Champion Pro Consulting Group, LLC v. Impact Sports Football, LLC
Docket: No. 1:12CV27
Court: District Court, M.D. North Carolina; July 15, 2015; Federal District Court
Plaintiffs Champion Pro Consulting Group, LLC, and Carl E. Carey, Jr., Ph.D., allege that Defendants Impact Sports Football, LLC, Mitchell Frankel, Tony Fleming, and Marvin Austin violated Section 75-1.1 of the North Carolina General Statutes and engaged in civil conspiracy. The court is currently addressing Defendants’ Motion for Summary Judgment, with extensive filings from both parties following discovery. The court notes that various fact statements submitted by the parties exceeded the page limit set by local rules but will consider them in its review.
The controversy centers on disputes between Robert Quinn's former agent, Plaintiff Carey, and his current agent, Defendant Fleming. Initially, Quinn and his girlfriend were named as defendants but were later dismissed from the case. Quinn was a college football player at the University of North Carolina and became an NFL draft pick in 2011. Carey and his firm represented Quinn prior to his signing with Fleming's firm, having established a professional relationship with Quinn during his college years. Carey facilitated Quinn's transition to the NFL, including preparations for the NFL Combine and Draft. The court has held a hearing on the summary judgment motion, which it is now poised to grant in favor of the Defendants.
In July 2011, Quinn ended his relationship with the Plaintiffs and entered into a new Sports Representation Agreement (SRA) with Defendant Fleming and his firm, Impact Sports. Defendants had been interested in representing Quinn since May 2010 and admitted to meeting with him in June 2011 while he was still under contract with Plaintiffs. Following several meetings, Quinn informed Carey via text on July 20, 2011, of his decision to terminate the SRA with Plaintiffs, but formally did so through fax on July 22, 2011. Quinn signed the new SRA with Fleming on July 28, 2011, alongside a Marketing Advance Agreement that provided Quinn with a $100,000 advance, to be recouped from his marketing income. These events occurred during an NFL lockout, allowing agents to communicate with players under existing contracts, which was typically prohibited. Plaintiffs allege that Defendants improperly recruited Quinn and induced his termination of the SRA, citing deposition testimony from Sean Kiernan, a former employee of Impact Sports, to support their claims. Defendants, however, characterize Kiernan as a disgruntled former employee. Plaintiffs assert three main allegations of unfair and deceptive practices: the use of "runners" for recruitment, payment of the Marketing Advance to induce contract termination, and retaliatory motives behind these actions.
The court addresses factual disputes related to three claims involving Plaintiffs and Defendants associated with Impact Sports and Quinn. Plaintiffs assert that recruitment efforts for Quinn by Impact Sports representatives, notably Todd Stewart, began prior to July 2011. Stewart, who was introduced to Defendant Frankel in 1997 and again in 2010, worked with Impact Sports on a trial basis from 2009 until the NFL lockout in 2011. Defendants confirm Stewart acted as an intermediary for Quinn starting in June 2011 but deny he was an employee. Stewart claims he does not recall receiving payments from Impact Sports; however, Plaintiffs reference Kiernan's reports indicating that Stewart was actively recruiting Quinn before June 2011 and was potentially compensated in relation to Quinn's contract. Kiernan also notes seeing payments to Stewart via Western Union, reaching up to $5,000 monthly, during 2011-2012. Fleming, a Defendant, acknowledges loaning Stewart money and reimbursing expenses tied to a June 2011 meeting with Quinn.
Additionally, Marvin Austin, a friend of Quinn, is alleged to have encouraged Quinn to engage with Impact Sports. Evidence presented includes Quinn receiving significant funds while at UNC, although the source of these funds remains unverified. There is a noted frequency of communications between Fleming, Austin, Stewart, and Quinn, with calls dating back to June 2010 and the first documented call between Quinn and Impact Sports occurring on July 21, 2011, after Quinn's relationship with Plaintiffs concluded. Plaintiffs highlight the absence of text messages from Defendants during this period.
