Based on the comments left on the two posts on SAB regarding this issue (Sports Agents Interfering With Contractual Relations and Digging Deeper Into The Contractual Interference Claim), the main concern continues to be that most agent/athlete contracts are terminable at will, and that based on the fact that they are labeled as such, the tort should not apply.  But other than the holding of the Illinois court, I can’t see why that concern should be valid.  Yes, a terminable at will contract may be terminated at the will of an athlete, but that still should not preclude an action based on interference with contractual relations, since that claim is based on the actions of a 3rd party to the contract, not the athlete’s actions alone.  In this type of case, but for the 3rd party’s interference, the athlete presumably would not have terminated the agency contract.  There should be a remedy available to the agent who loses the client in this situation.

I recently read through a piece titled, Actions For Interference With Contract Rights by Stanley Rothenberg, a partner in the firm of Heit & Rothenberg of New York City, who has specialized in copyright and entertainment law since graduation from Harvard Law School in 1953.  The full document is embedded at the end of this post.  I highlighted portions of the document, which I will provide in bullet points, below.

• The remedy for the tort of contract interference now extends to situations where an actual contract relationship is lacking, as where the defendant interferes with an expectancy or an advantageous relationship.
• The dominating consideration of the courts today, instead of a determination of the presence or absence of some kind of legal malice, seems to be balancing the conflicting economic interests of the parties, so as to prevent unwarranted and actual injury. For example, one who knowingly induces the employee of another to quit his employment, to the employer’s actual injury, will be held liable in damages to the employer. In brief, to sustain an action for damages for unlawful interference with a contractual right, the plaintiff must establish the matters listed in the following checklist:
  • The existence of a valid contract to which the plaintiff is a party.
  • The plaintiff’s rights under the contract.
  • The defendant’s knowledge of those existing rights.
  • The defendant’s intentional interference with those rights.
  • Lack of justification for the defendant’s acts.
  • Damage to the plaintiff resulting from the interference.
• As a general rule, there must be an existing, valid contract before one can be liable for intentional interference with a contractual relationship.
• Interference with a contract that is terminable at will, such as an employment contract, is actionable since such a contract, until it is terminated, is of value to the plaintiff and presumably will continue to be in effect. Moreover, an agreement may not even have to be enforceable against the employee or performer in order to be the basis of a tort action for contract interference by a third party. In such a case, the law assumes that even an unenforceable promise will be carried out if the third person does not interfere. However, there is no cause of action if the plaintiff did not possess the contractual rights with which there has been claimed interference. In fact, to defeat the plaintiff’s claim, it may be necessary for defense counsel to show that the invaded right was the property of a third party, even though this may expose the defendant to the possibility of a lawsuit by such party.
• Knowledge by the defendant of the existence of the plaintiff’s contract with another is a prerequisite to liability for interfering with the agreement. Negligent interference with a contractual relationship, absent such knowledge, does not constitute the tort of wrongful interference. Furthermore, the cases almost uniformly require that the plaintiff show actual knowledge of the agreement by the defendant before the defendant will be held liable for interference.

Interestingly, the article posits that not only is a terminable at will contract protected from interference with contractual relations, but additionally, an actual contract relationship does not even need to exist – all that is necessary is an expectancy or an advantageous relationship (this is slightly contradicted later in the article).  Truthfully, though, I think a contract is probably a smart move in this case, at least when it comes to an offering of proof.  The key point is that the plaintiff will need to prove that the 3rd party knew about the contract between the agent/athlete and purposefully interfered with that contractual relationship.  This burden may not be the easiest thing for a plaintiff to overcome.

I landed on another case that touches on an interference with contractual relations claim in our field, albeit the case is between agencies for the improper interference with an agent’s contract with an agency, not an agency contract between and agent/athlete.

The case is Vortex Sports & Entertainment, Inc. vs. R. David Ware; Ware & Associates, Inc; Constangy, Brooks & Smith, L.L.C.; and CSMG, Inc, which was affirmed on appeal in 2008.  In part of the appeal, CSMG claimed that the court should have granted its directed verdict motion on Vortex’s interference with a contract action.  Vortex originally claimed that CSMG interfered with its contractual relations with former employee, David Ware, when it hired him and he took many clients with him from Vortex to CSMG.

The Court looked to the case of Camp v. Springs Mortgage Corp. for the proper elements in proving an interference with contractual relations claim:

1. existence of a valid contract;
2. the wrongdoer’s knowledge thereof;
3. his intentional procurement of its breach;
4. the absence of justification; and
5. resulting damages.

This echoes the elements presented by Rothenberg.  The Court held that CSMG did interfere with contractual relations based largely on the fact that CSMG knew that Ware was responsible for debt repayment, that there was a clause in the employment contract providing that Ware be responsible to pay out any 3rd parties who demanded an interest in fees, and that CSMG had engaged in this type of wooing process in the past (with Fletcher Smith).

