Legacy Agency, Inc. v. Scoffield

• Decision Date: 08 September 2021
• Docket Number: 20-cv-5771 (JGK)
• Citation: 559 F.Supp.3d 195
• Parties: The LEGACY AGENCY, INC., Petitioner, v. Brodie SCOFFIELD, Meghan Whelan, and Chris Amezquita, Respondents.
• Court: U.S. District Court — Southern District of New York

559 F.Supp.3d 195

The LEGACY AGENCY, INC., Petitioner,

v.Brodie SCOFFIELD, Meghan Whelan, and Chris Amezquita, Respondents.

20-cv-5771 (JGK)

United States District Court, S.D. New York.

Signed September 8, 2021

Howard Jay Kaplan, Chandni Roy, Kaplan Rice LLP, New York, NY, for Petitioner.

Reade William Seligmann, Steven Campbell, Adam J. Kaiser, Alston & Bird, LLP, New York, NY, for Respondents.

OPINION AND ORDER

JOHN G. KOELTL, District Judge:

This action relates to two decisions by an arbitrator appointed by the Major League Baseball Players Association ("MLBPA") that were rendered to settle an employment dispute between The Legacy Agency, Inc. ("Legacy") and three of its former employees, Brodie Scoffield, Meghan Whelan, and Chris Amezquita. After Legacy filed a petition in the New York State Supreme Court to confirm the arbitrator's award dated May 6, 2020 ("Award") and subsequent clarification decision dated June 15, 2020 ("Clarification Decision"), the respondents removed the action to this Court and Scoffield filed a cross-petition to vacate the Award. The respondents filed an amended notice of removal on July 27, 2021, after the Court directed the parties to file supplemental submissions regarding the Court's subject matter jurisdiction.

The MLBPA filed an amicus brief in support of confirming the Award. Whelan and Amezquita do not oppose the Award's confirmation. For the reasons that follow, Scoffield's motion to vacate the Award is DENIED and Legacy's motion to confirm the Award is GRANTED.

I.

The following facts are taken from the Petition, Cross-Petition, and the supporting exhibits and declarations filed by the parties and are undisputed unless otherwise noted.¹

During the relevant time period, Legacy was a company that employed agents who represented major and minor league baseball players in contract negotiations. The MLBPA is a labor union that is recognized by Major League Baseball ("MLB") and the multi-employer bargaining entity representing MLB clubs ("Clubs") as the exclusive bargaining representative for all MLB players, pursuant to Section 9 of the National Labor Relations Act, 29 U.S.C. § 159. The MLB and MLBPA have entered into a collective bargaining agreement ("CBA") that establishes certain minimum contract terms and requirements for all MLB players. Cross-Pet. ¶¶ 1-4. The CBA also authorizes individual MLB players to designate an agent ("Player Agent") to assist or conduct the negotiation of an individual salary and any special covenants on the player's behalf. Id.

The disputes at issue in the Award and Clarification Decision arose when Scoffield became dissatisfied with his compensation at Legacy, resigned, and established a competitor company that quickly lured away several former Legacy clients. The disputes also involved Whelan and Amezquita, two other former employees of Legacy. Whelan assisted Scoffield with his work at Legacy and left to join Scoffield's new firm shortly after Scoffield resigned. Pet. ¶¶ 7, 9, 11; Award at 13-14. Amezquita, who also worked closely with Scoffield at Legacy, was terminated by Legacy following Scoffield's resignation. Amezquita subsequently joined Scoffield's new firm. Pet. ¶ 21; Award at 14-18.

To be authorized to represent individual players, Player Agents must be certified by the MLBPA and abide by the MLBPA Regulations Governing Player Agents ("Agent Regulations," ECF No. 6-2), which the MLBPA promulgated pursuant to its authority under the CBA. Cross-Pet. ¶ 7. The Agent Regulations include criteria for achieving and maintaining Player Agent certification, periodic reporting requirements for Player Agents, and rules governing the relationships Player Agents may have with their clients, non-client players, Clubs, and other Player Agents.

Scoffield, a certified Player Agent, was employed by Legacy from 2011 until his resignation on September 7, 2018. Pet. ¶ 7. As a Player Agent at Legacy, Scoffield specialized in recruiting young players, who may generate significant future fees but generally do not generate fees during the initial years of their careers. Id. ¶ 8 & n.3; Award at 8.

Scoffield's employment with Legacy was governed by an employment agreement ("Employment Agreement," ECF No. 1-6) and a non-disclosure and non-solicitation agreement ("NDA," ECF No. 1-7), both dated October 11, 2013. The Employment Agreement, which was amended in 2016 when Scoffield was promoted, provided that Scoffield "shall not terminate this Agreement at any time during the Term except by reason of Disability or for Good Reason," and that any termination without "Disability" or "Good Reason" would constitute a breach of the Employment Agreement by Scoffield. Employment Agreement § 4(e); Pet. ¶ 8. Under the Employment Agreement, "Good Reason" was defined as "a material breach of this Agreement by the Company that remains uncured following thirty (30) days written notice" from Scoffield to Legacy. Employment Agreement § 4(d).

