Powers of Attorney: A Cautionary Tale
Today I want to relate an unfortunate and cautionary tale that grew out of a professional basketball player's claim for the recovery of $2.74 million in unpaid salaries that was reported by the FIBA Basketball Arbitral Tribunal in 2011. This decision carries a series of warnings to players who have their contracts wrongly cut by clubs and offers suggestions about guiding their actions in relation to a "Power of Attorney [read more]
Powers of Attorney: A Cautionary Tale
Today I want to relate an unfortunate and cautionary tale that grew out of a professional basketball player's claim for the recovery of $2.74 million in unpaid salaries that was reported by the FIBA Basketball Arbitral Tribunal in 2011. This decision carries a series of warnings to players who have their contracts wrongly cut by clubs and offers suggestions about guiding their actions in relation to a 'Power of Attorney.'
Lawrence Roberts is a former NCAA First Team All-American and NBA player with the Memphis Grizzlies. After two years in the NBA, he signed a two year contract for the 2007-08 and 2008-09 seasons with Olympiakos in Athens. Roberts was to receive $1.5 million for the first year and $1.75 million for the second season with the Greek club.
It appears that Roberts was paid $550,000 by Olympiakos during the preseason and then, according to the BAT arbitrator, 'on about the 3rd of October 2007, the [club] decided that [Roberts] was not to continue as part of its team.' The reasons for this decision are not provided in the arbitration award, but on October 4, 2007, Euroleague.net reported that, 'Roberts failed to meet the expectations of head coach Pini Gershon, who decided to cut him and search for another player.'
Within a couple of days, a Greek agent that Roberts had included in the initial negotiations with the Club, Konstantinos Papadakis, showed up at Roberts' door and here came the player's first mistake. Roberts executed a blanket 'Power of Attorney' authorizing Papadakis to exercise all of the player's rights in seeking a settlement of his outstanding claims against the club. Now recall that as of this time, Roberts had not been paid $2.74 million of his $3.25 million contract. Consider also that Roberts had not put in place any back up contract with another team. (In fact, Roberts remained out of basketball for the remainder of the 2007-08 season.)
Incredibly, within 72 hours of receiving the 'Power of Attorney,' the Greek agent exercised the player's rights to negotiate a resolution on his $2.74 million claim against Olympiakos and reached, on Roberts behalf, a 'Termination Agreement' with Olympiakos providing Roberts with a settlement. Unfortunately for Roberts, the settlement amounted to $0.00 for the player. Zero. Niente. So in exchange for Roberts' $2.74 million in contract rights, Papadakis and Olympiakos agreed that the player would not receive a single dollar.
Moreover, not only were Roberts' rights against the club zeroed out by this 'Termination Agreement,' the arbitrator found that there was no fiduciary duty running from the agent to the player pursuant to the Olympiakos contract. This represents Roberts' second mistake. Roberts did not have prepared (or at least he did not submit) any other agreement as between himself and Papadakis establishing a duty on the agent to protect his rights, or any parameters for the eventual settlement of the Olympiakos claim, so he was unable to establish or even allege any contractual basis to recover against the agent and his claims against the agent were dismissed.
The third word of caution comes out of a legal doctrine known in Europe as venire contra factum proprium - a general principal providing that one's conduct or statements of intent concerning existing contractual rights can lead to a prohibition on the invocation of such rights. In the US and the UK, we know this as the doctrine of 'estoppel.' In the Roberts case, the application of this doctrine took two forms -- both Roberts' conduct and his statements -- which led to the dismissal of the Player's claim against Olympiakos.
First, the arbitrator noted the player's failure to undertake the prompt prosecution of the claim. The player waited nearly three years before bringing his case before the BAT, attributing the period of the delay to the need to formulate claims, gather evidence, locate witnesses, etc. His attorneys argued that the statute of limitations in Switzerland 10 years should be the BATs sole guide on the timeliness of the claim; nonetheless, the arbitrator disagreed, noting that there was no record of any written demands placed by Roberts on Olympiakos between the creation of the October 2007 Termination Agreement and the August 2010 BAT arbitration. Even though the arbitrator suggested it would have been reasonable for the player to wait until after the end of the 2008-09 season (when his duty to mitigate contract damages by securing other employment would have expired) the delay of an additional 14 months before the case was eventually filed was too much for the arbitrator.
