University Liability in Florida When Coaches Refer Student Athletes to Sports Agents: A Fiduciary A
The star running back at State U. is the leading rusher in the nation during his sophomore year and is projected by professional scouts and sports experts to be a top 10 pick in the National Football League (NFL) draft after his senior year. The head football coach at State U. refers the star running back to a professional sports representative (“sports agent”). The coach is financially compensated by the sports agent for the referral. Because of the sports agent’s shady representation, the star running back violates national intercollegiate athletic regulations, which cause his intercollegiate eligibility to be revoked. Thereafter, the star running back enters the NFL draft after his sophomore year and is picked in the second round. Consequently, the star running back loses millions of dollars in potential earnings as a result of being picked in the second round. The star running back initiates a lawsuit against State U. alleging that the university had a special duty to protect student athletes from the actions of the coach.
In the modern era of intercollegiate sports, the complexities and pressures involved in achieving success on the athletic field and in the classroom contributes to the formation of a special relationship between the university and the student athlete. Specifically, the university and its athletics staff are obligated to ensure that student athletes are afforded tangible, academic benefits1 after graduation. Also, university-sponsored intercollegiate athletic competitions provide student athletes a forum to develop their athletic talents for potential professional sports careers.2 The unique position of student athletes on university campuses, therefore, supports labeling the university and student athlete relationship as special or fiduciary. Consequently, the increase in television revenues from and the overall commercial exposure of intercollegiate sporting contests in this country3 may warrant judicial protection of student athletes’ intercollegiate eligibility, professional sports career aspirations, and earnings from a university’s breach of its fiduciary duty.
Referral of Student Athletes to Sports Agents by Staff
The selection of a sports agent has a major influence on a student athlete’s professional sports career aspirations and earnings. A practice involving a university’s athletics staff and sports agents can threaten those aspirations and potential earnings, however, and may trigger the protection of student athletes under various legal principles in Florida courts. Sports agents have increasingly accepted as clients student athletes referred by an athletics staff member or representative ( e.g., head coach, faculty member, booster) of a college or university for compensation ( e.g., cash).4 For example, in exchange for compensation, some college coaches have either permitted only one sports agent to speak with all of the student athletes on the coach’s team or directed or “referred” student athletes to only one sports agent.5
This system of “agent referrals” is prohibited by the National Collegiate Athletic Association (NCAA)6 and the laws of several states,7 including Florida.8 The purpose of this article, however, is not to discuss the regulatory or statutory prohibitions on agent referrals. Simply, these regulations and laws were not specifically designed to provide student athletes standing to sue academic institutions for damages to their intercollegiate eligibility, professional sports career aspirations, and earnings. Under the present statutory scheme, conversely, universities may sue violators of Florida’s agent law for damages to the institution’s revenues from media coverage of a sports contest, right to grant athletic scholarships, right to recruit an athlete, or ability to participate in postseason athletic competition.9
The extension of fiduciary theory to the intercollegiate sports context, therefore, provides student athletes a potential legal avenue to protect their intercollegiate eligibility, professional sports career aspirations, and earnings. Indeed, athletics staff members who practice agent referrals expose a university to civil liability under this theory. The recent trend in lawsuits filed by student athletes against universities for damages suffered during their participation in intercollegiate athletics should stand as a luminous warning to academic institutions.10 Naturally, it will be a matter of time before a student athlete successfully argues for the application of fiduciary theory to the university and student athlete context. For instance, liability under a fiduciary theory may attach to the university if the sports agent to whom the student athlete was referred commits malpractice or involves the student athlete in a scandal, regulatory infraction, or criminal violation. Under these circumstances, a student athlete normally loses eligibility to compete in intercollegiate athletics. As a result, the ineligible student athlete must enter prematurely into the applicable professional sports league draft. For most student athletes destined to play professionally, entering into the draft prematurely means the loss of millions of dollars in earnings or the inability to secure a guaranteed professional sports contract.11 Therefore, the university may have a fiduciary duty, and corresponding liability, to protect a student athlete from harm when a student athlete is referred to a sports agent for compensation.
