By Christopher R. Deubert, Senior Writer
At the 2009 Sports Lawyers Association Conference, in response to a question (from me) about the possibility of agents suing players unions for failing to enforce their regulations, Don Fehr, then-Executive Director of the Major League Baseball Players Association (MLBPA), came out of the audience to declare that if agents sued the union, then the union would disband its agent certification program and negotiate all player contracts itself. There is no indication that the MLBPA is considering doing away with agents, but it did just decisively win a challenge brought by some would be agents.
Bad Bad Bunny and Associates
Benito Martinez-Ocasio, better known as “Bad Bunny,” is a Puerto Rican rapper and one of the world’s most popular artists. In 2021, he and his business associates – Jonathan Miranda and Noah Assad – sought to capitalize on that fame by co-founding a sports agency, Rimas Sports, to represent Latin American athletes.
However, the upstarts’ efforts ran headlong into the MLBPA’s Agent Regulations. Pursuant to the National Labor Relations Act (NLRA), the MLBPA is the players’ exclusive representative for purposes of negotiating pay, hours, as well as terms and conditions of employment. The MLBPA exercises this authority in negotiating a comprehensive collective bargaining agreement (CBA) with Major League Baseball and its respective clubs. Yet, the MLBPA also delegates the authority to negotiate individual player contracts, which are not inconsistent with the CBA, to agents through a certification process (and, as noted by Fehr, it could take away that authority).
In 2021, Miranda and Assad filed to become MLBPA-certified agents. In so doing, they certified that they had read and agreed to comply with the MLBPA’s regulations. Unfortunately for them, they did not comply.
Miranda failed the September 2021 agent exam while Assad skipped it. Nevertheless, they undertook to start obtaining MLB player clients. To assist them in their venture, they enlisted the services of William Arroyo, a certified agent with a lengthy – but intermittent – career in professional baseball. Assad and Miranda arranged for dozens of players who were not their clients to attend Bad Bunny concerts and a Phoenix Suns basketball game. They also sent players “care packages” of various merchandise and employed non-certified personnel for the purposes of recruiting players. Finally, they arranged for loans for players, including from a financial institution with which they had a close relationship.
All of these actions violated the MLBPA’s Agent Regulations which, among other things, prohibit offering money or items of value to induce a player to become a client, require loans to be reported to and approved by the MLBPA, and forbid agents from employing non-certified personnel for purposes of recruiting clients.
The MLBPA Investigates
Certified agents who were having their clients poached by Rimas Sports quickly complained to the MLBPA. In May of 2022 alone, 21 players had signed with Arroyo as their agent.
The MLBPA investigated the matter over the course of nearly two years, gathering documents and interviewing the people involved. However, Miranda, Assad, and Arroyo routinely failed in their obligations to cooperate with the investigation by delaying responses, refusing to provide certain information or documents, and providing inconsistent or untruthful responses.
On April 10, 2024, MLBPA issued a 61-page Notice of Discipline which revoked Arroyo’s certification and barred him from reapplying for five years. The Notice further barred Assad and Miranda from reapplying for such certification for five years.
Rimas Sports Swings Back – and Misses
On April 15, 2024, Arroyo, Assad and Miranda filed an appeal of the MLBPA’s decision and requested the appointed arbitrator to issue an injunction preventing the discipline pending the outcome of the appeal. The arbitrator refused and, on April 22, 2024, the MLBPA filed an action in a New York federal court to confirm the arbitrator’s decision.
On May 16, 2024, Rimas Sports filed a lawsuit against the MLBPA in a Puerto Rico federal court. Rimas Sports argued that the MLBPA has exceeded its authority under the NLRA and in so doing had tortiously interfered with the agency’s contracts with its player-clients and its agents. Specifically, Rimas Sports argued that the MLBPA has the authority to regulate individual agents insofar as they are involved in negotiating player contracts but has no authority to regulate agents or agencies when they are involved in negotiating marketing and endorsement deals on behalf of players. Rimas Sports then claimed the disciplinary action taken by the MLBPA effectively prevented them from providing these services as well, an assertion the MLBPA denied.
In an August 15, 2024 Opinion and Order, the District of Puerto Rico granted the MLBPA’s motion to compel the action to arbitration in accordance with the MLBPA’s regulations. The court recognized and held that the union’s regulations could and did govern the agents’ business entity, a decision which splits from the NFLPA’s regulation of agents.
When Rimas Sports tried to skirt the MLBPA arbitration process by filing a different arbitration through the American Arbitration Association, the court ordered Rimas Sports to comply with its prior order and to pay $10,797.45 in attorneys’ fees accrued by the MLBPA in contesting the matter.
Meanwhile, on July 24, 2024, the Southern District of New York denied the MLBPA’s request to confirm the arbitrator’s order denying Arroyo, Assad, and Miranda’s request to stay the discipline against them on the ground that the order was not sufficiently final for the federal court to have jurisdiction.
Game Over (Almost)
The courts’ orders forced the matter back to an arbitration process during which Arroyo, Assad, and Miranda were faced with the prospect of convincing an arbitrator that the MLBPA’s imposed discipline was unreasonable, arbitrary, or unsupported by the evidence.
After seven days of hearings in September and October which included testimony from seven witnesses and 228 exhibits, on October 30, 2024, an arbitrator ruled in the MLBPA’s favor. In an 80-page decision, Arbitrator Ruth Moscovitch detailed the essentially undisputed and voluminous violations of the agent regulations by the three claimants and found that the MLBPA investigation had been fair and thorough. The arbitrator upheld the five-year bans on Assad and Miranda but reduced Arroyo’s to three years by finding that he had been placed in an “impossible position” by Assad and Miranda’s actions and dominance over the new business enterprise.
On November 12, 2024, the MLBPA filed a petition with a New York state court to confirm the arbitration award. Arbitration awards are only vacated in extraordinary circumstances, such as where the arbitrator was biased or manifestly disregarded relevant law, or where there was some other type of egregious misconduct, none of which appears present in the instant matter. Consequently, it is anticipated that the court will confirm the award, effectively ending Assad, Miranda, and Bad Bunny’s foray into the baseball player representation industry (though they may provide other services, such as for marketing).
For the MLBPA, the outcome is a hard-fought and strong affirmation of its authority over agents, its regulations, and its investigatory process. The results are likely to also discourage any agents who might consider a future legal challenge against the MLBPA, regardless of whether the MLBPA is interested in carrying out Fehr’s hypothetical response.
Deubert is Senior Counsel at Constangy, Brooks, Smith & Prophete LLP
