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Attorney Steve Estep On Sports, Entertainment, and Securities Litigation

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Atlanta, GASteve Estep had just finished an unexpected filing when LawyersandSettlements contacted him in his Atlanta office. "Fortunately, we have electronic filing these days," he said. "I don't think I'd be able to keep up without it." From his description of his practice, it's hard to disagree!

LawyersandSettlements (LAS): Your biography shows that you've been a defense-side lawyer and you're now mainly plaintiff-side. What's the scope of your practice within your firm?

Steve Estep (SE): I was a big-firm defense lawyer and did mostly product liability defense work originally. I still do some of that for some of my old clients, but I try not to. My practice now includes plaintiff-side class actions, personal injury, securities, and complex commercial disputes. The biggest one of those is the ownership dispute around the Atlanta Hawks, the Thrashers, and Phillips Arena. There's been a big public fight among the owners of the teams; the assets are the teams and the arena, which is one of the best in the country—matter of fact, I'm going to see Springsteen there this week.

There's a long, sordid history to this—there were internal disputes, lawsuits were filed, and part of the settlement was that the majority owners were to buy out the minority owner based on an appraisal process. Then the minority owner hijacked the appraisal process, so when the majority owners didn't go along with it, a Maryland trial court ruled that a clause in their contract kicked in that meant the minority owner could buy out the others at cost. That involved a series of very screwy rulings which were reversed by the Court of Special Appeals in Maryland, the mid-level appellate court. So now it's back at square one a year and a half later.

So I do a pretty wide variety of stuff. I'm working on the defense for Kid Rock, who as you probably heard got sued down here in a well publicized scuffle in a waffle house that was started by the guy who's suing him, so I'm representing him and some co-defendants down here. That happened last October at 5:00 AM in the waffle house; nothing good's going to happen there at 5:00 AM! My partners Mudder and Cohen are pretty high-profile sports and entertainment lawyers, so the firm gets lot of high-profile stuff in the sports and entertainment industries.

LAS: You've recently filed a class action against the All American Football League and its founder and chairman Marcus Katz. Can you tell us about that?

SE: We filed the AAFL case a week or two ago. This was a new professional football league that was to have started in March. The idea behind it was to have six teams to start, each one identified with a state, such as Team Texas, guys who played college football in Texas as well as some ex-NFL players. They had contracts with 40-odd players per team, so nearly 300 players were involved. Three days before training was to begin, they cancelled the season. The players were left high and dry.

LAS: Do you know why the season was cancelled?

SE: You'd have to ask Marcus Katz about that. They say some sponsorships and TV deals didn't come through, but we frankly don't know; that's a matter for discovery. We do know that all along the players were told this season was going to happen.

It's filed as a class action, and we're hoping the players will be certified as a class and will get what they're due contractually and whatever else they've lost. Other angles may be pursued; for example, other employees who were told the same thing as the players have been contacting me, people who work for league and were told, "You don't have a job any more. Sorry."

LAS: Is there a specific reason you filed against Marcus Katz personally?

SE: Marcus Katz was going to be the money behind the league. He said so on several different occasions, so if the league isn't capitalized, under the piercing-the-corporate-veil theory you can go after the people who were supposed to be capitalizing it. We don't know if AAFL has a dollar of its own, but we do know that Marcus Katz has lots of dollars, or at least he says he does.

They say there may be a season next year—officially, it's a postponement. Their Web site says that they intend to have a season next year, but who knows? They had a contract with Detroit field for Team Michigan and are being sued for defaulting on that, so who knows?

LAS: What stage are you at in the litigation?

SE: It's brand new; they haven't even had time to file an answer yet. Usually the way class actions go is that they'll file a motion to dismiss, we'll fight it, we'll file to certify the class, they'll fight that, then there would be motions for summary judgment. So realistically, I see no resolution for six months at the earliest, and more like a year.

Meanwhile, the players are going back to whatever their jobs were; some were playing in the Arena leagues, some in practice squads in the NFL, some will be playing football and some won't. We're seeking to recover what they were to have been paid plus whatever out of pocket damages they could show, the kind of hard dollar expenses associated with getting new apartment leases and moving, things like that.

LAS: Have you ever handled a class action like this before?

SE: It's really unusual. I don't know of a case like it that's ever been filed. This could come down to that, if we don't get class certification, we have 250 to 300 guys who could be individual plaintiffs.

I've worked both sides of the aisle, but because my firm has lawyers who focus on sports and entertainment, we tend to get these cases. Most of my class action work has been in the context of securities, either direct class actions for shareholders such as the Cumulus Media case—they're probably the second largest radio station owners after Clear Channel—about the insiders in the company trying to take the company private and buy all the shares.

Or I might do derivative cases such as one I'm working on against Home Depot in the Fulton County Superior Court. That one's about Bob Nardelli resigning with over $200 million in his severance package, including backdated stock options. The shareholders aren't very happy about that, because the value of their shares certainly doesn't justify it.

I wish someone would fire me and give me $200 million, then put me in charge of Chrysler!

Steven J. Estep, partner in Cohen, Cooper, Estep, and Whiteman, is a 1985 graduate of Florida State and received his JD from Mercer University School of Law, Macon, Georgia, in 1988. He has been chosen by his peers as a Georgia Super Lawyer for the past four years; he describes himself as "a pretty good golfer, a decent surfer, and a lousy but determined downhill skier."

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