Beruflich Dokumente
Kultur Dokumente
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2 I. INTRODUCTION
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1. Plaintiff ISE brings this action against Defendant Daniel Fegan ("Fegan")-a former
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ISE executive that previously served as the President ofISE's basketball division-to protect its
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clients, its agents and employees, and its business interests and goodwill against Fegan's consistent
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7 and continued efforts to damage ISE while ISE pursues its other substantive claims in arbitration.
8 2. Daniel Fegan's disloyal and unethical conduct toward his own employer, ISE and ISE
9 Basketball, LLC (a division ofISE that operates its basketball business), has caused immense harm
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and damage to ISE, and even the termination of Fegan for cause as a result of his misconduct is not
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sufficient to undo the damage he has caused ISE. Fegan has repeatedly taken action to unfairly
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compete with ISE, to poison ISE's business by attempting to tum its own employees against it, and to
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freeze out executives from asserting their supervisorial authority. Fegan has carried out this scheme
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15 to put his own personal business interests above that of ISE with the goal of capitalizing on his
16 disloyalty by attempting to take from ISE the very business he sold to it in 2013. In light of Fegan's
17 egregious misconduct, ISE brings the instant arbitration action to seek recovery for the damage Fegan
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has caused to ISE and to protect its future business interests from Fegan's unfair and unethical
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business practices.
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3. ISE has separately filed two arbitration demands against Fegan (the "Fegan
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Arbitrations"). 1 Through this action, ISE seeks injunctive relief to maintain the status quo and
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1
In accordance with mandatory arbitration clauses contained in key contracts between ISE and
25 Defendant, ISE separately brought two arbitration actions before Judicial Arbitration and
Mediation Services on March 10, 2017. For further context in the instant action for injunctive
26 relief, a true and correct copy of the Demand for Arbitration that corresponds with the
27 Employment Agreement between ISE and Defendant (without the exhibits) as attached hereto as
Exhibit 1. A true and correct copy of the Demand for Arbitration that corresponds with the Asset
28 Purchase and Contribution Agreement between ISE and Defendant (without the exhibits) is
attached hereto as Exhibit 2.
Gibson, Dunn &
Crutcher LLP 2
COMPLAINT FOR INJUNCTIVE RELIEF
1 prevent irreparable harm to ISE until the Fegan Arbitrations have concluded, or alternatively, until
8 5. Fegan is a well-known sports agent who represents NBA clients. In 2013, Fegan and
9 ISE negotiated a deal in which ISE would acquire Fegan's basketball business assets and goodwill-
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which included the marketing agreements and fees for Fegan's NBA clients-in exchange for a
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substantial sale price and stock in ISE. As part of this deal, Fegan previously agreed to enter into an
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employment relationship with ISE so he could continue to represent these clients as an employee and
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executive of ISE and ISE Basketball.
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16 ISE Basketball, which was scheduled to expire on December 31, 2017. Under the terms of the
17 Agreement, Fegan has served as the President ofISE Basketball. On June 13, 2016, Fegan signed the
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First Amendment to Employment Agreement ("Amendment") that updated certain provisions in the
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Agreement.
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7. As an employee and executive of ISE Basketball, Fegan owed express and implied
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fiduciary duties and a duty of loyalty to ISE, and was required to keep ISE' s interests first and
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23 foremost above his own business interests. He did precisely the opposite by scheming against ISE,
24 and in the process, hurting the interests of ISE and many of ISE Basketball's employees.
25 8. A few months later, on July 12, 2013, Fegan and ISE agreed to the terms of the
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acquisition ofFegan's basketball business under the Asset Purchase and Contribution Agreement
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("APA"). On June 13, 2016, Fegan signed the First Amendment to Asset Purchase and Contribution
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2 and the APA, Fegan explicitly contracted not to take any action that competed with ISE. All the
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while, however, Fegan failed to uphold his fiduciary duties and duty of loyalty to ISE.
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9. Not only did Fegan own and operate a side business, Fegan Sports, LLC ("Fegan
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Sports")-which Fegan used to keep employees, prospective clients, and other business interests
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7 away from ISE until such a time when Fegan could steal them for himself after his employment
8 agreement expired-but Fegan also abandoned his moral compass in devising a plot to unfairly
9 compete with ISE Basketball in order to make it possible for Fegan to take back the very business he
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sold to ISE in 2013 when his employment term expired, severely damaging ISE in the process. As
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part of his plan, Fegan set the stage for a potential mass exodus from ISE Basketball: he manipulated
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the company's employees and agents to give their personal loyalty to him and interfered with their
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ability to sign new long-term employment agreements with ISE Basketball so that he could deliver on
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16 10. Fegan took actions, some deliberate and others grossly negligent, to ensure that ISE
17 never got the full benefit of the acquisition of his business under the AP A. ISE invested over $20
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million to acquire Fegan's business and goodwill; because ofFegan's misconduct and poor
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performance, however, ISE has not fully benefited from the acquisition and has only received a
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fraction in return on its investment.
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11. Starting at least in June 2016, Fegan embarked on a campaign to undermine ISE's
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23 business interests in favor of his own. Fegan's disloyalty to his employer has caused extreme damage
24 to ISE's finances, reputation, and future business prospects, as well as unfairly denying ISE
25 Basketball's agents and employees the employment and financial stability that they deserved.
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12. As part of his scheme, Fegan sought to turn the employees and agents of ISE
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Basketball against ISE. In an effort to gain leverage over ISE and to further his own personal and
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2 long-term contracts, despite the fact that several of ISE Basketball's top-producing agents had
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employment agreements that had expired and thus they were "at-will." Fegan simply refused to sign
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agents to long-term deals, and when told that it was not in the company's interest to have its agents
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unsigned, Fegan said "I don't give a shit about the company." As part of his scheme, Fegan kept
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7 changing his story. Fegan also admitted that he had entered into an agreement with the ISE
8 Basketball agents that none of them would sign any contract with ISE unless all of them signed
9 agreements (i.e., unless Fegan signed an agreement). Later, when confronted again, Fegan tried to
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negotiate such agreements against ISE's interests by demanding that ISE include "key man"
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provisions in every agreement so that every agent could leave if Fegan left. And when ISE refused,
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Fegan confronted ISE Basketball agents with threats and intimidation, demanding that they swear
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loyalty to Fegan, and not ISE, and threatening to ruin the career of agents who dared sign an
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16 13. For any agent that signed a contract with ISE over Fegan's objections, Fegan called
17 such agents "disloyal," "double-agents," and even attempted to negatively impact these agents'
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business dealings by using his power as an executive to freeze them out of interactions with their own
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business development opportunities with NBA clients. Fegan also unjustly retaliated against these
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agents by delaying and rejecting legitimate expense reports that the agents submitted for
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reimbursement. As President of ISE Basketball, Fegan abused his power over these agents by
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23 treating their expense reimbursements differently after they signed new contracts with ISE; in some
24 cases, this has resulted in the delay of agents being reimbursed, or being denied reimbursement, for
25 amounts well over $10,000. Fegan selfishly and viciously pushed aside the career interests of the
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very agents and employees he worked with to further his own self-centered aspirations.
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2 worked under Fegan who he used as pawns. Never mind what was best for the agents and their
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families-Fegan's only concern was protecting and promoting himself, as opposed to the agents and
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employees he was supposed to lead, and ISE to which Fegan owed legal and contractual duties of
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loyalty. Now that ISE Basketball has terminated Fegan to protect its business, agents, and employees
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from further damage, the threat of a debilitating exodus has become immediate, prompting ISE to
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8 respond appropriately before this and other tribunals to protect its future business interests and that of
15 missed ISE executive committee calls and regularly scheduled one-on-one phone calls with Ratner to
16 discuss important personnel and business decisions of ISE Basketball, usually with no advanced
17 notice and without good reason. As one example, when Fegan missed a scheduled call with Ratner,
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he admitted that he purposefully missed that call because Ratner had missed a previous call-a call
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that Ratner only missed because of a last-minute conflict.
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16. Fegan's absence on pre-scheduled phone calls and refusal to acknowledge Ratner's
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rightful authority over Fegan was also in part blatant insubordination and retaliation.
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23 17. Fegan also acted as a financial rogue on many occasions, paying hundreds of
24 thousands of dollars in unauthorized transactions to protect his own self-serving interests and to
25 forward his ultimate plans. As an example, Fegan paid several large unauthorized sums to
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prospective clients and employees to induce personal loyalty to himself in place of ISE. In some
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circumstances, Fegan intentionally circumvented ISE to make these payments in order to build
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2 without authority that is so awful, not the payment of money to further legitimate company interests,
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which may have been approved by ISE had Fegan properly requested that these expenses be
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considered by the company.
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18. Fegan also displayed a lack of professionalism and care regarding the operation ofISE
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7 Basketball. Due to Fegan's questionable personal conduct and poor performance issues, several of
8 ISE's most valuable NBA clients fired Fegan and parted ways with ISE Basketball in often high
9 profile and embarrassing ways, unfairly damaging ISE Basketball by this conduct.
10 Fegan also was derelict and grossly negligent in his duties, responsibilities, and
19.
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obligations as the President of ISE Basketball to direct the overall success of the business by refusing
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to hold regular meetings or conference calls with the employees of the company, and failing to
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provide even a minimal level of supervision and direction to the employees and agents of the
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15 company. For instance, Fegan has not initiated an all-division meeting for ISE Basketball since early
16 2016, and he actively dissuaded several senior agents from initiating any conference calls and
17 meetings with the entire group to avoid anyone speaking "out of turn" as part of his divide and
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conquer strategy.
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20. Fegan's egregious and shameful scheme to compete with and potentially destroy ISE
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with a mass exodus of its agents necessitated the termination of Fegan and caused significant damage
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to ISE. Therefore, ISE asks this tribunal to award it necessary relief to counteract Fegan's deleterious
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23 acts against ISE designed to prevent it from enjoying the full benefits of Fegan's Employment
25 II. PARTIES
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21. ISE is an integrated sports management company that represents over 300 athletes in
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the NBA, National Football League, and Major League Baseball. ISE's services include contract
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10 Fegan is a California resident who has as his primary address at 610 Burk Place,
24.
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Beverly Hills, California 90210-1908.
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25. Fegan has served as an ISE Basketball executive from March 15, 2013 until his
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termination on March 10, 2017. Fegan is a well-known NBA agent that has represented high profile
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15 NBA clients. As previously mentioned, several of these high profile NBA players ultimately fired
16 Fegan because of his poor performance and lack of attention to their business interests on and off the
17 court. Fegan's high-profile blunders, his botching of multi-million dollar endorsement deals, his
18 failure to personally engage with the clients and their families, and his lack of attention to detail, has
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steered several ofISE Basketball's clients elsewhere, has prevented ISE Basketball from attracting
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new high-profile NBA clients, and has done serious damage to ISE Basketball's business and
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reputation.
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23 26. Over his career, Fegan has run his own basketball practice, and has also been
24 employed by several other sports and entertainment companies including Assante Sports Group and
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2 27. This Court has subject matter jurisdiction over the claims asserted herein pursuant to
3 Section 410.10 of the Code of Civil Procedure. This ~ourt has personal jurisdiction over Defendant
4 because he is domiciled in California such that the exercise of jurisdiction in California is proper.
5 28. Venue is proper in this Court pursuant to section 395(a) of the Code of Civil
6 Procedure because Defendant currently lives in Los Angeles County at the time of the filing of this
7 Complaint.
IV. BACKGROUND FACTS
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10 29. On March 15, 2013, ISE Basketball entered into an employment relationship with
11 Fegan under the Agreement, which was partially amended on June 13, 2016. On July 12, 2013, ISE
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also struck a deal to buy Fegan's existing basketball practice under the APA for a substantial sum,
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which was also amended on June 13, 2016.
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30. As President of ISE Basketball, Fegan was charged with many responsibilities under
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the Agreement and the subsequent AP A Amendment. These duties included, among other things, a
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17 duty of loyalty and fiduciary duties owed to ISE as an employee and executive of ISE Basketball that
18 also existed independently of the Agreement. The Agreement itself, as amended, listed several
25 procedures;
27 opportunities that Fegan became aware of which ISE Basketball could take
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advantage, and not to exploit any such opportunity for his own gain. This
Gibson, Dunn &
Crutcher LLP 9
COMPLAINT FOR INJUNCTIVE RELIEF
1 Duty of Loyalty expressly prohibited Fegan from performing services, directly
8 convey to that person fees that should otherwise be the property of ISE; and
9 e. To hold in trust and pay all fees to ISE Basketball that he is contractually
12 31. Additionally, as the seller of his basketball business's assets and goodwill under the
13 AP A, Fegan owes several ongoing duties and responsibilities under the AP A, as amended, relevantly
14 listed as follows:
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a. To refrain from soliciting, raiding, enticing, inducing, or attempting to do any
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such action toward any employee, agent, or consultant of ISE to likewise
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improperly compete with ISE during the Non-competition period; and
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b. To refrain from directly or indirectly owning, managing, operating, controlling,
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21 representation, recruiting, or that otherwise competes with ISE from March 15,
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8 term contract under threat of a mass exodus, or alternatively, to cripple and poison ISE Basketball
9 from the inside out by stealing the very business he sold to ISE in 2013 by taking all of ISE
10 Basketball's clients and agents with him for his planned departure from ISE Basketball.
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33. As part of his scheme, Fegan took many actions to alienate Ratner and ISE's General
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Counsel of the Sports Division and Senior Vice President, David Bauman. Fegan's actions were
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designed, in part, to keep Ratner in the dark about the issues in ISE Basketball, attempting to prevent
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15 his plan from being discovered and to prevent ISE Basketball from being able to function without
16 pim in an effort to negotiate a lucrative long-term contract or otherwise cripple ISE Basketball by
17 taking its agents and employees with him when he left ISE Basketball.
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34. On information and belief, Fegan has taken similar actions when working for other
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sports agencies, such as Assante Sports Group, Lagardere Sports & Entertainment, and Relativity.