Defendants acknowledge meeting with Quinn in Miami in mid-June 2011, but there is contention regarding whether this meeting was coincidental or arranged by Quinn seeking new representation, with Fleming attributing the meeting's setup to Stewart. Plaintiffs argue that the "Marketing Advance" given to Quinn was a financial incentive to terminate his existing SRA with them and switch to Defendants, with discussions about this advance occurring shortly after the Miami meeting, prior to Quinn's termination of the SRA. Plaintiffs highlight that such an advance is unusual in the St. Louis market for NFL rookies, noting Quinn's limited prior marketing revenue. Additionally, Quinn's request to remove a marketing fee from a later invoice suggests the advance was not intended to be repaid, implying it was a tactic to induce his departure from Plaintiffs. Furthermore, Plaintiffs claim that Defendants' actions were motivated not by business interests but by a desire for retaliation due to past grievances, particularly regarding Plaintiff Carey’s advice to NFL player Julius Peppers. Although Plaintiffs lack direct evidence of this animosity, they cite Fleming's comments about Peppers and express frustration over losing representation of him. Despite these claims, both Fleming and Frankel deny any animosity towards Carey, asserting they were unaware of his representation of Peppers prior to litigation.
Plaintiffs allege that Defendants acted out of retaliation rather than legitimate business motives, highlighting the timing of Quinn's decision to terminate his SRA with Carey. They note that at a June 2011 meeting, Defendants may have provided Quinn with a sample termination letter. However, Quinn did not terminate the SRA until July 22, 2011, during which time Carey funded a home search trip for Quinn’s family. Notably, Quinn terminated the SRA shortly after Carey mentioned potential contract negotiations with the Rams. Plaintiffs argue that Defendants' failure to preserve text messages means they cannot claim discussions about extracting money and services from Carey occurred prior to termination. In contrast, Defendants assert through Quinn’s declaration that he engaged Carey as a Contract Advisor based on family advice and dissatisfaction with Carey's representation, leading him to independently decide to terminate the relationship and seek other agents.
The legal standard for summary judgment requires that no genuine issue of material fact exists to entitle the moving party to judgment as a matter of law. The moving party must initially demonstrate the absence of such an issue, after which the nonmoving party must provide specific facts indicating a genuine dispute for trial. The court does not weigh evidence but assesses whether a genuine dispute exists regarding material issues, ensuring that any evidence presented is admissible and based on personal knowledge. The court must view facts in favor of the nonmoving party, with a genuine dispute requiring that reasonable jury deliberation could result in a verdict for that party.
Plaintiffs allege that Defendants violated North Carolina's Unfair and Deceptive Trade Practices Act (Section 75-1.1) by recruiting Quinn to terminate his service agreement with Plaintiffs. They also claim Defendants engaged in a civil conspiracy related to this recruitment, which is contingent on the Section 75-1.1 claim. The court first assesses whether a genuine dispute exists regarding the Section 75-1.1 claim, which prohibits unfair competition or deceptive practices affecting commerce.
To establish a violation, Plaintiffs must demonstrate that Defendants' actions are immoral, unethical, or likely to deceive consumers. The court notes that it is ultimately for a jury to determine if the alleged actions occurred, while the court will decide if these actions legally constitute a violation. At the summary judgment stage, the court must evaluate both factual disputes and the legal merits of the claim.
Plaintiffs present three main arguments for their allegations: the use of 'runners,' the Marketing Advance, and retaliatory animus. Regarding the 'runners,' Plaintiffs assert that Defendants employed individuals, including Defendant Austin and others, to recruit Quinn while he was under contract with Plaintiffs, which violates North Carolina law on athlete agents and the NFLPA’s rules.
The court acknowledges a genuine dispute regarding whether these individuals acted on behalf of Defendants to persuade Quinn to terminate his contract. Testimony from Sean Kiernan indicates that Stewart, a 'runner,' was allegedly promised a share of the contract and that money transfers from Defendants to Stewart may support this claim. This testimony could be admissible as an admission by a party opponent, lending credence to Plaintiffs’ argument about the use of 'runners' in violation of Section 75-1.1.
