SBJ/January 6 - 12, 2003/Labor Agents

Judge bars Dunn from spending profits

A federal judge has issued a temporary restraining order barring agent David Dunn and his firm, Athletes First, from spending any profits, including fees owed to him by NFL players, in the wake of a $44.66 million jury verdict against him.

Dunn
A jury ruled in November that Dunn broke a contract and engaged in unfair competition when he started Athletes First with 50 players originally signed by Steinberg, Moorad & Dunn.

The judgment against Dunn has not been formally entered because of the illness of U.S. District Judge Ronald Lew. So lawyers for Leigh Steinberg sought the restraining order.

In his order, Lew wrote that Dunn and Athletes First's "threatened insolvency, past malice, and the likelihood that [Dunn and his firm] will secret or otherwise dissipate their assets prior to entry of judgment will likely cause [Steinberg's firm] irreparable harm by making the jury's damage award uncollectable and inadequate at law."

The Dec. 23 restraining order permits Dunn "reasonable living expenses" and Athletes First "normal operating expenses."

Lew has scheduled a hearing for Wednesday to enter the judgment and rule on Steinberg's motions to be awarded an additional $23.5 million in damages on the grounds of unjust enrichment, as well as a motion to stop Dunn from representing any players until the end of 2004. Lew scheduled a hearing for today for Dunn to show cause why Lew should not replace the temporary restraining order with a more formal preliminary injunction.

Mark Humenik, general counsel for Athletes First, said the restraining order Lew issued was "typical" in cases in which there is a delay between the verdict and a judgment. "It will have no effect on how we perform our day-to-day operations."

But Steinberg's lawyer, David Cornwell, disputed Humenik's characterization of Lew's order. He said, "It is not common for a court to find that a party is likely to secret its assets."

Cornwell added, "We are pleased with the court's order and we look forward to the court resolving the final remaining issues ... on Jan. 8."

Meanwhile, Lew denied a request by Dunn's lawyers that he order Steinberg's firm not to communicate with Dunn's clients or potential clients for the purpose of disparaging or unfairly competing with Dunn.

In a letter sent to NFL players and others in December, Cornwell urged them to "contemplate the significance of your continued association with David" in light of the jury's verdict, which included $22.66 million in punitive damages.

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