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I have discovered that there is no shortage of interesting, sometimes humorous and occasionally outright quirky legal disputes that have a golf connection. Please enjoy

I also invite you to join the Golf Dispute Resolution Linked In group, which has more than 2000 members.

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Please don’t hesitate to share ideas for either the blog or the Linked In group.

By way of background, I am an attorney who serves as general counsel to a financial services company.  I also frequently serve as a mediator and arbitrator. And, of course,  I enjoy golf, most often at the Yale Golf Course. You can learn more about my experience here.

Now, for the required disclaimer, so I can remain in the good graces of the legal ethics powers-that-be:  This website, which may constitute Attorney Advertising in some jurisdictions, is for informational purposes only and does not constitute legal advice.

Best,

Rob Harris
rharris@golfdisputeresolution.com
914-482-2448

 

 

By: Rob Harris

Fans of the NCIS TV show are not likely to see an episode about the saga of Brian Farkas.

A recent opinion from the Ninth Circuit Court of Appeals describes Mr. Farkas’ ordeal with naval investigators as follows:

Farkas was a golf instructor at the naval base in Ventura County, California, when he discovered that the pro shop’s cashier was skimming cash from the register. Farkas blew the whistle on the alleged theft only to find himself the target of a criminal investigation into “a budgetary irregularity concerning golf lesson revenue.” Base administration placed Farkas on leave, and a Naval Criminal Investigative Services (“NCIS”) detective investigated the theft and interviewed Farkas on the base.

Although Farkas was ultimately cleared of wrongdoing, reinstated, and given back pay, he commenced [an] action to redress the severe emotional distress he claims he suffered from the ordeal. He alleges that base administrators retaliated against him for whistleblowing and violated his due-process rights by placing him on leave without notice or an opportunity to be heard. He also alleges that the NCIS detective unconstitutionally seized him by directing him to place his keys, wallet, and loose change in a lockbox during the interview.

Alas, Mr. Farkas was deemed to be without a judicial remedy. The court’s analysis of arcane statutory law can be found here.

 

By: Rob Harris

Our previous post on the Securities and Exchange Commission’s complaint against Phil Mickelson touched on Phil’s good fortune in a 2014 federal court ruling that made it more difficult for the SEC to bring insider trading charges.

Joe Nocera’s weekend column in the New York Times–entitled “In the Clear, Phil Mickelson Can Thank an Insider Trading Ruling”–provides great insight to the 2014 decision, and how it impacted the disposition of the case against Phil. Nocera also posits that, “for Mickelson, this too shall pass — and probably pretty quickly,” although “given the set of facts laid out by the government, it’s a little hard to believe that he didn’t know what he was doing.”

The PGA Tour’s silence also is noteworthy. One has to wonder whether this would be the case if the defendant were a player without Phil’s stature.

By: Rob Harris

It’s never a good day when a federal complaint is filed and your name follows the words “Securities and Exchange Commission against.” Today, Philip A. Mickelson found himself on the wrong side of those words, and no matter how Phil spins this 64 degree legal wedge, he likely dodged bigger legal issues by virtue of a 2014 court decision that gutted insider trading law as previously known.

That’s probably what SEC Enforcement Director Andrew Ceresney had in mind when, in commenting on why Phil was not charged with insider trading, said that charges have to be justified “based upon the evidence and the law.”

As far as the facts are concerned, the SEC seemed to be sitting pretty. Here’s what the SEC Complaint says about Phil:

3. In July 2012, [Billy] Walters called professional golfer Philip A. Mickelson. Mickelson had placed bets with Walters both before and after July 2012 and owed Walters money at the time of the telephone call. At a time when Walters was in possession of material nonpublic information regarding Dean Foods, Walters communicated with Mickelson and urged Mickelson to trade in Dean Foods stock, which Mickelson did the next trading day in three brokerage accounts he controlled. About one week later, Dean Foods’s stock price jumped 40% on the announcements of the WhiteWave spin-off and strong second quarter (“Q2”) 2012 earnings, allowing Mickelson to profit by approximately $931,000….

8. … On one occasion, at a time when Walters was in possession of material nonpublic information regarding Dean Foods, Walters communicated with Mickelson, with whom he was friends, and urged Mickelson to trade in Dean Foods stock. Davis owed Walters money at the times he provided such information. Similarly, Mickelson owed Walters money at the time Walters urged him to trade…

51. …On Friday, July 27, Walters called Mickelson. The two exchanged text messages later that day, and again on July 28, 2012.

52. On Monday, July 30 and Tuesday, July 31, Mickelson bought, partially on margin, a total of 200,240 Dean Foods shares, a $2.4 million position, in three accounts he controlled. This position dwarfed the other holdings in the brokerage accounts, which collectively were valued at less than $250,000. Mickelson had not been a frequent trader and these were his first ever Dean Foods purchases.

