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Wednesday, December 16, 2009

Did Aroldis Chapman switch agents because of Tortious Interference?

An interesting lawsuit has been filed in a Massachusetts state court by the former agents of 21-year-old Cuban defector Aroldis Chapman --whom the Boston Red Sox have reportedly offered a $15.5 million contract--against his new agents for "stealing" Chapman as a client.

If Athletes Premier International v. Hendricks Sports Management goes to trial, it could pose significant ramifications for agents who encourage baseball players to switch agents (which traditionally has not received legal scrutiny, though the MLPBA, which licenses agents with players on teams' 40 man rosters, regulates that practice). Jimmy Golen of the Associated Press has the story on this lawsuit -- here are several excerpts:

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Chapman's original representative sued his current agent in Massachusetts state court on Tuesday, claiming that Hendricks Sports Management illegally lured him away from Athletes Premier International and agent Edwin Mejia. The lawsuit accuses Hendricks of tortious interference and unjust enrichment, claiming that Athletes Premier "invested substantial time and hundreds of thousands of dollars" on Chapman's behalf to help him defect, establish residency in Andorra and begin negotiating with major league teams.

Citing text messages and call logs from a cell phone Mejia provided to the Cuban left-hander, the suit claims that "Hendricks and its employees made material false and disparaging statements to Chapman concerning Athletes Premier and Mejia as well as provided improper enticements to Chapman in order to cause Chapman to terminate his contract with Athletes Premier and sign a contract with Hendricks."

In a statement e-mailed to The Associated Press, the Hendricks agency described its representation of Chapman as "an unexpected and unsolicited opportunity" and called the lawsuit "pure fiction and self delusion."

* * *

The statement said Mejia brought his complaint to the players association "and the union didn't buy it." It also noted that the suit was filed on the same day that Chapman was scheduled to work out for major league clubs in Houston, where the Hendricks brothers are based.

* * *

Stealing clients is a longtime and lucrative practice among some sports agents, who can earn up to 5 percent of salaries reaching into the hundreds of millions of dollars. Inducing someone to break a valid contract — called tortious interference — is illegal, but it depends on what the agreement was between Mejia and the former star of the Cuban national team.

"Generally speaking, players can change agents at their discretion," said Michael McCann, a sports law professor at the Vermont Law School. "There is certainly evidence of agents poaching clients (in cases) that don't result in litigation. Maybe it's unethical; maybe it's wrong; but it happens."

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To read the rest of Golen's story, click here. For the lawsuit, click here. This lawsuit might make for an interesting law review/journal note for a law student looking for a topic to write about.

Update 12/16/2009: A lawyer who has represented several prominent MLB players e-mailed me and offers these thoughts:

I am a little surprised that they didn't try to bring it in Florida (where Chapman's agent Rodney Fernandez of Hendricks Brothers is based) - Florida has a "tortuous interference with prospective business opportunity" cause of action that I would find more advantageous in this type of case, rather than a straight tortuous interference with contract. Reasoning being is that per MLBPA regs, all player/agent contracts can be terminable at will (and have a maximum length of 1 year). I would have brought it in Florida - there are enough connections there.

I don't see how this claim, as currently posited, is much different from Speakers of Sport v. Proserv (involving Ivan Rodriguez), which was argued in federal court on a similar theory, and plaintiff agent did not prevail on the basis that the court found that it's a high risk/high reward business (agency), and that statements to the player that are "puffery" do not rise to the level of tortuous interference.

Likewise, there have been a number of agent/agent cases argued in the MLBPA arbitration forum that have held essentially the same thing.

-- Posted by Michael McCann @ 12/16/2009 12:38:00 AM -- Comments (18) -- Post a Comment

18 Comments:

Thanks for the post, Michael. This case has an interesting twist because of the Cuban connection and the assistance provided in the process of getting to Andorra. The outlay of money to get Chapman to the point of trying out for teams and working towards signing a contract might have been higher than usual, but many agents provide this type of assistance and clients jump to another agent before the original agent has a chance to collect on the big payday. It will be interesting to watch how this plays out.

