Another Cautionary NIL Tale
Jaden Rashada was a stand-out high school quarterback. In the summer of 2022, he was one of the country’s most highly-recruited quarterback prospects. According to Mr. Rashada’s complaint, the University of Miami offered him a $9.5 million Name, Image and Likeness (NIL) deal. The complaint alleges that the University of Florida (The University) ultimately topped that offer with a $13.85 million NIL deal to be paid out by one or more collectives associated with the University over four years.
We’ve been here before. Sid DeLong got the discussion started early in 2022. We shared a ProPublic expose on NILs here. There were NIL scandals at the University of Tulsa and UNLV. We shared the story of the Iamaleava brothers. We shared NPR’s reporting on what may well be the end of the NIL era, which it seems will be remembered as a short rest stop on the slippery slope towards the complete, professionalization of college sports, which I fervently hope leads to its decoupling from educational institutions. Jaden Rashada’s story is one of many that illustrates why the NIL era will not be mourned.
Mr. Rashada’s deal with the University fell through. Despite signing a $13.85 million contract on November 10, 2022, the University purported to terminate the contract on December 6, just one day after the first $500,000 payment was due. A booster, one of the defendants, sent $150,000, but on national Letter of Intent signing day, December 21st, Mr. Rashada had received nothing more. After the University’s coach called Mr. Rashada and promised that the booster would pay $1 million, Mr. Rashada signed the Letter of Intent, as the University threatened to yank his scholarship.
When he had not been paid by mid-January, Mr. Rashada withdrew from the Letter of Intent and decided to, as the Court put it, “begin his college football career at Arizona State University.” Note, he did not decide to begin his educational experience at ASU. Education doesn’t seem to figure here at all. Mr. Rashada did not play much at ASU. He transferred to Georgia, where he did not play at all, and he is now at Sacramento State, where is plays occasionally. NILs were not involved at any of those institutions. I hope that he is now getting a good education. He is certainly learning something about contracts law.
Mr. Rashada brought suit, alleging a fraudulent scheme and tortious interference by a booster, that booster’s company, and members of the University’s coaching staff. In Rashada v. Hatchcock, the District Court for the Northern District of Florida ruled on Defendants’ motions to dismiss. Mr. Rashada seems not to have claimed breach of contract or promissory estoppel, nor does he seem to have named the University as a defendant. That’s all a bit of a puzzler.
The Court found that Mr. Rashada has adequately alleged a scheme of fraudulent misrepresentation involving the Defendants. Defendants alleged that Mr. Rashada had not adequately alleged an agency relationship among the parties. They sought to hold Mr. Rashada to the heightened pleading standards applicable for misrepresentation claims. The Court declined to do so. The heightened pleading standard would apply to agency allegations only where the predicate facts for agency and fraud were the same. Here they were not, as the agency relationship was broader than the fraud. The agency relationship served all of the University’s athletic recruiting needs and not only their fraudulent misrepresentation scheme with respect to Mr. Rashada. The allegations of agency were plausible, and that suffices.
The elements of fraudulent misrepresentation were well-pled. Mr. Rashada alleged that the collective never intended to pay him. He presents evidence that the entity was undercapitalized and never had the funds to pay him the amount he was promised. It seems that Defendants’ true aim might not have been to lure Mr. Rashada to the University but to deprive a rival, Miami, of a recruiting coup. I’m really curious why there is no promissory estoppel claim. He had a $9.5 million offer from Miami. In reliance on the Defendants’ offer to pay him more, he walked away. Doing so was reasonable, given the repeated assurances Defendants provided that payment was forthcoming. The promissory estoppel claim might only get him $9.5 million in damages rather than the full $13.85 million, but that’s not nothing.
The Court was persuaded that the complaint alleged a civil conspiracy to commit fraud but not that there was a civil conspiracy to commit an independent tort. The application of the cause of action to this context would have been novel, and the Court was disinclined to stretch.
The Court was similarly disinclined to adopt an expansive view of tortious interference that would cover a situation such as this where Mr. Rashada voluntarily withdrew from his prospective business relationship with the University of Miami in favor of the promise of a more lucrative deal with the University. The Court engaged in some Erie guessing and concluded that Florida courts would not adopt § 766A of the Restatement (2d) of Torts. It has never suggested that it would do so, and at least one intermediate court of appeals has rejected § 766A.
The case will proceed on the remaining claims.
Imagine if boosters, instead of committing $13.85 million to a football prospect were willing to invest in education. The government is pulling back from a lot of funding on which STEM programs rely. Boosters could step into that gap. Wouldn’t a Nobel Prize in physics or chemistry or medicine or economics be as big a feather in the university’s cap as would be a Heisman Trophy? You can probably fund three chaired professorships in law for that much money. I’m just sayin’.