Hollywood’s portrayal of sports agencies presents a world that is dramatic and cut-throat, with ambitious sports agents competing for the chance to represent talented athletes. A recent court decision in Alberta brought this competitive business into the courtroom when a sports agency squared off against a former employee. It also provides several important lessons of broad application to many employers operating in Canada.
Background
Richard Evans switched from the practice of law into sports agency in 2000, and he signed an employment contract with The Sports Corporation (TSC). He was put in charge of TSC’s “Czech-Slovak pipeline.” That was a network of contacts through which TSC recruited Czech and Slovakian hockey players. Evans became the primary TSC contact with these Czech and Slovak recruiters.
By the spring of 2006, relations between Evans and TSC had disintegrated. As the end of his six-year contract approached, Evans decided to split from TSC. He started his own sports agency. But TSC asked him to leave before the end of the contract. Several of the Eastern European contacts transferred their relationships from TSC to Evans’ new company.
Key issues
Evans sued TSC. He claimed that he was owed money because of the early termination of his fixed-term contract, the suspension of his salary during the 2004-2005 NHL lockout, and the outstanding bonus he was owed for signing a player, Radim Vrbata, with TSC.
TSC countered with its own claim against Evans. It alleged that Evans had violated the nonsolicitation clause in his employment agreement. In it, he had agreed to not solicit the employees or clients of TSC after his departure.
Court decision
Although both Evans and TSC were successful on certain points, TSC won the damages battle.
The court found that Evans was entitled to payment of his salary until the end of his fixed-term contract. He also was entitled to the bonus for signing Vrbata. But his claim for salary stemming from the lockout was denied.
More importantly, TSC succeeded in its first nonsolicitation claim. The court ruled that Evans was in violation of the nonsolicitation clause for soliciting two European affiliates. While these affiliates weren’t officially TSC employees, the court found that the relationship between them and TSC was tantamount to employment – TSC paid their expenses and they were key people in the Czech-Slovak pipeline that TSC had nurtured. In addition, although Evans maintained that he didn’t personally solicit those contacts, the court found that his decision to turn a blind eye to such actions violated the nonsolicitation agreement.
The court dismissed TSC’s second nonsolicitation claim because of a lack of evidence. Evans denied soliciting any clients and TSC presented no concrete evidence to the contrary. It relied only on circumstantial proof. It looked to the fact that a number of TSC clients had followed Evans to his new agency and that he had forwarded calls from his TSC cell phone to his new business line.
The court stated that although suspicious circumstances existed, they weren’t enough to allow it to make an inference of solicitation. The employment agreement prevented Evans from soliciting clients, but it didn’t prevent him from accepting clients. The clients had a right to choose their own agent.
A key part of the decision was the finding that quasi-professionals, such as sports agents, have “the right and duty” to advise their clients of their departure but do NOT have the right or duty to inform their clients that they can follow the agent. The court stated that, “the clients of professionals can find out their rights from others, not from the departing professional him or herself.”
Impact for employers
This largely employer-friendly decision makes several important points. First, it reinforces the principle that a clause restricting the solicitation of employees can cover persons who don’t have the legal status of employees but are similar. Second, it limits the information that departing employees can tell clients, specifically denying the employees the right to tell clients that they can follow that employee.
Finally, in a less positive vein for employers, this case highlights the difficulty of proving that solicitation took place. One needs more than merely suspicious circumstances.
