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PUBLISHED
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
No. 22-1793
ZION WILLIAMSON,
Plaintiff − Appellee,
v.
PRIME SPORTS MARKETING, LLC; GINA FORD,
Defendants – Appellants.
------------------------------
NATIONAL BASKETBALL PLAYERS ASSOCIATION,
Amicus Supporting Appellee.
No. 22-1946
NATIONAL BASKETBALL PLAYERS ASSOCIATION, USCA4 Appeal: 22-1946 Doc: 52 Filed: 05/06/2024 Pg: 2 of 23
Appeal from the United States District Court for the Middle District of North Carolina, at Greensboro. Loretta C. Biggs, District Judge. (1:19−cv−00593−LCB−JLW)
Argued: October 24, 2023 Decided: May 6, 2024
Before DIAZ, Chief Judge, TRAXLER, Senior Circuit Judge, and Jamar K. WALKER, United States District Judge for the Eastern District of Virginia, sitting by designation.
Affirmed by published opinion. Chief Judge Diaz wrote the opinion, in which Judge Traxler and Judge Walker joined.
ARGUED: Douglas Frederic Eaton, EATON & WOLK PL, Miami, Florida, for Appellants. Zachary D. Tripp, WEIL, GOTSHAL & MANGES, LLP, Washington, D.C., for Appellee. ON BRIEF: Jeffrey S. Klein, CLARICK GUERON REISBAUM LLP, New York, New York; Lauren E. Richards, LOEB & LOEB LLP, New York, New York; John R. Wester, Fitz E. Barringer, ROBINSON, BRADSHAW & HINSON, P.A., Charlotte, North Carolina; Robert B. Niles-Weed, Zachary A. Schreiber, WEIL, GOTSHAL & MANGES, LLP, New York, New York, for Appellee. Ronald E. Klempner, NATIONAL BASKETBALL PLAYERS ASSOCIATION, New York, New York; Nicole A. Saharsky, Minh Nguyen-Dang, Erik P. Fredericksen, MAYER BROWN LLP, Washington, D.C., for Amicus Curiae.
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DIAZ, Chief Judge:
In this case, we interpret the North Carolina Uniform Athlete Agents Act, which
governs contracts between student-athletes and their agents. Prime Sports Marketing,
LLC, and Gina Ford 1 argue that their former client, Zion Williamson, wasn’t a “student-
athlete” when he contracted with them, so he can’t benefit from the Act’s protections.
The district court rejected that argument. It also granted summary judgment to
Williamson on Prime’s contract and tort claims.
Because Williamson was engaged in an intercollegiate sport while on the Duke
University men’s basketball team, and was thus a “student-athlete,” we agree with the
district court that Prime’s failure to comply with the Act’s requirements voided the
contract. We also affirm the district court’s grant of summary judgment on Prime’s
contract and tort claims.
I.
A.
When he enrolled at Duke University, Zion Williamson was one of the most
prominent young stars in basketball. As a freshman on the Duke men’s basketball team,
Williamson was named Atlantic Coast Conference (ACC) Player of the Year and led Duke
to the ACC Championship. At the end of his first season, Williamson entered the NBA
draft, where he was selected by the New Orleans Pelicans as the number one overall pick.
1 We refer to Ford and Prime collectively as Prime.
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Williamson’s talents generated interest not just from basketball fans, but from
agents eager to represent him. During his freshman year, Williamson began to
communicate with Gina Ford, a marketing agent and Prime’s president. Ford met with
Williamson and his mother and stepfather several times to discuss Prime representing
Williamson as his marketing agent when he turned pro.
After Williamson played his last game at Duke (but before being drafted), he hired
Prime as his marketing agent. Under the agreement, the parties could terminate the contract
only after five years, and then, only for cause.
For a few weeks, all seemed well. Ford secured a cover shoot and article about
Williamson for Slam Magazine. She also sent Williamson two “Partnership Summaries,”
which contained a compilation of one-page offers purportedly made to Williamson by
various companies, J.A. 1849–97, 1965, as well as a “Brand Management Strategy,” which
discussed Williamson’s brand and identified “potential brand partnerships,” J.A. 1426–45.
