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Donald Sterling’s Legal Strategy Makes Little Sense

Nate Duncan explains why Donald Sterling should have paid his fine, and lays out the enormous hurdles he must overcome to succeed in litigation against the NBA

Nate Duncan

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The Donald Sterling saga took its latest turn with reports Thursday that Sterling was refusing to pay the $2.5 million fine levied by Adam Silver. The initial reaction by many was, essentially, of course he didn’t. If he is going to fight the termination of the franchise, why not fight the fine too? The reason is that Sterling has almost no legal argument to contest the fine, and that failing to pay the fine makes his contention that he did not violate the NBA Constitution far more difficult.

Sterling previously had an uphill climb to retain control of the team, but he at least had an argument that his racist comments did not violate the express provisions of Article 13 of the league’s constitution, which sets out the criteria under which ownership may be terminated. From all reports, it appears that the league will argue that Sterling failed to adhere to contracts* in a way that hurt the league under Article 13(d).

*Reports have indicated that, among other things, Sterling signed a number of agreements with the league that contained morals clauses that the comments violated. The enforceability of such clauses is a whole separate issue that I have not yet researched.

But by failing to pay the fine, Sterling makes the league’s case much easier. Under Article 13 Section C, failure to pay a fine is grounds for franchise termination in and of itself. Specifically, a franchise may be terminated if it:

Fail[s] to pay any dues or other indebtedness owing to the Association within thirty (30) days after Written Notice from the Commissioner of default in such payment.

If Sterling does not pay the fine, there is no ambiguity about whether he is violating this section.

What about arguing, as it seems Sterling will, that Adam Silver did not have the authority to impose this fine? Under the NBA Constitution, that argument is very difficult because Article 24(l) gives Silver “the authority to fix such penalty as in the Commissioner’s judgment shall be in the best interests of the Association.” Such a penalty may include “a fine, suspension, and/or the forfeiture or assignment of draft choices. No monetary penalty fixed under this provision shall exceed $2,500,000.”
The penalty imposed by Silver is of course within these guidelines, so Sterling really has no argument that Silver could not determine or levy this fine because his agreement to the NBA Constitution empowered Silver to do so.

By failing to pay the fine, Sterling has essentially changed his argument from the somewhat reasonable (in a legal sense) contention that making racist comments is not “failing or refusing to fulfill contractual obligations…in such a way as to affect the Association or its Members adversely” to the far worse argument that Silver was not empowered to levy the fine.

The League is Getting Its $2.5 Million

But at least Sterling gets to keep his $2.5 million, right? Not really:

(j) The Commissioner shall be empowered to withhold all revenues due to any Member in the event that said Member has, in the Commissioner’s determination, failed to discharge its financial obligations to the Association or any Member thereof.

So Silver can simply take the fine out of the Clippers’ revenue, such as the national TV contract (payments on which the league disburses) or any other revenues since the league has taken effective control of the franchise.

Paying the Fine is Not an “Admission of Guilt”

Some have argued that paying the $2.5 million would have constituted an “admission of guilt.” This argument is a bit of a canard, as “guilt” is not really the standard we are dealing with here. Sterling is not claiming that he did not make these racist comments, and he certainly cannot claim that it was not him in that disastrous appearance on Anderson Cooper 360.* Paying the $2.5 million does provide some legitimacy for Silver’s decision to fine him, but as we have discussed the standard governing the fine is much different than what would be required to take away the team. Having paid the fine would not have hurt Sterling’s legal argument to keep the team in the slightest.

*Marv Albert described his comments as “deLUsional” during Tuesday’s Game 5, as only he can.

Sterling Already Missed His Best Chance to Keep the Team

Once the comments were made, the strategy should have been to express immediate contrition publicly and privately (to the other owners and the commissioner) in the broadest and most unequivocal terms. In addition to potentially reducing Sterling’s penalty, this would have helped with the reality that sponsors, players and fans would at some point need to be mollified for Sterling to keep the team even if he were to win a lawsuit against the league and retain control. Without an effective apology, the practical implication of Sterling continuing to own the team would likely be sponsor, player and fan boycotts.

