Parrish et al v. National Football League Players Incorporated

Filing 139

*** FILED IN ERROR. DOCUMENT LOCKED. PLEASE SEE DOCKET # 190 . *** MOTION for Leave to File a Third Amended Complaint filed by Bernard Paul Parrish, Walter Roberts, III, Herbert Anthony Adderley. (Attachments: # 1 Exhibit 1 - Third Amended Complaint - redacted# 2 Exhibit A# 3 Exhibit B# 4 Exhibit C# 5 Exhibit D# 6 Exhibit E# 7 Exhibit F# 8 Exhibit G# 9 Exhibit H# 10 Exhibit I# 11 Exhibit J# 12 Exhibit K# 13 Exhibit L# 14 Exhibit M# 15 Exhibit N# 16 Exhibit O# 17 Exhibit P# 18 Exhibit Q# 19 Exhibit R)(Katz, Ronald) (Filed on 9/27/2007) Modified on 11/27/2007 (ewn, COURT STAFF). Modified on 11/28/2007 (ewn, COURT STAFF).

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Parrish et al v. National Football League Players Incorporated Doc. 139 Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 1 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O MANATT, PHELPS & PHILLIPS, LLP RONALD S. KATZ (Bar No. CA 085713) E-mail: rkatz@manatt.com RYAN S. HILBERT (California Bar No. 210549) E-mail: rhilbert@manatt.com NOEL S. COHEN (California Bar No. 219645) E-mail: ncohen@manatt.com 1001 Page Mill Road, Building 2 Palo Alto, CA 94304-1006 Telephone: (650) 812-1300 Facsimile: (650) 213-0260 McKOOL SMITH, P.C. LEWIS T. LECLAIR (Bar No. CA 077136) E-mail: lleclair@mckoolsmith.com JILL ADLER (Bar No. CA 150783) E-mail: jadler@mckoolsmith.com 300 Crescent Court, Suite 1500 Dallas, TX 75201 Telephone: (214) 978-4000 Facsimile: (214) 978-4044 Attorneys for Plaintiffs UNITED STATES DISTRICT COURT NORTHERN DISTRICT SAN FRANCISCO DIVISION BERNARD PAUL PARRISH, HERBERT ANTHONY ADDERLEY, and WALTER ROBERTS III, on behalf of themselves and all others similarly situated, Plaintiffs, CIVIL ACTION NO. C07 0943 WHA PLAINTIFF'S MOTION FOR LEAVE TO FILE A THIRD AMENDED COMPLAINT NATIONAL FOOTBALL LEAGUE PLAYERS ASSOCIATION, a Virginia corporation, and NATIONAL FOOTBALL LEAGUE PLAYERS INCORPORATED d/b/a PLAYERS INC, a Virginia corporation, Defendants. Date: Time: Judge: Honorable William H. Alsup MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Dockets.Justia.com Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 2 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O TABLE OF CONTENTS Page I. II. III. IV. INTRODUCTION .............................................................................................................. 1 HOW THE TAC DIFFERS FROM PRIOR COMPLAINTS............................................. 1 THE GOOD FAITH BASIS ON WHICH THE AMENDMENTS WERE MADE........... 3 HOW THE AMENDED TAC CURES THE PROBLEMS IDENTIFIED IN THE COURT'S ORDER ............................................................................................................. 5 A. Statute of Limitations.............................................................................................. 5 B. Section 17200 Claim ............................................................................................... 6 C. Breach of Contract .................................................................................................. 6 1. Existence of the Contract ............................................................................ 6 2. Defendants' Breaches.................................................................................. 7 3. Damages...................................................................................................... 9 D. Fiduciary Duty Claims ............................................................................................ 9 1. Breach of Fiduciary Duty Claim for Adderley and the GLA Class.......... 10 a. Direct Agency ............................................................................... 10 b. Agency by Estoppel ...................................................................... 10 c. Confidential Relationship ............................................................. 11 d. Defendants' Breaches of Fiduciary Duty for Adderley and the GLA Class ............................................................................... 12 e. Damages........................................................................................ 12 2. Breach of Fiduciary Duty for Parrish and other Retired NFLPA Members.................................................................................................... 13 a. Agency by Estoppel ...................................................................... 14 b. Confidential Relationship ............................................................. 14 c. Defendants' Breaches of Fiduciary Duty for Parrish and the Retired NFLPA Member Class. .................................................... 15 d. Damages........................................................................................ 16 E. Accounting Claim on Behalf of the GLA Class.................................................... 16 CONCLUSION ................................................................................................................. 16 V. i MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 3 of 20 1 2 3 4 5 6 7 8 9 41161205.1 TABLE OF AUTHORITIES Page CASES Forsyth v. Humana, Inc., 114 F.3d 1467 (9th Cir. 1997)................................................................................................... 6 Richelle L. v. Roman Catholic Archbishop, 106 Cal. App. 4th 257 (Cal. App. 2003) ........................................................................... 