20-1831(L)
`Olson v. Major League Baseball
`
`
`
`
`United States Court of Appeals
`for the Second Circuit
`_____________________________________
`
`August Term 2020
`
`(Submitted: December 14, 2020 Decided: March 21, 2022)
`
`Nos. 20-1831-cv; 20-1841-cv
`
`_____________________________________
`
`KRISTOPHER R. OLSON, CHRISTOPHER CLIFFORD, ERIK LIPTAK,
`CHRISTOPHER LOPEZ, WARREN BARBER, INDIVIDUALLY
`AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
`
`Plaintiffs-Appellants-Cross-Appellees,
`
`
`— v. —
`
`MAJOR LEAGUE BASEBALL, MLB ADVANCED MEDIA, L.P.,
`
`
`Defendants-Appellees-Cross-Appellants,
`
`
`NEW YORK YANKEES PARTNERSHIP,
`
`Interested Party-Appellee-Cross-Appellant,
`
`
`BOSTON RED SOX BASEBALL CLUB, L.P., HOUSTON ASTROS, LLC,
`
`
`Defendants-Appellees.*
`_____________________________________
`
`
`* The Clerk of Court is respectfully directed to amend the official caption as set forth above.
`
`

`

`
`
`Before:
`
`LIVINGSTON, Chief Judge, LYNCH and BIANCO, Circuit Judges.
`
`Plaintiffs-Appellants Kristopher R. Olson, Christopher Clifford, Erik Liptak,
`Christopher Lopez, and Warren Barber appeal from the judgment of the United
`States District Court for the Southern District of New York (Rakoff, J.), granting
`the motion to dismiss all claims against Major League Baseball (“MLB”) entities
`and two teams. Plaintiffs, a putative class of fantasy sports players, assert claims
`for fraudulent misrepresentations and omissions, negligent misrepresentations,
`violations of various state consumer protection laws, and unjust enrichment. The
`gravamen of the lawsuit is that plaintiffs, along with a potential class of thousands
`of other contestants, paid to compete in fantasy baseball contests operated by non-
`party DraftKings Inc. (“DraftKings”), wrongly believing that they were engaging
`in “games of skill” based upon a fair gauge of player performance, while
`defendants fraudulently concealed that the player statistics were purportedly
`unreliable because of rule violations in the form of electronic sign-stealing by
`certain MLB teams during the 2017–2019 baseball seasons. Plaintiffs further allege
`that MLB intentionally took no action to address these rule violations in order to
`protect its financial interest and investment in DraftKings.
`
`We affirm the district court’s dismissal of the First Amended Complaint and
`its denial of plaintiffs’ motion for reconsideration. At its core, this action is nothing
`more than claims brought by disgruntled fantasy sports participants, unhappy
`with the effect that cheating in MLB games may have had on their level of success
`in fantasy sports contests. We hold that alleged misrepresentations or omissions
`by organizers and participants in major league sports about the competition
`itself—such as statements about performance, team strategy, or rules violations—
`do not give rise to plausible claims sounding in fraud or related legal theories
`brought by consumers of a fantasy sports competition who are utilizing a league’s
`player statistics.
`
`The MLB entities and the New York Yankees Partnership have filed a cross-
`appeal, challenging the district court’s separate order, which concluded that a
`September 14, 2017 letter from the MLB Commissioner to the New York Yankees
`General Manager should be unsealed. This letter related to the results of an
`internal investigation, which plaintiffs allege contradicted a subsequent MLB
`press release on the same subject. In light of plaintiffs’ attempted use of the letter
`in their proposed Second Amended Complaint and the district court’s discussion
`
`