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He used the same pretext and modus operandi when working with these companies that has now
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revealed itself again. ISE believes that Fegan, like in this case, took actions to prevent those
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23 companies from receiving the full benefit of his employment and their acquisition of his basketball
24 business, ultimately to put himself in a position to gain leverage over the company and to take his
25 business elsewhere.
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35. As early as June 27, 2015, Fegan made it clear in an email to the agents and
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employees of ISE Basketball that he did not intend to stay at ISE Basketball, and that he would leave
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7 many of whom were working under expired agreements and were therefore "at-will," were told that
8 the future recapitalization of the company would ensure that they all would be offered long-term
9 contracts. This would have been a win-win; it would reward the agents for their hard work by
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expressing ISE's loyalty and appreciation of their contribution, and the agents would be able to enjoy
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long-term stability with ISE Basketball.
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37. At the time the Amendment was executed in 2016, Ratner discussed with Fegan
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signing all of the ISE Basketball agents to long-term contracts because it would not be in the
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15 company's best interest to have them remain as "at-will" employees until December 31, 2017, or
16 whenever Fegan agreed to a long-term agreement with ISE Basketball. Fegan gave every indication
24 Basketball unless all of them signed agreements (i.e., unless Fegan signed an agreement). This was
25 an outrageous admission of wrongdoing and breach of loyalty to ISE. Fegan's misbehavior and
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unstable personal conduct continued when Fegan later "apologized" for his behavior, but it was not
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sincere because his misconduct continued.
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2 agreements - i.e., they could leave ISE Basketball if Fegan left ISE Basketball. Fegan was literally
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negotiating against ISE! Agents had not asked for such provisions before, and only after Fegan
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berated them did any ask for such provisions, which were unacceptable. When ISE would not accede
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to these coordinated pressure tactics, Fegan bullied, harassed, and pressured the agents to take
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7 "loyalty pledges" to him, to disavow any loyalty to ISE, and unreasonably pressured them not to sign
8 long-term contracts with ISE Basketball but to instead stay as at-will employees so they could leave
9 with Fegan when his employment term expired. Fegan's selfishness was on full display, totally
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oblivious to the harm he caused to the agents he worked with by asking them to sacrifice their
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prospects of stable employment so that he could "win" in his nonsensical and unjustified campaign to
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compete with ISE and ISE Basketball. It was obviously a direct violation of his contractual and legal
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duties of loyalty to ISE as well.
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15 40. However, several agents that believed in the long-term prospects of employment at
16 ISE became alarmed by Fegan's disloyalty, pettiness, vindictiveness, and mismanagement of the ISE
17 Basketball and started to break ranks in order to secure the financial and employment stability they
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deserved, and to protect the interests of their clients. In a truly bizarre act of paranoia, Fegan set up
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what he called a "canary in a coal mine test" to determine which agents were loyal by telling each of
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them different information to track whether and from whom this information got back to Fegan.
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When agents signed (or even inquired about signing) a long-term contract without taking the "loyalty
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23 pledge," Fegan would intimidate, ostracize, and humiliate that agent to destroy their reputation and to
24 deter other agents from defecting as well. Fegan has called these agents "disloyal," "double agents,"
25 and has viciously berated them with verbal assaults. Fegan also unjustly retaliated against these
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agents by delaying and rejecting legitimate expense reports that the agents submitted for
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reimbursement. As President of ISE Basketball, Fegan abused his power over these agents by
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2 Basketball; in some cases, this has resulted in the delay of agents being reimbursed, or being denied
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reimbursement, for amounts well over $10,000. Fegan also fabricated stories about these agents in an
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attempt to discredit them with ISE management, adversely affect the financial terms of their new
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agreements, and even to get them terminated. Fegan has also spread unsubstantiated rumors that
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these agents were not good at their job, and that he himself should be given credit for these agents'
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8 success. Fegan also has told these agents, among other things, that he would no longer work with
9 them, that they would be out of his basketball division and froze these agents out of the very business
10 development deals with potential NBA clients that the agents themselves set up.
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41. By trying to improperly persuade ISE Basketball's employees to negotiate these
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contract provisions, in contravention of Fegan's own duties to ISE, Fegan intentionally stalled the
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contract renewal process of several of ISE Basketball's agents and employees-and in tum, hurt them
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16 42. Fegan also improperly and directly competed with ISE Basketball during his tenure at
17 the company by operating Fegan Sports as a side business, even signing a high profile NBA player to
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an agreement with Fegan Sports, instead ofto ISE Basketball. In an effort to cover his tracks of
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wrongdoing, and only after numerous requests by ISE, Fegan only recently assigned this contract to
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ISE after several months of refusing to comply with his contractual obligations.
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C. Fegan Has Also Been Willfully Insubordinate
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23 43. Fegan's insubordination and several direct refusals to follow the direction of Ratner
24 were, in part, designed to block Ratner from asserting his supervisorial authority over Fegan and ISE
2 ISE Basketball.
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45. Fegan admitted in an email that he sent to the basketball agents and employees on
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June 27, 2015, over 2~ years before his employment term was up, that he was planning to leave ISE
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when his employment term expired.
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46. In an attempt to keep his business dealings in the dark, Fegan did not keep regular
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8 office hours in ISE Basketball's Los Angeles offices (located in Century City) from July 2016 until
9 his termination. Fegan intentionally conducted his business outside of the office and routinely
10 demanded ISE Basketball employees to meet him at his house or at nearby restaurants to conduct
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business. Not only was this unprofessional behavior designed to keep his superiors in the dark, but it
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also showed a lack of consideration for ISE Basketball employees who often had to meet Fegan
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outside of the office at all times of the day and night. For Fegan, it was easy for him to conduct his
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15 business out of the office because he rarely worked out ofISE Basketball's offices, sometimes
16 showing up at the office, ifhe showed up at all, for less than an hour and then leaving. Fegan's
17 disdain for ISE Basketball's office space is problematic because Fegan handpicked ISE Basketball's
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office space and insisted that ISE enter into the lease.
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D. Fegan's Improper Deal-Making to Build Loyalty and Forward His Plan
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47. Fegan has also "gone rouge" with several unauthorized payments to employees and
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third parties in an attempt to build personal loyalty among these constituents to himself. For
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23 example, Fegan paid several large unauthorized sums to prospective clients and employees to induce
25 Ill
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2 for Fegan's Past Misconduct and to Protect Itself from Fegan's Future
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Misconduct
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48. On March 9, 2017, one last effort was made to meet with Fegan to assess the
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possibility of brokering a reconciliation with the hopes of putting an end to Fegan's egregious,
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disloyal and insubordinate behavior. This meeting was unfruitful, however, when it became clear
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8 that Fegan only had his own self-interests at heart, and his relationship with ISE was no longer
9 tenable.
10 49. Given Fegan's disloyalty, dishonesty, and grievous attempts to subvert ISE's business
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interests to forward his own agenda, ISE Basketball terminated Fegan for cause pursuant to section
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6(d) of the Agreement on March 10, 2017. ISE Basketball determined that it had cause to terminate
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Fegan under this section because of Fegan's "willful misconduct or gross negligence in the
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15 performance of [his] duties hereunder or the continuing and repeated willful failure or refusal to
16 perform," and Fegan's "perpetration of ... fraud [and] material dishonesty against or affecting [ISE
17 Basketball] or any affiliates, or any customer, client, agent, or employee thereof." ISE Basketball
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took this action first and foremost to protect its loyal employees from the irreparable and ongoing
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harm resulting from Fegan's rogue schemes, and to start the healing process to repair the
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immeasurable damage already done. ISE takes its commitment to its clients and employees
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seriously, and cherishes the personal and professional relationships that have been developed at ISE.
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23 50. ISE now brings this current arbitration to seek recovery for Fegan's misconduct and to
24 protect ISE's future business interests from Fegan's continued and intentional scheme to subvert
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7 adjudicated through the arbitration process, ISE is without an immediate remedy to protect its
8 business interests from the irreparable harm that Fegan's direct competition for clients and employees
9 would cause to ISE's basketball division. Consequently, ISE has suffered, and will continue to suffer
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irreparable harm if this Court does not grant injunctive relief and enjoin Fegan from competing with
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ISE or poaching ISE's current basketball agents.
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53. ISE is likely to prevail on the merits of its claims because Fegan is subject to vali
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non-compete and anti-raiding covenants under the AP A in connection with the sale of his basketball
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16 54. Under California law, non-compete covenants are valid when they restrict the seller of
17 a business ownership interest, business assets, and/or business goodwill from operating a similar
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business within a specified geographical area within a certain time frame. (See Cal. Bus. & Prof.
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Code 16601.)
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55. Section 8.1 of the APA outlines a valid non-noncompete covenant that prohibits Fegan
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from "directly or indirectly, own[ing], manag[ing], operat[ing], join[ing], control[ing] or
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24 director, officer, employee, partner, consultant or otherwise with, any profit or non-profit business or
25 organization within the restricted territory, that engages in the sports marketing, representation,
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recruiting and/or management business, or otherwise, directly or indirectly, competes with, or is
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about to compete with" ISE's business.
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2 raid[ing], entic[ing], induc[ing] or contact[ing]," or attempting such conduct, toward any "employee,
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agent or consultant of [ISE] to [do] anything from which [Fegan] is restricted" from doing, which
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includes improperly competing with ISE by being employed or working for a competitor during the
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non-competition period.
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57. As part of the AP A, Fegan also acknowledged that his breach of any of these
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8 covenants entitles ISE to "specific performance and injunctive relief."
9 58. The AP A, as amended defined the non-competition period to run from March 15, 2013
15 60. This non-compete covenant advances a legitimate business interest because it was
16 reasonably designed to prevent Fegan from competing with ISE in order for ISE to receive the full
17 benefit of the considerable investment itmade in Fegan's business. Any competition from Fegan
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would largely diminish ISE's investment when it purchased Fegan's business assets and goodwill for
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which ISE bargained.
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61. ISE is likely to suffer irreparable harm if this Court does not grant injunctive relief.
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Fegan has repeatedly demonstrated a disregard for the aforementioned non-compete covenant and has
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23 already violated each of the aforementioned non-compete covenant while working for ISE. He has
24 also expressed his desire to continue disregarding the non-compete covenant upon his departure from
25 the company.
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62. For example, while working for ISE, Fegan owned and operated a competitive
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business, Fegan Sports, in contravention of his express and implied duties to ISE as his employer, and
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2 many actions to poach, raid, or otherwise entice current ISE Basketball employees to refrain from
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signing long-term employment contracts with ISE Basketball. Fegan expressly told Ratner that he
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would not cooperate with ISE' s attempts to sign all of its basketball agents to long-term contracts.
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When asked about putting the interests of the company above his own interests, Fegan went as far as
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7 to say that he did not "give a shit about the company." Fegan also admitted that he had entered into
8 an agreement with ISE Basketball agents that none of the agents would sign with ISE Basketball
9 unless all of them signed agreements (i.e., unless Fegan signed an agreement). Fegan also persuaded
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many agents to ask for "key man" provisions, and ultimately ended up bullying agents to take
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"loyalty pledges" to Fegan, and pressuring agents to continue as at-will employees with ISE
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Basketball until Fegan's contract term expired so they could leave with Fegan when he left ISE
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Basketball. Fegan persuaded at least two experienced ISE Basketball agents to pledge their loyalty to
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15 him and to continue as at-will employees to potentially leave with Fegan upon his departure from ISE
16 Basketball. Fegan was ultimately able to pressure and induce these agents to participate in his
17 schemes. Now that Fegan's departure has manifested, the threat oflosing additional agents and other
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ISE employees is ripe.
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63. The harm to ISE is irreparable. For example, because of the nature of the business, it
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will be impossible for ISE to retain additional agents with the same unique skills and unique clients
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of its current basketball agents. ISE has invested considerable amounts of resources assisting,
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23 supporting, and developing its agents' unique book of business. In the world of sports agents, every
24 agent is unique. Each has a one-of-a-kind book of business based on the athletes they represent, and
25 the business opportunities those athletes provide.
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64. If Fegan is allowed to disregard the non-compete and other restrictive covenants he
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entered into as part of the AP A, he will likely force ISE to spend tremendous amounts of resources to
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2 resources to hire additional agents and develop their book of business to make up for the lost agents
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Fegan may illegally poach.
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65. ISE will also suffer irreparable harm to its business goodwill and reputation if Fegan is
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allowed to compete with ISE by stealing its clients and employees.
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66. On the other hand, the harm to Fegan will be minimal. Fegan will still be able to
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8 represent his current clients under the existing standard player agent contracts ("SP AC") he has with
9 them. He will simply be required to fulfill his ongoing contractual obligations to ISE by remitting
10 fees due and owing under the Agreement. Fegan will be able to resume his full business interests by
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working for or owning a company that works in basketball management, marketing, and
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representation in less than one year's time when the non-compete covenant expires, and for which the
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parties have already bargained. Fegan, who was paid a substantial sum for his basketball business,
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15 will not suffer any unreasonable financial harm, and will not suffer irreparable harm due to the
16 relatively short time frame that he will be subject to the non-compete covenant. Further, Fegan will
17 be able to resume the representation of any clients he currently serves upon the expiration of the non-
18
compete covenant.
19
PRAYER FOR RELIEF
20
WHEREFORE, ISE pray for the following relief:
21
A. For a preliminary and permanent prohibitory injunction against Fegan until the earlier
22
23 of: (a) the conclusion of the pending Fegan Arbitrations; or (b) the expiration of the non-competition
24 covenant on February 15, 2018, as bargained for in sections 8.1, 8.2, 8.4, and 8.6 of the APA and
25 section 5(g)(iii)(A) of the Agreement. The requested injunction would prohibit Fegan from the
26
following during this period:
27
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24 ISE's rights under the Agreement and the APA, as contemplated in Sections 13 and 14 of the
28
4
By:
5
6
Attorneys for Plaintiff
7
INDEPENDENT SPORTS & ENTERTAINMENT,
8 LLC
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12
13
14
15
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19
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iNSHWCTlONS
Please submit this form to your local JAMS Resolution Center. Once the below items ~ 1-800-352-JAMS
are received, a JAMS professional will contact all parties to commence and coordinate
the arbitration process, including the appointment of an arbitrator and scheduling a
mwww.jamsadr.com
hearing date.