But the day after receiving the strategy document, Williamson’s mother and
stepfather told Ford that Williamson was terminating the Prime contract and instructed her
to stop negotiating with third parties on Williamson’s behalf. Unbeknownst to Ford,
Williamson’s parents also forwarded the strategy document and Partnership Summaries to
agents from Creative Artists Agency (“CAA”), a competitor agency that Williamson had
retained as his player agent. 2
2 A player agent helps an athlete negotiate his playing contract. A marketing agent (like Prime) helps an athlete develop his “brand” through endorsements and other marketing opportunities.
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On May 31, 2019, Williamson emailed Ford to formally terminate the contract.
That same day, Williamson signed a marketing contract with CAA. CAA later negotiated
partnerships for Williamson with many of the same companies identified in Prime’s
partnership summaries.
B.
On June 2, 2019, Williamson’s attorney sent a preemptive cease-and-desist letter to
Prime. The letter stated that the Prime contract was void under the North Carolina Uniform
Athlete Agents Act, N.C. Gen. Stat. § 78C-85 et seq.
Williamson alleged that the contract violated two provisions of the Act, which made
it unenforceable. First, with two exceptions not relevant here, an agent seeking to contract
with a student-athlete must register as an agent with the North Carolina Secretary of State.
N.C. Gen. Stat. § 78C-88(a). If an agent fails to register, any agency contract the agent
makes with a student-athlete is void. N.C. Gen. Stat. § 78C-88(d). Williamson claimed
that because Ford never registered as an agent in North Carolina, the Prime contract was
void.
Second, the contract must contain, “in close proximity to the signature of the
student-athlete,” a notice in boldface type and capital letters that states:
WARNING TO STUDENT-ATHLETE IF YOU SIGN THIS CONTRACT: (1) YOU SHALL LOSE YOUR ELIGIBILITY TO COMPETE AS A STUDENT-ATHLETE IN YOUR SPORT; (2) IF YOU HAVE AN ATHLETIC DIRECTOR, WITHIN 72 HOURS AFTER ENTERING INTO THIS CONTRACT, BOTH YOU AND YOUR ATHLETE AGENT MUST NOTIFY YOUR ATHLETIC DIRECTOR;
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(3) YOU WAIVE YOUR ATTORNEY-CLIENT PRIVILEGE WITH RESPECT TO THIS CONTRACT AND CERTAIN INFORMATION RELATED TO IT; AND (4) YOU MAY CANCEL THIS CONTRACT WITHIN 14 DAYS AFTER SIGNING IT. CANCELLATION OF THIS CONTRACT SHALL NOT REINSTATE YOUR ELIGIBILITY.
N.C. Gen. Stat. § 78C-94(c).
An agency contract lacking this exact warning is voidable by the student-athlete.
N.C. Gen. Stat. § 78C-94(d). The Prime contract didn’t contain this notice, so Williamson
stated that, even if the contract weren’t void under the registration requirement, he was
voiding the contract on this ground.
Prime responded that the Act didn’t apply to the contract because Williamson
wasn’t a “student-athlete,” as defined by the Act, when he signed it. See N.C. Gen. Stat. §
78C-86(11).
Williamson then sued Prime in federal court, invoking the court’s diversity
jurisdiction. He sought a declaratory judgment that Prime’s violations of the Act voided
the Prime contract. He also claimed that Prime violated North Carolina’s Unfair and
Deceptive Trade Practices Act, N.C. Gen. Stat § 75-1 et seq., (“UDTPA”) and that Prime
fraudulently induced him to contract.
After the district court denied its motion to dismiss, Prime answered the complaint
and counterclaimed. As relevant here, Prime raised a breach of contract claim and two
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related contract claims. It also claimed that Williamson misappropriated its trade secrets
and acquired its marketing materials by making fraudulent representations. 3
Williamson moved for partial judgment on the pleadings on his declaratory
judgment claim. In response, Prime conceded that Ford never registered as an agent nor
included the requisite warning in the Prime contract. But it argued that Williamson wasn’t
a “student-athlete” under the Act because he allegedly violated National Collegiate Athletic
Association (NCAA) rules, and those violations made him “permanently ineligible” to play
college basketball. See N.C. Gen. Stat. § 78C-86(11).
Under the Act, a player who is “permanently ineligible” to compete in
intercollegiate sports isn’t a “student-athlete” entitled to the Act’s protections. Id.
Williamson disputed that he violated NCAA rules and argued that even if he did, those
violations wouldn’t impact whether he was a “student-athlete” under the Act. Prime then
moved to supplement its response with more evidence of Williamson’s alleged
wrongdoing.
