LANE ONE: FINA asks for dismissal of International Swimming League and athlete suits

Following the cancellation of a high-profile swimming meet scheduled for last December, the new International Swimming League (ISL) filed suit against the international governing body for swimming – the Federation Internationale de Natation or “FINA” – in U.S. Federal Court.

ISL filed its own suit, and one in the names of U.S. stars Tom Shields and Michael Andrew and Hungarian star Katinka Hosszu, as a class action against FINA, alleging actions in violation of the U.S. anti-trust law known as the Sherman Act.

FINA said little at the time, but confirmed in mid-January that “swimmers are free to participate in competitions or events staged by independent organisers, namely entities which are neither members of FINA nor related to it in any way.”

Now, FINA is talking again and has more to say.

The federation’s attorneys filed responses to both suits in the Northern District of California last Friday and asked for dismissal of both suits on multiple grounds. The filings were similar since the allegations were essentially the same in both suits. (For reference, the cases are International Swimming League vs. FINA, 3:18-cv-07394-JSC; and Shields et al vs. FINA, 3:18-cv-07393-JSC; both before Judge Jacqueline Scott Corley.)

The FINA motion asks, in both cases, for dismissal on four grounds:

(1) The Court lacks jurisdiction over FINA because it is a foreign entity;

(2) The antitrust claims made by ISL and the swimmers are blocked by the absolute control over Olympic sports given to the United States Olympic Committee and the National Governing Bodies in the Ted Stevens Olympic and Amateur Sports Act;

(3) By the Foreign Trade Antitrust Improvements Act, and

(4) The claim made by the plaintiffs does not “plausibly allege an antitrust conspiracy.”

From a legal perspective, each of these replies is quite fascinating, but from the sports angle, the concepts are more technical.

Regarding jurisdiction, the reply in the ISL suit states simply, “this is a foreign dispute, between two foreign parties, that rests on foreign conduct” and that “ISL’s inability to plead the requisite jurisdictional facts is inherent to its theory of the case, which is an attack on FINA’s position as the global arbiter of international and Olympic swimming and FINA’s implementation of rules and decisions that equally affect all of its 209 different national member federations.”

The brief argues in detail about how ISL’s “Complaint is conspicuously thin on allegations as to how any of that alleged conduct bears any real connection to the United States” as FINA’s rules and actions impact all 209 of its affiliated national federations.

Regarding immunity, the reply states that prior case law has clarified that the Ted Stevens Act gave the USOC and the affiliated National Governing Bodies “monolithic control” over their sports to exercise their responsibilities, which also includes coordination with the relevant international federation. In the case of USA Swimming, that would be coordination with FINA.

The reply states that “The alleged conduct by FINA that impacted swimming in the U.S. is
protected from antitrust scrutiny under the Ted Stevens Olympic Amateur Sports Act (“ASA”), 36 U.S.C. § 22050, et seq. Any U.S.-based effect stemming from FINA’s conduct was, as ISL alleges, the result of the decision of USA Swimming (the FINA-affiliated national governing body for swimming in the U.S.) to withdraw its support for ISL in compliance with FINA’s rules. Actions governing U.S. athletes’ participation in international competition and undertaken in compliance with FINA’s rules are precisely the kind of conduct the ASA impliedly immunizes from the antitrust laws.”

Regarding the Foreign Trade Antitrust Improvements Act, the filing contends that this 1982 statute places limits on the impact of the Sherman Act outside the U.S., on technical grounds.

The final section of the reply hammers at the core of the ISL and athlete’s complaint, that the actions of FINA constitute a restraint of trade. The filing noted that in a 1984 case, the U.S. Supreme Court “held that a corporation and its wholly-owned subsidiary were legally incapable of conspiring to violate Section 1, as they have a ‘complete unity of interest.’”

FINA’s filing notes that ISL’s own complaint maintains that “the member federations ‘exist primarily, if not exclusively, to prepare and present swimmers for competition in the Olympic Games’.” Thus, says FINA’s reply, “without the Olympic Games, there would be no FINA, and no member federations. FINA and its member federations are not distinct entities pursuing different economic goals; rather, they share a unity of interest — the promotion and organization of top-tier international and Olympic swimming.”

Now, the suits are in the hands of the judge, who will receive the motions to dismiss in court on 11 April. The application of U.S. law to international disputes is a tricky one and FINA’s reply makes a compelling argument against a U.S. court getting involved in a dispute between two European entities.

(In fact, it’s quite odd that these suits were filed in the U.S., instead of in the European Court of Justice, where the anti-trust statutes are a bit stiffer in some aspects than the U.S.)

As is sometimes the case in legal disputes, the most important comment on the entire matter was in a footnote:

“For the record, ISL’s claims are moot as a result of an interpretation of the disputed ‘unauthorised relations’ rule that FINA issued on January 15, 2019, after this case was filed, which among other things states that swimmers who participate in competitions or events staged by independent organizers such as ISL will not be found to have violated that rule.”

What should be happening is that the two sides get together to create a revision of the international swimming calendar which maximizes the opportunities for swimmers to make a living at the sport they love so much.

In the interim, FINA has launched a new competition, the Champions Swim Series, a three-stage program starting in April that will offer about $3 million in prize money. That’s a fairly direct outcome of all of the controversy, and a benefit to the participating swimmers.

A look at the ISL Web site shows a promised program of meets between to-be-formed clubs of international swimmers, starting in August. Even if it doesn’t happen, it moved FINA to clarify its rules and helped create the new events.

But if ISL’s real goal is – as it insists – to improve the earning power and profile of swimmers, it ought to be at the negotiating table and not in a U.S. courtroom. Perhaps soon, it will be.

Rich Perelman