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Source: Josh Hamilton could be gone from Angels in matter of days

According to an industry source, embattled outfielder Josh Hamilton could be gone from the Los Angeles Angels 'in a matter of days,' as the team tries to remove him following his self-reported relapse in February.

Angels outfielder Josh Hamilton, who in February admitted to relapsing and abusing drugs and alcohol, may never play for Los Angeles again and could be gone from the team in a matter of days, according to an industry source.

Hamilton, 33, is currently in a baseball purgatory of sorts. The 2010 American League MVP is on the disabled list while recovering from offseason shoulder surgery but would like to resume baseball activities soon. The Angels, however, do not seem to want Hamilton back, and their aversion has nothing to do with his healing shoulder.

Team officials, including owner Arte Moreno and general manager Jerry DiPoto, appear displeased by Hamilton’s self-reported relapse in February and a subsequent decision by an arbitrator that Major League Baseball cannot punish Hamilton. The Angels might also be skeptical that Hamilton, who underperformed at the plate during the 2013 and '14 seasons, will regain the hitting stroke that made him one of the most feared hitters in baseball from '08 to '12.

Hamilton, however, has two significant legal advantages over the Angels in his contract dispute: Contracts in baseball are guaranteed, and any discipline for Hamilton’s relapse falls under the Joint Drug Agreement.

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Hamilton’s contract is not a public document, but like other players, he must satisfy the terms of the Uniform Player Contract (“UPC”). Players sign the UPC as part of their employment with big league teams, and the UPC is incorporated as an attachment into the collective bargaining agreement negotiated by owners and players.

Moreno has implied that there is unique language in Hamilton’s contract that bars Hamilton from drug and alcohol use. Most teams attach what are known as "conversion to non-guaranteed contract" provisions as riders to their player contracts. These provisions vary by club but they are often used in long-term contracts. At least in theory, these provisions can convert guaranteed money into non-guaranteed money when players engage in certain types of misconduct--including illegal drug use. But an industry source tells that Hamilton’s contract does not contain any language that would make it easier for the Angels to void the contract.

At first glance, the Uniform Player Contract (“UPC”) supplies language that might enable the Angels to void Hamilton’s contract. Upon closer inspection, however, this language does not carry the kind of impact its plain reading would indicate.

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Some of the relevant language can be found in the UPC’s Loyalty Clause:


3.(a) The Player agrees to perform his services hereunder diligently and faithfully, to keep himself in first-class physical condition and to obey the Club’s training rules, and pledges himself to the American public and to the Club to conform to high standards of personal conduct, fair play and good sportsmanship.

The Angels, it would seem, could persuasively argue that Hamilton’s relapse constitutes a failure to render services “diligently and faithfully,” as well as a failure to “keep himself in first-class condition and to obey the Club’s training rules.” A drug and alcohol relapse, moreover, could be viewed as evidence that Hamilton breached his contractual duty to “pledge himself to the American public and to the Club to confirm to the high standards of personal conduct ... and good sportsmanship.”

The UPC’s termination section would also seem to authorize the Angels to cut ties with Hamilton:

By Club

7.(b) The Club may terminate this contract upon written notice to the Player (but only after requesting and obtaining waivers of this contract from all other Major League Clubs) if the Player shall at any time:

(1) fail, refuse or neglect to conform his personal conduct to the standards of good citizenship and good sportsmanship or to keep himself in first-class physical condition or to obey the Club’s training rules; or

(2) fail, in the opinion of the Club’s management, to exhibit sufficient skill or competitive ability to qualify or continue as a member of the Club’s team; or

(3) fail, refuse or neglect to render his services hereunder or in any other manner materially breach this contract.

From a strictly literal—and not legal—perspective, Hamilton’s drug relapse would indicate a failure to “keep himself in first-class physical condition” since any sensible definition of “first-class physical condition” would be one that doesn’t include illegal drug use. Similarly, it wouldn’t take a stretch of the English language to conclude that a relapse constitutes a failure to “exhibit competitive ability to qualify or continue as a member of the Club’s team.”

None of this language, however, will authorize the Angels to terminate Hamilton’s contract. Through the grievance process, the Major League Baseball Players’ Association (MLBPA) has aggressively prevented teams from attempting to use the aforementioned language to terminate guaranteed player contracts. The MLBPA is most concerned with preventing the creation of a precedent whereby teams can readily convert guaranteed contracts into non-guaranteed contracts.

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Given the strength of the MLBPA, the history of teams voiding players’ contracts on the grounds of a UPC violation is virtually non-existent. The Brewers, for instance, might plausibly contend that Ryan Braun violated the aforementioned UPC language through his involvement in the Biogenesis scandal. Milwaukee, however, has not made any attempt to void his lucrative contract since the team knows any attempt would fail.

