Appeals Court sides with Zion Williamson in dispute involving NC law

Keenan Hairston from Raleigh, CC BY-SA 2.0, via Wikimedia Commons

Listen to this story (6 minutes)

  • A unanimous federal Appeals Court panel has sided with former Duke University basketball star Zion Williamson in his legal dispute with a former agent.
  • Appellate judges agreed with a trial court that Williamson had a right to void his contract with the agent because the agent violated state law.
  • Agent Prime Sports Marketing had argued that the law did not apply to its contract with Williamson because the player had violated NCAA rules and lost his athletic eligibility.

The 4th US Circuit Court of Appeals has ruled in favor of former Duke University basketball star Zion Williamson in his legal battle with a former agent. A unanimous three-judge panel upheld a lower court decision that the agent violated North Carolina state law.

“In this case, we interpret the North Carolina Uniform Athlete Agents Act, which governs contracts between student-athletes and their agents,” wrote Chief Judge Albert Diaz. “Prime Sports Marketing, LLC, and Gina Ford argue that their former client, Zion Williamson, wasn’t a ‘student-athlete’ when he contracted with them, so he can’t benefit from the Act’s protections.”

“The district court rejected that argument,” Diaz added. “Because Williamson was engaged in an intercollegiate sport while on the Duke University men’s basketball team, and was thus a ‘student-athlete,’ we agree with the district court that Prime’s failure to comply with the Act’s requirements voided the contract.”

Williamson was a star basketball player from his earliest days at Duke. “Williamson’s talents generated interest not just from basketball fans, but from agents eager to represent him,” Diaz wrote. “During his freshman year, Williamson began to communicate with Gina Ford, a marketing agent and Prime’s president. Ford met with Williamson and his mother and stepfather several times to discuss Prime representing Williamson as his marketing agent when he turned pro.”

The star athlete hired Prime after he played his last Duke game but before he was drafted by the New Orleans Pelicans pro team. “Under the agreement, the parties could terminate the contract only after five years, and then, only for cause,” Diaz explained.

“For a few weeks, all seemed well,” but Williamson ended up dropping Prime and signing with a competitor agency on May 31, 2019. Two days later, Williamson’s lawyer sent a letter to Prime indicating that its contract was void under North Carolina’s law for sports agents.

“Williamson alleged that the contract violated two provisions of the Act, which made it unenforceable,” Diaz wrote. First, Ford never registered as an agent in North Carolina as required by state law. Second, the contract did not include mandatory language warning Williamson that signing the contract would cause him to lose athletic eligibility.

“Prime responded that the Act didn’t apply to the contract because Williamson wasn’t a ‘student-athlete,’ as defined by the Act, when he signed it,” Diaz wrote.

Williamson “allegedly violated National Collegiate Athletic Association (NCAA) rules, and those violations made him ‘permanently ineligible’ to play college basketball,” Prime argued in court. A permanently ineligible athlete would not be entitled to the state law’s protections.

The Duke star countered that the “permanently ineligible” language was designed to refer to athletes playing two sports.

“We agree with Williamson,” Diaz wrote. “If a student is engaged in an intercollegiate sport when he signs an agency contract, he is a student-athlete subject to the Act. The permanent ineligibility clause doesn’t apply to Williamson, who was engaged in a single sport.”

“In our view, the legislature included the Act’s second definitional sentence of ‘student-athlete’ to protect two-sport athletes, and Prime’s interpretation runs contrary to that purpose,” Diaz added. “While the second sentence might suggest that a student-athlete who violates NCAA rules can’t benefit from the Act’s protections, that construction works only if we ignore the first sentence.”

Diaz also explained that the court would not step into the NCAA’s role of determining athletes’ eligibility. “Prime argues that a court may analyze the NCAA rules to determine that Williamson’s rule violations made him permanently ineligible to compete, even while he was engaged an intercollegiate sport. We disagree,” the 4th Circuit opinion continued.

Once determining that the state law applied to Williamson’s contract with Prime, appellate judges agreed that the law voided the contract.

“Prime concedes that Ford wasn’t registered as an agent in North Carolina, and under the Act, any agency contract between a student-athlete and an agent who fails to register in North Carolina is automatically void,” Diaz wrote. “Likewise, it’s undisputed that the Prime contract didn’t contain the requisite warnings. So even if the contract weren’t already void, Williamson was free to void it, which he did both via email and through counsel.”

The 4th Circuit judges rejected Prime’s argument that Williamson had a duty to disclose negotiations with another agent. “[W]e decline to enforce any duty to disclose, even in an arm’s length negotiation, when the underlying relationship between the parties is illegal,” Diaz wrote.

Nor did the appellate judges accept Prime’s argument that Williamson had “misappropriated its trade secrets.”

Appellate Judge William Traxler and US District Judge Jamar Walker of Virginia joined Diaz’s opinion. The three judges heard oral arguments in the case last October.