Donald Sterling vs. the NBA: A legal primer
SI.com has learned that attorney Maxwell Blecher, on behalf of Clippers owner Donald Sterling, demanded tonight the NBA give his client three months to respond to the NBA's charge from early in the day. The NBA, sources say, will reject the demand. The league has given Sterling until May 27 to respond to the charge, which asserts that Sterling engaged "in conduct that has damaged and continues to damage the NBA." The May 27th deadline is consistent with the NBA constitution and procedures assented to by Sterling. The NBA, sources say, regard Blecher's request for a three-month delay as unreasonable. May 27th is a month after Sterling's infamous recording became public. The league also asserts it is crucial that there be clear title on the Clippers ownership prior to the start of the 2014-15 season.
As explained on SI.com, the charge is one of several steps required for the NBA to oust Sterling. The league's Board of Governors—which consists of the controlling owner for each of the 30 teams—will meet on June 3 to decide Sterling's fate. SI.com has learned details of the hearing. Minnesota Timberwolves owner Glen Taylor, the board's chairman, will be the presiding officer of the hearing, with the 29 controlling owners other than Sterling acting as jurors. Attorneys for the NBA will make their case against Sterling, and Sterling and counsel can respond. The NBA constitution expressly provides that the federal rules of evidence do not apply to the hearing, meaning the rules for evidence and witness examination will be less formal than in court. If 22 owners sustain the charge, Sterling will be removed from the NBA and the Sterling family trust's ownership of the Clippers would cease. At that point, Sterling and his wife, Shelly, would no longer own the Clippers. The Clippers would then be managed by the office of NBA commissioner Adam Silver, who would put the team up for sale.
Assessing the charge
To justify the charge, the NBA details a wide-range of harms Sterling has allegedly inflicted on the league. The harms range from undermining the league's diversity efforts to damaging NBA relations with fans, players, business partners and government officials. Sterling is also accused of lying through a misleading press release.
For at least two reasons, the league has an incentive to identify as many of those harms as possible. First, doing so bolsters the NBA's case that Sterling has inflicted unprecedented damage on the league. Second, if some of the harms prove exaggerated or unfounded, the league can turn to the others for support.
What to expect in Sterling's response
Sterling has until May 27 to respond to the charge. He could decline to respond, but doing so would seal his fate for ouster. Assuming Sterling does respond, his intended audience will not be the public or media, but rather the 29 other controlling owners who comprise the league's board of governors. His attorneys will draft a brief that likely raises at least three core arguments.
1. Retell the facts as a story of an old man who didn't know he was being taped:
Sterling will attempt to soften the NBA's depiction of his conduct. Watch for him to stress that his comments were made in private and may have been unlawfully recorded and sold to TMZ.com. Sterling knows that some owners may be sympathetic to the fact his remarks were made at home and not intended for public discourse. Perhaps some owners might put themselves in Sterling's shoes and remember making their own statements that, had they become public, may have triggered a similar uproar. These owners also know that if Sterling sues the NBA and if the lawsuit advances past a motion to dismiss, a judge would likely allow Sterling and his attorneys to depose owners about skeletons in their past statements and conduct. Other owners may worry that, while it is unlikely another owner would be tossed, once expulsion happens a first time it can happen a second time.
Sterling might also remind his fellow owners that he is 80 years old. It would not be surprising if the word "elderly" and phrase "senior citizen" are incorporated into his response. Sterling is unlikely to claim—as Shelly Sterling suspects—that he is suffering from early signs of dementia, but he might nonetheless try for elderly sympathy. The logic would be that as an octogenarian, he no longer has his "A" game and is thus less blameworthy for what he says. This would be an especially useful strategy should the NBA cite Article 13(a) as one ground to oust Sterling. Article 13(a) requires willful misconduct. If Sterling's age contributed to his conduct, his attorneys may contend he lacked the necessary willfulness to breach Article 13(a).