`

`of the letter in explaining its decision to deny plaintiffs’ request for leave to amend
`in their reconsideration motion, and because MLB disclosed a substantial portion
`of the substance of the letter in its press release about the investigation, we
`conclude that the district court did not abuse its discretion in unsealing the letter,
`subject to redacting the names of certain individuals.
`
`Accordingly, we AFFIRM the district court’s dismissal of plaintiffs’ First
`Amended Compliant without leave to amend and the district court’s denial of
`plaintiffs’ motion for reconsideration. We also AFFIRM the district court’s
`unsealing order.
`
`
`
`
`
`
`
`DAVID S. GOLUB (Steven L. Bloch, on
`the brief), Silver Golub & Teitell LLP,
`Stamford, Connecticut;
`John D.
`Radice, Kenneth Pickle, Natasha
`Fernandez-Silber, April Lambert,
`Radice Law Firm, P.C., Princeton,
`New Jersey (on the brief), for Plaintiffs-
`Appellants-Cross-Appellees.
`
`JOHN L. HARDIMAN (Benjamin R.
`Walker, Hannah Lonky Fackler, on the
`brief), Sullivan & Cromwell LLP, New
`for Defendants-
`York, New York,
`Appellees-Cross-Appellants.
`
`RANDY L. LEVINE, New York Yankees
`Partnership, Bronx, New York;
`Jonathan D. Schiller, Thomas H.
`Sosnowski, Boies Schiller Flexner
`LLP, New York, New York (on the
`for Interested Party-Appellee-
`brief),
`Cross-Appellant.
`
`Katherine B. Forrest, Michael T.
`Reynolds, Lauren A. Moskowitz,
`Cravath, Swaine & Moore LLP, New
`
`3
`
`

`

`for Defendant-
`York, New York,
`Appellee Boston Red Sox Baseball Club,
`L.P.
`
`HILARY L. PRESTON (Clifford Thau,
`Marisa Antos-Fallon, on the brief),
`Vinson & Elkins LLP, New York, New
`York; Michael C. Holmes, Vinson &
`Elkins LLP, Dallas, Texas (on the brief),
`for Defendant-Appellee Houston Astros,
`LLC.
`_____________________________________
`
`JOSEPH F. BIANCO, Circuit Judge:
`
`Plaintiffs-Appellants Kristopher R. Olson, Christopher Clifford, Erik Liptak,
`
`Christopher Lopez, and Warren Barber appeal from the judgment of the United
`
`States District Court for the Southern District of New York (Rakoff, J.), granting
`
`the motion to dismiss all claims against Major League Baseball (“MLB”) and MLB
`
`Advanced Media, L.P. (“MLBAM,” and together with MLB, the “MLB
`
`Defendants”), as well as the Boston Red Sox Baseball Club, L.P. (the “Red Sox”)
`
`and Houston Astros, LLC (the “Astros,” and together with the Red Sox, the “Team
`
`Defendants”).
`
`Plaintiffs assert claims for fraudulent misrepresentations and omissions,
`
`negligent misrepresentations, violations of various state consumer protection
`
`laws, and unjust enrichment. The gravamen of the lawsuit is that plaintiffs, along
`
`
`
`4
`
`

`

`with a potential class of thousands of other contestants, paid to compete in fantasy
`
`baseball contests operated by non-party DraftKings Inc. (“DraftKings”), wrongly
`
`believing that they were engaging in “games of skill” based upon a fair gauge of
`
`player performance, while defendants fraudulently concealed that the player
`
`statistics were unreliable because of rule violations in the form of electronic sign-
`
`stealing by certain MLB teams during the 2017–2019 baseball seasons. Plaintiffs
`
`further allege that MLB intentionally took no action to address these rule
`
`violations in order to protect its reputation and financial interests, as well as its
`
`investment in DraftKings.
`
`Defendants moved to dismiss all the claims in this action, and the district
`
`court granted that motion, dismissing the First Amended Complaint (“FAC”) in
`
`its entirety without leave to amend. In a motion for reconsideration, plaintiffs
`
`moved to vacate the judgment and for leave to amend, attaching their proposed
`
`Second Amended Complaint (“SAC”) to the motion, which purported to cure the
`
`deficiencies in the FAC by, inter alia, adding new allegations drawn from materials
`
`obtained during discovery.
`
` The district court denied the motion for
`
`reconsideration for substantially the same reasons it dismissed the FAC.
`
`
`
`5
`
`