Fleming's deposition reveals that Stewart acted as an intermediary, receiving compensation for introducing Quinn to Impact Sports and facilitating a meeting in June 2011. Stewart argued for employment at Impact Sports based on his ability to influence players, but the company chose not to hire him. The court establishes that Stewart introduced Quinn to the defendants and acted as a link between them in 2011. However, there is a genuine dispute regarding whether Austin and C. Quinn encouraged Quinn to sever ties with his current representatives and engage with Fleming and Impact Sports. Despite evidence of multiple communications involving these individuals, there is insufficient proof that they were acting on behalf of Impact Sports. The court notes that while there is a potential dispute about their encouragement for Quinn to switch agencies, the evidence does not support the claim that they were directed by the defendants to undermine his relationship with Plaintiffs. The motivations of Stewart, Austin, and C. Quinn appear to stem from personal interests rather than a coordinated effort to recruit Quinn on behalf of the defendants. Furthermore, even if their actions were viewed as recruitment efforts for Impact Sports, the court finds that such actions do not constitute a violation of Section 75-1.1 under North Carolina law, which requires a clear statutory basis for claims of unfair or deceptive practices.
Plaintiffs allege that Defendants violated Section 78C-86 of the North Carolina General Statutes, the Uniform Athlete Agents Act (UAAA), by employing unregistered 'runners' to recruit athlete Quinn while he was still a student at UNC. Plaintiffs argue this constitutes a violation of Section 75-1.1. However, the claim is undermined for two reasons. First, the alleged recruitment occurred before Quinn signed with Plaintiffs in December 2010, and since he ultimately signed with them, Plaintiffs have not demonstrated any injury caused by Defendants' actions. Second, after Quinn signed his SRA with Plaintiffs, he was no longer considered a 'student-athlete' under the UAAA, which only protects individuals eligible to engage in intercollegiate sports. Thus, any recruitment by Defendants post-signing does not violate the UAAA. Additionally, Plaintiffs contend that using runners violates NFLPA regulations, but the relevant regulation prohibiting such conduct did not take effect until June 1, 2012, after the events in question. Consequently, Plaintiffs have not established a basis for their claims against Defendants.
The use of runners in 2010 and 2011 did not breach NFLPA Regulations. However, there was a regulation prohibiting Contract Advisors from initiating communication with a represented player about specific topics, including the player’s current Contract Advisor, contract status, or services offered by a prospective advisor, unless the player initiates the contact. If the NFLPA Regulations had been in effect during a June 2011 meeting arranged by Defendants, discussions regarding services could have violated these regulations. While there is no direct evidence of Defendants initiating the meeting, testimony suggested that Stewart facilitated it, which could imply a violation might be found by a jury. Despite this, Plaintiffs failed to prove that these regulations constituted North Carolina public policy relevant to a Section 75-1.1 claim. A North Carolina appellate court ruled that violations of internal policies and industry standards are not inherently Section 75-1.1 violations. Consequently, the court determined that Defendants’ actions did not constitute a per se violation of Section 75-1.1. Furthermore, the court considered whether using runners to recruit Quinn violated Section 75-1.1 but found no evidence that such use contradicted public policy or was unethical. Plaintiffs also claimed Defendants’ reference to Stewart as 'Mr. Cowboy' suggested deception. However, the court concluded this did not violate Section 75-1.1, as it was not shown to have caused any injury to Plaintiffs. Lastly, Plaintiffs argued that a $100,000 Marketing Agreement between Impact Sports and Quinn was an inducement for Quinn to terminate his SRA with them, questioning its commercial reasonableness due to limited marketing opportunities in St. Louis.
Plaintiffs contend that Defendants paid a Marketing Advance to Quinn as an inducement to terminate his SRA, potentially violating Section 75-1.1. The court disagrees, ruling that the circumstances do not support such a violation. Although Plaintiffs present evidence, including claims that Impact Sports did not bill Quinn for reimbursement and that he faced challenges generating marketing income since joining the Rams, Defendants counter with an invoice that contradicts these assertions.
Plaintiffs also reference Kiernan’s deposition, highlighting the difficulties in the St. Louis market for marketing NFL rookies, which Kiernan describes as "terrible." He indicates that low ticket value limits players' ability to secure marketing opportunities, further complicated by the NFL lockout. Plaintiffs argue this testimony suggests Defendants lacked intent to seek marketing dividends from Quinn.
Despite acknowledging a genuine dispute regarding Defendants’ intent in offering the Marketing Advance, the court finds that Kiernan explicitly denied it was an inducement for Quinn's contract termination. He stated that the advance was tied to Quinn’s potential contract fees, not merely as a bribe. Thus, the evidence indicates that the Marketing Advance served a mixed purpose, reinforcing that it was not solely intended to induce contract termination. Consequently, the court concludes that Plaintiffs have not established a genuine dispute regarding Defendants' intent concerning the Marketing Advance.
