Pierre Garcon’s FanDuel lawsuit presents several legal challenges

Washington Redskins receiver Pierre Garcon filed a class-action lawsuit against FanDuel on Friday. SI broke down the lawsuit and what it means for the NFLPA and daily fantasy.

Editor’s note: FanDuel is a sponsor of Sports Illustrated. This piece was pursued and executed independent of that business relationship. Sports Illustrated also has a partnership with DailyMVP, another daily fantasy sports provider.

In the latest sign of legal turmoil for the daily fantasy sports industry, Washington Redskins wide receiver Pierre Garcon on Friday filed an Ed O’Bannon-styled lawsuit against FanDuel in the U.S. District Court for the District of Maryland. Garcon will seek class certification of his lawsuit so that he can represent other NFL players. If successful, Garcon’s lawsuit could force FanDuel to incur substantial new costs in its business model. The lawsuit could also create awkwardness for the NFL and team owners as they pursue business relationships with daily fantasy sports companies—companies that might be in court litigating against NFL players.

Explaining Garcon’s lawsuit

Garcon’s lawsuit raises two main legal theories. First, he contends that FanDuel unlawfully uses NFL players’ names and likenesses without those players’ consent. This argument invokes the so-called “right of publicity,” a right found under some states’ laws that protects individuals from the commercial exploitation of their names, images and other aspects of their personas. The strength of the right of publicity varies considerably by state. The First Amendment to the U.S. Constitution also trumps the right of publicity in many circumstances. This is true when the use of someone’s persona is for news purposes or when the use reflects “significant transformative elements,” a term that often includes parodies or artistic depictions of the persona.

• MCCANN: How a U.S. prosecutor’s probe can doom daily fantasy sports

Second, Garcon cites the Lanham Act, a federal law that prevents businesses from creating false endorsements when those endorsements tend to cause consumer confusion. According to Garcon, potential FanDuel consumers are likely deceived into believing that Garcon has a business association with FanDuel. Along those lines, Garcon insists that FanDuel “exploits” his name and likeness into tricking consumers into playing on FanDuel, which in turn collects entry fees. Further, Garcon—who leads the Redskins this season in receptions and is tied for first in receiving yards—maintains that because he is “highly recognizable to potential consumers who are deciding whether to establish a FanDuel account,” he deserves compensation when consumers pay money to FanDuel. Without this compensation, Garcon insists, FanDuel is unjustly enriched.

Garcon’s lawsuit does not mention the insider trading allegations involving DraftKings employee Ethan Haskell that have given rise to the more than two dozen consumer fraud lawsuits against DraftKings and FanDuel in recent weeks. This is mainly because Garcon’s lawsuit hinges on a completely different legal theory than those consumer lawsuits. Garcon, as an NFL player, is not interested in who’s winning at daily fantasy sports or how they are winning. He instead cares that FanDuel may be generating revenue through his name and likeness and he believes he ought to receive some of that revenue.

Garcon's lawsuit is also distinguishable from O’Bannon’s case against the NCAA in that O’Bannon’s case, though similarly based on the commercial use of players’ names and images, centers on antitrust claims against the NCAA and its members. Garcon's lawsuit, in contrast, is focused on intellectual property claims.

DraftKings preempted being sued by Garcon by striking a deal with the NFLPA

Garcon’s lawsuit only names FanDuel as a defendant, a move that reflects a licensing agreement signed by the NFLPA (of which Garcon is a member) and DraftKings in September. In hindsight, the decision of DraftKings to expressly obtain the legal right to use NFL players’ publicity rights appears very smart. DraftKings’ collaboration with NFL players also puts its main DFS competitor, FanDuel, in a weaker legal position to contend that it is “industry custom” to use players’ names and likenesses without their consent.

How FanDuel will wage a defense against Garcon

Garcon’s lawsuit is not the first of its kind against the fantasy sports industry. About 10 years ago, Major League Baseball players, through MLB Advanced Media, litigated in the U.S. District Court for the Eastern District of Missouri against the fantasy sports provider C.B.C. Distribution and Marketing (C.B.C). The players argued that the fantasy company violated players’ publicity rights by using players’ names, stats and pictures without consent. The U.S. Court of Appeals for the Eighth Circuit ultimately heard the case and ruled in favor of the fantasy sports company. The Eighth Circuit reasoned that the First Amendment to the U.S. Constitution empowers fantasy companies to use players’ names and statistics because players’ names, statistics and other aspects of their “personas” are readily available in the public domain. As a secondary rationale, the Eighth Circuit highlighted that fantasy companies’ use of players’ names and statistics did not harm the earning potential of big league players.

The C.B.C case does not automatically mean that Garcon’s lawsuit will fail. There are several key differences between the two cases, including that the C.B.C case was based on Missouri law whereas Garcon’s case is based on Maryland and federal laws. Garcon has also filed in the U.S. District Court for the District of Maryland, which is in a different federal circuit. Indeed, should Garcon’s case go on appeal, it would be heard by the U.S. Court of Appeals for the Fourth Circuit, meaning the Eighth Circuit’s holding in the C.B.C case would be only influential precedent rather than binding authority.

• MCCANN: Legal analysis of the risks facing daily fantasy sports business

FanDuel is also a very different business than C.B.C. Whereas FanDuel is a daily fantasy sports company, C.B.C. offered season-long fantasy games for baseball fans. FanDuel, as Garcon’s lawsuit stresses, also incorporates NFL players’ pictures in lineup cards. Lastly, the leading Supreme Court case on the right of publicity—Zacchini v. Scripps-Howard Broadcasting Co. (in it, a TV station videotaped a man performing a human cannonball act without his consent)—indicates that the right of publicity can in certain circumstances trump the First Amendment.

Still, the right of publicity and the Lanham Act have not always worked as areas of law for NFL players. Last year, for instance, U.S District Judge Paul Magnuson (Minnesota) granted summary judgment in favor of the NFL in a case brought by Fred Dryer and other retired players who argued the NFL’s use of video of those players violated their right of publicity and the Lanham Act. Judge Magnuson rejected the players’ claims, holding that the First Amendment trumped the players’ publicity rights and that Dryer failed to show use of his image in game footage was in any way misleading or confusing to consumers in contravention of the Lanham Act. As it relates to consumer confusion, watch for FanDuel to highlight that Garcon aggressively used Twitter to promote FanDuel as recently as last year.

Next steps

If it advances past FanDuel’s upcoming motion to dismiss, Garcon’s lawsuit would take years to play out. There is, however, an apparent roadmap for a settlement: if DraftKings could work out a licensing deal with the NFLPA, then FanDuel might be able to do the same (unless, of course, DraftKings’ deal with the NFLPA is exclusive). A deal between FanDuel and the NFLPA would be contingent on the NFLPA securing consent from its members—including Garcon—that they not bring legal action against FanDuel.

Michael McCann is a Massachusetts attorney and the founding director of the Sports and Entertainment Law Institute at the University of New Hampshire School of Law. This fall he is teaching an undergraduate course at UNH titled “Deflategate.” McCann is also the distinguished visiting Hall of Fame Professor of Law at Mississippi College School of Law and he teaches “Intellectual Property Law in Sports” in the Oregon Law Sports Law Institute. As a disclosure, one of McCann’s family members is represented in a personal matter by an attorney who represents a plaintiff in John Weaver v. FanDuel and DraftKings.