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800-Meter Champion Berian Eventually Outpaces Nike Endorsement Suit... Or Did He?

World 800-meter champion Boris Berian is seemingly capable of out-running just about anything these days. Berian is just a year removed from sprinting out of a McDonald's kitchen and into track lore – essentially trading a fry cook apron for track shorts and blowing away the competition en route to gold at the 2016 world indoor championships. Some months later, the American track star appears to have, at least for the moment, finally put some distance between himself and his former sponsor with the news last month that Nike has decided to drop its breach of contract lawsuit against the soon-to-be Olympian. So, why did Nike split with this up-and-coming track star?

The relationship between Berian and Nike started, as these things typically do, quite harmoniously. After an unexpected second place finish at the Adidas Grand Prix in June 2015, Berian, until then having attracted attention largely for his previous work as a McDonald's fry cook, caught the eye of several suitors hoping to sponsor him, ultimately selecting the Oregon shoe giant because it came in with the highest offer.

Yet just as quickly as runner and corporate sponsor fell in love, they puzzlingly split. As early as January 2016, Berian was spotted racing in New Balance gear. At the time, Berian's agent explained that his client's contract with Nike had expired and that any contractual restrictions against signing another footwear endorsement contract had lapsed.

If the middle distance champion thought he had left Nike in the dust, he was quite mistaken. In April, Nike dashed to court and filed a breach of contract lawsuit. (Nike USA Inc. v. Berian, No. 16-00743 (D. Or. filed April 29, 2016)). Berian was served with notice of the suit seemingly during the only time Nike could catch him: while the runner stood still and watched others compete at a track meet in Los Angeles.

In the complaint, Nike claimed that it had a right of first refusal to match a $125,000 sponsorship deal that Berian had signed with New Balance. Nike further alleged that it had exercised its right of first refusal and matched the New Balance offer, which included $125,000 a year plus a performance bonus, and that therefore Berian had breached the endorsement deal in eloping with New Balance. Nike further asserted that its offer was a match even if it contained reductions (which Nike stated are standard in track and field endorsement contracts) because the New Balance offer was only a brief term sheet (with omitted reductions) and not a complete contract. As a result of the alleged violation, Nike sought an order enjoining Berian from entering into an endorsement relationship with any Nike competitor and from competing while wearing or otherwise endorsing any Nike competitor's product. Nike claims that it would suffer irreparable harm if Berian is allowed to compete in a competitor's product, particularly in an Olympic year.

In a response in opposition to a motion for an expedited hearing and discovery on the injunction issue, Berian maintained that he had not breached the deal because Nike did not truly match New Balance's offer. The crux of Berian's argument focused on the insertion of the reductions clause in Nike's offer that allowed Nike to reduce Berian's compensation in certain circumstances relating to performance, as opposed to New Balance's offer, which did not contain any reductions.

Nonetheless, in early June, Nike obtained a temporary restraining order barring Berian from wearing New Balance products.

That temporary victory, however, came with rather limited fanfare, a reaction that perhaps served as an indicator of what awaited Nike, both in the courtroom and out. Inside the courthouse halls at oral argument, the judge set to rule on the injunction request reportedly appeared skeptical of the merits of Nike's case. That perceived skepticism also took the form of criticism in the court of public opinion, with members in the track community decrying the proverbial Goliath for singling out a modern-day David.  

Within several weeks, however, Nike had changed course, deciding to drop the suit altogether, in the process adding another chapter to what had quickly become a tumultuous saga. Nike, while maintaining the validity of its breach claims, stated that it opted to drop the suit to eliminate any distraction for Berian who was preparing for the Olympic trials. Berian placed second in those trials and earned a trip to the Rio Olympics at summer's end. And he did so wearing a New Balance kit.

Ironically enough, Berian's performance in the trials means that the saga continues into the present.

Nike is the official sponsor of USA Track and Field and, as such, all track and field athletes representing the United States at the Rio Olympics will be outfitted in Nike-branded national team attire in competitions, award ceremonies, official press conferences, and other official team functions.

Berian's prize, then, for securing a trip to Rio by placing second at the trials?

Glory, sure. And a clean Nike uniform to don at the starting line.

© 2020 Proskauer Rose LLP.

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