The Major League Baseball Players’ Association petitioned a New York trial court last week to confirm an arbitration award against Rimas Sports executives in a move that draws attention to the competitive, if not cutthroat, world of player agents.
MLBPA found that agent William Arroyo and two prospective agents, Noah Assad and Jonathan Miranda, violated MLBPA regulations that prohibit inducements and compel cooperation with MLBPA investigations. Evidence indicated they provided assorted items—including tickets to concerts and NBA games, complimentary transportation, free lodging and even loans—to induce players to join the Puerto Rico-based Rimas Sports, which is backed by music artist Bad Bunny and has represented Ronny Mauricio, Wilmer Flores and Santiago Espinal and other players since launching last year. The agents were also accused of trying to obstruct MLBPA’s investigation by providing misleading responses and refusing to turn over documents and text messages.
In April, MLBPA imposed a $400,000 fine, revoked Arroyo’s agent certification, barred Arroyo from reapplying for five years, denied agent certification for Assad and Miranda and banned them from reapplying for five years. The trio invoked their right under MLBPA regulations to appeal the discipline to a neutral arbitrator. Arbitrator Ruth M. Moscovitch presided over a handful of hearings during September and October. Eight witnesses testified, and 228 exhibits were introduced.
In her 80-page award (ruling) issued on Oct. 30, Moscovitch found MLBPA had presented substantial evidence resulting from a two-year investigation into prohibited practices. She also concluded MLBPA’s investigator, assistant general counsel Robbie Guerra, was competent, acted without bias and followed applicable MLBPA regulations. Further, Moscovitch reasoned MLBPA’s discipline was neither arbitrary nor unreasonable given “the large number of violations of so many regulations” and given that Arroyo, Assad and Miranda can continue to negotiate marketing and sponsorship deals for players. However, she lowered Arroyo’s prohibited period from five years to three on grounds that five years was “too harsh.”
While it appears MLBPA presented a compelling case that Arroyo, Assad and Miranda engaged in prohibited practices, the trio raised several defenses that raise questions about the decision to punish them so severely.
Arroyo, Assad and Miranda argued they were not “consciously aware of wrongdoing” since they were a “young agency trying to get started in a highly regulated field with complicated technical regulations and distinctions.” They also maintained the players at issue weren’t harmed by free tickets and other benefits and wanted Arroyo to keep representing them. Further, the trio maintained the case was “flawed from its inception” since it relied on damaging “tips” from competing agencies that the trio said MLBPA deemed presumptively truthful.
Moscovitch was unpersuaded by these defenses.
She explained the trio’s state of mind in breaking rules is not a viable excuse since “when a businessperson starts any type of new business – whether it is plumbing, a restaurant, a law office, or a baseball agency – the business must comply with all governing laws, rules, and regulations.” To that point, Moscovitch distinguished an arbitration proceeding from a criminal proceeding where a defendant’s state of mind is relevant to a finding of guilt or innocence.
As to an absence of player harm, though Moscovitch noted Guerra “acknowledged that no player has complained to the MLBPA about the conduct” at issue, there is another form of player harm at issue: The enforcement of agent regulations endorsed and adopted by a union of about 6,000 baseball players. “They want to see their regulations enforced,” Moscovitch reasoned.
Moscovitch also addressed whether the investigation was faulty because it originated from allegations made by rival agents who were incentivized to inflict harm on their competition. She noted “it is not unusual for an investigation into any kind of wrongdoing to start with a tip from a competitor, a disgruntled employee or a whistleblower” and added the tips here “revealed potential, serious violations of the regulations.” Moscovitch also underscored how Guerra investigated the allegations to assess their veracity and found “that Rimas was using free concert and game tickets to bring non-client players close to them so that they could recruit them.”
Michael Strauss, an attorney who represents a roster of high-profile athletes, celebrities, influencers, and entrepreneurs, told Sportico in a phone interview, “The MLBPA is the exclusive bargaining unit for players. The union has delegated some of that authority to agents on the condition that they play by the union’s rules. The PA appears to have invested significant time and resources to enforcing the rules in this case.”
But Strauss cautioned that it remains to be seen if MLBPA intends to enforce these rules with the same force elsewhere to make a point.
“The offending conduct here is not new,” Strauss stressed. “And so the question is whether this should be viewed as a sign of greater enforcement activity across the industry or was this just a targeted effort against a disruptive newcomer to make an example.”
MLBPA turning to the courts to confirm the arbitration award is also telling.
MLBPA has the legal right to ask a court to find Moscovitch’s award is valid. That could prove a crucially important move if Arroyo, Assad and Miranda refuse to comply. By itself, an arbitration award can’t be enforced since it is not a court order. Arbitration is a private, out-of-court dispute forum that relies on the willingness of parties to accept the results. But by convincing a judge to confirm an award, the award effectively becomes a court order.
Petitioning a court to confirm an arbitration award can also be part of a forum shopping strategy, particularly if the winning party believes the losing side will petition a court to vacate the award in a more favorable forum. The party that files first tends to win the forum debate, too. That dynamic played out in 2015 when the NFL petitioned a federal court in New York to enforce Roger Goodell’s arbitration award against Tom Brady right before Brady petitioned a federal court in Minnesota to vacate that award. Brady was represented by Jeffrey Kessler, who nine years later is representing MLBPA in this matter (and is representing many other sports clients in active litigations).
MLBPA is also mindful it has already battled in litigation with the Rimas trio over their dispute. In May, Rimas sued the U.S. District Court for the District of Puerto Rico, claiming the MLBPA has exceeded its authority and tortiously interfered with the agency’s contracts. For its part, MLBPA sued in the U.S. District Court for the Southern District of New York. The union sought a court order to enforce a decision by another arbitrator, Michael Gottesman, to deny the trio a temporary restraining order to postpone their MLBPA punishment from taking effect.
MLBPA might have another reason to sue for confirmation of Moscovitch’s award. By including the 80-page document as an exhibit (which enabled me to write about it), a document that might have remained confidential became a public record. To the extent MLBPA wants to send a message to the industry, publicly sharing details of the controversy should help to accomplish that goal.
