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The Significance of Zion Williamson’s Lawsuit Against Prime Sports Marketing
Former Duke basketball star Zion Williamson, the presumptive No. 1 pick in next Thursday’s 2019 NBA draft, hopes for the same success in federal court as he has achieved on the hardwood. Williamson on Thursday sued Prime Sports Marketing, a Florida based company, and its president, Gina Ford, in the U.S. District Court for the Middle District of North Carolina. The 18-year-old forward, who is widely regarded as the most marketable new player to enter the NBA since LeBron James in 2003, seeks a court declaration that a contract he signed with Prime Sports in April is null and void.
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To that end, Williamson contends that the Prime Sports contract is voidable under a North Carolina law designed to protect college athletes from unscrupulous agents. He also asserts that he took the requisite steps to void it.
Although not a party to the lawsuit, CAA Sports is certainly interested in its outcome. Last month, Williamson signed with CAA Sports to represent him in contractual matters. A court order along the lines sought by Williamson would ensure that CAA gains full legal authority to represent him in his employment and endorsement deals.
The lawsuit, first reported by ESPN’s Adrian Wojnarowski, has significant implications for Williamson, the New Orleans Pelicans as holders of the top pick, the companies with whom Williamson might sign massive endorsement deals and, more broadly, the landscape for enforcement of rules designed to protect college athletes from exploitation.
Representing Williamson is accomplished sports attorney Jeffrey Klein of the New York-based law firm Weil, Gotshal & Manges. In his 38-year practice, Klein has represented Jim Harbaugh, Dave Winfield, the New York Yankees and the National Basketball Players’ Association (NBPA), among many other high-profile sports figures.
Understanding the facts as told by Williamson
Williamson’s case is essentially about getting out of a contract he signed willingly and, in hindsight, unwittingly.
The relevant timeline begins in the first half of 2019. This was when Williamson dominated college basketball and acquired a level of celebrity unsurpassed by any other amateur basketball player in recent memory. As Williamson filled up the stat sheets and even overcame an exploded sneaker that drew the gasp of former U.S. President Barack Obama, Ford, a sports marketing professional aggressively pursued the attention of Williamson and his family. Ford is identified in the complaint as president, manager and registered agent for Prime Sports, which is headquartered in Miami and does not appear to have a website. Materials provided by Prime Sports or its legal representatives describe Ford as President of Prime Sports. They also classify her profession as a “marketing manager” and “global marketing agent” on behalf of athletes while emphasizing that she is not a “sports agent.”
According to Williamson, while Ford portrays herself as a type of agent, she is not certified by the NBPA. This is potentially significant because the NBPA is the exclusive bargaining agent for all players in the NBA—meaning only an NBPA-certified agent can represent a player in the context of him seeking or obtaining employment in the NBA (though Ford does not claim to represent players for purposes of negotiating employment contracts with NBA teams). In addition, the lawsuit asserts that Ford has not registered with the State of North Carolina or the State of Florida for purposes of representing athletes. Both states require agents to obtain registration from their respective government agencies for legal authorization to represent athletes in employment contracts and, in the case of North Carolina, endorsement deals as well.
As Klein tells it, Ford’s persistence in persuading Williamson and his family to do business with her became quasi-harassment. It’s worth stressing that Williamson’s depiction, as told through Klein, is not neutral. As the plaintiff, Williamson will shape the depiction of events in ways that maximize his interests in the litigation. When Ford and her attorney answers the complaint, Ford will undoubtedly offer a different retelling of events.
Still, Williamson asserts that after Ford initiated contact with him and his family—the complaint doesn’t explain how this initiation occurred—Ford pestered them with “numerous texts.” She also went so far as to physically travel to Durham on four occasions to meet with Williamson and his family. Ford’s goal: get Williamson to sign an agency contract.
Legal significance of Williamson declaring for the 2019 NBA draft
The relevant timeline then turns to Monday, April 15, 16 days after the Michigan State Spartans had upset the Blue Devils in the Elite Eight. Williamson was still enrolled at Duke at this point. It was on that day when Williamson declared for the 2019 NBA draft.
