On this bonus episode Jason talks with sports lawyer and founder of the Sports Agent Blog, Darren Heitner. Darren is an expert in the field of sports business litigation and tells Jason about the inner workings of these types of disputes as well as what he expects to happen in the process of Nerlens Noel’s suit against his former agent Rich Paul of Klutch Sports.

Transcript

Jason Concepcion: Welcome to Extra Takes. As you know, we’ve been releasing these bonus episodes to dive deeper into relevant news stories in the sports world. Today, it’s the lawsuit filed by New York Knicks Center Nerlens Noel against his former agent, Rich Paul of Klutch Sports, alleging a abrogation of fiduciary duty on Nerlens’ behalf. In this episode, I’ll be talking with sports lawyer Darren Heitner, who has represented athletes such as Brandon Marshall, Terrell Owens, Terrell “that’s my quarterback” Owens, Anna Kournikova, Andrew Wiggins, Manny Ramirez—just to name a few. He’s also the founder of the Sports Agent Blog, where you can find a copy of the lawsuit Nerlens Noel filed against his former agent, Rich Paul. We dive into the lawsuit itself and how these legal disputes affect the business of sports and the ramifications of any impending litigation. Please take a listen.

Jason Concepcion: Darren, thanks for joining us. This great write up on your, on your blog, Sports Agent blog—go see it there—some good context and the original litigation papers. Take us through what this suit is alleging. I don’t know that I’ve ever seen one like this. Most of the incidents in which talent or athletes sue their agents, it’s flat-out fraud is being alleged, somebody stole money. This is not that.

Darren Heitner: It’s not. In fact, it’s a breach of fiduciary duty, much like alleging that someone stole from you. But here, what Nerlens Noel has alleged is that Rich Paul, Klutch Sport, had a duty to do what was in his best interests and failed on multiple occasions in that regard. Going all the way back to Nerlens Noel making a decision to terminate his previous representation, that being Happy Walters, in favor of going with Rich Paul and Klutch sports as his representatives, and indicating that at the time, essentially, Rich Paul—this is Nerlens Noel’s allegation—but that Rich Paul promised him that he would be making tons of money by doing so, and that he should just deny and refuse the offer that was on the table from the Dallas Mavericks. And it just goes on and on arguing that for many years, Rich Paul and Klutch Sports dropped the ball—that they were not responsive to coaches and general managers who were reaching out, that they didn’t even return those calls, and that there are coaches that perhaps could testify to that effect. And so that’s really the crux of this claim. And Nerlens Noel is taking the position that he’s now lost out on tens of millions of dollars based on the negligence of his representatives.

Jason Concepcion: So my understanding of the laws that underpin the athlete-agent relationship are very of the layman variety. That said, I was under the understanding that agents are indemnified against bad advice, essentially, you know? Like, you know, this is an advice relationship, you’re representing a person and hopefully giving them some context on the decisions they make, but these, none of these things are sure-fire, you know, wins: signing a deal, passing of a deal because you believe another deal is out there—these are all essentially gambles and you’re being advised. Are agents indemnified against bad advice, and like, what are the, what kind of battle is is Noel facing in trying to win this lawsuit?

Darren Heitner: Agents, nor any fiduciary, even myself as a lawyer—we’re not indemnified against providing bad advice. In fact, there’s constant claims with regard to malpractice in a variety of service industries when a service provider such as a lawyer or an agent, a financial planner, accountant, provides that type of bad advice. But I’d argue that it’s a very large burden for the plaintiff, for the grievant, when he or she brings a claim like that. Because ultimately in an agent-player relationship, the player’s the principal. The player ultimately makes the decision on his behalf. And while the agent does have a fiduciary duty to always act in a way where he’s putting the player’s interests above his own, that’s not to say that the agents are always going to give the perfect advice. And a lot of the advice is very subjective. It’s not objective. On any case by case circumstance, hindsight’s always 20/20 but you’re not seeing 20/20 always when you’re looking at two different options. And I think Rich Paul and Klutch Sports would argue, who were we to know that Nerlens Noel would suffer injuries that would reduce his value? And ultimately, if he didn’t sustain those injuries, perhaps declining that offer from the Mavericks would have been the proper move, if he ended up signing a max contract. I think a lot of people now, years later say, what were you even thinking? Nerlens Noel was never a max contract guy, but who knows?

Jason Concepcion: You’re talking about, you’re talking about an era two, three years back when it was not uncommon to see big dollar deals for players that you were, that were role players.

