No. 00-203 

In the Supreme Court of the United States 

UNITED STATES OF AMERICA, PETITIONER 

v. 

CLEVELAND INDIANS BASEBALL COMPANY, 
A LIMITED PARTNERSHIP 

ON WRIT OF CERTIORARI 
TO THE UNITED STATES COURT OF APPEALS 
FOR THE SIXTH CIRCUIT 

JOINT APPENDIX 

ANNE BERLEMAN KEARNEY 

Foley & Lardner 
777 E. Wisconsin Avenue 
Milwaukee, Wis. 53202 
(414) 297-5555 

Counsel of Record 
for Respondent 
SETH P. WAXMAN 

Solicitor General 
Department of Justice 
Washington, D.C. 20530-0001 
(202) 514-2217 

Counsel of Record 
for Petitioner 

PETITION FOR WRIT OF CERTIORARI FILED: AUGUST 8, 2000 
CERTIORARI GRANTED: OCTOBER 16, 2000 

TABLE OF CONTENTS 

Page 

Relevant docket entries, United States District 

Court for the Northern District of District of 
Ohio (Cleveland) ........................................................... 

1 
Relevant docket entries, United States Court of 

Appeals for the Sixth Circuit ..................................... 

14 

Stipulated Facts ................................................................... 
21 

Statutory Provisions ........................................................... 30 

(I) 

UNITED STATES DISTRICT COURT 
NORTHERN DISTRICT OF OHIO (CLEVELAND) 

Civil Docket for Case No. 96-CV-2240 

CLEVELAND INDIANS BASEBALL COMPANY, 

A LIMITED PARTNERSHIP ORGANIZED IN THE 
STATE OF OHIO, PLAINTIFF 

v. 

UNITED STATES OF AMERICA, DEFENDANT 

DOCKET ENTRIES 

_________________________________________________ 

DOCKET 
DATE NUMBER PROCEEDINGS 

_________________________________________________ 

10/15/96 – 

FILING FEE: on 10/15/96 in 

the amount of $120.00, receipt 
#241029. (baw) [Entry date 
10/16/96] 

10/15/96 – ASSIGNMENT OF MAGIS- 
TRATE JUDGE pursuant to 
Local Rule 1:2.4, Assignment 
of Cases. In the event of 
referral this case will be 
referred to Mag. Judge Jack 
B. Streepy. 1 pg (dh) [Entry 
date 10/21/96] 

(1) 

2 

_________________________________________________ 

DOCKET 
DATE NUMBER PROCEEDINGS 

_________________________________________________ 

10/15/96 1 COMPLAINT (Service: sum- 
mons issd, magistrate consent 
form issd) (exh & 12 pgs) (dh) 
[Entry date 10/21/96] 

10/15/96 2 

CIS filed by pltf. Recom- 
mended Track: Standard. (2 
pgs) (dh) [Entry date 
10/21/96] 

10/16/96 3 

PRAECIPE by pltf for issu- 
ance of alias summons. (issued 
on 10/16/96) (1 pg) (dh) [Entry 
date 10/21/96] 

10/18/96 4 

MOTION by pltfs for attys 

Robert A. Dupuy, Timothy C. 
Frautschi & Mary Kay Braza 
to appear pro hac vice (4 pgs) 
(dh) [Entry date 10/22/96] 

10/30/96 – MARGINAL ENTRY ORDER 

granting motion by pltfs 
for attys Robert A Dupuy, 
Timothy C. Frautschi & Mary 
Kay Braza to appear pro hac 
vice [4-1] (issued on 10/30/96) 
Judge Kathleen M. O’Malley 
(dh) [Entry date 10/31/96] 

3 

_________________________________________________ 

DOCKET 
DATE NUMBER PROCEEDINGS 

_________________________________________________ 

11/25/96 5 ATTORNEY APPEARANCE 

on behalf of deft by attys 
Stephen A. Sherman, & 
Annette G. Butler (2pgs) (dh) 
[Entry date 11/26/96] 

12/18/96 6 

MOTION by deft for ext of 

time until 1/17/97 to answer 
pltf ’s complt w/memo in supp. 
(3 pgs) (dh) [Entry date 
12/19/96] 

1/10/97 – MARGINAL ENTRY ORDER 

granting motion by deft for 
ext of time until 1/17/97 to 
answer pltf ’s complt [6-1] 
(issued on 1/13/97) Judge 
Kathleen M. O’Malley (dh) 
[Entry date 01/13/97] 

1/21/97 7 

ANSWER to Complaint by 

USA (6pgs) (dh) [Entry date 
01/23/97] 

4 

_________________________________________________ 

DOCKET 
DATE NUMBER PROCEEDINGS 

_________________________________________________ 

2/12/97 8 CASE MANAGEMENT CON- 
FERENCE scheduling order. 
CMC set at 12:30 p.m. on 
3/6/97 in room 135 before 
Judge O’Malley (issued on 
2/12/97) (3 pgs) Judge 
Kathleen M. O’Malley (dh) 
[Entry date 02/14/97] 

2/25/97 9 

MAIL Returned addressed to 

plaintiff Cleve Indians Co re: 
CMC scheduling order (rs) 
[Entry date 02/26/97] 

3/4/97 10 

STATEMENT by deft USA re 

the CMC (4 pgs) (dh) [Entry 
date 03/05/97] 

3/6/97 11 CASE MANAGEMENT PLAN/ 

ORDER: Track Designation: 
standard, CMC held on 3/6/97; 
non-expert discovery to be 
complete by 12/6/97; expert 
discovery to be complete by 
12/24/97; expert rpts shall be 
exchanged by 9/1/97 for initial 
& 11/1/97 for rebuttal; disp 
mtn filing ddl is 2/1/98; status 
hrg set at 12:30 p.m. on 

5 

_________________________________________________ 

DOCKET 
DATE NUMBER PROCEEDINGS 

_________________________________________________ 

7/31/97 (issued on 3/6/97) (4 
pgs) Judge Kathleen M. 
O’Malley (dh) [Entry date 
03/07/97] 

7/31/97 12 

STATUS Report by deft (3 

pgs) (js) [Entry date 08/01/97] 

