Answering the 10 Biggest Legal Questions Surrounding the NBA Amid Coronavirus

The ongoing coronavirus pandemic raises a number of legal and business issues for the NBA and the NBPA.
Author:
Publish date:

The ongoing coronavirus pandemic raises a number of legal and business issues for the NBA and the National Basketball Players Association. I’ve received many questions about how the league, players and other stakeholders should navigate through this complex situation. Below I answer 10 of those questions.

1. The CDC recommends an eight-week suspension of gatherings—what does that mean for the NBA?

The CDC recommendation is significant. It urges that until mid-May, in-person events that consist of 50 people or more be canceled or suspended. The underlying logic is that closures of get-togethers will reduce opportunities for the spread of the infection.

Although transmission of COVID-19 remains an emerging topic, one way it is spread is by air and in droplets. This means that breathing in the air while around someone with COVID-19 puts you at risk, especially if the infected person sneezes or coughs. The recommendation doesn’t supersede directives issued by local public health officials and it doesn’t apply to the day-to-day operation of schools and businesses. However, it governs sports and entertainment events and similar gatherings.

The CDC’s recommendation is less restrictive than the guidance issued late Monday by President Donald Trump. The President encourages people to avoid gatherings of more than 10 people.

It’s worth stressing a key caveat: neither the CDC recommendation nor the President’s guidance is binding. They don’t obligate event organizers to make any changes. However, for at least a few reasons, expect many event organizers—including the NBA—to heed the warnings.

First, these recommendations follow advice shared by infectious disease experts. They stress that social distancing and related measures are essential to “flattening the curve.” Reducing in-person interactions not only protects us individually but makes us less likely to spread the virus.

Second, many states and municipalities have already banned group gatherings. They have also forbidden bar seating and the serving of food at restaurants (activities that commonly occur within NBA arenas). Each day brings new restrictions, closures and shutdowns. What the CDC merely recommends other certain government agencies already compel or will soon compel.

Third, a sports organizer that rejects these recommendations and proceeds with games would become more vulnerable to allegations of negligence should the gathering lead to the spread of the virus. What counts as “reasonable” conduct with COVD-19 is further clarified each day. An organizer that sees itself as more knowledgeable than public health experts might later regret it.

2. Should we be hearing about specific NBA players testing positive—doesn’t that violate HIPAA?

The short answer: journalists reporting the names of NBA players who tested positive for COVID-19 are not violating the Health Insurance Portability and Accountability Act. However, the person(s) who tipped them off may have violated HIPAA.

HIPAA is a federal law that imposes a bevy of requirements on holders of medical records. HIPAA only applies to “covered entities,” a term that includes physicians, chiropractors, dentists, nurse practitioners, pharmacists, nursing home aides, insurance officials, human resource staff and other professionals who are involved in the delivery and management of patient care. Generally speaking, HIPAA makes it illegal for covered entities to disclose patient information without patient consent. In contrast, journalists, reporters, broadcasters and the media companies that employ them are not classified as covered entities under HIPAA.

It’s possible, though unlikely, that journalists learned of a player test through a team doctor. In that scenario, the doctor would have run afoul of HIPAA assuming there was no player consent. He or she could face other professional repercussions, too, including a suspension of their license to practice medicine. Alternatively, a team official might have leaked the information. The HIPAA impact in that latter scenario would be uncertain. In 2002, the U.S. Department of Health and Human Services (DHS)—the federal agency that enforces HIPAA—issued an opinion expressing that HIPAA likely does not contemplate pro sports teams and their employees as “covered entities.” Lastly, the player himself, his teammates or his agent may have shared the test information with his consent. Of course, we’ll never know who tipped off the journalists. The tip was made on the promise of confidentiality. No credible journalist would betray his or her sources.

HIPAA is also unlikely to have legal impact given that it does not contain a so-called “private right of action.” This means that a person whose medical records are shared without authorization can’t file a lawsuit under HIPAA. As noted above, DHS instead enforces HIPAA and can issue fines.