11, 15 STATUTES Bus. & Prof. Code 17200 ......................................................................................................... 2, 6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O ii MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 4 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O Plaintiffs BERNARD PAUL PARRISH and HERBERT ANTHONY ADDERLEY on behalf of themselves and all others similarly situated, file this Motion for Leave to File Third Amended Complaint. I. INTRODUCTION Pursuant to the Court's September 6, 2007 Order Granting Defendants' Motions to Dismiss (the "Order"), Plaintiffs submit this Motion for Leave to File a Third Amended Complaint ("TAC"), a copy of which complaint is attached to this motion as Exhibit 1. Consistent with the Order at p. 24, this motion, accompanied by the Declaration of Ronald S. Katz ("Katz Decl."), counsel for Plaintiffs, addresses the following issues: (1) how the TAC differs from prior complaints; (2) the good-faith basis on which the amendments set forth in the TAC were made; and (3) how the proposed TAC cures problems identified by the Court in its Order. II. HOW THE TAC DIFFERS FROM PRIOR COMPLAINTS The TAC differs from prior complaints as follows: First, the TAC asserts only those claims that fall within the statute of limitations period as discussed in the Court's Order (see Order, p. 5). Katz Decl. 5. Second, the TAC sets forth an amended breach of contract claim on behalf of Adderley and the GLA Class (as that class is defined in the TAC) which now: (1) specifically references and attaches the GLAs signed by Adderley, (2) identifies the provision(s) of the Adderley GLA(s) that ha(s,ve) been violated, and (3) identifies the personal nature of the breaches to Adderley (see Order, pp. 14-18). More specifically, the TAC allegations address the Court's stated concerns concerning Plaintiffs' contract theory by asserting that Adderley and other class members entered into a GLA with the NFLPA (the rights to which were assigned to PLAYERS INC), that PLAYERS INC licensed the rights to Adderley and those retired players who signed the Adderley GLA to third parties pursuant to license agreements, that PLAYERS INC received substantial sums from such licensees, and that Defendants breached the terms of the Adderley GLA by failing to share the revenues with retired players as promised in the express language of the GLA (see Order, pp. 14-18). Katz Decl. 7-9. 1 MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 5 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O Third, the TAC sets forth an amended breach of fiduciary duty claim on behalf of Adderley and the GLA Class which now: (1) identifies additional facts suggesting a fiduciary duty arising from an express agency, agency by estoppel, and a confidential relationship; (2) alleges numerous breaches of fiduciary duty owed to Adderley and the GLA class, including a conflict of interest on the part of Defendants between themselves, the active players and the retired players, and (3) identifies damages personally suffered by Adderley, including Defendants' failure to pay retired players like Adderley who signed a GLA an "equal share" royalty that was to be paid to "all eligible NFLPA members" but was instead paid only to active NFLPA members (see Order, pp. 18-22). Katz Decl. 10-13. Fourth, based upon the above additional allegations, the TAC seeks an accounting on behalf of the GLA Plaintiffs (see Order, p. 23). Fifth, the TAC sets forth an amended claim for a breach of fiduciary duty on behalf of Parrish and a class of retired NFLPA members who joined the Retired Players Association but who, according to the NFLPA's own records, did not sign a GLA (the "Retired NFLPA Members Class"). Consistent with the Court's Order, this claim: (1) identifies specific facts suggesting a fiduciary relationship between Defendants and the Class based on agency by estoppel and/or a confidential relationship, including Defendants' solicitation of Parrish and retired members for membership in the NFLPA and the vulnerability of Parrish and retired members to the internal operations and functions of the NFLPA and PLAYERS INC; (2) identifies specific breaches of fiduciary duty, including Defendants' Chairman's statement that he "does not work for" retired members of the NFLPA and the failure to provide Parrish and retired members with information regarding benefits to which they may be entitled, and (3) identifies specific, personal damages to Parrish and the Class, up to and including, dues paid to the NFLPA in exchange for membership (see Order, pp. 18-22). Katz Decl. 14-17. Sixth, the TAC respectfully re-alleges a claim pursuant to Bus. & Prof. Code 17200, on behalf of Roberts and a 17200 California Resident Class, but only for purposes of preserving Plaintiffs' right to appeal the dismissal of this claim (as relevant Ninth Circuit authority cited below requires Plaintiffs to do) (see Order, pp. 7-14). Katz Decl. 6. 