The district court denied Prime’s motion to supplement and granted Williamson’s
motion for partial judgment on the pleadings. Williamson v. Prime Sports Mktg., LLC, No.
1:19-cv-593, 2021 WL 201255, at *9 (M.D.N.C. Jan. 20, 2021). It held that Williamson
was a student-athlete when he signed the Prime contract, and that Prime’s allegations that
Williamson violated NCAA regulations didn’t create “a genuine issue of material fact as
3 Prime raised eleven counterclaims in total, only some of which are relevant to this appeal.
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to whether Plaintiff had been deemed permanently ineligible during the time period in
question.” Id. at *8. And it concluded that supplementing Prime’s response with more
evidence of Williamson’s misconduct would be futile. Id. at *4.
After the district court entered judgment for Williamson, Prime filed four related
motions seeking to amend, reconsider, or vacate the court’s judgment. Prime also moved
to amend its pleadings. The district court denied these motions. Williamson v. Prime
Sports Mktg., LLC, No. 1:19-cv-593, 2021 WL 4193343, at *9 (M.D.N.C. Sept. 15, 2021).
Following discovery, the parties filed cross motions for summary judgment on
Prime’s counterclaims. The district court granted Williamson’s motion and denied
Prime’s, holding that Prime’s violations of the Act barred its contract claims. Williamson
v. Prime Sports Mktg., LLC, No. 1:19-cv-593, 2022 WL 2802611, at *3–4, *12 (M.D.N.C.
July 18, 2022). It also held that Williamson was entitled to summary judgment on Prime’s
fraud, misappropriation of trade secrets, and related claims because Prime failed to
establish essential elements of those claims. Id. at *4–9. Williamson voluntarily dismissed
his UDTPA and fraudulent inducement claims, and the court entered final judgment.
Prime now appeals (1) the grant of Williamson’s motion for judgment on the
pleadings; (2) the denial of its motion for leave to amend; and (3) the grant of summary
judgment for Williamson on its counterclaims.
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II.
We begin with Prime’s appeal of the district court’s grant of judgment on the
pleadings, which we review de novo. Burbach Broad. Co. of Del. v. Elkins Radio Corp.,
278 F.3d 401, 405–06 (4th Cir. 2002). We take all reasonable factual inferences in favor
of Prime, as the non-moving party. Id.
Prime’s appeal centers on one question: Who is a student-athlete subject to the Act?
Because North Carolina law is silent on this question, we must anticipate how the Supreme
Court of North Carolina would rule. Stahle v. CTS Corp., 817 F.3d 96, 100 (4th Cir. 2016).
And to do that, we must interpret the statute as North Carolina’s high court would, using
its tools of statutory construction. Whitmire v. S. Farm Bureau Life Ins. Co., 52 F.4th 153,
158 (4th Cir. 2022).
“Under North Carolina law, ‘the goal of statutory interpretation is to determine the
meaning that the legislature intended upon the statute’s enactment.’” Id. (quoting State v.
Rankin, 821 S.E.2d 787, 792 (N.C. 2018)). We start by examining the plain language of
the statute. Rankin, 821 S.E.2d at 792. “When the language of a statute is clear and without
ambiguity,” we must “give effect to the [statute’s] plain meaning.” Diaz v. Div. of Soc.
Servs., 628 S.E.2d 1, 3 (N.C. 2006) (cleaned up). And we must consider the text “within
the context of the statute, rather than in isolation.” Farm Lab. Org. Comm. v. Stein, 56
F.4th 339, 346 (4th Cir. 2022) (cleaned up).
Generally, once we determine the plain meaning of a statute’s clear text, our inquiry
ends. Id. But if the plain language is ambiguous, or seems to contravene legislative intent,
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we may then examine “the legislative history, the spirit of the act[,] and what the act seeks
to accomplish.” Rankin, 821 S.E.2d at 792 (cleaned up).
1.
We first consider whether Williamson is a “student-athlete” based on the plain
language of the Act. The Act defines “student-athlete” as:
An individual who engages in, is eligible to engage in, or may be eligible to engage in any intercollegiate sport. If an individual is permanently ineligible to participate in a particular intercollegiate sport, the individual is not a student-athlete for the purposes of that sport.
