Lance Armstrong in new attempt to halt SCA Promotions case

Insurance company seeking return of $12 million Tour de France bonus money; Armstrong's lawyers claim 2006 settlement final

by Simon_MacMichael   January 3, 2014  

Lance Armstrong and Oprah Winfrey Photo by Maryse Alberti, Courtesy of Sony Pictures Classics

Lance Armstrong’s attorneys have launched a fresh attempt to have a $12 million lawsuit brought by insurer SCA Promotions set aside. In October, a three-member arbitration panel voted two-to-one to reopen the case.

Armstrong and the company that owned his US Postal Service team, Tailwind Sports, reached a settlement with SCA in 2006. They had sued the insurers for bonus money they claimed was due to him for winning the Tour de France in 2002, 2003 and 2004.

SCA had withheld the money due to concerns that Armstrong had cheated to win those three editions of the race. After being banned for life and stripped of all seven of his Tour de France victories in October 2012, the American finally admitted to having doped his way to those wins in January last year.

According to Dallas News, court documents filed last Monday on behalf of Armstrong and Tailwind requesting a stay of proceedings show that one of the members of the arbitration panel, Ted B. Lyons, opposed SCA’s request to have the case reopened.

Tailwind and Armstrong say that SCA waived any rights to reclaim the money when it settled with them in 2006 following a two-year legal battle in which Armstrong maintained he was riding clean. The settlement says that “no party may challenge, appeal or attempt to set aside the Arbitration Award.”

However, in a ruling on the case dated 29 October last year, two of the arbitrators, Richard Faulkner and Richard Chernick, describe that settlement as no more than “the private equivalent of temporary ‘cease-fire.’”

They added: “Hostilities between these parties resumed and continued as anticipated albeit at varying intensity. … The ability of both tribunals to address and determine disputes within the parameters of the parties’ agreements is unquestioned.”

The third member of the panel, Lyons, believes however that it has no power to “re-decide claims that were resolved seven years ago.”

He wrote: “What Armstrong did, if true, is morally reprehensible, but the law does not allow this Panel to address it at this time.”

Lyons was appointed to the panel – and is remunerated - by Armstrong, while Chernick is SCA’s appointee, and Faulkner was jointly appointed by both parties.

SCA decided to try and have the case reopened following Armstrong’s confession to Oprah Winfrey last year, saying that because he had lied under oath, it had been misled into settling with him.

When the arbitration panel’s decision was announced in October, Jeffrey Dorough, acting for SCA Promotions, told Bloomberg: “There’s still a fight ahead but at least we’re allowed to get in the ring at this point.”

It’s not the only legal action Armstrong faces, with potentially the most damaging being the one brought under whistleblower legislation by his former team-mate, Floyd Landis.

The US government has joined that action, which could result in Armstrong having to pay tens of millions of dollars if it is held that government funds, in the form of US Postal’s sponsorship, were misused to fund the team’s doping programme.

Some of the documents relating to the SCA case, including the motion to stay, the arbitration panel’s rulings and the 2006 agreement between Armstrong and SCA, have been posted to the file-sharing website, Scribd.

9 user comments

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Armstrong confirmed he cheated therefore he must deal with the fallout.

The interesting aspect for me will be how sponsors are dealt with. They sponsored Armstrong and his teams with the objective of gaining positive publicity by associating their brands with Armstrong's success. They received that return at the time and benefitted from it.

The current scandals are all about Armstrong and not about his sponsors. I don't believe anyone is implying that US Postal, Radio Shack or Motorola are complicit in this cheating and as such their brands are not damaged. For this reason they should not be entitled to any compensation.

posted by Legin [40 posts]
3rd January 2014 - 11:39

19 Likes

"The third member of the panel, Lyons, believes however that it has no power to “re-decide claims that were resolved seven years ago.”
He wrote: “What Armstrong did, if true, is morally reprehensible, but the law does not allow this Panel to address it at this time.”"

I can't claim any knowledge of US law, but it seems strange to me (if true) that US law would prevent reopening of a settlement which is subsequently shown to have been based on fraud by one of the parties.

posted by Sadly Biggins [266 posts]
3rd January 2014 - 12:32

19 Likes

In the UK we have the principle that "fraud unravels everything". Perhaps the Americans don't.

Gasman Jim's picture

posted by Gasman Jim [70 posts]
3rd January 2014 - 13:02

20 Likes

Legin wrote:
Armstrong confirmed he cheated therefore he must deal with the fallout.

The interesting aspect for me will be how sponsors are dealt with. They sponsored Armstrong and his teams with the objective of gaining positive publicity by associating their brands with Armstrong's success. They received that return at the time and benefitted from it.

The current scandals are all about Armstrong and not about his sponsors. I don't believe anyone is implying that US Postal, Radio Shack or Motorola are complicit in this cheating and as such their brands are not damaged. For this reason they should not be entitled to any compensation.

Not sure that is entirely true. US Postal in particular is now synonymous with doping. Even though no one from US Postal (the company) participated or acted in the process of doping, the associate with Armstrong and drug taking is explicit. Effectively US Postal funded and paid for illegal doping activity and that is damaging.

posted by Colin Peyresourde [1200 posts]
3rd January 2014 - 13:39

23 Likes

Sadly Biggins wrote:
"The third member of the panel, Lyons, believes however that it has no power to “re-decide claims that were resolved seven years ago.”
He wrote: “What Armstrong did, if true, is morally reprehensible, but the law does not allow this Panel to address it at this time.”"

I can't claim any knowledge of US law, but it seems strange to me (if true) that US law would prevent reopening of a settlement which is subsequently shown to have been based on fraud by one of the parties.

The battle didn't end according to US law but instead by an out of court settlement. As a part of that settlement both parties accepted the result (and signed a contract) and therefore can't decide to go it again now that the facts are more favorable. Like the Winklevoss twins in their Facebook lawsuit. They sued and settled on a damages amount but then years later Facebook was worth WAY more than they ever thought possible and tried to return to court for more money and it was thrown out.

posted by jarredscycling [456 posts]
3rd January 2014 - 14:40

9 Likes

As I said, I can't claim any knowledge of US law but it seems to me that a settlement reached following untrue confirmations by Armstrong that he did not dope is different from the Winklevoss case, which seems to have been based on disputed evidence as to the valuation of FB shares. In the former case, Armstrong's evidence which led up to the settlement was false and he has subsequently admitted this; in the latter case, as you say, the twins wished they'd got a better deal despite doing pretty well out of it.

posted by Sadly Biggins [266 posts]
3rd January 2014 - 15:11

9 Likes

If you "can't claim any knowledge of US law" , why, then, do you feel the need to comment on finer points of US law?

posted by RouleurTwo [21 posts]
3rd January 2014 - 20:23

18 Likes

all seems very odd. LA is going to start running out of money to pay his lawyers soon. And the wave of litigation keeps on rolling. I think he will have to make undisclosed offers for out of court settlements soon ( with the obvious confidentiality and no liability clauses thrown in) as his only option to avoid total bankruptcy. I guess he must be in a very difficult place psychologically and I hope he finds a way to well being.

posted by philtregear [81 posts]
6th January 2014 - 21:33

3 Likes

because - as I said above - I find it strange if that really is what US law says. Not exactly an incentive for parties to be honest.

posted by Sadly Biggins [266 posts]
7th January 2014 - 9:52

6 Likes