A fiduciary relationship arises where one party places its trust and confidence in a dominant party.12 The Second District Court of Appeal in Prescott v. Kreher, 123 So. 2d 721 (Fla. 2d DCA 1960), for instance, held that a fiduciary relationship generally exists where a confidence is reposed and, on the other side, there is the resultant superiority and influence.. . . The relation need not be legal but may be moral, social, domestic, or purely personal. Thus, the term, “fiduciary” or “confidential” relation as defined is a very broad one. Such a relation has been said to exist and to suffice as a predicate for relief in all cases wherein confidence has been reposed and betrayed.13
Under this general rule, particular relationships, including husband and wife,14 principle and agent,15 trustee and beneficiary,16 attorney and client,17 physician and patient,18 guardian and ward,19 and minister and parishioner,20 have been held by courts to be fiduciary relationships under Florida law. Fiduciary relations also can emerge, as a matter of fact, from other types of relationships.21 In instances when a fiduciary relationship exists, Florida law imposes on the more powerful party (the fiduciary) a duty to act for the benefit of the principal in all matters relevant to the relationship.22
in Collegiate Sports
In the context of intercollegiate athletics, the nature of the university and student athlete relationship supports the protection of student athletes’ intercollegiate expectations and potential benefits from a professional sports career.23 Although no Florida court has ruled that a college or university owes a fiduciary duty to its student athletes,24 The lack of judicial recognition should not deter academic institutions from recognizing and protecting against the potential legal obligations arising from this type of relationship. Moreover, the extension of the fiduciary concept to the university and student athlete relationship could be imposed by Florida courts to maintain the law’s relevance with the evolving and complex world of intercollegiate athletics.25
Application of fiduciary concepts in the intercollegiate sports context is supported by several scholars and commentators. One scholar noted that “the law of fiduciary obligation has developed through analogy to contexts in which the obligation conventionally applies.”26 Under this methodology, scholars and commentators have identified several factors inherent in the university and student athlete relationship that warrant the application of fiduciary concepts to this special relationship.27 One commentator, for example, opined that “[t]he most prominent of these factors is the dominance and control which a university exercises over the lives of student athletes.”28 Interestingly, the Colorado Supreme Court in University of Colorado v. Derdeyn, 863 P.2d 929 (Colo. 1993), noted the tremendous influence that a university exerts over its student athletes: “[Student athletes] submit to extensive regulation of their on- and off-campus behavior, including maintenance of required levels of academic performance, monitoring of course selection, training rules, mandatory practice sessions, diet restrictions, attendance at study halls, curfews, and prohibitions on alcohol and drug use.”29
The Derdeyn court, relying on the testimony of a director of athletics, also looked at the level of dominance college coaches have over student athletes: “[S]ome coaches within their discretion impose curfews; that athletes are required to show up for practice; that athletes are ‘advised.. . on what they should take for classes’; that ‘we have a required study hall in the morning and in the evening’; and that it is ‘fair to say that the athletes are fairly well regulated.’”30
Accordingly, college coaches develop a special influential relationship with student athletes based on trust and dependence because of the multiple roles coaches play in student athletes’ lives.31 Consequently, an academic institution, through its coaches, has a dominant role into and control over the lives of student athletes that creates a special, or fiduciary, relationship.32 The fiduciary nature of the relationship, therefore, gives the university the responsibility to carry out the reasonable expectations of student athletes.33
University’s Fiduciary Duties
If Florida courts begin to apply fiduciary concepts in the intercollegiate athletics context, colleges and universities need to become more aware of their fiduciary duties if athletics staff members improperly refer student athletes to sports agents for compensation. Simply, the existence of a university and student athlete fiduciary relationship involves the imposition of the highest standard of duty implied by law.34
The scope of this special duty can be defined through analogy from cases where courts have acknowledged the special duty universities owe to their students in other circumstances. The U. S. Court of Appeals for the Third Circuit in Kleinknecht v. Gettysburg College, 989 F.2d 1360 (3d Cir. 1993), held that a special relationship existed between a college and a student athlete that was sufficient to impose a duty of reasonable care on a college.35
Florida has imposed a duty on universities to protect their students in limited situations. The Fourth District Court of Appeal in Gross v. Family Services Agency, Inc., 716 So. 2d 337 (Fla. 4th DCA 1998), held that a university had a duty to students to use ordinary care in providing educational services and programs.36 In particular, the Gross court concluded that “[w]hile a person or other entity generally has no duty to take precautions to protect another against criminal acts of third parties, exceptions to this general rule have emerged, including the ‘special relationships’ exception.”37
