NBA player agent Mark Termini’s federal lawsuit accusing Klutch Sports and its founder, Rich Paul, could disappear from the docket if Klutch persuades U.S. District Judge Patricia Anne Gaughan to dismiss the case to arbitration.
The possibility of another blockbuster sports litigation leaving the public forum of litigation for a confidential and out-of-court dispute resolution process comes on the heels of cases brought by Brian Flores, Jon Gruden, the New York Knicks and Nerlens Noel—who also sued Paul—being dispatched in part or in whole to arbitration.
As previously detailed, Termini and Klutch had a contractual relationship during the 2010s wherein Termini provided contract negotiation services. Termini’s complaint claims he negotiated more than $1.4 billion in contracts for Klutch, including lucrative deals for LeBron James, Draymond Green, Ben Simmons, Eric Bledsoe, Tristan Thompson and J.R. Smith.
The complaint also portrays Termini as the behind-the-scenes architect of Klutch’s negotiations platform and, in effect, the brains behind the operation. Meanwhile, Paul is denigrated as playing a superficially high-profile, but substantively inconsequential role. Termini contends Klutch is in breach of the contract by not paying him all the fees that he says he’s owed.
Klutch disagrees. In court filings authored by Sarah K. Rathke and other attorneys from Squire Patton Boggs and Winston & Strawn, the company marginalizes Termini’s complaint as “an 18-page ode to himself that shamelessly (and falsely) claims responsibility for Paul’s success.” Klutch also maintains the contractual dispute isn’t for a court to decide since the matter concerns a disagreement between two player agents over fees for clients they “jointly represented.”
To that point, Klutch stresses that under the National Labor Relations Act, the NBPA is the exclusive bargaining representative for all NBA players. Agents can only negotiate employment contracts for NBA players if they are certified by the NBPA. One condition for obtaining NBPA agent certification is acceptance of mandatory arbitration as the exclusive method for resolving disputes that—NBPA regulations state—are “between two or more Player Agents with respect to their individual entitlement to fees owed, whether paid or unpaid, by a player who was jointly represented by such Player Agents.”
Klutch insists the arbitration provision governs since Termini’s dispute is over fees for contracts signed by players whom Termini and Paul jointly represented. Klutch maintains that Termini elected to sue, which is public and, given the nature of his lawsuit, sure to attract headlines, instead of complying with an arbitration provision in order to boost his image and malign Paul’s. As Klutch tells it, Termini has “publicly advance[d] a tale where he (and not Paul) is responsible for Paul’s and Klutch’s unprecedented success.”
Case closed?
Not so fast.
Through his attorneys, including Richard C. Haber and Alexis E. Anderson, Termini maintains that arbitration is inappropriate for the dispute since “there is simply no agreement between the Parties to arbitrate disputes.” He emphasizes that his agent certification application and NBPA regulations “are not a contract between Termini and Paul.” Instead, as Termini puts it, they formulate the relationship between Termini and the NBPA, which is not a party to Termini’s lawsuit and, unlike in Noel’s case, has not intervened.
Those documents also allegedly contemplate arbitration for only two categories of disputes—those involving the standard player agent contract (which is between an agent and a player) and denial of agent certification—neither of which, Termini says, captures the dispute here, one between two player agents. Along those lines, Termini stresses that he doesn’t seek fee payment from any player, has no claims against any player and his fee dispute with Klutch “is in no way dependent upon whether the player pays [Klutch]” since (as Termini tells it) Klutch was obligated to pay him regardless.
Termini also finds the absence of language in the regulations as significant. He underscores that there is no rule prohibiting one player agent from filing a lawsuit against another, an omission he insists is legally significant.
The case could settle at any time, but if it doesn’t and if Gaughan doesn’t dismiss it to arbitration, the case will continue into 2025.
