Report Title:

Uniform Athlete Agents Act

Description:

Adds new chapter, Uniform Athlete Agents, that establishes service of process procedure for nonresident agents; provides requirements, procedures, and fees for agent registration; required form for agency contract. Establishes student athlete's right to cancel contract.

THE SENATE

S.B. NO.

3146

TWENTY-SECOND LEGISLATURE, 2004

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to the uniform athlete agents act.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that the proliferation of professional sport franchises in the United States, and the immense sums now paid to athletes for commercial endorsement contracts, have made the commercial marketplace in which athlete agents operate very competitive. The potentially dark side of this phenomenon, however, is that the recruitment of a student athlete while still enrolled in an educational institution may cause substantial eligibility or other problems for both the student and the school. This is particularly the case where the athlete is not aware of the implications of signing the agency agreement or where the agency is established without notice to the athletic director of the school. The problem can be even more acute if an unscrupulous agent misleads a student.

In an effort to try to combat this problem, a few states had enacted legislation to address these issues. But agent registration and disclosure requirements varied greatly among those states, causing confusion among student athletes, athletic departments, educational institutions, and even the agents themselves.

In 1997, the National Collegiate Athletic Association (NCAA) and several major academic institutions urged the National Conference of Commissioners on Uniform State Laws to draft a proposed uniform law for enactment in all states that would establish a system for regulating athlete agents. The National Conference has a long established record of developing uniform legislation, and many of its products, including the Uniform Commercial Code, the Uniform Probate Code, the Uniform Partnership Act, and the Uniform Interstate Family Support Act, have been enacted in Hawaii. After agreeing to take on the project, the National Conference convened a drafting committee that conducted drafting sessions over a three-year period. All interested parties were welcome to attend, and participants included representatives from the National Collegiate Athletic Association, staff from the professional league players associations, athlete agents, and other interested parties. This uniform law, the Uniform Athlete Agents Act, was the result of those three years of deliberations.

The legislature recognizes that while this uniform law is a professional and vocational regulatory law, it differs in two ways from most other professional and vocational regulatory laws enacted in Hawaii to date. First, while most licensing laws seeking to protect the general public from unscrupulous or incompetent practitioners, this uniform law seeks to protect innocent parties other than the general public, namely, student athletes. This uniform law is therefore an atypical regulatory law in much the same manner as the regulation of boxing.

Second, the legislature typically enacts professional regulatory law in response to a perceived problem. Under section 26H-6, Hawaii Revised Statutes, the legislature requires the auditor to review proposals to regulate heretofore unregulated professions and vocations. The purpose of this "sunrise" review is to determine whether a problem exists, and whether the proposed regulatory law is an appropriate means to combat the problem. In enacting this uniform law, the legislature recognizes that there are probably few or no athlete agents operating in Hawaii, at this time, and that there is no problem yet. As such, requiring the auditor to conduct a sunrise review under these circumstances will simply be a waste of everyone's time. In enacting this uniform law now, the legislature seeks to accomplish two goals that are not included in the policy considerations involved in the sunrise review:

(1) Making Hawaii part of a growing national effort to establish a uniform system for regulating athlete agents by enacting the Uniform Athlete Agents Act nationwide; and

(2) Having a regulatory framework in place before "bad actors" can move here from other jurisdictions.

For the foregoing reasons, the legislature finds that there is more than adequate justification to enact the Uniform Athlete Agents Act and hereby waives the applicability of section 26H-6, Hawaii Revised Statutes.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

UNIFORM ATHLETE AGENTS ACT

-1 Short title. This chapter may be cited as the Uniform Athlete Agents Act.

-2 Definitions. As used in this chapter:

"Agency contract" means an agreement in which a student athlete authorizes a person to negotiate or solicit on behalf of the student athlete a professional sports services contract or an endorsement contract.

"Athlete agent" means an individual who enters into an agency contract with a student athlete or, directly or indirectly, recruits or solicits a student athlete to enter into an agency contract. The term includes an individual who represents to the public that the individual is an athlete agent. The term does not include a spouse, parent, sibling, grandparent, or guardian of the student athlete or an individual acting solely on behalf of a professional sports team or professional sports organization.

"Athletic director" means an individual responsible for administering the overall athletic program of an educational institution or, if an educational institution has separately administered athletic programs for male students and female students, the athletic program for males or the athletic program for females, as appropriate.

"Contact" means a communication, direct or indirect, between an athlete agent and a student athlete, to recruit or solicit the student athlete to enter into an agency contract.