Universities also are liable under other theories of negligence, including negligent hiring, retention, and supervision of employees ( i.e., athletics staff).38 Therefore, the existence of a special relationship between a university and its students imposes a corresponding duty of care.39
Florida courts also have imposed a duty on public schools to supervise students placed within its care.40 In these cases, the courts have held that “a negligent failure to act in carrying out this duty of the school is actionable.”41 In carrying out the supervisory duty, a school, and its officials and teachers, “must use the degree of care ‘that a person of ordinary prudence, charged with the duties involved, would exercise under the same circumstances.’”42 A breach of this duty, furthermore, exposes a school to liability for “reasonably foreseeable injuries caused by the failure to use ordinary care.”43 The supervisory duty in Florida is based on the notion that the school is partially standing in place of the student’s parents.44
Similarly, the university has two primary duties to student athletes under a fiduciary relationship. First, the university has an implied duty to limit institutional conduct that unreasonably interferes with the student athletes’ ability to develop and participate athletically.45 For example, arbitrary and capricious conduct that interferes with an opportunity for student athletes to participate in intercollegiate athletics would be precluded under this duty.46 Second, institutional conduct which promotes its interests ahead of that of the student athlete, is prohibited under this duty.47 The referral of student athletes to sports agents by athletics staff for compensation specifically would be prohibited under this duty because of the coach’s conflict of interest.
Colleges and universities may be liable in a breach of fiduciary duty lawsuit if a sports agent, with whom an athletics staff member refers student athletes, damages a student athlete’s professional sports career aspirations and earnings. Florida appellate courts have yet to rule on the validity of student athletes’ property interests in intercollegiate eligibility or prospective professional sports earnings.48 Courts from other jurisdictions, however, are increasingly finding that student athletes have a protected property interest in their intercollegiate eligibility and prospective professional sports earnings.49 The federal district court in Hall v. University of Minnesota, 530 F. Supp. 104 (D. Minn. 1982), for example, held that a student athlete’s opportunity to be drafted in the second round of the National Basketball Association draft was a private interest and, as such, protected by the United States Constitution.50 In particular, the Hall court concluded that a student athlete “would suffer a substantial loss if his career objectives were impaired.”51 The Hall decision stands in contrast to decisions of courts in other jurisdictions, which held that student athletes do not have a protected property interest in either participating in intercollegiate athletics or future professional sports earnings.52 These holdings were based on the belief that future professional sports earnings, for instance, were “too speculative” to constitute a property interest.53 However, a student athlete’s future professional sports earnings can be ascertained more accurately today due to the sports industry’s use of sophisticated scouting techniques and projections and professional sports leagues’ imposition of rookie salary caps.54
Agent’s malpractice becomes more meritorious in a breach of fiduciary duty claim, therefore, if Florida courts adopt the Hall analysis. Under such a claim, a college or university may be liable to compensate a former student athlete for all earnings “lost” as a result of the sports agent’s malpractice or improper dealings.
As sports agents strive to find alternate ways to solicit and secure student athletes, colleges and universities must become aware of any activity by athletics staff that may impose liability on the institution. Although Florida courts have not specifically recognized the existence of a fiduciary relationship between a university and a student athlete, the risks associated with sports agent referrals are too great for an academic institution to ignore. Accordingly, colleges and universities should do the following to limit their liability:55
1) Conduct a general review of all university policies and guidelines on communications and dealings with sports agents, including rules pertaining to sports agent referrals, the recording of improper offers made by sports agents to student athletes, and the procedure to document agents properly signed by student athletes;
2) Consult with legal counsel for the applicability of the Florida sports agent referral statute on current university policies;
3) Compile and review a list of former student athletes and their sports agents and interview former student athletes on such list in order to identify any improper acts ( i.e., possible referrals) committed by athletics staff;
4) Implement sports agent education seminars for intercollegiate athletics staff and student athletes, and institute one-on-one meetings between “monetizable”56 student athletes and an institutional staff member twice a year; and
5) Incorporate questions regarding sports agent referrals in student athlete exit interviews, and promptly investigate and report any impropriety.
Prompt attention to this issue will limit an institution’s potential liability in Florida under fiduciary or other legal theories.
