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Sloane v. Tennessee Department of State, Business Services Division

Court of Appeals of Tennessee, Nashville

October 3, 2019

DAVID MARK SLOANE
v.
TENNESSEE DEPARTMENT OF STATE, BUSINESS SERVICES DIVISION

          Assigned on Briefs August 1, 2019

          Appeal from the Chancery Court for Davidson County No. 18-466-II Anne C. Martin, Chancellor

         On September 30, 2016, Appellee Tennessee Secretary of State, Business Services Division assessed $25, 000.00 in civil penalties against Appellant David M. Sloane for his violations of the Athlete Agent Reform Act of 2011. Mr. Sloane requested a hearing to dispute the penalties, and the Administrative Law Judge ("ALJ") reduced the penalties to $5, 000.00 for each violation and $740.00 in investigatory costs. Mr. Sloane then filed a petition for judicial review with the trial court; the trial court affirmed the ALJ's order. Mr. Sloane appeals. We affirm.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed and Remanded

          David M. Sloane, West Coral Springs, Florida, appellant, pro se.

          Herbert H. Slatery, III, Attorney General and Reporter, Andrée Blumstein, Solicitor General, Janet M. Kleinfelter, Deputy Attorney General, and Kelley L. Grover, Assistant Attorney General, for the appellee, Tennessee Department of State, Business Services Division.

          Kenny Armstrong, J., delivered the opinion of the court, in which Thomas R. Frierson, II and W. Neal McBrayer, JJ., joined.

          OPINION

          KENNY ARMSTRONG, JUDGE

         I. Background

         Mr. David M. Sloane ("Appellant"), a Florida resident, worked as a professional sports agent with a focus on representing young baseball players. In 2012, Mr. Sloane became aware of Mr. Jordan Sheffield, a talented young baseball player in Tullahoma, Tennessee with good Major League Baseball ("MLB") draft prospects. That fall, Mr. Sloane initiated correspondence with the Sheffield family, including Mr. Justus Sheffield, Jordan's younger brother who was also a talented young baseball player.[1] In October 2012, Mr. Sloane traveled to Jupiter, Florida to meet with Jordan and Justus' parents, Travis and Misty Sheffield. Thereafter, Mr. Sloane kept in touch with the family by telephone and email. In December 2012, Mr. Sloane sent an email to Jordan and Justus, copying their parents, in which he stated, in part:

If you are interested in anything about me, please check out my web site . . . . You can email me questions you may have as well or if it's ok with your Parents, I'm available by phone any time. If you get my voice mail, I promise you will hear back from me within 24 hours as long as you leave a number for me to call.
***
Thanks for giving me a chance to communicate with you. I promise you will never regret giving me this chance to show you what I bring to the table.

         In the spring of 2013, Mr. Sloane met with Jordan, Justus, and their parents in the family's home in Tennessee. At that time, Jordan was a senior in high school and Justus was a junior. The purpose of Mr. Sloane's visit was to discuss the prospect of Mr. Sloane representing Jordan and Justus, the services Mr. Sloane could provide, and the cost of Mr. Sloane's services. During this meeting, Mr. Sloane showed the family his standard agency contract, but neither Jordan nor Justus signed a contract.

         During the MLB 2013 draft process, Jordan did not sign with a team and chose instead to attend Vanderbilt University. In August 2013, Justus began his senior year of high school, and Mr. Sloane remained in contact with him. On August 13, 2013, Mr. Sloane emailed Justus, copying his parents, and stated, in part:

My initial objective in this relationship is acquiring you as a client. To this point, I have tried to provide as much information as possible about myself, the business of Professional Baseball, and my view of what role I will play in your future MLB career.
***
I promise that we will be seeing each other several times between now and the MLB Draft in June. I will be in Tullahoma this Fall and will see you again at the Jupiter Showcase in Oct. I will return to see you at some point during your HS season. In between these visits, should you require my presence, I'm a short plane trip away. I will also be keeping in constant touch with you and/or your family by phone, email and texts.

         In the fall of 2013, Mr. Sloane made a call to the Sheffields to discuss Justus' 2014 draft prospects, the draft process, Mr. Sloane's representation of Justus, and Mr. Sloane's professional agency contract. Shortly after this conversation, the Sheffields decided that Mr. Sloane would represent Justus. In November 2013, Mr. Sloane and Justus came to an oral agreement concerning Mr. Sloane's contract, but Justus never signed a written contract. However, after November 2013, Justus informed baseball scouts that Mr. Sloane represented him, and Mr. Sloane began communicating with scouts and other professionals on Justus' behalf.