Second, the arbitrator found that the player had given an interview to a Greek newspaper reporter in January 2010. In the interview, Roberts suggested that he was satisfied with the outcome of his contract by commenting on his season cut short by Olympiakos, 'besides I received a big part of the fees that were agreed for the first year.' Indeed, the arbitrator held, 'it seems inconceivable that [Roberts] would have made such conciliatory remarks about [Olympiakos] in January 2010 were arbitration proceedings in preparation.' This combination of the delay and this publicized remark was fatal to the player's claim which was dismissed in its entirety.
So, players, draw these lessons from Roberts v. KAE Olympiakos SPF & Papadakis (121/10 BAT):
* If forced to negotiate a settlement of your contract claims, don't hand over your rights through a 'Power of Attorney' to an agent without defining what are the limits on that agents negotiating authority.
* Always prepare a clear, written understanding of the parameters (the minimum limits) for the agent's exercise of those rights that establishes the agent's duty to you as the player.
* Don't delay in assembling the facts, witnesses (including witness statements) and theories in a contract claim and don't neglect sending the Club demands for their performance, even if you don't have all of the evidence about the case that you expect to gather from your witnesses.
* Don't talk to reporters about your contract rights.
I trust that the unfortunate experience of Mr. Roberts won't be visited upon other players in the future and that this article will help others avoid a similar fate.
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The Eurobasket Legal Corner is written and produced by John B. Kern, an American lawyer with offices in the United States and San Marino, who focuses on international sports rights and arbitrations. The legal principles discussed are general in nature. Laws change and even similar circumstances may call for the application of different laws.
If you have a question for a future edition of The Eurobasket Legal Corner, please write to Mr. Kern at kern@jbkinternational.com.
2012 JBK Intl Cons. LLC. All rights reserved. 120401
Today I want to review a case that was published by the Basketball Arbitral Tribunal late last year about a players effort to recover salary payments after being cut by a Club due to an off-season aggravation of an injury. The critical lessons to take away from this case are the importance of reporting injuries to the Club and being diligent about observing the directives of the club's medical staff [read more]
Today I want to review a case that was published by the Basketball Arbitral Tribunal late last year about a players effort to recover salary payments after being cut by a Club due to an off-season aggravation of an injury. The critical lessons to take away from this case are the importance of reporting injuries to the Club and being diligent about observing the directives of the club's medical staff.
While under a two year 'no cut' contract with Italys ASD Basket Parma, Dutch star Naomi Halman passed her first year physical and later developed an injury that caused some difficulties to her in the first season. The injury did not cause her to miss any significant playing time. She received treatment for her injury which was being managed by the player and the club's medical staff.
At the beginning of the season, Halman and all of the players on the club were handed a set of Internal Regulations, part of which dealt with conditioning. At the close of the first season, the players were given general instructions about conditioning during the off-season. Halman was not provided any particular medical plan for addressing her injury or any specific information about conditioning in relation to her injury during the Summer. Halman returned to her home in the Netherlands and began practicing with the Dutch National Team.
The player reinjured herself while training with the Dutch team. She stopped practicing and sought medical treatment and therapy in the Netherlands. Instead of formally reporting the circumstances of the injury to the medical staff of the Parma club, she talked to the coach about it on the phone and also started a facebook (r) chat with one of the clubs coaches about her pain.
When Halman returned for the second season, she arrived in Parma having gained 7 kg (16 lbs) in weight. The complications caused by her aggravated injury were obvious to the clubs medical staff. She was allowed to start training camp, but within two weeks she was sent by the club to be examined by a surgeon. Eventually, she was cut after another two weeks with the club citing her physical injury and condition.
The player underwent treatment for her injury at her own expense in the Netherlands and in Greece and did not play professionally for the remainder of the season. By the end of the season, her medical issue was totally resolved and she returned to play with another club the following year.
The player sued the club to recover unpaid salaries for the balance of the second season. The principal defense of the club in Halman v. ASD Basket Parma, (169/11 BAT) rested upon showing the player's failure to reveal her injury to the club during the off-season. A second line of defense was based upon the player's weight gain and lack of physical conditioning.
The arbitrator found that Halman disregarded an explicit duty of loyalty to the club to report her injury and have her treatment for the injury managed by the Club. According to the arbitrator, [b]y failing to follow these rules, she deprived the club of the opportunity to take the measures it deemed appropriate to restore the player's fitness to play. The player argued that the quality of care she received in the Netherlands over the Summer was exceptional, but the arbitrator held the quality of her care to be irrelevent. The fundamental point was that the club was deprived of the opportunity to oversee her care.
