May 21, 2016
Last night, world indoor 800 champion Boris Berian tweeted out that that he’d been served court papers by Nike as they are suing him for breach of contract.
Today, I got served at the Hoka Classic, @nike is going to sue me for breach of a contract that expired on 12/31/15. What shall I do?
— Boris Berian (@borisgump800) May 21, 2016
Christopher George, a savvy LetsRun.com visitor who is a lawyer and 2:44 marathoner from Boston, has emailed us a copy of the lawsuit that Nike filed against Berian on April 29, 2016, in the United States District Cout, District of Oregon, Portland Division. You can take a look at it in its entirety at the bottom of this document.
We’ve taken a look at it and it might boil down to what does the right to match a contract and right of first refusal mean.
According to the lawsuit, Berian signed an endorsement contract with Nike last June that ran through the end of December 2015. According to Nike’s lawsuit, during the final 60 days of 2015, Nike had the exclusive right to try to extend the agreement with Berian, who was prohibited from negotiating with other shoe companies during that time frame. If the two parties didn’t agree to a renewal, Berian could seek a new sponsor, but during the first 180 days of 2016, the contract granted Nike 10 business days to match any bonafide written offers that Berian received from other shoe companies. After 180 days, Berian could sign with whomever he wanted without consulting with Nike.
According to Nike, on January 20, 2016, Merhawi Keflezighi, Berian’s agent, emailed Nike a contract that Berian had been offered by New Balance that Berian had found agreeable.
Under Nike’s reasoning, when Berian (through Keflezighi) presented the New Balance offer to them, it meant that Nike had 10 business days to match the offer and if they agreed to the match the terms of the offer, then Berian was forced to sign with Nike. From the lawsuit:
Presenting this offer to Nike converted Nike’s right of first refusal into an option to enter into a contract on the same terms as the New Balance Offer. At that point, Nike could accept or decline to match the New Balance Offer, but acceptance would bind both parties to the material terms of the New Balance Offer.
Berian clearly doesn’t agree to that logic. While he hasn’t filed a response to the lawsuit and we’ve been unable to get a statement from Merhawi Keflezighi (Update at 8:17 pm ET: We have a statement from Merhawi. It reads: “Nike has filed a lawsuit for declaratory relief and for injunctive relief regarding an expired contract. The dispute regards interpretation of contract language.”), we imagine Berian believes that he was only required to present to Nike the offer of any contracts he was willing to sign with another company. If Nike agreed to match the terms, Berian apparently doesn’t believe he then had to sign with Nike. He could decline to sign and wait for the 180-day matching period or try to negotiate a higher deal.
Nike claims that Berian did try to get a bigger offer as it says on February 15 that it received an email from Keflezighi that stated while Berian “has expressed an interest not to resume a relationship with Nike” he was giving Nike a “revised offer.”
Nike claims in the lawsuit counter-offer by Keflezighi was not allowed:
In sending this letter, Defendant, by and through his agent, ignored that Defendant was already bound under the 2016 Contract to the terms initially presented to Nike on January 20, 2016. Neither Defendant nor his agent was free to go back to New Balance to try to get a different or better offer to present to Nike.
George says that “Nike is seeking a declaration that its January match of the NB offer constitutes a binding contract between Berian and Nike. Or, if Nike’s match did not create a binding contract, then the Court enforce Nike’s terms presented in the February long-form contract. Also, Nike wants Berian immediately enjoined from wearing NB during the 2016 Contract period.”
So who is in the right? Well it’s hard to say because Nike doesn’t include the actual language of the original contract between itself and Berian in the deal. (Monday Update: An athlete emailed us with an excerpt from a standard Nike contract. We have included it below and will reach out to George for an update.) Were the rights of the first refusal/matching explicitly stated? George told us that he’d need to see the actual language of the contract to offer an opinion. “I need to see what the contract language states. Just because Nike has the right to match NB’s terms does not mean that the contract automatically began….I am surprised that the contract has not been attached to the complaint or filed as a sealed document. The Court will certainly want to see it before making a ruling on a preliminary injunction.”
As we were getting ready to publish this article, we became aware that Kevin Liao of The Sporting News emailed us to let us know he has an article out on the situation: Boris Berian speaks after being served lawsuit by Nike.
In that article, Berian claims that Nike didn’t match the terms of the New Balance contract as shown by this excerpt:
“No, I followed everything,” Berian said when asked if he felt he did anything wrong. “When the time came for a new contract this year, Nike didn’t match the New Balance contract.”
In the lawsuit, Nike claims Berian breached his contract by not accepting their offer.
“Nike values its relationships with athletes and we expect them to honor their contractual commitments,” Nike spokesman Charlie Brooks said in a statement. “Where necessary we’ll take steps to protect our rights.”
Obviously, Nike and Berian are at odds in this situation. When Berian told Liao that Nike didn’t match the New Balance contract, is he referring to the January offer (which Nike claims it did match) or the February offer? And did Nike offer to match all terms of the January contract or just the value of it? For example, it’s possible New Balance’s contract offer said something like “$75,000 per year plus coaching by Carlos Handler (Berian’s current coach).” Perhaps Nike responded by agreeing to the $75,000 number but demanding that Berian work with a Nike-affiliated coach (Handler is affiliated with New Balance). We can’t say for sure whether Berian or Nike is in the wrong, but that’s one scenario where Berian might feel Nike didn’t match the offer and Nike might feel that it did (by matching the dollar value and providing him with a coach).
The full lawsuit is below. Talk about the lawsuit on our world famous fan forum / messageboard: MB: Holy cow!! Nike just served Boris Berian at the Hoka One One Meet – They are suing him for breach of contract.
Nike Contract Excerpt on “Right of First Dealing & Refusal”:
“RIGHT OF FIRST DEALING & REFUSAL. Until sixty (60) days prior to the expiration of this Contract, ATHLETE shall not engage in negotiations with any third-party regarding ATHLETE’s endorsement of Products of such third-party. During the Contract Period and for a 180-day period thereafter, NIKE shall have a right of first refusal with regard to any bona fide third-party offer received by ATHLETE and which ATHLETE desires to accept. ATHLETE shall submit in writing to NIKE (on the third-party’s letterhead) the specific terms of any such offer. NIKE shall have ten (10) business days from the date of its receipt of such third-party offer to notify ATHLETE in writing if it will enter into a new contract with ATHLETE on terms no less favorable to ATHLETE than the material, measurable and matchable terms of such third-party offer.”