`

`As part of its order denying plaintiffs’ motion for reconsideration, the
`
`district court discussed a September 14, 2017 letter, referenced in the proposed
`
`SAC and filed under seal, which was sent by the Commissioner of the MLB to the
`
`General Manager of the New York Yankees Partnership (the “Yankees”) and
`
`related to the results of an internal investigation by MLB. In a separate order, after
`
`application of the three-part analysis required by our precedent, the district court
`
`determined that the letter should be unsealed, but permitted the MLB Defendants
`
`and the Yankees to submit a redacted version to protect the identity of the
`
`individuals mentioned therein, and then stayed the unsealing order to allow the
`
`Yankees to appeal to this Court.
`
`We affirm the district court’s dismissal of the FAC and its denial of plaintiffs’
`
`motion for reconsideration. At its core, this action is nothing more than claims
`
`brought by disgruntled fantasy sports participants, unhappy with the effect that
`
`cheating in MLB games may have had on their level of success in fantasy sports
`
`contests. We hold that alleged misrepresentations or omissions by organizers and
`
`participants in major league sports about the competition itself—such as
`
`statements about performance, team strategy, or rules violations—do not give rise
`
`to plausible claims sounding in fraud or related legal theories brought by
`
`
`
`6
`
`

`

`consumers of a fantasy sports competition who are utilizing a league’s player
`
`statistics.
`
`More specifically, among other pleading defects, plaintiffs have not
`
`plausibly alleged, either in the FAC or the proposed SAC, actual or reasonable
`
`reliance upon the alleged fraudulent and negligent misrepresentations about
`
`player performance and electronic sign-stealing. Apart from actual reliance, no
`
`consumer of fantasy baseball competitions could plausibly allege that, in paying
`
`to participate in the competition, they reasonably relied upon these statements in
`
`believing that the sport of major league baseball was free from intentional
`
`violations of league rules by teams and/or individual players. Instead, any
`
`reasonable spectator or consumer of sports competitions—including participants
`
`in fantasy sports contests based upon such sporting events—is undoubtedly aware
`
`that cheating is, unfortunately, part of sports and is one of many unknown
`
`variables that can affect player performance and statistics on any given day, and
`
`over time.
`
`The claims under the various state consumer protection laws fail for a
`
`similar reason—that is, the alleged statements by defendants about the integrity
`
`of their sport (including the electronic sign-stealing issue) do not rise to the level
`
`
`
`7
`
`

`

`of a deceptive or unfair practice that would plausibly mislead the reasonable
`
`consumer under these circumstances. In addition, with respect to the unjust
`
`enrichment claim, there is no plausible claim that any alleged benefit to MLB was
`
`unjust. Thus, the FAC was properly dismissed, and the motion for reconsideration
`
`was properly denied because the additional allegations in the proposed SAC do
`
`not cure these pleading defects, as the claims in this particular case are based on
`
`fundamentally-flawed legal theories.
`
`We likewise affirm the district court’s order unsealing the September 14,
`
`2017 letter sent by the MLB Commissioner to the Yankees’ General Manager about
`
`the results of an internal investigation, which plaintiffs allege contradicted a
`
`subsequent MLB press release on the same subject. In light of plaintiffs’ attempted
`
`use of the letter in their proposed SAC and the district court’s discussion of the
`
`letter in explaining its decision to deny them the leave to amend requested in their
`
`reconsideration motion, and because a substantial portion of the substance of the
`
`letter has already been disclosed in the press release about the investigation issued
`
`by MLB, we conclude that the district court did not abuse its discretion in
`
`unsealing the letter with redactions.
`
`
`
`8
`
`

