Late last week a report prepared for the National Basketball Players Association by attorneys at the Washington law firm Paul, Weiss became public. The 469-page document addresses various allegations of mismanagement against Billy Hunter, the NBPA’s executive director since 1996. While Paul, Weiss did not find any evidence of criminal wrongdoing by Hunter, it did reach two other conclusions: Hunter’s tenure has been replete with numerous conflicts of interest, mostly arising from the use of his position to aid himself and family members; and second, that Hunter’s most recent employment contract with the union may not be valid. Overall, the report appears designed to protect the NBPA from a wrongful termination lawsuit should it decide to fire Hunter and hire a new executive director.
The thrust of the Paul, Weiss report is that Hunter is a shabby lawyer who runs the NBA players union like a family business:
The Union is a small organization, with fewer than 30 employees, and few senior executives. Two Hunter family members serve in director-level positions at the Union, and another two are employed by important Union vendors. Hunter told us that he enjoyed working with family members because he prized loyalty, but he did not seem to fully appreciate that allowing a Hunter family culture to develop at the Union could have negative consequences. For example, one Union employee reported that she and other staff members feel ‘surrounded’ by the Hunter family. The employee who might be best able to serve as a counterweight to Hunter is the Union’s General Counsel. But since approximately 2002, Hunter has either kept that position vacant or filled it with his closest friend.
Hunter’s nephew was the NBPA’s deputy counsel from 1996 until 2009. Megan Inaba, the NBPA’s director of special events and sponsorships since 2000, married Hunter’s son in 2006. Paul, Weiss found that both employees performed their jobs well and were not excessively compensated, yet still concluded that Hunter acted improperly. The report suggested firing Inaba due to her marriage, which strikes me as odd advice for a law firm to give a client.
Beyond direct employment, Hunter’s NBPA position indirectly benefitted his children, Alexis and Todd. Alexis Hunter is an attorney who worked for two law firms–one of which remains a competitor of Paul, Weiss, I would note–that did business with the NBPA. Alexis Hunter later claimed on her resume that she “generated $400,000 in new business for a labor union” while neglecting to mention it was a union run by her father. Of greater significance here, Alexis Hunter joined Steptoe & Johnson in early 2011, just before the NBPA began negotiating its last collective bargaining agreement with the NBA.
Knowing the NBA would impose a lockout, Billy Hunter retained Steptoe to advise him on legal strategy. Alexis Hunter was part of a group from Steptoe that met with Billy Hunter in April 2011. Billy Hunter wanted an alternative to threatening a decertification-and-antitrust action in response to a lockout–a move employed by the NFL Players Association and its executive director, DeMaurice Smith, in late 2011–and Steptoe was prepared to pursue an alternative legal strategy with the National Labor Relations Board. Paul, Weiss criticized both Billy Hunter’s legal strategy and his choice of Alexis Hunter’s firm:
Hunter’s choice to retain Steptoe and pursue an NLRB approach were regarded as unconventional and unlikely to succeed. It was contrary to the strategy that [NBPA outside counsel] Jeffrey Kessler had recommended and expected the Union to pursue. In addition, from the beginning of Steptoe’s retention, Alexis played a significant role in the lockout litigation, even though she lacked significant labor law experience. Further, certain Union employees felt that Steptoe did not have the particular type of labor law experience needed to be effective as counsel in the Union’s battle with the league. These employees claimed that prior to their work for the NBPA, [Steptoe attorneys] Wheeless and Katz had primarily represented management in labor disputes, and appeared to lack experience representing labor unions or litigating issues concerning professional sports. These factors contributed to the perception that Hunter had chosen Steptoe in part because Alexis worked there.
As Paul, Weiss sees it, Billy Hunter was desperate to avoid an antitrust strategy because that would require formally relinquishing control of the union without any guarantee he’d be able to get it back (although it didn’t prove to be a problem for the NFLPA’s Smith). Yet Paul, Weiss seems dismissive of the potential cost a full-blown antitrust lawsuit would have entailed, not to mention the financial self-interest of other law firms that pushed for such a strategy. The antitrust route didn’t exactly prove successful for the NFLPA. A federal appeals court denied the union an antitrust-based injunction that would have immediately ended the lockout. While the NFL and NFLPA did settle shortly after that decision, the timing was more likely a reflection of the NFL’s desire not to cancel any regular season games than fear of protracted antitrust litigation. Most observers expected the NBA to cancel games as part of its lockout strategy.