If you wish to proceed with an arbitration by executing. and serving a Demand for Arbitration on the appropriate
party, please submit the following items to JAMS with the requested number of copies:
Exhibit 1
Demand for Arbitration Form
Instructions for Submittal of Arbitration to JAMS
(continued)
TO I~ ES POND ENT (PARTY ON WHOM DEMAND FOR ARBITRATION IS MADE) Add more respondents on page 6.
REsroNDrnr
NAME
Daniel Fegan
FIRM/
COMPANY
Gibson, Dunn & Crutcher, LLP
ARBITRATION AGREEMENT
This demand is made pursuant to the arbitration agreement which the parties made as follows. Please cite location of arbitra-
tion provision and attach two copies of entire agreement.
RESPONSE
The respondent may file a response and counter-claim to the above-stated claim according to the applicable
arbitration rules. Send the original response and counter-claim to the claimant at the address stated above with
two copies to JAMS.
By checking the box to the left, Claimant requests that the Expedited Procedures described in JAMS Comprehensive Rules
D 16.1 and 16.2 be applied in this matter. Respondent shall indicate not later than seven (7) days from the date this Demand
is served whether it agrees to the Expedited Procedures.
SUBMISSION INFORMATION
SIGNATURE
NAME
(PRINT/TYPED)
r-p~
James P. Fogelman
DATE March 10, 2017
Completion of this section is required for all consumer or employment claims initiated in California.
CONSUMER ARB!TRJHION
Please indicate if this is a CONSUMER ARBITRATION as defined by California Rules of Court Ethics Standards for Neutral Arbi-
trators, Standard 2(d) and (e):
D YES, this is a CONSUMER ARBITRATION as defined by California Rules of Court Ethics Standards for Neutral
Arbitrators, Standard 2(d) and (e).
E] NQ, this is not a CONSUMER ARBITRATION as defined by California Rules of Court Ethics Standards for Neutral
Arbitrators, Standard 2(d) and (e).
"Consumer arbitration" means an arbitration conducted under a pre-dispute arbitration provision contained in a contract that
meets the criteria listed in paragraphs (1) through (3) below. "Consumer arbitration" excludes arbitration proceedings conduct-
ed under or arising out of public or private sector labor-relations laws, regulations, charter provisions, ordinances, statutes, or
agreements.
"Consumer party" is a party to an arbitration agreement who, in the context of that arbitration agreement, is any of the follow-
ing:
1. An individual who seeks or acquires, including by lease, any goods or services primarily for personal, family, or
household purposes including, but not limited to, financial services, insurance, and other goods and services as
defined in section 1761 of the Civil Code;
2. An individual who is an enrollee, a subscriber, or insured in a health-care service plan within the meaning of sec-
tion 1345 of the Health and Safety Code or health-care insurance plan within the meaning of section 106 of the
Insurance Code;
3. An individual with a medical malpractice claim that is subject to the arbitration agreement; or
4. An employee or an applicant for employment in a dispute arising out of or relating to the employee's employment
or the applicant's prospective employment that is subject to the arbitration agreement.
If Respondent disagrees with the assertion of Claimant regarding whether this IS or IS NOT a CONSUMER ARBITRATION, Re-
spondent should communicate this objection in writing to the JAMS Case Manager and Claimant within seven (7) calendar
days of service of the Demand for Arbitration.
EMPLOYMENT MATTERS
If this is an EMPLOYMENT matter, Claimant must complete the following information:
Private arbitration companies are required to collect and publish certain information at least quarterly, and make it available
to the public in a computer-searchable format. In employment cases, this includes the amount of the employee's annual wage.
The employee's name will not appear in the database, but the employer's name will be published. Please check the applicable
box below:
D Less than $100,000 D $100,000 to $2so,ooo E] More than $250,000 0 Decline to State
ADDRESS
FIRM/
COMPANY
ADDRESS
ADDRESS
FIRM/
COMPANY
ADDRESS
CLAIMANT #2
CLAIMANT
NAME
ADDRESS
REPRESEHTATIVE/ATTO RHEY
FIRM/
COMPANY
ADDRESS
CLAIMANT #3
CLAIMANT
NAME
ADDRESS
STATE ZIP
FIRM/
COMPANY
ADDRESS
Claimant Independent Sports & Entertainment, LLC ("ISE") 1 submits this Demand for
I. INTRODUCTION
1. Daniel Fegan's disloyal and unethical conduct toward his own employer, ISE and
ISE Basketball (a division of ISE that operates its basketball business), has caused immense
harm and damage to ISE, and even the termination of Fegan for cause as a result of his
misconduct is not sufficient to undo the damage he has caused ISE. Fegan has repeatedly taken
action to unfairly compete with ISE, to poison ISE's business by attempting to tum its own
employees against it, and to freeze out executives from asserting their supervisorial authority.
Fegan has carried out this scheme to put his own personal business interests above that ofISE
1 ISE is the successor company of Relativity Sports, LLC ("Relativity"). In July 2016, Relativity legally changed
its name to ISE. Around the same time, the division of Relativity that operated its basketball business,
Relativity Basketball, LLC, changed its name to ISE Basketball, LLC ("ISE Basketball"). For purposes of this
Statement of Claim, Relativity and ISE will collectively be referred to as ISE, and Relativity Basketball, LLC
and ISE Basketball will collectively be referred to as ISE Basketball.
with the goal of capitalizing on his disloyalty by attempting to take from ISE the very business
he sold to it in 2013. In light of Fegan's egregious misconduct, ISE brings the instant arbitration
action to seek recovery for the damage Fegan has caused to ISE and to protect its future business
2. ISE is a sports management company that represents over 300 athletes in the
National Basketball Association ("NBA"), National Football League, and Major League
Baseball. ISE's services include contract negotiations, endorsement and brand development, and
3. Fegan is a well-known sports agent who represents NBA clients. In 2013, Fegan
and ISE negotiated a deal in which ISE would acquire Fegan's basketball business assets and
goodwill-which included the marketing agreements and fees for Fegan's NBA clients-in
exchange for a substantial sale price and stock in ISE. As part of this deal, Fegan previously
agreed to enter into an employment relationship with ISE so he could continue to represent these
with ISE Basketball, which was scheduled to expire on December 31, 2017. A true and correct
copy of the Agreement is attached hereto as Exhibit 1. Under the terms of the Agreement,
Fegan has served as the President ofISE Basketball. On June 13, 2016, Fegan signed the First
Agreement. A true and correct copy of the Amendment is attached hereto as Exhibit 2.
implied fiduciary duties and a duty ofloyalty to ISE, and was required to keep ISE's interests
2
first and foremost above his own business interests. He did precisely the opposite by scheming
against ISE, and in the process, hurting the interests of ISE and ISE Basketball's employees.
6. A few months later, on July 12, 2013, Fegan and ISE agreed to the terms of the
acquisition of Fegan's basketball business under the Asset Purchase and Contribution Agreement
("APA"). 2 On June 13, 2016, Fegan signed the First Amendment to Asset Purchase and
both the Agreement and the AP A, Fegan explicitly contracted not to take any action that
competed with ISE. All the while, however, Fegan failed to uphold his fiduciary duties and duty
of loyalty to ISE.
7. Not only did Fegan own and operate a side business, Fegan Sports, LLC ("Fegan
Sports")-which Fegan used to keep employees, prospective clients, and other business interests
away from ISE until such a time when Fegan could steal them for himself after his employment
agreement expired-but Fegan also abandoned his moral compass in devising a plot to unfairly
compete with ISE Basketball in order to make it possible for Fegan to take back the very
business he sold to ISE in 2013 when his employment term expired, severely damaging ISE in
the process. As part of his plan, Fegan set the stage for a potential mass exodus from ISE
Basketball: he manipulated the company's employees and agents to give their personal loyalty to
him and interfered with their ability to sign new long-term employment agreements with ISE
8. Fegan took actions, some deliberate and others grossly negligent, to ensure that
ISE never got the full benefit of the acquisition of his business under the AP A. ISE invested
2
This Demand for Arbitration under Fegan's Employment Agreement with ISE is being submitted concurrently
with a separate but related Demand for Arbitration arising out of similar conduct that violated ISE and Fegan's
relationship under a separate contract, the APA, which memorialized Fegan's sale of his basketball sports
agency business to ISE on July 12, 2013.
3
over $20 million to acquire Fegan's business and goodwill; because of Fegan's misconduct and
poor performance, however, ISE has not fully benefited from the acquisition and has only
business interests in favor of his own. Fegan's disloyalty to his employer has caused extreme
damage to ISE's finances, reputation, and future business prospects, as well as unfairly denying
ISE Basketball's agents and employees the employment and financial stability that they
deserved.
10. As part of his scheme, Fegan sought to tum the employees and agents ofISE
Basketball against ISE. In an effort to gain leverage over ISE and to further his own personal
and business interests, Fegan explicitly refused to engage ISE Basketball's agents in negotiations
for long-term contracts, despite the fact that several ofISE Basketball's top-producing agents
had employment agreements that had expired and thus they were "at-will." Fegan simply
refused to sign agents to long-term deals, and when told that it was not in the company's interest
to have its agents unsigned, Fegan said "I don't give a shit about the company." As part of his
scheme, Fegan kept changing his story. Fegan also admitted that he had entered into an
agreement with the ISE Basketball agents that none of them would sign any contract with ISE
unless all of them signed agreements (i.e., unless Fegan signed an agreement). Later, when
confronted again, Fegan tried to negotiate such agreements against ISE's interests by demanding
that ISE include "key man" provisions in every agreement so that every agent could leave if
Fegan left. And when ISE refused, Fegan confronted ISE Basketball agents with threats and
intimidation, demanding that they swear loyalty to Fegan, and not ISE, and threatening to ruin
4
11. For any agent that signed a contract with ISE over Fegan's objections, Fegan
called such agents "disloyal," "double-agents," and even attempted to negatively impact these
agents' business dealings by using his power as an executive to freeze them out of interactions
with their own business development opportunities with NBA clients. Fegan also unjustly
retaliated against these agents by delaying and rejecting legitimate expense reports that the
agents submitted for reimbursement. As President of ISE Basketball, Fegan abused his power
over these agents by treating their expense reimbursements differently after they signed new
contracts with ISE; in some cases, this has resulted in the delay of agents being reimbursed, or
being denied reimbursement, for amounts well over $10,000. Fegan selfishly and viciously
pushed aside the career interests of the very agents and employees he worked with to further his
12. This scheme, however, not only hurt ISE, but ultimately harmed the agents that
worked under Fegan who he used as pawns. Never mind what was best for the agents and their
families-Fegan's only concern was protecting and promoting himself, as opposed to the agents
and employees he was supposed to lead, and ISE to which Fegan owed legal and contractual
duties of loyalty. Now that ISE Basketball has terminated Fegan to protect its business, agents,
and employees from further damage, the threat of a debilitating exodus has become immediate,
prompting ISE to respond appropriately before this and other tribunals to protect its future
13. As pmi of his scheme, Fegan attempted to keep other ISE executives in the dark
and prevent them from asserting their authority to supervise his leadership. Fegan consistently
3
In an effort to protect its business interests from Fegan's continued misconduct, ISE will take appropriate action
for injunctive relief before the proper state court.
5
made himself unavailable to meet with ISE's President and Global Chief Executive Officer
("GCEO"), Hank Ratner, for face-to-face meetings in ISE's New York or Los Angeles offices.
Fegan often missed ISE executive committee calls and regularly scheduled one-on-one phone
calls with Ratner to discuss important personnel and business decisions of ISE Basketball,
usually with no advanced notice and without good reason. As one example, when Fegan missed
a scheduled call with Ratner, he admitted that he purposefully missed that call because Ratner
had missed a previous call-a call that Ratner only missed because of a last-minute conflict.
Ratner's rightful authority over Fegan was also in part blatant insubordination and retaliation.
15. Fegan also acted as a financial rogue on many occasions, paying hundreds of
thousands of dollars in unauthorized transactions to protect his own self-serving interests and to
forward his ultimate plans. As an example, Fegan paid several large unauthorized sums to
prospective clients and employees to induce personal loyalty to himself in place of ISE. In some
circumstances, Fegan intentionally circumvented ISE to make these payments in order to build
personal loyalty and drive a wedge between these parties and ISE. It is the payment of such
funds without authority that is so awful, not the payment of money to further legitimate company
interests, which may have been approved by ISE had Fegan properly requested that these
16. Fegan also displayed a lack of professionalism and care regarding the operation of
ISE Basketball. Due to Fegan's questionable personal conduct and poor performance issues,
several of ISE's most valuable NBA clients fired FegaI). and parted ways with ISE Basketball in
often high profile and embarrassing ways, unfairly damaging ISE Basketball by this conduct.
6
17. Fegan also was derelict and grossly negligent in his duties, responsibilities, and
obligations as the President of ISE Basketball to direct the overall success of the business by
refusing to hold regular meetings or conference calls with the employees of the company, and
failing to provide even a minimal level of supervision and direction to the employees and agents
of the company. For instance, Fegan has not initiated an all-division meeting for ISE Basketball
since early 2016, and he actively dissuaded several senior agents from initiating any conference
calls and meetings with the entire group to avoid anyone speaking "out of turn" as paii of his
18. Fegan's egregious and shameful scheme to compete with and potentially destroy
ISE with a mass exodus of its agents necessitated the termination of Fegan and caused significant
damage to ISE. Therefore, ISE asks this tribunal to award it necessary relief to counteract
Fegan's deleterious acts against ISE designed to prevent it from enjoying the full benefits of
II. PARTIES
19. ISE is an integrated sports management company that represents over 300 athletes
in the NBA, National Football League, and Major League Baseball. ISE's services include
contract negotiations, endorsement and brand development, content opportunities, among other
services. ISE Basketball is a division within ISE that operates its basketball business.