In a side note, I agree that this an interesting topic for a seminar paper, and I just added it to my list for the spring semester. One of the benefits of this blog is the number of possible paper topics that regularly appear.

Ed Edmonds -- 12/16/2009 2:21 PM

Ed, thanks for those comments.

I particularly liked your point that the initial investment required in representing Chapman is higher than it would be for a U.S. player. I wonder if that might have legal significance -- might a court be more persuaded to recognize tortious interference in this kind of setting? It's probably a very hard claim for any plaintiff-original agent who has lost a client to another agent, but maybe the dynamics here work at least in some ways in the original agent's favor.

Michael McCann -- 12/16/2009 10:17 PM

This is one of the intriguing instances of trying to determine the difference between illegal activity and sleazy activity.

In an arena where people are behaving shady to begin with, it can be extremely difficult to draw legal lines in the sand.

hayeslegal -- 12/16/2009 10:26 PM

What makes anyone think it has to be illegal or sleazy? Did you not read the statement that the new representatives said their representation of Chapman was unsolicited?

Anonymous -- 12/17/2009 12:00 AM

If anyone believes Aroldis Chapman went and sought out the cell number of the Hendricks brothers and/or Rodney Fernandez -- who, to date, have negotiated exactly ZERO contracts for Cuban defectors -- they're delusional.

It seems like the original agent was in over his head, which might make this a tough lawsuit to win, but the underlying legal reasoning is valid.

As for the choice of venue, I, too, was a little surprised by that, as well as the fact API didn't name Rodney Fernandez or any other individual as a defendant.

However, I then noticed that the Miami-based law firm Greenberg Traurig is representing API. This is pure speculation, but I bet GT purposely avoided filing in Miami because it knows Cubans have such a home home-field advantage there.

Anonymous -- 12/17/2009 12:49 AM

As I read the update and the comments, I headed off in a number of directions this morning. It is easier during exam time to devote time to diversions. I first thought of the Sports Agent Responsibility and Trust Act (SPARTA - federal) and the Uniform Athlete Agent Act (adopted in close to 40 states). Both statutes are not involved here because an "athlete agent" is defined as one who solicits or represents student athletes. Massachusetts has not adopted the act, but Florida has adopted it.

Also, in 2007, Gus Dominguez was convicted in federal court in Florida on smuggling charges related to Cuban baseball players. Michael Lewis wrote an in depth article about Dominguez for the July 2008 issue of Vanity Fair.

As to Michael's question about the legal significance of the investment of money and effort in getting Chapman to the United States, I think if this proceeded to a jury trial it could be a strategic factor in favor of the plaintiff.

Ed Edmonds -- 12/17/2009 10:17 AM

I believe the MLBPA has exclusive jurisdiction in these client tampering cases. At the very least, the MLBPA will pressure plaintiffs to drop the suit, or punish them for going outside union channels.

Anonymous -- 12/17/2009 10:47 AM

Ed,

The MLBPA likely will claim jurisdiction and/or pressure API to drop the lawsuit, if only because the union cares more about veteran agents like the Hendricks Brothers than it does about API, but Chapman hasn't signed an MLB contract and, thus, isn't an MLBPA member.

API might not make any friends at the MLBPA by pushing this case, but, strictly speaking, the union has no real jurisdiction over the dispute, Chapman, or API at this point.

Anonymous -- 12/17/2009 4:59 PM

Oops... I addressed my last comment to Ed when it should have been directed at "Anonymous." Sorry about that.

Anonymous -- 12/17/2009 5:00 PM

Chapman's not a member of the union yet, but both agents are regulated by the union.

Anonymous -- 12/17/2009 5:08 PM

"Chapman's not a member of the union yet, but both agents are regulated by the union."

No, they aren't. Mejia doesn't have any clients on an MLB 40-man roster, so he's not certified. I don't see how the union could claim jurisdiction over a non-certified agent (Mejia) and a non-member player (Chapman).

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