Under applicable NCAA rules, Williamson’s declaration did not immediately terminate his NCAA eligibility. In fact, he could gain representation by an agent licensed by the NBPA to help him assess his draft stock. For Williamson, this so-called “assessment” was, of course, unnecessary. There was no doubt that he projected to be the first player picked and projected to sign endorsement contracts that could collectively exceed $100 million. Williamson wasn’t an underclassman who might be a late first-rounder but could possibly fall into the second round (and not secure a guaranteed contract) and thus needed more information—he was, is and will be the player to be picked first overall.
But rules matter. Williamson technically had until May 29 to withdraw from the draft and return to Duke. This was true long as he didn’t sign a contract in violation of NCAA rules. Stated differently, Williamson believed he was simultaneously an NBA draft candidate and NCAA eligible player between the dates of April 15 and May 29.
In reality, Williamson had forgone his NCAA eligibility on Saturday, April 20. On that day, Williamson met with Ford and signed a “Consulting and Joint Marketing and Branding Agreement” with Prime Sports.
It is unclear why Williamson would entrust his marketing to Ford. That said, Ford does have significant experience in sports. According to a 2017 profile by The Arza Group, Ford represented Usain Bolt and other athletes in marketing deals. She also allegedly collaborated with Kevin Durant’s mother, Wanda Durant, in connection with the Lifetime movie The Real MVP: The Wanda Durant Story. For a period of time, Ford was married to actor Tommy Ford, who starred in the TV show Martin and who passed away in 2016.
Breaking down the contract Williamson signed with Prime Sports
SI has obtained a copy of the agreement Williamson signed with Prime Sports. The agreement is a five-year deal. It stipulates that Williamson consented to retain Prime Sports for the following purposes:
• Introduce Williamson to endorsement opportunities
• Exclusively oversee all marketing opportunities brought before Williamson
• Analyze the economic value of endorsement opportunities
• Provide draft contract language to Williamson for his review before entering into an endorsement deal
• Negotiate on Williamson’s behalf with any company for purposes of an endorsement deal
• Provide advice to Williamson on “building of [his] brand domestically and internationally”
• Accept that Williamson or an authorized representative on his behalf could refuse any opportunity in regard to his “image, likeness, signatures, or other personal attributes, including without limitation and any of all endorsements, performance of services, appearances, production companies, social media services and content monetization.”
In exchange, Williamson agreed to pay Prime Sports a 15% commission on the gross value of any compensation relating to endorsement or branding. This fee, the percentage of which is ordinary, would also continue in perpetuity under certain conditions: so long as the fee stemmed from a relationship “introduced by and entered into or substantially negotiated” by Prime Sports during the period in which they represented Williamson.
Although the contract’s term is five years, it provides that either side can terminate the deal with 30 days notice. But there is a catch: termination is only permissible if “for cause.” The contract doesn’t clarify which conditions would give rise to a “for cause” termination, but normally they require a serious mistake—such as one party breaks the law or willingly disregards a contractual requirement. A “for cause” requirement effectively means that Williamson couldn’t decide to drop Prime Sports for another agency, like CAA Sports, without paying Prime Sports unless Williamson could prove Prime Sports engaged in substantial wrongdoing. Alternatively, Williamson would need to negotiate—meaning pay—for a buyout. Unless Williamson would be prepared to take such steps, Prime Sports could sue him for breach of contract and thus attempt to enforce the contract against Williamson.
Williamson signed the agreement and an accompanying letter of authorization. It stated:
I Zion Williamson effective immediately appoint Gina Ford as my Global Marketing Agent. I grant full permission to Gina Ford to negotiate and secure opportunities on my behalf and to work together to determine how to best position our efforts going forward. I look forward to working with you and believe your guidance will be instrumental in assisting me with achieving my long term goals.
Sincerely,
Zion Williamson
Williamson argues the agreement isn’t enforceable
In his client’s complaint, Klein articulates why the agreement should be deemed unenforceable.
First, the complaint cites North Carolina’s Uniform Athlete Agent Act, better known as North Carolina’s version of the UAAA. Among other things, the UAAA forbids a person from acting as an agent in the absence of obtaining registration from the North Carolina’s Secretary of State’s office. To be clear, the UAAA applies to any agency contract that contemplates representation for an employment contract or endorsement deals (which suggests that it applies to the contract Williamson signed with Prime Sports). The UAAA states that a contract that fails to satisfy the law is “voidable”—meaning it can be voided at the behest of one or multiple parties. Here, the college athlete reserves the right to void the voidable contract.
