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Donald Sterling v. NBA: An Analysis

I have a couple of articles for SI.com tonight on Donald Sterling's lawsuit against the NBA and the indemnity agreement his wife, Shell Sterling, has signed with the league:

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Sterling lawsuit

Here is Donald Sterling's federal Complaint against the NBA. I think I'm with Lester Munson that this is frivolous, particularly the anti-trust and state constitutional claims; Munson thinks Sterling will be hit with sanctions, although I doubt it, knowing how judges wield FRCP 11 with wealthy plaintiffs. As for the breach-of-contract claims: If, as reports are suggesting, the league is going to approve the Shelly Sterling-brokered sale of the Clippers to Steve Ballmer and the league is going to cancel the hearing on forcing Donald to sell, then he has no claim against the NBA, only against Shelley and/or the family trust.

Correction/Further Thoughts: I should have looked more closely at the relief sought, including on the breach claims (which have more merit than the federal antitrust claim): As to all counts, Sterling seeks injunctive relief  eliminating the fine and lifetime ban, reinstating his preferred CEO, and halting the NBA's termination proceedings (which the NBA already appears to have halted).

And here is where, I think, it has the makings of a Civ Pro exam: If the NBA approves the sale, these claims all become moot (assuming the NBA waives the fine, as I imagine it would to make this all go away). Sterling's next move is to enjoin the sale. But to do that, Shelly Sterling (and the family trust, to the extent she claims to be running it) become compulsory defendants under FRCP 19, since Shelly purports to control the trust and is making decisions (whether the NBA's fingerprints are on those decisions or not) and she thus claims an interest in this matter that Sterling will not represent. Alternatively, Shelly will move to intervene to protect her interests. Resolving that issue also will require determinations of Sterling's competency and who is in control of the trust--these are complex issues of state law, which might cause a federal court to decline to exercise supplemental jurisdiction over the state law claims (the three breach counts and the state constitutional law count) and leave Sterling to pursue this in state court. That would leave only the antitrust claim in federal court, which everyone seems to agree is a non-starter, regardless of relief sought.

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More Breaking News: Clippers may be sold to Steve Balmmer, but Donald Sterling reportedly declared Mentally Incompetent

The never settled Donald Sterling has taken some new twists over the last five hours.  I have a new article for SI.com examining what has happened and what to expect next.

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Breaking News: NBA willing to fast track sale of Clippers and postpone Donald Sterling hearing

I have some breaking news on SI.com on the Donald Sterling matter.  I hope you can check it out and also read Nathaniel Grow's excellent post below this post analyzing the Fair Labor Standards Act and pro sports--a very timely topic.

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Pro Sports Teams and the Fair Labor Standards Act

The professional sports industry has recently seen a wave of minimum wage and overtime lawsuits filed under the Fair Labor Standards Act (FLSA).  Michael McCann previously discussed one of these cases, Senne v. Office of the Commissioner of Baseball, a class action suit alleging that minor league baseball players are effectively paid below the minimum wage when the total number of hours most players work per year are taken into account.  Similarly, various groups of NFL cheerleaders have filed lawsuits against their teams (including the Buffalo Bills, Cincinnati Bengals, New York Jets, Oakland Raiders, and most recently, the Tampa Bay Buccaneers), also alleging that they are effectively paid less than the federally guaranteed minimum wage of $7.25 per hour.  Meanwhile, a separate class action lawsuit was filed last year against MLB on behalf of unpaid volunteers at the annual FanFest convention held in conjunction with the All-Star Game each year.  Fear of a similar lawsuit reportedly motivated the NFL to begin paying what had in previous years been unpaid volunteers at this year's Super Bowl.

One legal issue that will need to be resolved in these lawsuits is whether the professional sports industry is exempt from the FLSA's minimum wage and maximum hour requirements under Section 213(a)(3), a provision covering seasonal amusement and recreational establishments.  Under the exception, any business providing amusement or recreational services to the public may pay its employees a sub-minimum wage (without overtime) should one of the following two conditions exist: either (a) the business does not operate for more than seven months in any calendar year, or (b) the business's receipts from its six lowest revenue months in the previous year were less than 33 1/3% of its receipts in its six highest revenue months (e.g., the business's receipts from April-September were at least three times greater than its receipts from October-March).

While sports franchises clearly provide amusement or recreational services, it is less certain whether they satisfy the exception's seasonality requirement.  Professional sports teams hoping to claim seasonal exempt status under the FLSA will likely have to rely on the first condition under Section 213(a)(3).  Indeed, because teams tend to receive a significant percentage of their revenues during the off-season (from season ticket deposits, television broadcast agreements, sponsorship deals, etc.), they typically will not satisfy the six-month receipts requirement set forth in Section 213(a)(3)(b).  See Bridewell v. Cincinnati Reds, 155 F.3d 828 (6th Cir. 1998) "Bridewell II").

