E-Alert Case Updates
Fourth Circuit Dismisses Sports Agentís UDTPA and Civil Conspiracy Claims
Champion Pro Consulting Group, Inc., et al. v. Impact Sports Football et al., LLC
Available at: http://www.ca4.uscourts.gov/Opinions/Published/151899.P.pdf.
In Champion Pro Consulting Group, Inc. et al. v. Impact Sports Football, LLC, et al., No. 15-1899, the Fourth Circuit stepped into the “rough and tumble” world of NFL recruiting. In December 2010, NFL defensive end Robert Quinn – then a student at the University of North Carolina – entered into a Standard Representation Agreement (SRA) with Carl E. Carey, under which Carey became Quinn’s sports agent. Carey owned Champion Pro Consulting Group. The parties entered into a separate agreement that provided for Carey’s paying Quinn and Quinn’s father $125,000 in five (5) equal installments over the course of six (6) months.
In March 2011, the NFL Players’ Association locked out its players. During the lockout, the NFL discontinued its sports’ agent regulation system, making it possible for agents to contact and communicate with players already under contract with other agents. During the lockout period, representatives from Impact Sports Football met with Quinn twice and had other interactions with Quinn through intermediaries. In April 2011, the NFL held a draft and Quinn was selected by the St. Louis Rams. Carey allegedly negotiated various promotional deals on Quinn’s behalf after he was drafted.
On July 22, 2011, Quinn terminated his SRA with Carey by fax. The NFL lockout ended later that month, and on July 28, 2011, Quinn entered into an SRA with Tony Fleming of Impact Sports Football.
On January 13, 2012, Carey filed a grievance with the NFL Players’ Association, alleging that Quinn breached the SRA. Quinn and Carey arbitrated the dispute, and the arbitrator awarded Carey $17,500. Carey also filed suit against Quinn and Impact Sports Football (including several of its representatives individually) (collectively, “Defendants”) in federal court asserting (1) unfair method of competition in violation of the North Carolina Unfair and Deceptive Trade Practices Act (UDTPA), (2) tortious interference, (3) slander per se, (4) civil conspiracy, and (5) unjust enrichment. The district court dismissed all but Carey’s UDTPA and civil conspiracy claims. Defendants moved for summary judgment on the remaining claims.
With regard to Carey’s UDTPA claims, Carey argued that Defendants committed unfair and deceptive acts by (1) illegally using “runners” to recruit Quinn, (2) paying Quinn money in the form of a “Marketing Advance” as a means of inducing him to terminate his SRA with Carey and (3) committing these acts as a means of retaliating against Carey. Defendants argued that this conduct, even if true, did not amount to a violation of UDTPA. To state a claim under the UDTPA, a claimant must allege (1) an unfair or deceptive practice, (2) in or affecting commerce, (3) which proximately caused injury to the plaintiff or his business.
The Fourth Circuit determined that Carey’s allegations, even if true, were indicative of the industry in which the parties operated and fell outside the scope of business activities that the UDTPA is designed to address. Moreover, evidence suggested that the activities of sports agents were already subject to an extensive regulatory regime through the NFL Players Association. Violators of these regulations were subject to arbitration and North Carolina courts have long refused to apply the UDTPA to matters already under regulation by other statutory schemes. While not a statutory scheme per se, the Fourth Circuit noted that the NFL Players Association still had an extensive regulatory regime to govern business activity within the NFL. To find in favor of Carey, the court noted, would also have required it to “ignore the practical workings of the industry” in which “runners” and “Marketing Advances” were common. Finally, the court noted that there was no inherent imbalance of power between the parties that would have justified the application of the UDTPA.
Because the court found that Defendants’ actions did not constitute a violation of the UDTPA, there could therefore be no surviving claim for civil conspiracy to violate the statute. Accordingly, the Fourth Circuit affirmed the district court’s grant of summary judgment.
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