Essendon’s Federal Court legal action against ASADA: Out of bounds on the full?

On 13 June 2104, Essendon Football Club, a member of the Australian Football League caught up in a long running supplements saga, commenced legal action against the Australian Sports Anti-Doping Authority (ASADA) arising out of the latter’s decision to issue show cause notices to 34 players on the Essendon 2012 list in relation to alleged use of the prohibited substance Thymosin Beta 4. Essendon, and its suspended coach James Hird in a separate but corresponding action, allege that ASADA acted outside its statutory powers in the conduct of its investigation. They seek orders permanently restraining use of the evidence arising from the investigation forming the basis for the show cause notices. This post examines the legal process Essendon now faces, and addresses a number of questions raised in the press and social media forums.

EXECUTIVE SUMMARY

In this post Essendon and James Hird will be described as ‘Essendon’ unless the context otherwise requires.

Standing to sue

Essendon and James Hird do not have standing to sue as a matter of right, because they are not aggrieved persons. Only the 34 players who received show cause notices have a direct interest in the outcome of the investigation and a natural entitlement to sue.

Accordingly, if standing becomes an issue, Essendon and James Hird must demonstrate a ‘special interest’ under administrative law to be permitted to bring proceedings, namely, an interest in the action beyond that of any other member of the public. Both Essendon and James Hird are likely to establish this, although on different bases.

If Essendon and James Hird are permitted to sue, watch this space as to whether the AFL will seek to intervene in the proceedings. After all, the allegations of an improper joint investigation potentially affect the AFL’s powers under its own Anti-Doping Code as well.

Essendon’s ultra vires claim against ASADA

Given the breadth and generality of ASADA’s powers under the ASADA Act, it is hard to see how ASADA has acted beyond its statutory powers so long as its conduct is consistent with its overall purpose to prevent drugs or doping methods in sport. The ASADA Act provides ASADA with a very broad discretion in the exercise of its powers. Sporting organisations are required to assist ASADA’s processes (and the scope of that assistance is not specified or limited). ASADA is entitled to share information obtained during its investigations even prior to the making of findings. ASADA also has express constitutional power to provide services to corporate entities to protect their business reputation from the prospect of doping violations. In other words, it is plain that ASADA can do much more than simply engage in testing to identify doping violators, and that it is encouraged to work closely with sporting bodies to achieve its broader objectives.

Effect of invalid ASADA process

If Essendon and James Hird can somehow demonstrate that ASADA has exceeded its jurisdiction, to achieve their objective they really need the court to order that ASADA’s investigation is void ab initio (from the beginning). This would invalidate the show cause notices against the players, given they are otherwise not parties to the action and so the outcome would not ordinarily bind them. However, it is by no means certain that Essendon and James Hird could prove that ASADA has acted with such a want of jurisdiction that this drastic outcome should occur.

Given the significant resources already expended by ASADA, and the interests of justice in promoting anti-doping investigations, a court might limit any adverse finding and refuse to render the entire process invalid. Such an outcome would be a pyrrhic victory for Essendon, namely, a technical breach by ASADA without ultimate impact on the process Essendon wants to stop.

Compliance by Players with Show Cause notices

As to whether the players should comply with the show cause notices in the meantime, it would be folly not to do so. Essendon is not bringing a representative action on behalf of the players, which would involve a claim in the name of one of the players, with Essendon to fund that litigation behind the scenes. Essendon and James Hird are bringing legal action in their own right, and their interests are not the same as the players. This is confirmed by the fact that the players and Essendon have separate legal representation.

Any suggestion by Essendon and James Hird that the players should not comply with the show cause notices (and there is no evidence whatsoever that they have made any such suggestion) would be legally wrong and ethically inappropriate.

It would be legally wrong, because unless and until a court determines that ASADA has acted unlawfully, ASADA will be deemed to act lawfully. Only the court can determine that the ASADA process was flawed, and in the meantime the process will be regarded as valid. Therefore, any refusal to comply with the ASADA process pending court determination would be fraught with peril.

It would be ethically wrong, because it is clearly in the interests of Essendon and James Hird for the players to avoid making full admissions to ASADA, given the prospect that such admissions could ‘point the finger’ back to the Club and coach, and possibly demonstrate a breach of their duty of care. Therefore, Essendon and James Hird should take great care to avoid any step which could be seen to prejudice the players’ interest in minimizing any suspension should the ASADA process withstand judicial scrutiny.

A. BACKGROUND

The Essendon controversy has a lengthy history. A useful timeline can be found here.

