Takeaway
In short, this case shows that a putative class complaint must plead each named plaintiff’s own timely agreement, concrete injury, reliance, and contractual or fiduciary entitlement; broad allegations that a defendant mishandled money belonging to an undefined group are not enough.
Retired NFL players Bernard Parrish, Herbert Adderley, and Walter Roberts III brought a putative class action against the NFL Players Association (NFLPA) and its marketing subsidiary, Players Inc. The plaintiffs alleged that defendants controlled the market for licensing retired players’ names, images, and likenesses; entered exclusive arrangements with companies such as Topps and Electronic Arts; diverted licensing revenue; and failed to distribute revenue fairly among retired players.
Retired players could pay dues to join the NFLPA and could sign group licensing agreements (GLAs), generally authorizing group licenses involving six or more players. Parrish and Adderley alleged that they had signed GLAs, although the complaint identified only Parrish’s 1998 agreement and did not specifically identify any timely agreement signed by Adderley. Roberts did not allege that he had signed a GLA. The plaintiffs asserted claims for breach of contract, breach of fiduciary duty, unjust enrichment and restitution, unfair competition under California Business and Professions Code section 17200, and an accounting.
After an earlier amendment and related procedural motions, the plaintiffs filed a second amended complaint adding the NFLPA as a defendant. Both defendants moved to dismiss under Rule 12(b)(6). Judge Alsup granted the motions, stayed discovery, and allowed plaintiffs to seek leave to file a third amended complaint only by submitting a proposed pleading and a declaration explaining the amendments and their good-faith basis.
Issue #1
Whether the statute of limitations barred claims based on the plaintiffs’ GLAs, and whether the discovery rule or equitable estoppel tolled the limitations periods.
Holding
Yes, claims based on Parrish’s identified GLA were time-barred, and plaintiffs did not adequately plead tolling. Adderley could potentially plead a timely GLA claim if he amended to identify his timely agreements; claims not dependent on GLAs could survive only for injuries accruing within the applicable limitations periods.
Reasoning
California generally imposed a four-year limitations period on the contract, fiduciary-duty, and section 17200 claims, while the court treated unjust-enrichment claims as subject to a two-year period. Parrish identified a GLA that expired in 1998 and alleged only that he believed he had signed more recent agreements. That vague assertion did not adequately plead a timely contract. Roberts never alleged that he signed any GLA. Although documents outside the complaint showed that Adderley had signed GLAs effective during the limitations period, the complaint itself needed to be amended to allege those agreements specifically.
The discovery rule postpones accrual only when a plaintiff pleads the time and manner of discovery and explains why earlier discovery was impossible despite reasonable diligence. Plaintiffs alleged that defendants disclosed more licensing information after changes in labor-reporting requirements, but they did not identify what information they learned, what triggered discovery of their claims, or why diligent investigation could not have uncovered the claims earlier. Adderley’s own inquiries dating back to 1994 instead indicated that he had reason to suspect the asserted misconduct long before suit.
Equitable estoppel likewise could not toll the limitations periods because plaintiffs did not plead facts showing diligent but unsuccessful efforts to obtain vital information. Merely alleging that defendants possessed better information, or that more information became available in 2006, did not establish that defendants prevented plaintiffs from timely pursuing their claims.
Issue #2
Whether plaintiffs adequately pleaded standing and an unlawful or unfair business-practices claim under California’s Unfair Competition Law.
Holding
No. Plaintiffs did not adequately plead injury in fact from the alleged unfair or anticompetitive practices, and they did not allege facts showing an incipient antitrust violation or significant harm to competition.
Reasoning
A private plaintiff under section 17200 must have suffered injury in fact and lost money or property as a result of the challenged unfair competition. Plaintiffs relied on lost NFLPA dues and lost licensing opportunities. But the complaint did not allege that any named plaintiff paid dues, relied on defendants’ representations in paying dues, or expected particular benefits in return. The post-hearing declarations suggesting that Parrish and Adderley had paid dues indicated that this defect might be curable by a good-faith amendment, but declarations could not supply allegations absent from the complaint.
The claimed loss of licensing opportunities was also conclusory. Plaintiffs did not allege that they tried to license their own names, likenesses, or images; that they lost a specific licensing opportunity; or that a licensee refused to deal with them because of defendants’ agreements. A bare assertion that plaintiffs competed with defendants in licensing their own rights did not establish the required causal link between defendants’ conduct and plaintiffs’ economic injury.
The alleged exclusive arrangements with Topps and Electronic Arts did not themselves show unlawful or unfair competition. Exclusive dealing is assessed under the rule of reason, not treated as inherently illegal. Plaintiffs did not plead facts showing market foreclosure, an incipient Sherman Act or Cartwright Act violation, or a substantial threat to competition. Popular-press predictions that an Electronic Arts agreement reduced consumer choice in football video games did not establish harm in the market for retired players’ licensing rights or show that these plaintiffs could have received revenue from that agreement.
Issue #3
Whether plaintiffs sufficiently pleaded a fraudulent business-practices claim under section 17200.
