The Supreme Court of the State of New York has dismissed a lawsuit filed by the North American Soccer League (NASL) against 15 board members of the U.S. Soccer Federation (USSF).
The court ruled that the presence of a similar federal antitrust lawsuit filed by the NASL against the USSF and MLS made the New York case redundant, and since the federal suit was filed first, that is where the litigation will take place.
ESPN FC obtained a copy of the decision by Judge Andrea Masley, which in part read: "The complaint is dismissed on the ground that another action is pending between the parties." Judge Masley added that dismissal is warranted when there is a substantial identity of the parties, the two actions are sufficiently similar, and the relief sought is substantially the same.
Judge Masley wrote: "Here, defendants have established that this action should be dismissed in favor of the pending federal action."
The NASL also argued that the individual board members were different from the USSF itself, hence the need for a separate lawsuit. But Judge Masley ruled: "In this situation, the defendants, as directors of the USSF Board, are substantially similar to the not-for-profit corporation that they govern."
A USSF spokesperson declined to comment. NASL commissioner Rishi Sehgal told ESPN FC via text message, "We are studying the decision."
The decision is the latest legal setback for the NASL, albeit a minor one given that the federal case is still pending. That lawsuit against the USSF, filed in September of 2017, alleges that the Federation used the Professional League Standards as a way of driving the NASL out of business, while allowing MLS to maintain its monopoly status. The NASL attempted to regain that status via an injunction, but this was refused in U.S. District Court as well as on appeal.
The New York lawsuit alleged that the Board members, motivated by conflicts of interest and economic considerations, breached their fiduciary duties to the NASL by "arbitrarily refusing to sanction the NASL as a Division II league for the 2018 season." The suit added that this was done to protect the Board members' self-interested positions in Major League Soccer (MLS) and the league's marketing arm, Soccer United Marketing (SUM).
The individuals named in the suit were former USSF president Sunil Gulati, current USSF president Carlos Cordeiro, USSF CEO Daniel Flynn, and Board members Valerie Ackerman, Christopher Ahrens, Carlos Bocanegra, Lisa Carnoy, John Collins, MLS commissioner Don Garber, Jesse Harrell, Angela Hucles, Stephen Malik, Richard Moeller, now former Board member Donna Shalala and Timothy Turney. John Motta, who voted to give the NASL a Division II designation was not named in the suit.
The complaint went on to allege that through SUM, which has a contract to handle the USSF's media rights, "defendants have enriched MLS while wasting USSF assets and freezing out MLS competitors, like the NASL. In particular, Defendants Gulati and Garber have dominated Board operations to advance MLS interests while enhancing their own clout and influence. As Defendant Cordeiro recently admitted, '[t]he unique ownership of SUM creates conflicts that need to be addressed.'"
The league is currently on hiatus after failing to secure its Division II status. The refusal of the USSF to grant Division II status resulted in several of its remaining teams to either move to the USL or go out of business entirely. The three remaining franchises -- the New York Cosmos, Miami FC and the Jacksonville Armada -- are currently fielding teams in the fourth-tier National Premier Soccer League.