Meanwhile, courts are split regarding the status of professional sports teams under Section 213(a)(3)(a)'s seven-month operation provision.  Two of the three courts to consider the issue to date have held that sports franchises effectively operate year-round, and therefore do not qualify for the FLSA's seasonal exception.  For example, in Bridewell v. Cincinnati Reds, 68 F.3d 136 (6th Cir. 1995) ("Bridewell I"), a group of stadium maintenance employees sued the Cincinnati Reds alleging that the team had failed to pay them overtime as required under the FLSA.  The team asserted that it was exempt from the law because its season ran seven months (including spring training).  The 6th Circuit rejected this argument, concluding that the team was a year-round business.  In particular, the court noted that the team's operations extended beyond just the playing season, as evidenced by the fact that the Reds employed nearly 120 people on a year-round basis.  As a result, the appellate court concluded that the team was subject to the FLSA.

Similarly, the Eastern District of Louisiana held that the NBA's New Orleans Hornets were likewise subject to the FLSA in a suit brought by former ticket sales and fan relations employees.  In Liger v. New Orleans Hornets, 565 F.Supp.2d 680 (E.D. La. 2008), the court concluded that the Hornets were not exempt under Section 213(a)(3)(a) because the totality of their operations lasted more than seven months.   In particular, the court stressed that the Hornets' season could potentially last as long as nine months if pre-season and post-season games were considered, while also noting that the team participated in the NBA Draft each June.  Moreover, the court emphasized the fact that the Hornets employed 100 or more employees on a year-round basis.

However, at least one court has held that that a professional sports franchise was a seasonal operation exempt from the FLSA.  In Jeffery v. Sarasota White Sox, 64 F.3d 590 (11th Cir. 1995), a grounds keeper for a minor league baseball team sued the franchise for unpaid overtime.  The 11th Circuit rejected the challenge, holding that the team was exempt from the FLSA.  In particular, the court stressed that the proper focus under Section 213(a)(3)(a) was on the duration of the team's amusement and recreational-related operations themselves, not the fact that some of its employees may be employed on a year-round basis.  Consequently, because the minor league team's season only ran for five months, the court held that the franchise was not required to pay overtime.   Undoubtedly hoping to take advantage of this precedent, the MLB defendants in the Senne minor league wage lawsuit filed a motion to transfer the case from California to the Middle District of Florida (the original site of the Jeffery litigation) last week.

Thus, the status of professional sports teams under the FLSA is currently unsettled.  Should the courts in the pending lawsuits follow the Bridewell and Liger precedents, then it appears that the defendant professional sports franchises will be subject to the FLSA.  However, if future courts were to follow the Jeffery v. Sarasota White Sox precedent, then the applicability of the exemption would likely vary by league depending on the duration of its playing season.  In fact, a court could even determine that the status of teams in the same league differs depending upon whether the franchise qualified for the playoffs the year before. Given the number of suits currently pending, we will likely receive additional clarification from the courts on this issue in the near future.

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Sports law quote of the day

From the June/July Esquire, there is a sidebar on the ages at which "your child is capable of learning to" do certain sports-related things. On the list: "Understand the infield fly rule: 34"

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More on Sterling's defense

Mike and Jimmy both mentioned that Sterling had filed his written defense to the NBA's proceedings to oust him from the league; here is the full brief. A couple additional things of note.

Sterling's arguments are steeped in statutory interpretation, including some issues I previously noted. He insists that the $ 2.5 million fine is impermissible because the NBA is relying on the wrong provision. Article 24(l) is not in play, since it applies only if no other penalty is fixed for a given rule, but Article 35A(c), which prohibits speech detrimental or prejudicial to the best interests of the league, does provide for a fine of no more than $ 1 million. He also argues against the NBA's use of Article 13(d) as the basis for the forced sale--the NBA cannot use that as a catch-all provision to capture violations of all other rule or agreement, since Article 13(a) already serves as a catch-all by prohibiting willful violations of any provision of the Constitution and By-Laws, resolutions, or agreements. Presumably the NBA relied on 13(d) to get around the willfulness requirement; Sterling's point is the league cannot do that.

Sterling leads off by challenging the NBA's reliance on the secretly recorded conversations as evidence, which gets interesting. He points to California's penal code, which prohibits recording confidential communications without consent and excludes evidence obtained through unconsented-to recordings "in any judicial, administrative, legislative, or other proceeding." From this, Sterling insists he has a constitutional right not to have his private conversations recorded or having the evidence of his conversations used against him. That seems overstated--that the state offers a statutory protection against being recorded in furtherance of the constitutional right of privacy does not convert the right against being recorded into a constitutional right.

The interesting statutory question is whether internal dispute-resolution proceedings of a private organization constitute an "other proceeding" under California law. On one hand, the language seems to contemplate public proceedings, since the three enumerated types of proceedings are all public in nature (so under ejusdem generis, that catch-all should be read to cover only similarly public proceedings). It also makes sense that the criminal code would regulate evidence in public rather than private proceedings. On the other hand, what sorts of public proceedings exist that are not judicial, administrative, or legislative? Perhaps the catch-all refers to something like arbitration or mediation, which can be considered quasi-public--they are privately controlled processes to which parties agree to send otherwise-public disputes. Even so, however, does that capture the entirely private and internal proceedings the NBA is using here?

