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March 10, 2015 in 75-1.1 Exemptions by

Update on Athletes’ 75-1.1 Lawsuits Against UNC

Last November, we posted on the putative class action that former UNC football player Michael McAdoo has filed against UNC in the U.S. District Court for the Middle District of North Carolina. In our post, we noted a number of the obstacles faced by McAdoo’s claim under N.C. Gen.
Stat. § 75-1.1.

Despite these problems, McAdoo is pressing on with his section 75-1.1 claim. On February 24, he filed an amended complaint that continues to assert a 75-1.1 claim. Indeed, the amended complaint makes few changes to that claim. In particular, it doesn’t make any changes that (as far as I can tell) would make UNC any less immune from a 75-1.1 claim than the case law suggests.

The amended complaint does lessen McAdoo’s reliance on section 75-1.1. It does this by adding a number of nonstatutory claims: breach of fiduciary duty, constructive fraud, and fraudulent concealment. The amended complaint also adds further background facts on the UNC academic scandal.

Through these additions, McAdoo has moved his complaint a bit closer to the separate complaint that other former UNC athletes, including former basketball player Rashanda McCants, filed in North Carolina state court on January 22.

The McCants complaint does not allege claims under section 75-1.1 or any other statute. It alleges negligence, breach of fiduciary duty, breach of implied contract, and breach of the implied covenant of good faith and fair dealing. The McCants complaint, moreover, levels some of these claims at the NCAA, rather than UNC. (This choice of defendants is not surprising, because the plaintiffs’ lawyers in McCants include Michael Hausfeld, who is heavily involved in the federal antitrust litigation against the NCAA.)

Comparisons between the McAdoo and McCants complaints are likely to extend beyond this blog—indeed, to the courtroom itself. Both cases are now pending in the same federal court, before the same district judge. On February 27, the NCAA deployed the Class Action Fairness Act of 2005 and removed McCants to the Middle District of North Carolina.

Both McCants and McAdoo are now assigned to District Judge Loretta Biggs. So far, no one has asked Judge Biggs to coordinate the litigation of McAdoo and McCants, but we’re still in the early days after the McCants removal and the filing of the McAdoo amended complaint. For example, counsel for UNC—who reportedly include Skadden Arps—have not yet appeared in either case. Indeed, the docket in McAdoo does not report any service of process on UNC (not even service of the four-month-old original complaint).

The UNC athletes’ claims, including the 75-1.1 claim, might get an airing in North Carolina state court as well. On the same day as the filing of the amended complaint in McAdoo, the same lawyers filed a substantively identical putative class action in Mecklenburg County Superior Court. The proposed class representatives in that case are James Arnold, a former UNC football player, and Leah Metcalf, a former UNC basketball player.

It seems, then, that the plaintiffs in McAdoo and Arnold are going to test the hypothesis that 75-1.1 claims in the North Carolina state courts play out differently from how they play out in federal court. If so, these cases are likely to hold our attention for some time to come.

Author: Matt Sawchak