20. ISE is a Delaware Limited Liability Company and has its headquarters in New
York, New York. ISE also operates offices in Chicago, San Francisco, Indianapolis, and Los
Angeles.
21. ISE is the successor company of Relativity Sports, LLC ("Relativity"). In July
2016, Relativity legally changed its name to ISE, after already having recapitalized its business
7
and changed its leadership. Around the same time, the division of Relativity that operated its
basketball business, Relativity Basketball, LLC, changed its name to ISE Basketball.
22. Fegan is a California resident who has as his primary address at 610 Burk Place,
23. Fegan has served as an ISE Basketball executive from March 15, 2013 until his
termination on March 10, 2017. Fegan is a well-known NBA agent that has represented high
profile NBA clients. As previously mentioned, several of these high profile NBA players
ultimately fired Fegan because of his poor performance and lack of attention to their business
interests on and off the court. Fegan's high-profile blunders, his botching of multi-million dollar
endorsement deals, his failure to personally engage with the clients and their families, and his
lack of attention to detail, has steered several of ISE Basketball's clients elsewhere, has
prevented ISE Basketball from attracting new high-profile NBA clients, and has done serious
24. Over his career, Fegan has run his own basketball practice, and has also been
employed by several other sports and entertainment companies including Assante Sports Group
25. Section 14 of the Agreement states that "any controversy or claim arising out of
or in any way related to [Fegan]'s employment and/or termination of such employment and/or
the coverage of this arbitration provision shall be determined by arbitration in Los Angeles,
California, before a single arbitrator." (Ex. 1, 14.) "The arbitration shall be administered by
Judicial Arbitration and Mediation Services ("JAMS") in accordance with its Employment
8
Arbitration Rules & Procedures then in effect and subject to JAMS' Policy on Employment
Arbitration Minimum Standards of Procedural Fairness, and JAMS' appellate procedures." (Id.)
26. The Agreement also states that it "shall be governed by and construed in
accordance with the internal laws of the State of California without giving effect to any choice of
law or conflict provision or rule (whether of the State of California or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State of California."
(Id. 13.)
27. The Agreement also states that the single arbitrator "shall have experience in the
talent and sports representation business" (Id. 14), but otherwise does not provide for any
28. On March 15, 2013, ISE Basketball entered into an employment relationship with
Fegan under the Agreement, which was partially amended on June 13, 2016. On July 12, 2013,
ISE also struck a deal to buy Fegan's existing basketball practice under the APA for a substantial
sum.
29. As President ofISE Basketball, Fegan was charged with many responsibilities
under the Agreement and the subsequent AP A Amendment. These duties included, among other
things, a duty of loyalty and fiduciary duties owed to ISE as an employee and executive of ISE
Basketball that also existed independently of the Agreement. The Agreement itself, as amended,
9
a. To perform additional services and duties that the GCEO or the Board of
Managers of ISE would reasonably designate from time to time (See Ex. 2
3(a).);
clients of ISE Basketball that were not in accordance with ISE's policies
could take advantage, and not to exploit any such opportunity for his own
convey to that person fees that should otherwise be the property of ISE
e. To hold in trust and pay all fees to ISE Basketball that he is contractually
Ill
10
B. Fegan's Plans to Threaten a Mass Exodus by Intentionally Interfering with
and Blocking ISE Basketball Agents from Signing Long-Term Contracts and
Direct Violation of his Express and Implied Duties under the Agreement
30. In contravention of both his express and implied duties and responsibilities he
owed to ISE, Fegan embarked on a rogue campaign to force ISE under duress to give him a
lucrative long-term contract under threat of a mass exodus, or alternatively, to cripple and poison
ISE Basketball from the inside out by stealing the very business he sold to ISE in 2013 by taking
all of ISE Basketball's clients and agents with him for his planned departure from ISE.
31. As part of his scheme, Fegan took many actions to alienate Ratner and ISE' s
General Counsel of the Sports Division and Senior Vice President, David Bauman. Fegan's
actions were designed, in part, to keep Ratner in the dark about the issues in ISE Basketball,
attempting to prevent his plan from being; discovered and to prevent ISE Basketball from being
able to function without him in an effort to negotiate a lucrative long-term contract or otherwise
cripple ISE Basketball by taking its agents and employees with him when he left ISE Basketball.
32. On information and belief, Fegan has taken similar actions when working for
other sports agencies, such as Assante Sports Group, Lagardere Sports & Entertainment, and
Relativity. He used the same pretext and modus operandi when working with these companies
that has now revealed itself again. ISE believes that Fegan, like in this case, took actions to
prevent those companies from receiving the full benefit of his employment and their acquisition
of his basketball business, ultimately to put himself in a position to gain leverage over the
11
33. As early as June 27, 2015, Fegan made it clear in an email to the agents and
employees of ISE Basketball that he did not intend to stay at ISE Basketball, and that he would
leave when his employment term was up in December 2017. This gave Fegan another 30
months to do his dirty work. Over this time period, Fegan took strategic and surgical moves to
compete with and slowly poison and cripple ISE from the inside.
34. Prior to the Amendment being signed, and continuing thereafter, Fegan took
positions against ISE in order to promote his own agenda. In the spring of 2016, the agents in
ISE Basketball, many of whom were working under expired agreements and were therefore "at-
will," were told that the future recapitalization of the company would ensure that they all would
be offered long-term contracts. This would have been a win-win; it would reward the agents for
their hard work by expressing ISE's loyalty and appreciation of their contribution, and the agents
35. At the time the Amendment was executed in 2016, Ratner discussed with Fegan
signing all of the ISE Basketball agents to long-term contracts because it would not be in the
company's best interest to have them remain as "at-will" employees until December 31, 2017, or
whenever Fegan agreed to a long-term agreement with ISE Basketball. Fegan gave every
indication that he would assist in getting the agents to sign long-term contracts.
36. Fegan's story changed, however, after the Amendment was executed in June
2016. Fegan refused to sign any long-term contracts with ISE Basketball's agents. Fegan told
Ratner that he did not "give a shit about the company" when confronted. And later, in a fit of
rage after one agent signed a long-term contract with ISE Basketball, Fegan admitted that he had
encouraged the ISE Basketball agents to adhere to an agreement that none of them would sign
any contract with ISE Basketball unless all of them signed agreements (i.e., unless Fegan signed
12
an agreement). This was an outrageous admission of wrongdoing and breach of loyalty to ISE.
Fegan's misbehavior and unstable personal conduct continued when Fegan later "apologized" for
his behavior, but it was not sincere because his misconduct continued.
37. Fegan told Ratner that ISE had to agree to "key man" provisions in any agent
agreements - i.e., they could leave ISE Basketball if Fegan left ISE Basketball. Fegan was
literally negotiating against ISE! Agents had not asked for such provisions before, and only after
Fegan berated them did any ask for such provisions, which were unacceptable. When ISE would
not accede to these coordinated pressure tactics, Fegan bullied, harassed, and pressured the
agents to take "loyalty pledges" to him, to disavow any loyalty to ISE, and unreasonably
pressured them not to sign long-term contracts with ISE Basketball but to instead stay as at-will
employees so they could leave with Fegan when his employment term expired. Fegan's
selfishness was on full display, totally oblivious to the harm he caused to the agents he worked
with by asking them to sacrifice their prospects of stable employment so that he could "win" in
his nonsensical and unjustified campaign to compete with ISE and ISE Basketball. It was
obviously a direct violation of his contractual and legal duties ofloyalty to ISE as well.
38. However, several agents that believed in the long-term prospects of employment
the ISE Basketball and started to break ranks in order to secure the financial and employment
stability they deserved, and to protect the interests of their clients. In a truly bizarre act of
paranoia, Fegan set up what he called a "canary in a coal mine test" to determine which agents
were loyal by telling each of them different information to track whether and from whom this
information got back to Fegan. When agents signed (or even inquired about signing) a long-term
contract without taking the "loyalty pledge," Fegan would intimidate, ostracize, and humiliate
13
that agent to destroy their reputation and to deter other agents from defecting as well. Fegan has
called these agents "disloyal," "double agents," and has viciously berated them with verbal
assaults. Fegan also unjustly retaliated against these agents by delaying and rejecting legitimate
expense reports that the agents submitted for reimbursement. As President of ISE Basketball,
Fegan abused his power over these agents by treating their expense reimbursements differently
after they signed new contracts with ISE Basketball; in some cases, this has resulted in the delay
of agents being reimbursed, or being denied reimbursement, for amounts well over $10,000.
Fegan also fabricated stories about these agents in an attempt to discredit them with ISE
management, adversely affect the financial terms of their new agreements, and even to get them
terminated. Fegan has also spread unsubstantiated rumors that these agents were not good at
their job, and that he himself should be given credit for these agents' success. Fegan also has
told these agents, among other things, that he would no longer work with them, that they would
be out of his basketball division and froze these agents out of the very business development
deals with potential NBA clients that the agents themselves set up.
contract provisions, in contravention of Fegan's own duties to ISE, Fegan intentionally stalled
the contract renewal process of several ofISE Basketball's agents and employees-and in tum,
hurt them and their families and damaged ISE Basketball in the process.
40. Fegan also improperly and directly competed with ISE Basketball during his
tenure at the company by operating Fegan Sports as a side business, even signing a high profile
NBA player to an agreement with Fegan Sports, instead ofto ISE Basketball. In an effort to
cover his tracks of wrongdoing, and only after numerous requests by ISE, Fegan only recently
14
assigned this contract to ISE after several months of refusing to comply with his contractual
obligations.
41. Fegan's insubordination and several direct refusals to follow the direction of
Ratner were, in part, designed to block Ratner from asserting his supervisorial authority over
Fegan and ISE Basketball; Fegan did this to increase his leverage over ISE.
42. Fegan has stated on several occasions that he is a "great boss, but a terrible
employee," which is only half right: he was a terrible employee. There is no reasonable
definition under which Fegan could be considered a great boss, particularly given his terrible
43. Fegan admitted in an email that he sent to the basketball agents and employees on
June 27, 2015, over 2Yi years before his employment term was up, that he was planning to leave
44. In an attempt to keep his business dealings in the dark, Fegan did not keep regular
office hours in ISE Basketball's Los Angeles offices (located in Century City) from July 2016
until his termination. Fegan intentionally conducted his business outside of the office and
routinely demanded ISE Basketball employees to meet him at his house or at nearby restaurants
to conduct business. Not only was this unprofessional behavior designed to keep his superiors in
the dark, but it also showed a lack of consideration for ISE Basketball employees who often had
to meet Fegan outside of the office at all times of the day and night. For Fegan, it was easy for
him to conduct his business out of the office because he rarely worked out ofISE Basketball's
offices, sometimes showing up at the office, if he showed up at all, for less than an hour and then
15
leaving. Fegan's disdain for ISE Basketball's office space is problematic because Fegan
handpicked ISE Basketball's office space and insisted that ISE enter into the lease.
45. Fegan has also "gone rouge" with several unauthorized payments to employees
and third parties in an attempt to build personal loyalty among these constituents to himself. For
example, Fegan paid several large unauthorized sums to prospective clients and employees to
Recover for Fegan's Past Misconduct and to Protect Itself from Fegan's
Future Misconduct
46. On March 9, 2017, one last effort was made to meet with Fegan to assess the
possibility of brokering a reconciliation with the hopes of putting an end to Fegan's egregious
disloyal and insubordinate behavior. This meeting was unfruitful, however, when it became
clear that Fegan only had his own self-interests at heart, and his relationship with ISE was no
longer tenable.
47. Given Fegan's disloyalty, dishonesty, and grievous attempts to subvert ISE's
business interests to forward his own agenda, ISE Basketball terminated Fegan for cause
pursuant to section 6(d) of the Agreement on March 10, 2017. ISE Basketball determined that it
had cause to terminate Fegan under this section because of Fegan's "willful misconduct or gross
negligence in the performance of [his] duties hereunder or the continuing and repeated willful
failure or refusal to perform," and Fegan's "perpetration of ... fraud [and] material dishonesty
against or affecting [ISE Basketball] or any affiliates, or any customer, client, agent, or employee
thereof." (Id. 6(d).) ISE Basketball took this action first and foremost to protect its loyal
16
employees from the irreparable and ongoing harm resulting from Fegan's rogue schemes, and to
start the healing process to repair the immeasurable damage already done. ISE takes its
commitment to its clients and employees seriously, and cherishes the personal and professional
48. ISE now brings this current arbitration to seek recovery for Fegan's misconduct
and to protect ISE's future business interests from Fegan's continued and intentional scheme to
A. Breach of Contract
above.
50. ISE, ISE Basketball, and Fegan entered into a valid employment contract on
March 15, 2013. This Agreement was the result of extensive negotiation between sophisticated
parties. Both ISE and Fegan agreed to the terms, the services Fegan was to provide, and the
compensation due to Fegan for performing his duties. The contract was properly executed by
Fegan and Happy Walters, the former GCEO of Relativity. (Ex. 1 at p. 31.)
51. ISE has the right to enforce the Agreement against Fegan. When Relativity and
Relativity Basketball legally changed their names to ISE and ISE Basketball, respectively, ISE
and ISE Basketball assumed all of the benefits and liabilities under the Agreement.
52. ISE and ISE Basketball have performed all of their duties and obligations under
the Agreement, including but not limited to compensating Fegan according to section 4 of the
17
53. Even while ISE and ISE Basketball were performing their duties under the
Agreement, Fegan materially breached the terms of the Agreement through the conduct
described herein.
54. As an example, Fegan took several actions that violated 3(b)(i) of the
Agreement and its express Duty of Loyalty. In contravention to the express language of this
individually or to any other business entity, or acquir[ing] any interest of any type in any other
business entity, that competes with any actual or, to the extent known to Employee,
contemplated business of' ISE Basketball-Fegan operated Fegan Sports-which Fegan used to
keep employees, prospective clients, and other business interests away from ISE Basketball until
such a time when Fegan could steal them for himself after his employment agreement expired-
and also took many other actions to otherwise breach his duty of loyalty by competing with ISE
Basketball and putting his own personal business interests above ISE's interests.