1 See NCAA Const. art. 1.3.1, reprinted in National Collegiate Athletic Association, 1998–99 NCAA Manual (1998) [hereinafter NCAA M anual]; id. art. 2.2.1.
2 See Melvin L. Braziel, United We Stand: Organizing Student Athletes For Educational Reform , 4 S ports L.J. 81, 104 (1997).
3 See id. at 105; Timothy Davis, An Absence of Good Faith: Defining a University’s Educational Obligation to Student Athletes , 28 H ous. L. Rev. 743, 749–51 (1991); National Collegiate Athletic Assoc., Budget Supports New NCAA Structure (visited Nov. 12, 1998) < http://www.ncaa.org/financial/budget.html >.
4 See generally telephone interview with William S. Saum, agent and gambling representative, The National Collegiate Athletic Association (Jan. 6, 1999); Thomas J. Arkell, Agent Interference With College Athletics: What Agents Can and Cannot Do and What Institutions Should Do In Response , 4 S ports L.J. 147, 153 (1997); Agent’s Activities at LSU Prompt Investigation, The Chronicle of Higher Education, Feb. 19, 1999, at A55.
5 See generally interview with William S. Saum, supra note 4; Arkell, supra note 4, at 153.
6 NCAA bylaw, art. 10.1(e), NCAA Manual.
7 Ala. Code §8-26-34(b) (1997); Colo. Rev. Stat. §23-16-103(1)(a) (1998); Mo. Ann. Stat. §436.212(4) (Vernon 1997); 5 Pa. Cons. Stat. Ann. §3305(3) (1998); S.C. Code Ann. §59-102-40(4) (Law. Co-op 1997); Tenn. Code Ann. §49-7-2114(6) (1998).
8 Fla. Stat. §468.456(1)(e), (f) (1997).
9 Fla. Stat. §468.4562(1)-(2) (1997).
10 See Fortay v. University of Miami , Civ. A. No. 93-3443, 1994 WL 62319, at *6-7 (D.N.J. Feb. 17, 1994); Kleinknecht v. Gettysburg College , 989 F.2d 1360 (3d Cir. 1993).
11 See, e.g., Richard M. Summa, The Foot Locker Defense , 69 F la. B.J. 87, 87 (Oct. 1995).
12 Becks v. Emery-Richardson, Inc., Nos. 86-6866-CIV-GONZALEZ, 87- 1554-CIV-GONZALEZ, 1990 WL 303548, at *28 (S.D. Fla. Dec. 21, 1990); Morton v. Young , 311 So. 2d 755, 756 (Fla. 3d D.C.A. 1975); Prescott v. Kreher , 123 So. 2d 721, 727 (Fla. 2d D.C.A. 1960).
13 Prescott , 123 So. 2d at 727; see also Becks , 1990 WL 303548, at *28.
14 Safford v. McCaskill , 25 So. 2d 210, 212–13 (Fla. 1946).
15 Capital Bank v. MVB, Inc. , 644 So. 2d 515, 518 (Fla. 3d D.C.A. 1994).
16 Id. ; Allen v. Estate of C. Dutton , 394 So. 2d 132, 134–35 (Fla. 1980).
17 Forgione v. Dennis Pirtle Agency, Inc. , 701 So. 2d 557, 560 (Fla. 1997).
18 Nardone v. Reynolds , 333 So. 2d 25, 39 (Fla. 1976).
19 Capital Bank , 644 So. 2d at 518.
20 Doe v. Evans , 718 So. 2d 286, 291–93 (Fla. 4th D.C.A. 1998).
21 See Jacobs v. Vallancourt , 634 So. 2d 667, 670 (Fla. 2d D.C.A. 1994).
22 See id.
23 Timothy Davis, Student Athlete Prospective Economic Interests: Contractual Dimensions , 19 T. M arshall L. Rev. 585, 618–19 (1994).
24 But cf. Montalvo v. University of Miami , 705 So. 2d 1042, 1043 (Fla. 3d D.C.A. 1998); University of Miami v. Militana , 184 So. 2d 701, 704 (Fla. 3d D.C.A. 1966); Houston v. Mile High Adventist Academy , 872 F. Supp. 829, 834–35 (D. Colo. 1994); Moy v. Adelphi Inst. , 866 F. Supp. 696, 707–08 (E.D.N.Y. 1994); Maas v. Corporation of Gonzaga Univ. , 618 P.2d 106, 108 (Wash. Ct. App. 1980).