53. When Dean Foods announced the WhiteWave spin-off and Q2 2012 earnings results after the close of market on August 7, 2012, its stock price increased 40% from a close of $12.42 per share on August 7, 2012 to close at $17.46 per share on August 8, 2012. This share price increase occurred on a trading volume more than five times greater than the prior day’s volume…

55. On August 8, Mickelson sold all the Dean Foods shares he had purchased on July 30 and July 31, realizing a total profit of approximately $931,000…

76. Walters’s tip to Mickelson was of value to Walters. Mickelson had placed bets with Walters prior to the tip, and Mickelson owed Walters money at the time of the Dean Foods trading. Mickelson repaid Walters in September 2012, in part with the proceeds of his trading.

These facts, if proven, would enable the SEC to get from tee-to-green easy enough.

As for the law, however, getting the insider trading ball into the hole would have been a more substantial challenge. That’s because in 2014, as the Wall Street Journal notes, a federal court decision “made it harder to bring charges against people who receive stock tips indirectly, such as Mr. Mickelson. The government would have to be able to prove that Mr. Mickelson knew that Mr. Walters had received the tip illegally and that his source had received a benefit in exchange for the information.”

So, unless Phil was going to admit that he knew his friend Billy Walters had obtained the tip illegally, the SEC was unlikely to convince a court that Phil was guilty of insider trading. Thus, they settled for calling him a “Relief Defendant” and recouped the money by way of a settlement agreement.

And, yes, it’s technically true for his spokesman to say, as Golf Digest notes, that “the SEC has filed a civil complaint against certain individuals, including an acquaintance of Phil’s, but that complaint does not assert that Phil Mickelson violated the securities law in any way,” and that “[o]n that point, Phil feels vindicated.” Vindicated? Lucky is probably a better word. Sort of like how one might feel when a topped tee shot bounces off a rake and into the cup.

 

By: Rob Harris

Louisiana’s Lakewood Golf Club, former long time home to the New Orleans Open (now, Zurich Classic), finds itself on the receiving end of a lawsuit filed by a former member, claiming that his civil rights were violated by the club’s creation of a hostile and abusive environment.

The member claims that the club’s starter shared with him racist comments about another Louisiana club that the starter recently had played. Having reported the incident to the club manager, the member was advised that the starter was ”sorry for what he said and he did not realize (the member) was black.”

The member filed a grievance with the club, seeking the firing of a “known racist.” As alleged, however, instead of firing the starter, the club terminated the plaintiff’s membership.

Additional information and a copy of the complaint can be found here.

By: Rob Harris

Over the years we have had the opportunity to discuss legal disputes arising between golf clubs and members regarding membership resignation rights and financial issues.

These disputes have gained prominence on the heels of the economic downturn of the late 2000′s and the decline in country club membership.

For those interested, Bloomberg has published an article discussing this issue, generally, and in the context of a lawsuit brought by members of Cape Cod’s New Seabury Country Club, owned by Carl Icahn.

By: Rob Harris

Illinois has a state statute that provides as follows:

(b) It is unlawful for a sexual predator or a child sex offender to knowingly be present in any public park building or on real property comprising any public park.

(c) It is unlawful for a sexual predator or a child sex offender to knowingly loiter on a public way within 500 feet of a public park building or real property comprising any public park. For the purposes of this subsection (c), the 500 feet distance shall be measured from the edge of the property comprising the public park building or the real property comprising the public park.

The Chicago Sun Times reports that the statute is under attack via a federal lawsuit claiming that it is unconstitutionally vague.

In particular, one of the five plaintiffs alleges that “he can’t play golf out of fear he’d be charged with a crime.” According to the complaint, he “seeks to play golf at park-district owned golf courses, but he is unsure of the meaning or extent of the restrictions imposed under [the statute]…  [He] is in fear of violating [the statute] and is thus afraid he could be arrested or charged with a crime if he attempts to play golf at park-district owned facilities, even when no children are present.”

 

 

 

By: Rob Harris

In an article titled “TV host goes on epic rant about airlines losing his clubs,” Golf Digest’s Joel Beall regales us with the annotated Twitter feed of Roland Martin, as he became increasingly upset at the prospect of having to play in a golf outing with George Lopez while his clubs were MIA courtesy of American Airlines.

Take heart, Mr. Martin. You’re not alone. The obsession known as golf has taken over many a soul. I share with you, Mr. Beal, Mr. Lopez, American Airlines and all others the unfortunate saga of Henry W. Jessup, about whom I first posted on Golf Dispute Resolution five years ago. The year was 1911 and Mr. Jessup, a Princeton alum and noted New York City attorney, found himself on Long Island, looking forward to a competitive round of golf.