55. As another example, Fegan signed a high profile NBA player to a marketing
representation agreement with Fegan Sports, instead ofto ISE Basketball. In an effort to cover
his tracks of wrongdoing, and only after numerous requests by ISE, Fegan only recently assigned
this contract to ISE Basketball after several months of refusing to comply with his contractual
obligations.
56. Fegan also took several actions that violated 3(b)(ii) of the Agreement-which
prohibited Fegan from "conduct[ing] his affairs in such a manner that he will not compete or
conflict with" ISE Basketball and from "engag[ing] in the business of, or own or control any
interest in, or act as a director, officer or employee of, or consultant to, any individual or entity
directly or indirectly engaged anywhere in the United States, its possessions and/or territories, in
18
any business competitive with the business" of ISE Basketball-for example, by owning and
operating Fegan Sports to ISE's detriment and to compete with ISE Basketball.
57. Fegan also took several actions that violated the subsection of 3(a) of the
Agreement, as amended in the Amendment, that requires him to "perform additional services and
duties consistent with his position that the [GCEO] or the Board of Managers of [ISE] may from
time to time reasonably designate." As part of his scheme, for example, Fegan committed many
overt acts of insubordination to avoid contact with Ratner in contravention of his duties. As a
result, Fegan has effectively failed to comply with his duty to "report to the GCEO." (Ex. 2
3(a).)
58. Fegan also took several actions that violated the subsection of 3(a) of the
Agreement, as amended in the Amendment, that prohibits him from "providing services to and
entering into agreements with [an ISE Basketball] Client where such services or agreements are
not in accordance with [ISE's] policies and procedures." Among several examples is that Fegan
paid several large unauthorized sums to prospective clients and employees to induce personal
loyalty to himself in place of ISE. It is the payment of such funds without authority that is so
awful, not the payment of money to further legitimate company interests, which may have been
approved by ISE had Fegan properly requested that these expenses be considered by the
company.
59. Fegan's violation of the Agreement's provisions directly caused damage to ISE
by causing significant harms, poisoning the well ofISE's workplace, and causing ISE to expend
19
B. Breach of the Implied Covenant of Good Faith and Fair Dealing
above.
61. As previously established, ISE and ISE Basketball entered into a valid
62. ISE and ISE Basketball have performed all of their duties and obligations under
the Agreement, including but not limited to compensating Fegan according to section 4 of the
63. Under California law, which governs the Agreement, an implied covenant of good
faith and fair dealing attaches to all contracts and prohibits parties to the contract from taking
action that will injure the other party by preventing them from receiving the full benefits of the
agreement. (See Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 658.)
64. Even while ISE and ISE Basketball were performing their duties under the
Agreement, Fegan intentionally took several actions designed to deprive ISE of its rights under
the Agreement that materially breached this implied covenant of good faith and fair dealing. For
example, Fegan's operation of Fegan Sports-which Fegan used to keep employees, prospective
clients, and other business interests away from ISE Basketball until such a time when Fegan
could steal them for himself after his employment agreement expired-has prevented ISE from
receiving Fegan's full attention and focus as contemplated in the Agreement. In addition, this
competition from Fegan has prevented ISE Basketball from receiving the full benefit ofFegan's
duty to "recruit[] new basketball clients for [ISE Basketball]," since he has instead recruited
20
65. Fegan's several actions to keep Ratner in the dark regarding the operation ofISE
Basketball was designed to prevent ISE from garnering the full benefit of the Agreement. For
example, Fegan committed overt acts of insubordination to avoid contact with Ratner in
contravention of his duties, which made it impossible for Ratner and ISE to receive the full
66. Fegan also took many actions in bad faith against ISE's interests that prevented it
from receiving the full benefit of the Agreement. Fegan expressly told Ratner that he would not
cooperate with ISE's attempts to sign all of its basketball agents to long-term contracts. When
asked about putting the interests ofthe company above his own interests, Fegan went as far as to
say that he did not "give a shit about the company." Fegan also admitted that he had entered into
an agreement with ISE Basketball agents that none of the agents would sign with ISE Basketball
unless all of them signed agreements (i.e., unless Fegan signed an agreement). Fegan also
persuaded many agents to ask for "key man" provisions, and ultimately ended up bullying agents
to take "loyalty pledges" to Fegan, and pressuring agents to continue as at-will employees with
ISE Basketball until Fegan's contract term expired so they could leave with Fegan when he left
ISE. These actions have negatively affected ISE's bottom line and have prevented ISE from
receiving the full benefit of its Agreement with Fegan that he would not take action against ISE's
67. Fegan's breaches of the implied covenant of good faith and fair dealing and
improper competition with ISE has directly caused damages to ISE's bottom line by causing
significant harms, poisoning the well of ISE's workplace, and causing ISE to expend tremendous
21
C. Breach of Duty of Loyalty
above.
69. As previously established, ISE, ISE Basketball, and Fegan had an employer-
employee relationship under the Agreement executed on March 15, 2013. (Ex. 1 at p. 31.)
70. Employees like Fegan owe an implied duty ofloyalty to their employers under
California law, in addition to the express Duty of Loyalty owed by Fegan under section 3(b) of
the Agreement. As the President of ISE Basketball, Fegan owed a duty of loyalty to ISE and ISE
Basketball.
71. In violation of his duty ofloyalty to ISE, Fegan knowingly took several actions
'
against ISE's best interest. Fegan instituted a plan to promote his own business interests to the
detriment of ISE by either making plans to steal back the business he sold to ISE by leading a
mass exodus from ISE and taking all or most of its clients and employees with him, or using the
threat of this exodus to force ISE, through duress, to give him a lucrative contract paying him
much more than his services are worth or that he actually has earned.
72. As one example, Fegan expressly told Ratner that he would not cooperate with
ISE's attempts to sign all of its basketball agents to long-term contracts. When asked about
putting the interests of the company above his own interests, Fegan went as far as to say that he
did not "give a shit about the company." Fegan also admitted that he had entered into an
agreement with ISE Basketball agents that none of the agents would sign with ISE Basketball
unless all of them signed agreements (i.e., unless Fegan signed an agreement). Fegan also
persuaded many agents to ask for "key man" provisions, and ultimately ended up bullying agents
to take "loyalty pledges" to Fegan~ and pressuring agents to continue as at-will employees with
22
ISE Basketball until Fegan's contract term expired so they could leave with Fegan when he
eventually left ISE Basketball. These actions have negatively affected ISE's bottom line and has
prevented ISE from receiving the full benefit of its Agreement with Fegan.
73. Fegan also took several actions to keep Ratner in the dark regarding the operation
of ISE Basketball that were designed to prevent ISE from garnering the full benefit of the
Agreement. For example, Fegan committed many overt acts of insubordination to avoid contact
74. Fegan also took action against ISE's best interests by owning and operating Fegan
Sports-which Fegan used to keep employees, prospective clients, and other business interests
away from ISE Basketball until such a time when Fegan could steal them for himself after his
employment agreement expired. Fegan signed a high profile NBA player to a marketing
representation agreement with Fegan Sports, instead of to ISE Basketball. In an effort to cover
his tracks of wrongdoing, and only after numerous requests by ISE, Fegan only recently assigned
this contract to ISE Basketball after several months of refusing to comply with his contractual
obligations.
75. Fegan also attempted to gain the loyalty of others at the expense ofISE by paying
several large unauthorized sums to prospective clients and employees to induce personal loyalty
to himself in place of ISE. It is the payment of such funds without authority that is so awful, not
the payment of money to further legitimate company interests, which may have been approved
by ISE had Fegan properly requested that these expenses be considered by the company.
76. ISE did not give informed consent to any of Fegan' s acts of disloyalty. In fact,
ISE has instead spent considerable resources in its many attempts to curb Fegan's destructive
behavior.
23
77. Fegan' s violation of his duty of loyalty to ISE was a substantial factor in damages
suffered by ISE, and directly caused damages to ISE's bottom line by causing significant harms,
poisoning the well of ISE's workplace, and causing ISE to expend tremendous costs to remedy
Fegan' s misconduct.
above.
79. Fegan served as a fiduciary ofISE because, pursuant to the Agreement, Fegan
was given the title and position as the President of ISE Basketball, a division within ISE, and
was responsible for the overall success of the division under the supervision of ISE senior
80. As President ofISE Basketball, Fegan owed fiduciary duties to ISE as a divisional
president member ofISE. (See Bancroft-Whitney Co. v. Glen (1966) 64 Cal.2d 327, 345.)
81. Fegan knowingly took several acts that injured ISE and deprived it of business
82. For example, Fegan expressly told Ratner that he would not cooperate with ISE's
attempts to sign all of its basketball agents to long-term contracts. When asked about putting the
interests of the company above his own interests, Fegan went as far as to say that he did not
"give a shit about the company." Fegan also admitted that he had entered into an agreement with
ISE Basketball agents that none of the agents would sign with ISE Basketball unless all of them
signed agreements (i.e., unless Fegan signed an agreement). Fegan also persuaded many agents
to ask for "key man" provisions, and ultimately ended up bullying agents to take "loyalty
pledges" to Fegan, and pressuring agents to continue as at-will employees with ISE Basketball
24
until Fegan's contract term expired so they could leave with Fegan when he left ISE Basketball.
83. Fegan also acted against ISE's business interests by committing many overt acts
84. Fegan also took action against ISE's best interests by owning and operating Fegan
Sports-which Fegan used to keep employees, prospective clients, and other business interests
away from ISE Basketball until such a time when Fegan could steal them for himself after his
employment agreement expired. Fegan signed a high profile NBA player to a marketing
representation agreement with Fegan Sports, instead of to ISE Basketball. In an effort to cover
his tracks of wrongdoing, and only after numerous requests by ISE, Fegan only recently assigned
this contract to ISE Basketball after several months of refusing to comply with his contractual
obligations.
85. Fegan also attempted to gain the loyalty of others at the expense ofISE by Fegan
paid several large unauthorized sums to prospective clients and employees to induce personal
loyalty to himself 1n place of ISE. It is the payment of such funds without authority that is so
awful, not the payment of money to further legitimate company interests, which may have been
approved by ISE had Fegan properly requested that these expenses be considered by the
company.
86. Fegan's violation of his fiduciary duties was a substantial factor in damages ISE
suffered, and directly caused significant harms, poisoning the well ofISE's workplace, and
25
E. Intentional Interference with Contractual Relationship
above.
88. In addition to its Agreement with Fegan, ISE Basketball had valid employment
agreements with several basketball agents and employees that served in ISE Basketball.
89. As the President of ISE Basketball, Fegan had knowledge of these employment
agreements, and actually asserted control over the negotiation of new employment agreements
90. Fegan intentionally took action to disrupt the contractual relationships between
ISE and ISE Basketball agents and employees, and as a result, made the performance of these
contracts for both ISE and the agents and employees more expensive or difficult.
91. Fegan expressly told Ratner that he would not cooperate with ISE's attempts to
sign all of its basketball agents to long-term contracts. When asked about putting the interests of
the company above his own interests, Fegan went as far as to say that he did not "give a shit
about the company." Fegan also admitted that he had entered into an agreement with ISE
Basketball agents that none of the agents would sign with ISE Basketball unless all of them
signed agreements (i.e., unless Fegan signed an agreement). Fegan also persuaded many agents
to ask for "key man" provisions, and ultimately ended up bullying agents to take "loyalty
pledges" to Fegan, and pressuring agents to continue as at-will employees with ISE Basketball
until Fegan's contract term expired so they could leave with Feg~n when he left ISE Basketball.
These actions have negatively affected ISE's bottom line and has prevented ISE from receiving
the full benefit of its Agreement with Fegan that he would not take action against ISE's interest
26
92. Fegan also undermined ISE's business interests because some of the ISE
Basketball agents indeed pledged their loyalty to Fegan, and have refrained from negotiating
long-term contracts with ISE as a result of Fegan's scheme. Because of their cooperation in
Fegan's schemes, Fegan pressured and induced these employees to breach their own
93. These contractual disruptions between ISE Basketball and its basketball agents
and employees-which were directly caused by Fegan's disloyal conduct-have directly caused
significant harms, poisoned the well of ISE's workplace, and caused ISE to expend tremendous
above.
95. In addition to its Agreement with Fegan, ISE Basketball has been attempting to
sign long-term contracts with all of the employees and agents in ISE Basketball. Many of these
96. As the President of ISE Basketball, Fegan had knowledge of these prospective
employment agreements, and actually asserted control over the negotiation of new employment
97. Some of the ISE Basketball agents indeed pledged their loyalty to Fegan, and
have refrained from negotiating long-term contracts with ISE Basketball as a result of Fegan's
scheme. Fegan was able to pressure and induce these agents to participate in his schemes. ISE
was in an economic relationship with these agents that would have resulted in a continuing
economic benefit to ISE had Fegan not interfered with his misconduct.
27
98. Fegan has taken several intentional actions to ensure that these and other
employees would not sign long-term contracts with ISE Basketball, including but not limited to,
favoring them in business deals, and embarrassing, ostracizing, defaming the character and the
work of other agents who had not taken the "loyalty pledge." These actions have intentionally
disrupted the prospective business relationship between ISE and these basketball employees that
99. These acts were wrongful and improperly competed with ISE under the
Agreement, unfair competition law, and public policy of the duties that Fegan owed to ISE
have caused significant harms, poisoned the well of ISE' s workplace, and caused ISE to expend
Code
101. ISE realleges and incorporates herein by reference Paragraphs 1 through 100
above.
102. Section 17200 of the California Business & Professions Code prohibits "unfair
competition" in the form of "any unlawful, unfair or fraudulent business act or practice." Over
his tenure at ISE, Fegan has perpetrated many unfair business practices against ISE.
103. Many of Fegan's business practices were unfair because they violate public policy
that holds that Fegan owes duties of loyalty and as a fiduciary to ISE Basketball as his employer.