Outside of the NBPA’s labor negotiating role, Billy Hunter also used family members to work on the union’s business interests. Todd Hunter, Billy’s son and Megan Inaba’s husband, has been an employee of Prim Capital since 2002. Prim is the NBPA’s principal financial advisor and largest outside vendor, managing about $200 million in union assets. Paul, Weiss did not find any evidence that Prim has mismanaged NBPA assets, but nonetheless concluded that “Hunter decided to expand the NBPA’s use of Prim after his son began to work there, and although he has been presented with valid reasons to reevaluate Prim’s role, it appears—as multiple witnesses observed—that Prim’s continued work for the Union has been treated as a foregone conclusion.”
More interesting is Todd Hunter’s role in attempting to fulfill his father’s bizarre obsession with getting the NBPA to start its own bank. In 2007, Todd Hunter was named to the board of ISN Bank, a New Jersey-based commercial lender that by its own admission was “plagued by very high levels of delinquent loans” and desperate for new capital. ISN approached Billy Hunter about having the NBPA invest $7 million. Hunter paid outside attorneys and consultants over $84,000 to review the ISN proposal before ultimately rejecting it. Still, Paul, Weiss concluded Billy Hunter should have known ISN was a bad investment from the outset, and that he wouldn’t have considered the idea at all if not for his son’s involvement.
But the report also notes Hunter was constantly looking for new (and risky) business opportunities for the NBPA. In 2007 and 2008, he spent over $130,000 to pursue an ultimately abandoned joint venture with a Chinese company. In a February 2006 email, Hunter outlined a myriad of cultural- and entertainment-related ideas for the Chinese market, including a “musical extravaganza” and the union’s own culinary empire:
If our intent is to introduce African American culture into China, it is only appropriate that we establish a chain of soul food restaurants. Having visited China several times I know that Chinese people like many of the same foods consumed by African-Americans. The key difference is one of preparation.
Hunter’s outside pursuits suggest he was bored with the role of a simple labor negotiator. Clearly his day-to-day management of the NBPA was leisurely. Among other things, Paul, Weiss noted that the NBPA general counsel’s role has gone unfilled since the death of the previous occupant–Hunter’s longtime best friend–more than a year ago. Hunter’s own contract was not negotiated at arms length and, according to Paul, Weiss, never received proper approval from the NBPA’s governing board.
The problem, as Paul, Weiss acknowledges, is that the NBPA’s members–the players–don’t exercise much oversight over Hunter. But this shouldn’t come as a shock to anyone. The membership is scattered among 30 cities. Union representatives come-and-go with frequency, and are often selected by Hunter himself. Paul, Weiss found there may only be two executive board members currently in office because of retirements and player movement.
If the players aren’t invested in union management–and NBPA dues are $10,000 a year, a pittance for even minimum-salary players–that should be taken as a sign the NBPA itself is irrelevant, at least to the labor side. Remember, most players have their own agents and financial advisors to protect their interests. Hunter’s real job is to protect the NBA. Collective bargaining is a government-mandated process that enables the league to maintain labor restrictions, notably the salary cap, that would not otherwise be practical or legal. Take away the NBPA and NBA clubs would have to deal directly with dozens of player agents, competing furiously for the players’ business. That’s precisely the sort of competition the NBA does not want.
Billy Hunter may have taken every advantage of the NBPA for his own benefit–including a contractual loophole that allowed him to accrue over $1.3 million in unused vacation time–but even the exhaustive analysis of Paul, Weiss could not uncover anything resembling fraud or embezzlement. His biggest offense was lazy hiring practices. You can certainly cherry pick individual items of excess, such as a $22,000 watch Hunter gave to union president Derek Fisher, but one suspects if Paul, Weiss were to turn its investigatory prowess on the NBA and Commissioner David Stern’s office, it would find more serious offenses–such as how a referee under the control of organized gambling was allowed to stay on the payroll for over a decade.