In fact, had the Clippers’ players boycotted games (or if they do so in the future), that would constitute an even more express violation of Sterling’s basic contractual obligations, namely actually having his team show up to play. This failure could provide grounds for franchise termination under Article 13(d), as well as subjecting Sterling to up to a $2.5 million payment to the opposing team AND up to a $5 million payment to the league per missed game under Article 36 of the NBA Constitution.

Apologizing and paying the fine would have been the rational approach to maximize Sterling’s chances of keeping the team, however minimal they might have been once the comments were made. Of course, the issue is that rational people don’t make the comments Sterling made to begin with.

Sterling’s Due Process Argument Makes No Sense When the Process Has Not Yet Concluded

The letter referenced by Sports Illustrated reportedly argues that Sterling’s “due process” rights have been violated. As SI’s Michael McCann points out, Sterling’s right to due process is much more limited by the NBA’s “justice system” than it would be with a public agency or in a courtroom because Sterling agreed to be bound by the procedures of the private association. Without the full text of the letter, it is difficult to know whether Sterling is challenging just the fine and suspension at this juncture or also the upcoming forced sale of the team. If it is the latter, it is difficult to see how a due process argument applies when the NBA’s process to force the sale is not even complete yet.

Sterling Already Faced Three Enormous Hurdles Before Refusing to Pay the Fine

The next part of the procedure is that three-fourths of the NBA Board of Governors will presumably vote to terminate Sterling’s franchise, putting the franchise under league control via Article 14A. Had Sterling paid the fine, he may have had somewhat of an argument in a purely factual sense that his comments did not violate any contract. Unfortunately for Sterling, he doesn’t have much recourse if he disagrees with the Board of Governors’ decision. Any legal challenge to that decision would face three key issues.

Covenant Not to Sue

The NBA Constitution, which Sterling agreed to, contains what is known as a covenant not to sue. That is part of Article 14(j), which reads as follows:

(j) The decisions of the Association made in accordance with the foregoing procedure shall be final, binding, and conclusive, and each Member and Owner waives any and all recourse to any court of law to review any such decision.

That means that Sterling has waived any right sue to the league on this issue. But that does not completely end the inquiry, as case law has articulated two narrow exceptions even where an owner has made such an agreement. However, those are unlikely to apply. They are if “(1) the rules, regulations, or judgments of the league are in contravention to the laws of the land or in disregard of the charter or bylaws of the league, and (2) the association has failed to follow the basic rudiments of due process of law.”* It is hard to see how the NBA’s actions will fall into either of those exceptions, so long as it follows its own procedures outlined in Article 14, which it surely will.

*That language is from a 1970s case, Charles O. Finley & Co. Inc. v. Bowie K. Kuhn, when the former A’s owner sued Major League Baseball.

The Board’s Decision is Treated Like an Arbitration Award

Nevertheless, let’s assume that Sterling gets over the covenant not to sue. The next issue is that the league’s decision is only reviewable by the court the way an arbitrator’s decision would be. Under Article 18(e):

(e) All actions duly taken by the Board of Governors shall be final, binding and conclusive, as an award in arbitration, and enforceable in a court of competent jurisdiction in accordance with the laws of the State of New York.

In layman’s terms, the league’s decision gets treated by the courts as if the two parties already went to arbitration and the arbitrator ruled. When that happens, there is very limited recourse for the losing party. Sterling would have to argue one of four things: 1) there was corruption, fraud or misconduct in procuring the award, (2) partiality (i.e. bias) of the arbitrator, (3) the arbitrator exceeded his power, perhaps by showing a “manifest disregard for the law,” or (4) the award violates public policy. It is hard to see how Sterling might argue the decision falls into any of these exceptions, and even if he could the practical reality is that arbitration awards are almost never overturned. The law has a policy for preferring private arbitration when parties so agree, as Sterling and the league have, with the goal of keeping disputes out of the courts when possible.