2 MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 6 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O Lastly, the TAC no longer alleges a claim for unjust enrichment because Defendants have now produced the signed Adderley GLAs (see Order, pp. 22-23), and no longer asserts a claim for the 17200 Class because of new information gathered about the EA agreement. Katz Decl. 18. III. THE GOOD FAITH BASIS ON WHICH THE AMENDMENTS WERE MADE As set forth in more detail in the accompanying Declaration of Ronald S. Katz, Plaintiffs have made the amendments detailed above in good faith, making more specific allegations, including the additional detail added on the following bases: Although Plaintiffs pled the legal effect of Adderley's GLAs, copies of the relevant Adderley GLAs were no longer in Adderley's records, but were received during discovery on August 1, 2007, after Plaintiffs filed their Second Amended Complaint ("SAC"); Additional facts confirming the basis for Plaintiffs' breach of contract and fiduciary duty claims come from the testimony of Doug Allen, President of PLAYERS INC and Assistant Executive Director of the NFLPA during the relevant limitations period (until his departure in January of 2007), which did not occur until September 7, 2007, after Plaintiffs filed their SAC; In particular, Mr. Allen authenticated certain of PLAYERS INC's licenses with Electronic Arts ("EA") (attached as Exhibits F and G to the TAC) and he explained the scope of such licenses and additional facts supporting Plaintiffs' breach of contract claim and breach of fiduciary duty claim on behalf of Adderley and the GLA class; Moreover, Mr. Allen confirmed the specific basis in the licenses for the claim that Defendants in fact licensed retired players' rights pursuant to the Adderley GLAs; Additional facts confirming the basis for Plaintiffs' breach of contract claim and breach of fiduciary duty claim on behalf of Adderley and the GLA in particular, the basis for the claim that Defendants' owe Adderley and other GLA class members an "equal share" royalty derive from specific provisions of an agreement between the NFLPA and PLAYERS INC dated March 1, 2000 (the "NFLPA-PLAYERS INC Agreement) (attached as Exhibit D to the TAC) which Plaintiffs received during discovery from Defendants on 3 MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 7 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O August 1, 2007, and which Mr. Allen authenticated during his September 7, 2007 deposition, both of which occurred after the date Plaintiffs filed the SAC; Additional facts confirming the basis for Plaintiffs' breach of fiduciary duty claim based on Defendants' "reallocation" of $8 million in licensing revenue derive from an Amendment (dated March 1, 2005 and attached as Exhibit I to the TAC) to the NFLPAPLAYERS INC Agreement which Plaintiffs received during discovery from Defendants on August 1, 2007, and which Mr. Allen authenticated during his September 7, 2007 deposition, both of which occurred after the date Plaintiffs filed the SAC; Additional facts confirming the basis for Defendants' acknowledged representation of all NFLPA members, including those who did not sign GLAs (previously pled in good faith on the basis of public statements); the specific confirmation of these facts was derived from the deposition of Doug Allen and from Defendants' Responses to Requests for Admission, none of which was available to Plaintiffs until after they filed their SAC; Although Plaintiffs alleged the loss of dues in the SAC, they did not allege the specific payment of dues paid by Parrish to the NFLPA during the relevant limitations period because a record of such dues payment was no longer in his personal files; confirmation of his dues payments were received from Defendants in discovery after Plaintiffs filed their SAC, and now (for reasons detailed below) form the basis for Plaintiffs' breach of fiduciary duty claims on behalf of the Retired NFLPA Members class.1 On September 21, 2007, counsel for Defendants sent Plaintiffs' counsel a letter and affidavit purporting to show that PLAYERS INC paid Plaintiff Herb Adderley all monies to which Defendants claim Mr. Adderley was entitled. Counsel suggested that these "indisputable facts", along with Plaintiffs' obligations under Rule 11 of the Federal Rule of Civil Procedure, indicate that there is no good faith basis for Plaintiffs to assert any claim under any theory on behalf of Adderley. Counsel further suggested that because Defendants reflect that neither Parrish or Roberts signed a GLA, and neither entered into "ad hoc" agreements with Defendants during the relevant limitations period, Plaintiffs had no good faith basis to assert any claims under any theory on their behalf either. Notwithstanding this letter and affidavit, Plaintiffs file their TAC in good faith. The monies paid to Adderley and identified in Defendants' letter and affidavit appear to relate to individual "ad hoc" agreements Mr. Adderley signed with PLAYERS INC. As explained in detail below and in the TAC, Plaintiffs are not claiming that Defendants failed to pay Mr. Adderley pursuant to any "ad hoc" agreement, nor have they alleged any claims based on an "ad hoc" agreement. Rather, the TAC alleges that Defendants failed to pay Mr. Adderley and other retired players a share of the guaranteed minimum revenue received from licensing retired player rights to third parties like EA. These guaranteed payments were to have been made based on the licensing of the images, not their use (as Defendants contend). In addition, consistent with the Court's Order, Plaintiffs allege no claims on behalf of Parrish or Roberts pursuant to a GLA or to an "ad hoc" agreement. 