Moreover, the answer to that question may be affected by the 2001 decision in Bartnicki v. Vopper. Bartnicki held that Congress could not punish publication of an illegally intercepted and recorded phone call, where the publishers were uninvolved in the unlawful interception or recording. The First Amendment protects publication (and, implicitly, other uses) of truthful lawfully obtained information on matters of public concern, except where the government is serving a need of the highest order. So perhaps the NBA could argue that it is entitled under Bartnicki to use the recording in its private internal proceedings, meaning California law is limited only to public, California-established proceedings, but not to whatever private proceedings private persons or entities may choose to use the lawfully obtained recordings.


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Donald Sterling's response to the NBA is nothing if not a signal that he plans to, as his lawyer told ESPN, "fight to the bloody end." If he does, the ownership of the Los Angeles Clippers could wind up in a three-way court battle while Sterling, his wife and the NBA claim control over the team and its sale. 


I looked at the legal issues today in an AP story. The thing that struck me about Sterling's position is that, while he may have a winning point or two, he would really need to sweep the legal arguments. The NBA constitution is silent on who bears the burden of proof in the trial-type hearing, which is still scheduled for Tuesday. It also says nothing about what standard his fellow owners must use before stripping him of his team -- no "beyond a reasonable doubt," no "preponderance of evidence," no nothing. The league seems to be interpreting that to mean that the Clippers can be seized at will, as long as its own rules are followed. 

We'll see.

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Donald Sterling Strikes Back

Donald Sterling struck back tonight with an impassioned response to the NBA charge to oust him. But did he connect? And how will the NBA strike back? My take for Sports Illustrated | SI.com.

Update: I was on the Dan Patrick Show this morning to talk about Sterling:

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NBA to reject Donald Sterling's attempted transfer of Clippers to wife Shelly Sterling

On SI.com I have a new article -- now with correct hyperlink -- on how the NBA will reject Donald Sterling's attempt to transfer the Clippers to his wife, Shelly Sterling, ostensibly for the purpose of selling the team.

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O'Bannon Litigation Court Filings

(Note: click on the graph if you want it to appear larger.)

The O'Bannon v NCAA case (officially "In Re: Student-Athlete Name & Likeness Licensing") was filed in May of 2009. Since that time, there have been more than 1,090 court filings in this case. The graph was produced by one of the nation's leading sports economists, and Sports Law Blog honorary expert economist, Andy Schwarz (@andyhre).

You'll note the volume increases when Keller & O'Bannon were being consolidated, during class certification motions, discovery fights, summary judgment filings, and finally leading up to the hearing and opinion.

One interesting fact, merits reports on liability and damages were exchanged but not filed with the Court and thus the actual volume is actually more substantial than this graph indicates for the months of September and November of 2013. Similarly, because of how pacer reports multiple-exhibit documents, the chart tends to understate the sheer volume of paper filed in the peak months when 10-plus exhibits can be the norm.

To be clear, this is a messy case relative to multiple plaintiffs, consolidation efforts, and the class certification process. However, it also speaks volumes as to the incredible investments--both by the plaintiffs and defendants--of both time, effort and money. Additionally, the case is no where near concluding. In the future, law schools may be able to teach civil procedure, constitutional law, rights of publicity, antitrust law, and labor law all by examining this case.

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Dent v. NFL: Painkiller Litigation

I have an article on Peter King's MMQB today on the new painkiller lawsuit brought eight retired NFL players against the NFL and the NFL might defend the suit. I also discuss the possible role of marijuana as an alternative to synthetic painkillers.

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The case against Sterling -- Update

The NBA has released a summary of the charges against Sterling. You can read it here, and here is the AP story about it.

The NBA filed its case against Donald Sterling on Monday, initiating a process that could have him stripped of the Los Angeles Clippers by June 3 -- two days before the start of the NBA finals. Under the league's constitution, Sterling will have a chance to respond and the right to a hearing, but Commissioner Adam Silver appears to have the votes to oust him.

Here is Sports Law Blog founder Michael McCann's take on how the process will go forward.

Although the charging documents have not been made public yet, the league said in its announcement that Sterling's racist comments have exposed the league to publicity "has damaged and continues to damage the NBA and its teams." The case against him is expected to include statements from sponsors regarding the diminished value of a connection with the Clippers. Also, because the league has an obligation under the CBA to maximize revenue, the NBA is expected to argue that Sterling's comments left the league vulnerable to a complaint from the players.



Here's what the NBA said in its press release: 


Mr. Sterling’s actions and positions significantly undermine the NBA’s efforts to promote diversity and inclusion; damage the NBA’s relationship with its fans; harm NBA owners, players and Clippers team personnel; and impair the NBA’s relationship with marketing and merchandising partners, as well as with government and community leaders. 

Sterling has until May 27 to respond. At the June 3 hearing, he will have the right to counsel but the league constitution specifically notes that strict rules of evidence will not apply. (Sterling agreed to that when he became a member of the league. It also notes that each owner "waives any and all recourse to any court of law to review any such decision" to terminate his ownership.)

