TPG Capital may soon find itself dragged into the fray of CAA’s poaching battle with UTA.
Attorneys in a Friday hearing argued whether the LLC agreement CAA employees signed when TPG bought its majority stake is relevant to the dispute and demands a separate arbitration — a move CAA says is a desperate response to its big wins in the current arbitration.
UTA attorney Bryan Freedman says while Gregory Cavic and Gregory McKnight weren’t under contract when they left CAA for UTA in March 2015, they had signed the LLC agreement and that dictates how they can leave the company and what rights they can assert. The agreements followed a nine-figure 2014 deal that brought TPG’s ownership stake from 35 percent to 53, making it the agency’s first outside majority owner.
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It also requires an arbitration with a retired judge to resolve any issues of interpretation.
CAA attorney Anthony Oncidi says UTA is playing a game to try to get a new arbitrator after the one they met with in April tentatively ruled in his client’s favor. (More to come about this.)
Meanwhile, Freedman argues that UTA, Cavic and McKnight aren’t parties to the current arbitration proceedings involving the three agents who were under contract at the time they departed, Dominic Nuciforo Jr., Martin Lesak and Jason Heyman.
“They have the right to bring their own arbitration,” Freedman says, adding that if they can’t arbitrate they’ll be forced to sue. “It will cause us to disclose things … that are in a confidential LLC operating agreement.” Those things include how much CAA leadership profited from the sale, Freedman says.
The move seems designed to force a settlement, anticipating that TPG will want to end the scrum if it’s involved.
“It’ll probably settle pretty quickly,” said Richard Frey, who represents Cavic and McKnight, during the Friday hearing.
Oncidi says there’s no need to arbitrate the LLC agreement because Cavic and McKnight aren’t being sued for leaving, but for helping others leave. If it had just been those two who defected, he says, there wouldn’t be a legal fight.
“Cavic and McKnight had no contractual obligation to remain at CAA,” said Oncidi, reminding the court the two men are being sued for tortious interference, not breach of contract.
Judge Nancy Newman isn’t yet sure the LLC agreement is relevant, but she’s asked attorneys for further briefing on the matter and delayed her decision on whether to grant a stay in the lawsuits pending arbitration.
UTA also is asking the court to help it hire away more agents. The amended cross-complaint asks the court for a declaration that any agreements binding agents to CAA for periods longer than seven consecutive years are unenforceable because “CAA has demonstrated that it will sue UTA if it successfully competes with CAA for those agents’ services.”
Nuciforo, Heyman and Lesak began working for CAA in 2005, and continuously re-upped their contracts before the terms had ended — which UTA argues effectively left them with no window to consider outside employment for nearly a decade.