104. Fegan violated public policy by breaching his express and implied duty ofloyalty
and fiduciary duties to ISE, among many other things. Fegan knowingly took actions against
28
ISE's best interest by attempting to keep Ratner in the dark in an effort to block Ratner from
asserting supervisorial control over Fegan's leadership ofISE Basketball. Fegan also improperly
sought to compete with ISE by operating Fegan Sports-which Fegan used to keep employees,
prospective clients, and other business interests away from ISE Basketball until such a time
when Fegan could steal them for himself after his employment agreement expired. Fegan signed
a high profile NBA player to a marketing representation agreement with Fegan Sports, instead of
to ISE. In an effort to cover his tracks of wrongdoing, and only after numerous requests by ISE,
Fegan only recently assigned this contract to ISE Basketball after several months of refusing to
105. Other examples include Fegan expressly refusing to help ISE sign its basketball
agents to long-term contracts. Fegan told Ratner that he would not cooperate with ISE's
attempts to sign all of its basketball agents to long-term contracts. When asked about putting the
interests of the company above his own interests, Fegan went as far as to say that he did not
"give a shit about the company." Fegan also admitted that he had entered into an agreement with
ISE Basketball agents that none of the agents would sign with ISE Basketball unless all of them
signed agreements (i.e., unless Fegan signed an agreement). Fegan also persuaded many agents
to ask for "key man" provisions, and ultimately ended up bullying agents to take "loyalty
pledges" to Fegan, and pressuring agents to continue as at-will employees with ISE until Fegan's
contract term expired so they could leave with Fegan when he eventually left ISE. These actions
have negatively affected ISE's bottom line and has prevented ISE from receiving the full benefit
of its Agreement with Fegan that he would not take action against ISE's interest or solicit ISE
29
106. Many of Fegan's business practices were also unfair because they were immoral
and oppressive. Fegan bullied and pressured ISE Basketball agents to take "loyalty pledges" to
him, and when the basketball agents signed new contracts without taking these pledges, Fegan
berated them and defamed their work and character to other ISE employees. Fegan has called
these agents "disloyal," "double-agents," and has even attempted to negatively impact these
agents' business dealings by using his power to freeze them out of interactions with their own
potential recruited clients. Fegan also unjustly retaliated against these agents by delaying and
rejecting legitimate expense reports that the agents submitted for reimbursement. As President
of ISE Basketball, Fegan abused his power over these agents by treating their expense
reimbursements differently after they signed new contracts with ISE Basketball; in some cases,
this has resulted in the delay of agents being reimbursed, or being denied reimbursement, for
107. . Fegan's unfair business practices caused damage to ISE by causing significant
harms, poisoning the well ofISE's workplace, and causing ISE to expend tremendous costs to
WHEREFORE, ISE hereby prays that the Arbitrator enter an Award in its favor against Fegan
acts;
B. Restitution for expenses ISE has incurred because ofFegan's wrongful acts,
including, but not limited to, taking swift action to correct course from Fegan's disloyal conduct;
30
C. Punitive damages for Fegan's intentional a~d willful actions designed to subvert
and disrupt ISE's business interests and practices for his own gain;
D. Disgorgement of all profits that Fegan has gained due to his improper ownership
and operation of Fegan Sports, which competed with ISE during his employment term;
E. Injunctive relief to hold in trust and to remit all fees owed to ISE under the
Agreement;
F. Injunctive relief to enjoin Fegan from further wrongful conduct that will damage
G. Full reimbursement of all attorneys' fees and expenses actually incurred by ISE to
enforce its rights under the Agreement, including but not limited to the remedies contemplated
H. Any other further relief as the Arbitrator shall deem just and proper.
By:
~~1f!:-/'
Attorneys for Claimant
INDEPENDENT SPORTS &
ENTERTAINMENT, LLC
31
E:xhlbit 2
Demand for Arbitration Form
Instructions for Submittal of Arbitration to JAMS
INSTRUCTIONS
Please submit this form to your local JAMS Resolution Center. Once the below items ~ 1-800-352-JAMS
are received, a JAMS professional will contact all parties to commence and coordinate
the arbitration process, including the appointment of an arbitrator and scheduling a
Go www.jamsadr.com
hearing date.
If you wish to proceed with an arbitration by executing and serving a Demand for Arbitration on the appropriate
party, please submit the following items to JAMS with the requested number of copies:
Exhibit 2
Demand for Arbitration Form (continued)
Instructions for Submittal of Arbitration to JAMS
REsPoNoENr
NAME
Daniel Fegan
FIRM/
COMPANY
Gibson, Dunn & Crutcher, LLP
See attached Statement of Claim Regarding Asset Purchase and Contribution Agreement Between
Claimant Independent Sports & Entertainment, Inc. and Respondent Daniel Fegan
ARBITRATION AGREEMENT
This demand is made pursuant to the arbitration agreement which the parties made as follows. Please cite location of arbitra-
tion provision and attach two copies of entire agreement.
RESPONSE
The respondent may file a response and counter-claim to the above-stated claim according to the applicable
arbitration rules. Send the original response and counter-claim to the claimant at the address stated above with
two copies to JAMS.
By checking the box to the left, Claimant requests that the Expedited Procedures described in JAMS Comprehensive Rules
D 16.1 and 16.2 be applied in this matter. Respondent shall indicate not later than seven (7) days from the date this Demand
is served whether it agrees to the Expedited Procedures.
Sl1B~ 1":,::~N
0 INrn;::f f'~ 15' oArE March 10, 2017
Completion of this section is required for all consumer or employment claims initiated in California.
CONSUMEH ARBITRATION
Please indicate if this is a CONSUMER ARBITRATION as defined by California Rules of Court Ethics Standards for Neutral Arbi-
trators, Standard 2(d) and (e):
D YES, this is a CONSUMER ARBITRATION as defined by California Rules of Court Ethics Standards for Neutral
Arbitrators, Standard 2(d) and (e).
E] NO, this is not a CONSUMER ARBITRATION as defined by California Rules of Court Ethics Standards for Neutral
Arbitrators, Standard 2(d) and (e).
"Consumer arbitration" means an arbitration conducted under a pre-dispute arbitration provision contained in a contract that
meets the criteria listed in paragraphs (1) through (3) below. "Consumer arbitration" excludes arbitration proceedings coriduct-
ed under or arising out of public or private sector labor-relations laws, regulations, charter provisions, ordinances, statutes, or
agreements.
"Consumer party" is a party to an arbitration agreement who, in the context of that arbitration agreement, is any of the follow-
ing:
1. An individual who seeks or acquires, including by lease, any goods or services primarily for personal, family, or
household purposes including, but not limited to, financial services, insurance, and other goods and services as
defined in section 1761 of the Civil Code;
2. An individual who is an enrollee, a subscriber, or insured in a health-care service plan within the meaning of sec-
tion 1345 of the Health and Safety Code or health-care insurance plan within the meaning of section 106 of the
Insurance Code;
3. An individual with a medical malpractice claim that is subject to the arbitration agreement; or
4. An employee or an applicant for employment in a dispute arising out of or relating to the employee's employment
or the applicant's prospective employment that is subject to the arbitration agreement.
If Respondent disagrees with the assertion of Claimant regarding whether this IS or IS NOT a CONSUMER ARBITRATION, Re-
spondent should communicate this objection in writing to the JAMS Case Manager and Claimant within seven (7) calendar
days of service of the Demand for Arbitration.
EMPLOYMENT MATTERS
If this is an EMPLOYMENT matter, Claimant must complete the following information:
Private arbitration companies are required to collect and publish certain information at least quarterly, and make it available
to the public in a computer-searchable format. In employment cases, this includes the amount of the employee's annual wage.
The employee's name will not appear in the database, but the employer's name will be published. Please check the applicable
box below:
D Less than $100,000 D $100,000 to $2so,ooo El More than $250,000 D Decline to State
ADDRESS
CITY STATE
ZIP
REPRESENTATIVE/ATTORNEY
FIRM/
COMPANY
ADDRESS
CITY STATE
ZIP
ADDRESS
FIRM/
COMPANY
ADDRESS
CLAIM!\NT #2
CLAIMANT
NAME
ADDRESS
FIRM/
COMPANY
ADDRESS
CLAIMANT #3
CLAIMANT
NAME
ADDRESS
FIRM/
COMPANY
AO DRESS
Claimant Independent Sports & Entertainment, LLC ("ISE"), 1 submits this Demand for
Arbitration against Respondent Daniel Fegan ("Fegan") in regards to the Asset Purchase and
Contribution Agreement entered into between ISE and Fegan, and alleges as follows:
I. INTRODUCTION
1. Daniel Fegan's disloyal and unethical conduct toward his own employer, ISE and
ISE Basketball (a division of ISE that operates its basketball business), has caused immense
harm and damage to ISE, and even the termination of Fegan for cause as a result of his
misconduct is not sufficient to undo the damage he has caused ISE. Fegan has repeatedly taken
action to unfairly compete with ISE, to poison ISE's business by attempting to turn its own
employees against it, and to freeze out executives from asserting their supervisorial authority.
1
ISE is the successor company of Relativity Sports, LLC ("Relativity"). In July 2016, Relativity legally changed
its name to ISE. Around the same time, the division of Relativity that operates its basketball business,
Relativity Basketball, LLC, changed its name to ISE Basketball, LLC ("ISE Basketball"). ,For purposes of this
Statement of Claim, Relativity and ISE will collectively be referred to as ISE, and Relativity Basketball, LLC
and ISE Basketball will collectively be referred to as ISE Basketball.
Fegan has carried out this scheme to put his own personal business interests above that of ISE
with the goal of capitalizing on his disloyalty by attempting to take from ISE the very business
he sold to it in 2013. In light of Fegan's egregious misconduct, ISE brings the instant arbitration
action to seek recovery for the damage Fegan has caused to ISE and to protect its future business
2. ISE is a sports management company that represents over 300 athletes in the
National Basketball Association ("NBA"), National Football League, and Major League
Baseball. ISE's services include contract negotiations, endorsement and brand development, and
3. Fegan is a well-known sports agent who represents NBA clients. In 2013, Fegan
and ISE negotiated a deal in which ISE would acquire Fegan's basketball business assets and
goodwill-which included the marketing agreements and fees for Fegan's NBA clients-in
exchange for a substantial sale price and stock in ISE. As part of this deal, Fegan previously
agreed to enter into an employment relationship with ISE so he could continue to represent these
with ISE Basketball, which was scheduled to expire on December 31, 2017. Under the terms of
the Agreement, Fegan has served as the President ofISE Basketball. On June 13, 2016, Fegan
signed the First Amendment to Employment Agreement ("Amendment") that updated certain
implied fiduciary duties and a duty ofloyalty to ISE, and was required to keep ISE's interests
first and foremost above his own business interests. He did precisely the opposite by scheming
2
against ISE, and in the process, hurting the interests ofISE and many of ISE Basketball's
employees.
6. A few months later, on July 12, 2013, Fegan and ISE agreed to the terms of the
acquisition of Fegan's basketball business under the Asset Purchase and Contribution Agreement
("APA"). 2 A true and correct copy of the APA is attached hereto as Exhibit 1. On June 13,
2016, Fegan signed the First Amendment to Asset Purchase and Contribution Agreement ("APA
Amendment") that updated certain provisions in the AP A. A true and correct copy of the AP A
Amendment is hereto attached as Exhibit 2. In both the Agreement and the APA, Fegan
explicitly contracted not to take any action that competed with ISE. All the while, however,
Fegan failed to uphold his fiduciary duties and duty of loyalty to ISE.
7. Not only did Fegan own and operate a side business, Fegan Sports, LLC ("Fegan
Sports")-which Fegan used to keep employees, prospective clients, and other business interests
away from ISE until such a time when Fegan could steal them for himself after his employment
agreement expired-but Fegan also abandoned his moral compass in devising a plot to unfairly
compete with ISE Basketball in order to make it possible for Fegan to take back the very
business he sold to ISE in 2013 when his employment term expired, severely damaging ISE in
the process. As part of his plan, Fegan set the stage for a potential mass exodus from ISE
Basketball: he manipulated the company's employees and agents to give their personal loyalty to
him and interfered with their ability to sign new long-term employment agreements with ISE
2
This Demand for Arbitration under Fegan's Employment Agreement with ISE is being submitted concurrently
with a separate but related Demand for Arbitration arising out of similar conduct that violated ISE and Fegan's
relationship under a separate contract, the APA, which memorialized Fegan's sale of his basketball sports
agency business to ISE on July 12, 2013.
3
8. Fegan took actions, some deliberate and others grossly negligent, to ensure that
ISE never got the full benefit of the acquisition of his business under the AP A. ISE invested
over $20 million to acquire Fegan's business and goodwill; because of Fegan's misconduct and
poor performance, however, ISE has not fully benefited from the acquisition and has only
business interests in favor of his own. Fegan's disloyalty to his employer has caused extreme
damage to ISE's finances, reputation, and future business prospects, as well as unfairly denying
ISE Basketball's agents and employees the employment and financial stability that they
deserved.