Second, the UAAA imposes a variety of procedural steps to ensure that agents and persons who hold themselves out as agents do not wrongfully induce college athletes into forfeiting their NCAA eligibility. One requirement is that the contract contains the following notice, in boldface type and in capital letters, in close proximity to the signature line:
WARNING TO STUDENT-ATHLETE IF YOU SIGN THIS CONTRACT:
(1) YOU SHALL LOSE YOUR ELIGIBILITY TO COMPETE AS A STUDENT-ATHLETE IN YOUR SPORT;
(2) IF YOU HAVE AN ATHLETIC DIRECTOR, WITHIN 72 HOURS AFTER ENTERING INTO THIS CONTRACT, BOTH YOU AND YOUR ATHLETE AGENT MUST NOTIFY YOUR ATHLETIC DIRECTOR;
(3) YOU WAIVE YOUR ATTORNEY-CLIENT PRIVILEGE WITH RESPECT TO THIS CONTRACT AND CERTAIN INFORMATION RELATED TO IT; AND
(4) YOU MAY CANCEL THIS CONTRACT WITHIN 14 DAYS AFTER SIGNING IT. CANCELLATION OF THIS CONTRACT SHALL NOT REINSTATE YOUR ELIGIBILITY.
The agreement Williamson signed with Prime Sports does not contain this notice or anything that could be construed as a functional equivalent.
Williamson also provided notice of terminating the agreement. On May 31—a day after Williamson reportedly signed with CAA—a representative of Williamson emailed Ford. SI has obtained a copy of the email. In it, Williamson says “please let this email serve as notice that the agreement entered into between me, Zion Williamson and Prime Sports is hereby terminated and voided effective immediately. Per my prior note and email, you are to cease all efforts and outreach on my behalf.”
A few days later, Klein emailed a letter to Ford in which he elaborated on Williamson’s email. The letter argued that Ford had relied on “unconscionable” representations that were “based on false and/or misleading information, and completely antithetical in both the spirit of [the UAAA] and basic contract principles.” She did so, Klein contends, to dupe the young Williamson into signing away his rights.
Klein now asks the court to declare the agreement void. He also demands that the court enjoin Ford and Prime Sports from any contact with Williamson and from making an attempt to claim that they are still acting on his behalf.
Likely defenses and a possible $100 million countersuit
In the coming days, Ford and her company will answer Williamson’s complaint. They have retained attorney Joann Squillace of the New York law firm Drummond & Squillace. Squillace is an experienced attorney. In 2017, she successfully represented inmates at Rikers Island who sued over alleged rat poisoning in the meatloaf they were served at their correctional facility.
Earlier this month, Squillace shed light on potential defenses in a letter to Klein. The letter flatly rejected Klein’s contention that Ford had violated the UAAA. “Your client,” Squillace wrote, “declared eligible for the 2019 NBA draft on or about April 15, 2019 and the agreement between our respective clients was entered into subsequent to your client’s declaration for the NBA draft. We reject your claims that the agreement is void and/or voidable.” Squillace’s argument, in other words, is that Williamson was no longer a college athlete on April 20 and was thus no longer protected by the UAAA at the time of contracting.
Williamson’s complaint, as authored by Klein, attempts to extinguish this rebuttal. It does so by stressing that Williamson could have withdrawn from the draft as late as May 29 without forfeiting his NCAA eligibility. In that transitional period, Williamson could still have returned Duke. He would only entertain the possibility of return if he was NCAA eligible in order to play for the Blue Devils.
To advance that point, recall speculation about Williamson after the Pelicans, who had a mere 6% chance of winning the May 14 draft lottery, surprisingly won the first pick, Williamson—who reportedly hoped that the New York Knicks or Los Angeles Lakers would take home the lottery prize, supposedly contemplated a return to Duke for a sophomore season, after which he would re-enter the draft in 2020. Obviously, that never happened. Also, the idea that Williamson would relinquish the chance to start his NBA career in 2019 and instead return to college and risk injury struck many observers as farfetched and perhaps wishful thinking on the part of certain teams’ fan bases.
