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by Shane Stokes
February 17, 2015
Responding to Monday’s announcement that the arbitration panel judging the Lance Armstrong vs SCA Promotions case had ruled against the Texan and ordered him to pay a penalty of $10 million, his legal team have expressed their dissatisfaction with the outcome.
“This award is unprecedented,” his lawyers said in a statement circulated to media. “No court or arbitrator has ever reopened a matter which was fully and finally settled voluntarily. In this matter SCA repeatedly affirmed that it never relied upon anything Armstrong said or did in deciding to settle.
“The proper analysis of governing law is set forth in the opinion of arbitrator Ted Lyon, which is part of the award and which we believe will be adopted when the courts review the action of the arbitration panel.”
Lyon was the arbitrator appointed by Lance Armstrong and Tailwind Sports, the company which owned the US Postal Service cycling team of which he was a part, and would normally be expected to lean towards their position.
The other two arbitrators were Richard Chernick, who was appointed by SCA Promotions, and the neutral chairman, former Judge Richard Faulkner.
They were the same three arbitrators who previously considered an action between Armstrong/Tailwind sports and SCA Promotions.
According to the latter company, Armstrong has refused to pay. As a result it lodged a request with a Texas district court on Monday to have the judgement enforced.
The first action took place during the mid 2000s as a result of a dispute between the parties. SCA Promotions, a prize promotion business, had originally entered into a contract with Tailwind Sports.
Under the terms of that contract, Tailwind Sports paid a premium to SCA Promotions so that the latter would cover the performance bonuses that it would have to pay the rider if he were to add to his Tour victories.
It paid Armstrong $4.5 million for his victories in 2001/2002 and 2003 and was due to pay out an additional $5 million after he won his sixth Tour title in 2004.
However it disputed this on the basis of doping claims made against Armstrong, with SCA arguing that the Tour wins may not have been clean.
Armstrong and Tailwind Sports fought this before the arbitration panel. SCA Promotions eventually settled, standing down from its position on the basis that the original contract between the two companies didn’t include stipulations about doping.
It ended up paying the sum in question as well as an additional $2.5 million in interest and legal fees.
Under the terms of that agreement, both sides undertook to abide by the panel’s decisions in any further rulings.
The wording of that agreement stated “the arbitration panel consisting of Richard Faulkner, Richard Chernick and Ted Lyon shall have exclusive jurisdiction over the parties hereto with respect to any dispute or controversy amongst them arising under or in connection with this settlement agreement.”
SCA Promotions took a new action on the matter after Armstrong finally admitted long-term doping in January 2013. This admission followed his disqualification from the Tours he won and made clear that he had committed perjury during the original hearing.
In the ruling released Monday, which saw Chernick and Faulkner agree that Armstrong had repeatedly lied under oath, the majority ruling saw the panel issue a scathing assessment of his behaviour.
“Ample evidence was adduced at the hearing through documents and witnesses that Claimants commenced this proceeding knowing and intending to lie; committed perjury before the Panel with respect to every issue in the case; intimidated and pressured other witnesses to lie; or influenced others to help them lie and to hide the truth; used a false personal and emotional appeal to perpetuate their lies to the Panel; used perjury and other wrongful conduct to secure millions of dollars of benefits from Respondents; used lies and fraud to falsely claim that the Panel exonerated them, thereby further allowing them to profit further from additional endorsements and sponsorships; expressed no remorse to the Panel for their wrongful conduct; and continued to lie to the Panel throughout the final hearing even while admitting to prior falsehoods and other wrongful conduct. Claimants admitted in substantial part the substance of all (but the last) of the foregoing conduct.
In another section of the ruling, the panel declared that “perjury must never be profitable,” and said that the case had presented “an unparalleled pageant of international perjury, fraud and conspiracy,” calling it “almost certainly the most devious sustained deception ever perpetrated in world sporting history.”
“Deception demands real, meaningful sanctions. This Arbitration Tribunal awards sanctions of Ten Million Dollars ($10,000,000.00) against Mr Lance Armstrong and Tailwind Sports Corporation.”
However Lyon’s dissenting opinion saw him argue that the original ruling had closed the door on future actions. He also claimed that in the original case, SCA Promotions had “been found by the Panel to have engaged in the business of selling insurance in Texas without a license, a fact which at the time of the settlement exposed SCA to possible liability for treble damages and attorney fees.”
Furthermore, he claimed that SCA’s past actions constituted a third degree felony under the Texas Insurance Code, and that the original confidentiality agreement had effectively prevented the company from possible action by the Texas Department of Insurance.
He concluded that he believed the ruling was both unprecedented and farfetched and not based on any Texas law.
According to Armstrong’s legal team, the Texan tried to settle for the agreed amount but SCA nevertheless decided to lodge its request for enforcement on Monday.
“Despite the absence of any legal basis for the sanction, Armstrong offered to pay SCA the entire $10 (million) in order to resolve the matter, but SCA refused,” stated the former pro rider’s lawyers.
According to SCA Promotions lawyer Jeff Tillotson, this is misleading.
“They didn’t make any offers until late Friday,” he told CyclingTips. “They made an offer that required payments over a lengthy time period with no guarantee of payment. SCA felt it had to turn that offer down.”
“Mr. Armstrong is encouraged to send us a check for $10 million. I promise that we will accept it.”
Click here to read SCA Promotions’ application to the 116th Judicial District Court for enforcement, and also to read the arbitration panel’s ruling.
Also see: Armstrong loses court case, ordered to pay ten million dollars to SCA Promotions