Clarity Sports Int'l LLC v. Redland Sports

1

CLARITY SPORTS INTERNATIONAL LLC and JASON BERNSTEIN, Plaintiffs v. REDLAND SPORTS, et al., Defendants

No. 1:19-cv-00305

United States District Court, M.D. Pennsylvania

August 9, 2024

KANE JUDGE

MEMORANDUM

CARLSON, MAGISTRATE JUDGE

Before the Court in the above-captioned action is the March 8, 2024 Report and Recommendation of Magistrate Judge Carlson (Doc No. 388) (the “Report and Recommendation”) recommending that the Court grant in part and deny in part Plaintiffs Jason Bernstein and Clarity Sports International LLC (“Plaintiffs”)' motion for sanctions against Defendants CAA Sports LLC (“CAA”) Redland Sports and Gerry Ochs (“Redland/Ochs”), Boone Enterprises Inc. d/b/a Boone Enterprises Authentic Autographs and Craig Boone (the “Boone Defendants”). Also pending before the Court is Redland/Ochs' motion pursuant to Federal Rule of Civil Procedure Rule 42 for separate trial or separate jury (“motion to bifurcate”). (Doc. No. 408.) Upon consideration of the briefing filed in connection with the motion for sanctions, the Report and Recommendation, the parties' objections to the Report and Recommendation, the briefing related to those objections, and the applicable law, and for the reasons provided herein, the Court will adopt the Report and Recommendation and grant Plaintiffs' motion in part. The Court will deny Redland/Ochs' motion to bifurcate.

I. BACKGROUND

On July 17, 2020, Plaintiffs filed their operative Third Amended Complaint alleging that CAA, Redland/Ochs, the Boone Defendants, and MVP Authentics, LLC, Daryl Eisenhour, and Jason Smith (“MVP”) tortiously interfered with Plaintiffs' representation, endorsement, and marketing agreements with National Football League (“NFL”) wide receiver Kenny Golladay (“Golladay”) by participating in a January 2019 Autograph Signing (the “Signing Event”), after which Golladay terminated his representation by Plaintiffs and signed with CAA. (Doc. No. 120.) Prior to the filing of the Third Amended Complaint, the case was referred to Magistrate Judge Schwab for pretrial management. (Doc. No. 82.) The Court has little doubt that the parties are familiar with the factual and procedural history of this case and therefore, the Court will only briefly discuss the facts before addressing the procedural history relevant to the instant motion.

In a related appeal resulting in the vacatur of an arbitration award granted in favor of former CAA Sports agent Todd France (“France”) and against Plaintiff Bernstein,^[1]the United States Court of Appeals for the Third Circuit (“Third Circuit”) provided a brief overview of the principal conduct upon which Plaintiffs' claims are based. Because the Third Circuit's statement provides a helpful background of the circumstances giving rise to this action, it is quoted in full below:

Bernstein and France are certified contract advisors (more commonly referred to as agents) registered with the National Football League Players Association (“NFLPA”). They each represent NFL players in contract negotiations with NFL teams and in related matters. Bernstein is also the majority owner of [Plaintiff Clarity Sports], which advises and represents professional athletes in matters other than their playing contracts, such as marketing and endorsement contracts. France, meanwhile, worked for the agency [CAA] during the period relevant to this case. As agents for NFL players, Bernstein and France must comply with the NFLPA Regulations Governing Contract Advisors (“the NFLPA Regulations”), which are a product of the collective bargaining agreement the players have with the NFL and its constituent teams.

Bernstein's roster of clients used to include Kenny Golladay, a wide receiver who signed a standard representation agreement [“SRA”] with Bernstein in late 2016, before Golladay's rookie season with the Detroit Lions in 2017. Golladay simultaneously signed a separate agreement with Bernstein's Clarity Sports for representation in endorsement and marketing deals [“EMA”]. Under those contracts, Bernstein and Clarity Sports were Golladay's exclusive representatives. As required by the NFLPA Regulations, the contracts were filed with the NFLPA.

That agency relationship ended on January 29, 2019, when Golladay terminated both agreements. Break-ups are seldom happy affairs, but Golladay's goodbye was particularly troubling to Bernstein because, three days earlier, Golladay had participated in an autograph-signing event in Chicago that Bernstein had played no role in arranging-even though setting up such publicity and money-making opportunities for Golladay was precisely what Bernstein and Clarity Sports were hired to do. Bernstein became aware of the event, but only because he saw a Facebook post from one of the three [Memorabilia Defendants] promoting it. Once Golladay's agreements with Bernstein and Clarity Sports were terminated, Golladay immediately signed with France. Bernstein soon came to believe that France and his colleagues from CAA Sports were behind the [S]igning [E]vent the whole time.