"Director" means the director of commerce and consumer affairs.

"Endorsement contract" means an agreement under which a student athlete is employed or receives consideration to use on behalf of the other party any value that the student athlete may have because of publicity, reputation, following, or fame obtained because of athletic ability or performance.

"Intercollegiate sport" means a sport played at the collegiate level for which eligibility requirements for participation by a student athlete are established by a national association for the promotion or regulation of collegiate athletics.

"Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, public corporation, or any other legal or commercial entity.

"Professional sports services contract" means an agreement under which an individual is employed, or agrees to render services, as a player on a professional sports team, with a professional sports organization, or as a professional athlete.

"Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

"Registration" means registration as an athlete agent pursuant to this chapter.

"State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

"Student athlete" means an individual who engages in, is eligible to engage in, or may be eligible in the future 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 purposes of that sport.

-3 Service of process; subpoenas. (a) By acting as an athlete agent in this State, a nonresident individual appoints the director as the individual's agent for service of process in any civil action in this State related to the individual's acting as an athlete agent in this State.

(b) The director may issue subpoenas for any material that is relevant to the administration of this chapter.

-4 Athlete agents: registration required; void contracts. (a) Except as otherwise provided in subsection (b), an individual may not act as an athlete agent in this State without holding a certificate of registration under section    -6 or    -8.

(b) Before being issued a certificate of registration, an individual may act as an athlete agent in this State for all purposes except signing an agency contract, if:

(1) A student athlete or another person acting on behalf of the student athlete initiates communication with the individual; and

(2) Within seven days after an initial act as an athlete agent, the individual submits an application for registration as an athlete agent in this State.

(c) An agency contract resulting from conduct in violation of this section is void, and the athlete agent shall return any consideration received under the contract.

-5 Registration as athlete agent; form; requirements. (a) An applicant for registration shall submit an application for registration to the director in a form prescribed by the director. An application filed under this section is a public record. The application shall be in the name of an individual and, except as otherwise provided in subsection (b), signed or otherwise authenticated by the applicant under penalty of perjury or of unsworn falsification to authorities, as applicable, and state or contain:

(1) The name of the applicant and the address of the applicant's principal place of business;

(2) The name of the applicant's business or employer, if applicable;

(3) Any business or occupation engaged in by the applicant for the five years next preceding the date of submission of the application;

(4) A description of the applicant's:

(A) Formal training as an athlete agent;

(B) Practical experience as an athlete agent; and

(C) Educational background relating to the applicant's activities as an athlete agent;

(5) The names and addresses of three individuals not related to the applicant who are willing to serve as references;

(6) The name, sport, and last known team for each individual for whom the applicant acted as an athlete agent during the five years next preceding the date of submission of the application;

(7) The names and addresses of all persons who are:

(A) With respect to the athlete agent's business if it is not a corporation, the partners, members, officers, managers, associates, or profit-sharers of the business; and

(B) With respect to a corporation employing the athlete agent, the officers, directors, and any shareholder of the corporation having an interest of five per cent or greater;

(8) Whether the applicant or any person named pursuant to paragraph (7) has been convicted of a crime that, if committed in this State, would be a crime involving moral turpitude or a felony and identify the crime;

(9) Whether there has been any administrative or judicial determination that the applicant or any person named pursuant to paragraph (7) has made a false, misleading, deceptive, or fraudulent representation;

(10) Any instance in which the conduct of the applicant or any person named pursuant to paragraph (7) resulted in the imposition of a sanction, suspension, or declaration of ineligibility to participate in an interscholastic or intercollegiate athletic event on a student athlete or educational institution;

(11) Any sanction, suspension, or disciplinary action taken against the applicant or any person named pursuant to paragraph (7) arising out of occupational or professional conduct; and

(12) Whether there has been any denial of an application for, suspension or revocation of, or refusal to renew, the registration or licensure of the applicant or any person named pursuant to paragraph (7) as an athlete agent in any state.

(b) An individual who has submitted an application for, and holds a certificate of, registration or licensure as an athlete agent in another state may submit a copy of the application and certificate in lieu of submitting an application in the form prescribed pursuant to subsection (a). The director shall accept the application and the certificate from the other state as an application for registration in this State if the application to the other state:

(1) Was submitted in the other state within six months next preceding the submission of the application in this State and the applicant certifies that the information contained in the application is current;

(2) Contains information substantially similar to or more comprehensive than that required in an application submitted in this State; and

(3) Was signed by the applicant under penalty of perjury or of a related offense in the other state.

