Friday, October 13, 2023

Basketball Star's RICO Dismissal Affirmed

The United States Court of Appeals for the Fourth Circuit affirmed the decision to grant defendants summary judgment in a RICO claim brought by a promising basketball prospect whose career was derailed by his father's acceptance of a bribe from Adidas

In 2017, Brian Bowen II was a promising high-school basketball player who aspired to play professionally. At the end of high school, Bowen committed to play NCAA Division I basketball for the University of Louisville (Louisville) in exchange for a full, four-year scholarship. Bowen hoped that by playing Division I basketball, he could become a top NBA prospect. Those hopes were dashed when a college basketball bribery scheme unraveled, exposing that Bowen’s father, Brian Bowen Sr., accepted a bribe in connection with Bowen’s decision to play for Louisville. As a consequence, Bowen lost his NCAA eligibility, and Louisville cut him from the team. Bowen sued the central figures in the bribery scheme under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961, et seq., to recover treble damages, including lost future professional earnings and the attorney’s fees and costs he incurred trying to restore his NCAA eligibility. The district court granted summary judgment to the defendants, concluding that Bowen did not demonstrate an injury to his business or property, as required for a private civil RICO claim. The district court later denied Bowen’s motion for reconsideration. Bowen appeals both rulings, and we affirm.

Louiville had not revoked the scholarship; plaintiff left the University and enrolled elsewhere

Bowen did not stay at Louisville. Instead, he voluntarily withdrew after his first semester and transferred to the University of South Carolina, where he began practicing with the basketball team. The University of South Carolina declared Bowen ineligible and petitioned the NCAA to reinstate his eligibility, but to no avail. Bowen and his family incurred nearly $30,000 in legal fees for their failed effort to restore his eligibility. After twice declaring for the NBA draft, briefly playing professionally in Australia, and playing several seasons on NBA two-way contracts, Bowen’s professional basketball career has not taken off as he had hoped.

Circuit Judge Rushing, who authored the majority opinion, is a Trump-appointed judge who clerked for then-Circuit Court Judge Gorsuch and Supreme Court Justice Thomas. 

Circuit Judge Heytens, who joined the majority opinion, is a Biden-appointed judge who clerked for Justice Ginsberg.

Circuit Judge King dissented (in my view, persuasively) 

The main issue we must resolve today is whether plaintiff Brian Bowen, II — a former McDonald’s All-American high school basketball player who lost his NCAA eligibility when his father was bribed by defendant Adidas America Inc. and its associates— satisfies the statutory injury requirement for his claims against Adidas and the other defendants under the civil provisions of the RICO Act. On the premise that Brian cannot satisfy RICO’s injury requirement, the district court and the panel majority have deemed the defendants to be entitled to summary judgment. As explained further herein, however, I would rule that Brian’s loss of NCAA eligibility constitutes an injury under RICO. I would therefore vacate the summary judgment award and remand for further proceedings. As such, I respectfully dissent from the decision of my friends in the majority.

The dissent outlines Adidas's efforts to compete with Nike and Under Armour

The Adidas Schemers primarily targeted the parents and guardians of talented young African American athletes — largely from poor backgrounds — and used an array of unlawful means to secure their attendance at Adidas-sponsored NCAA universities. With an utter lack of tact, the Schemers described their secret strategy as the “Soul Patrol” and the “Black Ops.”

In executing the fraud and bribery scheme, the Adidas Schemers travelled extensively to meet with the targeted players and their families. The Schemers would then sometimes secretly offer and make monetary payments to the players’ family members. In order for those payments to be covertly made, the Schemers would sometimes disguise Adidas funds by passing them through youth basketball teams in the Amateur Athletic Union (“AAU”).

The plaintiff was unaware of the scheme

From the perspective of the Adidas Schemers, it was essential to keep Brian in the dark about the bribe payment. And the Schemers needed to keep UofL in the dark as well. The Schemers needed to prevent public disclosure of the bribery not only to protect themselves from criminal liability, but also to keep Brian from being declared ineligible to play NCAA basketball. Put simply, a declaration of Brian’s loss of NCAA eligibility would undermine the Adidas fraud and bribery scheme. Again, the scheme’s primary purpose was to earn Adidas large sums of money by associating it with stellar college basketball players on the very best teams, such as UofL.

The Adidas Schemers were convicted of federal offenses

The veteran and distinguished presiding jurist, Judge Kaplan, [of Jean Carroll v. Trump fame] pronounced that “probably the worst victim, [the] most seriously injured victim, of the Louisville scheme was [Brian] Bowen.”

Majority error

The panel majority’s fundamental error is its failure to appreciate that Brian’s scholarship was only part of the compensation he received from UofL in exchange for his valuable athletic labor. Of great significance to Brian, he was also compensated with college basketball coaching and playing experience. Brian has been clear that he did not commit to UofL simply to obtain a scholarship and pursue an academic degree. Rather, he committed to UofL because he would be compensated with, inter alia, elite coaching and immediate playing time that would prepare him for a career in the NBA. That compensation was exceedingly valuable to Brian — regardless of whether he had an existing or prospective NBA contract — and it was something Brian was actively receiving before he was stripped of his NCAA eligibility. But along with the NCAA eligibility bar, Brian lost all compensation in the form of college basketball coaching and playing experience, thereby suffering a “concrete” and “tangible business loss” in satisfaction of RICO’s injury requirement.

There is ample support for the proposition that college basketball coaching and playing experience constituted valuable compensation to Brian, including the expert evidence of Michael Bratz. Based on his 36 years of NBA experience, Bratz described NCAA Division I basketball as “the proving ground for a player’s career,” where the player would receive an unmatched “level of coaching” and would be “able to play against the best competition and improve his basketball skills.” See J.A. 1218-19

Causation

Strikingly, the Adidas Schemers’ proximate causation argument (that Brian’s injury was caused by the discovery of the bribe, not the bribe itself) is directly at odds with their “but for” causation argument (that Brian was already ineligible to play college basketball by the time the first installment of the bribe was paid, on account of prior NCAA rules violations that had not then been discovered). Suffice it to say I am not at all impressed with those “heads I win, tails you lose” theories as to RICO’s causation requirement. In any event, I adamantly disagree with the rulings of the district court and the panel majority that the Schemers are entitled to summary judgment based on Brian’s failure to satisfy the injury requirement.

(Mike Frisch)

https://lawprofessors.typepad.com/legal_profession/2023/10/basketball-stars-rico-dismissal-affirmed.html

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