The DC United Law Suit: A Legal and Business Analysis

unitedBoth Steve Goff and Courthouse news are reporting on a lawsuit filed against DC United.  We will again put our lawyer hat on and take a look at the legal and business implications of the case.  We pulled a copy of the lawsuit off of the Federal Court website and read the Complaint and attachments.  Filed in the District of Columbia by a Brooklyn based attorney, the two Count Complaint alleges breach of contract and unjust enrichment.  The suit is in Federal Court based on a “diversity of citizenship” (i.e. the parties are from different states).  In order to be in Federal Court on a diversity, a claim must be worth at least $75k.

The gist of the lawsuit is that the plaintiffs (Jones and Mair) are alleging that DC United (Macfarlane Chang DC Soccer, LLC) breached a contract with the plaintiffs regarding the location of potential DC United Sponsors.  Specifically, the plaintiffs allege they were entitled to a 22-25% commission on the deal to make VW the presenting sponsor of DC United.

Based on the pleadings, the alleged contract originated with an oral agreement between the plaintiffs and Matt Homonoff, United’s Manager of Corporate Partnerships.  The Complaint also cites to an e-mail from Homonoff (attached to the Complaint) that says that the plaintiff (Jones) is “representing DC United in regarding to our pursuit of Official Corporate Partners for the 2007 Major League Soccer season”.  Plaintiffs allege that the unspecified oral representations and the confirming e-mail represent a binding contract entitling them to a percentage of the VW sponsorship.

Also attached to the Complaint are examples of the plaintiffs’s efforts to contact VW and sell DC United.  I am an attorney, not a corporate sponsorship professional, but the presentations seem pretty low rent.  Initial contact was made through a cold call e-mail and included very basic information about MLS.  There are a number of spelling and syntax errors throughout the documents.  The presentation also relies heavily on the possibility of a DC United Stadium naming right opportunity.

Some interesting business related notes are also in the documents:  According to the sales pitch:

1.  Jersey sponsorship would produce 8 minutes and 40 seconds of exposure per game

2.  Midfield sign board would produce 10 minutes and 40 seconds exposure per game

3.  Jersey would provide 6 seconds of legible exposure per local news telecast of the team and based on sampling, this would equate to 12 minutes and 8 seconds of exposure.

4.  DC is called the “premier” US soccer team, but the presence of Beckham in MLS is prominent and the documents say that the signing equates to MLS saying, “We Mean Business”

5.  The proposal is 3 years at $2 mill per year for the jersey and 3 years at $1 million for community sponsorships

As for the lawsuit, DC United will now need to either Answer or file a Motion to Dismiss against the Complaint.  Typically, United will have 20 days to respond.  We will continue to monitor the case as it moves forward.

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