Childs v. Meadowlands Basketball Associates, Civil Action No. 95-6126.

• Decision Date: 04 February 1997
• Docket Number: Civil Action No. 95-6126.
• Parties: Chris CHILDS, Plaintiff, v. MEADOWLANDS BASKETBALL ASSOCIATES, d/b/a New Jersey Nets, Defendant, and National Basketball Association, Intervenor.
• Court: U.S. District Court — District of New Jersey

954 F.Supp. 994

Chris CHILDS, Plaintiff, v. MEADOWLANDS BASKETBALL ASSOCIATES, d/b/a New Jersey Nets, Defendant, and National Basketball Association, Intervenor.

Civil Action No. 95-6126.

United States District Court, D. New Jersey.

February 4, 1997.

George G. O'Brien, Cherry Hill, NJ, for Plaintiff.

Jack Wenik, Sills Cummis Zuckerman Radin Tischman Epstein & Gross, P.A., Newark, NJ, for Defendant Meadowlands Basketball Associates.

David W. McGregor, Proskauer Rose Goetz & Mendelsohn, Clifton, NJ, for Defendant National Basketball Association.

OPINION

HAROLD A. ACKERMAN, District Judge:

This matter is before the court on motions by defendant Meadowlands Basketball Associates, d/b/a New Jersey Nets ("Nets") and by defendant National Basketball Association ("NBA") to dismiss plaintiff Chris Childs' complaint, or to compel arbitration. For the following reasons, the defendants' motions are denied in part and granted in part.

I. FACTUAL BACKGROUND

Plaintiff Chris Childs is a professional basketball player. Complaint ¶ 2. He resides in, and is a citizen of the state of Idaho. Complaint, at 1. The defendant New Jersey Nets is a professional basketball team and is a partnership of the state of New Jersey. Id. Because the amount in controversy exceeds $50,000 and because the plaintiff's citizenship is diverse from that of the defendant, this court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332.

The New Jersey Nets employed Childs as a professional basketball player during the 1994-1995 basketball season. Complaint, ¶ 2. During the 1994-1995 season, Childs received as salary $150,000, the minimum salary in the National Basketball Association ("NBA"). Complaint, ¶ 8. Steven A. Kauffman, Esq. is Childs' certified player agent. Complaint, ¶ 6.

The NBA imposed a lockout against its players after the collective bargaining agreement between the parties expired. See Complaint ¶ 11. During the lockout, on August 7, 1995, Childs received an offer to play basketball for the Panionios Sporting Club ("Panionios"), a professional basketball team in the Greek Basketball Federation ("GBF"). Complaint, ¶ 9. The Panionios offered Childs the United States equivalent of between $650,000 and $700,000 to play basketball in the GBF. Id. However, after consulting with the Nets, Childs rejected the Panionios' offer. Complaint, ¶ 13.

Childs' agent Kauffman informed the Nets General Manager, Willis Reed, of the terms of the offer. Complaint, ¶ 11. Reed expressed the Nets' intention to re-sign Childs for the 1995-1996 season, and acknowledged that the Panionios' offer was appropriate for a player of Childs' caliber. Id. However, Reed also explained that the Nets could not sign Childs immediately because the NBA's "lock-out" of its players was still in effect, i.e., on August 7, 1995. Id. "Reed assured Kauffman, however, that after the lock-out was lifted, the Nets would promptly resign Childs to a contract that was as financially attractive as the Panionios offer." Complaint, ¶ 8.

The NBA's lock out of its players was lifted on September 18, 1995. Complaint, ¶ 14. However, when Kauffman approached Reed to negotiate a contract for Childs, "the Nets refused to offer Childs a contract that was as financially attractive as the Panionios offer." Complaint, ¶ 15. At this point, after the lock-out had ended, it was too late for Childs to accept the Panionios' earlier offer. Complaint, ¶ 16.

Due to the restrictions of the salary cap in the NBA, the Nets were able to offer Childs only a one year contract for $350,000. Complaint, ¶ 16. Childs claims that he was forced to accept the offer because he had no other choices. Complaint, ¶ 17.

II. DISCUSSION

Childs' complaint alleges four state-law grounds for relief against the Nets. First, Childs claims that Reed committed fraud in falsely claiming that the Nets would match the Panionios's offer. Second, Childs claims that Reed made negligent misrepresentations during the contract negotiations. Third, Childs claims that Reed and the Nets intentionally interfered with Childs' prospective economic advantage. Finally, Childs claims that the actions of Reed and the Nets in this action constituted breach of contract. As a result of all of the foregoing, Childs claims that he is entitled to damages in excess of $100,000.