The court will assume, for the sake of this motion, that the jury might conclude the Marketing Advance partially incentivized Quinn to end his SRA with the Plaintiffs. However, under North Carolina law, this scenario does not constitute a violation of Section 75-1.1. Plaintiffs reference several cases where competitors were held liable for poaching employees or clients, but none specifically address whether providing a monetary benefit to a competitor's client to terminate a terminable-at-will contract constitutes such a violation.
The court distinguishes this case from established precedents. A simple breach of contract, even if intentional, does not equate to a Section 75-1.1 violation unless there are substantial aggravating circumstances. Courts have previously found that the terminable-at-will nature of a contract supports the conclusion that its termination does not violate Section 75-1.1. Additionally, expenditures made by a plaintiff during the defendant's termination planning do not alone create a violation. Conversely, inducing someone to breach a non-compete agreement with their former employer can constitute a violation, as demonstrated in the Kuykendall case, where inducement of a breach was deemed an unfair and deceptive act.
Kuykendall was offered subsidies to divert United's accounts to Share, alongside offers to pay legal fees to induce chemical sales representatives to breach non-compete agreements for the same purpose. The jury found Share's actions violated Section 75-1.1, which the appellate court upheld, characterizing the conduct as unfair competition lacking good faith. The court explored whether aggravating factors elevated the case from a typical breach of contract to a Section 75-1.1 violation, noting that significant aggravating factors typically involve forgery, lies, or fraudulent inducements. No such evidence was found against the defendants in this case. The court distinguished this case from Kuykendall, noting the absence of a non-compete restriction on Quinn and that his termination of the Service Retainer Agreement (SRA) was permissible. Therefore, unlike Kuykendall, this case aligns more closely with Bartolomeo, where the termination of a terminable-at-will contract did not constitute a Section 75-1.1 violation, leading to the conclusion that attempts to recruit Quinn did not amount to significant unlawful conduct.
The case is distinguished from Kuykendall based on agency principles. In Kuykendall, defendants recruited the plaintiffs' agent to exploit their knowledge, whereas in the current case, Quinn, the recruited individual, was the principal, leading to fewer obligations towards the plaintiffs. According to the Restatement of Agency, a principal is not generally required to refrain from competition with an agent unless specifically agreed upon, contrasting with the agent's duty to avoid competing with the principal. The act of inducing an agent to end a contract differs from inducing a principal to terminate their contract with an agent, making Kuykendall less relevant here. Furthermore, the absence of an established business relationship between the plaintiffs and defendants undermines the plaintiffs' Section 75-1.1 claim. The lack of such a relationship has been supported by case law, including Pleasant Valley Promenade, where a similar absence of business ties led to a ruling against the violation claim. Therefore, in this case, the lack of a business relationship reinforces the conclusion that the plaintiffs' allegations do not substantiate a valid Section 75-1.1 claim.
Under North Carolina law, tortious interference with contract claims can be dismissed if the defendant has a legitimate business reason for their actions. The court refers to precedent indicating that competition in business is justifiable interference and lawful conduct does not incur liability, as seen in Robinson, Bradshaw, Hinson, P.A. v. Smith. The current court has previously ruled that plaintiffs did not establish a claim for tortious interference because defendants had valid business justifications, as noted in an earlier order.
The court acknowledges that while plaintiffs suffered losses from Quinn’s termination of his SRA with Carey, these losses can be addressed through contract or quantum meruit claims, as supported by arbitration findings. The Fourth Circuit has clarified that while breaches of contract are inherently unfair, they are remedied through damages awarded in contract claims. Therefore, the plaintiffs' injuries from Quinn's actions do not imply a violation of Section 75-1.1.
Additionally, the plaintiffs' assertion that defendants acted with retaliatory intent does not substantiate a viable claim under Section 75-1.1. The court finds no genuine issue regarding this alleged retaliatory animus, indicating that even if such animus exists, it does not automatically correlate with a violation of Section 75-1.1. The court contrasts this with a prior case where retaliatory conduct was deemed unfair, but concludes that the specifics of the current case do not meet the threshold for unfair and deceptive acts or practices under North Carolina law.