How might this play out if Sterling sues anyway? Shortly after Sterling filed his complaint, the league would likely file a motion to dismiss the case based on the covenant not to sue and the arbitration clause. If a motion to dismiss is granted, it generally means the case is over before anything like written discovery, depositions or much else in the case even start. It exists for precisely situations like this, where one party (the NBA here) has a legal argument that it can prevail on right away, and thus going through the expense of discovery and trial is unnecessary. The league could very well win that motion, and the case would be over pending an appeal that would have no better odds of success.

Sterling’s Court Case Would Be Very Difficult As Well

Now say Sterling gets over those two hurdles and the case is heard on the merits. How would that play out? Sterling would probably ask for what is known as a preliminary injunction, by which he would ask the court to stop the league from selling the team. An injunction is where a party asks the court to order someone to do something (in this case not sell the team), rather than just award monetary damages as in most cases. A preliminary injunction is one that a court institutes at the outset of the lawsuit, pending the actual outcome of the case at trial. To get a preliminary injunction, i.e. to put the sale on pause before he actually won the case, Sterling would have to convince the judge that he had a) a probability of prevailing on the merits and b) that he would suffer irreparable harm for which money damages could not compensate him if the team were sold.

Neither of these appears likely in this case, so Sterling would face difficulties stopping the sale of the team at the outset of the case via preliminary injunction. Sterling would then be suing for monetary damages only. To get these, Sterling would have to prove the league was wrong to strip him of the franchise–i.e. he didn’t actually violate the Constitution in a way that justified the Board forcing him to sell the team. If he proves that, he would also have to prove damages, that he lost money because of the forced sale. This latter point would prove especially difficult for Sterling, as a) he is going to be amply compensated when the team sells for what will likely be a record price and b) in the alternative scenario in which he retained control of the team it would have been worth much less than after a sale because of the potential for team boycotts and general toxic attitude toward his ownership.* On the contrary, selling the team will likely make Sterling much more money than if he had retained it in the current environment.

*Perhaps the one reasonable argument he might make in this scenario is that he and his eventual estate suffered adverse tax consequences from having to sell the team now instead of after his death.

And finally, did we mention that Sterling would have to convince a jury of 12 people that he deserves to keep the team? Given his history and his handling of the situation to date, that could prove the biggest hurdle of all.

Disclaimer: We do not know all the facts right now, and this analysis is based entirely on publicly available information to date. It is possible that new facts or legal documents could emerge as we go on, but this is my best attempt with the information available.

Nate Duncan is an NBA analyst and attorney. He writes regular features for Basketball Insiders and chats weekly at 11 Eastern on Tuesdays.

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NBA Saturday: Kuzma Is The Main Attraction In Los Angeles

Kyle Kuzma, not Lonzo Ball, is the rookie in L.A. that is turning heads around the NBA.

Dennis Chambers

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Out in Los Angeles, there is a dynamite rookie first-round pick lighting it up for the Lakers, invoking memories of the days when the purple and gold had homegrown stars.

That’s Kyle Kuzma. He was the 27th pick in the NBA Draft. Twenty-five picks after Lonzo Ball, the rookie that first sentence would have presumably been about had it been written three months ago.

Ball’s early season struggles are well-noted. He’s missing shots at an all-time bad clip for a rookie, his psyche seems a bit rattled, and he isn’t having the impact most Lakers fans would have hoped he would from the jump.

All of that has barely mattered, though, in large part to the show Kuzma has been putting on just 16 games into the 2017-18 season. In Friday night’s loss to the Phoenix Suns, Kuzma put up 30 points and 10 rebounds for the Lakers, the most by an NBA freshman so far this year. That performance was Kuzma’s sixth 20-point game of the young season, another rookie best. And to top it all off, Kuzma was the first rookie to reach the 30-point, 10-rebound plateau since none other than Magic Johnson, back in February of 1980.