1 4 MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 8 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O See, generally, Katz Decl. 19. IV. HOW THE AMENDED TAC CURES THE PROBLEMS IDENTIFIED IN THE COURT'S ORDER The TAC cures the defects discussed in the Court's Order in the following specific ways: A. Statute of Limitations In its Order, the Court held that "Adderley can sustain a claim provided he amends his allegations to specify that he signed GLAs within the statute of limitations." Order, 5:18-19. Adderley has specifically alleged that he entered into several versions of a Group Licensing Assignment (GLA) with the NFLPA, including two GLAs within the period of the statute of limitations: (1) a GLA signed on May 1, 2002 that remained in effect until December 31, 2003 (attached to the TAC as Exhibit B) and (2) a GLA signed on November 22, 2002 that remained in effect until December 31, 2005 (attached to the TAC as Exhibit C). TAC, 17-19. These allegations form the basis for Adderley's breach of contract and breach of fiduciary duty claims. Id., 29-56. The Court also held that Roberts did not allege he had signed a GLA, nor was Parrish's belief that he signed a GLA within the relevant statute of limitations period sufficient to state a timely claim. Order, p. 5. The Court thus held that "[a]ny claims by Parrish based on the GLAs are barred by the statute of limitations." Id., 5:17. Accordingly, neither Parrish nor Roberts has alleged any claims based on the GLAs. The Court further noted, however, that "insofar as plaintiffs can plead claims that are not based on signing GLAs, these claims survive at least as to injuries accruing after February 14, 2005, for the unjust enrichment claim and after February 14, 2005 for the other claims." Order, 5:24-26 (emphasis added). The TAC does not assert a claim for unjust enrichment because Plaintiffs now possess the Adderley GLAs. In accordance with this Order, the TAC alleges a timely fiduciary duty claim on behalf of Parrish based on his membership in the NFLPA during 2005, a membership acknowledged by Defendants in a letter from Defendants' counsel filed with the Court on September 4, 2007. 5 MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 9 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O Consistent with the Court's Order, the TAC no longer relies on the discovery rule or the doctrine of equitable estoppel as a basis for tolling the relevant limitations period. Order, pp. 6-7. B. Section 17200 Claim Roberts has respectfully re-alleged a Section 17200 claim for the 17200 California Resident Class, based on the unfair and fraudulent prongs of Bus. & Prof. Code 17200. Plaintiffs re-allege the claim solely under relevant Ninth Circuit authority which requires the re-allegation of a claim for purposes of preserving the right to appeal dismissal of it. See, e.g., Forsyth v. Humana, Inc., 114 F.3d 1467, 1474 (9th Cir. 1997) (citations omitted). Plaintiffs do not intend to pursue this claim before the Court at this time, and respectfully request that the Court dismiss the claim with prejudice in order to preserve it for appeal. Plaintiffs have chosen not to bring a 17200 claim on behalf of the 17200 Class in the SAC based on new information regarding the EA contract. C. Breach of Contract As noted above, the TAC includes an amended breach of contract claim on behalf of Adderley and other class members which cures the problems identified in the Court's Order in the following specific ways: 1. Existence of the Contract In its Order, the Court found that Plaintiffs failed to plead the existence of a contract due to the failure of the named plaintiffs themselves to allege that they signed a GLA within the limitations period. Order, pp. 14-15. As noted above, Adderley attaches to the TAC copies of two GLAs signed by him, and alleges that these Adderley GLAs thereby formed legal contracts with the NFLPA, which are the subject of Adderley's breach of contract claim. TAC, Exhibits B and C and 94-96. The TAC further explains that according to PLAYERS INC's website (and as confirmed by Doug Allen, then President of PLAYERS INC), once a retired player signs a GLA with the NFLPA, the NFLPA assigns (and will continue to assign) the rights under those GLAs to PLAYERS INC. TAC, 13-14, 96. 6 MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 10 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O The Court referenced these Adderley GLAs in its Order, and specifically noted "[b]oth GLAs were in effect during the statute of limitations and could in theory form the basis of breach of contract claim, if plaintiffs should so amend." Order, 15:23-25. 2. Defendants' Breaches In its Order, the Court held that even if Plaintiffs had alleged the existence of a timely contract, "they have failed to allege what provision of the relevant GLAs was breached by defendants." Order, 16:18-19. The TAC now specifies exactly what provision of the Adderley GLAs was breached by Defendants. The Adderley GLA states, in relevant part, that "it is further understood that the moneys generated by such licensing of retired player group rights will be divided between the player and an escrow account for all eligible NFLPA members who have signed a group licensing authorization form." (emphasis added). TAC, 19, 29. The TAC further alleges that Defendants created an account , deposited licensing funds into it (including funds received for the licensing of retired players' rights from licensees such as EA), but Defendants breached this provision of the Adderley GLAs by failing to distribute revenue from this account to retired players. TAC, 