The court acknowledges the possibility of retaliatory conduct leading to a Section 75-1.1 violation but finds insufficient evidence to support the Plaintiffs' claims against the Defendants. Plaintiffs argue that Defendants acted with retaliatory animus due to disparaging remarks made by Plaintiff Carey about Defendant Fleming during Fleming's recruitment of NFL player Julius Peppers in 2002. Defendants deny any ill will and claim ignorance of Carey until litigation commenced. While Defendants expressed frustration over not securing Peppers as a client, the Plaintiffs' circumstantial evidence alleging a conspiracy to extract money lacks the necessary substance to create a genuine dispute of fact. The court emphasizes that the inferences drawn from the timing of Quinn’s termination of his relationship with Plaintiffs and the purported retaliatory scheme are too weak to overcome the Defendants’ denial of conspiracy.
Although the court considers Plaintiffs’ claims collectively, it finds no evidence of egregious retaliatory behavior that would warrant a Section 75-1.1 violation, as established precedents require more severe actions without legitimate business justification. The court compares the case to previous rulings where business-related conduct, even if unfortunate, does not constitute unlawful behavior on its own. Consequently, the court grants summary judgment in favor of Defendants on the Section 75-1.1 claim. Additionally, the court notes the elements required to prove a civil conspiracy, which include an agreement to commit a wrongful act, an overt act in furtherance of that agreement, and damages to the plaintiff, signaling that these claims also lack sufficient evidence.
To establish a genuine issue for civil conspiracy, circumstantial evidence must exceed mere suspicion. In Nye v. Oates, the court found insufficient evidence of an agreement among Defendants to engage in wrongful conduct, concluding that no genuine dispute existed regarding whether their actions violated Section 75-1.1. Consequently, the court granted Defendants' motion for summary judgment on the civil conspiracy claim and dismissed the case.
The court noted that the Plaintiffs had additional claims dismissed in a prior order. Plaintiffs filed a motion for sanctions related to lost text messages, which was granted in part, preventing Defendants from claiming they did not communicate with a key individual during the relevant time.
Regarding the Section 75-1.1 claim, the court highlighted that the elements include an unfair or deceptive act in commerce that proximately causes injury to the plaintiff. Defendants only contested the first element. The court determined there was no genuine dispute about this element and chose not to evaluate the second. However, it did assess the third element independently, analyzing whether any alleged unfair or deceptive act caused injury to Plaintiffs.
Testimony indicated that a "Marketing Advance" was not considered an inducement, aligning with NFLPA regulations. Plaintiffs argued that the term was deceptive, but the court found no evidence to suggest the agreement was not a legitimate advance on marketing income or that it was commercially improper. Moreover, the alleged deception did not occur directly between the contracting parties but rather involved third-party perceptions. Ultimately, Plaintiffs failed to demonstrate how the alleged deception caused them injury, leading the court to conclude that the actions did not constitute deceptive acts under Section 75-1.1.
The court finds that the deceptive conduct alleged by Plaintiffs does not reach the level established in Sunbelt Rentals, where significant fraudulent actions occurred, including misrepresentation of company names and improper use of contracts. Plaintiffs' claims regarding a breach of contract are characterized as speculative, especially since the agreement in question was terminable at will. While Plaintiffs argue there was a discrepancy in the signing of the Sports Representation Agreement (SRA) with Impact Sports, claiming it indicates deception and a violation under Section 75-1.1, the evidence does not substantiate a direct injury or create a genuine issue regarding other allegations. Furthermore, Plaintiffs failed to demonstrate that Quinn or the Defendants induced them to enter the original SRA, which is critical to their claims. The court distinguishes this case from Dealers Supply Co. v. Cheil Indus., where fraudulent misrepresentations were proven. Even if the Defendants concealed their true intentions, Plaintiffs did not establish how this caused them injury, a necessary component of a Section 75-1.1 claim. The court emphasizes that without specific NFLPA regulations preventing agent contact with players, the basis for contract termination is irrelevant unless it breaches known duties. Plaintiffs' assertions regarding Quinn's alleged intent to extract services from Carey lack sufficient evidential support. Although Defendants failed to produce relevant text messages during discovery, the court will not infer any retaliatory intent from their absence, as no alternative evidence was presented to support Plaintiffs' claims.