If a player wished to sue for unauthorized disclosure of medical records, he or she could sue for invasion of privacy. Don’t expect that to happen here. Very few pro athletes have sued along those lines. It has only happened in exceptional circumstances. For example, NFL linebacker Jason Pierre-Paul sued ESPN and reporter Adam Schefter for invasion of privacy after Schefter tweeted a photo of a medical chart showing that Pierre-Paul’s right index finger had been amputated due to a fireworks accident; the lawsuit was eventually settled out of court.

3. How can the NBA realistically expect to resume play when there will be an ongoing risk of infection?

This is the multi-billion-dollar question for the NBA and all sports leagues. Even if social distancing, self-quarantining and other infection-control measures are successfully implemented, the virus isn’t going to miraculously disappear from North America. The risk of infection might drop during the summer months, just like the flu drops during that time, but that is a complete unknown. Odds are, COVID-19 will continue to be passed from person-to-person. Hopefully transmission will happen less frequently than would occur without control measures. But it’s not going away.

This is a concern heightened by a new report that COVID-19 is spread more easily by infected, though asymptomatic, people than was previously assumed. In other words, people who seem healthy and who think they are healthy are unknowingly infecting others. This makes containment much more difficult.

According to ESPN, the NBA views a “best-case” scenario of a return to action as occurring in mid-to-late June. Under that scenario, games would likely be played without live audiences. As I detail in another story, the logistics of securing arena space and other hurdles could prove complex and costly.

Even assuming logistics are addressable, the games would be played with an ongoing risk that an ostensibly healthy player, coach or referee has COVID-19 and unknowingly spreads it to teammates, opponents, coaches, referees, not to mention his family and friends. To state the obvious, an NBA game can’t be played with social distancing measures. The same is true of a pick-up game or team practice, which the NBA has also banned for the time being. Basketball is a sport that inherently involves contact and close proximity.

With those points in mind, what would happen if the league resumed play and then a player, coach or referee were to test positive for COVID-19? Would the NBA shut down again?

This is a question that isn’t going away anytime soon. It is a concern that will be present in June as well as in the fall and next spring. Medical experts suggest that a vaccine for COVID-19 will take at least a year before one is created, FDA-approved and made commercially available—and that assumes a typically cumbersome regulatory process is placed at warp speed. The efficacy of a potential vaccine is also unknown, especially if multiple strains of the virus emerge. To put that in perspective, according to the CDC, the flu vaccine only works about 40% to 60% of the time. Unfortunately, COVID-19 will probably be a part of lives going forward.

4. So, you’re saying the NBA should remain shut down until a reliable vaccine is available?

No, I’m not saying that.

Much will depend on the availability of test kits. In an ideal arrangement in the unideal world of COVID-19, the NBA could test every player, coach, referee and other person who enters an arena to participate in a practice or play in a game (the same would be true if the NBA secures smaller venues for games given that, for an indefinite period, there likely would be no live attendance for games). The results of those tests would need to be made available not long thereafter.

This ideal arrangement isn’t currently possible. There are many reports of test kits being unavailable. Production by private and public sector entities should hopefully mollify that problem but it appears there will be a test kit shortage for a while. As a separate hurdle, test results take a day or two. However, labs are reportedly developing COVID-19 tests that would make results known within several hours.

If testing kits were available for each practice and game, and if the results could be made available in a matter of hours, games could presumably resume without live audiences. Again, these conditions aren’t currently in place. It is unknown how many months will be needed before they exist.

5. Won’t NBA players have to agree to be tested along the lines you suggest?

Yes, the NBPA would need to consent. There is no collectively bargained testing policy for COVID-19. Under labor law, employers and unionized employees generally must agree to workplace policies impacting wages, hours and other working conditions. Medical tests fall under working conditions.

However, I can’t imagine there would be many objections. By all accounts, the COVID-19 test is simple and painless. It is just like a flu test: a swab is taken from the person’s nasal cavity. Also, players, just like the rest of us, presumably would rather know than not know. They could then receive treatment and take steps to reduce the risk of infecting others.

6. Eventually, won’t the NBA need live audiences?

Yes, if the current NBA economic model is expected to continue.