Kuzma’s path to the NBA was much different than Johnson’s, though, along with his rookie counterpart Ball. Those two prospects were highly-touted “superstar potential” guys coming out of the college ranks. Kuzma? Well, he was a 21-year-old junior out of Utah who didn’t make the NCAA Tournament his last year and was a career 30 percent three-point shooter as an amateur.

The knocks on Kuzma began to change during the NBA Draft process and came to a head for the Lakers when long-time scout Bill Bertka raved about his potential.

“He got all wide-eyed,” Lakers director of scouting Jesse Buss told ESPN’s Ramona Shelburne. “And he said, ‘If this guy isn’t an NBA player, then I don’t know what the f— I’m looking at.'”

The Lakers took a chance on the 6-foot-9 forward who had a rare combination of a sweet shooting stroke to accompany his low-post moves that seemed to be reminiscent of players 20 years his senior.

Fast forward from draft night to the Las Vegas Summer League, and everyone could see with their own two eyes the type of player Los Angeles drafted. The numbers were startling: 21.9 points, 6.4 rebounds, 1.4 blocks, 1.1 steals, and 48 percent from beyond the arc out in Sin City for Kuzma, all capped off by a Summer League championship game MVP.

Summer League stats should be taken with a grain of salt, but what Kuzma did in July was proved he belonged.

Through the first month of Kuzma’s rookie campaign, when the games are actually counting for something, all he’s continued to do is prove that his exhibition numbers in Vegas were no fluke.

After his 30-point outburst, Kuzma now leads all rookies in total points scored (yet still second in scoring average), is fourth in rebounds per game, third in minutes, and third in field goal percentage.

By all accounts, Kuzma is outperforming just about every highly-touted prospect that was taken before him last June, and sans a Ben Simmons broken foot in September of 2016, he would be in line for the Rookie of the Year award if the season ended today.

Following Wednesday night’s loss to the Philadelphia 76ers, head coach Brett Brown had more than a few nice things to say about Kuzma.

“He’s a hell of a rookie,” Brown told NBC Philly’s Jessica Camerato. “That was a great pick by them.”

Brown went on to commend Kuzma for being “excellent” Wednesday night, when prior to his game Friday against the Suns, Kuzma set a career-high by scoring 24 points.

For all of the praise and the scoring numbers Kuzma is bringing to the Staples Center, his Lakers team sits at just 6-10 on the season, and has been on the wrong end of a number of close games so far this year.

While that’s good for second in the Pacific division right now, behind only the Golden State Warriors, it isn’t likely that type of success (or lack thereof) will get the Lakers to the playoffs. So, despite all of the numbers and attention, Kuzma isn’t fulfilling his rookie year the way he had hoped.

“It is cool, but I’m a winner,” Kuzma told Lakers Nation’s Serena Winters. “I like to win, stats don’t really matter to me. I just try to play hard and I want to win.”

Few projected the type of impact Kuzma would have this early on in his career, and even fewer would have assumed he’d be outperforming the Lakers’ prized draft pick in Ball. But surprising people with his game is nothing new to Kuzma.

From Flint, Michigan, to Utah, to Los Angeles, Kuzma has been turning heads of those that overlooked him the entire time.

With one month in the books as the Los Angeles Lakers’ most promising rookie, Kuzma has all the attention he could’ve asked for now.

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Kelly Olynyk Strengthens the HEAT Bench

David Yapkowitz speaks to Kelly Olynyk about his early showing in Miami.

David Yapkowitz

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The past few years, Kelly Olynyk carved out a nice role for himself as an important player off the Boston Celtics bench. He was a fan favorite at TD Garden, with his most memorable moment in Celtic green coming in last season’s playoffs against the Washington Wizards in the Eastern Conference Semifinals.

With Boston pushed to the limit and finding themselves forced into a Game 7, Olynyk rose to the occasion and dropped a playoff career-high 26 points off the bench on 10-14 shooting from the field in a Celtics win. He scored 14 of those points in the fourth quarter to hold Washington off.