See France v. Bernstein, 43 F.4th 367, 371 (3d Cir. 2022) (footnotes omitted).

The NFLPA arbitration was held in November and December of 2019 between France and Plaintiff Bernstein, pursuant to the dispute resolution provisions in the NFLPA Regulations, after Bernstein filed a grievance against France. See id. Bernstein's grievance stated that France had initiated contact with Bernstein's client, Kenny Golladay (“Golladay”), and arranged an autograph-signing event for Golladay (the “Signing Event”). See id. Bernstein claimed that the proceeds from the event had been used to induce Golladay to terminate his relationship with Bernstein and sign with France. See Id. France denied any involvement in Golladay's participation at the Signing Event. See id. at 372. Due to information withheld prior to the arbitration hearing (which is the subject of the instant motion for sanctions), Bernstein was unable to meet his burden of proof because he lacked evidence to counter France's testimony. See id. at 373. The arbitrator found in favor of France. See id. at 374. However,

[i]t turns out that France did indeed have crucial evidence that should have been available to Bernstein .... While pursuing his NFLPA grievance against France, Bernstein, along with Clarity Sports, was also litigating a case (the “Parallel Action”) in the U.S. District Court for the Middle District of Pennsylvania against CAA Sports and the three sports memorabilia dealers involved in the signing event. The suit alleged tortious interference with contractual relationships. See Third Amended Complaint, Clarity Sports Int'l LLC v. CAA Sports LLC, No. 1:19-cv-00305-YK-SES (M.D. Pa. July 17, 2020), ECF No. 120. Discovery in that suit yielded information pertinent to the grievance against France. The problem for Bernstein was that the information did not surface until June 2020, roughly two months after the arbitrator's decision denying the grievance. Bernstein had asked the arbitrator for an extension to file a post-hearing brief in light of the then-anticipated evidence from the Parallel Action, but the arbitrator denied that request.

The newly revealed evidence showed that France was in fact involved with the autograph-signing event. His involvement was at least implied in an interrogatory response from one of the memorabilia dealers, who said that one of France's colleagues at CAA Sports, Jake Silver, was instrumental in setting up the signing event:

Jake Silver is the person we have historically dealt with at CAA. Near the Christmas holidays in late December 2018, I had a telephone conversation with Jake Silver regarding such marketing events (such calls between us and various other parties are not unusual, but occur frequently in our ordinary course of business) . . . . [W]hile discussing the possibility of various signing events, Jake Silver mentioned that Mr. Golladay, a player for the Detroit Lions, might be interested in doing an autograph signing event, and asked us if we were interested.

(J.A. at 1833.)

The same dealer also produced screenshots of text messages, one of which showed a thread among the dealers discussing event logistics, including “[c]ar service for Kenny/mom/Todd CAA[,]” presumably referring to Golladay, his mother, and France. (J.A. at 1853.) In a subsequent deposition, the dealer admitted that Silver said that someone named Todd would be joining Golladay at the signing event. No one has suggested who else “Todd” from CAA could be except for Todd France. In fact, Bernstein received other evidence showing that France was scheduled to fly to Chicago the day before the event.

As discovery continued in October 2020, it became perfectly clear that France was involved in arranging the signing event. CAA Sports produced an email from Silver to France attaching a contract for the event for Golladay's signature, plus another email from France to Golladay attaching the same contract and asking him to sign and return it.

See France, 43 F.4th at 371, 374-75 (footnotes omitted). Based on the above, the Third Circuit reversed and remanded to this Court for entry of an order vacating the arbitration award because the arbitration award was procured by fraud. See id. at 382.

As to the discovery process in the instant case, the parties engaged in what Magistrate Judge Carlson describes as “a painfully prolonged, and frequently contentious course of discovery, which spanned from 2019 through 2022.”^[2](Doc. No. 388 at 6.) A review of the docket in this case reflects that Magistrate Judge Schwab issued eleven (11) case management orders (Doc. Nos. 84, 85, 166 184, 202, 211, 220, 247, 260, 266, 279)^[3]and issued Orders (Doc. Nos. 74, 190, 192, 251, 261, 280, 283, 285) on various motions to compel and...