`

`Accordingly, we AFFIRM the district court’s dismissal of plaintiffs’ FAC
`
`without leave to amend and the district court’s denial of plaintiffs’ motion for
`
`reconsideration. We also AFFIRM the district court’s unsealing order.
`
`BACKGROUND
`
`I.
`
`Factual Background1
`
`DraftKings was founded in 2012 to operate daily and weekly fantasy sports
`
`contests—across multiple sports including baseball—through its website and
`
`mobile applications. Less than a year after DraftKings’ founding, MLB, acting
`
`through and in a partnership or joint venture with MLBAM,2 acquired an equity
`
`stake in DraftKings.
`
`As part of the partnership, DraftKings offers daily fantasy sports baseball
`
`competitions (“MLB DFS”) and requires “contestants to select a lineup of MLB
`
`players pursuant to a ‘salary cap’ draft.” Joint App’x at 80. DraftKings
`
`
`1 The factual summary below is derived from the allegations in the FAC and the proposed
`SAC, which we must accept as true in reviewing a motion to dismiss. See Ashcroft v. Iqbal,
`556 U.S. 662, 678 (2009).
`
` 2
`
` MLB is an unincorporated association consisting of thirty major league baseball clubs,
`including defendants Houston Astros and Boston Red Sox, and interested party New
`York Yankees Partnership (the “Yankees”). MLBAM is a limited partnership comprised
`of MLB’s member clubs (or their affiliates). “MLBAM has responsibility for internet and
`interactive marketing for MLB, including MLB’s relationship with DraftKings and
`promotion and marketing of DraftKings’ fantasy baseball competitions on a nationwide
`basis.” Joint App’x at 78.
`
`
`
`9
`
`

`

`participants accumulate fantasy points based on the performance of their
`
`“drafted” players in real life on the particular day or week covered by the contest;
`
`at the end of the contest, the total points accrued determines who wins a cash prize.
`
`As outlined in the FAC, MLB DFS, like other fantasy sports competitions offered
`
`by DraftKings, are defined as “games of skill,” which are exempt from federal
`
`prohibitions on illegal gambling, pursuant to the Unlawful Internet Gambling
`
`Enforcement Act (“UIGEA”), 31 U.S.C. § 5361, et seq. (2006). The DraftKings’
`
`“Terms of Use” include a “Conditions of Participation” provision, which states
`
`that “[W]inners are determined by the individuals who use their skill and
`
`knowledge of relevant sports information and fantasy sports rules to accumulate
`
`the most points according to the corresponding scoring rules.” Joint App’x at 460.
`
`Participants pay DraftKings an entry fee to join a contest, a portion of which is
`
`kept by DraftKings and a portion of which funds the contests’ prizes.
`
`Plaintiffs Olson, Lopez, Barber, Clifford, and Liptak are residents of
`
`Massachusetts, California, Texas, Florida, and Colorado, respectively. Each
`
`plaintiff participated in these contests and alleged in the proposed SAC that he
`
`received and relied upon the MLB fantasy baseball contests’ Conditions of
`
`Participation, which stated that the contests were conducted as games of skill, in
`
`
`
`10
`
`

`

`deciding to pay to participate in these contests. Joint App’x at 505, 509, 512, 514,
`
`516–17.
`
`In early 2015, MLB made a further investment in DraftKings, creating what
`
`MLB and DraftKings called “the most comprehensive league partnership in daily
`
`fantasy sports history.” Joint App’x at 82 (internal quotation marks omitted).
`
`According to the FAC, the deal “provided for co-branding of DraftKings’ DFS
`
`baseball contests, allowed DraftKings to offer market-specific in-ballpark
`
`experiences, and gave DraftKings promotional rights, use of MLB league and team
`
`logos, the exclusive right to sign sponsorship deals with individual MLB member
`
`clubs, and a designation as MLB’s ‘Official Daily Fantasy Game.’” Joint App’x at
`
`82–83. In return, plaintiffs allege, the MLB Defendants “received a share of the
`
`multi-million dollar fees earned from fantasy baseball contestants, an increase in
`
`the value of its equity investment in DraftKings (which MLB redeemed in 2019),
`
`as well as substantial other financial benefits.” Joint App’x at 72–73.
`
`As part of that March 2015 deal, MLBAM, acting on behalf of MLB and its
`
`clubs and affiliates, and DraftKings signed a licensing and marketing agreement,
`
`setting out the conditions under which DraftKings could use MLB’s proprietary
`
`material in its fantasy baseball competitions (“MLB-DraftKings Agreement”). The
`
`
`
`11
`
`

