A federal judge ruled last week that litigation funding agreements with National Football League players who are seeking to recover under the NFL’s concussion settlement agreement.
In a sweeping ruling, U.S. District Court Judge Anita Broady held that the anti-assignment provision in the settlement agreement precluded the agreements where by the players sold their right to receive future settlement payments in order to receive more immediate sums from the litigation funders.
The high-profile concussion settlement involves former NFL players who settled with the professional football league for an estimated $1 billion over claims arising from concussion or other cognitive impairment that the players suffered while playing for the NFL.
The players were said to have entered agreements with several litigation funding companies, including Atlas Funding, RD Legal, and Cash4Cases, to receive monies while they waited for the settlement payments to be made.
The NFL argued that the litigation funders preyed on cognitively impaired athletes with loans at excessively high interest rates.
Judge Brody held that the loans were void, under the anti-assignment provision in the settlement agreement, and ordered the administrator overseeing the settlement not to pay the litigation funders.
Said Judge Brody:
It has come to the Court’s attention that members of the class or their representatives have assigned or attempted to assign monetary claims to third parties. Under the unambiguous language of the Settlement Agreement, Settlement Class Members1 are prohibited from assigning or attempting to assign their monetary claims to third parties, and any agreement making such an assignment or attempt to assign is void, invalid and of no force and effect. Additionally, under the Settlement Agreement, the Claims Administrator is prohibited from paying a Class Member’s monetary award to any third party that holds an assignment or an attempted assignment (“Third-Party Funder”).
Judge Brody said that “[i]n order to protect Class Members, the Settlement Agreement unambiguously prohibits Class Members from assigning claims or attempting to assign claims and renders any such assignment void, invalid and of no force and effect”, and quotes the anti-assignment clause, as follows:
Section 30.1 No Assignment of Claims. Neither the Settlement Class nor any Class or Subclass Representative or Settlement Class Member has assigned, will assign, or will attempt to assign, to any person or entity other than the NFL Parties any rights or claims relating to the subject matter of the Class Action Complaint. Any such assignment, or attempt to assign, to any person or entity other than the NFL Parties any rights or claims relating to the subject matter of the Class Action Complaint will be void, invalid, and of no force and effect and the Claims Administrator shall not recognize any such action.
The purpose of the anti-assignment clause “is to protect the interests of class members by recognizing that class members receiving monetary awards are by definition cognitively impaired,” she wrote in her December 8, 2017, opinion, in In Re: National Football League Players’ Concussion Injury Litigation, No. 2:12-md-02323-AB (E.D. Pa. Dec. 8, 2017).
Judge Brody said that “Class Members simply cannot enter into a binding agreement that assigns or attempts to assign their claims” and that a “Third-Party Funder that failed to perform proper due diligence before deciding to enter such an agreement is prohibited from now reaping the benefit of the contract.”
A New York Times article on the opinion (Judge Voids Loans to Impaired Players in N.F.L. Concussion Case) is available here.