-6 Certificate of registration; issuance or denial; renewal. (a) Except as otherwise provided in subsection (b), the director shall issue a certificate of registration to an individual who complies with section    -5(a) or whose application has been accepted under section    -5(b).

(b) The director may refuse to issue a certificate of registration if the director determines that the applicant has engaged in conduct that has a significant adverse effect on the applicant's fitness to act as an athlete agent. In making the determination, the director may consider whether the applicant has:

(1) Been convicted of a crime that, if committed in this State, would be a crime involving moral turpitude or a felony;

(2) Made a materially false, misleading, deceptive, or fraudulent representation in the application or as an athlete agent;

(3) Engaged in conduct that would disqualify the applicant from serving in a fiduciary capacity;

(4) Engaged in conduct prohibited by section    -14;

(5) Had a registration or licensure as an athlete agent suspended, revoked, or denied or been refused renewal of registration or licensure as an athlete agent in any state;

(6) Engaged in conduct the consequence of which was that a sanction, suspension, or declaration of ineligibility to participate in an interscholastic or intercollegiate athletic event was imposed on a student athlete or educational institution; or

(7) Engaged in conduct that significantly adversely reflects on the applicant's credibility, honesty, or integrity.

(c) In making a determination under subsection (b), the director shall consider:

(1) How recently the conduct occurred;

(2) The nature of the conduct and the context in which it occurred; and

(3) Any other relevant conduct of the applicant.

(d) An athlete agent may apply to renew a registration by submitting an application for renewal in a form prescribed by the director. An application filed under this section is a public record. The application for renewal must be signed by the applicant under penalty of perjury or of unsworn falsification to authorities, as applicable, and must contain current information on all matters required in an original registration.

(e) An individual who has submitted an application for renewal of registration or licensure in another state, in lieu of submitting an application for renewal in the form prescribed pursuant to subsection (d), may file a copy of the application for renewal and a valid certificate of registration or licensure from the other state. The director shall accept the application for renewal from the other state as an application for renewal in this State if the application to the other state:

(1) Was submitted in the other state within six months next preceding the filing in this State and the applicant certifies the information contained in the application for renewal is current;

(2) Contains information substantially similar to or more comprehensive than that required in an application for renewal submitted in this State; and

(3) Was signed by the applicant under penalty of perjury or of a related offense in the other state.

(f) A certificate of registration or a renewal of a registration is valid for two years.

-7 Suspension, revocation, or refusal to renew registration. (a) The director may suspend, revoke, or refuse to renew a registration for conduct that would have justified denial of registration under section    -6(b).

(b) The director may deny, suspend, revoke, or refuse to renew a certificate of registration or licensure only after proper notice and an opportunity for a hearing pursuant to chapter 91.

-8 Temporary. The director may issue a temporary certificate of registration while an application for registration or renewal of registration is pending.

-9 Registration and renewal fees. An application for registration or renewal of registration shall be accompanied by a fee in the following amount:

(1) $25 for an initial application for registration;

(2) $20 for an application for registration based upon a certificate of registration or licensure issued by another state;

(3) $25 for an application for renewal of registration; or

(4) $20 for an application for renewal of registration based upon an application for renewal of registration or licensure submitted in another state.

-10 Required form of contract. (a) An agency contract must be in a record, signed, or otherwise authenticated by the parties.

(b) An agency contract must state or contain:

(1) The amount and method of calculating the consideration to be paid by the student athlete for services to be provided by the athlete agent under the contract and any other consideration the athlete agent has received or will receive from any other source for entering into the contract or for providing the services;

(2) The name of any person not listed in the application for registration or renewal of registration who will be compensated because the student athlete signed the agency contract;

(3) A description of any expenses that the student athlete agrees to reimburse;

(4) A description of the services to be provided to the student athlete;

(5) The duration of the contract; and

(6) The date of execution.

(c) An agency contract shall contain, in close proximity to the signature of the student athlete, a conspicuous notice in boldface type in capital letters stating:

WARNING TO STUDENT ATHLETE

IF YOU SIGN THIS CONTRACT:

(1) YOU MAY 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; AND

(3) YOU MAY CANCEL THIS CONTRACT WITHIN 14 DAYS AFTER SIGNING IT. CANCELLATION OF THIS CONTRACT MAY NOT REINSTATE YOUR ELIGIBILITY.