29-39. Further confirming the basis for this theory, the TAC alleges the specific basis for Plaintiffs' claim that Defendants have licensed retired player rights to many of its licensees, and that they have been paid for those rights. TAC, 20-28. Indeed, the TAC gives an explicit example of one such license, the 2004 EA license, attaches a copy of the license, and references specific provisions of that license (Sections 1(A) and 2(A)) which specifies that PLAYERS INC licensed EA the right to retired players' rights, including the rights of Adderley and other GLA class members. TAC, 20-28 and Exhibit F. The TAC also quotes the sworn testimony of Doug Allen (the signatory of the EA 2004 Agreement on behalf of PLAYERS INC) who confirmed that the EA license included retired players' rights. TAC, 22, 24. Further, the TAC attaches the EA 2005 Agreement which contains the very same language referenced in Sections 1(A) and 2(A) of the EA 2004 Agreement, which likewise shows that EA acquired licensing rights for retired players under the 2005 Agreement. TAC, 25-26. 7 MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 11 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O The TAC explains further that Defendants received licensing royalties, such as the lucrative guaranteed minimum revenue paid by EA, regardless of whether EA made any use of any retired player's licensed rights. TAC, 25-27 and Exhibit G. Finally, the TAC alleges on information and belief that many of PLAYERS INC's other licenses included similar language, confirming that Defendants licensed retired players' rights to these licensees and, as in the case of EA, received royalty payments from these other licensees regardless of whether they made use of any active or retired player's licensed rights. TAC, 28. Thus, as set forth in the TAC, having licensed retired player rights to licensees, PLAYERS INC and the NFLPA breached the terms of the Adderley GLA(s) by failing to share the revenue they received from such licenses including the guaranteed minimum royalties under the EA Agreements, and other licensing royalties with retirees. TAC 29-39. The TAC further confirms that the Defendants failed to distribute these revenues as an "equal share" royalty to all players who had signed GLAs, pursuant to the agreement between the NFLPA and PLAYERS INC (attached as Exhibit D to the TAC). TAC, 30-35. That Agreement provides that PLAYERS INC obtains the rights of the NFLPA under the GLAs with retired NFL players like Adderley, and provides for a royalty in the amount of sixty per cent (60%) of gross licensing revenue to be paid "to such players as have currently licensed NFLPA to use their Group Licensing rights and who meet the eligibility requirements of Section 4(D)..." TAC, 30 and Exhibit D. The TAC thus alleges that the NFLPA-PLAYERS Agreement, which was made without the knowledge of Adderley or the other retired players, confirms the breach of the GLA by, among other things, not providing for payments to retired players, who, on information and belief, never received any payments pursuant to the GLA (see, e.g., Paragraph 4(A)(v) et. seq. of Exhibit D). TAC 31. The sixty percent (60%) of gross licensing revenue should have been paid to an "escrow account for all eligible NFLPA members [including retired NFLPA members] who signed a group licensing authorization form." TAC 31. 8 MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 12 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O 3. Damages In its Order, the Court found that Plaintiffs failed to specify how they "personally lost funds because a provision of the contract was breached." Order, 17:21-23. As detailed above, the TAC goes into great detail to address the personal nature of the breach of the above provision and the damages to Adderley and the GLA class members. TAC, 29-39. The EA licenses (and, on information and belief, many other licenses) confirm that Defendants licensed rights of retired players like Adderley and other GLA class members (and were paid handsomely for such rights regardless of whether the licensees actually used them), and thus such licensing fees are subject to distribution to the retired players pursuant to the Adderley GLAs. Id., 20-28, 34. The TAC clearly alleges that instead of honoring their obligations under the GLAs, the Defendants entered into a scheme designed to deprive the GLA class of their rightful share of the funds by arbitrarily, unnecessarily and wrongfully excluding them and, instead appropriating to the Defendants substantial sums. TAC, 30-35. Plaintiffs respectfully submit that these modifications cure the deficiencies identified by the Court, and properly state all elements necessary to plead a breach of contract on behalf of Adderley and the GLA class. D. Fiduciary Duty Claims In its Order, the Court identified various concerns with Plaintiffs' breach of fiduciary duty claims, including an inability to allege a fiduciary duty based on the GLA alone, a failure to allege breach, a failure to allege reliance, and a failure to allege damages. Order, pp. 18-22. As set forth specifically below, the TAC addresses each of these concerns. 