ANALYSIS: LIV Lawsuit Could Change Golf Landscape

Now that 11 golfers from LIV Golf have filed an antitrust lawsuit against the PGA Tour challenging their suspensions for signing with the rival organization, the legal maneuvering begins.

Since its inception, LIV officials have anticipated a suit, arguing that their players should be allowed to retain playing privileges on the PGA Tour, suggesting the tour is operating as a monopoly.

The suit, which includes Phil Mickelson and Bryson DeChambeau as plaintiffs along with three players – Hudson Swafford, Matt Jones and Talor Gooch – who are seeking to be allowed to compete in the upcoming FedEx Cup playoffs, potentially could redefine the operating structure of professional golf.

The plaintiffs chose to file their complaint Wednesday in U.S. District Court in Northern California, a jurisdiction in a state where the PGA Tour operates six tournaments and two golf courses, instead of Florida, where the tour’s headquarters is based.

“That’s known among lawyers as a plaintiff’s heaven and a tough jurisdiction as a defendant to be sued. In terms of the playing field, they picked the right playing field for their case,” said Gerald L. Maatman Jr., a law professor at Northwestern University and a senior partner in the Seyfarth Shaw of Chicago and New York where he specializes in class-action litigation, employment, and antitrust law.

The plaintiffs have asked for a jury trial, something Maatman said is standard to keep all options open. It’s possible the plaintiffs would later decide to have a judge rather than a jury. Should it reach a jury, Maatman said the trial could last up to 24 months.

The lawsuit, which totals 106 pages, directly challenges the PGA Tour’s rules regarding where players are allowed to compete. Having threatened tour members who accepted an offer to join LIV Golf with lengthy and perhaps lifetime suspensions, tour commissioner Jay Monahan has maintained a hard line defending the organization even as LIV Golf has landed several stars.

“Fundamentally, these suspended players – who are now Saudi Golf League employees – have walked away from the tour and now want back in,” Monahan said in a memo to players.

It would be to the tour’s advantage, Maatman said, to move the case to a Florida court, but he said that is unlikely. It will be up to the tour to make a convincing argument as to why the California court is not a proper venue.

“If you handicap it, I’d say it’s 70-30 against the tour trying to move it at this point,” Maatman said.

The players have joined forces with three large law firms known nationally for their corporate work and, as the plaintiffs, they have the early advantage in having laid out their case while forcing the tour and its attorneys to react.

Before its inception, leaders at LIV Golf including CEO Greg Norman have attacked the tour as a monopoly while citing its strategic alliance with the DP World Tour as well as its working relationships with the game’s most influential organizations including the USGA, the R&A, the PGA of America and Augusta National Golf Club.

That, it seems, is at the core of this legal fight.

“The tour will argue it is not (monopolistic) because there are other tours; there are other people putting on golf tournaments, and I think the argument would go that you, a player, have subscribed to and agreed to on a voluntary basis, a set of rules and now you don’t like the rules or the way they are applied so you’re trying to use a lawsuit to abrogate these rules,” Maatman said.

“The argument on the other side would be, you the PGA Tour have a monopoly; you’re using these internal regulations to abuse your monopoly power and that you have caused antitrust injury to the market including the market for services of professional golfers. It will be a very close question.”

For Gooch, Swafford and Jones, their request to compete in the FedEx Cup playoffs, for which they had qualified before joining LIV Golf, must happen soon. The first of three playoff events begins Aug. 11 in Memphis.

“Maybe they go into court for an emergency motion, a temporary restraining order to allow them to play. We’ve seen that in other sports and seen that in other situations, so it’s possible it could happen tomorrow. That’s a complete strategic selection by the plaintiff’s lawyers,” Maatman said.

Once the suit is served (it could formally happen any day), the tour will have 20 days to respond. A hearing on the matter could be held between 10 and 50 days from now before a judge randomly assigned by computer.

“What’s interesting here in terms of a preliminary injunction is this was like a hurry-up lawsuit,” Maatman said. “It’s not like a lawsuit is filed and then it lasts for 18 to 24 months while the parties are taking discovery. Here, there is going to be a hearing in a very short period of time where there is in essence going to be a mini-trial have the players shown an antitrust injury to be such that I, the judge, has to come in and enjoin the tour to allow these players to compete.

PGA Tour commissioner Jay Monahan (left) has watched as Greg Norman’s LIV Golf league has lured away several stars.

“So we’re going to get an early read from the court on that preliminary injunction motion in terms of the way the judge views the relative arguments of the parties. I would expect you’re going to see some expert witnesses in the courtroom pretty shortly. I would expect the plaintiffs have lined up some expert witnesses. More likely than not, they’re going to be economists and academics who know something about antitrust markets and antitrust injury.”

The plaintiffs have asked for a jury trial, something Maatman said is standard to keep all options open. It’s possible the plaintiffs would later decide to have a judge rather than a jury. Should it reach a jury, Maatman said the trial could last up to 24 months.

“Remember, out of 100 percent of lawsuits only 1 percent, or less than 1 percent, ever get tried,” Maatman said. “A huge percentage get dismissed. A huge percentage get settled. One would think this is a leverage tool. I would think as an outsider looking in, of the players and LIV, eventually to try and create some sort of settlement of co-existence or some sort of way to get around all the problems.”

As part of the discovery process, Maatman said it will become clear who is driving the lawsuit, whether it’s the players, Norman or the Saudi-backed LIV Golf group. More than one player said LIV officials had assured them that their legal challenges would be financed by the new group.

With the lawsuit filed in California, Maatman said the players will be able to take advantage of a plaintiff-friendly statute called the Unfair Competition Law claim, which consumers use to combat perceived fraud.

“If that California statute claim survives, that could turn the tables here and make things very interesting for the plaintiffs and very difficult for the PGA Tour,” Maatman said.

“So I would expect the PGA Tour is going to come out with guns blazing and try to eliminate as many aspects of this case on a motion to dismiss. If they can stop the case from going forward, there isn’t going to be a settlement and they will declare victory, and they’re just going to get stronger in their resolve to prevent what is going on with LIV.”

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