A “More-Serious Sign-Stealing Scheme” for the Yankees?

Photo Source: Jomboy Media/YouTube

With his team’s reputation on the line, President of the New York Yankees Randy Levine isn’t leaving it to anyone else to defend such reputation. Levine, of counsel at Jackson Lewis P.C., is defending his team in a matter requesting them to unseal a confidential letter (the “Investigation Letter”) sent by Major League Baseball (MLB) to the Yankees in 2017. That Letter details Yankees violations that are unknown, but the Yankees brief for the Court of Appeals said unsealing the Letter would cause “significant and irreparable reputational harm to the Yankees.” After a judge ordered the Letter to be unsealed in June 2020, Levine and the Yankees appealed and Levine filed his brief to state why this now famous concealed letter needs to remain that way.

Origin of the Lawsuit

The original suit began in January 2020 when DraftKings participants filed suit against MLB, MLB Advanced Media, the Houston Astros, and the Boston Red Sox in relation to the sign-stealing scandal that the Astros and Red Sox were punished for. As outlined earlier in the year by our own Jake Cercone, the plaintiffs claim “that because of the Astros’ and Red Sox’s intentional and calculated cheating efforts, coupled with MLB’s knowledge, the parties failed to adhere to consumer protection statutes designed to protect the integrity of the consumer market.” As Jake highlighted, the complaint states that Major League Baseball’s knowledge of the cheating meant they owed the DraftKings players a duty to disclose that teams were breaking the rules. The complaint also alleged that the DraftKings players relied on MLB’s repeated public statements regarding the integrity of the game being MLB’s most important priority and thus they deserve to recover damages.

Judge Rakoff disagreed with the plaintiffs’ theory and granted the defendant’s motion to dismiss in April this year. On page 26 of the opinion, Judge Rakoff responded by saying “plaintiffs have failed to allege with any specificity that they even saw or heard plaintiffs’ misrepresentations such that these misrepresentations could have caused them to enter MLB DFS [Daily Fantasy Sports] contests they otherwise would not have entered.” Judge Rakoff added that the plaintiffs were required to demonstrate some nexus between defendants and the transaction that allegedly caused the plaintiffs harm, yet they failed to allege that defendants made “any misrepresentations about the MLB DFS contests themselves, rather than about major league baseball.” While misrepresentations were made about Major League baseball, they were not made in relation to fantasy baseball itself. To recover on the DFS contests, the case needs to be more like the one from the 2019 Sports Betting National Championship that involved certain players getting an advantage from being paid out first that concretely affected who won the contest.

Reconsideration Order brings in the Yankees

After losing via the Dismissal Order, plaintiffs moved for reconsideration of the Dismissal Order in May. They amended the complaint and included an additional allegation of misrepresentation by MLB in relation to the previously non-party New York Yankees. The new allegation centered around the Investigation Letter sent from Commissioner Manfred to the Yankees in 2017 relating to some sort of technical violations. As Levine states on page 5 of the Yankees’ brief, the Yankees went on to cooperate with the MLB investigation and were told by investigators that “MLB would treat its investigation as a confidential matter.”

The district court denied the motion for reconsideration in a Reconsideration Order on June 5th due to, as the Yankees’ brief indicates, the same lack of nexus between the misrepresentation and fantasy baseball. Despite that ruling, the district court sua sponte brought up the issue of whether the Investigation Letter should be unsealed and ultimately ordered it to be unsealed on June 12th.

Now that the Yankees were brought into this suit, Levine is taking it into his own hands to keep this letter sealed and confidential. In his brief, he outlines the most important reasons why the Investigation Letter should remain sealed.

