In a new court filing, Rich Paul argues that New York Knicks center Nerlens Noel—who two months ago sued Paul and his agency, Klutch Sports Group—is unlawfully attempting to litigate a grievance that must instead be heard in arbitration.
Paul also accuses Noel of owing him a 4% agent commission on the one-year, $5 million contract Noel signed with the Knicks in November 2020.
On Oct. 18, Paul and Klutch filed a motion to dismiss Noel’s complaint in a Dallas federal court. Paul’s legal team, which includes attorney Ann Marie Arcadi, stresses that all NBA players and their agents sign the standard player agent contract (SPAC), as drafted by the NBPA. SPAC contains a dispute resolution provision that compels arbitration before a player or agent can turn to courts.
Noel, represented by attorney Craig Simon and others, accuses Paul and Klutch of negligence and breaches of contract, fiduciary duty and fair dealing. Noel contends that Paul, whose clients include LeBron James, John Wall, Anthony Davis and Ben Simmons, advised him in a neglectful and slipshod manner.
Noel’s chief complaint is that Paul allegedly instructed him to reject a four-year, $70 million offer from the Dallas Mavericks in the summer of 2017. Noel would go on to sign contracts worth just under $13 million for those four years, leading him to blame Paul for the $57 million difference.
Noel received the $70 million offer on July 1, 2017, at which time Happy Walters was his agent. A few weeks later Paul attended the 21st birthday party for his client Simmons in Los Angeles. Paul was at the party and happened to be seated next to Noel. Their conversation led to Noel letting go of Walters and, on Aug. 21, signing a SPAC with Paul. Two days later, Noel claims, Paul told Noel to “cease negotiations” with Dallas on a multiyear deal and instead sign a one-year, $4.1 million qualifying offer.
Evidence suggests, however, that Noel rejected the $70 million offer before he hired Paul. According to an SB Nation story, Noel turned down the offer in early July. Walters confirmed the account in a tweet. Dallas Mavericks owner Mark Cuban suggested the team would have revisited a multiyear offer, but Noel demurred.
Noel’s 2017-18 season didn’t go as planned. He suffered a torn ligament in his thumb, which required surgery. Noel missed 42 games and finished the season with the worst stats of his then-young career. The sixth overall pick in the 2013 NBA Draft, Noel played his first few seasons with the Philadelphia 76ers, who traded him to Dallas in February 2017.
Noel, now 27, asserts Paul “began to lose interest in Noel as a client” following the disappointing 2017-18 season. As Noel narrates history, neither Paul nor others at Klutch presented strategies for his free agency in the summer of 2018. Noel portrays himself as an afterthought to Paul, who Noel says failed to land him multiyear contract offers or lucrative endorsement opportunities. Noel also accuses Paul and his agency of being overly focused on “marquee” clients and disregarding more ordinary ones.
Russell Westbrook and Paul George, Noel says, recruited him to join the Oklahoma City Thunder in 2018. Noel played for the league minimum during the next two seasons and charges that Paul wouldn’t return calls from teams potentially interested in his services.
Noel’s complaint states he terminated his relationship with Paul last December, while Paul’s motion to dismiss contends it was the other way around. Either way, Paul was replaced by George Langberg of the GSL Sports Agency. This past summer, the Knicks signed Noel to a three-year, $32 million contract. Up until that point, he had earned $27.3 million in contracts over eight NBA seasons. Known mostly for his defense, Noel has averaged 8 points, 6 rebounds and 22 minutes per game during his NBA career.
Paul’s motion to dismiss offers a very different retelling of the dispute.
The motion describes how Paul initiated an NBPA grievance against Noel in August. Paul says he made “multiple written requests” for Noel to pay the agent commission on his 2020-21 contract with the Knicks. The contract was signed before Noel terminated his relationship with Paul. Paul’s grievance prompted Noel to file his own NBPA grievance and then a “nearly identical” complaint for court.
Noel’s lawsuit includes Klutch as a defendant, which Paul’s attorneys say is nonsensical since Klutch was never Noel’s agent and only individuals can represent NBA players. Paul argues that Noel has engaged in “irresponsible actions” that “have no legitimate purpose” and “presumably [constitute] a publicity stunt and/or designed to burden and inconvenience Paul and [Klutch].”
A key legal issue favoring Paul is the nature of the relationship between Noel and the NBPA, which negotiates wages, hours and other working conditions. Under the National Labor Relations Act, the NBPA is the exclusive bargaining representative for all NBA players—Noel included. Agents, then, are only permitted to act on behalf of players if they obtain a license from the NBPA and follow NBPA rules.
Paul’s motion includes sworn testimony of NBPA officials who confirm that agent/player disputes “must be arbitrated” when it arises from the player/agent relationship. Noel faces a high hurdle construing his dispute with Paul as not arising from this relationship. Noel portrays Paul as poorly advising him and as failing to generate market interest. These allegations raise the question of whether Paul satisfied his NBPA duties.
The NBPA uses arbitration—a private process—to resolve player/agent disputes. A litigation, in contrast, entails public court filings accessible to the media. Arbitration also gives the NBPA more control over the structure and timing of resolving disputes. Further, the NBPA uses one arbitrator, retired Judge Richard Levie, who, unlike a typical judge, has expertise in sports law, the CBA and NBPA agent regulations, as well as in norms of the NBA agent industry. Levie rules on disputes according to the language of NBPA rules and the “law of the shop,” a labor law term that reflects well-established understandings of legal and fiduciary relationships between NBA players and their agents.
The loser of an NBPA arbitration is not necessarily out of luck. He or she can petition a federal judge to vacate the arbitrator’s award (ruling). However, judges are obligated under the law to give those awards a high degree of deference and only vacate them in extraordinary circumstances.
Noel’s attorneys can file a brief opposing the motion to dismiss. If the case isn’t dismissed, Paul could raise other defenses. For instance, Noel’s lawsuit confidently maintains that “most people in the league believed that Noel was set to sign a multi-year deal [in 2019] with value much higher than the league minimum given his production in Oklahoma City in that past season.” Paul could retort that teams’ general managers seemed to view Noel in a less favorable light. Noel, moreover, could have fired Paul earlier. Noel says he thought about firing Klutch in early 2020 over alleged “lack of efforts or results” but was convinced to stay after being told the Thunder were going to offer him a three-year deal worth between $7 million and $10 million.
The case is before U.S. District Judge Jane Boyle.
(The story was updated to reflect Noel and Paul’s dispute over who terminated the player-agent relationship.)