Therefore, Squillace will argue that when Williamson declared for the draft on April 15, the decision was tantamount to an irreversible decision. Short of Williamson suffering a serious injury in pre-draft workouts, there was no plausible reason to believe that Williamson would return to Duke. Klein, however, will contend that NCAA rules are clear on this topic. Further, Williamson remained protected by those rules even if it was unlikely Williamson would have availed himself of those protections.
Squillace will probably also stress that Williamson was an adult when he signed the contract with Prime Sports and thus should honor it. It’s not clear if Williamson had retained legal counsel to review the Prime Sports contract before signing it. If an attorney had been retained, he or she absolutely should have objected to the “for cause” provision discussed above. Even so, Williamson's claim would not be with Prime Sports but with the attorney(s) who advised him.
Also, Squillace will depict Williamson as simply trying to exit a contract that he now regrets he signed. The law doesn’t recognize regret as a justifiable reason to exit a deal. Further, Squillace could depict the point about Ford lacking NBPA-certification as irrelevant: Ford did not purport to represent Williamson in his employment contract with an NBA team and only contemplated representing him for marketing and endorsement deals.Then again the UAAA also applies to endorsement deals and the NCAA forbids college athletes from signing with agents—be they “sports agents” or “marketing managers”—when they intend to represent those athletes in endorsement deals.
Lastly, it’s possible that in addition to answering the complaint, Ford will instruct Squillace to countersue Williamson for breach of contract and tortious interference with contractual relations. Squillace would assert that Williamson has terminated the contract without cause and thus without authorization. Further, the termination arguably damages Ford’s business and reputation in ways that adversely impacts her chances for attracting other clients. Squillace's letter contends that damages to Ford and Prime Sports could exceed $100 million. It’s not clear how such a number was calculated. Even if Williamson signs a sneaker deal worth $200 million, the 15% commission would be $30 million.
How this controversy could impact Williamson’s career and how it will be resolved
By all accounts, Williamson remains very popular and marketable. He has not been damaged by uncorroborated accusations brought by well-known attorney and now criminal defendant Michael Avenatti. The former attorney for adult film star Stormy Daniels insists that Nike paid Williamson’s mother, Sharonda Simpson, in a fake consulting deal as part of an arrangement that led Williamson to attend Duke. Williamson also attracted short-lived criticisms for his mildly stunned reaction to the Pelicans winning the lottery. In all likelihood, Williamson’s dispute with Ford will attract headlines for a day or two but probably won’t lead to any major reputational fallout.
That said, litigation could absorb some of Williamson’s limited time and perhaps become a nuisance or distraction. This would be particularly the case if the litigation leads to the taking of depositions involving Williamson and the sharing of electronic evidence with sensitive personal information.
Along those lines, the pretrial discovery process could require that Williamson answer questions under oath about his college experience and his decision-making on who to hire as an agent. It’s possible Williamson could be forced to share information that would not reflect well on him or his family, or Duke, particularly with respect to compliance with NCAA rules. In that regard, even if Williamson’s legal arguments may prove stronger, Ford still has bargaining leverage.
The litigation could also cloud negotiations by CAA with companies that seek to sign Williamson to an endorsement deal. Wojnarowski has reported that basketball agent Austin Brown and CAA executive Lisa Joseph-Metelus will primarily handle Williamson’s dealings. Brown and Joseph-Metelus will do so while another entity, Prime Sports, claims that it is representing Williamson. Companies that talk to CAA may want contractual assurances that they are indemnified from CAA in the event Ford and Prime Sports attempt to bring them into the litigation. The same dynamic is conceivably true for the Pelicans, though since Prime Sports makes no claim to representing Williamson in his employment negotiations the Pelicans are likely less concerned by this legal dispute.
The most likely outcome: Williamson and Ford reach a settlement. It’s not in either’s interest to engage in a long-lasting litigation. As Klein outlined in the complaint, Williamson appears to have a strong argument that under the UAAA the contract was voidable. On the other hand, it could take a lengthy litigation to reach that outcome in court. Williamson and CAA would much prefer a faster resolution. Expect this to settle out-of-court.
Michael McCann is SI’s Legal Analyst. He is also an attorney and Associate Dean of UNH Franklin Pierce School of Law.
