Judge Beth Labson Freeman’s ruling Tuesday evening in favor of the PGA Tour and against three LIV golfers seeking to be included in the FedEx Cup playoffs through a temporary restraining order had an immediate impact on the three-tournament playoff series that begins Thursday in Memphis.
The larger question with a bigger impact is whether the federal judge’s decision hinted at what might happen when LIV Golf’s antitrust case, which was filed last week in U.S. District Court in the Northern District of California, eventually is heard in the same courtroom in a full trial on the merits, perhaps one year from now.
By ruling in favor of the PGA Tour, which suspended Talor Gooch, Matt Jones and Hudson Swafford when they played in the first LIV event in June without being granted a competing-events waiver from the tour, Freeman rejected the plaintiffs’ argument that they were facing “irreparable harm” in being kept out of the playoffs, which each would have qualified for had they not been suspended.
“It appears to the court the LIV contracts negotiated by the players and consummated by the parties were based upon the players’ calculations of what they would be leaving behind and the amount the players would need to monetize to compensate for those losses,” Freeman said in her ruling from the bench Tuesday afternoon in San Jose. “I agree with the defendants that those losses were well known to the players at the time and clearly monetized.”
The judge also upheld the tour’s right to set and enforce its own rules, which led to the suspensions of players who joined LIV Golf, which launched with backing from Saudi Arabia’s Public Investment Fund.
“In essence, the PGA Tour turned the tables on the plaintiffs in the hearing. It was a really good day in the courtroom for the PGA Tour.” – Gerald Maatman
Freeman’s ruling came after a two-hour, eight-minute session in which attorney Robert C. “Rob” Walters of the Gibson Dunn firm in Dallas argued on behalf of the players and attorney Elliot Peters, a partner at Keker Van Nest & Peters of San Francisco, represented the PGA Tour in U.S. district court.
“This is bad news for the three players, LIV and the plaintiffs,” said lawyer Gerald Maatman, an antitrust specialist in Chicago. “In essence, the PGA Tour turned the tables on the plaintiffs in the hearing. It was a really good day in the courtroom for the PGA Tour. I guess you could say that the PGA Tour made a birdie and the plaintiff made a bogey or a double bogey.”
LIV Golf issued a statement: “We’re disappointed that Talor Gooch, Hudson Swafford and Matt Jones won’t be allowed to play golf. No one gains by banning golfers from playing.”
The PGA Tour sent a memo to players acknowledging the ruling and turning the focus to the playoff events.
While the hearing Tuesday focused on the narrow issue of whether the three players would be allowed to compete in Memphis, it was the first court battle since 11 players (Carlos Ortiz withdrew from the lawsuit this week after initially being part of it) filed suit Aug. 3, alleging that the PGA Tour violated antitrust rules and accusing the tour of being a monopoly.
It hardly could have gone better for the PGA Tour.
Freeman, who aggressively questioned Walters during his presentation, wasn’t swayed by the argument that the three players would suffer financially if they were denied the right to play in the FedEx Cup playoffs. At one point, Walters referred to the players as “these three poor kids” despite the fact that they have won more than $36 million in combined prize money in their PGA Tour careers.
“They made a business decision to receive money,” Peters argued. “They made more money in the last two months than they ever made on the PGA Tour. They’ve already been paid for what they are claiming is irreparable harm.”
Freeman agreed.
“I also find the LIV contract provides an opportunity for each of these plaintiffs to play elite golf in the United States with guaranteed pay and, in fact, the evidence shows it seems almost without a doubt they will be earning more than they have made and could reasonably have expected to make in a reasonable period of time under the PGA tournament. Therefore, I find that the plaintiffs have not established irreparable harm,” Freeman said.
The ruling came on the same day that reports surfaced that Cameron Smith, the reigning Open Championship and Players Championship winner, has agreed to join LIV Golf for a reported $100 million. Thus far, LIV has signed five of the 10 players who received bonuses from the PGA Tour as part of the inaugural Player Impact Program, which rewards the most influential and impactful players, something the judge called “remarkable.”
In a press conference at the FedEx St. Jude Championship on Tuesday, Smith was evasive when asked directly whether he is joining LIV Golf, saying his focus is on the upcoming playoffs. The next LIV event will be held near Boston in early September, after the playoffs have concluded.
“I have no comment to that,” Smith said. “Like I said, I’m here to play the FedEx Cup playoffs. That’s been my focus the last week and a half; that’s what I’m here to do. I’m here to win the FedEx Cup playoffs.”
In its response earlier this week to LIV Golf’s court filing, the PGA Tour began laying out its defense, using LIV’s success as part of its argument.
During the hearing, LIV’s lawyer also confirmed that the signing bonuses being paid to some players are an advance against future earnings. That isn’t believed to be the case with all players, but LIV officials and players had strongly denied reports that was the case.
In its response earlier this week to LIV Golf’s court filing, the PGA Tour began laying out its defense, using LIV’s success as part of its argument.
“LIV Golf is Exhibit A as for why the PGA Tour doesn’t have monopoly power, because it has been very successful,” Peters said in the hearing.
This defense argument seemed to resonate with the judge, and Maatman said it may force LIV Golf to reconsider its approach. The early victory makes it less likely, Maatman said, that the PGA Tour would consider a settlement, though he stressed the case is far from over.
“If you’re the plaintiff, you say to yourself, ‘Well, team, we have to reboot what we’re doing and think about some new strategies because this didn’t work. If we continue to do what we’re doing, we’re going to run into some problems,’” Maatman said.
“The plaintiffs likely need to go back to the drawing board.”
The judge said the case could come before the court in August 2023 for a trial if both sides can be ready by then. That would be an expedited timeline, what Maatman characterized as a “rocket docket.” If that date doesn’t work, the judge said it will be 2025 before the case is heard.
“Lawsuits are like marathons; they aren’t 100-yard dashes,” Maatman said. “If this is a race, it means the PGA Tour is winning the race, and pretty conclusively at this point. The judge was impressed with the tour’s defense.”