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Indiana Court Issues Decision in Daniels v. FanDuel with Implications for Right of Publicity Law and Online Sports Betting

By Kenneth L. Doroshow, Andrew J. Thomas, and Andrew G. Sullivan

On October 24, in Daniels v. FanDuel, Inc., the Indiana Supreme Court ruled that uses of college athletes' names, likenesses, and statistical data in online fantasy sports contests are of "newsworthy value" under Indiana's right of publicity statute. The court's unanimous decision halts plaintiffs' bid to block fantasy sports platforms FanDuel and DraftKings from using this information without the players' permission. Daniels v. FanDuel, Inc., No. 18S-CQ-00134, 2018 WL 5275775 (Ind. Oct. 24, 2018).

The court's expansive reading of the newsworthiness exception to Indiana's right of publicity statute is likely to have an immediate impact on right-of-publicity jurisprudence nationally, given Indiana's status as a go-to venue for right-of-publicity claimants. The court's decision also hands a major victory to the online fantasy sports industry. This outcome—following on the US Supreme Court's recent decision to allow states to legalize sports betting in Murphy v. NCAA—sets the stage for further growth in the emerging online sports betting industry.

Background

Daily fantasy sports operators such as FanDuel and DraftKings allow fantasy league participants to compete for cash prizes by paying an entry fee and selecting from rosters of college and professional athletes, subject to a budget cap that prevents entrants from picking only the best players. The daily results from actual games determine the distribution of cash prizes among participants.

In May 2016, former Northern Illinois University football players Akeem Daniels and Cameron Stingily, and former Indiana University football player Nicholas Stoner, filed a class action lawsuit in the Southern District of Indiana against FanDuel and DraftKings based on the platforms' use of college athletes' names, images, and statistics. Plaintiffs' suit alleged violations of Indiana's right of publicity statute, which gives individuals the right to limit the use of their name and likeness for commercial purposes. Indiana Code Title 32. Property § 32-36-1-1. Indiana's statutory scheme—similar to those in many other states—makes an exception for personal information that has "newsworthy value" or is a "topic of general or public interest."

In September 2017, District Court Judge Tanya Walton Pratt granted defendants' motions to dismiss plaintiffs' suit, holding that Indiana's right of publicity statute's newsworthiness and public interest exceptions removed plaintiffs' claims from the statute's coverage. Daniels v. FanDuel, Inc., No. 1:16-cv-01230-TWP-DML, 2017 WL 4340329 (S.D. Ind. Sept. 29, 2017). Plaintiffs subsequently appealed this ruling to the Seventh Circuit.

At oral argument last February, a panel of the Seventh Circuit expressed concern that Indiana state courts had never interpreted the scope of the statutory exceptions that were the basis of the district court's dismissal. Instead, the most relevant authority available consisted of federal court opinions interpreting similar provisions in other states' right of publicity statutes. In its opinion published in March, the Seventh Circuit—noting the "absence of precedent from Indiana" and "the dearth of precedent from other states"—declined to interpret the "ambiguous" scope of the newsworthy and public interest exceptions to Indiana's right of publicity statute. Daniels v. FanDuel, Inc., 884 F.3d 672, 674 (7th Cir.).

Instead, the court certified the following question to the Indiana Supreme Court: "Whether online fantasy‐sports operators that condition entry on payment, and distribute cash prizes, need the consent of players whose names, pictures, and statistics are used in the contests, in advertising the contests, or both." Id. The Indiana Supreme Court considered this question at oral argument held last June.

The Indiana Supreme Court's Decision

On October 24, 2018, the Indiana Supreme Court ruled unanimously that online fantasy sports operators' use of players' names, images, and statistics for online fantasy contests falls under the newsworthiness exception to Indiana's right of publicity statute. 2018 WL 5275775, at *6. While the court reiterated that its decision is limited to the "narrow[]" question before it, the court's opinion sets forth an unmistakably broad interpretation of the newsworthiness exception to Indiana's right of publicity statute that likely will have ramifications well beyond the case at hand. Id. at *1.