N.C. Gen. Stat. § 78C-86(11).
In Prime’s view, Williamson wasn’t a “student-athlete” because he was
“permanently ineligible,” even though he was “engage[d] in” an intercollegiate sport. In
other words, it reads the second sentence of the Act’s definition as creating an exception
to the first.
But according to Williamson, “the second sentence is not an exception at all.”
Appellee’s Br. at 27. Instead, the second sentences broadens the statute to include athletes
engaged in two sports, which he was not. Williamson reasons that if a student isn’t engaged
in (or eligible to engage in, or potentially eligible to engage in) a “particular intercollegiate
sport,” then he isn’t a student-athlete for purposes of that sport, but will still be a student-
athlete for other sports for which he’s eligible. At the very least, Willamson argues,
someone who is “permanently ineligible,” by definition, doesn’t “engage in”; isn’t “eligible
to engage in”; and won’t ever be eligible to engage in an intercollegiate sport.
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We agree with Williamson. If a student is engaged in an intercollegiate sport when
he signs an agency contract, he is a student-athlete subject to the Act. The permanent
ineligibility clause doesn’t apply to Williamson, who was engaged in a single sport.
In our view, the legislature included the Act’s second definitional sentence of
“student-athlete” to protect two-sport athletes, and Prime’s interpretation runs contrary to
that purpose. While the second sentence might suggest that a student-athlete who violates
NCAA rules can’t benefit from the Act’s protections, that construction works only if we
ignore the first sentence. As was decidedly not the case with Williamson, an athlete who
is “permanently ineligible” to compete is, by definition, not “engage[d] in, eligible to
engage in, or potentially eligible to engage in an intercollegiate sport.”
To the extent that the statutory language is ambiguous, a principle of statutory
construction—the presumption against superfluity—lends support for our reading. When
statutory language is ambiguous and one plausible reading would render another word,
phrase, or section of the statute unnecessary, the presumption against superfluity tells us to
adopt the interpretation that does not create any. See State v. Coffey, 444 S.E.2d 431, 417–
18 (N.C. 1994) (stating that a statute should not be interpreted in a manner that would
render any of its words superfluous).
Treating the Act’s second sentence as an exception makes it unnecessary because
the first sentence already encompasses athletes who are permanently ineligible. Put
differently, if an individual is not engaging in, eligible to engage in, or potentially eligible
to engage in an intercollegiate sport, then he is permanently ineligible. Prime’s
interpretation would strip the second sentence of its independent force.
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We find additional support in the commentary to the Uniform Law Commission’s
model Athlete Agents Act, on which the North Carolina statute is based. The commentary
explains: “The definition of ‘student-athlete’ applies to a two-sport athlete who has
eligibility remaining in one sport. For example, an individual who has signed a contract to
play professional basketball is not a student-athlete in basketball, but is a student-athlete in
baseball.” Unif. Athlete Agents Act § 2 & cmt.
The commentary closely tracks the language of the North Carolina statute, which
specifies that if a person is ineligible for a “particular intercollegiate sport,” he is not a
student-athlete in “that sport.” N.C. Gen. Stat. § 78C-86(11) (emphasis added). Had the
legislature intended to adopt Prime’s meaning, it could have written: “An individual who
may be ineligible to play an intercollegiate sport is not a student-athlete.” But it didn’t. So
long as a student-athlete is “engage[d] in” a particular intercollegiate sport (as Williamson
was), he is a student-athlete under the Act for purposes of that sport.
2.
Next, Prime argues that a court may analyze the NCAA rules to determine that
Williamson’s rule violations made him permanently ineligible to compete, even while he
was engaged an intercollegiate sport. We disagree.
Williamson and Prime both accept that “permanently ineligible” refers to
ineligibility under the relevant NCAA regulations. The Act defines “intercollegiate sport”
as a sport played at the collegiate level, whose “eligibility requirements for participation
by a student-athlete are established by a national association for the promotion or
regulation of collegiate athletics.” N.C. Gen. Stat. § 78C-86(6) (emphasis added). So we
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should look to the eligibility requirements that the relevant national association—here, the
NCAA—has set out to determine whether a student-athlete is “permanently ineligible” to
compete.
To participate in an intercollegiate sport, a student-athlete must comply with the
NCAA’s amateurism rules. Bowen v. Adidas Am. Inc., 84 F.4th 166, 171 (4th Cir. 2023)
(citing NCAA Bylaw § 12.01.1). Two of those rules are relevant here.