He was a free agent at the end of the season, and instead of coming back to the Celtics, he became a casualty of their roster turnover following Gordon Hayward’s decision to sign in Boston. Once he hit the open market he had no shortage of suitors, but he quickly agreed to a deal with the Miami HEAT, an easy decision for him.

“It’s awesome, they got a real good culture here,” Olynyk told Basketball Insiders. “The organization is great, the city is great, the staff from the top down they do a good job here.”

Olynyk was initially the HEAT’s starting power forward to begin the season. In their opening night game, a 116-109 loss to the Orlando Magic, he scored ten points, pulled down five rebounds, and dished out three assists.

The very next game, however, he found himself back in his familiar role as first big man off the bench. In that game, a win over the Indiana Pacers, Olynyk had an even stronger game with 13 points on 50 percent shooting from the field, including 60 percent from three-point range, eight rebounds, and four assists.

Throughout the first eight games of the season, Olynyk was thriving with his new team. During that stretch, he was averaging a career-high 11.4 points per game on a career-high 55 percent shooting from the field and 60. 8 percent from downtown.

“I’m just playing, I’m just playing basketball,” Olynyk told Basketball Insiders. “They’re kind of letting me just play. They kind of let us all just play. They put us in positions to succeed and just go out there and let out skills show.”

For a HEAT team that may not be as talented on paper as some of the other teams in the Eastern Conference, they definitely play hard and gritty and are a sum of their parts. Night in and night out, in each of their wins, they’ve done it off the contributions from each player in the rotation and Olynyk has been a big part of that. Through Nov. 16, the HEAT bench was seventh in the league in points per game with 36.6.

In a win over the Los Angeles Clippers on Nov. 5, Olynyk was part of a bench unit including James Johnson, Tyler Johnson, and Wayne Ellington that came into the game late in the first quarter. The score at that point was 18-14 in Miami’s favor. That unit closed the quarter on a 16-6 run to put the HEAT up double digits. After that game, head coach Erik Spoelstra recognized the strength of the HEAT bench.

“Our guys are very resilient, that’s the one thing you’ve got to give everybody in that locker room, they’re tough,” Spoelstra said. “This is all about everybody in that locker room contributing to put yourself in a position, the best chance to win. It’s not about first unit, second unit, third unit, we’re all in this together.”

In Boston, Olynyk was part of a similar group that won games off of team play and production from every guy that got in the game. They were also a tough, gritty team and Olynyk has recognized that same sort of fire in the HEAT locker room.

“It’s a group of hard-nosed guys that can really grind it out and play tough-nosed basketball,” Olynyk told Basketball Insiders. “We can go a lot of places. We just got to stick together and keep doing what we do. We can compete with anybody and we just got to bring it every single night.”

At 7-8, the HEAT currently sit outside the playoff picture in the Eastern Conference. Olynyk has seen a bit of a decrease in playing time, and likewise in production. He’s right at his career average in points per game with 9.5, but he’s still shooting career-highs from the field (54 percent) and from three-point range (47.4).

It’s still very early, though, and only one game separates the 11th place HEAT from the 8th place Magic. The HEAT are definitely tough enough to fight for a playoff spot, especially with Olynyk around helping to strengthen their bench.

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Defensive Player Of The Year Watch – 11/17/17

Spencer Davies updates the list of names to keep an eye on and who’s in contention for DPOY.

Spencer Davies

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We’re exactly one month into the season now, as the NBA standings have started to take shape headed into winter.

A couple of weeks ago, Basketball Insiders released its first Defensive Player of the Year Watch article to go in-depth on players that could compete for the prestigious award. Since then, there have been injuries keeping most of the household names out of the picture.

Guys like Rudy Gobert (knee) and Al-Farouq Aminu (ankle) have been or will be sidelined for weeks. Kawhi Leonard has yet to make his season debut recovering from a bothersome right quad.