Holding
No. Although the alleged deception could theoretically cause economic injury, plaintiffs did not plead fraud with the particularity required by Rule 9(b), including their own reliance or deception of third parties.
Reasoning
The court recognized that plaintiffs’ theory of fraudulent practices could support injury in fact if defendants led retired players to believe they would pursue licensing opportunities for them, caused players to forgo pursuing opportunities independently, and then failed to generate or distribute the promised revenue. That theory was distinct from the inadequately pleaded unfair-competition theory.
But section 17200 claims grounded in fraud must comply with Rule 9(b). Plaintiffs identified a letter allegedly sent to some retired players and statements on the NFLPA website about benefits and licensing opportunities, yet they never alleged that any named plaintiff received, saw, or relied on those statements. Allegations that unnamed putative class members might have been misled could not establish the named plaintiffs’ claims.
Nor did plaintiffs adequately allege public deception. They claimed that defendants held themselves out as the exclusive route to retired-player licensing rights, but did not allege that any prospective licensee believed that representation or declined to negotiate directly with retired players because of it. The complaint therefore failed to plead the who, what, and resulting deception necessary for a fraud-based section 17200 claim.
Issue #4
Whether plaintiffs stated a claim for breach of contract based on the GLAs.
Holding
No. Plaintiffs did not adequately plead a timely contract between each named plaintiff and defendants, the relevant contractual terms, or a breach that caused the named plaintiffs damage.
Reasoning
A contract claim required plaintiffs to plead the contract, their performance or excuse, defendants’ breach, and resulting damages. A plaintiff may plead a written contract’s legal effect rather than quote it verbatim, but must state the substance of its relevant terms. The named plaintiffs could not rely on allegations that unidentified members of a proposed GLA class had signed qualifying agreements; each named plaintiff needed to allege his own contract and injury.
Roberts did not allege that he signed any GLA, and Parrish’s identified 1998 GLA fell outside the limitations period. Adderley potentially had timely agreements, but the complaint neither identified them nor described their operative terms. The plaintiffs’ reliance on a specimen GLA attached to the Topps agreement was insufficient because they did not allege that any named plaintiff signed that form.
The complaint also failed to identify a contractual provision requiring defendants to pay every GLA signer licensing revenue regardless of whether the player’s name or likeness was used. The agreements cited by the parties described the division of money generated by group licensing, but did not establish the unconditional payment entitlement plaintiffs asserted. Plaintiffs similarly did not allege that defendants failed to pay any named plaintiff money personally owed under a particular agreement. Claims that defendants diverted funds belonging to unspecified retired players did not adequately allege a breach of the named plaintiffs’ contracts.
Issue #5
Whether defendants owed plaintiffs a fiduciary duty and, if so, whether plaintiffs pleaded breach, detrimental reliance, and damages.
Holding
No. Plaintiffs did not plead a fiduciary relationship as to Parrish or Roberts, and although Adderley plausibly alleged an agency-by-estoppel relationship, he did not plead a resulting breach, detrimental reliance, or personal damage.
Reasoning
A fiduciary-duty claim requires a fiduciary relationship, breach, and damage proximately caused by the breach. Mere contractual relations, unequal economic power, and defendants’ superior access to information do not create a fiduciary relationship. Plaintiffs did not allege that they themselves suffered the disabilities or special vulnerability that might support a confidential relationship, and the GLAs alone did not transform an arms-length licensing arrangement into a fiduciary one.
Plaintiffs expressly disclaimed a conventional agency theory because they could not allege that they controlled defendants’ actions. Still, their allegations that defendants held themselves out as the exclusive representatives of retired players for group licensing plausibly supported agency by estoppel as to Adderley, who could potentially plead a timely GLA. The GLAs limited defendants’ rights to group licenses and did not clearly foreclose players from seeking individual licensing arrangements.
Agency by estoppel requires detrimental reliance. Plaintiffs did not allege that Adderley’s likeness was licensed without authorization, that he was denied royalties actually owed to him, that he refrained from pursuing individual licensing opportunities because of defendants’ representations, or that he personally lost money because defendants failed to pursue licensing on his behalf. General allegations about what putative class members may have believed or lost could not substitute for allegations of Adderley’s own reliance and injury.
Issue #6
Whether plaintiffs stated claims for unjust enrichment, restitution, and an accounting.
Holding
No. Plaintiffs did not plead that defendants unjustly retained a benefit conferred by them or that a balance was due and no adequate legal remedy existed.
Reasoning
Even assuming unjust enrichment may be asserted as an independent California claim, plaintiffs had to allege that defendants received and unjustly retained a benefit at plaintiffs’ expense. Plaintiffs alleged that defendants benefited from their status as retired NFL players, but did not allege that defendants received a concrete benefit from any plaintiff who had not signed a GLA. As to players who did sign GLAs, plaintiffs authorized group licensing and did not allege that defendants licensed their names, images, or likenesses without permission.
An accounting is available only where the relationship requires one, a balance is due to the plaintiff, and no adequate remedy at law exists. Because plaintiffs did not adequately allege that defendants owed them any identifiable balance, and did not plead the absence of an adequate legal remedy, the accounting claim necessarily failed as well.