1. Breach of Fiduciary Duty Claim for Adderley and the GLA Class The TAC states a breach of fiduciary duty claim on behalf of the GLA Class, based on direct agency, agency by estoppel and confidential relationship. a. Direct Agency In its Order, the Court determined that Plaintiffs have "failed to plead that the GLA itself created a fiduciary relationship," and noted that there was no direct agency relationship at issue 9 MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 13 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O because "[p]laintiffs admit that they cannot plead, either by implication or by contract, that they had the ability to control the actions of defendants." Order, 20:14, 18-20. Based on newly discovered facts, Plaintiffs now allege a direct agency based on the GLAs, Defendants' admitted representation of all retired players who have signed GLAs, and the control that Adderley and other GLA class members exercise over Defendants in their ability to decline to participate in the Retired Players Group Licensing Program, a program for which Defendants have received substantial royalties in connection with retired players' rights. TAC, 45. Doug Allen's recent testimony also provides foundation for the establishment of a direct agency. Specifically, he testified (and the TAC alleges) that Adderley and other retired players retained control over PLAYERS INC'S ability to license all personal appearances and additional services that might be requested. TAC, 45. b. Agency by Estoppel According to the Order, Adderley had sufficiently alleged a fiduciary relationship based upon agency by estoppel in the SAC. More specifically, the Order states: "Essentially, the NFLPA and Players Inc. held themselves out to be agents of the players who signed GLAs for purposes of licensing and marketing", and "assuming the pleaded facts to be true, plaintiffs have sufficiently alleged that there was an agency by estoppel relationship." Order, 21:18-20, 27-28. The TAC continues to support the agency by estoppel relationship found in the SAC. TAC, 46-49. With regard to the agency by estoppel theory, the Court noted that the component of detrimental reliance was lacking from the SAC. Order, 22:6-19. The TAC specifically addresses this deficiency by alleging that Adderley relied on Defendants to act in good faith and to represent their best interests in connection with group licensing opportunities. TAC, 48. Because of this, Adderley and other members of the GLA Class did not pursue licensing opportunities on their own behalf. Even if they had, however, their efforts would have been highly unlikely to succeed. TAC, 48. The TAC further alleges that Adderley and other members of the Class also relied on language of the GLAs which provided for distribution of licensing revenue to all eligible 10 MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 14 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O NFLPA members who have signed a GLA in deciding to participate in the Retired Players Group Licensing Program, and in authorizing Defendants to represent them in connection with group licensing opportunities. TAC, 49. In doing so, Adderley and other Class members reasonably expected that the NFLPA and PLAYERS INC would act in good faith towards them, and would distribute to them a portion of group licensing revenue received as promised, regardless of whether their individual images were ever used. TAC, 49. c. Confidential Relationship In its Order, the Court noted that a confidential relationship giving rise to a fiduciary duty can occur where "(1) the vulnerability of one party to the other, (2) results in the empowerment of the stronger party by the weaker which (3) empowerment has been solicited or accepted by the stronger party and (4) prevents the weaker party from effectively protecting itself." Order, 19:1013 (citing Richelle L. v. Roman Catholic Archbishop, 106 Cal. App. 4th 257, 272 (Cal. App. 2003)). Consistent with these factors, Plaintiffs have also alleged a fiduciary relationship arising out of the confidential relationship between Adderley and the GLA Class and Defendants. More specifically, the TAC alleges that the retired players are vulnerable to the size and complete monopoly over information relevant to retired players' licensing revenues enjoyed by Defendants, and that Defendants kept information (like the terms of the EA Agreements that guarantee payments) from Plaintiffs. TAC, 48-51. The TAC also alleges that Defendants solicited execution of GLAs from Adderley and other class members. TAC, 51. In addition, the TAC specifically explains that Defendants were able to exploit the vulnerability of retired players by failing to provide them with relevant information about the operation and effect of their GLAs, and the receipt of licensing revenue pursuant to these GLAs. TAC, 48. Although the Adderley GLAs are purportedly "nonexclusive" license, they operate in practice like an "exclusive" license to Defendants which precludes existing and potential licensees, such as EA, from working directly with retired players and/or precludes retired players who have signed GLAs from entering into individual licensing agreements with these licensees. TAC, 48-51. 