First, the rules forbid student-athletes and their families from accepting payments
of any form in exchange for student-athletes’ playing or agreeing to play a sport, with
limited exceptions. NCAA Bylaw § 12.1.2(a). The rules also forbid a student-athlete from
entering into an agreement with an unauthorized agent. NCAA Bylaw § 12.1.2(g). 4 If a
student-athlete violates an amateurism rule, the NCAA or a member institution may declare
him ineligible to play. See NCAA Bylaw § 12.1.2; Bowen, 84 F.4th at 171–72; see
generally Arlosoroff v. Nat’l Collegiate Athletic Ass’n, 746 F.2d 1019, 1020 (4th Cir.
1984).
Prime alleges that Williamson violated both amateurism rules, which made him
permanently ineligible to compete. But Prime ignores that the NCAA eligibility
requirements are discretionary. See United States v. Gatto, 986 F.3d 104, 120–21 (2d Cir.
2021) (recognizing that the NCAA may choose to deem a student-athlete only temporarily
ineligible).
The rules authorize certain student-athletes to be represented by “NCAA-certified 4
agent[s],” though no one claims this exception would apply to Williamson. See NCAA Bylaw § 12.3.1.2.
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Here again, the model Act’s commentary is informative. It explains that “violation
of eligibility rules adopted by an educational institution or a national association is not
automatic and does not occur until a determination has been made by the educational
institution or national association.” Unif. Athlete Agents Act § 10 & cmt. No such
determination was made here. And without such a determination, a court can’t hypothesize
that the NCAA would have elected, in its discretion, to declare Williamson permanently
ineligible because of his alleged rule violations.
In response, Prime points to the Act’s warning language, that an athlete “shall” lose
his ability to compete if he signs the contract. But that language serves only to trigger
awareness and emphasize the gravity of the contract. Indeed, the model code and every
other state that has enacted a similar statute require that the contract state only that an
athlete “may” or will “likely” lose her ability to compete. 5 Prime’s contrary reading runs
5 See Unif. Athlete Agents Act § 10; see generally Ala. Code § 8-26B-10(c); Ariz. Rev. Stat. Ann. § 15-1770(C); Ark. Code Ann. § 17-16-110(c); Cal. Bus. & Prof. Code § 18897.73(a); Colo. Rev. Stat. § 23-16-209(c); Del. Code Ann, tit. 24, § 5409(c); D.C. Code § 47-2887.09(c); Fla. Stat. § 468.454(3); Ga. Code Ann. § 43-4A-15(c); Haw. Rev. Stat. § 481Z-10(c); Idaho Code Ann. § 54-4810(3); Ind. Code § 25-5.2-2-8(c); Iowa Code § 9A.110(3); Kan. Stat. Ann. § 44-1525(c); Ky. Rev. Stat. Ann. § 164.6917(3); La. Rev. Stat. Ann. § 4:423(B)(1)(b); Md. Code Ann., Bus. Reg § 4-409(c); Minn. Stat. § 81A.31(3); Miss. Code Ann. § 73-42-19(3); Mo. Rev. Stat. § 436.242(3); Neb. Rev. Stat. § 48-2610(3); Nev. Rev. Stat. § 398A.350(3); N.M. Stat. Ann. § 61-14F-10(C); N.Y. Gen. Bus. Law § 899-h(3); N.D. Cent. Code § 9-15.2-09(3); Ohio Rev. Code Ann. § 4771.02(A)(3); Okla. Stat. tit. 70, § 820.10(C); Or. Rev. Stat. § 702.047(3); 5 Pa. Cons. Stat. Ann. § 3510(c); R.I. Gen. Laws § 5-74.1-10(c); S.C. Code Ann. § 59-102-100(C); S.D. Codified Laws § 59-10-10(c); Tenn. Code Ann. § 49-7-2110(c); Tex. Occ. Code Ann. § 2051.204(a)(4); Utah Code Ann. § 58-87-301(3); Va. Code Ann. § 54.1-534(C); Wash. Rev. Code § 19.225.060(3); W. Va. Code § 30-39-10(c); Wis. Stat. § 440.994(3); Wyo. Stat. Ann. § 33- 44-107(c).