(d) An agency contract that does not conform to this section is voidable by the student athlete. If a student athlete voids an agency contract, the student athlete is not required to pay any consideration under the contract or to return any consideration received from the athlete agent to induce the student athlete to enter into the contract.

(e) The athlete agent shall give a record of the signed or otherwise authenticated agency contract to the student athlete at the time of execution.

-11 Notice to educational institution. (a) Within seventy two hours after entering into an agency contract or before the next scheduled athletic event in which the student athlete may participate, whichever occurs first, the athlete agent shall give notice in a record of the existence of the contract to the athletic director of the educational institution at which the student athlete is enrolled or the athlete agent has reasonable grounds to believe the student athlete intends to enroll.

(b) Within seventy two hours after entering into an agency contract or before the next athletic event in which the student athlete may participate, whichever occurs first, the student athlete shall inform the athletic director of the educational institution at which the student athlete is enrolled that the student athlete has entered into an agency contract.

-12 Student athlete's right to cancel. (a) A student athlete may cancel an agency contract by giving notice of the cancellation to the athlete agent in a record within fourteen days after the contract is signed.

(b) A student athlete may not waive the right to cancel an agency contract.

(c) If a student athlete cancels an agency contract, the student athlete is not required to pay any consideration under the contract or to return any consideration received from the athlete agent to induce the student athlete to enter into the contract.

-13 Required records. (a) An athlete agent shall retain the following records for a period of five years:

(1) The name and address of each individual represented by the athlete agent;

(2) Any agency contract entered into by the athlete agent; and

(3) Any direct costs incurred by the athlete agent in the recruitment or solicitation of a student athlete to enter into an agency contract.

(b) Records required by subsection (a) to be retained shall be open to inspection by the director during normal business hours.

-14 Prohibited conduct. (a) An athlete agent, with the intent to induce a student athlete to enter into an agency contract, may not:

(1) Give any materially false or misleading information or make a materially false promise or representation;

(2) Furnish anything of value to a student athlete before the student athlete enters into the agency contract; or

(3) Furnish anything of value to any individual other than the student athlete or another registered athlete agent.

(b) An athlete agent may not intentionally:

(1) Initiate contact with a student athlete unless registered under this chapter;

(2) Refuse or fail to retain or permit inspection of the records required to be retained by section    -13;

(3) Fail to register when required by section    -4;

(4) Provide materially false or misleading information in an application for registration or renewal of registration;

(5) Predate or postdate an agency contract; or

(6) Fail to notify a student athlete before the student athlete signs or otherwise authenticates an agency contract for a particular sport that the signing or authentication may make the student athlete ineligible to participate as a student athlete in that sport.

-15 Criminal penalties. An athlete agent who violates section    -14 is guilty of a misdemeanor.

-16 Civil remedies. (a) An educational institution has a right of action against an athlete agent or a former student athlete for damages caused by a violation of this chapter. In an action under this section, the court may award to the prevailing party costs and reasonable attorney's fees.

(b) Damages of an educational institution under subsection (a) include losses and expenses incurred because, as a result of the conduct of an athlete agent or former student athlete, the educational institution was injured by a violation of this chapter or was penalized, disqualified, or suspended from participation in athletics by a national association for the promotion and regulation of athletics, by an athletic conference, or by reasonable self-imposed disciplinary action taken to mitigate sanctions likely to be imposed by such an organization.

(c) A right of action under this section does not accrue until the educational institution discovers, or by the exercise of reasonable diligence would have discovered, the violation by the athlete agent or former student athlete.

(d) Any liability of the athlete agent or the former student athlete under this section is several and not joint.

(e) This chapter does not restrict rights, remedies, or defenses of any person under law or equity.

-17 Administrative penalty. The director may assess a civil penalty against an athlete agent not to exceed $25,000 for a violation of this chapter.

-18 Uniformity of application and construction. In applying and construing this chapter, consideration shall be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.

-19 Electronic signatures in global and national commerce act. The provisions of this chapter governing the legal effect, validity, or enforceability of electronic records or signatures, and of contracts formed or performed with the use of such records or signatures conform to the requirements of section 102 of the Electronic Signatures in Global and National Commerce Act, Pub. L. No. 106-229, 114 Stat. 464 (2000), and supersede, modify, and limit the Electronic Signatures in Global and National Commerce Act."

SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 4. This Act shall take effect on July 1, 2004.

INTRODUCED BY:

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