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Boston City Council member Josh Zakim proposes Athletes Bill of Rights in Boston

Zakim (150)Boston City Councilor Josh Zakim has filed two ordinances designed to protect college athletes in Boston and take on the NCAA.  This is an interesting use of municipal law to regulate college sports, which have traditionally been regulated by federal and state laws.  It will be worth watching how the NCAA responds.

The first ordinance is the "College Athlete Bill of Rights," which Zakim's office in a statement says,

[S]teps in where the NCAA has failed to adequately safeguard the educational and health rights of college athletes. The Bill of Rights guarantees that a college athlete who receives an athletic scholarship from a college or university in Boston will receive an equivalent scholarship commitment from his or her university that extends throughout the undergraduate career. This commitment remains even when the college athlete suffers an injury that ends his or her participation in athletics, or simply falls out of favor with his or her coach. "If the mission of the NCAA and its member institutions truly is to educate, then scholarships should not be renewable at the sole discretion of the school," said Zakim. "Asking college athletes to make a four year commitment to their schools without any reciprocal commitment from the school is unjust and hypocritical."
The Bill of Rights also requires that colleges and universities in Boston which grant athletic scholarships provide college athletes with comprehensive health insurance throughout their careers, as well as reimbursement for any uncovered health expenses relating to athletic injury. Moreover, if a college athlete requires medical care beyond his or her playing career, the university will be responsible for providing that care or covering its cost. "When a college athlete has committed his or her body to competing on behalf of a school, the least that school can do is guarantee that college athlete's healthcare," said Zakim. "Forcing a college athlete to go 'out of pocket' to pay for an injury suffered in his or her sport, as I know happens to college athletes in Boston and elsewhere, cannot be tolerated."
Finally, the Bill of Rights addresses the rising troubles of sports-related dehydration and concussion in practice and training sessions, which is where the majority of such incidents occur. Inspired by Massachusetts legislation covering high school athletics, the ordinance mandates that any college athlete who loses consciousness or suffers a concussion, whether in a practice or training session, must sit out the remainder of that session. Any further participation is prohibited until the college athlete receives documented medical clearance provided to his or her athletic
director. "Sports-related dehydration and injuries to the head, neck, and spine are on the rise," Zakim said, "and if the NCAA refuses to regulate this issue, then we here in Boston must."
The companion ordinance is the "College Athlete Head Injury Gameday Safety Protocol." It proposes to
institute health and safety measures specifically related to head, neck, and spine injuries which occur at intercollegiate athletic events anywhere in Boston, regardless of where the competing teams are domiciled. In addition to Massachusetts high schools, professional leagues like the NFL and NHL have such policies in place. The NCAA does not. The Protocol requires colleges and universities to create an emergency medical action plan for all gameday venues and provide an on-call neurotrauma consultant to support on-site medical staff. For football, ice hockey, and men's lacrosse, which produce the highest rates of gameday concussion, the neurotrauma consultant will be required on-site. Further, the Protocol bans re-entry into a competition when a college athlete loses consciousness, suffers a concussion, or is suspected to have suffered a concussion.

"Protecting young people in Boston, whether residents or visitors, is one of the City Council's most critical duties," said Zakim. "Recognizing that college athletes are at risk for serious injury, and taking reasonable measures to safeguard against that risk, is an urgent matter of public health and conscience."

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My response to Steve Edwards of NewsBusters

On NewsBusters, Steve Edwards of the Media Research Center takes aim at my recent Sports Illustrated article on Donald Sterling titled "Power and Process." He is complimentary of the piece until he reaches the last paragraph.  You can read more in "Sports Illustrated’s McCann Lumps Pro-Traditional Marriage Supporters With Actual Criminals."

I'm not sure how to contact Mr. Edwards, so I figured I would just post my email here and hope he reads it.

* * *

Dear Mr. Edwards,

I am e-mailing you because you or others on your behalf have contacted me repeatedly on Twitter. While I appreciate that you read my article on Donald Sterling in Sports Illustrated and your complimentary points about it, I believe your criticism about my reference to Rich Devos' position on marriage is not supported and I also find the title of your post to be badly misleading.  Let me explain. 

Mr. DeVos is protected by the U.S. Constitution (and state constitutions) to advocate any viewpoint he wants about marriage.  His view is not--and should never be--criminal.  His view, however, may like other views by owners on various topics breach a contractual obligation owed to the NBA.  This is the same reason why Donald Sterling is in trouble with the NBA.  Every NBA owner has signed a franchise agreement and a joint venture agreement which contain a covenant that states owners cannot "take positions that may have materially adverse effects on the league."  The NBA commissioner is entitled to interpret this language, and the NBA's Board of Governors can use this language to terminate ownership in a team.  Mr. Sterling and Mr. DeVos, for that matter, agreed to this language by contract.   To be clear: an owner can express a constitutionally protected view, including one based on his moral or religious beliefs, but still run afoul of a contractual obligation owed to the NBA. 