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headlong into the Act’s uniformity clause, which instructs courts to give consideration “to
the need to promote uniformity of the law with respect to its subject matter among states
that enact it” when “applying and construing” the Act. N.C. Gen. Stat. § 78C-102.
Prime next says that the fact that schools withdraw students from competition while
they investigate NCAA rule violations is evidence that a student becomes ineligible the
moment he violates the rules. Otherwise, Prime says, a school would have no incentive to
do so. Not so.
For background, if the NCAA determines that a student violated NCAA rules but
still competed, the NCAA may penalize the school. See, e.g., NCAA Bylaw 19.12. So, to
avoid that potential liability, a member school may (reasonably) choose to withdraw that
student from competition during its investigation. In that instance, the Act gives a school
a right of action against a former student-athlete who violates the Act to recover damages
caused by the school’s “reasonable self-imposed disciplinary action taken to mitigate
sanctions likely to be imposed by an athletic organization.” N.C. Gen. Stat. § 78C-100(a)–
(b).
Prime says that this part of the Act requires a court to determine whether the school’s
self-imposed disciplinary action was “reasonable,” which necessarily requires the court to
review the applicable NCAA rules. But that isn’t relevant to whether the student-athlete
was permanently ineligible, the question Prime asks us to resolve today. Nor would it
require a court to conclusively determine whether the student-athlete had, in fact, violated
NCAA rules, just whether the school’s response was “reasonable.”
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3.
Prime advances several additional arguments as to why Williamson was ineligible,
none of which persuade. First, Prime analogizes to other cases that refuse to defer to the
findings of certain governmental bodies. Appellants’ Br. at 31–33 (collecting cases). But
those cases are inapt. The Act explicitly contemplates that the NCAA is to set “eligibility
requirements,” N.C. Gen. Stat. § 78C-86(6), and thus be the final arbiter of a student-
athlete’s eligibility while he’s in school.
And unlike the governmental bodies at issue in the cases Prime points to, the NCAA
is a voluntary, private association. Under North Carolina law, “courts will not interfere
with the internal affairs of voluntary associations.” McAdoo v. Univ. of N.C. at Chapel
Hill, 736 S.E.2d 811, 825 (N.C. Ct. App. 2013) (cleaned up). We don’t know of any case
in which a court has analyzed the NCAA bylaws to determine whether the NCAA
hypothetically could have, under its own bylaws, elected to deem a student “permanently
ineligible” to compete.
We also find Prime’s reliance on United States v. Gatto misplaced. In Gatto, the
defendants organized a scheme to make improper payments to basketball recruits, in
violation of NCAA rules. 986 F.3d at 111. Prime highlights several statements in the
district court’s and Second Circuit’s opinions, where the courts reference that the payments
made the recruits “ineligible to compete.” See id. at 112, 126; United States v. Gatto, 295
F. Supp. 3d 336, 339 (S.D.N.Y. 2018) (“Student-athletes who are recruited in violation of
NCAA rules are ineligible to play.”).
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But neither court considered whether the athletes were “permanently ineligible” to
compete under the Act. Indeed, the Second Circuit acknowledged that student-athletes
may be deemed ineligible “temporarily,” and may even be reinstated after serving
suspensions. See Gatto, 986 F.3d at 120–21. That statement supports Williamson, not
Prime.
Prime curiously points to two state court decisions enforcing penalties against
agents who failed to register under other states’ versions of the Act. Neither helps Prime.
In Howard v. Mississippi Secretary of State, an agent argued that Mississippi’s
version of the Act didn’t apply to the student, since the student had purportedly exhausted
his eligibility to play college basketball (and thus wasn’t a “student-athlete”). 184 So.3d
295, 300 (Miss. Ct. App. 2015). But the court didn’t consider this argument because the
agent didn’t make it during the state administrative proceedings. Id.
Likewise, in Sloane v. Tennessee Department of State, an unregistered agent argued
that the student wasn’t a “student-athlete” under Tennessee’s version of the Act. No.
M2019-00126-COA-R3-CV, 2019 WL 4891262, at *6 (Tenn. Ct. App. Oct. 3, 2019).
Because the agent admitted that he violated the Act before the ALJ, the court rejected his
defense as “completely without merit.” Id.