Relevantly, aspects of ASADA’s investigation are regarded as unprecedented, in particular:

The high degree of publicity attached to the inception of the investigation and throughout (compared with typical levels of confidentiality prior to the announcement of any adverse findings against offending athletes).

The high level of cooperation between ASADA and the Australian Football League (AFL), the responsible Code.

Paul Little, the President of Essendon, has referred to this as a “joint investigation” (see 13 June 2014 Essendon media release). Ben McDevitt, the CEO of ASADA, confirmed that “joint interviews with the AFL” were conducted in mid-2013 (see 13 June 2014 ASADA media release).

The preparation of an ‘Interim Report’ apparently in close collaboration with the AFL containing preliminary findings following investigations which enabled the AFL in 2013 to charge Essendon and James Hird (and others), amongst other things, for bringing the game into disrepute. This led to a settlement by which Essendon and James Hird agreed to significant penalties by the AFL.

On 13 June 2014, Essendon launched proceedings in the Federal Court of Australia claiming relief under section 39B of the Judiciary Act 1903, and James Hird launched a corresponding action on the same day.

B. WHEN WILL THE CASE BE HEARD?

Both cases are in the docket of Justice Middleton, and are listed for directions on 27 June 2014.

A directions hearing is not the final hearing of the claim. At a directions hearing the Judge makes timetabling orders for next steps (e.g. fixing the hearing date and steps leading up to it).

Justice Middleton is not known as a judge who lets the grass grow under his feet. It would not surprise if the substantive hearing were to be fixed within 6 weeks of the filing date, rather than after many months as some have speculated.

One can expect the question of standing to sue to come up (see below). Justice Middleton will have the discretion either to hear this as a preliminary question, or to deal with it at the same time as the substantive merits of the case.

Once the case is heard, Justice Middleton will likely reserve his decision, meaning that he will consider his decision and publish his reasons after a number of weeks.

The losing party may then appeal the decision. Unless the matter is very urgent (which this might be), an appeal usually takes 6 months at least to be heard and determined.

Therefore, even if the wheels of justice have been oiled in this case, this litigation will not be finalized within at least 12 months, unless the parties resolve it earlier.

C. WHAT IS THE NATURE OF ESSENDON’S CLAIM?

“There is no power or capacity under the ASADA Act to conduct a joint investigation. There never was” – Paul Little, Essendon President (Essendon 13 June 2014 media statement) “The way I read it and the independent legal advice I’ve had on it, (the Act) always contemplated a co-regulatory regime between ASADA and the relevant sporting body” – Ben McDevitt, ASADA CEO (SEN radio interview on 13 June 2014)

In technical terms, Essendon seeks to invoke the original jurisdiction of the Federal Court of Australia to obtain judicial review of an administrative action. Essendon appears to contend that ASADA has acted ‘ultra vires’ in that it has exceeded its statutory powers by conducting a joint investigation with the AFL rather than investigating the matter unilaterally. We will return to the question of ‘ultra vires’ shortly.

Pursuant to section 39B(1), the original jurisdiction of the Federal Court of Australia includes jurisdiction with respect to any matter in which a writ of mandamus or prohibition or an injunction is sought against an officer or officers of the Commonwealth.

Taking the last point first, the claim is against the ‘Chief Executive Officer’ of ASADA because he is an officer of the Commonwealth (ASADA is a Commonwealth statutory authority). Under the ASADA Act, the CEO is not personally liable for any litigation. He or she will be indemnified (or no one would want the job!).

As for the archaic language of a ‘writ’ of mandamus or prohibition, this reflects the historical origins of this area of the law. The notion of a writ first developed out of medieval English practices. Over time, these writs became known as ‘prerogative writs’, were discretionary and related to Crown action.

One can expect Essendon would seek (at a minimum):

Writ of Prohibition (restraining ASADA from exceeding its powers)

(Possibly) Writ of Mandamus (ordering CEO of ASADA to perform its proper – more limited – duty)

Permanent injunction (an equitable remedy permanently restraining use of material obtained via improper investigative functions).

In practical terms, this would cause the show cause notices to be retracted, without the prospect of ASADA reissuing them because ASADA would be restrained from relying on their evidentiary foundation.

Essendon would also likely contend that the ASADA process should be regarded as void ab initio (from the beginning) such that the players would have no case to answer. This is discussed further below.

D. DO ESSENDON AND JAMES HIRD HAVE STANDING TO SUE?

Normally, only aggrieved persons are permitted to invoke the jurisdiction of the Court. This is because courts, given scarce resources, are unwilling to permit hypothetical cases by third parties.