The NBA and its 30 franchises generate significant revenue through live audiences. According to Statista, gate receipts account for about 22% of total revenue in the NBA. Gate receipts impact basketball related income (BRI), which includes other forms of revenue as well. The NBA and the NBPA have negotiated an even split of BRI. If BRI declines, teams’ salary caps would decline and future player contracts would become less lucrative.

Of course, the calculus is more complicated than solely projecting a percentage decline in gate receipts.

For instance, if live attendance falls to 0, many of the roughly 17,800 people who on average attend each NBA game would watch it on TV instead. This would lead to increased TV revenue. On the flip side, teams would lose revenue from lack of sale of concessions and parking, a loss that would be felt acutely by teams that own their arena. Also, the value of sponsorships, which are pegged in part to people in arenas seeing signage, would drop. To make matters more complicated and as explained last week, sponsors and broadcasters could potentially try to invoke force majeure clauses in their contracts with the league and its franchises as a means of withholding pay.

The bottom line: NBA teams would lose a substantial amount of revenue if games were played without spectators. The value of NBA franchises, which according to Forbes are worth on average $1.9 billion, would likely fall somewhat as a result. Players, in turn, would see their future contract values drop. They would still be paid well. According to Basketball Reference, the average NBA player salary is $6.9 million and the median salary is $2.9 million. Even a 25% drop in those numbers would place NBA players among the highest income earners in the United States and Canada.

7. You mention players, but what about others who work in NBA arenas?

In previous stories I detail how the postponement or cancelation of NBA games, as well as the prospect of games without live audiences, will lead to a loss of wages for dance team members, security officers, janitors, ushers, box office staff, lightening and production technicians, cashiers, cooks, concession stand workers, parking garage attendants and other part-time, seasonal workers who contribute to NBA game productions. Part-time workers and independent contractors are among the most vulnerable workers to pandemic-related economic disruptions. They often lack health care benefits and their eligibility for unemployment benefits varies by state.

Thankfully, some owners and players have offered to pay these workers while games are missed. However, if the pandemic continues for many months and if games resume with no live audiences for the foreseeable future, these workers could face long-term displacement.

8. If the NBA resumes play and if a player contracts the virus, could he sue the player who infected him or the team that employs him?

Yes, he could sue the player and the player’s team. Throw in the league, the team doctor and the team trainer as defendants, too. He can sue everyone. But for several reasons the case would almost certainly fail.

First, it is likely impossible to prove, with clinical certainty, the source of a COVID-19 infection. By all accounts, we can get it through the air and through touching a surface with it and then touching our face. Good luck proving in court how contraction occurred.

Second, courts will be wary of opening the door to lawsuits over transmission of COVID-19. There’s a reason why you haven’t heard of lawsuits brought by people who believe they caught the cold or flu from others. Inadvertent transmission of a virus is an unfortunate occurrence but is not an illegal act. Short of a person intentionally trying to infect another person, or a person who knew he or she was infected and was then very reckless in their conduct, the law probably won’t attempt to hold infectors accountable. In many cases, people who infect others don’t know they are sick.

Third, so long as teams adopt best practices for monitoring and treating COVID-19, they will probably be insulated from claims that they were negligent in their risk assessment of players and coaches’ health. Teams are not expected to be perfect in their health care. They must only be reasonable. Also, teams, like the rest of us, are learning more about COVID-19 each day. What is expected of teams today will be less than what is expected in the future.

Fourth, even if the first three reasons didn’t exist, few players would likely sue over contraction of COVID-19. Thankfully the vast majority of people who get it recover. An NBA player who is infected stands an especially good chance of emerging fine: he is young and is in superb condition. That’s not to say he doesn’t pose a risk to others, including his parents and grandparents, but he would likely recover. Probably the last thing on his mind would be to bring a lawsuit.

9. I bought NBA game tickets. Can I get my money back?

The short answer is that if you bought your tickets from an NBA team through the league’s partnership with Ticketmaster, you will get your money back or receive a credit if the game is ultimately canceled or if it is played without spectators. As of now, no games have been canceled. They have been postponed indefinitely. The league hopes the pandemic is under control by the summer and games could be played again by the end of June, most likely without live audiences. In that scenario your money would be refunded or you would be offered a credit since you would not be allowed in the arena. Other reputable sellers and resellers of tickets will adopt the same policy.