`

`terms of that agreement allegedly show that the MLB Defendants “were not
`
`simply [] investor[s] in DraftKings,” but were “directly and substantially involved
`
`in every aspect of the commercial venture.” Joint App’x at 458.
`
`Shortly thereafter, and before July 2015, DraftKings announced individual
`
`partnerships with twenty-seven of MLB’s member clubs, including the Astros and
`
`the Red Sox.3 As part of the terms of these partnerships, DraftKings could create
`
`“market-specific in-ballpark experiences” and could “place advertisements inside
`
`the stadiums of their partner MLB member clubs.” Joint App’x at 83. This
`
`business relationship between DraftKings and defendants allegedly continued
`
`into the relevant time period, which included the 2017–2019 baseball seasons.
`
`Meanwhile, the issue regarding electronic sign-stealing was brewing in
`
`baseball. During baseball games, pitchers and catchers use a series of signals—
`
`called “signs”—to communicate the type of pitch being thrown, and the intended
`
`speed, movement, and location of the pitch. A batter who knows the type of pitch
`
`being thrown in advance is more likely to hit the ball successfully. Thus, keeping
`
`such signs secret is significant to a pitcher’s success, and the disclosure to the batter
`
`of the content of the signs correspondingly affects his success.
`
`
`3 The Astros and the Red Sox deny that any separate individual contracts exist between
`them and DraftKings. Astros’ Br. at 11; Red Sox’s Br. at 4–5.
`12
`
`
`
`

`

`All of MLB’s member clubs have entered into an operating agreement (the
`
`“MLB Constitution”), pursuant to which all teams agreed to be bound by rules
`
`and regulations “relating to games, ballparks . . . and other matters” set by MLB.
`
`Joint App’x at 85. MLB rules and regulations do not prohibit sign-stealing per se,
`
`but as of the start of the 2017 season, they did explicitly prohibit electronic sign-
`
`stealing. Joint App’x at 87 (stating that regulations barred “the use of electronic
`
`equipment or devices during games, providing that no such equipment ‘may be
`
`used for the purpose of stealing signs or conveying information designed to give
`
`a Club an advantage’”).
`
`Throughout the 2017, 2018, and 2019 baseball seasons, officials and players
`
`of the Astros and the Red Sox (and possibly other MLB member clubs) allegedly
`
`violated MLB rules by engaging in electronic sign-stealing.4 Although plaintiffs
`
`allege that these teams improved their batting performance significantly during
`
`the class period by engaging in this prohibited practice, the Team Defendants
`
`attributed their success to legitimate factors in various public statements made
`
`throughout this period.
`
`
`4 The FAC cites a news article reporting that Astros personnel believed that as many as
`eight teams may have been electronically stealing signs. Joint App’x at 109. The
`proposed SAC further alleges that electronic sign-stealing occurred as early as the 2015
`baseball season.
`
`
`
`13
`
`

`

`Electronic sign-stealing was reported to MLB when the Yankees filed a
`
`complaint in 2017. MLB Commissioner Robert D. Manfred, Jr. then issued a public
`
`statement on September 15, 2017 (the “2017 Press Release”) announcing that his
`
`office had “conducted a thorough investigation” of the allegation by the Yankees
`
`“that the Boston Red Sox violated certain Major League Baseball Regulations by
`
`using electronic equipment to aid in the deciphering of signs being given by the
`
`Yankees’ catcher,” and that he was “prepared to disclose the results of that
`
`investigation.” Joint App’x at 295. The 2017 Press Release noted, “At the outset,
`
`it is important to understand that the attempt to decode signs being used by an
`
`opposing catcher is not a violation of any Major League Baseball Rule or
`
`Regulation.” Joint App’x at 295. It further emphasized that “Major League
`
`Baseball Regulations do, however, prohibit the use of electronic equipment during
`
`games and state that no such equipment ‘may be used for the purpose of stealing
`
`signs or conveying information designed to give a Club an advantage.’” Joint
`
`App’x at 295. Based on the investigation conducted by his office, Commissioner
`
`Manfred found that the Red Sox violated this regulation “by sending electronic
`
`communications from their video replay room to an athletic trainer in the dugout.”
`
`Joint App’x at 295. He noted that he had “received absolute assurances from the
`
`
`
`14
`
`