Occurring before the advent of Twitter, we lack a contemporaneous record of the events as they unfolded, yet the court admirably captured the agony enveloping Mr. Jessup. I encourage you to read the following aloud, slowly, to fully grasp the despair surrounding Attorney Jessup:

“Plaintiff testified that on the 15th day of July, 1911, he broke his Tom Morris cleek, a club which had been shaped to suit his peculiar idiosyncrasies as a golf player, in the use of which club he had attained great proficiency; that, upon offering the broken club for shipment to defendant’s agent, he stated to the agent that he was in trouble; that his golf was spoiled and his club was broken; that he was on his vacation, was soon to play a match game, and he wanted the club shipped at once, so that it might be repaired and immediately returned. Defendant’s agent furnished plaintiff with twine and tags, and plaintiff tied a tag to the club in defendant’s office and wrote on the tag the address of the consignee. Defendant’s agent then accepted the club and forwarded it to New York the same day. It is conceded that reasonable time for a shipment to reach New York was one day. Upon delivering the club for shipment, plaintiff sent an order to the consignee to immediately repair and return it to him at Montrose. On the eighteenth of July, plaintiff went to the express company, and was told that the club had not arrived. He telegraphed to New York, and received an answer that it had not been delivered to the consignee. On the nineteenth of July, he communicated with the agent of the defendant and asked him to telegraph to New York, but the agent stated that he would make the report in the usual way. Plaintiff then wrote a letter setting forth the facts, and delivering it to the defendant’s agent, who attached a copy to his way-bill and statement in regard to the matter, and mailed it to the claim agent in New York. In the letter, plaintiff requested the immediate tracing and return of the cleek, and stated that the matter was urgent; that the use of the cleek was worth five dollars a day to him, and that he could not play without it.

“On July twenty-fifth, the club not having been delivered, and plaintiff having received no reply to his previous letter, he again wrote the defendant company urging them to forward his club, stating that it was a very expensive club to start with; that he had been offered very many times what he had paid for it; that, as a result of numerous experiments, he had finally reshafted the iron so as to make it one of the most powerful clubs he had ever seen, capable of driving 225 yards; that with it he was able to play the drive and second shot with the same club, which was an enormous advantage; that it could not be duplicated; and that on the following Saturday he had to play a match game, and could not do without this club. The letter was delivered by plaintiff’s representative to an authorized agent of the defendant, who replied: “We have not yet taken the matter up.” On July twenty-seventh, the plaintiff came to New York to look for his club, expending about twelve dollars and seventy-five cents for traveling expenses, and two dollars and twenty-five cents in the purchase of a suitable club, which turned out to be entirely unsatisfactory. The club shipped by plaintiff was finally found and delivered to the consignee on July twenty-ninth, fourteen days after its delivery to the defendant. Plaintiff now sues to recover, by reason of defendant’s negligence, the expenses necessarily incurred by him in searching for his club, and the value of the use of the club during the time he was deprived of such use.”

With no ability to Twitter-shame the offending delivery company, Attorney Jessup took to another channel–the proverbial lawsuit. Imagine next the sadness, the pain, the victimization felt by Attorney Jessup when, after convincing the court that he was wronged, the judge granted damages in the amount of $0.01.

So, Attorney Jessup plowed on. He appealed. And finally, justice was served. As the appellate court ruled:

“The trial judge, learned in all things but golf, has evidently misconceived this case and treated it in a spirit of levity not at all warranted by the facts.

“The judgment in favor of plaintiff for one cent and costs was not in accord with the evidence and did not properly or adequately represent plaintiff’s damage. He is entitled to recover moneys necessarily expended by him in searching for the property wrongfully detained, and the $2.25 expended in purchasing a new club, less its value after use, upon plaintiff’s return from his vacation … and, so far as the same may be established by competent proof, the reasonable value of the use of the club detained during the period of its wrongful detention.”

Even here, however, the overdue victory was muddled by the dissenting voice of Judge Lehman, who, in fairness, acknowledged that he didn’t understand the compulsion that is golf:

“Though, like the trial justice, I am not learned in golf, my acquaintance with golf players leaves no doubt in my mind but that the failure to deliver to the plaintiff a golf club to which he was attached substantially deprived him of the enjoyment of his vacation. It is, therefore, in no spirit of levity but rather in a spirit of sympathy that I have reached the conclusion that, while the award of one cent damages can in no degree compensate him for his loss of pleasure, it is not in any legal sense inadequate. The law gives to the plaintiff no balm for his outraged feelings but merely attempts to reimburse him for the value of the use of the club during the time when he was wrongfully deprived of its use. The rental value during the interim would ordinarily furnish a full and sufficient compensation, but I am informed by my associates learned in golf as in all other things that when a golfer has found a club peculiarly adapted to his own physique and style the value of the use of that club cannot be estimated by its rental value to some other person, for no real golfer could be content with golf clubs picked out at random.