10. As part of his scheme, Fegan sought to turn the employees and agents ofISE
Basketball against ISE. In an effort to gain leverage over ISE and to further his own personal
and business interests, Fegan explicitly refused to engage ISE Basketball's agents in negotiations
for long-term contracts, despite the fact that several ofISE Basketball's top-producing agents
had employment agreements that had expired and thus they were "at-will." Fegan simply
refused to sign agents to long-term deals, and when told that it was not in the company's interest
to have its agents unsigned, Fegan said "I don't give a shit about the company." As part of his
scheme, Fegan kept changing his story. Fegan also admitted that he had entered into an
agreement with the ISE Basketball agents that none of them would sign any contract with ISE
unless all of them signed agreements (i.e., unless Fegan signed an agreement). Later, when
confronted again, Fegan tried to negotiate such agreements against ISE's interests by demanding
that ISE include "key man" provisions in every agreement so that every agent could leave if
Fegan left. And when ISE refused, Fegan confronted ISE Basketball agents with threats and
4
intimidation, demanding that they swear loyalty to Fegan, and not ISE, and threatening to ruin
11. For any agent that signed a contract with ISE over Fegan's objections, Fegan
called such agents "disloyal," "double-agents," and even attempted to negatively impact these
agents' business dealings by using his power as an executive to freeze them out of interactions
with their own business development opportunities with NBA clients. Fegan also unjustly
retaliated against these agents by delaying and rejecting legitimate expense reports that the
agents submitted for reimbursement. As President of ISE Basketball, Fegan abused his power
over these agents by treating their expense reimbursements differently after they signed new
contracts with ISE; in some cases, this has resulted in the delay of agents being reimbursed, or
being denied reimbursement, for amounts well over $10,000. Fegan selfishly and viciously
pushed aside the career interests of the very agents and employees he worked with to further his
12. This scheme, however, not only hurt ISE, but ultimately harmed the agents that
worked under Fegan who he used as pawns. Never mind what was best for the agents and their
families-Fegan's only concern was protecting and promoting himself, as opposed to the agents
and employees he was supposed to lead, and ISE to which Fegan owed legal and contractual
duties of loyalty. Now that ISE Basketball has terminated Fegan to protect its business, agents,
and employees from further damage, the threat of a debilitating exodus has become immediate,
prompting ISE to respond appropriately before this and other tribunals to protect its future
3
In an effort to protect its business interests from Fegan's continued misconduct, ISE will take appropriate action
for injunctive relief before the proper state court.
5
13. As part of his scheme, Fegan attempted to keep other ISE executives in the dark
and prevent them from asserting their authority to supervise his leadership. Fegan consistently
made himself unavailable to meet with ISE's President and Global Chief Executive Officer
("GCEO"), Hank Ratner, for face-to-face meetings in ISE's New York or Los Angeles offices.
Fegan often missed ISE executive committee calls and regularly scheduled one-on-one phone
calls with Ratner to discuss important personnel and business decisions of ISE Basketball,
usually with no advanced notice and without good reason. As one example, when Fegan missed
a scheduled call with Ratner, he admitted that he purposefully missed that call because Ratner
had missed a previous call-a call that Ratner only missed because of a last-minute conflict.
Ratner's rightful authority over Fegan was also in part blatant insubordination and retaliation.
15. Fegan also acted as a financial rogue on many occasions, paying hundreds of
thousands of dollars in unauthorized transactions to protect his own self-serving interests and to
forward his ultimate plans. As an example, Fegan paid several large unauthorized sums to
prospective clients and employees to induce personal loyalty to himself in place of ISE. In some
circumstances, Fegan intentionally circumvented ISE to make these payments in order to build
personal loyalty and drive a wedge between these parties and ISE. It is the payment of such
funds without authority that is so awful, not the payment of money to further legitimate company
interests, which may have been approved by ISE had Fegan properly requested that these
16. Fegan also displayed a lack of professionalism and care regarding the operation of
ISE Basketball. Due to Fegan's questionable personal conduct and poor performance issues,
6
several of ISE's most valuable NBA clients fired Fegan and parted ways with ISE Basketball in
often high profile and embarrassing ways, unfairly damaging ISE Basketball by this conduct.
17. Fegan also was derelict and grossly negligent in his duties, responsibilities, and
obligations as the President of ISE Basketball to direct the overall success of the business by
refusing to hold regular meetings or conference calls with the employees of the company, and
failing to provide even a minimal level of supervision and direction to the employees and agents
of the company. For instance, Fegan has not initiated an all-division meeting for ISE Basketball
since early 2016, and he actively dissuaded several senior agents from initiating any conference
calls and meetings with the entire group to avoid anyone speaking "out of tum" as part of his
18. Fegan's egregious and shameful scheme to compete with and potentially destroy
ISE with a mass exodus of its agents necessitated the termination of Fegan and caused significant
damage to ISE. Therefore, ISE asks this tribunal to award it necessary relief to counteract
Fegan's deleterious acts against ISE designed to prevent it from enjoying the full benefits of
II. PARTIES
19. ISE is an integrated sports management company that represents over 300 athletes
in the NBA, National Football League, and Major League Baseball. ISE's services include
contract negotiations, endorsement and brand development, content opportunities, among other
services. ISE Basketball is a division within ISE that operates its basketball business.
20. ISE is a Delaware Limited Liability Company and has its headquarters in New
York, New York. ISE also operates offices in Chicago, San Francisco, Indianapolis, and Los
Angeles.
7
21. ISE is the successor company of Relativity Sports, LLC ("Relativity"). In July
2016, Relativity legally changed its name to ISE, after already having recapitalized its business
and changed its leadership. Around the same time, the division of Relativity that operated its
basketball business, Relativity Basketball, LLC, changed its name to ISE Basketball.
22. Fegan is a California resident who has as his primary address at 610 Burk Place,
23. Fegan has served as an ISE Basketball executive from March 15, 2013 until his
termination on March 10, 2017. Fegan is a well-known NBA agent that has represented high
profile NBA clients. As previously mentioned, several of these high profile NBA players
ultimately fired Fegan because of his poor performance and lack of attention to their business
interests on and off the court. Fegan's high-profile blunders, his botching of multi-million dollar
endorsement deals, his failure to personally engage with the clients and their families, and his
lack of attention to detail, has steered several of ISE Basketball's clients elsewhere, has
prevented ISE Basketball from attracting new high-profile NBA clients, and has done serious
24. Over his career, Fegan has run his own basketball practice, and has also been
employed by several other sports and entertainment companies including Assante Sports Group
25. Section 9.10 of the AP A states that "any dispute arising out of or in any way
related to this Agreement or if any issue should arise regarding the interpretation or enforcement
hereof, the matter shall be resolved by binding arbitration in Los Angeles, California, before a
single arbitrator." (Ex. 1, 9.10.) "The arbitration shall be administered by Judicial Arbitration
8
and Mediation Services ("JAMS") in accordance with its Comprehensive Arbitration Rules then
26. The AP A also states that it "shall be governed by and enforced in accordance with
the laws of the State of Delaware, excluding its choice oflaw rules." (Id. 9.7(a).)
27. The APA does not provide for any procedure to select the arbitrator.
A. Express Duties Owed by Fegan, as the Seller, To ISE Under the APA
28. On July 12, 2013, ISE entered into a purchase agreement to acquire the business
assets and goodwill of Fegan's basketball business, which was partially amended on June 13,
2016.
29. As the seller of his basketball business, Fegan owes several ongoing duties and
a. To fully cooperate with ISE to hire Key Agents and other employees of
with ISE from March 15, 2013 through February 15, 2018 ("Non-
9
improperly compete with ISE during the Non-Competition Period (Ex. 1
or otherwise damages the goodwill ofISE (Ex. 1 8.4; Ex. 2 4.); and
e. To refrain from taking any action that would interfere with any contractual
2 4.).
and Blocking ISE Basketball Agents from Signing Long-Term Contracts and
Direct Violation of his Express and Implied Duties under the Agreement
30. In contravention of both his express and implied duties and responsibilities he
owed to ISE, Fegan embarked on a rogue campaign to force ISE under duress to give him a
lucrative long-term contract under threat of a mass exodus, or alternatively, to cripple and poison
ISE Basketball from the inside out by stealing the very business he sold to ISE in 2013 by taking
all of ISE Basketball's clients and agents with him for his planned depmiure from ISE.
31. As part of his scheme, Fegan took many actions to alienate Ratner and ISE' s
General Counsel of the Sports Division and Senior Vice President, David Bauman. Fegan's
actions were designed, in part, to keep Ratner in the dark about the issues in ISE Basketball,
attempting to prevent his plan from being discovered and to prevent ISE Basketball from being
able to function without him in an effort to negotiate a lucrative long-term contract or otherwise
cripple ISE Basketball by taking its agents and employees with him when he left ISE Basketball.
10
32. On information and belief, Fegan has taken similar actions when working for
other sports agencies, such as Assante Sports Group, Lagardere Sports & Entertainment, and
Relativity. He used the same pretext and modus operandi when working with these companies
that has now revealed itself again. ISE believes that Fegan, like in this case, took actions to
prevent those companies from receiving the full benefit of his employment and their acquisition
of his basketball business, ultimately to put himself in a position to gain leverage over the
33. As early as June 27, 2015, Fegan made it clear in.an email to the agents and
employees of ISE Basketball that he did not intend to stay at ISE Basketball, and that he would
leave when his employment term was up in December 2017. This gave Fegan another 30
months to do his dirty work. Over this time period, Fegan took strategic and surgical moves to
compete with and slowly poison and cripple ISE from the inside.
34. Prior to the Amendment being signed, and continuing thereafter, Fegan took
positions against ISE in order to promote his own agenda. In the spring of 2016, the agents in
ISE Basketball, many of whom were working under expired agreements and were therefore "at-
will," were told that the future recapitalization of the company would ensure that they all would
be offered long-term contracts. This would have been a win-win; it would reward the agents for
their hard work by expressing ISE's loyalty and appreciation of their contribution, and the agents
35. At the time the Amendment was executed in 2016, Ratner discussed with Fegan
signing all of the ISE Basketball agents to long-term contracts because it would not be in the
company's best interest to have them remain as "at-will" employees until December 31, 2017, or
11
whenever Fegan agreed to a long-tenn agreement with ISE Basketball. Fegan gave every
indication that he would assist in getting the agents to sign long-term contracts.
36. Fegan's story changed, however, after the Amendment was executed in June
2016. Fegan refused to sign any long-term contracts with ISE Basketball's agents. Fegan told
Ratner that he did not "give a shit about the company" when confronted. And later, in a fit of
rage after one agent signed a long-term contract with ISE Basketball, Fegan admitted that he had
encouraged the ISE Basketball agents to adhere to an agreement that none of them would sign
any contract with ISE Basketball unless all of them signed agreements (i.e., unless Fegan signed
an agreement). This was an outrageous admission of wrongdoing and breach of loyalty to ISE.
Fegan's misbehavior and unstable personal conduct continued when Fegan later "apologized" for
his behavior, but it was not sincere because his misconduct continued.
37. Fegan told Ratner that ISE had to agree to "key man" provisions in any agent
agreements- i.e., they could leave ISE Basketball if Fegan left ISE Basketball. Fegan was
literally negotiating against ISE! Agents had not asked for such provisions before, and only after
Fegan berated them did any ask for such provisions, which were unacceptable. When ISE would
not accede to these coordinated pressure tactics, Fegan bullied, harassed, and pressured the
agents to take "loyalty pledges" to him, to disavow any loyalty to ISE, and unreasonably
pressured them not to sign long-term contracts with ISE Basketball but to instead stay as at-will
employees so they could leave with Fegan when his employment term expired. Fegan's
selfishness was on full display, totally oblivious to the harm he caused to the agents he worked
with by asking them to sacrifice their prospects of stable employment so that he could "win" in
his nonsensical and unjustified campaign to compete with ISE and ISE Basketball. It was
obviously a direct violation of his contractual and legal duties of loyalty to ISE as well.
12
38. However, several agents that believed in the long-tenn prospects of employment
the ISE Basketball and started to break ranks in order to secure the financial and employment
stability they deserved, and to protect the interests of their clients. In a truly bizarre act of
paranoia, Fegan set up what he called a "canary in a coal mine test" to determine which agents
were loyal by telling each of them different information to track whether and from whom this
information got back to Fegan. When agents signed (or even inquired about signing) a long-term
contract without taking the "loyalty pledge," Fegan would intimidate, ostracize, and humiliate
that agent to destroy their reputation and to deter other agents from defecting as well. Fegan has
called these agents "disloyal," "double agents," and has viciously berated them with verbal
assaults. Fegan also unjustly retaliated against these agents by delaying and rejecting legitimate
expense reports that the agents submitted for reimbursement. As President of ISE Basketball,
Fegan abused his power over these agents by treating their expense reimbursements differently
after they signed new contracts with ISE Basketball; in some cases, this has resulted in the delay
of agents being reimbursed, or being denied reimbursement, for amounts well over $10,000.
Fegan also fabricated stories about these agents in an attempt to discredit them with ISE
management, adversely affect the financial terms of their new agreements, and even to get them
terminated. Fegan has also spread unsubstantiated rumors that these agents were not good at
their job, and that he himself should be given credit for these agents' success. Fegan also has
told these agents, among other things, that he would no longer work with them, that they would
be out of his basketball division and froze these agents out of the very business development
deals with potential NBA clients that the agents themselves set up.
13
39. By trying to improperly persuade ISE Basketball's employees to negotiate these
contract provisions, in contravention of Fegan's own duties to ISE, Fegan intentionally stalled
the contract renewal process of several of ISE Basketball's agents and employees-and in tum,
hurt them and their families and damaged ISE Basketball in the process.
40. Fegan also improperly and directly competed with ISE Basketball during his
tenure at the company by operating Fegan Sp01is as a side business, even signing a high profile
NBA player to an agreement with Fegan Sports, instead ofto ISE Basketball. In an effort to
cover his tracks of wrongdoing, and only after numerous requests by ISE, Fegan only recently
assigned this contract to ISE after several months of refusing to comply with his contractual
obligations.
41. Fegan's insubordination and several direct refusals to follow the direction of
Ratner were, in part, designed to block Ratner from asserting his supervisorial authority over
Fegan and ISE Basketball; Fegan did this to increase his leverage over ISE.
42. Fegan has stated on several occasions that he is a "great boss, but a terrible
employee," which is only half right: he was a terrible employee. There is no reasonable
definition under which Fegan could be considered a great boss, particularly given his terrible
43. Fegan admitted in an email that he sent to the basketball agents and employees on
June 27, 2015, over 212 years before his employment term was up, that he was planning to leave
44. In an attempt to keep his business dealings in the dark, Fegan did not keep regular
office hours in ISE Basketball's Los Angeles offices (located in Century City) from July 2016
14
until his termination. Fegan intentionally conducted his business outside of the office and
routinely demanded ISE Basketball employees to meet him at his house or at nearby restaurants
to conduct business. Not only was this unprofessional behavior designed to keep his superiors in
the dark, but it also showed a lack of consideration for ISE Basketball employees who often had
to meet Fegan outside of the office at all times of the day and night. For Fegan, it was easy for
him to conduct his business out of the office because he rarely worked out ofISE Basketball's
offices, sometimes showing up at the office, if he showed up at all, for less than an hour and then
leaving. Fegan's disdain for ISE Basketball's office space is problematic because Fegan
handpicked ISE Basketball's office space and insisted that ISE enter into the lease.
