The 4th U.S. Circuit Court of Appeals has affirmed the ruling of a district judge dismissing the claim of a sport agent, who alleged that another agent violated Section 75-1.1 of the North Carolina Unfair and Deceptive Act or Practice statute (Act) when he attempted to recruit and induce the plaintiff’s client.
In so ruling, the panel of judges found that the defendants, in representing Robert Quinn — the 14th overall pick in the 2011 NFL Draft, were “acting within the accepted confines of the industry in which they operated.”
The plaintiff in the case was Carl E. Carey Jr., Ph.D., a certified National Football League Players Association contract advisor. Carey was also the president of Champion Pro Consulting Group, Inc., his agency.
The corporate defendant was Impact Sports Football, LLC. The individual defendants were Tony Fleming, a player-agent representative; Mitchell Frankel, a player-agent representative as well as an active officer and registered agent for Impact with direct and supervisory authority over Fleming; Christina White, Quinn’s business manager; and Marvin Austin, who received monetary compensation for recruiting potential clients.
A mutual friend introduced Carey to Quinn in November 2010. Soon after, Quinn called Carey, and they allegedly had an introductory conversation, which was the only contact between Carey and Quinn until Dec. 4, 2010.
On or about Dec. 4, 2010, Carey allegedly met with Quinn and several members of his family in North Carolina, during which Quinn and his father signed a Standard Representation Agreement (SRA) with Carey. The NFLPA requires the use of an SRA to memorialize the agreement between a player and player-agent representative for services to be provided in exchange for a commission on a player’s contract. Based on this SRA, Carey was to receive a three percent commission on the value of Quinn’s future contract.
Carey and Quinn also allegedly agreed to a separate contract for personal expenses, where Carey would provide Quinn with money for personal expenses on the condition that Quinn repay the money if he terminated Carey within two years of the agreement. If Quinn terminated the contract, the money he owed would revert to a loan, according to the complaint.
In the spring of 2011, NFL team owners and the NFLPA could not agree on a new collective bargaining agreement. NFL players were locked out from March 11 to July 25, 2011. As a result of the lockout, the NFLPA decertified as a union, meaning it did not serve as a governing body over player representatives.
Without the NFLPA’s agent regulation rules in place, a number of agents began to contact and communicate with players under existing contracts with other agents, according to the complaint.
In June 2011, Carey allegedly started receiving text messages from Quinn demanding more marketing contracts. Quinn and defendant White requested an emergency meeting with Carey in Chapel Hill to address Quinn’s demands. Other members of Quinn’s family also attended the meeting. At the meeting, White was allegedly introduced as Quinn’s business manager and girlfriend. Quinn asked Carey to cut his commission from three percent of Quinn’s professional contract to one and one-half percent. Carey would later claim that defendant Fleming and White “knew each other and had an agreed upon plan and scheme to terminate the relationship between Carey and Quinn.”
Later that summer, a trainer from the St. Louis Rams, who drafted Quinn that spring, contacted Carey about Quinn. Carey informed his client, who then terminated their relationship.
Carey alleged that the defendants were “operating under a plan and scheme to terminate Carey immediately upon the beginning of any contact with the St. Louis Rams related to contract negotiations.” Under this plan and scheme, Quinn was to remain under contract with Carey for as long as possible to extract as much money and as many services from Carey as possible before hiring the defendants as his agents.
“Fleming discussed contract terms with the St. Louis Rams within five days of Carey receiving Quinn’s fax terminating their SRA. On July 30, 2011, Quinn signed a four-year contract worth a maximum of $9.4 million, including a $5.3 million signing bonus.”
The plaintiff maintained that “before 2011, players rarely terminated representatives after the draft, but before negotiating with an NFL team. While the NFLPA was decertified, however, several former UNC football players, including Quinn and Austin, did so.”
Carey sued the defendants under the following legal theories: “(1) unfair methods of competition, (2) tortious interference with contract, (3) slander per se, and (4) civil conspiracy.” The amended complaint also includes a fifth claim for unjust enrichment against the defendants Impact, Frankel, and Fleming.