In an agency contract, a Court could look at whether the 3rd party has engaged in such practices in the past, boasted in public about stealing clients, documents/statements showing awareness of a contractual relationship, a clause in the 3rd party’s agency contract that stipulates the athlete will be responsible for any fees owed to the former agent, etc.

Perhaps the Illinois case reference in a previous article on this subject has been given too much credence by members in this profession.  Not all hope is lost for agents who believe their clients are intentionally stolen from them by others.

Actions For Interference With Contract Rights

The Interference With Contractual Relations Conversation Continues from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Before this NBA season started, and even now, before the playoffs is even finished, LeBron has been the big story in basketball.  More people cared day-to-day about where he will be playing next year instead of what his line was in his current team’s match-ups.

I can’t imagine how many clippings Leon Rose has stored regarding LeBron James in the past year.  Leon Rose is an agent at CAA.  CAA not only represents LeBron, but also Dwyane Wade and Chris Bosh (both of whom came to CAA through CAA’s acquisition of former CSMG agent, Henry Thomas), who will also receive max contract.  And they also happen to represent coach Calipari and Pat Riley.  But LeBron’s decision is not only in the hands of Leon Rose at CAA.  Worldwide Wes (William Wesley) is also officially a part of the crew at CAA, and it is well known that LeBron has gone to Wes for advice plenty of times throughout LeBron’s life.

Beyond his people at CAA, LeBron will undoubtedly be receiving advice from his team at LRMR, those at the large companies he endorses (with an emphasis on the big guys at Nike), and others that he respects and trusts.

People Involved In/Affected By LeBron James’ Decision from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Odell McCants is representing Cousins’ former teammate at Kentucky, Patrick Patterson.  While Odell doesn’t have a huge Twitter presence, at least he is following myself and SportsAgentBlog.com (the small things that put a smile on my face).  McCants also doesn’t have much of a website.  McCants Sports Management looks like it will be powered by WordPress, but thats all I can gather from the blank page.  Patterson is McCants’ first NBA client – it’s not bad when your first professional client is a projected lottery pick.  McCants has Patterson working out at St. Vincent Sports Performance in Indianapolis.  Hopefully, for McCants’ sake, he keeps Patterson as far away from other hawking agents as possible.  I find it very interesting how Coach Cal’s boys have all gone in different directions with agents, and that none of them signed with Leon Rose (Daniel Orton signed with Raymond Brothers).

Kim Grillier works for a large company in Blue Equity Sports Television.  It’s easy to find yourself hidden when you are working with Dan Fegan, Donald Dell, and Bill Strickland.  That said, Grillier is about to make a name for himself.  Along with serving as the secondary agent for Corey Brewer, Grillier will now be the primary agent for Willie Warren, who is a player that would have been a sure-fire lottery pick had he left Oklahoma last year, after his freshman season.  I still believe that Willie will be a first round pick, but probably not in the lottery selections.  Jonathan Blue (Chairman and Managing Director of Blue Equity) has been quoted in the past saying that Kim Grillier is one of the great young up-and-coming agents.  Prior to joining BEST, Grillier had plenty of experience working for Fred Slaughter Management Group and the former powerhouse named CSMG Sports.  With Henry Thomas (who is now at CAA) at CSMG, Grillier was instrumental in recruiting decent players named Dwyane Wade and Chris Bosh.  Grillier did not easily part ways with Thomas, however.  In 2008, Grillier  filed a lawsuit against Henry Thomas, claiming that he was never paid commissions for helping Thomas recruit players like Wade and Bosh.  In June 2009, the judge in the case ordered that the case go to arbitration.  That order, which is an interesting read in itself, is embedded below.

Grillier v. CSMG Sports

NBA Draft Virgins: Odell McCants & Kim Grillier from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Let’s look at CAA’s basketball division, first.  Before hiring Henry Thomas, CAA already boasted three strong basketball agents: Leon Rose, Andre Buck, and Steven Heumann.  Heumann mostly deals with the high profile overseas players and those born outside of the U.S. who now play in the NBA (think Omri Casspi).  Andre Buck is up-and-coming, and serves as the primary agent for guys like Jason Thompson, Aaron Brooks, and Renaldo Balkman.  Then there is Leon Rose, who has LeBron James, O.J. Mayo, Jonny Flynn, Allen Iverson, Richard Hamilton…the list goes on.  The key thing that I notice with Henry Thomas’s arrival is that LBJ and D-Wade are now under the same roof.  The two most marketable basketball players (you can throw Dwight Howard in at #3 in my book) are at CAA.  Interestingly, though, LBJ has his own marketing company, so CAA, the sports marketing juggernaut, does not reap rewards from that account.  D-Wade will bring in some nice profits, though.  He recently switched from repping Converse to the Jordan Brand (both owned by Nike).