If you bought your tickets from a friend or obtained them through some informal arrangement, the situation is less clear. You should check to see if you signed a contract or if there are emails that that might indicate your rights. In addition, state consumer protection laws might offer you protection. The bottom line is that if you paid for a ticket for a canceled game or a game that doesn’t allow you and other fans to enter, you should get your money back or receive equivalent compensation, such as a credit.

10. Will the NBA invoke the force majeure clause in Article XXXIX of the CBA?

For now, no. The league clearly hopes the 2019–20 season can be salvaged. To tell players that they will lose pay would draw complaints. The NBPA would also depict the move as insensitively timed given the difficult circumstances facing the country.

In the event of a qualifying cataclysmic event, the force majeure clause allows the NBA to terminate the CBA and reduce franchises’ contractual obligations to players. Chemical warfare, biological warfare, terrorism, earthquakes, floods, drought and epidemic are among the listed events that qualify. Given that the World Health Organization now classifies COVID-19 as a pandemic and given that President Trump has declared a national emergency to address the virus, the league could presumably invoke the clause.

If force majeure is successfully invoked by the league, players’ pay would be reduced by 1/92.6th for each lost game. This unusual denominator reflects the following math: a projection of 5 exhibition games + 82 regular season games + 5.6 playoff games during each season. Keep in mind, teams have already played between 69 and 72 exhibition and regular season games, meaning most of the 2019–20 season is already over. Still, players could lose a significant amount of money—indeed, around a fifth of their wages this year could be lost (assuming the rest of the season were canceled).

The NBA has 60 days from the event’s occurrence to notify the NBPA of invoking Article XXXIX. As an epidemic, COVID-19 does not have a “date” per se. It is an ongoing problem. Article XXXIX expresses that such an event occurs when the event (1) makes it impossible for the NBA to perform its obligations under the CBA; (2) frustrates the underlying purpose of the CBA; or (3) makes it economically impracticable for the NBA to perform its obligations under the CBA. The NBPA might argue that a sensible date for the event is March 12, when the league suspended operations. If interpretation correct, it would give the NBA until the second week of May to notify the NBPA.

The NBA could take on some risk in terminating the CBA. The move would likely upset the NBPA, who could then consider the possibility of filing antitrust litigation against the league. Various salary rules, including salary caps and maximum player salaries, are exempt from antitrust litigation because they have been collectively bargained. If those restrictions lost such protection, players could contemplate litigation.

Is antitrust litigation likely to happen? No. The terms of an expired CBA continue in effect so long as there is good faith bargaining by both sides. Both the NBA and NBPA would almost certainly engage in such bargaining. To that point, Article XXXIX expressly makes clear that for 60 days following the league giving notice, the league and NBPA “shall engage in good faith negotiations for the purpose of entering into a successor agreement.” Also, during those 60 days, the league would be prohibited from locking out players and the player would be prohibited from striking. In other words, for 60 days after Article XXXIX is invoked the two sides would work on a new deal. Given that they enjoy a positive working relationship, the NBA and NBPA would presumably reach a new deal.

While it’s unlikely the league would invoke Article XXXIX anytime soon, some players, as Chris Mannix reports, are concerned. These concerns appear to be heightened by the NBA permitting players to leave their markets. Mannix cites Brooklyn Nets guard Spencer Dinwiddie who tweeted, “if they ain’t controlling where we’re at, they may stop ‘controlling’ those checks too.” Dinwiddie makes a sensible observation, but players probably don’t need to worry about lost pay in the near future.

A more likely scenario in the event the rest of the season is canceled would be for the NBA and NBPA to negotiate the impact of that cancelation on player pay. Again, the two sides work well together. Don’t expect that to change due to COVID-19.

Michael McCann is SI’s Legal Analyst. He is also an attorney and the Director of the Sports and Entertainment Law Institute at the University of New Hampshire Franklin Pierce School of Law.