7/31/97 13 MINUTES of proceedings: 
before Judge Kathleen M. 
O’Malley; Court reporter 
none; status hrg held 7/31/97; 
Parties to contact the court by 
8/8/97 to apprise the court re- 
garding the status of settle- 
ment discussions. No exts of 
the dates in the Case Manage- 
ment Plan are contemplated 
(issd on 7/31/97) (2 pgs) (pl) 
[Entry date 08/01/97] [Edit 
date 03/23/99] 

8/4/97 14 

STATUS Report by pltf Cleve 

Indians Co (3 pgs) (dh) [Entry 
date 08/05/97] 

10/9/97 15 

NOTICE by deft of filing facts 

deemed admitted as set for in 
its request for admissions. (21 
pgs) (dh) 

6 

_________________________________________________ 

DOCKET 
DATE NUMBER PROCEEDINGS 

_________________________________________________ 

10/31/97 16 ORDER directing pltf to 
provide responses to deft’s 1st 
set of interr & request for 
prodctn of docmts by 11/7/97; 
failure to comply will result in 
dismissal for failure to pro- 
secute; deft has requested an 
ext of discovery ddls; how- 
ever, the Ct feels there is no 
reason to extend ddls at this 
time. (issued on 10/31/97) (2 
pgs) Judge Kathleen M. 
O’Malley (dh) [Entry date 
11/03/97] 

11/10/97 17 

MOTION by pltf for protective 

order (9 pgs) (dh) [Entry date 
11/12/97] 

11/20/97 18 

MOTION by USA for ext of 

time to conduct discovery & 
file disp motions w/memo of 
law. (6 pgs) (dh) 

11/20/97 19 

MOTION by USA to compel 

prodctn of docmts or alter- 
natively, to dismiss pltf ’s 
complt w/memo of law in 
support. (60 pgs) (dh) 

7 

_________________________________________________ 

DOCKET 
DATE NUMBER PROCEEDINGS 

_________________________________________________ 

11/24/97 20 

NOTICE by USA of taking de- 
positions of Cleveland Indians 
Baseball Company on 12/2/97 
& of Major League Baseball 
Players Association on 
12/4/97. (13 pgs) (dh) 

11/25/97 21 NOTICE OF SERVICE by 

USA of docmt subpoena upon 
the law firm of Morgan Lewis 
& Bockius. (7 pgs) (dh) 

12/5/97 22 
RESPONSE by pltf to deft US’ 

mot to compel prodctn of 
docmts [19-1] (66 pgs) (bb) 

12/5/97 – MARGINAL ENTRY ORDER 

granting in part motion by 

USA for ext of time to conduct 
discovery & file disp motions 
[18-1]; deft’s non-expert dis- 
covery to be complete 1/20/98; 
all other ddls remain intact. 
(issued on 12/5/97) Judge 
Kathleen M. O’Malley (dh) 
[Entry date 12/08/97] 

12/5/97 23 

PROTECTIVE ORDER re dis- 
closure of “confidential infor- 
mation”. (issued on 12/5/97) 

8 

_________________________________________________ 

DOCKET 
DATE NUMBER PROCEEDINGS 

_________________________________________________ 

(5 pgs) Judge Kathleen M. 
O’Malley (dh) [Entry date 
12/08/97] 

12/15/97 24 

REPLY Memo by deft USA to 

Cleveland Indians’ response 
to motion to compel prodctn of 
docmts or alternatively, to 
dismiss pltf’s complt [19-1], 
[19-2] (79 pgs) (dh) 

1/28/98 25 MEMORANDUM AND OR- 
DER granting in part & 
denying in part USA’s motion 
to compel prodctn of docmts; 
pltf must produce docmts 
requested in deft’s docmt 
requests #3, 4, & 5; failure to 
do so w/in 14 days will result 
in dismissal of this case purs 
to FRCP 37(b)(2)(C); pltf will 
be allowed no ext; [19-1] & 
denying motion to dismiss 
pltf ’s complt [19-2] (issued on 
1/28/98) (19 pgs) Judge M. 
O’Malley (dh) [Entry date 
01/29/98] 

1/30/98 26 

MOTION by pltf for SJ. (44 

pgs) (kv) 

9 

_________________________________________________ 

DOCKET 
DATE NUMBER PROCEEDINGS 

_________________________________________________ 

1/30/98 27 

APPENDIX by pltf to afdvt of 

Rober A. Dupu (attached to 
mot) in supp of mot for SJ [26- 

1]. (one volume) (kv) 

2/2/98 28 MOTION (Request) by USA 
to enlarg time to file disp 
motions by 30 days. (4 pgs) 
(dh) 

2/2/98 29 ATTORNEY SUBSTITUTION: 

terminating atty Stephen A. 
Sherman for USA and substi- 
tuting atty Glenn J. Melcher. 
(2 pgs) (dh) 

2/5/98 – MARGINAL ENTRY ORDER 

granting motion by USA to 
enlarg time to file disp mo- 
tions by 30 days. [28-1] Disp 
mtn filing ddl ext until 4/20/98 
(issued on 2/6/98) Judge 
Kathleen M. O’Malley (dh) 
[Entry date 02/06/98] 

2/19/98 30 

JOINT MOTION by ptys to 

reopen limited discovery, & to 
enlarg time to respond to 
pltf ’s motion for SJ. (3 pgs) 
(dh) 

10 

_________________________________________________ 

DOCKET 
DATE NUMBER PROCEEDINGS 

_________________________________________________ 

2/25/98 – MARGINAL ENTRY ORDER 

granting motion by ptys to 
reopen limited discovery & to 
enlarg time to respond [30-1], 
[30-2]; only deft may engage 
in additional discovery - pltf is 
barred from further affirma- 
tive discovery efforts. No 
extensions of time of any sort 
will be granted to pltf. (issued 
on 2/25/98) Judge Kathleen M. 
O’Malley (dh) [Entry date 
02/26/98] 

3/10/98 31 

MOTION by deft to dismiss 

case or at least for other 
sanctions w/memo of law. (28 
pgs) (dh) 