Photo Source: N.Y. Post: Charles Wenzelberg

Relevancy of the Investigation Letter

Levine’s main reason is the district court’s language that indicates the Investigation Letter is not material to the lawsuit. As the brief states on page 23, both the Dismissal Order and Reconsideration Order held that “whether or not MLB made any misrepresentations about sign stealing do not relate to the transactions – DraftKings fantasy baseball contests – that the plaintiffs allegedly entered.” With the evidence of the Astros and Red Sox cheating scandal already out to the public and well-known, what does the unsealing of the Investigation Letter materially provide for the present suit? The brief on page 24 cited the case Newsday, LLC v. County of Nassau that ruled the investigation report must remain under seal when the substance of the report was irrelevant to the issue. Just like the present action, the Yankees see the Investigation Letter outlining violations providing nothing relevant to the lawsuit that wasn’t already considered in the Dismissal and Reconsideration Orders. The brief also draws from the district court’s language in the Reconsideration Order on page 27 stating the “Press Release was ‘not material’ to the Reconsideration Order.” The Yankees believe if the Press Releases were not material to the Reconsideration Order, it’s not logical to say the Investigation Letter can then be material.

Policy Concerns

Another issue Levine highlighted in his brief was the precedent this would set for the involvement of innocent third-parties. As Levine said on page 25 and 26, this would create a “roadmap for a plaintiff who brings meritless litigation to, after the case is dismissed, circumvent a protective order and harm a non-party by simply filing a meritless motion for reconsideration and attaching the sealed document to that motion.” In this case, the Yankees were not sued or accused of any wrongdoing, yet were brought in as a non-party for a non-material concern. As Levine states in the brief on page 32 citing United States v. Amodeo, “the privacy interests of innocent third parties . . . should weigh heavily in a court’s balancing equation.”

Another policy concern comes with trying to unseal, as the Yankees call it, a “traditionally considered private” document. Levine, on page 31, is worried that the unsealing of documents like this would potentially “chill the cooperation and candor that is essential to the conduct of thorough and fair internal investigations in MLB and other sports and industries.” The Yankees cooperated with the MLB under the belief the cooperation would be completely confidential and expected that to be the case. If this Letter is unsealed, parties in the future may hesitate to fully cooperate with investigations which would lead to the longer and more expensive litigation option. Allowing private investigation materials of a non-party in a lawsuit to become public could change the world of private investigation in professional sports.

The Red Sox, Astros, and the Media

Another issue for Levine and the Yankees is the comparison to the Astros and Red Sox cheating scandal. Despite not breaking any sign stealing rule (p.7 of the brief), they are being asked to reveal the contents of their confidential letter while the Red Sox and Astros never had theirs released. Levine states on page 36 of the brief, “Comparable investigation letters arising from MLB’s investigations into the Astros and the Red Sox sign stealing incidents were either not produced or not used in the failed lawsuit, even though those teams were parties to the lawsuit.” Levine indicated on page 35 that it is common to just release the final outcome of the investigation without having a duty to show the public all of the confidential information shared before it.

The most publicized part of the brief was Levine’s defense that revealing the contents of the Letter would cause “significant and irreparable reputational harm to the Yankees.” While media members took those words and believed that must mean that the Yankees must have cheated as badly or worse than the Astros and Red Sox, Levine’s concerns were just that: the media hype would grow out of control. He stated on page 36 of the brief that he believed revealing the contents of the Investigation Letter would “incorrectly and unfairly draw the Yankees into the separate and later sign stealing incidents and discipline involving the Astros and Red Sox.” Examples include nj.com, the New York Post, and baseball media members, correlating the Yankees with the Red Sox and the Astros. Some articles said the Investigation Letter would reveal the Yankees were involved in a “more serious, sign-stealing scheme” than previously reported. These reports validate Levine’s concerns and indicate that the need for protection may be to prevent the unnecessary media hype more so than some intricate cheating scheme Commissioner Manfred swept under the rug.

The Yankees are not going to just roll over and allow the Investigation Letter to be unsealed. After not even being involved in the original suit and not being punished by Major League Baseball, they see no reason to believe they should be subjected to this potential problem. Levine and the Yankees don’t believe legally it is justified to unseal the Letter, which will have a potentially seismic shift in the way professional sports private investigations are handled. Despite the hype around the potential unsealing, it seems difficult to say the Yankees should be subjected to a non-material unsealing of a confidential notice. The Yankees would sure like to have the Astros 2017 and Red Sox 2018 World Series titles, but they sure don’t want to be lumped into their cheating scandals and punishments.

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