Disclaimer: The following is a legal opinion based on the limited facts available to the public. It is meant to explain some general principles, but not as any binding legal advice.
If you follow sports at all, you know that former Miami Heat player, Mike Miller is involved in filing a lawsuit against the Heat for their part in Haider Zafar’s defrauding Miller $1.7 million. If you have read any of the comments by armchair attorneys opining on this story, you know there are a lot of differing thoughts and odd applications of law being tossed around.
Whether or not Miller goes through with the lawsuit or whether or not he deserves to have lost his money for being foolish are not questions we will address here. However, since we are attorneys, we can explain the fundamental legal issues regarding his potential suit and their basis in the law. The four main issues at hand are “what duty did the Heat have to Miller, if any,” “what responsibility do the Heat have for the actions of a former employee,” “what is the Heat’s best defense” and “why did Miller come up with a $700,000 settlement offer, as opposed to another number?”
Heat’s Duty To Miller:
While a number of sports’ teams do look out for their players more so than the average company looks out for its employees, the Heat and Miller do not share a fiduciary relationship. A fiduciary relationship is one defined as “an individual in whom another has placed the utmost trust and confidence to manage and protect property or money.” For example, the type of relationship between an attorney and a client or a trustee and a beneficiary. Unless Miller had some odd stipulation in his contract (which he probably does not or it would have been noted by this point), the Heat are not responsible for how Miller handles his money. Lawsuit over, right? Not so fast.
The lawsuit alleges the Heat had prior knowledge that Zafar was a financial risk, stating that Zafar had failed to pay for 3 million dollars worth of courtside seats and other team benefits and was under an IRS investigation. In addition, a Heat employee introduced Zafar to Miller AND a portion of the money Zafar defrauded from Miller was used to pay a portion of Zafar’s debt to the Heat. Now, any one of those allegations, in and of themselves, is not enough to bring forth a strong lawsuit against the Heat. However, combined, (and if all true) Miller looks to have a case for conspiracy to defraud. Conspiracy to defraud “requires that two or more individuals dishonestly conspire to commit a fraud against a victim.”
Miller’s attorney could paint the following picture: the Heat knew Zafar was a risk, because he owed them money. They then used their relationship with Miller to get him to trust Zafar. Then, through Zafar’s purchase of the season tickets, funneled money back into their own pockets at the expense of Miller. If the lawsuit continues, this will (most likely) be the line of argument Miller’s attorney uses.
Heat’s Responsibility For Employees:
In later reports, it has become clear that Miller was introduced through only one Heat employee, Executive Vice President of Sales, Stephen Weber, who is no longer with the team. Does the fact that it was just one employee, an employee who no longer works there, help the Heat? Not really. There is a common law legal doctrine known as Respondeat Superior, that essentially means, an employer can, and usually is, responsible for the actions of his or her employees. Granted, there are exceptions to the doctrine as it has been curtailed throughout the years, however, none of these exceptions seem to apply here.
Exceptions generally tend to be unforeseeable circumstances, like a postal shooting or bombing, and it is unlikely a high level sales executive who already had a spurious history with Zafar could not foresee what would happen. Furthermore, just because an employee is no longer with the employer, does not excuse the employer for damages incurred while he was an employee. If it did, employers would just immediately fire any employee accused of wrongdoing to escape legal action.
The Heat have a couple of ways to defend these allegations, but their best defense is to prove there was no collusion. They have a few ways they could do that. First, they could show that the Heat did not know that Zafar owed them 3 million dollars. This may sound difficult to prove, but if the Heat could show that several other people have owed them large debts from time-to-time, and they don’t always take note of every large debt until a certain time passes, then it might make sense as to why the Heat did not see Zafar as a threat. Or, Zafar could have convinced the Heat that he was going to pay back the money through legitimate business dealings and just needed a little more time. Surely, we have all needed a little more time to pay a bill at one point in our lives, that did not necessarily make us a financial risk. Lastly, they could show that they had no idea where Zafar got the money from to pay back a portion of the money he owed. Granted, these defenses may not sound as powerful as Miller’s complaints, but remember, the Heat are the defendants and therefore subject to a lesser burden.
The $700,000 Question:
The last part to discuss is the dollar amount. Why did Miller choose $700,000 (plus his attorney’s fees) instead of a much larger number? While only he and his attorney can know that with 100% certainty, this looks like a common tactic in the settlement phase. If Miller’s allegations are correct, the Heat should be on the hook for the whole $1.7 million Zafar took from him, and since Zafar is in jail, it’s not likely Miller could go after him with much success. However, proving conspiracy, even if you have the facts on your side, is always a difficult proposition. Since the Heat directly benefited from $700,000 of the money Miller lost, he is putting forth a reasonable number that would only fault the Heat for what they gained, nothing punitive.
In addition, since the settlement offer is not binding if rejected, he can threaten to sue for the whole $1.7 million at trial. Thus, the Heat are in a tight spot. As it stands, if they just settle they are out $700,000 (plus his attorney’s fees). If they go to trial, and lose, they would be out $700,000, plus Miller’s attorney’s fees, plus their own attorney’s fees, (which would be substantial by then) plus, the jury could always award more than the $1.7 million. Lastly, the Heat also have to consider the negative publicity and distraction this will bring to their team as they try to three-peat. All-in-all, the $700,000 (plus attorney’s fees) is a powerful settlement number that should get the Heat to resolve this issue quickly. If not, it could very well cost them much more in both direct and indirect costs.
If more facts unfold, we will update this blog to reflect them. Until then, we hope you enjoyed our post. Please, share it with your friends!