(CN) – Seven former NFL players failed to convince the 11th Circuit to let them sue the league and its players union for the $20 million they lost in an investment Ponzi scheme.
The federal appeals court in Atlanta refused to reinstate the negligence and breach of fiduciary claims of six former players, a spouse of one of the players, and the various investment entities they controlled.
In 2004 and 2005, the plaintiffs invested about $20 million with Kirk Wright, who stole most of their money in a classic Ponzi scheme. Wright hanged himself in jail in May 2008, after he was convicted of bilking his clients for millions of dollars.
The former players said they never would have invested with Wright had the NFL and the NFL Players Association done their research. The players union had listed Wright and his business partner, Nelson “Keith” Bond, in its financial advisers program without conducting a proper investigation, the investors claimed. And the NFL allegedly provided inadequate background checks on Wright, Bond and International Management Associates, the now-bankrupt investment company through which Wright operated the Ponzi scheme.
The league and the players union argued that federal law preempts the claims under Georgia law, because the allegations hinged on a collective bargaining agreement between the players union and the NFL’s management council.
This agreement includes the disclaimer that “players shall be solely responsible for their personal finances.”
A federal judge in Georgia sided with the NFL and players union, and the 11th Circuit rejected the players’ bid for a reversal.
“Because plaintiffs’ claims arise from or are substantially dependent upon an interpretation of the terms of a collective bargaining agreement, we conclude those claims are preempted,” Judge David Ebel wrote.
The appeals court also tossed the union’s counterclaims, including its claim that the former players should have first submitted their claims to the union’s Board of Player Representatives.
The former players who originally filed suit were Stephen Atwater, Blaine Bishop, Carlos Emmons, Clyde Simmons, Al Smith, Marco Coleman and Ray Crockett.