Based on this philosophy, only those who have received show cause notices would be normally entitled to bring legal action. To date, it is understood that only the players have received show cause notices. If a player were to challenge the process, its standing to sue would be uncontroversial.

Show cause notices are directed towards individuals. Essendon cannot receive a show cause notice.

Show cause notices can be directed to “support persons”, defined under the ASADA Act to mean an individual who works with or treats one or more athletes participating in, or preparing for, sporting activities. James Hird as coach could possibly receive a show cause notice in this capacity but to the best of our knowledge has not received one. [Stephen Dank would have received a show cause notice in his capacity as a support person.]

Given that neither Essendon nor it appears James Hird have received show cause notices, under Australian law they will only have standing to sue for an administrative remedy if they can separately show a “special interest” in the outcome. “Interest” does not mean “interesting”, or this means any Essendon supporter could file a s.39B application in the Federal Court against the CEO of ASADA.

Generally speaking, “special interest” in order to obtain a prerogative writ requires the applicant to show an interest in the subject matter of the action beyond that of any other member of the public. A stake in the outcome might satisfy this test.

Essendon could therefore contend it has a special interest because, amongst other things, adverse findings against the players would likely prevent the club from having the numbers to participate in the AFL competition for the period they are suspended, not to mention the consequential impact on membership revenue, sponsorship support, which could prejudice the financial survival of the club.

James Hird’s situation intrigues. Presumably, he must demonstrate he has a “special interest” because of the prospect he might receive a show cause notice himself. He might also argue that his ability to resume duties as Essendon’s coach following his suspension would be prejudiced if adverse findings were made against the players for whom he was responsible during the relevant period. He might also point to the reputational harm he might personally suffer should an allegedly flawed ASADA process be permitted to proceed.

E. HOW IS THE COURT LIKELY TO ASSESS THE ‘ULTRA VIRES’ QUESTION?

The discussion in response to this question is necessarily speculative. The Applications and supporting affidavits by which Essendon and James Hird have launched legal action are not yet publicly available. We are therefore limited to a review of the public comments emanating from Essendon and ASADA. [James Hird also issued a media statement on 14 June 2014. Note that his use of “I have been advised by my lawyers” could be construed as a waiver of privilege such that ASADA is entitled to seek production of that legal advice.]

Based on those public statements, it seems that the central question is whether the ASADA Act permitted ASADA and the AFL to conduct a joint investigation, or whether ASADA should have acted alone. The unprecedented level of cooperation by the AFL is likely to be attacked by Essendon on the basis that it was a “bridge too far”.

First, there is a question of fact as to whether a “joint investigation” did in fact occur. See, for example, the AFL’s 2013 Annual Report summarizing the Essendon saga, including the AFL’s role and action taken, but not in terms which could be regarded as a “joint” action with ASADA. Therefore, expect this question to be controversial.

Secondly, a court might not be interested in general assertions of a ‘joint investigation’, on the basis that the conduct of ASADA and the AFL should be particularised to see whether – on a piecemeal basis – the legislation permitted such conduct to occur.

A review of the ASADA Act, its Explanatory Memorandum and the National Anti-Doping (NAD) Scheme (found in the regulations to the ASADA Act) reveals the following:

ASADA’s purpose is to assist the CEO to discharge his or her functions (s.20B ASADA Act)

Those CEO functions are broadly defined, encompassing not just the NAD Scheme, but a whole range of activities associated with anti-doping and related safety issues. In particular, the CEO is to encourage sporting organisations to carry out initiatives about sports doping and safety matters (s.21(1)(i)). Even more generally, the CEO is to do anything incidental to or conducive to the performance of any of the above functions (s.21(1)(o))

There are constitutional limits to the CEO’s powers. Yet, the CEO is expressly permitted to perform his or her functions by providing a service to a constitutional corporation, where the service is provided to protect the constitutional corporation’s business reputation from being damaged by the use of drugs and/or doping methods in sport (s.21(2)(j)). [AFL corporate entities are registered in each state and territory of Australia.]

As to the NAD Scheme itself, the Explanatory Memorandum to the ASADA Act explains that the Act is only intended to set out the “bare bones” of what must be in the NAD scheme. Also clarified is that: “It is not intended that the anti-doping rules would be limited to drug testing, and should include things such as administration of a prohibited substance or method to an athlete.”