25 See, e.g., Gates v. Foley , 247 So. 2d 40, 43–44 (Fla. 1971).
26 Deborah A. DeMott, Beyond Metaphor: An Analysis of Fiduciary Obligation , 1988 D uke L.J. 879, 879 (1988).
27 Davis, supra note 23, at 620–23; DeMott, supra note 26, at 879; Robert Faulker, Note, Judicial Deference to University Decisions Not to Grant Degrees, Certificates, and Credit—The Fiduciary Alternatives , 40 S yracuse L. Rev. 837, 855–65 (1989); Alvin L. Goldman, The University and the Liberty of Its Student—A Fiduciary Theory , 54 K ent L.J. 643, 672 (1966).
28 Davis, supra note 23, at 620–21.
29 Derdeyn , 863 P.2d at 937.
30 Id. at 940–41.
31 Davis, supra note 23, at 622.
32 Id. at 620–23.
33 Id. at 625.
34 Federal Deposit Ins. Corp. , 854 F. Supp. at 1572.
35 Kleinknecht , 989 F.2d at 1368.
36 Gross, 716 So. 2d at 339.
37 Id. at 338–39.
38 See School Bd. of Orange County v. Coffey , 524 So. 2d 1052, 1053 (Fla. 5th D.C.A. 1988); Collins v. School Bd. of Broward County , 471 So. 2d 560, 563–64 (Fla. 4th D.C.A. 1985); Fortay , 1994 WL 62319, at *6-7.
39 Gross , 716 So. 2d at 338–39; Rupp v. Bryant , 417 So. 2d 658, 666 (Fla. 1982).
40 Wyke v. Polk County Sch. Bd. , 129 F.3d 560, 571 (11th Cir. 1997); Rupp , 417 So. 2d at 666; La Petite Academy, Inc. v. Nassef , 674 So. 2d 181, 182 (Fla. 2d D.C.A. 1996); Doe v. Escambia County Sch. Bd. , 599 So. 2d 226, 227 (Fla. 1st D.C.A. 1992).
41 See Wyke , 129 F.3d at 571.
42 Id. (quoting Collins , 471 So. 2d at 564).
44 Rupp , 417 So. 2d at 666.
45 Davis, supra note 23, at 623–24.
47 Id. at 624.
48 But cf. Metsch v. University of Florida , 550 So. 2d 1149, 1150–51 (Fla. 3d D.C.A. 1989).
49 Hall v. University of Minnesota , 530 F. Supp. 104, 108 (D. Minn. 1982). But see Parish v. National Collegiate Athletic Assoc. , 506 F.2d 1028, 1034 & n.17 (5th Cir. 1975); Hawkins v. National Collegiate Athletic Assoc. , 652 F. Supp. 602, 610–11 (C.D. Ill. 1987).
50 Hall , 530 F. Supp. at 108.
52 Parish , 506 F.2d at 1034 & n.17; Hawkins , 652 F. Supp. at 610–11.
53 Parish , 506 F.2d at 1034 & n.17; Zehner v. Central Berkshire Reg. Sch. Dist. , 921 F. Supp. 850, 862 (D. Mass. 1995); Colorado Seminary v. National Collegiate Athletic Assoc. , 417 F. Supp. 885, 895 (D. Colo. 1976).
54 See, e.g., John C. Graves, Controlling Athletes with the Draft and the Salary Cap: Are Both Necessary? , 5 S ports L.J. 185, 201 (1998).
55 See Arkell, supra note 4, at 160–65, for a more detailed discussion of preventive measures.
56 A “monetizable” student athlete is an individual possessing the ability to get a loan or insurance for future earning potential as determined by loan officers. Id. at 161 n.62.
Michael L. Buckner is an associate in the Jacksonville office of Holland & Knight LLP, and practices in the firm’s collegiate sports administration and compliance practice area. He received his B.A. in international relations and history from the University of Southern California in 1993 and his J.D. from Florida State University in 1996.
This column is submitted on behalf of the Entertainment, Arts and Sports Law Section, Kimberly D. Kolback, chair.