`

`Red Sox that there will be no future violations of this type,” and imposed a fine on
`
`the Red Sox of “an undisclosed amount.” Joint App’x at 295. According to
`
`plaintiffs, that fine did not serve to deter the Red Sox, as the team is alleged to have
`
`resumed the practice the following season.
`
`The 2017 Press Release further explained that, after the Yankees’ complaint,
`
`“the Red Sox brought forward allegations that the Yankees had made improper
`
`use of the YES Network in an effort to decipher the Red Sox signs.” Joint App’x at
`
`295. It then described how the Commissioner’s Office subsequently conducted an
`
`investigation into the Yankees’ alleged conduct, and the results of that
`
`investigation:
`
`During that investigation, we found insufficient evidence to support
`the allegation that the Yankees had made inappropriate use of the
`YES Network to gain a competitive advantage. In the course of our
`investigation, however, we
`learned
`that during an earlier
`championship season (prior to 2017) the Yankees had violated a rule
`governing the use of the dugout phone. No Club complained about
`the conduct in question at the time and, without prompting from
`another Club or my Office, the Yankees halted the conduct in
`question. Moreover, the substance of the communications that took
`place on the dugout phone was not a violation of any Rule or
`Regulation in and of itself. Rather, the violation occurred because the
`dugout phone technically cannot be used for such a communication.
`Based on the foregoing, I have decided to fine the Yankees a lesser
`undisclosed amount which in turn will be donated by my office to
`hurricane relief efforts in Florida.
`
`
`
`
`15
`
`

`

`Joint App’x at 296.
`
`
`
`Allegations of electronic sign-stealing by the Astros did not become public
`
`until various news articles were published in November 2019. Shortly thereafter,
`
`Commissioner Manfred announced the commencement of a “really, really
`
`thorough” investigation into the alleged conduct by the Astros. Joint App’x at 96.
`
`On January 13, 2020, Commissioner Manfred announced in a press release that
`
`MLB had determined that the Astros engaged in electronic sign-stealing in the
`
`2017 season and part of the 2018 season. Commissioner Manfred described how
`
`“the conduct of the Astros, and its senior baseball operations executives, merits
`
`significant discipline” because this behavior “caused fans, players, executives at
`
`other MLB Clubs, and members of the media to raise questions about the integrity
`
`of games in which the Astros participated.” Press Release, Major League Baseball,
`
`Office of the Commissioner, MLB Completes Astros’ Investigation (Jan. 13, 2020);
`
`see Joint App’x at 96 n.40 (citing press release). The press release contained many
`
`of the details regarding the findings of that investigation of the Astros, and also
`
`announced the imposition of disciplinary sanctions against the Astros and certain
`
`members of the Astros organization.
`
`
`
`
`
`16
`
`

`

`II.
`
`Procedural History
`
`Ten days after the January 13, 2020 press release about the Astros, plaintiff
`
`Olson filed the initial class action complaint alleging: (1) violations of state
`
`consumer protection statutes of nearly all fifty states against the MLB Defendants,
`
`(2) unjust enrichment against all defendants, (3) negligence against the MLB
`
`Defendants, and (4) violations of the Texas Deceptive Trade Practices and
`
`Consumer Protection Act (“TDTPA”) against the Astros. Plaintiff Olson also
`
`indicated an intent to file a cause of action alleging violations of the Massachusetts
`
`Consumer Protection Act (“MCPA”) against the Red Sox.
`
`
`
`On February 14, 2020, the FAC was filed, and plaintiff Olson was joined by
`
`new plaintiffs Lopez, Barber, Clifford, and Liptak. The FAC added a claim for
`
`common law fraud against all defendants, provided more detailed allegations
`
`regarding particular violations of state consumer protection statutes in connection
`
`with the domiciles of plaintiffs, and now alleged negligence as a separate cause of
`
`action against the Team Defendants to supplement the prior negligence allegations
`
`against the MLB Defendants. In sum, plaintiffs allege common law fraud,
`
`negligence, and unjust enrichment against all defendants; violations of the
`
`consumer protection statutes of plaintiffs’ home states (and the “substantially
`
`
`
`17
`
`