11 MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 15 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O As further support for Plaintiffs' claim, the TAC alleges that Adderley is a senior citizen who has been retired from professional football for more than thirty years, earns a pension from the NFLPA of less than $180 per month, and suffers from some physical disabilities as a result of his career in professional football. TAC, 51. d. Defendants' Breaches of Fiduciary Duty for Adderley and the GLA Class In reviewing the breach of fiduciary duty claims brought on behalf of the GLA Class, the Order found that "Adderley has failed to plead that defendants breached the duty and that Adderley was damaged as a result." Order at 22. The TAC now pleads the basis for Defendants' breaches of duty with specificity, including: Failing to accurately report revenues to members of the GLA Class; Failing to distribute revenues to the members of the GLA Class that should have been distributed and were owed to them; Arbitrarily, capriciously and wrongfully excluding retired players from the "equal share" royalty paid from sixty percent (60%) of gross licensing revenue; Misappropriating funds totaling eight million dollars ($8,000,000) or more that should have been paid, in part, to Adderley and the class; and Placing themselves in a position of conflict of interest and acting adversely to the interest of retired NFL players who signed a GLA. TAC 52-56. e. Damages The Order further found that the SAC did not show how Adderley had been personally harmed, as a result of a breach of fiduciary duty, including: that he did not receive licensing royalties owed to him; that he relied to his detriment on specific information released or withheld by the NFLPA or PLAYERS INC; that he failed to pursue individual, non-group licensing opportunities on his own because he believed that PLAYERS INC was representing him; or 12 MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 16 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O that Adderley himself lost money because defendants failed to pursue licensing opportunities on his behalf. Order, 22:10-15. As detailed above, the TAC now specifically addresses the Court's concerns related to detrimental reliance. TAC, 48-49. In addition, the TAC alleges that Adderley and the GLA class have alleged that they did not receive any portion of "equal share" royalties to which they were entitled in connection with Defendants' licensing of retired players' rights. Id., 52-53, 55. The TAC no longer alleges that Defendants failed to pursue licensing opportunities on behalf of Adderley and other GLA Class members. Instead, the TAC alleges that Defendants pursued (and were paid for) the licensing of retired players' rights, but failed to distribute any portion of that licensing revenue to the retired players. TAC, 52-53. The TAC also alleges harm to Adderley from the appropriation of $8,000,000 that was taken and shared between PLAYERS INC and the NFLPA instead of being shared between the individual players and the NFLPA members. TAC, 54. Plaintiffs respectfully submit that these modifications cure the deficiencies identified by the Court, and properly state all elements necessary to plead a breach of fiduciary duty on behalf of Adderley and the GLA class. 2. Breach of Fiduciary Duty for Parrish and other Retired NFLPA Members In its Order, the Court held that Parrish may not base a fiduciary duty claim on signing a GLA. Order, 19:6-7. It noted that Parrish may nevertheless be able to plead claims that are not based on signing GLAs. Id., Order 5:24-25. Accordingly, Parrish has stated a fiduciary duty claim based on agency by estoppel and/or confidential relationship on behalf of a class of retired members of the NFLPA who, according to the NFLPA's own records, did not sign a GLA (the "Retired NFLPA Member Class"). Although the Court did not specifically address this claim in its Order, Plaintiff Parrish believes and asserts that the claim nevertheless cures the Court's concerns raised in connection with a fiduciary duty as detailed above. See Order, pp. 18-22. 13 MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 17 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O a. Agency by Estoppel In its Order, the Court suggested that Adderley had stated a claim for agency by estoppel, but had failed to allege detrimental reliance of damages. Order, pp. 21-22. Parrish has similarly alleged an agency by estoppel relationship by virtue of their membership in the NFLPA, and has alleged both detrimental reliance and damages as set forth below. TAC, 66-70. The TAC alleges that NFLPA provides for membership of retired NFL players, and solicits the membership of such retired NFL players in exchange for dues. TAC, 58, 72 and Exhibits K, L and M. The TAC further alleges that Parrish paid membership dues to the NFLPA. TAC, 59. As alleged in the TAC, PLAYERS INC has now conceded that it "represents" all retired NFLPA members, whether or not they ever signed a GLA, because those players were "available" to PLAYERS INC by virtue of their membership in the NFLPA. TAC, 62, 66. The TAC further alleges that when deciding to join the NFLPA and pay dues, Parrish and, on information and belief, other members of the Retired NFLPA Member Class, relied on the NFLPA's membership solicitation and promises and reasonably expected that in exchange for their payment of dues and membership in the NFLPA, Defendants would provide information concerning benefits to which they might be entitled and that their Chairman, would act in good faith on their behalf and/or refrain from disavowing any obligation to work for or on behalf of retired NFLPA members. TAC 68. Thus, by virtue of offering membership in the NFLPA after retirement in exchange for dues and/or in order to gain access to retired players' rights by virtue of their membership in the NFLPA, the NFLPA and PLAYERS INC stand in a fiduciary