How the Nunez Lawsuit Could Be Trouble for ACES

This represents the first post by new contributor Sheryl Ring. An attorney in the Chicago area, Ring will cover legal matters for FanGraphs. We’re excited to have her!

Until this week, Juan Carlos Nunez was most famous for having made a website for a fake company selling a fake product, in an attempt to convince the world that Melky Cabrera’s flunked drug test in 2012 wasn’t really Melky’s fault. Since those revelations, Nunez has been barred from baseball permanently and also spent a few months in prison for his involvement with Biogenesis. You would have been forgiven for thinking it would be the last you’d hear of Juan Carlos Nunez.

But if baseball is done with Nunez, it seems as though Nunez isn’t quite done with baseball. This week, Nunez filed a 30-page lawsuit against his former employer, Athletes’ Careers Enhanced and Secured, Inc. (ACES, for short), demanding $3 million in damages. ACES is one of the largest and most well known baseball agencies.  According to MLBTradeRumors’ Agency Database, ACES is the current representation for stars like Charlie Blackmon, Carlos Carrasco, and Dustin Pedroia among more than 50 other notable major leaguers. And in 2012, ACES represented Cabrera, as well. You might also have heard of ACES’ two most high-profile names, Sam and Seth Levinson, who are also named as defendants in Nunez’s lawsuit. Sam is the President of ACES; Seth is its CEO.

Nunez contends in the Complaint that the Levinsons knew about Nunez arranging for players to receive performance enhancing drugs like HGH from Anthony Bosch and Biogenesis and actually instructed Nunez to distribute those PEDs to players. Nunez says that better performance meant better numbers and bigger paychecks for players — and bigger commissions for the Levinsons and ACES. According to the Complaint, the Levinsons wanted Nunez to make Biogenesis a selling point in his pitch to get new players to sign with ACES. Nunez even namechecks a couple of stars in his Complaint, alleging that he personally, with the Levinsons’ knowledge and approval, arranged for Nelson Cruz to receive HGH in the early 2012 to help him recover from an infection. And Nunez also says that the whole fake-website debacle was the Levinsons’ idea. As you can imagine, there is a lot to unpack here.

It’s probably important to note that, for the most part, Nunez has a pretty weak case. Underneath all of the sensational allegations about performance-enhancing drugs is actually a pretty standard breach of contract claim. In this case, the contract in question was for Nunez’s employment with ACES. (For those of you who are wondering, Nunez specifically alleges he was employed pursuant to a contract and not an at-will employee.) Nunez says the Levinsons and ACES breached it by failing to pay him finder’s fees and commissions on clients he recruited to the agency, and not reimbursing him for various expenses. But courts, as a general rule, won’t enforce a contract that requires a party to do something that’s illegal. And that’s true even if one of the parties to the contract doesn’t actually do what the contract requires.

Nunez filed in New York, so I’ll use a New York case as an example. In McConnell v. Commonwealth Pictures Corp., the plaintiff sued the defendant for commissions he never received related to a movie distribution. The only problem was that the plaintiff got those distributions by bribery. And so even though the plaintiff in McConnell failed to receive his commissions, the court in McConnell basically said that it would corrupt the moral fabric of society to enforce a contract where a party performed an illegal act.

Now, we don’t have all of the details, and it’s certainly possible that at least some of Nunez’s commissions are based on actions not related to Biogenesis, or Bosch, or HGH, or fake websites. But the problem is that Nunez says in his own complaint that he used Biogenesis as a basis for recruiting players to ACES. And that means that Nunez is basically suing the Levinsons for not paying him for the very actions which landed him in prison. If that’s true, it’s hard for me to see how this isn’t an illegal contract.

That said, the Levinsons could — could, I stress — have a problem anyway. The most reported allegations in the Complaint tie ACES and the Levinsons to PEDs. Perhaps equally important, however, are allegations by Nunez that the Levinsons and ACES, against the express instructions of the MLBPA, gave kickbacks to players and players’ families. According to Nunez, ACES paid 10% of its commissions to Fernando Rodney and his family as an incentive for him to return to their agency. Nunez says in his Complaint that ACES and the Levinsons did so despite being told by the MLBPA not to contact Rodney. Nunez says that it was standard practice at ACES to compensate players in this way for hiring, or remaining with, ACES.

And Nunez lays out in his Complaint a conspiracy between the Levinsons and ACES to have Nunez take the fall for the entire scheme — websites, PEDs, and all — while telling Nunez they would protect him and continue to pay him. According to Nunez, this conspiracy included hiring a lawyer for Nunez, having Nunez leave the country during an investigation, and having Nunez lie to a reporter, among other things.

Nunez’s credibility has serious questions. After all, after Nunez’s resignation, the MLBPA actually investigated ACES and the Levinsons to determine their role in the website saga and eventually cleared them. The MLBPA also reportedly declined to investigate whether ACES was involved in PEDs at that time.

But if there’s any truth to what Nunez is alleging, there could actually be some fallout here. The MLBPA, which certifies and regulates player agents, expressly prohibits in Rule §5(B)(5) the sort of kickbacks Nunez is alleging. And Rule §5(B)(20) also prohibits an agent from providing banned substances to a player. And so it will be interesting to see how seriously MLB and the MLBPA react to these allegations, given their apparent seriousness on the one hand and their source on the other.