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Sports Agent Steinberg's Firm Awarded $45 Million

Jury determines that rival stole information and clients and threatened blackmail.

November 16, 2002|Ralph Frammolino | Times Staff Writer

Sports super-agent Leigh Steinberg won a decisive victory Friday when a jury awarded his Newport Beach firm $45 million after finding that a former protege unfairly started a rival agency and stole away some of football's biggest names.

The award capped a bitter six-week trial in Los Angeles federal court that pitted Steinberg, whose career was an inspiration for the hit movie "Jerry Maguire," against former best friend and partner David Dunn, considered one of the most savvy contract negotiators in pro football.

Steinberg's reputation took a thrashing in the trial. The agent admitted to battling alcoholism and witnesses for Dunn and his breakaway company, Athletes First, portrayed Steinberg as an out-of-touch businessman and abusive boss. Former Super Bowl quarterback Drew Bledsoe, now of the Buffalo Bills, took the stand to say he was among those athletes who followed Dunn to the new firm because he was disgusted by Steinberg's boorish behavior.

But in making the award, the eight-person jury shrugged off those criticisms and sided with Steinberg's firm, Steinberg & Moorad. It had contended that Dunn and five other former employees plundered everything from players' cell phone numbers to proprietary information such as whether certain athletes preferred grass to artificial turf. After the February 2001 office rebellion, Dunn and company allegedly threatened to blackmail Steinberg into silence.

"Look, I haven't lived a perfect life, but I don't think anybody has," Steinberg said Friday from Miami, where he was with one of his clients, running back Ricky Williams of the Miami Dolphins. But "as it regards representing athletes, I've tried to comport myself with as much dignity and honor as possible."

He added that he was "excited, gratified and pleased" that jurors "saw through the unethical behavior, lies and character assassination" by Dunn and Athletes First.

Dunn and Athletes First vowed to appeal the verdict, which they said demonstrated the difficulty faced by small firms that "become the litigation target of a billion-dollar company admittedly out for 'a pound of flesh.' "

Asked if the award ultimately would put Athletes First out of business, as was claimed during closing arguments, general counsel Mark Humenik said, "I think that's certainly a strong possibility."

The jury found against Dunn and his firm on four key issues: breach of contract, unfair competition, tortious inducement of breach of contract and tortious interference with prospective economic advantage. It rejected claims of false advertising.

The total damages awarded to Steinberg & Moorad amounted to $44.66 million. The jury socked Dunn personally with $2 million in compensatory damages and an additional $2.66 million in punitive damages, finding he acted with "oppression, fraud and malice." Athletes First was hit for $20 million in compensatory and $20 million in punitive damages.

That wasn't enough for Steinberg. His legal team plans to return to U.S. District Judge Ronald S. W. Lew's courtroom next week to request as much as $70 million in additional damages by arguing that Dunn "unjustly enriched" himself by that amount. It also wants a ruling barring Dunn from representing any clients who formerly were represented by Steinberg's firm.

The jury, which deliberated 3 1/2 days, also rejected three counterclaims by Dunn.

Juror Irvin DePriest, a former parole officer, would say only that no single piece of evidence tipped the decision. "I think it was everything collectively," he said.

For his part, Dunn accused Assante Corp., the Canadian financial services firm that bought Steinberg & Moorad in 1999, of fraudulently inducing him to sign a three-year extension to his employment contract.

Attorneys for Steinberg's firm, however, maintained that Dunn had willingly agreed to the contract that forbade him from competing with his old employer for two years if he were to quit.

The attorneys also introduced evidence that Dunn and others tried to blackmail Steinberg into silence after they left. The most telling document was a memo written last January by Brian G. Murphy, now chief operating officer of Athletes First, detailing Steinberg's failings. Murphy wrote that Steinberg's fear of having such secrets made public "could prove to be useful in negotiating a settlement."

"If we wanted to, we could rip apart his marriage, his reputation and his career," Murphy said, adding that the mere threat of exposure would "drive Leigh insane."

Steinberg said Friday that the memo played an important part in the case. "I think it was a very damning document," he said.

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