The arbitrator also found that the players weight gain amounted to a further implicit disregard of a significant obligation of any professional athlete, namely to take care that she always maintained an optimum physical condition, whether or not such a duty was explicitly stipulated in the player contract.
Finally, the arbitrator found that the players facebook (r) chat was not an adequate means of placing the club on notice about her in jury. Whether these failings amounted to a breach of the contract and an excuse for the club to not pay the contractual salary obligations would resolve the question of whether the club was justified in terminating the 'no cut' contract because of these failings.
In the end, the arbitrator held that the players faults amounted to a minor violation of the duties of loyalty that she owed the club not a major breach of the contract since the club had allowed her to rejoin the team for the second season after her second physical. The arbitrator found that the player's failure to notify the club of the aggravation of her injury slowed her return to physical condition by a period of two months. Consequently, the arbitrator deducted two months pay from her recovery against the club.
The first lesson to be taken from this case is that even in the offseason, players should immediately report their injuries to the medical staff of their contracting club and that before undertaking any medical treatments, do so with the knowledge of the club, without exception. Second, put it in writing. And remember, just because the club has not given a player specific instructions on how to manage his or her condition during the off-season does not mean that the player is free to establish his own fitness regimen or physical rehabilitation.
I trust that the experience of Ms. Halman wont be visited upon other players in the future and that this article will help others avoid a similar challenge to their professional careers.
_________________________________________
The Eurobasket Legal Corner is written and produced by John B. Kern, an American lawyer with offices in the United States and San Marino, who focuses on international sporting rights and arbitrations. The legal principles discussed are general in nature. Laws change and even similar circumstances may call for the application of different laws.
If you have a question for a future edition of The Eurobasket Legal Corner, please write to Mr. Kern at kern@jbkinternational.com.
2012 JBK Int'l Law LLC. All rights reserved. 120203
Today we received a question from Tayron in Mexico:
If I have a contract claim for a small amount - like a final contract payment of $5,000 - is it worth it to take the case to the BAT?
Great question, Tayron.
Over the years, the Basketball Arbitral Tribunal (BAT) has tried to sort out a means of making small claims affordable [read more]
Today we received a question from Tayron in Mexico:
If I have a contract claim for a small amount - like a final contract payment of $5,000 - is it worth it to take the case to the BAT?
Great question, Tayron.
Over the years, the Basketball Arbitral Tribunal (BAT) has tried to sort out a means of making small claims affordable. The first thing to note is that according to the BAT rules the non-reimbursable handling fee is limited to EUR 1,500 for any case where the claim is less than EUR 30,000 (i.e. $40,000). The fees of the arbitrator were limited for a period of time prior to 2011 to only EUR 2,500 for these cases. In 2011, that rule changed. The BAT rules now provide that the arbitrator is not authorized to spend the time to prepare a written opinion with reasons on these small cases. So, instead of paying the costs of the arbitrator preparing a long opinion, the arbitrator can charge a fee only for reviewing the case submissions and issuing a one page award either granting or denying the claim. The actual amount to be charged by the arbitrator, and the willingness of the responding party to pay their share of the fees, changes from case to case.
Consequently, the costs for a small claim may reach between EUR 3,000 to EUR 5,000 (USD 4,000 to USD 6,500.) The good news is that the BAT arbitrator has the authority to award these costs, as well as attorney's fees, to the prevailing party in any case. Recall that FIBA has the authority to sanction the club for failing to immediately honor the award.
There are a couple of other things you may want to take into consideration in evaluating the claim. First, many contracts have penalty provisions that assess additional damages on a daily basis as a consequence of the club's failure to pay any portion of the contract. The BAT has authorized a penalty of as much as USD 100 per day, but the more traditional figure is either USD 50.00 per day or EUR 50.00 per day. If you are owed USD 5,000, and despite your demands the claim remains unpaid for one year, you may be eligible to recover more than USD 18,000, assuming a USD 50.00 per day penalty. Second, the BAT will award interest on the claim at the rate of 5% per year.
I trust this helps you and appreciate your question.
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The Eurobasket Law Column is written and produced by John B. Kern, an American lawyer with offices in the United States and San Marino, who focuses on international sports rights and arbitrations. The legal principles discussed are general in nature. Laws change and even similar circumstances may call for the application of different laws.
If you have a question for a future edition of the Eurobasket Law Column, please write to Mr. Kern at kern@jbkinternational.com.
2012 JBK Intl Cons. LLC. All rights reserved. 120202
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