Also, the five examples provided in the article have one thing in common, and it is not -- as your post suggests -- a link to criminal conduct.  Here are the five examples:
  • Donald Sterling: stated controversial comments that have caused the NBA economic damage, and in Commissioner Silver's view have had a materially adverse effect on the league.
  • Rich DeVos: advocated a controversial position on marriage that arguably runs counter to the NBA's views about this topic. 
  • Jim Crane: reportedly settled civil lawsuits concerning discrimination.
  • Jimmy Haslam: is under investigation for fraud.  He has not been charged with a crime, let alone convicted of one.
  • Mark Cuban: was a defendant in a civil lawsuit filed by the SEC and he won the lawsuit.  The lawsuit generated some controversy for the NBA.
Please note that none of these examples references an "actual criminal"--let alone, as your post's title wrongly asserts, "actual criminals."  The closest to an "actual criminal" is Haslam, who again, has not been charged with a crime and thus has not been convicted.  He therefore is not a "criminal."  The other four examples reference individuals who have generated controversy but have obviously not broken any criminal laws.  I think you owe your readers a correction.

Along those lines, the article does not raise moral questions about positions.  It is a legal article about how the NBA might enforce a contractual covenant about positions that arguably have a materially adverse effect on the NBA.  I think you would agree that Mr. Devos' position on marriage is controversial.  I recognize that you may support his position, but I also believe that you recognize it is a controversial position.  To date, there is no reason to believe Devos position has had a materially adverse effect on the league.  However, whether that is true in 5 or 10 years, is unclear.  It will be up to the NBA to judge.

Thank you for reading this e-mail.  You have my permission to quote this email, but on that condition that if you do, you post it in its entirety.

Best regards,
Michael McCann

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Infield shifts and infield flies

Today's New York Times reports on the increasing use of infield shifts.
In March, I did a workshop at American University on my empirical study of the infield fly rule. One person asked how the increased use of shifts affects the rule and it is a potentially interesting question.

First, we may have to rethink what is playable with "ordinary effort" when a shift is on. In this photo, there is no one playing in the shortstop "space." On a ball hit right to where the unshifted shortstop would have been standing, either the third baseman (standing in his normal spot) or the shortstop (standing to the right of second base) may have to run a fair distance to catch even an easy fly ball. Is that still "ordinary effort"?

Second, if the infielder is playing in the shallow outfield, is he still an infielder? We know the converse is true--an outfielder "who stations himself in the infield on the play" is deemed an infielder for purposes of the rule. But what about an infielder in the outfield? The rules define an infielder as "a fielder who occupies a position in the infield." Does the shallow infield grass count as the infielder?  (I would argue it does, since that is an area routinely covered by infielders and the I/F/R applies to a lot of balls hit to that area). Does it require the umpire to judge whether the player is close enough to the infield to still be an infielder?

Now, it seems to me that teams would be less likely to shift with runners on first and second or the bases loaded (the situations in which the I/F/R might take effect), since the shift makes it more difficult for infielders also to deal with base runners. If so, this becomes a somewhat academic point. Still, to the extent shifts remain, it could present some interesting interpretive issues.

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New Developments in Sterling and A-Rod Controversies + Johnny Manziel and Taxes

I have a few new articles for SI.com on Donald Sterling and new revelations into MLB's investigation into Alex Rodriguez, and have also co-authored an article with sports tax guru Robert Raiola on Johnny Manziel and state income taxes:
 
The Potential Legal Fallout from Donald Sterling's CNN Interview (May 13, 2014)
"While these responses may reveal a man who makes sweeping generalizations about groups of people -- especially African-Americans and Jewish people—they may also signal a man who no longer processes information as effectively as he once did. Along those lines, would some owners feel uncomfortable ousting an elderly owner whose mind may not be what it was? Would they feel even more unease if Sterling is diagnosed by a physician with an actual cognitive impairment? Remember, a supermajority of NBA owners -- 22 out of 29 -- will be needed to oust Sterling. If Sterling, the longest serving owner, can find eight sympathetic colleagues, he won't be kicked out of the league."


State Taxes may compel Johnny Manziel to avoid Ohio residency (with Robert Raiola) (May 13, 2014)
"Manziel can still avoid Ohio's income tax on most of his endorsement earnings simply by making sure that he remains a Texas resident. He's thus likely to keep his Texas residency and not avail himself of Ohio tax law unless it's absolutely necessary. A local trading card show or endorsement for a Cleveland car dealer would trigger Ohio tax law, but national endorsement deals would not. Expect Manziel to avoid spending 182 days in Ohio, as doing so would risk him being classified as a "full-year nonresident" under Ohio law and having higher taxes. Although Manziel dropped in the draft, he remains one of its most marketable players. He recently signed a multi-year endorsement deal with Nike that will reportedly pay him at least $20 million."