According to Prime, both cases suggest that an agent may raise a student-athlete’s
“permanent ineligibility” as an affirmative defense. But because both courts found that the
agent didn’t raise this argument in prior proceedings, neither reached the question of
whether the agent had sufficiently alleged that the student-athlete was “permanently
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We agree with the district court that neither case is relevant or persuasive, since
neither answers the question Prime asks here: whether a district court may make an initial
retroactive decision that the NCAA would have, in its discretion, declared a student-athlete
permanently ineligible to compete, while he remained engaged in an intercollegiate sport.
Considering the statute’s text and history, the answer is “no.” 6
Now that we’ve determined that the Act applies to the Prime contract, we must
decide whether the statute voids the contract. It does.
Prime concedes that Ford wasn’t registered as an agent in North Carolina, and under
the Act, any agency contract between a student-athlete and an agent who fails to register
in North Carolina is automatically void. N.C. Gen. Stat. § 78C-88(d). Likewise, it’s
undisputed that the Prime contract didn’t contain the requisite warnings. So even if the
contract weren’t already void, Williamson was free to void it, see N.C. Gen. Stat. § 78C-
94(d), which he did both via email and through counsel.
Because the contract was void, the district court correctly granted Williamson’s
motion for judgment on the pleadings. And since we can’t make a retroactive
6 Our reading also comports with the Act’s purpose. As amicus National Basketball Players Association explains, the Act was created to protect student-athletes and institutions from unscrupulous agents’ misconduct. See Prefatory Note, Unif. Athlete Agents Act (2000) (citing agents’ unethical practices when recruiting students-athletes and recognizing the “serious problems for student-athletes and educational institutions” such conduct poses); 15 U.S.C. § 7807 (stating that it is the “sense of Congress” that states should enact the Act “to protect student athletes and the integrity of amateur sports from unscrupulous sports agents”). And the Act applies to all student-athletes, even those who intend to leave intercollegiate sports after a single season, like Williamson. See generally N.C. Gen. Stat. § 78C-86(11) (defining “student-athlete”). 18 USCA4 Appeal: 22-1946 Doc: 52 Filed: 05/06/2024 Pg: 19 of 23
determination about Williamson’s permanent ineligibility to compete, we agree with the
district court that any motion to amend Prime’s complaint with other evidence of
Williamson’s rule violations would be futile. See Johnson v. Oroweat Foods Co., 785 F.2d
503, 509 (4th Cir. 1986) (explaining that while a district court should liberally allow a party
to amend its pleadings, the court should deny the motion if “the amendment would be
futile”).
Finally, since the Prime contract was void, the district court properly granted
summary judgment to Williamson on Prime’s breach of contract and related contract
claims. See McDonald v. Bank of N.Y. Mellon Trust Co., Nat’l Ass’n, 816 S.E.2d 861,
864–85 (N.C. Ct. App. 2018) (recognizing that the “existence of a valid contract” is
necessary for breach of contract and good faith and fair dealing claims (cleaned up)).
III.
Prime contends that even if the contract is void, it may still recover in tort for fraud
and misappropriation of trade secrets. The district court granted summary judgment to
Williamson on both claims, and we affirm.
We’ll begin with Prime’s fraud claim. To state a claim for fraud under North
Carolina law, a plaintiff must show “(1) false representation or concealment of material
fact, (2) reasonably calculated to deceive, (3) made with the intent to deceive, (4) which
does in fact deceive, and (5) result[s] in damage to the injured party.” Harrold v. Dowd,
561 S.E.2d 914, 918 (N.C. Ct. App. 2002) (citing Ragsdale v. Kennedy, 209 S.E.2d 494,
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500 (N.C. 1974)). A fraud claim may be based on an “affirmative misrepresentation of a
material fact, or a failure to disclose a material fact relating to a transaction which the
parties had a duty to disclose.” Harton v. Harton, 344 S.E.2d 117, 119 (N.C. Ct. App.
1986) (cleaned up).
Prime alleges that Williamson concealed facts that would have been material to its
partnership with him, by not disclosing that he planned to send copies of Prime’s marketing
strategy to CAA. The district court held that Prime didn’t raise the false omission theory
in its counterclaim, and that it couldn’t “pivot” to a new legal theory at the summary
judgment stage. We disagree.
Prime’s counterclaim alleges that Williamson had a “duty to speak” and
“intentionally concealed the material fact” that he planned to provide Prime’s marketing
materials to CAA. J.A. 154. So, we may consider this theory on appeal.
