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SBJ/June 18 - 24, 2001/This Weeks Issue
Steinberg case: Secret agent's tale
Published June 18, 2001
In the sensational battle that has become the talk of the sports-representation world, prominent agent Leigh Steinberg claims that he lost at least 18 NFL clients after former partner David Dunn bolted and that he is owed a million dollars.
Court papers filed by Steinberg say Dunn betrayed his former partners by coaxing athletes such as Ryan Leaf, John Lynch and Amani Toomer to dump Steinberg, Moorad & Dunn and join Dunn's new competing firm, Athletes First.
In declarations that support his court bid for an injunction, Steinberg and employees swear that Dunn and his pals downloaded sensitive client information from computers before they quit. Steinberg, in a declaration, said he has been given information on the process Dunn is using to get his NFL player clients to fire him.
In another declaration, which reads like a spy novel, an SMD executive in charge of technology said he uncovered secret files that were left behind on the hard drives and trash files on the company-owned computers of the fleeing employees.
The motion for a preliminary injunction seeks to enjoin Dunn and his fledgling firm from contacting any of SMD's former or current clients — a list that includes many NFL all-stars — and from engaging in the athlete representation business. A hearing on the motion has been scheduled for July 9 in Los Angeles Superior Court.
"A preliminary injunction must be issued to stop Dunn's wholesale raid on SMD's business," Steinberg's attorneys from the high-powered law firm of Gibson, Dunn (no relation to David Dunn) & Crutcher argue in court papers.
Dunn has not yet filed his response to the charges but will soon, said Dunn's attorney, Gerald Sauer. "We believe Steinberg, Moorad & Dunn will not be awarded any injunctive relief whatsoever."
Steinberg's lawyers have alleged that Dunn, who learned the sports business from Steinberg during a decade-long tenure at the firm, "masterminded" a plot to steal clients and trade secrets from the firm, in violation of California business codes. Dunn, lawyer Brian Murphy, and four other SMD employees left the firm in February.
Andrew Kim, attorney for Murphy, who is being sued in a separate case and is also an officer of Dunn's new company, said, "We deny any wrongdoing under any standard of law and we will prove that at the appropriate time."
The employees who stayed with SMD provide a number of new details on the actions Dunn and his alleged co-conspirators, Joby Branion and Murphy, took in the days before and after they left the firm. All three sent termination letters to SMD's parent company, Assante Corp., over the three-day Presidents' Day weekend in February.
Among the new allegations detailed in the court filing:
New Orleans Saints running back Terrelle Smith was sent a pre-addressed form letter by Murphy, now the chief operating officer of Dunn's new firm, for his signature in which he would have fired Steinberg as his agent. Smith refused to sign it and instead gave it to Steinberg. That letter is now evidence offered by Steinberg.
Murphy, about two weeks before he quit the firm, created two computer files, titled "Money" and "Projections," that contained spreadsheets containing most if not all of SMD's 86 NFL clients, their salaries to be earned through 2005 and the fees the agent representing those players would earn.
Branion, who is now the executive director of Athletes First, in one of his last acts before he resigned, opened the confidential computer list of all SMD clients. That file, which was accessible only to SMD's most trusted employees, contained detailed personal information on athlete clients, including spouses' names, private telephone numbers and addresses.
Branion, days after resigning from the company, flew to the NFL Combine on SMD's dime. Steinberg's attorney, during a seven-hour meeting with Dunn and Murphy at Dunn's home, demanded that Branion return immediately and stop acting on behalf of SMD clients. But Murphy, according to the court documents, retorted that the rookies at the combine were not SMD clients, but clients of Athletes First.
Steinberg's attorney, David Cornwell, stated in his declaration that SMD quickly sent independent contractors Dennis Thurman and Frank Baskerville to Indianapolis to assist the SMD NFL draft prospect clients at the combine, but Branion "interfered with" Thurman and Baskerville's contacts with the draft picks.
Deanna Allen, spokeswoman for Assante Corp., said it is her understanding that Branion "physically moved his body in between" the clients and Baskerville and Thurman and that Branion "walked them away" from the two independent contractors, who were trying to talk to them.