4/30/98 32 STIPULATION and ORDER: 

that USA withdraws its 
motion for dismissal/sanctions 
[31-1]/[31-2], denying as moot 
pltf’s motions for SJ. [26-1] 
and for protective order [17- 

1]; ct II of the complt is dis- 
missed w/prejudice, jgm on ct 
I is ordered pltf, entry to 
abide the final disposition of 

11 

_________________________________________________ 

DOCKET 
DATE NUMBER PROCEEDINGS 

_________________________________________________ 

the case; briefing schedule 
established for the parties’ 
respective SJ motions on the 
ct III - 4/29/98, stipulated 
facts - 5/13/98, initial briefs - 
5/27/98, response briefs. (is- 
sued on 4/30/98) (3 pgs) Judge 
Kathleen M. O’Malley (ej) 
[Entry date 05/01/98] 

5/5/98 33 STIPULATED FACTS by 
parties (8 pgs) (rs) 

5/13/98 34 

MOTION by deft for SJ (58 

pgs) (jam) 

5/13/98 35 

MOTION by pltf for judgment 

on stipulated facts (22 pgs) 
(jam) 

5/27/98 36 REPLY Brief by pltf in 
support of its motion for 
judgment on stipulated facts 
[35-1] (9 pgs) (dh) [Entry date 
05/28/98] 

12 

_________________________________________________ 

DOCKET 
DATE NUMBER PROCEEDINGS 

_________________________________________________ 

1/25/99 37 MEMORANDUM & OPINION 

granting motion by pltf for 
judgment on stipulated facts 
[35-1], & denying motion by 
deft for SJ [34-1]; jgm is 
entered in favor of pltfs for a 
total of $97,202.20, plus int. 
Dismissing case (issd on 
1/26/99) (5 pgs) Judge 
Kathleen M. O’Malley (dh) 
[Entry date 01/27/99] [Edit 
date 03/23/99] 

1/25/99 38 

ORDER entering judgment in 

favor of pltf the Cleve Indians 
Baseball Co, & against deft 
USA for refunds of FICA 
taxes in the amt of $96,250.20 
plus int from 4/30/94 at the 
rate dictated by IRC 6621 & 
6622; & $952.00 in FUTA 
taxes plus int from 1/31/95 at 
the rate fixed by IRC 6621 & 
6622. (issued on 1/26/99) (1 pg) 
Judge Kathleen M. O’Malley 
(dh) [Entry date 01/27/99] 

13 

_________________________________________________ 

DOCKET 
DATE NUMBER PROCEEDINGS 

_________________________________________________ 

2/8/99 39 MAIL Returned addressed to 
cnsl for pltf, Robert Dupuy, 
w/insufficient address. (jk) 
[Entry date 02/09/99] 

3/22/99 40 

NOTICE of Appeal by USA 

re: memo and opn [37-2], re: 
order dismissing case [38-1] 
(cc: all counsel-notice only. 
USCA-notice and docs mailed 
on 3/23/99) (2 pgs) (shh) [En- 
try date 03/23/99] 

14 

UNITED STATES COURT OF APPEALS 
FOR THE SIXTH CIRCUIT 

________________ 

Docket No. 99-3410 

CLEVELAND INDIANS BASEBALL COMPANY, 

A LIMITED PARTNERSHIP, PLAINTIFF-APPELLEE 

v. 

UNITED STATES OF AMERICA, DEFENDANT-APPELLANT 

Appeal from: Northern District of 
Ohio at Cleveland 

DOCKET ENTRIES 

_________________________________________________ 

DATE PROCEEDINGS 

_________________________________________________ 

3/31/99 Civil Case Docketed. Notice filed by 

Appellant USA. Transcript needed: n (cf) 

3/31/99 BRIEFING LETTER SENT setting 
briefing schedule: appellant brief due 
5/10/99; appellee brief due 6/9/99; 
appendix due 6/30/99; final appellant brief 
due 7/21/99. [99-3410] final appellee brief 
due 7/21/99;. (cf) 

15 

_________________________________________________ 

DATE PROCEEDINGS 

_________________________________________________ 

4/12/99 APPEARANCE filed by Attorney 

Michelle O’Connor for Appellant USA [99- 
3410] (cf) 

4/12/99 PRE-ARGUMENT STATEMENT filed by 

Michelle O’Connor for Appellant USA [99- 
3410] (cf) 

4/14/99 APPEARANCE filed by Attorney James 

L. Huston for Appellee Clev Indians [99- 
3410] (cf) 

4/16/99 TRANSCRIPT ORDER FORM filed by 

Glenn J. Melcher for Appellant USA: 
Transcript not needed. [99-3410] [1927110- 

1] (blh) 

4/19/99 APPEARANCE filed by Attorney 

Annette G. Butler for Appellant USA [99- 
3410] (cf) 

5/7/99 APPEARANCE filed by Attorney Robert 

W. Metzler for Appellant USA [99-3410] 
(cf) 

5/7/99 Appellant MOTION filed to extend time to 
file brief. Motion filed by Robert W. 
Metzler for Appellant USA. Certificate of 
service date 5/3/99 [99-3410] (cf) 

16 

_________________________________________________ 

DATE PROCEEDINGS 

_________________________________________________ 

5/7/99 LETTER SENT by cf granting motion to 
extend briefing [1939636-1] filed by 
Robert W. Metzler [99-3410] resetting 
briefing schedule: [99-3410] appellant 
brief due now 5/24/99; appellee brief now 
due 6/23/99; appendix now due 7/14/99; 
appellant final brief now due 8/4/99; 
appellee final brief now due 8/4/99. (cf) 

5/26/99 PETITION for en banc hearing filed by 

Robert W. Metzler for Appellant USA. 
Certificate of service date 5/24/99. [99- 
3410] (blh) 

5/26/99 PROOF BRIEF filed by Robert W. 