But Prime’s fraud claim is viable only if Williamson had a duty to speak. See
Harton, 344 S.E.2d at 119. Specifically, Prime must show that (1) there was a fiduciary
relationship between it and Williamson; (2) Williamson took affirmative steps to conceal
material facts from Prime; or (3) Williamson “ha[d] knowledge of a latent defect in the
subject matter of the negotiations about which [Prime was] both ignorant and unable to
discover through reasonable diligence.” Id. (cleaned up).
Prime claims that Williamson’s duty to disclose his outside negotiations to Prime
arose from their fiduciary relationship. As Prime argues, in North Carolina, the principal-
agent relationship is a fiduciary one, and Williamson and Prime had a principal-agent
relationship. See Honeycutt v. Farmers & Merchants Bank, 487 S.E.2d 166, 168 (N.C. Ct.
20 USCA4 Appeal: 22-1946 Doc: 52 Filed: 05/06/2024 Pg: 21 of 23
App. 1997) (“An agent is a fiduciary with respect to matters within the scope of his
agency.”). The problem for Prime is that its failure to comply with the Act made any
principal-agent relationship void, and thus didn’t create a fiduciary duty.
Prime argues that even if no fiduciary duty existed between them, Williamson still
had a duty to disclose because he took “affirmative steps to conceal material facts from the
other.” See Godfrey v. Res-Care, Inc., 598 S.E.2d 396, 402 (N.C. Ct. App. 2004). Prime
says that it’s “undisputed” that Williamson took such steps to conceal his intent to
terminate Prime and provide its marketing plan to CAA, but it doesn’t elaborate further.
Appellants’ Br. at 54.
We aren’t persuaded. Though parties negotiating at arm’s length may have a duty
to disclose some things, a party has no duty to disclose that he’s negotiating with a third
party in a commercial transaction. See Comput. Decisions, Inc. v. Rouse Off. Mgmt. of
N.C., Inc., 477 S.E.2d 262, 266 (N.C. Ct. App. 1996). And we decline to enforce any duty
to disclose, even in an arm’s length negotiation, when the underlying relationship between
the parties is illegal.
We thus affirm the district court’s grant of summary judgment on Prime’s fraud
claim.
We come now to Prime’s final claim, that Williamson misappropriated its trade
secrets. The district court held that Prime’s marketing materials weren’t trade secrets. We
agree.
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North Carolina law defines a trade secret as:
[B]usiness or technical information, including but not limited to a formula, pattern, program, device, compilation of information, method, technique, or process that:
(a) derives independent actual or potential commercial value from not being generally known or readily ascertainable through independent development or reverse engineering by persons who can obtain economic value from its disclosure or use; and
(b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
N.C. Gen. Stat. § 66-152(3). A plaintiff must specify a trade secret with sufficient
particularity; simply making “general allegations in sweeping and conclusory statements”
won’t do. Washburn v. Yadkin Valley Bank & Tr. Co., 660 S.E.2d 577, 585 (N.C. Ct. App.
2008).
Prime claims that its “marketing materials,” including “a compilation of
endorsement offers that [Ford] obtained from various brands” were trade secrets.
Appellants’ Br. at 56. But a trade secret must be more than “a nebulous, potential business
opportunity, not yet realized, that is being offered by a third-party individual.” RLM
Commc’ns v. Tuschen, 66 F. Supp. 3d 681, 700 (E.D.N.C. 2014), aff’d, 831 F.3d 190 (4th
Cir. 2016).
We think that Prime’s “compilation of endorsement offers,” is too nebulous to
qualify for trade secret protection. Most of the endorsement offers contain minimal
information, and many lack concrete offer amounts. A few of the endorsement offers do
contain offer amounts, commitments, and other contract terms that Prime purportedly
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negotiated. But looking at the compilation of offers collectively, as Prime does, we can’t
say that it represents anything more than unrealized invitations to negotiate.
And even if the offers were concrete, Prime’s misappropriation claim fails because
the offers were “readily ascertainable through independent development.” N.C. Gen. Stat.
§ 66-152(3). It didn’t matter that Williamson had forwarded the partnership summaries to
CAA, since the companies described in the summaries independently initiated deals with
CAA.
The district court correctly dismissed Prime’s misappropriation of trade secrets
* * *
For these reasons, we affirm the district court’s judgment.
AFFIRMED