Benito Martinez-Ocasio, better known as “Bad Bunny,” is a Puerto Rican rapper and one of the world’s most popular artists. He sought to capitalize on that fame by co-founding a sports agency, Rimas Sports, to represent Latin American athletes. However, the Major League Baseball Players Association, which governs player agents, has effectively banned Rimas Sports, leading to dueling legal actions that will test the scope of the Players Association’s authority.

Labor law context

The National Labor Relations Act, passed in 1935, was one of several major pieces of legislation enacted as part of President Franklin D. Roosevelt’s New Deal. The NLRA protects the rights of private sector employees to come together, unionize, and collectively bargain with their employers about their wages, hours, and other terms and conditions of employment.

By the 1960s and 1970s, players in the major American professional sports leagues began to avail themselves of their rights under the NLRA by unionizing and collectively bargaining over a range of issues with the leagues and teams.

The Players Association was formed in 1966 for purposes of negotiating with Major League Baseball and its clubs. In 1968, the parties executed their first collective bargaining agreement, which set minimum salaries at $10,000 and established a pension fund. That collective bargaining process continues to this day and is a cornerstone of sports and the law across all of the leagues.

The NLRA empowers not only employees, but also the unions formed or selected by them for representation. Specifically, Section 9 provides that the union “shall be the exclusive representatives of all of the employees in [the employee] unit for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, or other conditions of employment.” In other words, both employees and employers are prohibited from negotiating the terms of an employee’s employment without the involvement or permission of the union.

The sports agent legal framework

Everyone is familiar with agents representing athletes in negotiations with teams. What is less understood is their legal basis for doing so.

As stated above, unions have the right to be the exclusive negotiator on behalf of unionized employees. In baseball this means, for example, that the Players Association has the right to negotiate all of the contracts of the more than one thousand players on MLB rosters. Because of the volume of negotiations that this would entail, the Players Association (as well as other unions in professional sports, such as the NFL Players Association) effectively delegates some of that negotiating authority to agents pursuant to a certification process.

In the collective bargaining agreement, the Players Association and MLB negotiate many aspects of player employment, including minimum salaries, the terms of the uniform player contract, dispute resolution, benefits, work schedules, and more. Nevertheless, there is still a considerable amount of room left to individual negotiation between the player and his agent and the team, notably the annual salary and length of the contract.

The union certification process varies across unions but generally requires an extensive background check, sometimes an exam, and the agreement to abide by the union’s agent regulations. The regulations are extensive and intended to ensure that agents represent players competently, zealously, and ethically. The unions’ authority is further cemented as part of the collective bargaining agreements, in which the teams agree not to negotiate player contracts with agents who have not been certified by the relevant union.

Failure to abide by the union’s regulations can lead to substantial penalties (as in the case of NFL agent Todd France) and the revocation of the agent’s certification.

Players Association strikes Rimas Sports out – for now

Bad Bunny formed Rimas Sports in 2021 with Noah Assad and Jonathan Miranda. William Arroyo later joined as the firm’s lead baseball agent. According to a recent legal filing, the agency currently represents 68 baseball players, including 14 in MLB and the rest in minor league baseball.

The manner in which Rimas Sports apparently grew drew the attention of the Players Association. The union determined that Rimas Sports was providing benefits to players to induce them to become clients and also using unauthorized recruiters (“runners”) to secure clients, actions which violated the Players Association’s agent regulations.

On April 10, the Players Association revoked Mr. Arroyo’s agent certification and denied the pending certification applications of Mr. Assad and Mr. Miranda. The trio were also fined a combined $400,000. Finally, the the Players Association prohibited any certified agents from working with the three individuals or Rimas Sports, and informed MLB clubs that the clubs could not negotiate with them.

The Players Association decision may result in the end of Rimas Sports’ baseball player representation business. On April 15, Mr. Arroyo, Mr. Assad and Mr. Miranda appealed the Players Association decision and asked the appointed arbitrator to issue an injunction staying the discipline while the appeal was pending. The arbitrator refused and, on April 22, the Players Association filed an lawsuit in a New York federal court to confirm the arbitrator’s decision.

Rimas Sports swings back

On May 16, Rimas Sports filed a lawsuit against the Players Association in a Puerto Rico federal court. Rimas Sports argues that the Players Association has exceeded its authority under the NLRA and in so doing has tortiously interfered with Rimas’ contracts with its player-clients and its agents.

Specifically, Rimas Sports argues that the Players Association has the authority to regulate individual agents insofar as they are involved in negotiating player contracts but has no authority to regulate agents or agencies when they are involved in negotiating marketing and endorsement deals on behalf of players. The disciplinary action taken by the Players Association effectively prevents Rimas Sports from providing these services as well.

The court in Puerto Rico denied Rimas Sports’ request for a temporary restraining order against the discipline. However, the court has set for June 18 a hearing to consider whether to grant Rimas’ request for a preliminary injunction. 

At that hearing, the court will almost certainly ask why the Puerto Rico lawsuit should proceed given that there is an appeal pending in New York before an arbitrator. Rimas Sports’ response is that the parties to the appeal are the three individuals, but the only plaintiff in the Puerto Rico lawsuit is Rimas Sports. The court may find this to be a difference in form, not substance. The real parties-in-interest are the same in both cases, so the court is likely to stay the Puerto Rico lawsuit pending the outcome of the arbitration in New York.