relationship to Parrish and other members of the Retired NFLPA Member Class. TAC 65. b. Confidential Relationship As noted above, the Court held that a fiduciary relationship can arise out of a confidential relationship, which can occur where "(1) the vulnerability of one party to the other, (2) results in the empowerment of the stronger party by the weaker which (3) empowerment has been solicited or accepted by the stronger party and (4) prevents the weaker party from effectively protecting itself." Order, 19:10-13 (citing Richelle L., 106 Cal. App. 4th at 272). Consistent with these 14 MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 18 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O factors, Plaintiffs have also alleged a fiduciary relationship arising out of the confidential relationship between Parrish and the Retired NFLPA Member class and Defendants. The TAC alleges that retired NFLPA members are particularly vulnerable to the NFLPA and PLAYERS INC because they are not entitled to vote in the NFLPA and because both the NFLPA and PLAYERS INC fail to provide them with information concerning benefits to which they may be entitled (including licensing and other opportunities). TAC, 72-73. The TAC further alleges that Defendants have solicited membership in the NFLPA from retired players for the purpose of obtaining dues and of obtaining access to these retired players for the purpose of pursuing commercial and marketing opportunities concerning retired players (including licensing). TAC, 64. The TAC also alleges that Defendants have confirmed the vulnerability of retired players (and their inability to protect themselves). Indeed, Gene Upshaw, Executive Director of the NFLPA and Chairman of PLAYERS INC, has confirmed not only the vulnerability of these retired players, but Defendants' exploitation of it, repeatedly stating that "he does not work for retired players" and comparing them to dog food. TAC, 74, 77 and Exhibits P, Q and R. c. Defendants' Breaches of Fiduciary Duty for Parrish and the Retired NFLPA Member Class In its Order, the Court noted that Plaintiffs had failed to plead how Defendants breached any fiduciary duty. Order, p. 22. Accordingly, Parrish and other Retired NFLPA Members have pled specific breaches by Defendants, including that they: In plain and direct contravention of the NFLPA Constitution, as well as in violation of the duty of good faith, failed to provide retired members with accurate and complete information regarding other benefits to which they might be entitled, including licensing and marketing benefits; Failed to act in good faith towards retired NFLPA members by acknowledging that they do not work for retired members; and/or Failed to act in good faith on behalf of retired NFLPA members (whom Defendants have now admitted they represent) who did not sign a GLA in pursuing commercial and 15 MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 19 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O marketing opportunities on their behalf and/or informing the retired NFLPA members of any benefits that may be owing to them in connection with opportunities that were pursued on behalf of retired NFLPA members. TAC, 78-81. d. Damages Because Defendants have breached their obligations to Parrish and other members of Retired NFLPA Member Class, Parrish seeks return of all NFLPA dues paid by him and those other retired NFLPA members who paid dues during the period of the statute of limitations, but did not sign a GLA according to the records of the NFLPA. TAC, 81. Plaintiffs respectfully submit that these modifications cure the deficiencies identified by the Court, and properly state all elements necessary to plead a breach of fiduciary duty on behalf of Parrish and the Retired NFLPA Members class. E. Accounting Claim on Behalf of the GLA Class The Order found that the SAC failed to plead a balance due to the Plaintiffs and that there was no other adequate remedy at law. Order, p. 23. The TAC specifically pleads that money is due to the GLA Class, that an accounting is necessary, and that there is no other adequate remedy at law. TAC, 107-109. 16 MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA Case 3:07-cv-00943-WHA Document 139 Filed 09/27/2007 Page 20 of 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP A T T O R N E Y S A T LAW PALO A L T O V. CONCLUSION For the reasons set forth above, Plaintiffs' TAC cures the specific problems identified by this Court in Order, and is amended and offered in good faith. Consistent with the standard freely allowing for such amendments, Plaintiffs respectfully request that the Court grant them leave to file their Third Amended Complaint. Respectfully submitted, Dated: September 27, 2007 /s/Ronald S. Katz Ronald S. Katz (SBN 085713) Ryan S. Hilbert (SBN 210549) Noel S. Cohen (SBN 219645) MANATT, PHELPS & PHILLIPS, LLP 1001 Page Mill Road, Building 2 Palo Alto, CA 94304-1006 Telephone: (650) 812-1300 Facsimile: (650) 213-0260 Attorneys for Plaintiffs Lewis T. LeClair, Esq. Jill Adler, Esq. McKOOL SMITH, P.C. 300 Crescent Court Suite 1500 Dallas, TX 75201 214-978-4984 214-978-4044 (fax) OF COUNSEL Samuel A. Mutch Esq. SAMUEL A. MUTCH, P.A. 2114 N.W. 40th Terrace, Suite A-1 Gainesville, FL 32605 Telephone: (352) 378-5599 Facsimile: (352) 378-3388 17 MOTION FOR LEAVE TO FILE THIRD AMENDED CLASS ACTION COMPLAINT CASE NO. C07 0943 WHA

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