Noel v. Paul
| Decision Date | 09 September 2022 |
| Docket Number | Civil Action 3:21-CV-2485-B |
| Parties | NERLENS NOEL, Plaintiff, v. RICHARD PAUL and KLUTCH SPORTS GROUP, LLC, Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Before the Court is Defendants Richard Paul (Paul) and Klutch Sports Group, LLC (KSG)'s Motion to Dismiss (Doc. 3). For the reasons explained below, the Court GRANTS the Motion.[1]
This is a dispute between a professional athlete and his former agent. Plaintiff Nerlens Noel (Noel) is a professional basketball player in the National Basketball Association (NBA). Doc. 1-3, Pet., 2. Defendant Paul is a sports agent who is the “founder, [chief executive officer (CEO)] and Board Member of Defendant [KSG],” a sports agency. Id. at 3.
Noel began his NBA career as a member of the Philadelphia 76ers after being selected in the first round of the 2013 NBA draft. See id. at 2. After three and a half years in Philadelphia, Noel was traded to the Dallas Mavericks during the middle of the 2016-17 NBA season. Id. at 2-3. Noel had a successful finish to the season with the Mavericks and became a restricted free agent the following summer. Id. When the NBA free agency period opened in July 2017, the Mavericks offered Noel a four-year contract worth $70 million. Id. Noel's agent at the time of the offer was Happy Walters (Walters). Id. at 3.
Around the time Noel received the Mavericks contract offer, Noel met Paul for the first time at a birthday party for a former teammate. Id. At the party, Noel claims that Paul “made a pitch to become Noel's agent.” Id. at 4. The pitch consisted of Paul telling Noel that he “was a [$]100 million man” and that, if Noel fired Walters and hired Paul, Paul would get Noel a deal at the league maximum salary. Id. According to Noel, Paul also “advised Noel that he should cease negotiations with Dallas, accept [a] single year qualifying offer, and seek a max deal on the free agent market the following season.” Id.
Paul's pitch was successful. The month after the party, Noel terminated his relationship with Walters and executed a Standard Player Agent Contract (the SPAC) with Paul. Id. “The SPAC is a standard form agreement used for all NBA player and agent contracts” that is drafted by the National Basketball Players Association (the NBPA), a union for NBA players. Id.; Doc. 4, Defs.' App., 42-44, 63. Shortly thereafter, Noel-on Paul's advice-accepted a one-year, $4.1 million contract to play for the Mavericks. Doc. 1-3, Pet., 4-5. In accordance with the SPAC, Paul “received a payment of 4% of the value of [Noel's] contract,” compensation Paul would not have been entitled to had Noel accepted the long-term offer negotiated by Walters. See id. at 3-5.
When the next season began, things took a turn for the worse. In “December 2017, Noel tore a ligament in his thumb . . . [,] had surgery to repair the ligament[,] and was forced to miss 42 games.” Id. at 5. After the season ended, Noel alleges that “Paul began to lose interest in [him] as a client.” Id. “[N]either Paul nor anyone at [KSG] presented any real proposals to Noel in terms of strategies or ideas on how Noel might secure a long-term contract or even a significant contract for the following season,” Noel claims. Id. As a result, Noel had “no real offers or deals” presented to him at the start of the 2018 free agency period, and he ultimately decided to join the Oklahoma City Thunder on a two-year, $3.75 million, league minimum deal with a player option for the second year that would allow him to test free agency again the following season. Id. at 5-6.
Noel played limited minutes for the Thunder during the 2018-19 season, during which time he avers that “neither Paul nor [KSG] made any effort to try and secure contracts or deals on [his] behalf.” Id. at 6. When the season ended, Noel, on Paul's advice, declined his player option and once again became a free agent. Id. When free agency began that July, rumors had circulated in NBA circles that Noel was primed to sign a new, lucrative three-year deal with the Thunder. Id. Noel believes that the rumors were started by Paul, a KSG employee, or the Thunder. Id. Unfortunately, however, these rumors never materialized, and, after receiving no offers from other teams, Noel signed a one-year league minimum deal to return to the Thunder for the 2019-20 season. Id. Noel posits that the false rumors about the three-year offer from the Thunder caused other teams to shy away from pursuing him during free agency on the assumption that Noel's return to the Thunder was predetermined. Id.