Metzler for Appellant USA. Certificate of 
service date 5/24/99 Number of Pages: 53. 
[99-3410] (vf) 

5/26/99 Request to require oral argument filed by 

Robert W. Metzler for Appellant USA 
[99-3410] (vf) 

5/28/99 LETTER SENT by cf to hold case in 
abeyance pending ruling on the petition 
for rehearing en banc [99-3410], cancelling 
the briefing schedule (cf) 

17 

_________________________________________________ 

DATE PROCEEDINGS 

_________________________________________________ 

6/11/99 ORDER filed denying petition for en banc 
hearing [1950454-1] filed by Robert W. 
Metzler [99-3410]. Entered by order of 
the court. (blh) 

6/18/99 BRIEFING LETTER SENT resetting 
briefing schedule: appellee brief now due 
7/19/99; appendix now due 8/9/99; appel- 
lant final brief now due 8/30/99; appellee 
final brief now due 8/30/99 [99-3410] . (bb) 

7/1/99 Appellee MOTION filed to extend time to 
file brief. Motion filed by James L. Hus- 
ton for Appellee Clev Indians. Certificate 
of service date 6/28/99 . [99-3410] (cf) 

7/2/99 LETTER SENT by cf granting motion to 
extend briefing [1972639-1] filed by James 
L. Huston [99-3410] resetting briefing 
schedule: [99-3410] appellee brief now 
due 8/2/99; appendix now due 8/23/99; 
appellant final brief now due 9/13/99; 
appellee final brief now due 9/13/99. (cf) 

8/5/99 PROOF BRIEF filed by James L. Huston 
for Appellee Clev Indians. Certificate of 
service date 8/2/99. Number of Pages: 21. 
[99-3410] (vf) 

18 

_________________________________________________ 

DATE PROCEEDINGS 

_________________________________________________ 

8/5/99 Request to waive oral argument and sub- 
mit case on the briefs, (waiver on page: 1), 
filed by James L. Huston for Appellee 
Clev Indians [99-3410] (vf) 

8/10/99 PROOF REPLY BRIEF filed by Robert 

W. Metzler for Appellant USA. Certi- 
ficate of service date 8/6/99. Final reply 
brief due 9/13/99. [99-3410] (vf) 

8/25/99 APPENDIX filed by Robert W. Metzler 
for Appellant. Copies: 5. Certificate of 
service date 8/23/99 [99-3410] (vf) 

8/31/99 FINAL BRIEF filed by Robert W. Metzler 
for Appellant USA. Copies: 7. Certificate 
of service date 8/27/99 Number of Pages: 

53. [99-3410] (vf) 

8/31/99 FINAL REPLY BRIEF filed by Robert W. 

Metzler for Appellant USA. Copies: 7 
Certificate of service date 8/27/99 Number 
of Pages: 14. [99-3410] (vf) 

9/7/99 FINAL BRIEF filed by James L. Huston 
for Appellee Clev Indians. Copies: 7. 
Certificate of service date 9/2/99. Number 
of Pages: 21. [99-3410] (vf) 

19 

_________________________________________________ 

DATE PROCEEDINGS 

_________________________________________________ 

2/15/00 ADDITIONAL CITATION filed by Robert 

W. Metzler for Appellant USA. Certifi- 
cate of service date 2/14/00 [99-3410] (cf) 

2/24/00 CAUSE SUBMITTED on briefs to panel 
consisting of Judges Suhrheinrich, Cole, 
Quist sitting on 5/3/00. [99-3410] (me) 

2/28/00 Appellee RESPONSE to appellant’s addi- 
tional citation filed. Response from James 
L. Huston for Appellee Clev Indians. 
Certificate of service date 2/25/00 [99- 
3410] (cf) 

3/7/00 Record requested from district court. 
(dac) 

3/8/00 Submission on briefs date set for May 3, 
2000, Notice sent to counsel. (rld) 

3/30/00 CERTIFIED RECORD filed. Volumes 
include 2 Pl. [99-3410] (pb) 

5/10/00 Per Curiam OPINION filed: AFFIRMED 

[99-3410], decision not for publication pur- 
suant to local rule 28(g) [99-3410]. Richard 
F. Suhrheinrich, Circuit Judge, R. G. Cole, 
Circuit Judge, Gordon J. Quist, District 
Judge. (cf) 

20 

_________________________________________________ 

DATE PROCEEDINGS 

_________________________________________________ 

5/19/00 Appellee MOTION filed to publish this 
court’s 5/10/00 opinion [2155867-1]. Mo- 
tion filed by James L. Huston for Appellee 
Clev Indians. Certificate of service date 
5/16/00. [99-3410] (bb) 

5/25/00 RULING denying motion to publish deci- 
sion of 5/10/00 opinion [2155867-1] filed by 
James L. Huston [99-3410]. (cf) 

7/7/00 MANDATE ISSUED with no cost taxed 
[99-3410] (dac) 

7/12/00 CERTIFIED RECORD RETURNED to 
lower court at the end of appellate pro- 
ceedings. [99-3410]. Volumes included: 2 
Pl;. (dac) 

8/9/00 Record acknowledgment received from 
the district court. Acknowledged by: 
Shawn Harrigan. Acknowledgment date: 
8/4/00. [99-3410] (dac) 

9/6/00 U.S. Supreme Court notice filed regard- 
ing petition for writ of certiorari filed by 
Appellant USA. Filed in the Supreme 
Court on 08-08-00 , Supreme Ct. case 
number: 00-203. [99-3410] (swh) 

21 

UNITED STATES DISTRICT COURT 
FOR THE NORTHERN DISTRICT OF OHIO 
EASTERN DIVISION 

Case No. 1:96CV2240 
Judge O’Malley 

CLEVELAND INDIANS BASEBALL COMPANY, 
A LIMITED PARTNERSHIP, PLAINTIFF 

v. 

UNITED STATES OF AMERICA, DEFENDANT 

STIPULATED FACTS 

Plaintiff Cleveland Indians Baseball Company and 
defendant United States of America, by their under- 
signed attorneys, stipulate without prejudice to any 
position that either party may take in any other action 
to the following facts: 

1. The relationship between Major League 
Baseball Players Association (“MLBPA”) and the 
Major League Baseball Clubs (the “Clubs”) is and was 
at all times material to the Complaint herein covered by 
a Collective Bargaining Agreement (“CBA”), which 
deals with the overall terms and conditions of players’ 
employment that are collective in nature. 

