Employment & Labor Insider

At the 2009 Sports Lawyers Association Conference, in response to a question (from me) about the possibility of agents suing players unions for failing to enforce their regulations, Don Fehr, then-Executive Director of the Major League Baseball Players Association, came out of the audience to declare that if agents sued the union, then the union would disband its agent certification program and negotiate all player contracts itself.

There is no indication that the Players Association is considering doing away with agents, but it appears to be on the verge of a decisive win in a challenge brought by some would-be agents.

Bad, Bad Bunny and associates

Benito Martinez-Ocasio, better known as “Bad Bunny,” is a Puerto Rican rapper and one of the world’s most popular artists. In 2021, he and his business associates – Jonathan Miranda and Noah Assad – sought to capitalize on that fame by co-founding a sports agency, Rimas Sports, to represent Latin American athletes.

The upstarts’ efforts ran headlong into the Players Association’s Agent Regulations. Under the National Labor Relations Act, the Players Association is the exclusive representative of Major League Baseball players for purposes of negotiating pay, hours, and terms of conditions of employment. The Players Association exercises this authority in negotiating a comprehensive collective bargaining agreement with MLB and its clubs. Yet, the Players Association also has a certification process by which it can delegate its authority to agents to negotiate individual player contracts that are not inconsistent with the collective bargaining agreement. (and, as noted by Mr. Fehr, it could take away that authority).

In 2021, Messrs. Miranda and Assad filed to become certified agents and affirmed that they had read and agreed to comply with the Players Association regulations.

But they did not comply. Mr. Miranda failed the September 2021 agent exam, while Mr. Assad skipped it. Nevertheless, they undertook to start obtaining MLB player clients. They enlisted the help of William Arroyo, a certified agent with a lengthy – but intermittent – career in professional baseball. Messrs. Assad and Miranda arranged for dozens of players who were not their clients to attend Bad Bunny concerts and a Phoenix Suns basketball game. They also sent players “care packages” of various merchandise and employed non-certified personnel to recruit players. Finally, they arranged for loans for players, including from a financial institution with which they had a close relationship.

All of these actions violated the Players Association Agent Regulations which, among other things, require loans to be reported to and approved by the Players Association, prohibit offering money or items of value to induce a player to become a client, and prohibit agents from employing non-certified personnel for purposes of recruiting clients.

Players Association investigates

Certified agents whose clients were being poached by Rimas Sports quickly complained to the Players Association. In May 2022 alone, 21 players had signed with Mr. Arroyo as their agent.

The Players Association investigated the matter over the course of nearly two years, gathering documents and interviewing the people involved. However, the three agents allegedly routinely failed to cooperate by delaying responses, refusing to provide certain information and documents, and providing inconsistent or untruthful responses.

On April 10, 2024, the Players Association issued a 61-page Notice of Discipline. Mr. Arroyo’s certification was revoked, and he was barred from reapplying for five years. Messrs. Assad and Miranda were barred from reapplying for five years.

Rimas Sports swings back – and misses

Five days later, the agents appealed the decision and asked the appointed arbitrator to enjoin the discipline pending the outcome of the appeal. The arbitrator refused and, on April 22, 2024, the Players Association asked a federal court in New York to enforce the arbitrator’s decision.

Less than a month later, Rimas Sports sued the Players Association in federal court in Puerto Rico. Rimas Sports argued that the Players Association exceeded its authority under the NLRA and tortiously interfered with the agency’s contracts with its player-clients and its agents. More specifically, Rimas Sports contended that the Players Association has the authority to regulate individual agents negotiating player contracts but not to regulate agents or agencies negotiating marketing and endorsement deals on behalf of players. They claimed that the disciplinary action taken by the Players Association effectively prevented Rimas Sports from providing these services as well.

In an Opinion and Order issued in August, the court in Puerto Rico granted a motion by the Players Association to compel arbitration in accordance with Players Association regulations. The court held that the union’s regulations could and did govern the agents’ business entity. (The decision conflicts with another decision involving regulation of agents by the National Football League Players Association.)

Then Rimas Sports tried to skirt the Players Association arbitration process by filing a different arbitration through the American Arbitration Association. As a result, the court ordered Rimas Sports to comply with its prior order and to pay the Players Association $10,797.45 in attorneys’ fees.

Meanwhile, as noted above, in New York the Players Association had asked the court to confirm the arbitrator’s order denying the agents’ request to stay the discipline against them. In July, the New York court denied the Players Association request, saying it did not have jurisdiction.

Game over – almost

Both courts’ orders forced the matter back to arbitration. The agents were required to persuade an arbitrator that the imposed discipline was unreasonable, arbitrary, or unsupported by the evidence. 

After seven days of hearings in September and October – which included testimony from seven witnesses and 228 exhibits – the arbitrator ruled in favor of the Players Association. In an 80-page decision issued on October 30, Arbitrator Ruth Moscovitch detailed the essentially undisputed violations of the agent regulations and found that the investigation had been fair and thorough. Ms. Moscovitch upheld the five-year bans on Messrs. Assad and Miranda but reduced Mr. Arroyo’s to three years, finding that he had been placed in an “impossible position” by the actions and dominance over the new business enterprise by his two counterparts.

On November 12, 2024, the Players Association asked a New York state court to confirm the arbitration award, and the court is likely to rule in its favor. Arbitration awards are vacated only in extraordinary circumstances, such as where the arbitrator was biased or manifestly disregarded relevant law, or where there was some other type of egregious misconduct. None of that appears to apply in this matter. A ruling in favor of the Players Association would effectively end the foray into the baseball player representation industry by Bad Bunny and his colleagues, although they may provide other services, such as marketing.

Assuming the anticipated outcome is the actual outcome, it will be a major victory for the Players Association and a strong affirmation of its its regulations, its investigatory process, and its authority over agents. The results are also likely to discourage any agents who might consider legal challenges in the future.