45. Fegan has also "gone rouge" with several unauthorized payments to employees
and third parties in an attempt to build personal loyalty among these constituents to himself. For
example, Fegan paid several large unauthorized sums to prospective clients and employees to
Recover for Fegan's Past Misconduct and to Protect Itself from Fegan's
Future Misconduct
46. On March 9, 2017, one last effort was made to meet with Fegan to assess the
possibility of brokering a reconciliation with the hopes of putting an end to Fegan's egregious
disloyal and insubordinate behavior. This meeting was unfruitful, however, when it became
clear that Fegan only had his own self-interests at heart, and his relationship with ISE was no
longer tenable.
15
47. Given Fegan's disloyalty, dishonesty, and grievous attempts to subvert ISE's
business interests to forward his own agenda, ISE Basketball terminated Fegan for cause
pursuant to section 6(d) of the Agreement on March 10, 2017. ISE Basketball determined that it
had cause to terminate Fegan under this section because of Fegan's "willful misconduct or gross
negligence in the performance of [his] duties hereunder or the continuing and repeated willful
failure or refusal to perform," and Fegan's "perpetration of ... fraud [and] material dishonesty
against or affecting [ISE Basketball] or any affiliates, or any customer, client, agent, or employee
thereof." (Id. 6(d).) ISE Basketball took this action first and foremost to protect its loyal
employees from the irreparable and ongoing harm resulting from Fegan's rogue schemes, and to
start the healing process to repair the immeasurable damage already done. ISE takes its
commitment to its clients and employees seriously, and cherishes the personal and professional
48. ISE now brings this current arbitration to seek recovery for Fegan's misconduct
and to protect ISE's future business interests from Fegan's continued and intentional scheme to
A. Breach of Contract
above.
50. ISE and Fegan entered into a valid contract to purchase business assets on July
12, 2013. The AP A was the result of extensive negotiation between sophisticated parties. Both
ISE and Fegan agreed to the terms, the duties the parties owed to each other, and the
16
compensation due to Fegan for performing his obligations under the APA. The contract was
properly executed by Fegan and Happy Walters, the former GCEO of Relativity. (Ex. 1 at p. 40.)
51. ISE has the right to enforce the APA against Fegan. When Relativity and
Relativity Basketball legally changed their names to ISE and ISE Basketball, respectively, ISE
and ISE Basketball assumed all of the benefits and liabilities under the AP A.
52. ISE has performed all of its duties and obligations under the AP A, including but
53. Even while ISE was performing its duties under the APA, Fegan partially
54. As an example, Fegan took several actions that violated section 8.2 of the APA-
attempting such conduct, any "employee, agent or consultant of [ISE] to anything from which
[Fegan] is restricted" from doing, which includes improperly competing with ISE by being
employed by or working for a competitor. (See Ex. 1 8.2.) For example, Fegan violated this
section by attempting to solicit and raid employees, persuading them to continue as at-will
employees with ISE Basketball until Fegan's contract term expired so they could leave ISE
Basketball with Fegan and c_ompete against ISE as part ofFegan's competitor business, among
other things.
55. Fegan also took several actions that violated section 8.4 of the APA-which
prohibited Fegan from making "any statement or other communication that impugns or attacks
the reputation or character of [ISE] or its Affiliates or their Representatives, or damages the
goodwill of [ISE] or its Affiliates or their Representatives." Fegan violated this section, among
other things, by making several defamatory comments about ISE Basketball agents who entered
17
into long-term contracts with ISE Basketball without taking a "loyalty pledge" to Fegan. Fegan
attacked these agents' good character by calling them "disloyal," and "double-agents," and even
56. Fegan also took several actions that violated another subsection of section 8.4-
which prohibited Fegan from taking "any action that would interfere with any contractual ...
Fegan expressly told Ratner that he would not cooperate with ISE's attempts to sign all of its
basketball agents to long-term contracts. When asked about putting the interests of the company
above his own interests, Fegan went as far as to say that he did not "give a shit about the
company." Fegan also admitted that he had entered into an agreement with ISE Basketball
agents that none of the agents would sign with ISE Basketball unless all of them signed
agreements (i.e., unless Fegan signed an agreement). Fegan also persuaded many agents to ask
for "key man" provisions, and ultimately ended up bullying agents to take "loyalty pledges" to
Fegan, and pressuring agents to continue as at-will employees with ISE Basketball until Fegan's
contract term expired so they could leave with Fegan when he eventually left ISE Basketball.
These actions have negatively affected ISE's bottom line and has prevented ISE from receiving
57. Related to this conduct, Fegan took several actions that violated Section 5.7 of the
APA-which required Fegan to "use reasonable best efforts to encourage ... Key Agent[s] and
other employee[s] ... or other Person[s] associated with [Fegan]" to accept offers of
employment from ISE. Fegan, in fact, has done the very opposite. For example, Fegan told ISE
Basketball agents to negotiate for "key man" provisions, bullied agents to take "loyalty pledges"
to Fegan, and pressured agents to continue as at-will employees with ISE Basketball until
18
Fegan's contract term expired so they could leave with Fegan when he eventually left ISE
Basketball. These actions have negatively affected ISE, including its bottom line and through
58. Fegan's violation of the APA's provisions directly caused damage to ISE by
causing significant harms, poisoning the well of ISE's workplace, and causing ISE to expend
above.
60. As previously established, ISE entered into the APA with Fegan on July 12, 2013.
director, officer, employee, partner, consultant or otherwise with, any profit or non-profit
business or organization with the Territory, that engages in the sports marketing, representation,
62. As one example, Fegan improperly owned and operated Fegan Sports-which
Fegan used to keep employees, prospective clients, and other business interests away from ISE
Basketball until such a time when Fegan could steal them for himself after his employment
agreement expired. Fegan signed a high profile NBA player to a marketing representation
agreement with Fegan Sports, instead of to ISE Basketball. In an effort to cover his tracks of
19
wrongdoing, and only after numerous requests by ISE, Fegan only recently assigned this contract
to ISE Basketball after several months of refusing to comply with his contractual obligations.
63. Fegan's breach of the non-compete covenant has directly caused damages to ISE
including, for example, in fees that could have been garnered from the NBA player's
management contract, as well as from the full attention and services of the employees signed to
Fegan Sports.
64. Further, Fegan will continue to detrimentally damage ISE and ISE Basketball if
he is allowed to continue to breach the non-compete covenant in the future upon his rightful
termination from ISE for cause. For this reason, ISE requests injunctive relief, as well as
damages, to protect its future business interests from Fegan's unlawful competition.
above.
66. As previously established, ISE entered into a valid purchase agreement with
67. ISE has performed all of its duties and obligations under the APA, including but
68. Under Delaware law, which governs the AP A, an implied covenant of good faith
and fair dealing attaches to all contracts and prohibits parties to the contract from taking action
that will injure the other party by preventing them from receiving the full benefits of the
agreement. (See E.I duPont de Nemours & Co. v. Pressman (Del. 1996) 679 A.2d 436, 443.)
69. Even while ISE was performing its duties under the APA, Fegan intentionally
took several actions designed to deprive ISE of its rights under the AP A that materially breached
20
this implied covenant of good faith and fair dealing. For example, Fegan's operation of Fegan
Sports-which Fegan used to keep employees, prospective clients, and other business interests
away from ISE Basketball until such a time when Fegan could steal them for himself after his
employment agreement expired-has prevented ISE Basketball from receiving Fegan's full
attention and focus as contemplated in the Agreement. In addition, this competition from Fegan
has prevented ISE from receiving the full benefit of Fegan's duty under the APA not to compete
with ISE.
70. Fegan's several actions to keep Ratner in the dark regarding the operation ofISE
Basketball was designed to prevent ISE from garnering the full benefit of the APA. For
example, Fegan committed overt acts of insubordination to avoid contact with Ratner in
contravention of his duties, which made it impossible for Ratner and ISE to receive the full
71. Fegan also took many actions in bad faith against ISE's interests that prevented it
from receiving the full benefit of the Agreement. Fegan expressly told Ratner that he would not
cooperate with ISE' s attempts to sign all of its basketball agents to long-term contracts. When
asked about putting the interests of the company above his own interests, Fegan went as far as to
say that he did not "give a shit about the company." Fegan also admitted that he had entered into
an agreement with ISE Basketball agents that none of the agents would sign with ISE Basketball
unless all of them signed agreements (i.e., unless Fegan signed an agreement). Fegan also
persuaded many agents to ask for "key man" provisions, and ultimately ended up bullying agents
to take "loyalty pledges" to Fegan, and pressuring agents to continue as at-will employees with
ISE Basketball until Fegan's contract term expired so they could leave with Fegan when he left
ISE Basketball. These actions have negatively affected ISE's bottom line and have prevented
21
ISE from receiving the full benefit of its Agreement with Fegan that he would not take action
against ISE's interest or solicit ISE Basketball employees to leave ISE Basketball.
72. Fegan's breaches of the implied covenant of good faith and fair dealing and
improper competition with ISE has directly caused damages to ISE's bottom line by causing
significant harms, poisoning the well of ISE' s workplace, and causing ISE to expend tremendous
above.
74. Pursuant to the APA, Fegan owed a duty during the Non-Competition Period
from taking actions that would interfere with any of ISE's contractual relationships, including
75. In addition to its Agreement with Fegan, ISE had valid employment agreements
with several key basketball agents and employees that served in ISE Basketball.
76. As the President ofISE Basketball, Fegan had knowledge of these employment
agreements, and actually asserted control over the negotiation of new employment agreements
77. Fegan intentionally took action to disrupt the contractual relationships between
ISE and ISE Basketball agents and employees, and as a result, made the performance of these
contracts for both ISE and the agents and employees more expensive or difficult.
78. Fegan expressly told Ratner that he would not cooperate with ISE's attempts to
sign all of its basketball agents to long-term contracts. When asked about putting the interests of
the company above his own interests, Fegan went as far as to say that he did not "give a shit
22
about the company." Fegan also admitted that he had entered into an agreement with ISE
Basketball agents that none of the agents would sign with ISE Basketball unless all of them
signed agreements (i.e., unless Fegan signed an agreement). Fegan also persuaded many agents
to ask for "key man" provisions, and ultimately ended up bullying agents to take "loyalty
pledges" to Fegan, and pressuring agents to continue as at-will employees with ISE Basketball
until Fegan's contract term expired so they could leave with Fegan when he left ISE Basketball.
These actions have negatively affected ISE' s bottom line and has prevented ISE from receiving
the full benefit of its Agreement with Fegan that he would not take action against ISE's interest
79. Fegan also undermined ISE's business interests because some of the ISE
Basketball agents indeed pledged their loyalty to Fegan, and have refrained from negotiating
long-term contracts with ISE Basketball as a result ofFegan's scheme. Because of their
cooperation in Fegan's schemes, Fegan pressured and induced these employees to breach their
80. These contractual disruptions between ISE and its basketball agents and
significant harms, poisoned the well ofISE's workplace, and caused ISE to expend tremendous
above.
23
82. Pursuant to the APA, Fegan owed a duty during the Non-Competition Period
from taking actions that would interfere with any ofISE's contractual relationships, including
83. In addition to its Agreement with Fegan, ISE Basketball has been attempting to
sign long-term contracts with all of the employees and agents in ISE Basketball. Many of these
84. As the President of ISE Basketball, Fegan had knowledge of these prospective
employment agreements, and actually asserted control over the negotiation of new employment
85. Some of the ISE Basketball agents indeed pledged their loyalty to Fegan, and
have refrained from negotiating long-term contracts with ISE Basketball as a result of Fegan' s
scheme. Fegan was able to pressure and induce these agents to participate in his schemes. ISE
was in an economic relationship with these agents that would have resulted in a continuing
economic benefit to ISE had Fegan not interfered with his misconduct.
86. Fegan has taken several intentional actions to ensure that these and other
employees would not sign long-term contracts with ISE Basketball, including but not limited to,
favoring them in business deals, and embarrassing, ostracizing, defaming the character and the
work of other agents who had not taken the "loyalty pledge." These actions have intentionally
disrupted the prospective business relationship between ISE and these basketball employees that
87. These acts were wrongful and improperly competed with ISE under the
Agreement, unfair competition law, and public policy of the duties that Fegan owed to ISE
24
88. Fegan's intentional interference with ISE's prospective business relationships
have caused significant harms, poisoned the well of ISE's workplace, and caused ISE to expend
WHEREFORE, ISE hereby prays that the Arbitrator enter an Award in its favor against Fegan
acts;
B. Restitution for expenses ISE has incurred because ofFegan's wrongful acts,
including, but not limited to, taking swift action to correct course from Fegan's disloyal conduct;
C. Punitive damages for Fegan's intentional and willful actions designed to subvert
and disrupt ISE's business interests and practices for his own gain;
D. Disgorgement of all profits that Fegan has gained due to his improper ownership
and operation of Fegan Sports, which competed with ISE during his employment term;
E. Injunctive relief pursuant to section 8.6 of the APA, to enforce the APA's
Noncompetition (section 8.1 ), Non-solicitation (section 8.2), and Certain Statements (section
8.4) clauses;
F. Injunctive relief to enjoin Fegan from further wrongful conduct that will damage
G. Full reimbursement of all attorneys' fees and expenses actually incurred by ISE to
enforce its rights under the APA, including any remedies contemplated by Section 9.9 of the
APA; and
H. Any other further relief as the Arbitrator shall deem just and proper.
25
Dated: March 10, 201 T GIBSON, DUNN & CRUTCHER LLP
By:
26