New evidence released in Alex Rodriguez case, but his options are limited (May 12, 2014)
"Rodriguez and Sterling now appear to be in the same boat of league justice: both have been punished by leagues based in part on dubious evidence. Keep in mind, this is evidence that a jury would probably never hear on grounds of inadmissibility. The legal problem for Rodriguez and Sterling is two-fold: leagues play by a different set of rules for what counts as admissible evidence in their "courts" and both men agreed to these rules. The leagues run their own hearings, featuring their own procedures for admissible evidence. While Rodriguez had an opportunity to plead his case before an arbitrator, Frederic Horowitz, arbitration is not a court trial. Rules of evidence in an arbitration are much more lax and informal. There are no jurors in an arbitration. There is no public record. It is private justice."

I also had the chance to join the Dan Patrick Show yesterday and discuss social media law for pro athletes and Donald Sterling:

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Sports Lawyers Association Conference


If sports lawyers attend one conference a year it's the Sports Lawyers Association (SLA) annual conference. Next week, SLA will descend upon Chicago for the 40th Annual Conference.  To see the entire agenda, you can visit the SLA website here.

It should be noted, that the Sports Law Blog will be well represented on the following panels this year:

"The Evolving Legal Landscape of College Athletics" will be moderated by Warren K. Zola and the panel will be enhanced by having Timothy Epstein on it.

"Balancing Legal Ethics in a 24/7 Media World" will be moderated by Gabe Feldman.

"Teaching Sports Law" will benefit from having Mark Conrad on the panel.

"Investigating Sports Corruption in the U.S." will be moderated by Ryan Rodenberg.

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Understanding the NBA's Legal Strategy to oust Donald and Shelly Sterling

The NBA has designed a legal strategy to oust both Donald and Shelly Sterling. I learned about the strategy last night and wrote about it on SI.com.

Here is an excerpt:

But Shelly Sterling's ownership of the Clippers should not be confused with control of the Clippers. This distinction reflects the different layers of NBA ownership. Most NBA owners are not in charge of their teams. They have been approved by the NBA to own some percentage of a franchise, but they do not represent their franchise on the NBA's Board of Governors and are not considered the official voice of their franchises. They are regarded as "non-controlling" owners. There are many perks to being a non-controlling owner, including attendance privileges, inside access to team operations and the ability to tell the world that you own an NBA team. But actual control over the team is not one of those benefits. Shelly Sterling is a non-controlling owner of the Clippers. 

Donald Sterling, in contrast, is in a more exclusive and powerful category as one of the NBA's 30 controlling owners. Until his ban, he had final say over all matters Clippers and represented the team in league matters. In his absence, the office of the NBA commissioner has become de facto controlling owner. Earlier today, the league—not Shelly Sterling—installed a new CEO, former Time Warner CEO Dick Parsons, to run the team. While Shelly Sterling has signaled support for the move, her support is irrelevant under the law. 

If Shelly Sterling wants to become controlling owner of the Clippers, the league would have to approve such a step. The NBA would not approve Shelly Sterling as controlling owner, sources close to the situation tell SI.com.

To read the rest, click here.

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Will Jim Tressel be the NCAA's Gorbachev?

The Akron Beacon Journal is reporting that Jim Tressel, who remains subject to an NCAA sanction in connection with his tenure at Ohio State, has been named president of Youngstown State University.

The NCAA, under multiple existential threats, has always been governed largely by college presidents.  Tressel may be the first college president selected after having been involved in NCAA violations (bleg for other examples).  One can't help but speculate that Tressel could become the Gorbachev of college sports -- an insider who helps instigate the destruction of the current system.

Tressel had also been a candidate for the presidency at the University of Akron.

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Power and Process: The Long Term Implications of the NBA disciplining Donald Sterling


Hope you have a chance to pick up this week's issue of Sports Illustrated magazine (May 12th issue). My essay titled "Power and Process" appears on pages 16 to 18, and it centers on the long term implications for the NBA in disciplining Donald Sterling. I'll share the link to the essay when it's put online in the next week or two. Here are a couple of excerpts:
* * *

Silver asserts that Sterling's troubled history can help to justify his ouster.  Should it? Until last week, the NBA had practiced a hear-no-evil, see-no-evil approach to Sterling's prior bad acts and broken promises . . . Silver stressed that the league could not act in those instances because were either settled or won by Sterling.  But now Sterling faces banishment for words that can't even give rise to a lawsuit?

  . . . 

In the future, should owners who draw the wrath and outrage of the public be subject to the loss of their franchises?  Regardless of how you feel about Sterling's behavior, a precedent has now been established.  Maybe it shouldn't have been.
Update: Ryan Rodernberg has co-authored an outstanding article on New Jersey's sports betting case on page 52 of this same issue, and Andrew Brandt has a great article on the NFL needing a D League on page 20. This is the issue of sports law!

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Involuntary Conversion tax benefit for Donald Sterling? Think again

Some media commentaries have suggested that Donald Sterling, if forced to sell the Clippers, would be able to avoid taxes under federal tax law which permits taxpayers to avoid capital gain taxes for "involuntary conversions."  In a new article for SI.com, I interview CPA and sports tax expert Robert Raiola, who explains why those commentaries are likely wrong.  Here's an excerpt:

"First," Raiola stressed, "the IRS could argue that the sale was pursuant to bylaws and provisions which Sterling agreed to play by, rather rules being forced on Sterling."

