North American Soccer League vs. U.S. Soccer Federation legal battle escalates
The legal skirmishes between the North American Soccer League and the U.S. Soccer Federation show no signs of abating.
On Feb. 1, the NASL sent a demand letter to the U.S. Soccer Federation, asking for all records and materials related to what it deems to be possible violations of the New York Not-for-Profit Law (N-PCL).
The letter, dated Feb. 1, a copy of which was obtained by ESPN FC, was sent via certified mail to the USSF's general counsel, Lydia Wahlke, by the NASL's counsel, Jeffrey Kessler. The NASL is entitled to view the records so long as it is a "member of record" of the USSF for at least six months prior to the date of the letter.
"NASL is informed and believes that the members of the Board of Directors of the USSF have engaged in certain conduct in violation of the New York Not-for-Profit Corporation Law and in breach of the fiduciary duties," the letter reads.
The letter asks that the USSF turn over all minutes and materials from meetings of the Board of Directors as well as any relevant committees relating to several decisions made by the USSF.
These topics include the latest renewal or continuation of the commercial rights agreement between the USSF and Soccer United Marketing (which is the marketing arm of MLS); the September, 2017 decision to revoke the NASL's status as a Division II league for the 2018 season; and the Jan. 2018 decision to sanction the United Soccer League as a Division II league for 2018.
The letter also asks for USSF's financial statements for the fiscal year ended March 31, 2017, which have yet to be posted on the USSF's website.
The USSF responded via email on Feb. 5, directing the NASL to the Federation website to view available financial records and meeting minutes. The USSF noted that the financial statements for the 2017 fiscal year are still being completed by its independent auditors, BDO.
It's worth noting that the meeting minutes do not include off-the-record discussions that took place while the meeting was in "executive session."
As for the materials the NASL asked for beyond the minutes and financial statements, the USSF stated that the requests "fall outside of the scope of U.S. Soccer's obligations" pursuant to the N-PCL.
The USSF also stated in its letter that, "NASL's request for additional 'materials' appears overly broad in scope and raises concerns that NASL is attempting to use [N-PCL] to attempt to circumvent the limits on discovery in the pending litigation that your firm commenced on behalf of the NASL against U.S. Soccer."
The letters are the latest chapter in the ongoing legal dispute between the NASL and the USSF. In early September, the USSF denied the NASL's application to obtain a Division II sanction for 2018. The NASL responded on Sept. 19 by filing an antitrust lawsuit against the USSF, alleging that the Federation used the Division Standards as a way of driving the NASL out of business, while allowing MLS to maintain its monopoly status.
The NASL sought an injunction in U.S. District Court to reinstate its Division II status, but that request was denied. That decision is currently under appeal.
Jeff Carlisle covers MLS and the U.S. national team for ESPN FC. Follow him on Twitter @JeffreyCarlisle.