Spring may seem like it is a long time away, but it is never too early to think about baseball. In the following guest post, Sarah Abrams, Head of Claims Baleen Specialty, a division of Bowhead Specialty, takes a look at issues surrounding the potential liability of sports league officials and board members and considers the D&O insurance implications. My thanks to Sarah for allowing me to publish her article as a guest post on this site. Here is Sarah’s article.
*********************
A January 20, 2026, Third Circuit decision arising from a lawsuit brought by a minor league baseball club against an individual member of the Minor League Baseball Board of Trustees significantly narrowed the circumstances under which teams may assert direct fiduciary duty claims against league officials and board members. The decision both underscores that the governing law, here, Florida nonprofit law, can be outcome-determinative and reinforces a recurring theme in private company and nonprofit governance litigation, which may have relevance for D&O exposure.
For D&O underwriters of similarly situated private sports organizations, the Sports Enterprises, Inc. decision highlights how entity-centric governance documents, bylaws, operating agreements, charters, and related policies can materially limit individual director and officer liability, which may constrain Sides A and B exposure. The discussion below examines the complaint and appellate ruling in Sports Enterprises, together with a similar fiduciary duty decision arising from litigation brought by the formerly known as Oakland Raiders, to illustrate how courts are increasingly limiting personal fiduciary exposure stemming from league governance decisions and what that trend may mean for private company D&O underwriting of comparable risks.
Sports Enterprises, Inc.
Sports Enterprises, Inc. (SEI)’s complaint alleged that SEI owned the Salem-Keizer Volcanoes, an Oregon-based minor league baseball club that for decades maintained a professional affiliation with the San Francisco Giants. That relationship allegedly ended in 2020, when Major League Baseball restructured its relationship with Minor League Baseball and permitted MLB clubs to eliminate affiliations with dozens of minor league teams, leaving the Volcanoes without an affiliation.
SEI brought suit against Marvin Goldklang, a minority owner of the New York Yankees who also served on the Board of Trustees of the National Association of Professional Baseball Leagues and on a committee delegated authority to negotiate renewal of the Professional Baseball Agreement governing relations between MLB and Minor League Baseball. The complaint alleged that Goldklang acted in his own financial interest and participated in negotiations that favored teams in which he held ownership interests, to the detriment of other minor league clubs, including the Volcanoes.
Among other claims, SEI asserted that Goldklang breached fiduciary duties allegedly owed to National Association members by virtue of his board position and role on the negotiating committee, contending that under Florida nonprofit law, the association’s governing documents, and common-law principles, league officials entrusted with exclusive negotiating authority owed duties not only to the association itself but also directly to its member clubs.
The district court dismissed SEI’s complaint under Rule 12(b)(6), rejecting SEI’s allegations that Goldklang owed fiduciary duties directly to individual minor league clubs by virtue of his board position and delegated negotiating authority. SEI appealed, and the Third Circuit affirmed the district court’s dismissal of SEI’s complaint.
Notably, the appellate court held that Florida’s nonprofit statute imposes fiduciary duties on directors only to the corporation itself, not to its members. While Goldklang conceded that he owed fiduciary duties to the association as a director, the statute’s plain language did not extend those duties to individual member clubs. In particular, the Third Circuit rejected SEI’s attempt to rely on common law fiduciary principles to expand the scope of duty. The court held that any such expansion would conflict with Florida Supreme Court guidance requiring courts to apply statutes as written.
In addition, the Third Circuit found that SEI failed to allege any express or implied fiduciary relationship. The court noted that the association’s bylaws required board members to act in the best interests of the association “as a whole,” not for the benefit of individual clubs. Nor did SEI allege facts showing a relationship of trust and confidence or any undertaking by Goldklang to act for SEI’s specific benefit. Thus, even accepting SEI’s factual allegations as true, the Third Circuit concluded that Goldklang owed no fiduciary duty to SEI, and the complaint therefore failed as a matter of law.
FKA The Oakland Raiders
From a D&O underwriting perspective, the Third Circuit’s refusal to recognize a fiduciary duty owed to an individual club aligns with earlier professional sports league precedent, including in a case brought by the Oakland Raiders, in a mid-2000s California Court of Appeals decision, applying California law, likewise declined to impose fiduciary obligations on league officials for governance decisions that prioritize league-wide interests over those of any single team.
In that case, the Raiders alleged that the NFL and Commissioner Paul Tagliabue discriminated against the team and placed it at a competitive disadvantage by mishandling relocation opportunities and stadium-related decisions, and that these actions constituted breaches of fiduciary duty. The Raiders advanced multiple theories, including fiduciary duty, antitrust, and related business torts, effectively arguing that the league owed the team a heightened duty of loyalty and fair dealing in the context of relocation and stadium development.
The California Court of Appeals rejected those claims and affirmed summary judgment for the NFL and its commissioner. Central to the decision was the court’s conclusion that no fiduciary relationship existed as a matter of law between the league (or its commissioner) and an individual member club. The court emphasized the NFL’s status as a unique, voluntary, unincorporated association and explained that the breadth of the commissioner’s contractual authority, encompassing disciplinary, regulatory, and business decisions, was fundamentally incompatible with fiduciary obligations owed to any single team. The court further concluded that, even if fiduciary duties could be hypothesized, principles of judicial abstention barred courts from interfering in intra-association governance decisions absent clear violations of governing documents.
Discussion
The Third Circuit’s decision in the Sports Enterprises Litigation, together with the California Appellate Court precedent in the Oakland Raiders litigation, highlights important limits on fiduciary duty exposure in private sports leagues and nonprofit governance structures. The decisions reinforce that, absent express statutory or contractual undertakings, fiduciary duties generally run to the entity itself, not to economically dependent member teams, and courts may be reluctant to expand personal liability for directors and officers based on dissatisfaction with collective governance outcomes.
From a D&O insurance perspective, these cases do not suggest that claims arising from league governance disputes are inherently non-indemnifiable. Rather, “claims against league officials or team executives asserting fiduciary breaches are often indemnifiable under Side B coverage, with the relevant entities, here, the leagues, advancing or reimbursing defense expenses, incurred by their directors and officers. In addition, Side A exposure may still arise in scenarios where indemnification is unavailable or prohibited, if indemnification is barred by statute, or if a final adjudication establishes non-indemnifiable conduct.
Taken together, the Sports Enterprises Litigation and Oakland Raiders decisions may signal that courts are increasingly unwilling to recognize the threshold fiduciary duty necessary to trigger personal liability in the first place, which in turn narrows both Side A and Side B loss scenarios tied to governance-driven claims. Thus, for D&O underwriters, the takeaway is less about the exclusivity of Side A risk and more about how entity form, governing law, and entity-centric governance documents operate upstream to limit fiduciary duty claims altogether.
The views expressed in this article are exclusively those of the author, and all of the content in this article has been created solely in the author’s individual capacity. This article is not affiliated with her company, colleagues, or clients. The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any subject matter.