Articles 13 and 14 of the NBA's constitution detail an intricate procedure for owners to terminate the interest of another owner in a team. Sterling and other owners agreed to this procedure. Interestingly, the termination of Sterling's interest in the Clippers would not technically constitute a sale of the franchise. Instead, the NBA and the office of commissioner Adam Silver take control of Sterling's interest. This means the league would essentially run the Clippers, much like it ran the New Orleans Hornets after purchasing the team from George Shinn in 2010. The league would then have the choice of selling the Clippers at a price Silver deems "reasonable and appropriate." From this lens, the sale of the Clippers would not be "involuntary": Sterling would have voluntarily given his blessing to a procedure later used to oust him. Sterling (and perhaps the NBA) would be subject to capital gain taxes in this scenario. 
To read the rest, click here.

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Donald Sterling and free speech

There have been scattered rumblings about the problem of the NBA sanctioning Donald Sterling for protected, although offensive, speech. Obviously, this is not a First Amendment problem, since the NBA is a wholly private actor. But we might call it a free speech problem, in that Sterling did suffer a sanction for expressing his opinions. And because it may be difficult to draw the line between this case and people speaking on other matters of people controversy (marriage equality, gay rights, abortion, whatever) and possibly offending someone, the specter of league-imposed suspensions for political speech looms.

Mike Dorf looks for a principled line and finds it in a broad  conception of harassment, such that once Sterling's racist views became public, his continued position as owner "created a kind of hostile work environment." While this is not enough to violate Title VII, Dorf argues that private firms often adopt prophylactic policies that go beyond what the law requires. He thus urges the NBA to defend the punishment on those grounds, rather than on his offensive speech simpliciter.

There is an appeal to this view, especially as a post hoc explanation for what the league did and as a way to isolate what Sterling did as something unique. But I wonder if the principle can be easily cabined. Any controversial policy could be recast as creating this sort of hostile environment--an openly LGBT player may find it hostile that the owner or a teammate contributes to anti-marriage equality causes, just as a devoutly religious player may find it hostile that a teammate opposes Christian prayer before public meetings, just as an Dominican player may find it hostile that a teammate supports heightened immigration enforcement. Maybe this is just the worst kind of slippery-slope anxiety--no league is going to suspend anyone for being involved in genuine social and political causes and we should not dignify what Sterling did by comparing it genuine political involvement. But I am not convinced Sterling (or to go back a longer time, former MLB pitcher John Rocker) only a difference of degree, not kind.

But if not Dorf's approach, then what?

One possibility is to try to distinguish speech (and wrongful non-speech activities) that genuinely relates to one's part or role on a team and in the league from speech that does not, with only the former providing a basis for league sanction. I thought about a version of this in thinking about what the league should have done a decade ago with the various racialized civil actions Sterling was involved in.

Now, this may not be any better, since it does not necessarily avoid those same line-drawing problems. Just as a league always can say X's involvement in a hot-button political controversy "creates a kind of hostile work environment," so can a league always say X's involvement in a hot-button political controversy relaates to his role on the team (often by throwing out the buzzword of creating "distractions in the lockerroom"). This saves us having to define and develope a new concept such as "kind of hostile work environment." But we still have to figure out what "genuinely relates" to one's role on the team. Another approach is for private entities to import some kind of Pickering balance, although that remains squishy and malleable enough to still cause problems.

None of this changes my basic view that the NBA has the authority to force the sale (and probably to suspend) Sterling and that these sanctions should hold up if/when he challenges them in court. But Dorf is onto something about not what the league can do, but what it ought to do.

status within the Clippers organization created a kind of hostile environment - See more at: http://verdict.justia.com/2014/05/07/limiting-principle-donald-sterling-case#sthash.d6L4K1IG.dpuf
Although the immediate predicate for disciplining Sterling was the recording of his racist comments, he was not - See more at: http://verdict.justia.com/2014/05/07/limiting-principle-donald-sterling-case#sthash.d6L4K1IG.dpuf
Although the immediate predicate for disciplining Sterling was the recording of his racist comments, he was not—or should not have been—disciplined merely because he held racist views. He was disciplined because once those views were made public, his status within the Clippers organization created a kind of hostile environment. - See more at: http://verdict.justia.com/2014/05/07/limiting-principle-donald-sterling-case#sthash.d6L4K1IG.dpuf
Although the immediate predicate for disciplining Sterling was the recording of his racist comments, he was not—or should not have been—disciplined merely because he held racist views. He was disciplined because once those views were made public, his status within the Clippers organization created a kind of hostile environment. - See more at: http://verdict.justia.com/2014/05/07/limiting-principle-donald-sterling-case#sthash.d6L4K1IG.dpuf
Although the immediate predicate for disciplining Sterling was the recording of his racist comments, he was not—or should not have been—disciplined merely because he held racist views. He was disciplined because once those views were made public, his status within the Clippers organization created a kind of hostile environment. - See more at: http://verdict.justia.com/2014/05/07/limiting-principle-donald-sterling-case#sthash.d6L4K1IG.dpuf
Although the immediate predicate for disciplining Sterling was the recording of his racist comments, he was not—or should not have been—disciplined merely because he held racist views. He was disciplined because once those views were made public, his status within the Clippers organization created a kind of hostile environment. - See more at: http://verdict.justia.com/2014/05/07/limiting-principle-donald-sterling-case#sthash.d6L4K1IG.dpuf

