Bad Legal News for Lance Armstrong Team

The hits just keep on coming for former all-American boy Lance Armstrong and his team. Back in 2004, Armstrong was America’s hero, riding his bike for the U.S. Postal team and winning the Tour de France. According to published reports, Armstrong’s salary in 2004 was $4.5 million. Yes, $4.5 million to ride that bike. And, his agreement provided that if he won the Tour de France every year from 2001 to 2004 he would be paid a $10 million dollar bonus. The agreement also provided that the U.S. Postal Team had to purchase insurance to cover those bonuses.

So the ownership of the U.S. Postal Team purchased insurance from an outfit called SCA Promotions, a Texas firm that protects the interests of team owners and sponsors. According to an article in the Wall Street Journal[written by Vanessa O’Connell] SCA covers “hole in one” insurance and athlete incentive clauses in most of the major sports.

But, SCA refused to give Armstrong $5 million in bonus monies, suspecting that he was cheating. Mr. Armstrong of course was appalled and sued SCA to collect his money. The case was arbitrated and Armstrong testified under oath that he did not dope. According to the transcript from his 2006 testimony, Lance testified that “I race the bike straight up and fair” – sounding very much like a hero in some old Western. SCA was concerned it would lose, so they paid $7.5 million to Armstrong. The settlement agreement said “No party may seek to challenge, appeal, or attempt to set aside” the settlement terms. Wonder who insisted on that particular language being inserted?????

Flash forward to 2012. Armstrong, was stripped of nearly all of his titles, including the Tour wins. And in 2013 he publicly acknowledged he had used performance-enhancing drugs when he was winning all those races.

SCA then sued Armstrong for fraud, demanding he repay them $12 million dollars – which is the money SCA paid him from 2002 to 2004. Armstrong refused, saying Texas law would not countenance re-opening the earlier settlement.

An arbitration panel agreed to hear the case. Today an final arbitration award was entered, ordering Armstrong and Tailwind Sports to pay SCA $10 million dollars. Armstrong’s lawyers called the award “unprecedented”. Lance of course, is very concerned about fairness and all that sort of thing.

Armstrong is also looking down the barrel of a False Claims Act lawsuit filed by former teammate Floyd Landis alleging Armstrong defrauded the U.S. Postal Service as a team sponsor.

“Oh what a tangled web we weave when first we practice to deceive….”[apologies to Walter Scott].