First, the court squarely rejected plaintiffs' argument that the newsworthiness exception "does not apply in the context of commercial use." Id. at *3. The court also rejected the plaintiff's argument that the exception is available only to news broadcasters and media companies. Instead, the court looked to judicial usage of the term "newsworthy" prior to the Indiana statute's 1994 enactment, which defined the word "'in the most liberal and far reaching terms'" as encompassing "all types of factual, educational and historical data, or even entertainment and amusement, concerning interesting phases of human activity in general." Id. (citing Time, Inc. v. Sand Creek Partners, L.P., 825 F.Supp. 210, 212 (S.D. Ind. 1993) (quoting Rogers v. Grimaldi, 695 F.Supp. 112, 117 (S.D.N.Y. 1988))).

The court also noted that the Indiana legislature's carve-out for newsworthy content was an "obvious attempt to avoid constitutional issues with the statute," and that "a broad interpretation of the term 'newsworthy value'" would achieve this purpose by "avoid[ing] a First Amendment issue in parsing acceptable forms of speech." Id. at *5.

Based on the foregoing, the Indiana Supreme Court ultimately held that—just as players' names, images, and statistics are published in "in newspapers and websites across the nation"—this "information that is available to everyone" may also be used in conducting fantasy sports contests, whether such contests are paid or not. Id. As the court explained, "[t]his information is not stripped of its newsworthy value simply because it is placed behind a paywall or used in the context of a fantasy sports game." Id.

With respect to whether defendants' use of the players' names, images, and statistics constitutes unauthorized advertising, the court held that "it would be difficult to draw the conclusion that the athletes are endorsing any particular product" based on the manner in which their images and information are presented on defendants' website. Id. at *6. However, the court noted this finding "does not foreclose a court from closely scrutinizing the actions of a particular defendant to ensure no unauthorized endorsements are being made." Id. Because it found the defendants' conduct to be protected under the exception for "newsworthy" material, the court declined to examine whether the use also fell under the statute's "public interest" exception. Id. at *3.

Implications of the Court's Decision

While the Indiana Supreme Court's ruling in Daniels v. FanDuel, Inc. addresses only a single state's right of publicity statute, the decision has implications that reach far beyond Indiana. Indeed, the comprehensive protections provided by Indiana's right of publicity statute—combined with the state's aggressive choice-of-law and jurisdictional rules—have made Indiana a popular venue for right of publicity claimants. See, e.g., K. Vick and J.P. Jassy, "Why A Federal Right of Publicity Statute Is Necessary," American Bar Association, Communications Lawyer, Volume 28, Number 2, August 2011. This frequently includes claims brought by plaintiffs that have only a tenuous connection to the state. Id.; see also CMG Worldwide, Inc. v. Bradford Licensing Assocs.,2006 WL 3248423, at *6 (S.D. Ind. Mar. 23, 2006). Moreover, the Indiana Supreme Court's broad reading of the newsworthiness exception is likely to influence other courts' interpretations of similar provisions in their state's right of publicity statutes.

Beyond the online fantasy sports industry, the Indiana Supreme Court's decision in Daniels v. FanDuel, Inc. may help fuel the explosive growth in the wake of the United States Supreme Court's landmark decision in Murphy v. NCAA last June. See Murphy v. Nat'l Collegiate Athletic Ass'n, 138 S. Ct. 1461, 200 L. Ed. 2d 854 (2018). In Murphy, the Supreme Court held that provisions of the Professional and Amateur Sports Protection Act of 1992 that prohibited state authorization and licensing of sports betting schemes violated the Constitution's anti-commandeering rule. Since Murphy, six states now allow legal sports betting (Delaware, Mississippi, Nevada, New Jersey, New Mexico, West Virginia), and three states have passed legislation allowing for its implementation (New York, Pennsylvania, Rhode Island). A bill to allow sports betting was introduced in the Indiana Legislature last January and is currently under committee review.

Had the Indiana Supreme Court adopted the plaintiff's reading of the newsworthiness exception in Daniels v. FanDuel, Inc., this would have been a significant boost for individual athletes and for the players' associations in their efforts to capture a piece of the sports betting revenue.  Instead, the Indiana Supreme Court's held that fantasy sports platforms—just like newspapers and other media platforms—have a right to use publicly available information about player names, images, and statistics.

Kenneth L. Doroshow, Andrew J. Thomas and Andrew G. Sullivan are lawyers with Jenner & Block LLP. Kenneth L. Doroshow represented FanDuel in the Daniels v. FanDuel litigation. Former US Solicitor General Ian Heath Gershengorn of Jenner & Block argued on behalf of both FanDuel and DraftKings in the Seventh Circuit and the Indiana Supreme Court.

 
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