The problem for Sterling, of course, is that he has been accused of racial insensitivity in the past, long before he was an old man. Sterling must also explain his offensive answers to Anderson Cooper about Magic Johnson and race relations. As previously examined on SI.com, Sterling's decision to speak with Cooper could ultimately undermine any chance he has to defeat the NBA. During the interview, Sterling unwittingly provided new evidence for the NBA to oust him. Also, the NBA will cite multiple grounds to justify his ouster, most of which do not require willful conduct. Article 13(d), in particular, will be used and only requires that Sterling breached a contract with the NBA. The league is prepared to show that Sterling breached covenants contained in the franchise agreement and joint venture agreement barring him from taking positions adverse to the league.
2. Assert that the NBA has grossly overstated the harm:
The NBA portrays Sterling as having caused the league unprecedented and massive harm. Watch for Sterling to argue the "harm" was mostly speculative, not actual. Players threatened a boycott, but did not actually boycott. Sponsors dropped the Clippers, but it's unclear if replacement sponsors could have been found or if the league or any other team lost sponsors. President Obama linked Sterling's remarks to the legacy of slavery, but he did not blame the NBA or the Clippers, nor did he threaten any action against the league. Sterling is poised to argue the media overreacted to a story on TMZ.com and fanned the flames into an international controversy. From that lens, Sterling would assert the NBA's grievance should be with media not him.
A defense amounting to, "this is all one big misunderstanding," is unlikely to help Sterling. For instance, while it is true the players did not boycott, the threat of a boycott, led by star NBA players, was itself damaging to the NBA. The league receives substantial revenue through the broadcasts of games, and its television partners were troubled by the possibility of games being cancelled. The threat of a boycott also undermined labor relations between the NBA and the players' association.
Blaming the media is also unlikely to score points with NBA owners, who recognize that in this world of a continuous news cycle, any misstep can spiral out of control. These owners probably expected Sterling to know the same and act accordingly. Sterling's decision to go on CNN and speak with Cooper also suggests that he intentionally disregarded the best interests of the league.
3. Portray the NBA as denying him due process and fundamental fairness:
Sterling will likely try to drive a wedge between Adam Silver, Rick Buchanan and other top league officials and his fellow owners. He is poised to frame the commissioner's office as acting without checks and balances and as beholden to media relations rather than principles of fairness. Sterling will highlight how the normally deliberative NBA took just four days to both impose a lifetime ban and recommend the unprecedented step of franchise termination. Sterling might also claim that his attorneys should have had access to the implicating evidence and an opportunity to formulate a thoughtful response before the league made any decision to punish him. In that same vein, watch for Sterling to charge that Sliver, by forcefully recommending Sterling's ouster, irreparably prejudiced his chances for a fair hearing with owners. Sterling might implore owners to stop a commissioner's office that he'll depict as out of control.
These types of arguments are premised on due process, which generally refers to underlying fairness in how rules are used and applied. Lack of due process was a theme raised in a letter by Blecher in which he threatened the NBA with a lawsuit. The letter and Blecher's hiring were first reported by SI.com and provided a glimpse into Sterling's legal strategy.
Due process is a difficult source of law for plaintiffs to raise in the context of a private association. Sterling signed various legal documents with the NBA which, among other things, (1) contractually bound him to avoid taking positions that adversely harm the NBA and (2) affirmed the power of the commissioner to interpret and apply these documents. Sterling would have to convince a court that the NBA acted arbitrarily and capriciously in applying its own rules. "Arbitrary and capricious" is a very high standard to show, and would likely require proof the NBA failed to follow its own rules. On a related note, while Sterling indeed has a First Amendment right to speak about race, that right is likely trumped in this context by his contractual obligations to the NBA.
In addition to Sterling's own affirmation to the process now being used against him, the NBA will surely cite Sterling's refusal to pay his $2.5 million fine as evidence that he refuses to play by the rules. Owners who appreciate that individuals live up to their end up of the bargain may especially resent Sterling's insubordination. This would further undermine Sterling's attempt to cast the NBA as failing to provide due process.
