June 22, 2016
2nd update: 8:00 p.m. Pacific Time – Judge Hernández has delayed his ruling until next week, bringing the court back to session and saying “I did not get as far as I wanted. I will have an opinion to you by (next) Wednesday.”
He said there were some cases he still needed to look at and did not get to. Previously, when he said he wanted to rule within one hour of the hearing today he said that was because his schedule was very busy in the time before the Olympic Trials.
He also said he is not continuing the temporary restraining order. Boris Berian is currently free to compete in whatever shoe company’s gear he wants — at least until next Wednesday.
PORTLAND, Ore. — After a hearing for a little over an hour on whether a preliminary injunction should be issued to prevent Boris Berian from running in non-Nike shoes in the immediate future and at the Olympic Trials, Judge Marco Hernández of the US District Court in Oregon said, “I think I know what I want to do in this case.”
Judge Hernández is going to reconvene the court at 4:30 p.m. Pacific Time and issue a ruling today, giving the parties immediate time to appeal, as the judge understands speed is important in this case with the Olympic Trials starting July 1st.
Refresh this page for more updates from today’s hearing.
Below updated at 4:00 p.m. Pacific
In the hearing today to get a preliminary injunction, “the burden of proof” is on Nike as Judge Hernández noted. They have to prove it is more likely than not that they will prevail on the merits of the case at trial and there will be irreparable harm if the injunction isn’t issued.
Nike’s lawyer Per Ramfjord spoke for the majority of the time today with much less testimony from Berian’s side.
Ramfjord’s argument was that Nike wanted to 100% match New Balance’s contract and that when Nike said it was matching the contract in an email on January 22nd to Berian’s agent Merhawi Keflezighi, replacing the words New Balance with Nike in the short-form contract, that that constituted a match. Nike eventually presented a long-form contract in February that had significant reduction clauses in it. Ramfjord said it included the reductions because Nike wanted clarification from Keflezighi about whether there were reduction clauses in the New Balance contract and never got it.
Judge Hernández interjected at one point and said, “but they (Berian and Keflezighi) had already communicated to you the lack of reductions was material” to the contract in an email from Merhawi Keflezighi to Nike on January 19th.
The Nike lawyer said that was never communicated to Nike on New Balance letterhead as was required and reductions clauses are “relatively common” and that Merhawi Keflezighi never communicated until much later in April that it wasn’t a match.
Ramfjord focused on Keflezighi’s intentions a lot at the hearing, saying Keflezighi was trying to come up with a contract Nike wouldn’t match. He said, “We were bargaining in good faith, unfortunately the defendant’s agent (Keflezighi) was not bargaining in good faith” and later that Keflezighi was “delaying and stymieing Nike at every term tips the balance in Nike’s favor.”
The only somewhat overdramatic moment for a track fan was when Ramfjord talked about how this was of utmost immediate importance for Nike because it had to “prevent Mr. Berian from busting the tape” at the Olympics in a competitor’s shoes. He said although at the Olympics Berian will be running in a Nike singlet no matter what the outcome of the case, Nike is a “shoe company at its core.”
Ramfjord said they are not forcing Berian to run in Nike shoes, he has the option of not competing at all and that if Berian didn’t want to run with Nike he should have waited the six months for the option term of the contract to end.
Berian’s lawyer Vincent Ewing spoke for much less time. A main argument he made was that Nike did not match the offer of New Balance as the New Balance offer had no reductions. Ewing argued Nike does not get to say we believe you Mr Berian and your agent in regards to certain things conveyed about the contract, but not about others (the lack of reductions).
He said the motive of Keflezighi not wanting to work with Nike should not matter. Ewing also said Nike had some other language that showed its initial email matching was not a match but an “agreement to agree” and they were still negotiating. He also spent time talking about how it is essential Berian not have to switch shoes at this point in the season in arguing an injunction should not be issued.
Nothing was said by his team whether Berian could still sit out six months after being presented with a matching contract by Nike.
Ramfjord spoke to rebut some of Ewing’s arguments and said this isn’t about Nike forcing Berian to do something against his will it is about “trying to prevent Mr. Berian from violating something he agreed to.”
QT #1: Athletes Beware of Reduction Clauses
We have no idea which way the judge will side and will consult our legal experts. The burden is high for Nike so Berian preventing an injunction seems the most likely scenario but with the judge delaying his ruling we’re not sure if that changes anything. Initially, the judge said he wanted to rule quickly so the parties could appeal.
The big news to come out of this trial that wasn’t really stressed in court or in the filings in the case is how onerous reduction clauses are. Our reading of Berian’s contract is if Berian got injured and only competed a handful of times and didn’t make Worlds and wasn’t ranked in the top 10 in the world, his pay could be reduced 95% (50% for not competing in six events a year, 20% for not being top 10 in the world, 25% for not making the Olympics) from $125,000 to $6,250 per year and also that Nike could extend that for two more years. That is unbelievable. (He also could lose another 20% if he didn’t compete at Pre or Penn Relays, but that would be 115% in reductions. No way he’d have to pay Nike to wear their gear!).
Ramfjord also used slightly different language when he discussed reductions today. Once he said they were “relatively common” and another time he said they were “indisputably customary terms.” Whatever they are athletes should beware of them. A 90% reduction in many ways is worse than a contract getting cancelled. If a contract gets cancelled you at least are free to sign with someone else.
QT #2: This Likely is More About Sending a Message to Other Agents and Athletes
Observing the case today it seems like Nike likely wants to send a message to other agents and athletes, “don’t screw with us.” It is clear Keflezighi tried to come up with a contract that Nike would not match. Once Nike said it was matching, we’re not sure why Nike sent over a contract with tons of reductions when it had been conveyed to them there weren’t reductions. Maybe Nike didn’t believe Keflezighi when he said this? Nonetheless, Nike is spending a lot of resources to defend a $125,000-a-year contract. This seems likely to send a message to others, plus Berian’s value has gone up since he won world indoors. Plus in the big scheme of things even $100,000 in legal fees is nothing for Nike, while for Keflezighi and Berian it is a much bigger deal, hence they have created a legal defense fund to try to raise $25,000 for Berian’s defense.
When this was a flash one paragraph story saying the decision was expected in an hour, we called the judge Jacob Hernández instead of Marco Hernández. Our apologies.
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