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When teams have tried to void deals, they have not succeeded. The most telling example occurred in 1987, when the Padres voided the contract of pitcher LaMarr Hoyt. At the time, Hoyt was serving a one-year prison sentence for drug possession. San Diego reasoned that Hoyt’s misconduct and subsequent incarceration constituted an obvious violation of the good citizenship and good sportsmanship clause, among other duties outlined in his contract. The MLBPA objected, reasoning that the punishment was excessive and unreasonable. The MLPBA filed a grievance, which was heard by George Nicolau, a neutral arbitrator. To the surprise of many, Nicolau agreed with the MLBPA and restored Hoyt’s contract.

Teams have only escaped contractual obligations when they agree to lucrative buyouts. In 2005, for example, the Rockies cut ties with pitcher Denny Neagle, who had been criminally charged with soliciting a prostitute, by paying him more than 80% of the remainder of his $19.5 million contract. That same year, the Orioles agreed to pay pitcher Sidney Ponson a significant portion of $11.2 million owed to him after he encountered various legal difficulties.

It is plausible that the Angels and Hamilton could agree to a buyout, but the Angels would likely have to pay him the vast majority of the $83 million he is still owed. One agent tells he believes the Angels would likely have to pay around 90 percent of the remainder of Hamilton's contract (meaning $75 million) in a buyout. The MLPBA, sensitive to precedent, would only assent to a buyout if Hamilton were paid nearly in full. If Hamilton is bought out, he would be free to sign with any other ball club. For that reason, the Angels would clearly prefer to trade Hamilton and his contract instead.

Income tax considerations might also play a motivating factor for Hamilton and the Angels to part ways. Robert Raiola, senior manager in the Sports & Entertainment Group of the accounting firm O'Connor Davies, LLP, tells that Hamilton has a clear financial incentive to join a team that isn’t based in California. “By moving out of California sooner,” Raiola observes, “Hamilton would escape the state’s high income tax—the highest in the nation at 13.3%—and thereby recoup some of the money he’d lose if he takes less than he wants from the team in a smaller buyout.” Raiola adds that published reports of Hamilton, thought to be a Texas resident, placing his Newport, Calif., home on the market for $16.5 million signals that "Hamilton already seems to be taking steps to relocate out of state."

It is also worth noting that Hamilton has retained prominent sports attorney Jay Reisinger, a partner at Farrell & Reisinger LLC in Pittsburgh. Reisinger successfully advocated on behalf of Hamilton in the recent arbitration over whether Hamilton’s drug relapse could warrant a punishment from MLB and has a long track record of success in representing ballplayers in legal disputes and arbitrations, such as when Reisinger guided former Yankees pitcher Andy Pettitte through the Congressional investigation into Roger Clemens and Brian McNamee. Reisinger will surely adopt a aggressive approach in defending Hamilton from contract termination.

Another key legal argument in Hamilton’s favor is that the collectively bargained Joint Drug Treatment and Prevention Program (“Program”)—and not his player contract—covers possible sanctions for his relapse. Teams are barred from disciplining players for violating the Program. These points are apparent in the following Program excerpt:

7.M. Exclusive Discipline

All authority to discipline Players for violations of the Program shall repose with the Commissioner's Office. No Club may take any disciplinary or adverse action against a Player (including, but not limited to. a fine, suspension, or any adverse action pursuant to a Uniform Player’s Contract) because of a Player’s violation of the Program. Nothing in this Section 7.M is intended to address whether: (i) a Club may take adverse action in response to a Player’s failure to render his services due to a disability resulting directly from a physical injury or mental condition arising from his violation of the Program; or (ii) a Club may withhold salary from a Player for any period he is unavailable because of legal proceedings or incarceration arising from his violation of the Program.

A neutral arbitrator, Roberta Golick, heard competing arguments by Hamilton and Major League Baseball over whether Hamilton should be punished for his relapse. Reisinger proved that Hamilton’s conduct did not constitute a violation of the Program.

The Angels could highlight how the Program mentions that, “a Club may take adverse action in response to a Player’s failure to render his services due to a disability resulting directly from a physical injury or mental condition arising from his violation of the Program.” This language, however, seems inapplicable to Hamilton’s situation. Remember, Golick found that he did not violate the Program. Hamilton is also currently sidelined for a shoulder injury that appears unrelated to any drug or alcohol issues.

If anything, the Angels—rather than Hamilton—might have run afoul of the Program by issuing remarkably harsh and unsympathetic statements following the arbitrator’s award. For instance, a spokesman on behalf of Angels president John Carpino bluntly remarked, “It defies logic that Josh's reported behavior is not a violation of his drug program.” Note that the Program bars teams from issuing “public statements which undermine the integrity and/or credibility of the Program.” While Carpino’s statement and others like it likely will not lead to any consequences for the Angels, it’s a reminder that Hamilton’s conduct is not the only one at issue in this controversy.

But while Hamilton has the law on his side when it comes to his contract, he and the Angels have likely crossed a point of no return in their relationship.

Michael McCann is a Massachusetts attorney and the founding director of the Sports and Entertainment Law Institute at the University of New Hampshire School of Law. He is also the distinguished visiting Hall of Fame Professor of Law at Mississippi College School of Law.