Importantly, the ASADA Act does specify that the NAD scheme must authorise the CEO to disclose information, documents or things obtained in relation to the administration of the NAD scheme ( including information obtained during investigations of possible violations of the anti ‑ doping rules ) for the purposes of, or in connection with, that administration (emphasis added): s.13(1)(g). [Note the generality of this requirement]

) for the purposes of, or in connection with, that administration (emphasis added): s.13(1)(g). [Note the generality of this requirement] In turn, the ASADA Act also requires the NAD scheme to contain rules applicable to sporting administration bodies. Such rules should require sporting administration bodies to assist and give information to ASADA in relation to investigations of possible violations of the anti‑doping rules: s.15(2). [The AFL Anti-Doping Code illustrates how these rules are exemplified, and refers to the assistance the AFL is to provide ASADA at no cost.]

In short, ASADA’s remit is to prevent doping in Australian sport as well as associated safety hazards, and to work closely with sporting associations to ensure that this happens. In turn, sporting associations are required to assist and cooperate with ASADA, and the ASADA Act does not limit the extent of that assistance. The Act authorizes ASADA to share information obtained during investigations of possible doping violations without constraint (for instance, it is not necessary that adverse findings first be made).

It is also constitutional for ASADA to offer services to corporate bodies to protect them from reputational damage by the use of drugs or doping methods in sport. This is sufficiently broad to leave open how that corporate body might decide to protect its business reputation. Accordingly, the supply of an Interim Report by ASADA to the AFL to enable the AFL to charge potential wrongdoers for bringing the game into disrepute in connection with an insufficiently regulated supplements program, could be regarded as a protected ‘service’, intended to help the AFL prevent damage to its business reputation from possible doping methods implemented by one of its Clubs.

Given the breadth and generality of its powers as noted above (and in the absence of further information), it is hard to see how ASADA has acted beyond its statutory powers so long as its conduct is consistent with its overall purpose to prevent drugs or doping methods in sport.

F. EFFECT OF DELAY

In contract law, acquiescence or delay by the complainant can later prevent the complainant from making a claim.

Commentators have suggested Essendon and James Hird might be estopped from bringing this litigation because they complied with ASADA’s investigative process in 2013, and agreed to the settlement by which they acknowledged (some) of the AFL’s charges and acquiesced to the sanctions provided.

However, acquiescence, estoppel or delay are not available where statutory jurisdiction is concerned (as distinct from contract law). Either ASADA has statutory power, or it does not. Whether or not people have complied with its edicts is irrelevant in assessing whether or not the CEO of ASADA has acted beyond his or her powers.

G. IF ASADA HAS EXCEEDED ITS POWERS, WHAT IS THE EFFECT ON ITS INVESTIGATION TO DATE?

If ASADA lacks legal authority, or its CEO oversteps the limits of his or her authority, the resulting action or decision will be unlawful.

In general, any action undertaken without proper legal authority is invalid and void ab initio (as if it never occurred). This means the Essendon investigative process simply would not exist and no consequences could flow from it. Consequently, there would be no lawful foundation for subsequent conduct by ASADA. It is very important for Essendon to establish this for the players to face no legal consequences.

It goes without saying that this can be problematic where many consequential actions flow, and so courts are often hesitant to take such a drastic step. Throughout the world there is continuing debate about when and whether courts should determine legal processes to be void ab initio (particularly where the interests of justice favour validity), so it cannot be assumed that such an order would be made.

Given the significant resources already expended by ASADA, a court might also try to limit any adverse finding to a statutory breach (rather than a complete want of jurisdiction), and refuse to render the entire process invalid. Such an outcome would be a pyrrhic victory for Essendon, namely, a technical breach by ASADA without ultimate impact on the process Essendon wants to stop.

As an example of how this would work, it has been previously argued that ASADA breached certain confidentiality requirements in the conduct of its investigation into Essendon’s practices. If that did occur, then this would be a statutory breach by ASADA.

However, if this breach of confidentiality was considered collateral to ASADA’s primary goal of preventing doping activities under the ASADA Act, a court could hold that the overall process nevertheless remained valid.

H. SHOULD THE PLAYERS COMPLY WITH THE SHOW CAUSE PROCESS IN THE MEANTIME?

In short: Yes.

Whether or not an administrative act is invalid is a judicial function exercised by a court. Until a court declares invalidity, executive actions are presumed to be lawful. Therefore, ASADA’s acts and decisions should be regarded as lawful unless and until declared otherwise.

Further, the players’ interests are not necessarily aligned with Essendon and James Hird, and they should consider their own positions independently. The legal action might ultimately benefit them by bringing the ASADA process to an end, but it is not a representative action, and the players should consider their own positions independently.

Essendon and James Hird should also be very cautious not to make recommendations to the players about how they should conduct themselves during this process, given that their interests are not necessarily aligned.

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