refer disciplinary matters to the NFL executive committee in instances where the commissioner believes that greater punishment is warranted. In those cases, the commissioner may recommend the most draconian of punishments, cancellation of a member club’s NFL franchise. Further, the commissioner may impose severe sanctions — including expulsion from the League — for gambling on the outcome or score of any NFL game.
The question of the applicability of such release provisions is not argued by the parties here and is not before us. We take no position on this issue.
The absence of such a principal-agency relationship is a matter that was appropriate for resolution by summary adjudication. Although agency is generally a question of fact, the issue may be determined by the court without trial where the undisputed facts negate any such relationship. (See Universal Bank v. Lawyers Title Ins. Corp. (1997)
In a Maryland case that cited California Dental and contained a thoughtful discussion of the subject of judicial intervention of intra-association disputes, the appellate court reversed the trial court’s decision to intervene in a dispute between a voluntary organization and its members. (See NAACP v. Golding (1996)
In Charles O. Finley & Co., Inc. v. Kuhn, supra, 569 F.2d at pages 532-535, the Seventh Circuit noted that the baseball commissioner (parallel to the NFL commissioner here) had extremely broad authority over the affairs of the professional baseball league. Similar to the kind of standards here — such as the NFL commissioner’s right to investigate and punish conduct found to be “detrimental to the welfare of the League or professional football" — the agreement governing the baseball league provided that “ ‘the functions of the Commissioner shall be ... to investigate . .. any act, transaction or practice . .. not in the best interests of the national game of Baseball’ and ‘to determine . . . what preventive, remedial or punitive action is appropriate in the premises, and to take such action . . . .’ [Citation.]” (Id. at p. 533.) Apropos of our holding that the abstention doctrine applies here, the court in Finley stated: “Standards such as the best interests of baseball, the interests of the morale of the players and the honor of the game, or ‘sportsmanship which accepts the umpire’s decision without complaint,’ are not necessarily familiar to courts and obviously require some expertise in their application. While it is true that professional baseball selected as its first Commissioner a federal judge, it intended only him and not the judiciary as a whole to be its umpire and governor.” (Id. at p. 537, fns. omitted.)
LTIP refers collectively to the “Long Term Incentive Compensation Plan” and accompanying “Supplemental Employee Retirement Plan.”
“Where the variance is not material, as provided in [Code of Civil Procedure section] 469 the court may direct the fact to be found according to the evidence, or may order an immediate amendment, without costs.” (Code Civ. Proc., § 470.) Code of Civil Procedure section 469 reads: “No variance between the allegation in a pleading and the proof is to be deemed material, unless it has actually misled the adverse party to his prejudice in maintaining his action or defense upon the merits. Whenever it appears that a party has been so misled, the Court may order the pleading to be amended, upon such terms as may be just.”
The Raiders argues that it was not required to move to amend its complaint before the hearing on the summary adjudication motion. Any statement to the contrary in 580 Folsom Associates, supra,
We acknowledge that the second cause of action — through its incorporation by reference of all paragraphs of the complaint preceding the breach of fiduciary duty claim — includes paragraphs that generally refer to the LTIP, to the formation of NFLE, and to the NFL Broadcasting Committee. But these incorporated paragraphs contain no reference to Tagliabue’s alleged agency relationship with the Raiders or to any alleged breaches of fiduciary duties as identified in the Additional Claims. Thus, we reject the Raiders’ assertion that the Additional Claims were included in the second cause of action as a result of the incorporation of these prior, nonspecific paragraphs of the complaint.
We likewise reject the Raiders’ claim that the court below should have considered the Additional Claims as an “immaterial variance” from the second cause of action. As we discuss in part V. C. 3, post, the Raiders’ Additional Claims were derivative rather than direct claims. As such, they could not have been alleged as part of the Raiders’ individual cause of action for breach of fiduciary duty contained in the second cause of action. The assertion of these derivative Additional Claims as individual claims would have been an attempt to allege an entirely different cause of action. (See Fineberg v. Niekerk (1985)
See also Avikian v. WTC Financial Corp. (2002)
Of course, derivative suits are not limited to actions brought on behalf of corporations; they include derivative actions filed on behalf of unincorporated associations. (See Corp. Code, § 800, subds. (a), (b); Oakland Raiders, supra,
Defendants assert several additional arguments in support of their positions that the Additional Claims were not maintainable and that the motion to amend was properly denied, including the claim that the motion by the Raiders was untimely. We need not address these additional questions, since we have concluded that the court’s rejection of the Additional Claims was otherwise proper.
Concurrence Opinion
Concurring. — The Raiders are a diverse group of athletes. But despite such pluralism, the Raiders is a singular football team, and because of this, I must concur in the technical propriety of such phrases as “the Raiders asserts,” “the Raiders does not contend,” and “the Raiders was discriminated against,” which appear in the main opinion. However, although these phrases may be sound, their sound, to me, is personally foul and deserves dissent, if not a 15-yard penalty and loss of down. This is especially so when the phrases are read out loud.
I have long been a loyal fan of grammatical agreement. The natural harmony between subject and verb is usually euphonious. But my boosterism has not deafened me. Though the merits of agreement may be great, here it is grating. The phrases noted above are like blasts from an air horn or plastic trumpet, blaring technical correctness.