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Ken Feinberg discusses the Former College Athletes Players Association


I had the honor of interviewing famed mediator Kenneth Feinberg for his role in the Former College Athletes' Association, an organization that would distribute money to former college athletes should the O'Bannon and related litigation prevail or lead to a settlement.  Here's my interview for SI.com

Here is an excerpt:
The distribution of funds by the FCAA to former college athletes would require formulas, and Feinberg says those formulas, along with associated bylaws and regulations, are "still in development." In other distributions supervised by Feinberg, individuals and businesses have been awarded different amounts of money depending on such factors as type of injury suffered, proximity to the harm, loss of revenue pegged to prior years' averages and quality of supporting documentation. As an illustration, business geographically closer to oil spills have received more money because of proximity, but their type of harm and prior earnings matter, too.

Feinberg has generally received praise for developing formulas that balance equity and fairness, although some have complained his methodologies are too rigid. No matter what formulas are used, some do better than others. The same would be true of former college athletes should they be entitled to compensation. Some would do better than other former players and some would likely complain. Potential factors for formulas are numerous and may include type of sports played, playing time, team and individual exposure on television, statistical performance and public recognition.

Along those lines, it is possible that college athletes at big-time sports schools would receive more from the FCAA after college. This could provide a recruiting advantage for coaches at big time sports schools when recruiting star high school athletes. It is important to stress, however, that until formulas are finalized and revealed, it is difficult to know their possible impact on college sports. Feinberg emphasizes that the FCAA would be "fair" in distributing any money.
To read the rest, click here.

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My kind of blog

Welcome to Full Court Press--A Blog on Sports and the First Amendment, run by the law firm of Levine, Sullivan, Koch & Schulz, a firm specializing in entertainment, media, IP, and First Amendment law. The introductory post rejects the hand-wringing over Donald Sterling's supposed privacy interests.

Worth adding to your bookmarks.

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The Nation Turns to SLB Contributors for Legal Analysis!

Not surprising, Sports Law Blog contributors have been instrumental in providing their expert legal analysis on the NBA events surrounding Donald Sterling's comments and Commissioner Adam Silver's response. Here's a brief summary of some of the contributions many of us have made in the past week: 

MICHAEL McCANN, UNIVERSITY OF NEW HAMPSHIRE

Michael McCann, of the University of New Hampshire School of Law, provided the initial legal analysis as a result of his work for Sports Illustrated.  Mike authored two outstanding articles that have been widely discussed, quoted and cited.  Mike, quite frankly, shaped the legal debate on this story.

What's Next for NBA in Donald Sterling Fight? (April 26, 2014)

Donald Sterling, NBA Set for Epic Legal Battle (April 29, 2014)

Additionally, it's virtually impossible not to change channels and see Mike on the news. Here's his YouTube channel which provides links to the TEN times he's been on national television in the past week. Of course he's really skimming the bottom of the coverage when he appears on CNN, The Today Show, MSNBC and PBS News Hour.

NPR, All Things Considered

Mike has also authored an essay that will run in this week's issue of Sports Illustrated on the Sterling scandal and the NBA's reaction.  The magazine hits the newsstands today. 

GABE FELDMAN, TULANE UNIVERSITY

Gabe Feldman, of Tulane University's Law School, has been all over the media as well. Here's just a sampling of his television appearances.


MSNBC, Jansing & Co.

MSNBC, The Last Word

CNN, The Lead:  


NBC, The Today Show

I've given up trying to locate ALL of the other media impressions Gabe has made this week....

MARC EDELMAN, BARUCH COLLEGE, CUNY

Marc Edelman, of the Zicklin School of Business, Baruch College, City University of New York, contributed the following:

Television:
CNN (May 3, 2014)

Article:

Quotes:

Radio interviews:


WARREN K. ZOLA, BOSTON COLLEGE

So, if Mike, Gabe and Marc's phones were all busy, or they were live on the air, the media found me a few times. Most importantly, and I did trump the others in PR for The Sports Law Blog, was my appearance on MSNBC where my caption indicated my relationship with The Sports Law Blog and NOT Boston College. [You'll also note I've been "banned for life."

http://www.nbcnews.com/video/the-reid-report/55074430/#55074430

I was also on the radio 89.3KPPC (Southern California) (April 30, 2014) and Huff Po Live on April 30, 2014. I'll skip posting my various quotes on the topic because, at this point, you've got the message: the nation turns to the Sports Law Blog contributors for their analysis!

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