The defendants successfully moved to dismiss part of the claim in the fall of 2014. The remaining claims, concerning the Act and Civil Conspiracy arguments, were ripe for a decision after discovery. The plaintiffs’ claims centered on three allegations: (1) the defendants illegally used “runners” to recruit Quinn as a client; (2) the defendants paid a large amount of money to Quinn in the form of a “Marketing Advance” as a means of inducing him to terminate his SRA with the plaintiffs; and (3) the defendants committed these acts as a means of retaliating against the plaintiffs.
Before embarking on its analysis, the court noted that Section 75-1.1 declares as “unlawful” all “unfair methods of competition in or affecting commerce” or “unfair or deceptive acts or practices in or affecting commerce.” N.C. Gen. Stat. § 75-1.1(a). To show that an act or practice violates Section 75-1.1, a plaintiff must show that it “offends established public policy”; is “immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers”; or has a tendency to deceive. See Walker v. Fleetwood Homes of N.C., Inc., 362 N.C. 63, 72, 653 S.E.2d 393, 399 (2007).
Examining the “runners” argument first, the court found that the actions “did not constitute a per se violation of Section 75-1.1. Although the plaintiffs base their ‘runners’ argument on an alleged UAAA violation and an alleged violation of NFLPA Regulations, this court has also examined whether using runners to recruit Quinn violates Section 75-1.1, even if it does not violate these regulations. However, this court has not been given any reason to believe that the use of runners ‘offends established public policy’ or is ‘immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers.’”
Next up was whether the marketing agreement signed between Impact Sports and Quinn, which included a $100,000 “Marketing Advance” to be paid immediately to Quinn, was actually a paid inducement for Quinn to terminate his SRA with the plaintiffs and sign with the defendants. While the plaintiffs “were injured by Quinn’s termination of the SRA and that the defendants may have precipitated that termination to a certain extent does not lead to the conclusion that the defendants have violated Section 75-1.1.”
As for the contention that the defendants’ acts were motivated by a retaliatory animus and was a Section 75-1.1 violation, the court found that the plaintiffs “have not shown a genuine issue as to the defendants’ alleged retaliatory animus, and even assuming that the defendants harbor retaliatory animus, this fact does not give rise to a viable Section 75-1.1 claim or make it more likely that a Section 75-1.1 violation occurred.”
The court next turned to whether the defendants’ actions constituted “a civil conspiracy.” A civil conspiracy requires: (1) an agreement between two or more persons to do a wrongful act; (2) an overt act committed in furtherance of the agreement; and (3) damage to the plaintiff. Nye v. Oates, 96 N.C. App. 343, 347, 385 S.E.2d 529, 531-532 (1989). To show a genuine issue on the civil conspiracy, the circumstantial evidence must amount to more than mere suspicion or conjecture. Dickens v. Puryear, 302 N.C. 437, 456, 276 S.E.2d 325, 337 (1981).
“Here, this court does not find sufficient evidence showing an agreement between the defendants to commit a wrongful act, as this court has determined that there is no genuine dispute over whether the defendants’ actions constitute a Section 75-1.1 violation. See Pleasant Valley Promenade, 120 N.C. App. at 657, 464 S.E.2d at 54.”
The plaintiff’s appeal fell short of its desired result.
The defendants “did not violate the Act in recruiting a football player as a client,” wrote the panel, noting that “the allegations did not establish egregious or aggravating conduct. The activities of contract advisors were extensively regulated by the National Football League Players Association, and evidence indicated that a marketing advance paid to the player was a type of payment common in the industry. There was no overt evidence that the agency’s actions were motivated by a retaliatory animus toward the player’s former contract advisor, and the alleged conduct could be explained as the agency acting within the accepted confines of the industry.”
Champion Pro Consulting Group, LLC, and Carl E. Carey, JR. Ph.D. v. Impact Sports Football, LLC, Mitchell Frankel, Tony Fleming, and Marvin Austin; No. 15-1899, 2016 U.S. App. LEXIS 23056; 12/22/16
Attorneys of Record: Kevin James Dolley, James Carter Keaney, LAW OFFICES OF KEVIN J. DOLLEY, LLC, St. Louis, Missouri, for Appellants. Peter Robert Ginsberg, PETER R. GINSBERG LAW, LLC, New York, New York, for Appellees.