The event wouldn't have been the MLS playoff game in LA the other night, would it? Not a major event... no one would have known ...  

As the disclaimer goes; "any reproduction or retransmission...without the expressed written consent..." is a violation of the law.  Of course, it's also illegal per the FCC to put an out-of-sync source or a source that exceeds H/V Blanking limits (although most newer switchers & master control units re-clock the signal) and this happens all the time.  But I hear about Producers and Directors doing this kind of stuff all the time.  The main reason that shows now have station ID bugs is because during the (1st) Gulf War, everybody was pirating CNN's feed - CNN started bugging their content to thawart this...local stations responded by putting in their own bugs on top of CNN's, and the rest is history. 
While I'm no lawyer, my understanding of Broadcast Law would say that yes, it's illegal.  Yes, your station could get in big trouble for doing this.  And the excuse "I was only following orders" wouldn't necessarily absolve YOU of any legal issues should ESPN decide to go after all those involved in stealing their copyrighted transmission.  Often, stations can get by using a "Courtesy Of" graphic, like they do when showing sports highlights.  But routing through a live program from somebody else without their permission?  I would offer that your Producer crossed the line with this one - maybe they figure that it's only illegal if they get caught.