United States of America v. Gatto: The Second Circuit AffirmsJanuary 28, 2021
The NCAA Committee on Infractions Has Spoken: University of South CarolinaMarch 2, 2021
This action arises out of a marketing agreement (“the Agreement”) between Plaintiff and Defendants. Plaintiff, Zion Williamson, is a former basketball player for Duke University (“University”). Defendants are Gina Ford, a marketing agent from Florida, and Prime Sports Marketing, LLC (“Prime Sports”), a Florida based marketing agency. The parties entered into the Agreement on or about April 20, 2019, at the time Plaintiff was still a student at the University. In the Complaint, Plaintiff sought, among other things, a “judicial declaration that the Agreement is void as a matter of law and that Defendants engaged in conduct prohibited by [North Carolina’s Uniform Athlete Agent Act (“UAAA”)].” In the alternative, Plaintiff sought a declaration that “Defendants engaged in conduct prohibited by the UAAA, that the Agreement fails to meet the form of contract under the UAAA, [and] is therefore voidable, and that Mr. Williamson voided the Agreement.” Defendants answered and alleged counterclaims requesting, among other things, a judicial declaration that the Agreement is valid. On May 20, 2020, Plaintiff moved for judgment on the pleadings as to the declaratory judgment claim of his Complaint.
The North Carolina General Assembly enacted into law its version of the UAAA in 2003. The UAAA provides requirements for the conduct of individuals acting as athlete agents in North Carolina and for contracts entered into between athlete agents and student-athletes. Under the statute, an individual is required to register with the North Carolina Secretary of State before acting as an athlete agent in the state, unless the individual is a North Carolina licensed and resident attorney. The UAAA defines “athlete agent” as a person who (1) “enters into an agency contract with a student-athlete;” (2) “directly or indirectly. . . recruits or solicits a student-athlete to enter into an agency contract;” or (3) “represents to the public that” he or she “is an athlete agent.” Those seeking certification as an athlete agent must submit an application that provides, among other things, a description of their formal training, practical experience, and educational background relating to agent activities. The UAAA provides that an agency contract resulting from conduct that violates the UAAA is void.
The UAAA also provides requirements for contracts between athlete agents and student-athletes, and its definition of an “agency contract” incorporates any agreement which grants an individual the authority to negotiate or solicit “a professional-sports-services contract or an endorsement contract” on behalf of a student-athlete. These requirements include, among other things, that the contract include a “conspicuous” warning to the potential client that his signature will result in a loss of intercollegiate eligibility as well as the date of execution of the contract. An agency contract that does not meet the express terms of the statute is voidable by the student-athlete.
Defendants’ primary argument against the appropriateness of judgment on the pleadings is that they have made sufficient allegations to call into question Plaintiff’s status as a student-athlete, which would mean that the UAAA did not apply to Plaintiff and Defendants’ relationship, or the resulting Agreement. Given the pleadings before the Court, taken in the light most favorable to Defendants and resolving all inferences in their favor, the Court found that there is no genuine dispute that Plaintiff engaged in intercollegiate sports while a student at the University during the relevant time period. Further, there is no genuine dispute that he had not been declared permanently ineligible to do so at the time of the Agreement. Therefore, there is no genuine issue of material fact as to whether Plaintiff was a student-athlete under the UAAA during the time he entered into the Agreement with Defendants.
The Court found that it was undisputed that Defendant Ford holds herself out as an athlete agent yet neither she nor her agency are licensed as athlete agents in North Carolina, nor have they applied for such a designation. When an individual acts as an athlete agent without holding a certificate of registration, the UAAA expressly provides that any agency contract the individual entered with a student-athlete “is void, and the athlete agent shall return any consideration received under the contract.”
The Court further found that it is undisputed that Defendants entered into a contract in North Carolina with Plaintiff for the purposes of identifying branding and endorsement opportunities. The Court found it is additionally undisputed that the Agreement provides that Defendants are to act as Mr. Williamson’s agents for purposes of endorsements, namely, as Mr. Williamson’s “Global Marketing Consultant for identifying branding and endorsement opportunities.” The Agreement further empowers Defendants to “exclusively oversee all marketing opportunities” brought before Plaintiff and to “[negotiate] with any entity contracted to [Plaintiff] to resolve any problems that may arise in the delivery of the services and in meeting the entity’s obligations to [Plaintiff].” Finally, the pleadings and exhibits show that the Agreement does not contain the warning required by the UAAA. Further, Defendants admit that on May 31, 2019, Plaintiff’s family sent a letter to Defendants on Plaintiff’s behalf terminating and voiding the Agreement.
Viewing the pleadings in the light most favorable to Defendants and drawing all reasonable inferences in Defendants’ favor, the Court concluded that Plaintiff is entitled to judgment as a matter of law on the issue of whether the Agreement is void. Specifically, there is no dispute that: (1) Plaintiff was a student at the University and played on the University’s men’s basketball team at the time that the parties engaged one another; (2) he had not been determined to be permanently ineligible by any governing body at the time of the agreement; (3) Defendant Ford did not hold the requisite athlete agent certification as required by North Carolina’s UAAA; (4) the parties entered into the Agreement; (5) the Agreement permits Defendants to negotiate or solicit professional-sports-services or endorsement contracts on Plaintiff’s behalf; (6) the Agreement at issue did not have the statutorily required warning; and (7) Plaintiff’s family communicated to Defendants that they were terminating and voiding the agreement. Accordingly, the Court declared that the Agreement entered into by the parties is void as a matter of law under the UAAA.