Disgruntled employees and creditors filed a $25-million lawsuit Wednesday against the United States Football League, claiming team owners bled funds from the crippled Los Angeles Express to bolster their flagging legal battle against the National Football League.
The suit, filed in Los Angeles Superior Court on behalf of nearly 60 plaintiffs, also claims that USFL owners secretly planned to shut down the Los Angeles team but kept it operating in order to maximize the damages they might be able to collect from the NFL.
The lawsuit seeks damages for fraud, breach of contract, conspiracy and conversion on behalf of dozens of travel agencies, hotels, printers, advertisers and former staff members who were left holding thousands of dollars in unpaid bills when the Los Angeles team was dissolved last year.
Also joining in the suit was former L.A. Express controller Paul Sandrock, who claims that USFL Commissioner Harry Usher lied to him in 1984 when Usher assured him that the league planned to keep the team in operation and in fact "had no intention" of paying any of the team's creditors.
Sandrock, said attorney James H. Davis, who filed the suit, "was assuring people all over the country that the team was viable, that it was going to go on. He put his reputation on the line, and he feels understandably disturbed about that."
Usher could not be reached for comment Wednesday, but the USFL's general counsel, Jane Ellison, said of the suit: "If those statements were made other than in a lawsuit, they would be slanderous, because the people making those statements know they are not true."
Ellison said the suit appears to involve creditors who have claims against the old management of the L.A. Express, not the USFL, and employees who believe they are due vacation and severance pay that the league never promised.
Davis said Sandrock will testify that he learned of a secret meeting in the winter of 1985 at which USFL owners, who had stepped in to operate the financially strapped Express, decided to shut down at the end of the summer season but refrained from announcing the decision because of the league's pending $1.69-billion antitrust suit against the NFL.
"In order for the other teams to bring their suit, they had to keep the L.A. Express alive, they had to have an L.A. team. They had to have a viable entity to bring to the case, or else there's no damage," Davis said.
"They maintained a front, paid rent, paid decorating bills and other expenses, not for the purpose of operating a football team in this area but for the purpose of presenting a fraudulent impression to the world about their status and circumstances to add to their pending antitrust case."
Knowing that there was no plan to remain in operation the next year, USFL owners continued to incur expenses running the Los Angeles team with the knowledge there was no way to pay the bills, the suit alleges.
Ellison denied any secret plan to shut down the Express and said the widespread publicity during 1985, about the search for a new owner for the team, was a sign that the league had every hope of keeping the franchise alive.
"Certainly, our thinking at that time was to limp our way through that season, and at the close of the season, to have an owner in place," she said. "It certainly is evident to a stranger that if you never find a new owner, you can't go on forever."
The lawsuit also seeks damages on behalf of creditors and former staff members, including band members, bus drivers, cheerleaders and secretaries, who say money from the sale of Express players' contracts that should have gone to pay the team's bills was diverted instead to pay the league's mounting legal bills.
But Ellison said the league realized very little cash through the release of such players as Steve Young and Gary Zimmerman to the NFL. Moreover, the league has paid all bills accrued during the 1985 season after it took over the Express franchise from former owner Bill Oldenburg, she said.
"If there are any creditors out there from 1985, I would suggest that they most seriously contact the L.A. Express, because that organization has always paid its debts," she said. "It's the one bright note in all of this gloom and doom."
The antitrust suit resulted in a declaration that the NFL was guilty of antitrust violations but a triple-damage award of only $3 left the future of the league, which subsequently canceled its 1986 season, in grave doubt.
Named as defendants in the suit, in addition to Usher, are Express Football Club Inc. and 11 USFL team owners, who, Davis said, could be held personally liable for any damages assessed.