The NDA included certain confidentiality requirements and restrictive covenants prohibiting Scoffield from soliciting players represented by Legacy or other Legacy employees to leave Legacy. NDA § 4. The NDA also contained a "Fee Tail" provision requiring that, if Scoffield resigned and breached the NDA by representing players who were Legacy clients during the year prior to Scoffield's termination date, then in addition to any other remedies, Scoffield would be obligated to pay Legacy a decreasing percentage of fees earned from those former Legacy clients for 5 years following his resignation from Legacy.² NDA § 8(d).

In addition to the restrictive covenants of the NDA, as a certified Player Agent, Scoffield was subject to Section 4(L)(1) of the Agent Regulations, which provides that Player Agents owe a fiduciary "Duty of Loyalty" to their employers. The Duty of Loyalty explicitly prohibits Player Agents from "[c]ompeting with the employer while employed by the employer," including "[r]ecruiting for [the Player Agent's] own present or future self-interest or for any ... other competitor of the employer" or "using work time or the employer's facilities or equipment to prepare to become a competitor of the employer." Agent Regulations § 4(L)(1)(a).³ Under the Agent Regulations, post-employment restrictive covenants, such as the Fee Tail provision, are enforceable "only if" certain conditions are met, including that the covenant must be in a "written agreement" and that "[t]he party seeking enforcement of the Restrictive Covenant has not breached the underlying agreement governing the relationship between the parties, nor acted in bad faith." Agent Regulations § 4(L)(2). The Agent Regulations also stipulate that Player Agents consent to the MLBPA's exclusive jurisdiction to resolve all disputes between or among Player Agents and their agencies and affiliated persons or entities relating to the breach of the Duty of Loyalty (including enforcement of restrictive covenants) through arbitration. Agent Regulations §§ 4(L)(1), 4(L)(3), 7(A).

The Employment Agreement contains a "Governing Law" clause that provides:

This Agreement shall be governed by, construed in accordance with and enforced under the laws of the State of New York without giving effect to any choice or conflict of law provision or rule that would cause the application of any jurisdiction other than New York .... Notwithstanding the foregoing, all disputes between or among the Company and Employee involving the validity, interpretation, application, enforcement or alleged breach of the [NDA] shall be resolved exclusively in accordance with the final and binding arbitration procedures set forth in Section 7(A) of the MLBPA [Agent Regulations].

Id. § 9(d). The NDA similarly provides that any "alleged breach of any of the restrictive covenants and clauses relating to the duty of loyalty ... shall be resolved exclusively in accordance" with the arbitration procedures set forth in Section 7(A) of the Agent Regulations, but all other disputes "[s]hall be governed by, interpreted and enforced in accordance" with New York law. NDA §§ 9(a)-(b). Under Section 7(A) of the Agent Regulations, the MLBPA has the authority to select arbitrators to adjudicate disputes, and the arbitrators have broad authority to, among other things, rule on their own jurisdiction and issue decisions and awards "including any appropriate remedy or remedies."

The dispute between Scoffield and Legacy began when Scoffield raised concerns to Legacy about his compensation. See Cross-Pet. ¶ 30. Scoffield believed that the amount he received from Legacy was inconsistent with certain compensation provisions of the Employment Agreement. Id. In January 2018, Scoffield sought to discuss the payment of his 2017 commission and bonus compensation, due to be paid by April 30, 2018, and inquired about certain stock options to which he believed he was entitled under the Employment Agreement. Award at 10. After Legacy did not make the commission and bonus payments by April 30, 2018 and no substantive agreement had been reached on Scoffield's stock options, Greg Genske, Legacy's President of Baseball, sent Scoffield a proposal to pay him a certain amount in bonus compensation but did not provide further information about Scoffield's ability to collect on his stock options. Award at 11. Scoffield told Genske that the amount proposed was not enough. Id. On June 12, 2018, Scoffield emailed Genske to state that Scoffield believed that Legacy had breached the Employment Agreement and demanded that the breach be cured immediately. Id.; Cross-Pet. ¶ 30. On July 6, 2018, Legacy paid Scoffield a certain amount and provided Scoffield with an explanation for how Legacy calculated the amount that it believed Scoffield was owed and why Legacy believed that Scoffield's requested amount was incorrect. Award at 11; Cross-Pet. ¶ 30. On August 14, 2018, Scoffield's lawyer responded to Legacy with a letter raising objections to Legacy's calculations. Award at 11-12....