In yesterday’s post, I alluded to Jason Belzer’s Sports Agency Power Rankings.  The list was created a year ago, and I think that he would agree with me that the pecking order should be changed.  I believe that the top 4 are now CAA, WMG, Octagon, and BEST.  WMG, Octagon, and BEST are not all that far from one another, but all 3 are a giant step below CAA, in my opinion.

A key question is: How does one compete?  One thing is sure, you are not going to beat CAA by playing its game.  The company does not have unlimited resources, but something close to it.  They have more connections to producers, directors, potential sponsors, etc, so you can’t out-promise Creative Artists Agency on providing more avenues outside of the field/court.  What you can beat CAA at (possibly) is personal care.  CAA is the largest sports agency in terms of quality of clients and track-record of agents, but they are not interested in players who are going to be taken Day 2 of the NFL Draft, beyond the 10th round of the MLB Rule 4 Draft, or un-drafted basketball players (for the most part).  In fact, even if you are a 2nd round NFL draft pick, do you want to be splitting time with Matt Stafford?  If you are a 4th round pick, will you get the same attention as Derek Jeter?  LeBron Jame and Dwayne Wade might get a few more phone calls then a 2nd round NBA draft pick.

A lot of athletes crave attention.  They also want someone that they can relate to.  Personal relationships mean a lot in this business.  Just because CAA is growing by the day and seems like it is a company that is beyond competition, does not mean that it is immune to losing some big potential clients to a boutique firm that knows what it is doing and can connect with the athletes.  Don’t fight CAA at its strengths, find out what your own strengths are and use those to impress future clients.

All of that being said, CAA sure got a lot stronger with its latest acquisition.

Is Creative Artists Agency Unstoppable? from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Am I surprised by the move?  No.  Almost two year’s ago, I asked on this blog, Is CSMG Still The Place To Be? The company was just coming off of terminating its CEO, laying off several employees, having its founder step down as chairman of the board of directors and had a signed separation agreement with one of its major NFL player agents.  Thereafter, the CSMG football division vanished.  The company was left with a strong baseball and basketball division…until Octagon bought out CSMG’s very strong baseball client list and the agents working on their behalf.  Roughly twenty CSMG employees and over one-hundred-and-forty baseball players switched hands in the deal.

Since the deal between CSMG and Octagon in October 2008, CSMG had one thing to focus on: basketball.  The company’s website currently reflects that fact.  Dwyane Wade’s likeness is all over the homepage, the client sites listed are Henry Thomas’s players, and the only clients listed are those playing basketball.  Will CSMG close up shop for good now that Thomas is leaving for CAA?  The company has had internal issues for quite some time now, and Thomas’s departure may just be the final step to dismantling an entity that was once #6 on Jason Belzer’s Sports Agency Power Rankings.

As listed on CSMG’s website, there are only two Executive Officers: Henry Thomas (President) and Ginger Gordon (Chief Financial Officer).  No need for a CFO if there is no President.  And CAA grows again..

Is CSMG Something Of The Past? from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

In his well written but controversial Sports Agency Power Rankings, Jason Belzer ranked CSMG at #6, wedged between #5 Octagon and #7 Career Sports & Entertainment.  He noted, CSMG has not had recent success in the NBA draft, but its MLB division continues to grow and is one of the largest amongst all agencies.  At the time of Belzer’s post, #5 Octagon was actually deep into negotiations with CSMG about acquiring that strong baseball division along with its coaches, broadcast, legends and marketing divisions.  The deal has just been sealed, and the aforementioned Nero along with roughly twenty CSMG employees and over one-hundred-and-forty CSMG clients will now fall under the Octagon umbrella.

What does this do to the sports agency landscape?  In terms of athlete representation, I believe this move firmly establishes Octagon as a memeber of a new big four (CAA, WMG, Octagon, BEST).  IMG has been going away from its traditional athlete representation business to different kinds of business opportunities in collegiate licensing opportunities, television deals, etc.  It is still a very powerful entity in the sports business world, but has a markedly different composition than the big four.

CSMG will still exist as a basketball operation, with names like Dwyane Wade, Chris Bosh, and Ronnie Brewer headlining Henry Thomas’ practice.

Octagon becomes a behemoth in the world of representing baseball players, CSMG’s shareholders will make good money on the sale, and former internal strife seems to have been calmed before any storm let loose.  When a top high school baseball player is looking for an advisor, what company will be more enticing: Boras Corp or Octagon?

Octagon Acquires Bulk Of CSMG from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules