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Boston Red Sox Win Dismissal of Putative Electronic "Sign‑Stealing" Class Action Lawsuit

On April 3, 2020, the U.S. District Court for the Southern District of New York dismissed, with prejudice, purported class action litigation brought by fantasy sports contestants against Cravath client Boston Red Sox Baseball Club, L.P. (the “Red Sox”), as well as Major League Baseball and MLB Advanced Media, L.P. (collectively “MLB”) and the Houston Astros, LLC (the “Astros”). The named plaintiffs in the suit were five individuals who, between 2017 and 2019, participated in daily fantasy baseball contests hosted by DraftKings Inc. (“DraftKings”). On behalf of themselves and similarly situated DraftKings participants, plaintiffs alleged that the Red Sox and Astros engaged in electronic sign‑stealing in violation of MLB rules and that the MLB failed to prevent, remedy and disclose the violation. They further alleged that the electronic sign‑stealing schemes improperly impacted player statistics, which form the basis for fantasy contests, and thereby corrupted the DraftKings contests promoted by defendants. Plaintiffs asserted various fraud, negligence, unjust enrichment and consumer protection law claims based on alleged harm arising from the electronic “sign‑stealing” scandal.

In granting Cravath’s motion to dismiss, the Court rejected the claims and the notion that professional sports organizations owe fantasy participants any duty of care absent a transaction or other relationship between them. In his decision, U.S. District Judge Jed S. Rakoff noted that “the absence of duty and reliance forecloses plaintiffs’ fraud and negligence claims, and the lack of a transaction, relationship or other nexus forecloses plaintiffs’ consumer protection claims.”

The Cravath team was led by partners Katherine B. Forrest, Michael T. Reynolds and Lauren A. Moskowitz, who argued the motion, and included practice area attorney Hector J. Valdes and associate Feyilana Lawoyin. Zachary W. Jarrett, Miranda Li and Ravinder Singh also worked on the matter.

The case is Olson v. Major League Baseball, No. 20‑CV‑632 (JSR) (S.D.N.Y.).