Darren Heitner: Right. Specifically, if they feel a need on a team. And perhaps Nerlens Noel skill set, his size, the elements that he contributes to an organization, but for being injured, he perhaps could have been that max player. None of us will ever know. That’s pure speculation. But to your point, it is very difficult, it’s very hard for any principle to sue his agent and prevail on the claim that the player got bad advice. Now, again, that’s separate and apart from the arguments that Rich Paul and Klutch Sports just failed to acknowledge him as a client, which is essentially the argument. The argument is Klutch Sports has the top tier players like LeBron, like Anthony Davis, Draymond Green, Trae Young, and then those other guys like Nerlens Noel, Norris Cole etc., who are mentioned in the lawsuit that are sort of afterthoughts. And if they were ignored, if offers were presented, perhaps that’s a concern, but it’s just so hard to prove.

Jason Concepcion: So how would you—just try and draw this out—how do you do that? I guess you get into discovery and then you say, look at these text messages that weren’t returned? Like barring, you know, Rich Paul saying in another text message: I’m going to just ignore everything that has to do with Nerlens and well, fuck that guy. Like, you know, in terms of evidence, how do you actually build that case? What would you have to do?

Darren Heitner: Well, if we make the assumption—and I’m not sure that we should—but assuming that the case stays in a court of law as opposed to being removed to the NBPA arbitration process, then, yes, you would discover all of that potential evidence through the discovery process. And to the extent that either that information is in the possession and control of Rich Sports and Klutch Sports or you go out and subpoena third parties for that information and obtain it ,or perhaps even depose individuals and get subpoenas to depose third parties, you could perhaps find that smoking gun, which you will need as the plaintiff in order to prevail. But as I mentioned, I think that makes a very important assumption that the case remains in a court of law. I think first and foremost, the very first thing you’ll see is Rich Paul and Klutch lawyering up and filing a motion to dismiss, indicating that this case should have never been brought in a court of law, under the NBPA regulations it is mandatory arbitration when the dispute arises with respect to the meaning, interpretation, or enforcement of a standard player-agent contract. And underlying this relationship between Nerlens and Rich Paul for many years was a SPAC, a standard player agent contract. And if you look at the first course of action in the complaint that’s filed against Rich Paul, what’s Nerlens Noel trying to do? He’s trying to get the court to declare filed a declaratory judgment to declare that the SPAC itself is unenforceable, that it should be discarded. And I don’t think the court’s going to do that. Judges love to kick cases to arbitration when they can.

Jason Concepcion: Right. My feeling is it is in neither party’s benefit to allow this to go to a courtroom, right? This will not see a courtroom.

Darren Heitner: Well, I think Nerlens Noel would love it to stay in a court of law. I think it allows him, as I mentioned before, to have certain discovery tools that he may not have within the arbitration process. Furthermore, I think there’s a lot of leverage that Nerlens Noel has the longer this remains in a court of law, because Rich Paul and Klutch Sports desperately do not want anyone to be reading about this. They don’t want their competitors to be using it against them. Obviously, some of that leverage has been lost merely by filing the complaint in the court of law. But I do still think Nerlens has leverage as long as it remains out there on the public docket for anyone to consume. Normally, none of us will be talking about this because it would have been filed within the confines of the NBPA, which is a private process.

Jason Concepcion: How common are friction spats like this? This is the first time I can remember something of this nature going to litigation. But, you know, frictions within agencies feeling like you’re lost in the shuffle at a large agency—those seem like common concerns, right?

Darren Heitner: Absolutely. And typically, the consequence of that is a player will switch agents. We see it all the time. In this case with Nerlens Noel, I think George Langberg, who’s his current agent, would be his fourth in his career. That’s on one side of the spectrum. Most players don’t go through four agents throughout their careers, although it isn’t all that atypical for a player to make at least one switch throughout his career. I’d say it’s more common in basketball and football than it is in other sports, and perhaps basketball even being the most common. But typically, as I mentioned, the consequence of feeling as though you’re not getting the respect that you should is that you change agents, it’s not that you bring a case against the former agent for breach of fiduciary duty. Where we commonly see most cases between players and agents really revolves around agents suing players for nonpayment of agent fees. And again, that’s typically also within the scope of the NBPA regulations and thus it doesn’t ever reach the light of day for the public to consume. Or sometimes we will see cases involving individuals in the realm of basketball is actually with tortious interference, where one agent may sue another agent for prying a player away from him or her. Again, a very difficult cause of action to prevail on because the evidence is the issue. Typically your best evidence will be from the individual, the player who left you. But if the player left, it’s not likely that a player is going to be testifying in favor of the agent who he left. So, again, these are difficult cases for the plaintiffs to win.

Jason Concepcion: Yeah, I would imagine in a courtroom, in arbitration, the question will be asked, OK, so you discover that Kutch is not being communicative with potential suitors for Nerlens’ talents, and yet you remained with them. Like why?