         In 2012, when he initially contacted the Sheffields, Mr. Sloane was registered as an athlete agent in Florida and Alabama; he was not yet registered as an athlete agent in Tennessee. In April 2014, Mr. Sloane submitted his registration application to the Tennessee Secretary of State, Business Services Division ("Appellee" or "Business Services Division") and was approved as an athlete agent in Tennessee under Tennessee Code Annotated section 49-7-2101, et seq. (the "Athlete Agent Reform Act of 2011" or "Act").[2] In June 2014, following his approval as an athlete agent in Tennessee, Mr. Sloane represented Justus in the 2014 MLB professional draft. The Cleveland Indians drafted Justus in the first round and paid him a $1.6 million dollar signing bonus. Thereafter, Justus paid Mr. Sloane $48, 000.00. Mr. Sloane contends that Justus orally agreed to pay him five percent of his signing bonus, which is $80, 000.00, not the $48, 000.00 amount.

         In October 2014, Mr. Sloane sued Justus in Arizona state court alleging that Justus breached his agreement to pay Mr. Sloane five percent of the signing bonus. During the lawsuit, Justus discovered that Mr. Sloane was not registered as an athlete agent in Tennessee when he first initiated contact with him. Justus' current professional sports agent, Mr. Bo McKinnis, reported this information to Mr. Kevin Rayburn, who at the time was the assistant director of the Business Services Division who oversaw administration of the Act.[3]

         On September 30, 2016, Appellee issued an Order and Assessment of Civil Penalties against Mr. Sloane related to his representation of Justus and his violations of the Act.[4] Appellee assessed: (1) a $10, 000.00 penalty for Mr. Sloane initiating contact with Justus prior to Mr. Sloane's registration as an athlete agent in violation of Tennessee Code Annotated section 49-7-2114(b)(1); and (2) a $15, 000.00 penalty for Mr. Sloane acting as an athlete agent prior to Mr. Sloane's registration as an athlete agent in violation of Tennessee Code Annotated sections 49-7-2104(a) and 49-7-2114(b)(5). See also Tenn. Code Ann. § 49-7-2135(b)(5). Mr. Sloane requested a hearing to dispute the penalties.

         On November 30, 2017, Administrative Law Judge ("ALJ") Elizabeth Cambron held a contested hearing concerning Mr. Sloane's alleged violations of the Act. Mr. Sloane proceeded pro se. Both Mr. Sloane and the Business Services Division were given the opportunity to present witnesses and exhibits. Appellee called two witnesses: (1) Mr. Nathan Burton, the director of the Business Services Division; and (2) Mr. Travis Sheffield. Mr. Sloane testified as the only witness for his side. On February 28, 2018, ALJ Cambron entered an initial order finding, inter alia, that Mr. Sloane violated the Act when he initiated contact with Justus and represented a student athlete prior to registering as an athlete agent with the Business Services Division. However, ALJ Cambron reduced the two penalties to $5, 000.00 each and assessed $740.00 in investigatory costs against Mr. Sloane. Mr. Sloane filed a petition for reconsideration of the initial order, which the ALJ denied.

         On April 25, 2018, Mr. Sloane filed a petition for judicial review in the Chancery Court of Davidson County ("trial court"). While it is not explicitly stated in his petition, it appears Mr. Sloane argued that: (1) the Business Services Division "selectively" and "unlawfully" enforced the Act against him; (2) the ALJ violated his Due Process rights when she denied his motions to compel compliance with several subpoenas; and (3) the penalties that Appellee/ ALJ assessed against him were excessive and unreasonable.[5] On November 27, 2018, the trial court held a final hearing. By order of December 29, 2018, the trial court affirmed the ALJ's order, concluded that Mr. Sloane violated two provisions of the Act, and upheld the ALJ's imposition of $10, 000.00 in fines and $740.00 in investigatory costs. Mr. Sloane appeals.

         II. Issues

         Mr. Sloane raises four issues on appeal, which we state as follows:

1. Whether the ALJ erred when she denied Mr. Sloane's motions to compel.
2. Whether Justus Sheffield was a student athlete under the Athlete Agent Reform Act of 2011 when Mr. Sloane initially contacted the Sheffield family.
3. Whether Appellee abused its discretion and conducted selective, unlawful enforcement of the Act by rendering arbitrary and capricious fines against Mr. Sloane.
4. Whether the civil penalties and investigatory costs assessed to Mr. Sloane violated the Eight Amendment of the United States Constitution and Tennessee Constitution Article I, Section 16.

         III. Standard of Review

         When the Tennessee Secretary of State assesses a civil penalty against an athlete agent, "[a]ny hearing on the imposition of any fine . . . shall be in accordance with the Uniform Administrative Procedures Act . . . ." Tenn. Code Ann. § 49-7-2117; Tenn. Code Ann. § 49-7-2138. The UAPA provides, in pertinent part:

(a)(1) A person who is aggrieved by a final decision in a contested case is entitled to judicial review under this chapter, which shall be the only available method of judicial review. . . .
***
(b)(1)(A) Proceedings for review are instituted by filing a petition for review in the chancery court of Davidson County, unless another court is specified by statute. Such petition shall be filed within sixty (60) days ...

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