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Powers of Attorney: A Cautionary Tale - Apr 12, 2012

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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, 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.


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

2012 JBK Intl Cons. LLC. All rights reserved. 120401

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