Darren Heitner: I think it’s an excellent question and certainly one that will get brought up, whether it’s in a court of law or an arbitration. If you were so disgruntled, there’s dozens of agents out there, very reputable ones. And it’s not as though someone of the stature of Nerlens Noel would have a tough time finding someone to substitute. So why stick around? I think what Nerlens would respond to that with is nestled within the complaint, where there were promises of offers coming. And he was basically led to believe that Klutch was interested in continuing to represent him, to prioritize them, and that they were working on substantial offers. So I think that would be his response to your question.

Jason Concepcion: Yeah, there is one agent, veteran agent, said anonymously: it is wild to see all of it aired like this, it happens all the time, but it never becomes public—it happens around the draft, even guys will say anything to convince these players to come. I mean, you know, in spaces like this, in entertainment writ large, representation is so important. Getting good advice is so important. But it really feels like, you know, again, agents and anybody who is wooing talent will say a lot of things. Whether those actually constitute legally binding promises, I don’t think that that’s fair to characterize, right?

Darren Heitner: Yeah. Again, I think the devil’s in the details. But as you mentioned, if Rich Paul said to Nerlens Noel: I can be a benefit to you and help you earn millions upon millions of dollars—I’d say that’s par for the course, and agents, show me an agent who doesn’t. Right? I mean ultimately, it’s up to the player to perform. The agent has an important role in finding opportunities and negotiating them and using his or her skill and experience to the benefit of the player, but Nerlens became very aware through experience that it doesn’t matter how great of an agent you have, if ultimately you suffer an injury and there’s questions about your ability to perform, people are typically not going to take a flier on you, or especially not make you a max contract player. So I think it’s difficult because you still, you have these allegations that Nerlens Noel was allegedly tortuously interfered with, that he was with Happy Walters and went to, I think it was Ben Simmons birthday party and at a dinner was persuaded to make a switch—and I guess that’s the concern. If, in fact, that happened, well, that’s an issue. There’s no lawsuit that’s been brought against Rich Paul for tortious interference, but that is an issue with the industry, if something like that did occur, because I hate to see players leaving agents and making decisions based on promises that someone else may be making when they were actually happy with their existing representation. I mean, it’s never a good look to change agents, especially in such an important period in one’s career, so—but that’s besides the point. That’s not an issue that’s currently up for debate.

Jason Concepcion: Finally, Darren, assuming—and I think it’s a big assumption—that this case breaks in some way, that is seen as beneficial to Nerlens, whether by settlement or arbitration, do you think you see more cases like this? We just mentioned that it’s you know, the friction between talents and agencies is not uncommon.

Darren Heitner: I don’t think we see more cases like this. I would say typically players will hire—and this is not to attack the attorneys who are assigned to this case and have been retained by Nerlens Noel—but I think a lot of lawyers with experience in this space would probably recommend let’s skip the public filing and go straight to the NBPA and arbitration. And I don’t know that this is necessarily a strong case. I think there are many cases that are filed, not necessarily based on how meritorious the underlying claims may be, but because there’s some ulterior motive. Perhaps that’s true here. Perhaps this was to really attack Rich Paul and Klutch Sports and get a pound of flesh based on Nerlens Noel being disgruntled because he feels like he wasn’t properly treated. I don’t think that this will turn into some sort of trend where we see a lot of players suing their former representation for breach of fiduciary duty. It’s just such an incredibly difficult case to prevail on. I really don’t think that you’ll find a lot of lawyers looking to come on board with a case like this unless they’re getting paid an hourly fee. And I have to imagine that these lawyers are not.

Jason Concepcion: I mean, just to tag on, this suit was filed after a initial suit by Rich Paul and Klutch suing Nerlens for not paying a $200,000 commission on the deal he signed with the Knicks, which, you know—not to put myself in Nerlens shoes—but it smacks to me of a guy saying, you cost me X amount of millions of dollars and now you want $200,000 on a basically minimum contract that I signed. No, now I’m suing you. How about that? I mean—

Darren Heitner: And it goes to show you the general public, myself included, did not even know that Rich Paul had filed a grievance against Nerlens Noel for nonpayment of agent fees, which I mentioned earlier, is really the most common form of dispute between agents and players. And so that was filed within the NBPA arbitration process. The public isn’t aware of it because of the confidentiality surrounding that process. And meanwhile, Nerlens Noel fires back publicly.

Jason Concepcion: He’s Darren Heitner, founder of Heitner Legal and the Sports Agent Blog. Darren, thanks for joining me.

Darren Heitner: Thank you.