Legal wild card: Sterling seeks an injunction
At any time, Sterling could petition a court for an injunction to stop the NBA from ousting him. The most likely form of an injunction would be a preliminary injunction, which would constitute a court order instructing the NBA to refrain from further actions against Sterling. Sterling would probably ask that an injunction last in duration until a court holds a trial on an accompanying lawsuit against the NBA. Sterling would make such a request knowing that a trial would likely not occur for several years. Sterling's odds for obtaining an injunction are low. A judge would balance four factors, three of which seem to cut decisively against Sterling.
First, Sterling would have to show that he has a substantial likelihood of success on the merits. Sterling would struggle to establish this. At the end of the day, he contractually assented to the NBA's rules and procedures. Unless he has evidence that he was misled or tricked by the NBA into signing legal documents -- an unlikely scenario given that he's a lawyer and the longest-serving NBA owner -- he would face an uphill battle.
Second, Sterling would have to prove that he'd suffer irreparable injury if no injunction was granted. Here Sterling would have a decent argument. If Sterling loses the Clippers, it's safe to say that he would never get another NBA team or a team in any of the other major pro leagues. To the extent a judge regards losing a pro team as an irreparable harm, Sterling would prevail on the second factor. Still, judges are often skeptical of irreparable harm, with many judges believing that if money damages can adequately remedy a loss the loss should not be considered irreparable. It seems reasonable to assume that if Sterling loses the Clippers and then later prevails in a trial, a jury could calculate an appropriate damages figure.
Third, Sterling would need to establish that a preliminary injunction would not harm the NBA more than it helps him. Sterling might assert that he would bear the entire loss of being forced to sell the team, whereas his continued presence in the NBA would be as merely one of 30 controlling owners. The problem for Sterling on this factor is that LeBron James and other players have threatened to boycott the NBA if he remains an owner. Such a threat poses serious harm to the NBA. Sponsors may also avoid dealings with a Sterling-led Clippers, and some Clippers fans may be less inclined to follow the team if Sterling is still involved.
Lastly, Sterling would have to show that an injunction would advance the public's interest. Sterling would likely insist that he is being unfairly ousted for exercising his the First Amendment rights and in a context in which the recording may have been illegal. The NBA, however, would quickly point out that Sterling's ouster is consistent with rules he agreed to play by and that his remarks extended beyond a private conversation into a very public interview with Anderson Cooper. The NBA, moreover, is not affiliated with the government and it would take a highly creative argument to prove the NBA is a "state actor" for purposes of having to safeguard Sterling's constitutional rights.
Legal wild card 2: Shelly Sterling files for divorce
In the chess match of potential legal maneuvers, Shelly Sterling—who as reported on SI.com would lose her stake in the Clippers if her husband is ousted—could file for divorce before the NBA votes out Donald Sterling. The filing of a divorce would probably not stop the NBA from ending the Sterling family's ownership of the Clippers, but it might delay the NBA considerably. California is a community property state, which means that Mr. and Mrs. Sterling jointly own assets acquired during their marriage. The Clippers are one such asset. The filing of a divorce would require a fair market valuation of assets by a family judge, who would likely issue a restraining order against the NBA at least until the valuation was complete. This process could take months or much longer.
Sources familiar with the NBA's legal strategy, however, are skeptical Shelly Sterling will file for divorce. They note that she has maintained a 59-year marriage with her husband despite his open acquaintances with other women, including V. Stiviano. They also point out that Shelly Sterling sued Stiviano to retrieve property, rather than file for divorce. Even if she files for divorce, the valuation of the team may not take very long: an auction of the Clippers would provide a clear market value, especially since both the NBA and Sterlings would have the common interest of maximizing value of the team.
Michael McCann is a Massachusetts attorney and the founding director of the Sports and Entertainment Law Institute at the University of New Hampshire School of Law. He is also the distinguished visiting Hall of Fame Professor of Law at Mississippi College School of Law.