“It would rather appear that such clubs have no rental value, and that if the plaintiff is limited to the recovery of the rental value then the trial justice correctly awarded merely nominal damages. It is true that the rental value is ordinarily adopted as the measure of damages merely because it does ordinarily furnish an adequate compensation for deprivation of use, but where the article is of a peculiar nature so that no substitute can be rented, and the deprivation of its use causes peculiar injury to the owner, he is entitled in a case where notice of its peculiar character and use was given to show its actual value to him. The plaintiff is entitled to the benefit of this rule, but on analysis of the injury suffered by the plaintiff and of the value of the club to him I find only injury to his feelings and value only as adding to his enjoyment, and these are elements of which our law, the creature of a materialistic age and race, takes no account.”

 

 

 

By: Rob Harris

Golf’s version of texting while driving has been working its way through the Ohio courts, resulting in an appellate court holding Roger Kreps liable for plowing his cart into a member of his threesome. As found by the court, Mr. Kreps perpetrated an unfortunate example of distracted driving when he ran over golfer Jeff Forman while preoccupied by his scorecard.

The court explained it this way:

“Forman, Kreps, and Dr. Charles Yourstowsky were golfing together at Tippecanoe Country Club. After hitting their first shots from the 15th tee, the three men drove two golf carts to their respective second shots. Forman and Yourstowsky were sharing a cart, while Kreps followed behind in his own cart.

“Forman stopped at his ball and exited his cart to play his second shot. Meanwhile, Kreps looked down at his scorecard but continued to operate his golf cart and hit Forman from behind; Forman went through the double panel plexiglass windshield of Kreps’ cart and landed on the floor of the cart with his legs up.”

So, what to do when faced with a lawsuit for the ensuing injuries?  Well, Mr. Kreps (or more likely his attorney) came up with a defense, arguing that Mr. Forman had assumed the risk of being run over by a golf cart. As the court explained, “Kreps argues that since the club’s customs are to use a cart, anyone playing a round of golf there is aware of the ordinary risks of using a cart.”

That’s right. Drawing parallels to the well-settled view that being hit by an errant shot is an inherent risk of playing golf, Mr. Kreps asserted that being on the receiving end of a negligently operated golf cart is a non-actionable event that unfortunately sometimes occurs. Thus, a golfer must bear the injuries caused by a misdirected EZ Go just as he would for a misdirected Titleist.

Unfortunately for Mr. Kreps, the court did not accept his argument. According to the court, “as the nonuse of a cart does not prevent a person from engaging in golf—while the nonuse of a ball or club would—it cannot be considered an inherent part of the game. As such, the risk of being injured by a golf cart does not become an ordinary and foreseeable risk.”

So, for all those intent on micromanaging their scorecards, please do so with the cart brake on.



By: Rob Harris

From Denver, comes this story about a recent, unpleasant (at least for one) interaction at the city’s Wellshire Golf Course:

“Prosecutors have filed a second-degree assault charge against a man accused of using a golf cart to run down and strike a fellow golfer at a Denver course.

“Richard Ponds, 57, is accused in the April 3 hit-and-run at Wellshire Golf Course.

“The alleged victim told police he got into a verbal argument with Ponds because Ponds was sitting in a cart in the middle of the course despite being done golfing, according to an arrest warrant.

“The victim told police Ponds then drove the cart ‘full speed’ at him. When he realized Ponds was not going to stop, the victim said he tried to dive out of the way but was too late. The affidavit says Ponds then kept on driving toward the course’s parking lot.”

Perhaps it’s time to implement a “walking only” policy.

 

By: Rob Harris

Anyone who ever had an interest in taking a look at a contract between a municipality and a third party manager of the public course can do so here. This contract, and a more recent amendment, are central to a class action complaint brought against the Town of Smithtown, New York and Michael Hebron, who for many years has managed the Smithtown Landing Municipal Golf Course.

Conjuring an image of an angry horde of golfers each seeking to recover from Caesar and his representative, the complaint alleges that Mr. Hebron is liable for “breach of contract, fraud, negligent misrepresentations, unjust enrichment, monies had and received, breach of a fiduciary duty, [and] breach of an implied warranty of good faith and fair dealing… resulting from his standard practice of charging Plaintiff and Class Plaintiffs for golf and cart rental services at rates in excess of the rates authorized and agreed upon by Hebron and Smithtown at the Smithtown Landing Municipal Golf Course…”

As for the Town, the complaint asserts that “Smithtown permitted and/or failed to prevent the Plaintiffs from being charged at rates in excess of the rates authorized and agreed upon by Defendants for the use of the Golf Course and for cart rentals.”

Additional coverage of this recently filed lawsuit can be found here.

 

 

 

 

 

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