2. Article XVIII(H) of the CBA prohibits 
concerted action by players or Clubs in dealing with 

22 

free agents. Free Agents are those players who are not 
bound or reserved to a Club by contract for an 
upcoming baseball season. 

3. Individual players sign a Uniform Player Con- 
tract (“UPC”) with an individual Club, the standard 
form of which was negotiated between the MLBPA and 
the Clubs. Depending on individual players’ success in 
bargaining for themselves, the UPC might include 
salaries greater than the minimum, bonuses, deferred 
compensation, or other special covenants or conditions 
of employment. 

4. Under the CBA, grievances are submitted to an 
arbitration panel for resolution and binding arbitration. 
The arbitration panel can fashion whatever remedy it 
deems appropriate, including requiring the clubs to pay 
salary as damages if the terms of the CBA have been 
violated. Pursuant to the CBA, the MLBPA filed three 
separate grievances claiming that the Clubs breached 
the CBA before the 1986, 1987 and 1988 seasons, with 
the result that players suffered damages from 1986 
through at least 1990. Specifically, the MLBPA 
contended that the Clubs acted in concert in violation of 
Article XVIII(H) and, because of the inter-relationship 
between free agency and all other aspects of the 
employment relationship, this concerted action was 
alleged to have deprived free agents and players at all 
seniority levels of direct and consequential benefits that 
would otherwise have been available to them. 

5. After evidentiary hearings, the duly constituted 
arbitration panel in three separate decisions found that 
the Clubs had, in fact, interfered with the contractual 
rights of the players before the 1986, 1987 and 1988 
seasons by acting in concert (1) to preclude or hinder 

23 

players who were free agents from leaving their 
previous Clubs after the 1985 and 1986 baseball sea- 
sons, and (2) to depress overall salary levels and the 
levels of other contract benefits and special covenants 
after the 1987 baseball season by sharing information as 
to what offers were being made to free agent players. 
As a result of the Clubs’ found violation of the CBA, the 
Arbitration Panel held on August 29, 1989, that the 
players collectively suffered damages from loss of 
salary in 1986 of $10,040,000.00. On September 17, 
1990, the Arbitration Panel held that the players’ 
collectively suffered damages from loss of salary for the 
1987 and 1988 baseball seasons of $37,560,000.00 and 
$66,340,000.00, respectively. The Arbitration Panel did 
not attempt to determine what any individual player’s 
salary may have been in the absence of collusion. 

6. Before the arbitration panel rendered its final 
decision as to salary damages for years other than 1986, 
1987 and 1988, and its decision as to the applicability of 
other claims for damages or injury made by the 
MLBPA for all years, the Clubs and the MLBPA 
settled the three grievances on December 21, 1990. The 
settlement required the Clubs to pay $280 million into 
two custodial accounts to be administered by a custo- 
dian, for later distribution, pursuant to a distribution 
plan approved by the Arbitration Panel, to the players 
who had suffered damages. The exhibit to the 
Settlement Agreement provided for the allocation of 
the total damages for 1986 and 1987 based in part on 
the amount of the Arbitration Panel’s awards in the 
August 29, 1989 decision and the September 17, 1990, 
decision. Under the settlement, the Clubs were not to 
have (and did not have) any responsibility for or input 
into the distribution decisions. Like the Arbitration 

24 

Panel decisions, the Settlement Agreement did not 
establish sums that would be paid to individual players. 
The Settlement Agreement also provided that the 
custodian would withhold from any distributions, acting 
solely as agent for each of the Clubs, the required 
amount of employment taxes to be deducted from the 
distributions to players from the accounts. 

7. Under the CBA, a respondent Club or Clubs has 
the right to argue the amount of any damages for any 
violation of the CBA under the arbitration procedure. 
In these three grievances, the Clubs provided argu- 
ments and briefs as part of the decision of the Arbitra- 
tion Panel as to the amount of loss of overall industry 
salary for the 1986, 1987 and 1988 years resulting from 
violation of the CBA. As part of the Settlement 
Agreement, the MLBPA had exclusive authority to 
propose the Framework and all distribution plans 
thereunder. 

8. The Settlement Agreement provides that the 
Arbitration Panel would be empowered to make the 
final decision as to the approval of the terms of any dis- 
tribution plan. The distribution plan was to be deve- 
loped by the MLBPA and submitted to the Arbitration 
Panel for approval. First, the MLBPA drafted a 
Framework for distribution, proposed it to its members 
for comment, and the Framework was ultimately 
approved by the Arbitration Panel. 

9. Pursuant to the Framework, the MLBPA pro- 
posed a partial distribution plan to the arbitrators on 
December 8, 1992 under the Settlement Agreement and 
Framework, providing for payments to individual 
players whose claims for damages related to the 1986 
and 1987 seasons. 

25 

10. The arbitrator made his first awards under the 
Framework on February 14, 1994. As the Framework 
required, and as the parties had done in their overall 
Settlement Agreement, the awards distinguished base 
damages awards from interest components. As in the 
Settlement Agreement, interest was calculated at the 
U.S. government treasury bill rate, in accordance with 
the Settlement Agreement and Framework. 

11. For purposes of liability for FICA and FUTA 
taxes the Cleveland Indians Baseball Company is the 
employer with respect to the payment of the 1986 
damage awards and the 1987 damage awards for certain 
players. All players who received settlement payments 
from the Cleveland Indians were employees of the 
Cleveland Indians during 1986 and 1987, except for one 
player who was an employee of the Cleveland Indians 
during 1986 and is deemed to be an employee for 
purposes of a damage award for 1987 pursuant to the 
Settlement Agreement because the Cleveland Indians 
were the last club prior to the 1987 season which 
employed that player. 

12. Pursuant to the Settlement Agreement and the 
MLBPA’s proposals for distributions, the arbitrator 
ordered distributions with respect to the 1986 and 1987 
seasons in a written award dated February 14, 1994. 
As a result, on or about March 1, 1994, eight players 
who were employees of the Cleveland Indians in 1986 
received distributions with respect to the 1986 season 
(1986 damage awards), and fourteen players who were 
employees of the Cleveland Indians in 1987 and one 
who was deemed to be an employee in 1987 received 
distributions with respect to the 1987 season (1987 
damage awards). None of these players performed 

26 

services for the Cleveland Indians in 1994. The awards 
were received in checks drawn on the custodial account, 
less FICA tax and income tax withholding, from the 
custodian of the custodial account. There was some 
duplication, so that a total of 18 separate players re- 
ceived awards allocated to the Cleveland Indians for 
1986 and 1987. 