`

`similar” consumer protection statutes of numerous other states) against the MLB
`
`Defendants; violations of the TDTPA against the Astros; and violations of the
`
`MCPA against the Red Sox. Plaintiffs seek the certification of a nationwide class,
`
`and Massachusetts, California, Texas, Florida, and Colorado subclasses.
`
`
`
`Plaintiffs’ allegations center on defendants’ purported concealment of the
`
`electronic sign-stealing scheme: The FAC ties defendants’ alleged concealment of
`
`the prohibited electronic sign-stealing—which purportedly corrupted the fairness
`
`of MLB DFS contests—to defendants’ financial interest and investment in
`
`DraftKings. The FAC alleges that defendants made various statements and
`
`omissions designed to conceal the electronic sign-stealing scheme in order to
`
`convince plaintiffs (and other MLB DFS contest participants) that the MLB DFS
`
`contests were “games of skill” grounded in fair and legitimate player performance
`
`statistics. The ultimate aim of such deception was allegedly to induce plaintiffs
`
`and other DraftKings participants to play MLB DFS contests, which each plaintiff
`
`alleges he would not have done “had he known that the honesty of the player
`
`performance statistics on which his wagers were based and the results of his
`
`wagers were determined was compromised by MLB teams’ and players’ electronic
`
`sign stealing.” Joint App’x at 112–15.
`
`
`
`18
`
`

`

`
`
`On April 3, 2020, the district court dismissed the FAC in its entirety without
`
`leave to amend. Olson v. Major League Baseball (“Olson I”), 447 F. Supp. 3d 159, 173
`
`(S.D.N.Y. 2020). Judgment was entered on April 7, 2020. On May 6, 2020, pursuant
`
`to Rules 59(e) and 60(b) of the Federal Rules of Civil Procedure, plaintiffs sought
`
`reconsideration in the form of a motion to alter, amend, and vacate the judgment
`
`and for leave to amend, attaching their proposed SAC. According to plaintiffs, the
`
`proposed SAC cured the deficiencies in the FAC by, inter alia, adding new
`
`allegations drawn from materials obtained during discovery. On June 5, 2020, the
`
`district court denied the reconsideration motion in its entirety. Olson v. Major
`
`League Baseball (“Olson II”), 447 F. Supp. 3d 174, 182 (S.D.N.Y. 2020).
`
`
`
`In Olson II, the district court discussed a letter, dated September 14, 2017,
`
`sent by Commissioner Manfred to the General Manager of the Yankees. Id. at 179.
`
`That letter, filed under seal, was referenced in the proposed SAC and was subject
`
`to a request for continued sealing by the MLB Defendants and third-party
`
`Yankees. Id. at 179 n.3.
`
`In a subsequent order, the district court determined that the letter should be
`
`unsealed, but permitted the MLB Defendants and the Yankees to submit “a
`
`minimally redacted version of the letter to protect the identity of individuals
`
`
`
`19
`
`