While that isn’t the best news for fans and the league at the moment, it’s likely that those players will be just fine and return with the same impact they’ve always made. In the meantime, there are opportunities for others to throw their names in the hat as elite defenders. With new names and mainstays, here’s a look at six healthy candidates.

6) Joel Embiid

Trusting the Process in Philadelphia was worth the wait. As polished as the seven-footer is with the ball in his hands on offense, he might be even more dangerous as an interior defensive presence.

One of ten players in the NBA averaging at least a block and a steal per game, Embiid makes a world of a difference for in limiting opponents. Through 14 games, the Philadelphia 76ers are allowing just 96.4 points per 100 possessions with him playing. Furthering that, he’s the only one on the floor who dips the team’s defensive rating below 100 and has the second-highest Defensive Real Plus-Minus rating (3.03) in the NBA.

5) Kristaps Porzingis

Like Embiid, it’s been an incredible season for the one called The Unicorn. Before the season started, Porzingis stated it was a goal of his to accomplish three things—an All-Star game appearance, Most Improved Player, and Defensive Player of the Year.

So far, he’s on the right track. Outside of being the league’s third-highest scorer (28.9 points per game), the Latvian big man is hounding and deterring shot attempts nearly every time inside. According to SportVU data, Porzingis is allowing his opponents to only convert 35.1 percent of their attempts at the rim, which is the lowest by far among his peers seeing at least four tries per game. Oh, and when he’s off the floor, the Knicks have a 112.4 defensive rating, which is 9.3 more points per 100 possessions than with him on.

4) Nikola Jokic

At the beginning of the season, it looked like the same old story with the Denver Nuggets defense, but their intensity has stepped up on that end of the floor for the past couple of weeks. Playing next to new running mate Paul Millsap has taken some getting used to, but it seems like the two frontcourt partners have started to mesh well.

Though it might not have been the case a season ago, the Denver Nuggets are a net -12.4 per 100 possessions defensively without Jokic on the court as opposed to a team-best 100.1 defensive rating with him on. A huge knock on the Serbian sensation last year and before then was his inability to defend. He’s still got things to work on as a rim protector with his timing, but the progress is coming. He’s seventh in the league in total contested shots (168) and has been forcing turnovers like a madman. Averaging 1.6 steals per game, Jokic has recorded at least one takeaway in all but two games.

3) Draymond Green

In the first DPOY watch article, the Golden State Warriors had been better off defensively with Green sitting. That right there should tell you how much we can really put into data in small sample sizes. It’s changed dramatically since that point in time.

Without Green playing, the Golden State Warriors have a defensive rating of 105.4 as opposed to 98.4 on the same scale with him on the floor. His matchups are starting to grow weary of driving on him again, as he’s seen less than four attempts at the basket. Currently, in DRPM, he ranks eighth with a 2.60 rating.

2) Al Horford

The Boston Celtics are still the number one team in the NBA in defensive rating. Horford is still the straw that stirs the drink for Brad Stevens. If you didn’t see that watching that knockdown, drag-it-out game against the Warriors on Thursday, go back and watch it.

He has the highest net rating on the team among starters and is leading the team by altering shots and grabbing rebounds with aggressiveness we haven’t seen since he played for the Atlanta Hawks. Ranking fourth in Defensive Box Plus-Minus and in DRPM, Horford is continuing to make his presence felt.

1) DeMarcus Cousins

Dominance is the word to describe Cousins’ game. With a month-long absence of Gobert, he has a real chance to show fans and voters that his defensive side of him is no façade.

Next to his partner Anthony Davis, Boogie has kept up the physicality and technique of locking up assignments. The third and final member of this list averaging at least a block and steal per game, Cousins is at the top of the mountain in DRPM with a 3.13 rating.

The New Orleans Pelicans significantly benefit with him on the hardwood (102.3 DRTG) as opposed to him on the bench (112.7 DTRG). He’s one of six players in the league seeing more than six attempts at the rim, and he’s allowed the lowest success percentage among that group. He’s also contested 193 shots, which is the second-most in the NBA.

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