13. The 1986 damage awards for Cleveland Indians 
players constituted wages totaling $610,000, and these 
players also received $219,638 in interest. The 1987 
damage awards for Cleveland Indians players consti- 
tuted wages totaling $1,457,848, and these players also 
received $409,119.17 in interest. 

14. On March 23, 1993, The Clubs asked the IRS for 
a ruling on the payroll tax treatment of these settle- 
ment distributions. Because the IRS had not yet 
responded when the 1986 and 1987 awards were made 
in 1994, the Cleveland Indians paid the employer’s 
share of FICA and FUTA taxes on the entire awards as 
if they were wages paid in 1994. The FICA tax 
payment was $99,381.90, and the FUTA payment was 
$1,008. 

15. The IRS issued its private letter ruling on 
October 18, 1995. On February 21, 1996, the Cleveland 
Indians filed claims with the IRS for refunds of the 
FICA and FUTA taxes for the 1st Quarter, 1994 and 
1994 calendar year, respectively. Sixteen of the 18 
players have consented to join the refund claims. The 
IRS has neither allowed nor denied the claims for 
refund. 

16. As to Count I of the complaint, the parties have 
now stipulated that the Cleveland Indians are entitled 

27 

to a refund of FICA payments on the interest portions 
of these awards of $13,071.10, with judgment to be 
entered at the conclusion of proceedings in this Court. 
The Cleveland Indians are also entitled to interest on 
this amount from April 30, 1994, at the rate fixed by the 
Internal Revenue Code (“IRC”) §§ 6621 and 6622. IRC 
§ 6611(b)(2). The Cleveland Indians are not entitled to 
any refund from FUTA taxes as to Count 1 of the Com- 
plaint, because the damages amount for each player 
was in excess of the FUTA wage base. 

17. Count II of the Complaint has been dismissed by 
stipulation, with prejudice. 

18. Count III of the Complaint remains for 
determination by the Court upon these stipulated facts. 
If the Court determines that these awards should be 
treated as attributable for FICA tax and FUTA tax 
purposes to the tax years 1986 and 1987, the Cleveland 
Indians should have judgment for $96,250.20 (FICA) 
and $952.00 (FUTA). (This amount is inclusive of the 
amount in Paragraph 16 above.) The Cleveland Indians 
also will be entitled to interest on these amounts from 
April 30, 1994 for FICA and January 31, 1995 for 
FUTA, at the rate fixed by IRC §§ 6621 and 6622. IRC 
§ 6611(b)(2). But, if the Court determines that these 
awards should be treated as attributable for FICA tax 
and FUTA tax purposes to the tax year 1994, the 

28 

Government should have judgment dismissing Count 

III. 

ROBERT A. DUPUY #1014584 

/s/ ROBERT A. DUPUY 

Attorneys for Cleveland 

Indians Baseball Company 

FOLEY & LARDNER 
777 East Wisconsin Avenue 
Milwaukee, WI 53202-5367 
414-271-2400 
414-297-4900(fax) 

OF COUNSEL: 

Michael K. Farrell 
Baker & Hostetler LLP 
3200 National City Center 
1900 East 9th Street 
Cleveland, Ohio 44114-3485 
216-621-0200 
216-696-0740(fax) 

29 

GLENN J. MELCHER 

/s/ GLENN J. MELCHER 

Attorney for United States 
of America 

Trial Attorney, Tax Division 
U.S. Department of Justice 
Post Office Box 55 
Washington, D.C. 20044 
202-307-1099 
202-514-5238(fax) 

30 

STATUTORY PROVISIONS 

1. 26 U.S.C. 3101 provides in relevant part: 

(a) Old-age, survivors, and disability insurance. 

In addition to other taxes, there is hereby imposed on 
the income of every individual a tax equal to the 
following percentages of the wages (as defined in 
section 3121(a)) received by him with respect to 
employment (as defined in section 3121(b))— 

In cases of wages received during: 
The rate shall 

be: 

1984, 1985, 1986, or 1987 ..................... 

5.7 percent 

1988 or 1989 .......................................... 6.06 percent 

1990 or thereafter ............................... 
6.2 percent. 

(b) Hospital insurance. 

In addition to the tax imposed by the preceding 
subsection, there is hereby imposed on the income of 
every individual a tax equal to the following per- 
centages of the wages (as defined in section 3121(a)) 
received by him with respect to employment (as defined 
in section 3121(b))— 

(1) with respect to wages received during the 
calendar years 1974 through 1977, the rate shall be 

0.90 percent; 

(2) with respect to wages received during the 
calendar year 1978, the rate shall be 1.00 percent; 

31 

(3) with respect to wages received during the 
calendar years 1979 and 1980, the rate shall be 1.05 
percent; 

(4) with respect to wages received during the 
calendar years 1981 through 1984, the rate shall be 

1.30 percent; 

(5) with respect to wages received during the 
calendar year 1985, the rate shall be 1.35 percent; 
and 

(6) with respect to wages received after 
December 31, 1985, the rate shall be 1.45 percent. 

* * * * * 

2. 26 U.S.C. 3111 provides in relevant part: 

(a) Old-age, survivors, and disability insurance.— 

In addition to other taxes, there is hereby imposed on 
every employer an excise tax, with respect to having 
individuals in his employ, equal to the following 
percentages of the wages (as defined in section 3121(a)) 
paid by him with respect to employment (as defined in 
section 3121(b))— 

In cases of wages paid during: 
The rate shall be: 

1984, 1985, 1986, or 1987 ............................. 5.7 percent 

1988 or 1989 ................................................... 6.06 percent 

1990 or thereafter ........................................ 6.2 percent. 