`

`mentioned therein.” Olson v. Major League Baseball (“Olson III”), 466 F. Supp. 3d
`
`450, 456–57 (S.D.N.Y. 2020). The district court also stayed the unsealing to allow
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`the Yankees to pursue an appeal in this Court. Id. at 457.
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`This appeal followed. Plaintiffs appeal the dismissal of the FAC, as well as
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`the denial of the motion for reconsideration based on the proposed SAC. The MLB
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`Defendants and the Yankees cross-appeal the district court’s unsealing order.
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`DISCUSSION
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`I.
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`Plaintiffs’ Appeal
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`A.
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`The Standard of Review
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`We review the grant of a motion to dismiss de novo, accepting all factual
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`allegations in the complaint as true and drawing all reasonable inferences in favor
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`of the plaintiff. City of Providence v. Bats Glob. Mkts., Inc., 878 F.3d 36, 48 (2d Cir.
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`2017).
`
`To survive a motion to dismiss under Rule 12(b)(6), “a complaint must
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`contain sufficient factual matter, accepted as true, to state a claim to relief that is
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`plausible on its face.” Iqbal, 556 U.S. at 678 (internal quotation marks omitted). “A
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`claim has facial plausibility when the plaintiff pleads factual content that allows
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`the court to draw the reasonable inference that the defendant is liable for the
`
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`misconduct alleged.” Id. “Threadbare recitals of the elements of a cause of action,
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`supported by mere conclusory statements, do not suffice.” Id.
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`Claims sounding in fraud must satisfy the heightened pleading standards
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`of Federal Rule of Civil Procedure Rule 9(b). See Eternity Glob. Master Fund Ltd. v.
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`Morgan Guar. Tr. Co. of N.Y., 375 F.3d 168, 177 (2d Cir. 2004). Under Rule 9(b)’s
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`particularity requirement, the plaintiff must “(1) detail the statements (or
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`omissions) that the plaintiff contends are fraudulent, (2) identify the speaker, (3)
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`state where and when the statements (or omissions) were made, and (4) explain
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`why the statements (or omissions) are fraudulent.” Id. at 187; see also Fin. Guar.
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`Ins. Co. v. Putnam Advisory Co., LLC, 783 F.3d 395, 402–03 (2d Cir. 2015).
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`The district court’s denial of leave to amend is similarly reviewed de novo
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`because the district court made an interpretation of law when it determined that
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`any amendment, and specifically the proposed amendments in the SAC, would be
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`futile. See Panther Partners Inc. v. Ikanos Commc’ns, Inc., 681 F.3d 114, 119 (2d Cir.
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`2012). “Futility is a determination, as a matter of law, that proposed amendments
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`would fail to cure prior deficiencies or to state a claim under Rule 12(b)(6) of the
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`Federal Rules of Civil Procedure.” Id. In general, when evaluating whether a
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`proposed amended complaint would state a claim, we consider “the proposed
`
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`amendment[s] . . . along with the remainder of the complaint.” Starr v. Sony BMG
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`Music Ent., 592 F.3d 314, 323 n.3 (2d Cir. 2010).
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`Finally, we generally review the denial of a reconsideration motion under
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`Federal Rules of Civil Procedure 59(e) and 60(b) for abuse of discretion. See Johnson
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`v. Univ. of Rochester Med. Ctr., 642 F.3d 121, 125 (2d Cir. 2011) (per curiam) (Rule
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`60(b)); Schwartz v. Liberty Mut. Ins. Co., 539 F.3d 135, 150 (2d Cir. 2008) (Rule 59(e)).
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`However, where (as here) the denial of reconsideration is based solely on futility
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`grounds, we again conduct de novo review. See, e.g., Ind. Pub. Ret. Sys. v. SAIC, Inc.,
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`818 F.3d 85, 92 (2d Cir. 2016).
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`For ease, we will review the allegations contained in both the FAC and the
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`proposed SAC together. Moreover, the parties agree that the claims should be
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`analyzed under the law of each plaintiff’s home states and, unless otherwise noted,
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`the elements for the respective claims under each state’s law (Massachusetts,
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`California, Texas, Florida, and Colorado) do not differ in a material manner.5
`
`
`5 In addition, to the extent we cite persuasive authority from other jurisdictions, such
`courts also were analyzing state law claims that are substantially similar to those at issue
`here.
`
`
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`
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`B.
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`Plaintiffs’ Fraud and Negligent Misrepresentation Claims
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`Plaintiffs have alleged two types of affirmative misrepresentations
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`sounding in fraud and negligent misrepresentation: those regarding fantasy
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`baseball and those regarding real-life major league baseball.
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`Common law fraud requires a (1) material misrepresentation or omission,
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`(2) with knowledge of its falsity, (3) for the purpose of inducing an action by
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`plaintiffs, (4) that was reasonably relied upon, and (5) that caused injury. See Small
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`v. Fritz Cos., Inc., 65 P.3d 1255, 1258 (Cal. 2003); Bristol Bay Prods., LLC v. Lampack,
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`312 P.3d 1155, 1160 (Colo. 2013); Balles v. Babcock Power Inc., 70 N.E.3d 905, 913
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`(Mass. 2017); Formosa Plastics Corp. USA v. Presi