Sometime thereafter, Noel learned from a former coach that the 76ers had been interested in signing him, but that “Paul did not take and/or return any of the calls from the 76ers.” Id. at 7.
Noel “also learned that Paul was not returning or taking calls from other team representatives who were interested in signing Noel for their respective teams.” Id. “Concerned about the lack of effort or results, Noel contemplated terminating his relationship with Paul sometime in January 2020,” but decided not to after a KSG employee, Lucas Newton, “informed [him] that [KSG] had been talking to [the Thunder] on his behalf and that [they were] planning on offering Noel a three-year deal for between $7 and $10 million per year.” Id. However, on the first night of free agency the following November, “Noel did not hear from a single team.” Id. When Noel inquired about the Thunder's purportedly impending offer, Newton “advised [him] that the Oklahoma City deal was still in play and that they were just trying to move money around on the books to create cap space for the deal.” Id. at 7-8.
For reasons not pleaded, the Oklahoma City offer/deal never came to fruition. Noel later learned that, during the free agency period, two other teams had each been “trying to contact Paul, but that Paul was not taking or returning those calls.” Id. at 8. Noel ultimately signed a one-year, $5 million deal with the New York Knicks, which Noel claims was arranged only after the Knicks reached out to one of Noel's friends, who then connected the Knicks with Paul. Id. After years of frustration, things “came to a tilt in December 2020 when [Noel] learned that Paul had a history of mismanaging and ignoring” clients who were not deemed “marquee,” “costing them significant money.” Id. For this reason, “Noel . . . terminated his relationship with Paul and [KSG] on or around December 19, 2020.” Id.
Sometime before this suit was filed, a payment dispute arose between Paul and Noel that provoked Paul to file a grievance against Noel, initiating the arbitration process provided for in the SPAC. Doc. 3, Defs.' Mot., 1. Noel answered Paul's grievance, initiated his own in response, and then, on August 23, 2021, filed the instant lawsuit in Texas state court against Paul and KSG. Id. at 1-2; Doc. 1-3, Pet. Noel brings claims for breach of fiduciary duty, negligence and gross negligence, and breach of the duty of good faith and fair dealing against Paul and KSG. Doc. 1-3, Pet., 9-13. He also brings a claim for breach of the SPAC against Paul. Id. at 11. Additionally, Noel seeks a declaratory judgment stating that the arbitration procedure provided by the SPAC “is invalid, void, and unenforceable.” Id. at 9.
Defendants timely removed the case to this Court and filed the pending Motion to Dismiss. See Doc. 1, Notice of Removal; Doc. 3, Defs.' Mot. Defendants contend that all of Noel's claims should be compelled to arbitration pursuant to the SPAC or should be dismissed for lack of personal jurisdiction. See Doc. 3, Defs.' Mot. The motion is fully briefed and ripe for review. The Court considers it below.
In enacting the Federal Arbitration Act (“FAA”), “Congress . . . expressed a strong policy favoring arbitration before litigation.” J.S. & H. Constr. Co. v. Richmond Cnty. Hosp. Auth., 473 F.2d 212, 214-15 (5th Cir. 1973). Under the FAA, “[a] written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The Fifth Circuit follows a two-step process to decide whether to compel arbitration. Kubala v. Supreme Prod. Servs., Inc., 830 F.3d 199, 201 (5th Cir. 2016). “First, the court asks whether there is a valid agreement to arbitrate and, second, whether the current dispute falls within the scope of a valid agreement.” Edwards v. Doordash, Inc., 888 F.3d 738, 743 (5th Cir. 2018) (citing Klein v. Nabors Drilling USA L.P., 710 F.3d 234, 236 (5th Cir. 2013)). “[The] analysis for both steps is governed by [state] law.” Gezu v. Charter Commc'ns, 17 F.4th 547, 553 (5th Cir. 2021) (quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995)).
Below, the Court first examines whether the parties have a valid, enforceable agreement to arbitrate. Finding that they do, the Court then considers whether the claims at issue fall within the scope of that agreement. The Court concludes that, except for Noel's declaratory judgment claim-which is rendered moot by the Court's analysis at the first step-all of Noel's claims fall within the scope of the arbitration agreement. Finally, because the Court finds that all non-moot claims must be compelled to arbitration, the Court determines that this case should be dismissed in its entirety.
At the first step of its analysis, the Court must...
To continue reading
Request your trial