32 

(b) Hospital insurance.— 

In addition to the tax imposed by the preceding 
subsection, there is hereby imposed on every employer 
an excise tax, with respect to having individuals in his 
employ, equal to the following percentages of the wages 
(as defined in section 3121(a)) paid by him with respect 
to employment (as defined in section 3121(b))— 

(1) with respect to wages paid during the 
calendar years 1974 through 1977, the rate shall be 

0.90 percent; 

(2) with respect to wages paid during the 
calendar year 1978, the rate shall be 1.00 percent; 

(3) with respect to wages paid during the 
calendar years 1979 and 1980, the rate shall be 1.05 
percent; 

(4) with respect to wages paid during the 
calendar years 1981 through 1984, the rate shall be 

1.30 percent; 

(5) with respect to wages paid during the 
calendar year 1985, the rate shall be 1.35 percent; 
and 

(6) with respect to wages paid after December 
31, 1985, the rate shall be 1.45 percent. 

* * * * * 

33 

3. 26 U.S.C. 3121 provides in relevant part: 

(a) Wages.— 

For purposes of this chapter, the term “wages” 
means all remuneration for employment, including the 
cash value of all remuneration (including benefits) paid 
in any medium other than cash; except that such term 
shall not include— 

(1) in the case of the taxes imposed by 
sections 3101(a) and 3111(a) that part of the 
remuneration which, after remuneration (other than 
remuneration referred to in the succeeding 
paragraphs of this subsection) equal to the 
contribution and benefit base (as determined under 
section 230 of the Social Security Act) with respect 
to employment has been paid to an individual by an 
employer during the calendar year with respect to 
which such contribution and benefit base is 
effective, is paid to such individual by such em- 
ployer during such calendar year. If an employer 
(hereinafter referred to as successor employer) 
during any calendar year acquires substantially all 
the property used in a trade or business of another 
employer (hereinafter referred to as a predecessor), 
or used in a separate unit of a trade or business of a 
predecessor, and immediately after the acquisition 
employs in his trade or business an individual who 
immediately prior to the acquisition was employed 
in the trade or business of such predecessor, then, 
for the purpose of determining whether the 
successor employer has paid remuneration (other 
than remuneration referred to in the succeeding 
paragraphs of this subsection) with respect to 
employment equal to the contribution and benefit 

34 

base (as determined under section 230 of the Social 
Security Act) to such individual during such calen- 
dar year, any remuneration (other than remunera- 
tion referred to in the succeeding paragraphs of this 
subsection) with respect to employment paid (or 
considered under this paragraph as having been 
paid) to such individual by such predecessor during 
such calendar year and prior to such acquisition 
shall be considered as having been paid by such 
successor employer; 

* * * * * 

(v) Treatment of certain deferred compensation 
and salary reduction arrangements. 

(1) Certain employer contributions treated as 
wages.— 

Nothing in any paragraph of subsection (a) (other 
than paragraph (1)) shall exclude from the term 
“wages”— 

(A) any employer contribution under a 
qualified cash or deferred arrangement (as de- 
fined in section 401(k)) to the extent not included 
in gross income by reason of section 402(e)(3), or 

(B) any amount treated as an employer 
contribution under section 414(h)(2) where the 
pickup referred to in such section is pursuant to a 
salary reduction agreement (whether evidenced 
by a written instrument or otherwise). 

35 

(2) Treatment of certain nonqualified deferred 
compensation plans 

(A) In general.— 

Any amount deferred under a nonqualified 
deferred compensation plan shall be taken into 
account for purposes of this chapter as of the later 
of— 

(i) when the services are performed, or 

(ii) when there is no substantial risk of 
forfeiture of the rights to such amount. 

The preceding sentence shall not apply to any 
excess parachute payment (as defined in section 
280G(b)). 

(B) Taxed only once.— 

Any amount taken into account as wages by 
reason of subparagraph (A) (and the income 
attributable thereto) shall not thereafter be 
treated as wages for purposes of this chapter. 

(C) Nonqualified deferred compensation 
plan.— 

For purposes of this paragraph, the term 
“nonqualified deferred compensation plan” means 
any plan or other arrangement for deferral of 
compensation other than a plan described in 
subsection (a)(5). 

* * * * * 

36 

4. 26 U.S.C. 3301 (1994 & Supp. IV 1998) provides: 

There is hereby imposed on every employer (as 
defined in section 3306(a)) for each calendar year an 
excise tax, with respect to having individuals in his 
employ, equal to— 

(1) 6.2 percent in the case of calendar years 
1988 through 2007; or 

(2) 6.0 percent in the case of calendar year 
2008 and each calendar year thereafter; 

of the total wages (as defined in section 3306(b)) paid by 
him during the calendar year with respect to 
employment (as defined in section 3306(c)). 

5. 26 U.S.C. 3306 provides in relevant part: 

* * * * * 

(b) Wages.— 

For purposes of this chapter, the term “wages” 
means all remuneration for employment, including the 
cash value of all remuneration (including benefits) paid 
in any medium other than cash; except that such term 
shall not include— 

(1) that part of the remuneration which, after 
remuneration (other than remuneration referred to 
in the succeeding paragraphs of this subsection) 
equal to $7,000 with respect to employment has 
been paid to an individual by an employer during 
any calendar year, is paid to such individual by such 
employer during such calendar year. 

* * * * * 

37 

(r) Treatment of certain deferred compensation 
and salary reduction arrangements 

(1) Certain employer contributions treated 
as wages. 

Nothing in any paragraph of subsection (b) 
(other than paragraph (1)) shall exclude from the 
term “wages”— 

(A) any employer contribution under a 
qualified cash or deferred arrangement (as 
defined in section 401(k)) to the extent not 
included in gross income by reason of section 
402(e)(3), or 

(B) any amount treated as an employer 
contribution under section 414(h)(2) where the 
pickup referred to in such section is pursuant to 
a salary reduction agreement (whether evi- 
denced by a written instrument or otherwise). 

(2) Treatment of certain nonqualified de- 
ferred compensation plans 

(A) In general 

Any amount deferred under a nonqualified 
deferred compensation plan shall be taken into 
account for purposes of this chapter as of the 
later of— 

(i) when the services are performed, or 

(ii) when there is no substantial risk of 
forfeiture of the rights to such amount. 