Soon after Childs filed his complaint, the Nets filed a motion to either dismiss the action or to compel arbitration. In addition to their briefs and arguments, the Nets submitted affidavits in support of their motion. While this motion was pending, the NBA filed a motion to intervene in this action, which was eventually granted as unopposed by U.S. Magistrate Judge Stanley R. Chesler. The NBA also submitted briefs and affidavits in support of the motion to dismiss or to compel arbitration.

A. The Motion to Dismiss on Preemption Grounds

The Nets argue that Childs' state law contract claims are preempted by § 301 of the Labor Management Relations Act ("LMRA").¹ According to the defendants Childs' state law claims are substantially dependent upon an analysis of the terms of the collective bargaining agreement which the Players Association entered into with the NBA. Specifically, the defendants contend that Childs' claims involving oral agreements and detrimental reliance on his behalf require an interpretation of the CBA's prohibition against oral agreements. Moreover the defendants argue that the resolution of Childs state law claims would depend upon an analysis of Childs' contract with the Nets, which specifically incorporates provisions of the CBA.

The Nets quote Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 220, 105 S.Ct. 1904, 1915-16, 85 L.Ed.2d 206 (1985), for the proposition that state law claims must either be treated as § 301 claims or must be dismissed as preempted by federal labor law where resolution of the state law claims is dependent upon analysis of the CBA. On the instant motion, the defendants contend that Childs' claims must be dismissed.

The Nets acknowledge, however, that the NBA and the Players Association have not yet reached an agreement on a final version of the collective bargaining agreement. Nonetheless, the Nets contend that preemption of Childs' claims is still required because the terms of a final CBA can be implied from the parties' conduct. Specifically, the Nets contend that there is clear evidence that the Players' Association and the NBA have acted in accord with an arbitration grievance procedure which was required under the expired CBA. The Nets have submitted affidavits in support of this claim. Notably, however, the Nets have not offered "evidence" of other terms of the CBA, even though the Nets relied in their opening brief, see supra at 997, upon specific provisions of the alleged CBA in arguing that specific portions of Childs' state law claims required interpretation of the CBA.

I will not express an opinion at this time on the defendants' motion to dismiss on preemption grounds. Resolving the defendants' arguments would involve a consideration of affidavits and other evidence submitted on this motion. However, in ruling upon a motion to dismiss, it is well settled that a court must restrict its consideration to only those matters alleged in the complaint, exhibits attached to the complaint and matters of public record. Pension Benefit Guaranty Corp. v. White Consolidated Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.1993), cert. denied, 510 U.S. 1042, 114 S.Ct. 687, 126 L.Ed.2d 655 (1994).

I acknowledge that I could convert the motion to dismiss to a motion for summary judgment. See Fed.R.Civ.P. 12(b) (permitting court to convert Rule 12(b)(6) motion to motion for summary judgment). The decision to convert a motion to dismiss into a summary judgment motion is entrusted to the district judge's discretion. See Kulwicki v. Dawson, 969 F.2d 1454, 1463 (3d Cir.1992) (citing 5A Wright & Miller, Federal Practice & Procedure, § 1366, at 491 (1990)). However, after reviewing the parties' submissions on this motion, I have decided in my discretion to refrain from converting the instant motion into a summary judgment motion. I have not been advised whether any discovery has taken place in this case and I note that the plaintiff appears to be experiencing difficulties in obtaining potentially crucial discovery from the defendants. See Certification in Opposition to Defendant's Motion to Dismiss or Compel Arbitration, at 2. In these circumstances, I believe that it would be inappropriate for the court to convert the pre-answer motion to dismiss into a motion for summary judgment.²

Accordingly, the defendants' motion to dismiss on preemption grounds, which relies on matters outside the pleadings and has not actually been briefed as a motion to dismiss, is denied.

B. Motion to Compel Arbitration

The defendants also argue that Childs' claims must be submitted to arbitration, even if this court does not conclude that his claims are preempted. In support of this argument, the defendants rely upon the terms of the contract which Childs entered into with the Nets following Willis Reeds' alleged misrepresentations. That contract provides:

In the event of any dispute arising between the Player and the Club relating to any matter arising under this contract, or concerning the performance or interpretation thereof (except for a dispute arising under paragraph 9 hereof), such dispute shall be resolved in accordance with the Grievance and Arbitration Procedure set forth in the NBA/NBPA Collective Bargaining Agreement.

See Affidavit of Ray Schaetzle (filed Apr. 29, 1996), at Ex. B (containing copy of Childs' 1995 contract).³ Furthermore, Childs' contract contains an integration clause:

This contract (including any Exhibits hereto) contains the entire agreement between the parties ... and there are no undisclosed agreements of any kind, express or implied, oral or written, promises, undertakings, representations, commitments,...