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Benito Martinez Ocasio, known as “Bad Bunny,” is a Puerto Rican rapper and one of the most popular artists in the world. He sought to use his fame to co-found Limas Sports, a sports agency representing Latin American athletes. However, the Major League Players Association (MLBPA), which governs player agents, has effectively banned such agencies, leading to a series of legal lawsuits testing the scope of the MLBPA's authority.
Labor law context
The National Labor Relations Act (NLRA), passed in 1935, was one of several major laws enacted as part of President Franklin D. Roosevelt's New Deal. The NLRA protects the right of private sector employees to organize, form labor unions, and bargain collectively with employers over wages, hours, and other terms and conditions of employment.
By the 1960s and 1970s, players in America's major professional sports leagues began taking advantage of their rights under the NLRA by forming unions and bargaining collectively on a variety of issues with their leagues and teams. .
The MLBPA was established in 1966 to negotiate with Major League Baseball (MLB) and its clubs. In 1968, the parties entered into their first collective bargaining agreement, setting a minimum salary of $10,000 and establishing a pension fund. This collective bargaining process continues to this day and is the basis of sports and law across all leagues.
The NLRA not only empowers employees, but also the unions they organize or elect to represent them. Specifically, Article 9 states that the union “shall be the sole representative of all employees.” [the employee] A unit for the purpose of collective bargaining regarding wages, wages, working hours, and other conditions of employment. ” In other words, both employees and employers are prohibited from negotiating the terms and conditions of an employee's employment without the involvement or permission of a trade union.
Legal framework for sports agents
Everyone is familiar with agents who represent athletes in negotiations with teams. What is less understood is the legal basis for doing so.
As stated above, unions have the right to be the exclusive negotiator on behalf of unionized employees. In sports, for example, this means that the MLBPA has the right to negotiate all contracts for over 1,000 players on MLB rosters. Such a workload is not realistic. As a result, the MLBPA and other unions in professional sports, such as the NFL Players Association, have effectively delegated some of their bargaining authority to agents pursuant to a certification process.
In collective bargaining agreements, the MLBPA and MLB negotiate many parameters related to player employment, including minimum salaries, uniform player contract terms, dispute resolution, benefits, and work schedules. Despite this, there is still considerable scope for individual negotiations between players, agents and teams, especially regarding salary and contract length.
The union certification process varies by union, but typically requires extensive background checks, possibly testing, and consent to comply with the union's agent rules. This regulation is extensive and aims to ensure that agents represent players competently, diligently and ethically. Unions' powers are further strengthened as part of collective bargaining agreements, in which teams agree not to negotiate player contracts with agents who are not certified by the relevant union.
Failure to follow the association's rules can result in hefty penalties and disqualification (as was the case with NFL agent Todd France).
MLBPA attacks Limas Sports
Bad Bunny formed Limas Sports in 2021 with Noah Assad and Jonathan Miranda. William Arroyo later joined the company as its chief baseball agent. According to recent legal filings, the agency currently represents 68 baseball players, 14 of whom are in MLB and the rest in Minor League Baseball.
Nevertheless, his apparent growth caught the attention of the MLBPA. The association claims that Limas Sports uses unauthorized recruiters (i.e., “runners”) to provide benefits to players, induce them to become clients, and to retain clients, which violates the MLBPA's agent regulations. It was determined that this was a violation.
On April 10, 2024, the MLBPA revoked Arroyo's agent certification and denied Assad and Miranda's pending certification applications. The three were also fined a total of $400,000. Finally, the MLBPA prohibited authorized agents from dealing with Arroyo, Asad, Miranda, and Limas Sports, and notified MLB teams that they could not negotiate with them.
The MLBPA's decision could result in the end of Limas Sports' baseball player representation business. On April 15, 2024, Arroyo, Asad, and Miranda appealed the MLBPA's decision and asked an appointed arbitrator to issue an injunction blocking discipline pending the outcome of the appeal. The arbitrator refused, and on April 22, 2024, the MLBPA filed suit in New York federal court to confirm the arbitrator's decision.
Limas Sports swings back
On May 16, 2024, Limas Sports filed a lawsuit against the MLBPA in federal court in Puerto Rico. Limas Sports alleges that the MLBPA exceeded its authority under the NLRA and thereby tortiously interfered with MLBPA's contracts with its player-clients and agents.
In particular, Limas Sports notes that while the MLBPA has the authority to regulate individual agents insofar as they are involved in negotiating player contracts, the MLBPA has the power to regulate agents and distributors involved in negotiating marketing and endorsement contracts on behalf of players. It claims that there is no. Nevertheless, due to disciplinary action taken by the MLBPA, Rimas Sports is no longer able to provide these services.
The court denied Limas Sports' request for a temporary restraining order against the MLB Players Association's disciplinary actions, but set a hearing for June 18 to consider whether to grant the request for a preliminary injunction.
At that hearing, the court will almost certainly ask why the case should proceed given that an appeal is pending before the arbitrator. Limas Sports' response is that while the appellants are Arroyo, Asad, and Miranda, the plaintiffs in the lawsuit are only Arroyo, Asad, and Miranda. The court may consider this to be a formal rather than a substantive difference. Since the substantive stakeholders in both cases are the same, the court appears to be in a favorable position to continue the litigation pending the outcome of the arbitration.