38 

(B) Taxed only once 

Any amount taken into account as wages by 
reason of subparagraph (A) (and the income 
attributable thereto) shall not thereafter be 
treated as wages for purposes of this chapter. 

(C) Nonqualified deferred compensation 
plan. 

For purposes of this paragraph, the term 
“nonqualified deferred compensation plan” 
means any plan or other arrangement for defer- 
ral of compensation other than a plan described 
in subsection (b)(5). 

* * * * * 

6. 26 C.F.R. 31.3101-2 provides in relevant part: 

* * * * * 

(c) Computation of employee tax. The employee tax 
is computed by applying to the wages received by the 
employee the rate in effect at the time such wages are 
received. 

Example. In 1972, employee A performed for employer 
X services which constituted employment (see 
§ 31.3121(b)-2). In 1973 A receives from X $1,000 as 
remuneration for such services. The tax is payable at 
the 5.85 percent rate (4.85 percent plus 1.0 percent) in 
effect for the calendar year 1973 (the year in which the 
wages are received) and not at the 5.2 percent rate 
which was in effect for the calendar year 1972 (the year 
in which the services were performed). 

39 

7. 26 C.F.R. 31.3101-3 provides: 

The employee tax attaches at the time that the wages 
are received by the employee. For provisions relating 
to the time of such receipt, see § 31.3121(a)-2. 

8. 26 C.F.R. 31.3111-2 provides in relevant part: 

* * * * * 

(c) Computation of employer tax. The employer tax 
is computed by applying to the wages paid by the 
employer the rate in effect at the time such wages are 
paid. 

9. 26 C.F.R. 31.3111-3 provides: 

The employer tax attaches at the time that the wages 
are paid by the employer. For provisions relating to 
the time of such payment, see § 31.3121(a)-2. 

10. 26 C.F.R. 31.3121(a)-2 provides in relevant part: 

(a) In general, wages are received by an employee 
at the time that they are paid by the employer to the 
employee. Wages are paid by an employer at the time 
that they are actually or constructively paid unless 
under paragraph (c) of this section they are deemed to 
be subsequently paid. For provisions relating to the 
time when tips received by an employee are deemed 
paid to the employee, see § 31.3121(q)-1. 

(b) Wages are constructively paid when they are 
credited to the account of or set apart for an employee 
so that they may be drawn upon by him at any time 
although not then actually reduced to possession. To 
constitute payment in such a case the wages must be 

40 

credited to or set apart for the employee without any 
substantial limitation or restriction as to the time or 
manner of payment or condition upon which payment is 
to be made, and must be made available to him so that 
they may be drawn upon at any time, and their pay- 
ment brought within his own control and disposition. 
For provisions relating to the treatment of deductions 
from remuneration as payments of remuneration, see 
§ 31.3123-1. 

* * * * * 

11. 26 C.F.R. 31.3121(a)(1)-1(a)(2) provides: 

The annual wage limitation applies only if the 
remuneration received during any 1 calendar year by 
an employee from the same employer for employment 
performed after 1936 exceeds the amount of such 
limitation. The limitation in such case relates to the 
amount of remuneration received during any 1 calendar 
year for employment after 1936 and not to the amount 
of remuneration for employment performed in any 1 
calendar year. 

Example. Employee A, in 1967 receives $7,000 from 
employer B in part payment of $8,000 due him from 
employment performed in 1967. In 1968 A receives 
from employer B the balance of $1,000 due him for 
employment performed in 1967, and thereafter in 1968 
also receives $7,000 for employment performed in 1968 
for employer B. The first $6,600 of the $7,000 received 
during 1967 is subject to the taxes in 1967. The re- 
maining $400 received in 1967 is not included as wages 
and is not subject to the taxes. The balance of $1,000 
received in 1968 for employment during 1967 is subject 
to the taxes during 1968 as is also the first $6,800 of the 

41 

$7,000 thereafter received in 1968 ($1,000 plus $6,800 
totaling $7,800, which is the annual wage limitation 
applicable to remuneration received in 1968 by an 
employee from any one employer). The remaining $200 
received in 1968 is not included as wages and is not 
subject to the taxes. 

* * * * * 

12. 26 C.F.R. 31.3301-2 provides: 

The tax for any calendar year is measured by the 
amount of wages paid by the employer during such year 
with respect to employment after December 31, 1938. 
(See § 31.3306(b)-1, relating to wages, and §§ 31.3306(c)- 
1 to 31.3306(c)-3, inclusive, relating to employment.) 

13. 26 C.F.R. 31.3306(b)(1)-1 provides in relevant part: 

(a) In general. (1) The term “wages” does not 
include that part of the remuneration paid within any 
calendar year by an employer to an employee which 
exceeds the first $3,000 of remuneration (exclusive of 
remuneration excepted from wages in accordance with 
paragraph (j) of § 31.3306(b)-1 or §§ 31.3306(b)(2)-1 to 

31.3306(b)(8)-1, inclusive), paid within such calendar 
year by such employer to such employee for employ- 
ment performed for him at any time after 1938. 

(2) The $3,000 limitation applies only if the remu- 
neration paid during any one calendar year by an em- 
ployer to the same employee for employment per- 
formed after 1938 exceeds $3,000. The limitation in 
such case relates to the amount of remuneration paid 
during any one calendar year for employment after 

42 

1938 and not to the amount of remuneration for employ- 
ment performed in any one calendar year. 

Example. Employer B, in 1955, pays employee A 
$2,500 on account of $3,000 due him for employment 
performed in 1955. In 1956 employer B pays employee 
A the balance of $500 due him for employment per- 
formed in the prior year (1955), and thereafter in 1956 
also pays A $3,000 for employment performed in 1956. 
The $2,500 paid in 1955 is subject to tax in 1955. The 
balance of $500 paid in 1956 for employment during 
1955 is subject to tax in 1956, as is also the first $2,500 
paid of the $3,000 for employment during 1956 (this 
$500 for 1955 employment added to the first $2,500 paid 
for 1956 employment constitutes the maximum wages 
subject to the tax which could be paid in 1956 by B to 
A). The final $500 paid by B to A in 1956 is not included 
as wages and is not subject to the tax. 

* * * * *