Branion, through an assistant, declined to be interviewed for this story.
Allen also said that the $1 million was just a portion of the fees earned by SMD for last year's contracts, which were due at the beginning of the year, but she declined to quantify how large a portion. "It is a million dollars. It is a remarkable amount," she said.
But the damage may be only beginning. Steinberg, in his declaration, said in addition to the 18 clients who have sent termination letters (see chart), other clients have communicated that they are considering leaving SMD.
Steinberg also states that Dunn takes the position that he is the agent for 14 of the 18 clients who terminated him.
Other agents signed at least three of the 18 players listed in the lawsuit, according to industry sources. Jevon Kearse signed with agent Drew Rosenhaus; Reggie McGrew signed with agent Joel Segal; and Kynan Forney signed with agent Ralph Cindrich.
Meanwhile, Dunn appears to be going about the agent business in his new office, which is near SMD's offices in Newport Beach, Calif. Athletes First has launched a Web site at athletesfirst.net, in which the company outlined its strategy.
"We are Athletes First, the most prolific, effective, and client-focused representatives in sports management," the Web site states. "At the core of it all is the athlete ... as soon as you forget that, you've betrayed him. We develop lasting bonds with each athlete we represent."
The Web site also provides an icon titled "featured clients." Clicking on it reveals the message "coming soon."
But under another section, titled "charities we support," charities of some of the athlete clients who recently fired Steinberg are listed, as are charities of SMD clients who had not fired Steinberg as of the middle of last week.
For example, the charities of NFL quarterbacks Kerry Collins and Kordell Stewart were listed. It is not clear whether that is an indication that those two players plan to leave Steinberg for Dunn. The site also touts that Athletes First supports the charities of NBA players John Starks and Greg Anthony, who have been Steinberg clients, according to SportsBusiness Journal research.
The Steinberg-Dunn agent war has been the talk of the sports business since Steinberg filed his lawsuit against his former protégé in May. Some observers are wondering what Dunn's answer will be.
"Our position will become clear when we file our papers," said Dunn's attorney, Gerald Sauer.
Russ Sauer, no relation to Gerald Sauer, and a sports lawyer at the firm of Latham & Watkins who is not involved in the case, said the outcome of the preliminary injunction motion could be crucial in determining the fates of Steinberg and Dunn.
If Steinberg wins the injunction, Dunn would be effectively put out of business until the case is resolved, Sauer said. That process could take as long as two years — an eternity in the athlete representation game — and many clients supportive of Dunn could go back to Steinberg or to other third-party agents.
If Dunn wins, Steinberg may be awarded money if he wins the case in the end, but he will not be able to stop Dunn from wooing his clients.
"The preliminary injunction," Sauer said, "that's the ball game."
|Drew Bledsoe*||New England Patriots||$8,542,700||
|Jake Plummer*||Arizona Cardinals||$5,942,700||
|Todd Lyght||Detroit Lions||$4,042,000||
|John Lynch*||Tampa Bay Buccaneers||$3,309,300||
|Todd Steussie||Carolina Panthers||$3,258,800||
|Darren Woodson||Dallas Cowboys||$3,001,600||
|Corey Dillon||Cincinnati Bengals||$3,000,000||
|Ryan Leaf||Tampa Bay Buccaneers||$2,733,600||
|Amani Toomer||New York Giants||$1,578,500||
|Jevon Kearse||Tennessee Titans||$1,171,700||
|Reggie McGrew||San Francisco 49ers||$857,100||
|Derrick Rodgers||Miami Dolphins||$476,300||
|Ahman Green||Green Bay Packers||$358,600||
|Danny Farmer||Cincinnati Bengals||$193,000||
|Kynan Forney||Atlanta Falcons||2001 draft pick||
|Jamal Reynolds||Green Bay Packers||2001 draft pick||
|A.J. Feeley||Philadelphia Eagles||2001 draft pick||
|Eric Bjornson||Oakland Raiders||N/A||
Indicates athletes whose charitable foundations are listed
Sources: Documents filed by Steinberg Moorad & Dunn Inc.
with Superior Court in Los Angeles County, Street &
Smith's SportsBusiness Journal research, NFLPA, nfl.com