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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 Daily: Pelicans Might Be Better Off Without DeMarcus Cousins

Without DeMarcus Cousins, Anthony Davis has excelled. It might not be a coincidence.

Moke Hamilton

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Forget Kawhi Leonard, the most interesting storyline of this NBA summer is going to be DeMarcus Cousins.

By now, if you’ve wondered whether the New Orleans Pelicans would be better off without the talented big man, you’re certainly not alone.

Just ask the Portland Trail Blazers.

On Saturday, the Pelicans pulled off an improbable sweep of the third-seeded Blazers in the first round of their best-of-seven playoff series. And while the immediate question that comes to mind is what to make of the Blazers, a similar question can be (and should be) asked of the Pelicans.

Without question, Cousins is one of the most gifted big men the NBA has sen in quite some time, but it shouldn’t be lost on any of us that Anthony Davis began to put forth superhuman efforts when Cousins was absent.

Ever heard the saying that too many cooks spoil the brew?

That may be pricisely the case here.

Sure, having good players at your disposal is a problem that most head coach in the league would sign up for, but it takes a special type of player to willingly cede touches and shots in the name of the best interests of the team.

We once had a similar conversation about Russell Westbrook and Kevin Durant, mind you. Those that recognized that Westbrook’s ball dominance and inefficiency took opportunities away from Durant to be the best version of himself once believed that the Oklahoma City Thunder would have been wise to pitch Westbrook to New Orleans back when Chris Paul was still manning their perimeter.

For what it’s worth, with Cousins in the lineup, he averaged 18 shots per game. In the 48 games he played this season, the Pelicans were 27-21. With him in the lineup, Davis shot the ball 17.6 times per game and scored 26.5 points per contest.

In the 34 games the Pelicans played without Cousins, Davis’ shot attempts increased fairly significantly. He got 21.9 attempts per contest and similarly increased his scoring output to 30.2 points per game.

Aside from that, Cousins’ presence in the middle made it a tad more difficult for Rajon Rondo and Jrue Holiday to have the pace and space they need to be most effective. With both Davis and Cousins, the Pelicans struggled to consistently string together wins. Without Cousins, they improbably became the first team in the Western Conference to advance to the second round.

That Cousins tore his achilles tendon and is just a few months from becoming an unrestricted free agent combine to make him the most interesting man in the NBA.

* * * * * *

With Chris Paul having decided that the grass was probably greener with James Harden and Mike D’Antoni than it was with Doc Rivers and Blake Griffin, the Clippers fulfilled his request to be trade to the Houston Rockets and re-signed Griffin to a five-year max. deal. In doing so, they both gave Griffin a stark reminder of what life in the NBA is like and provided a blueprint for teams to follow when they have a superstar player with whom they believe to have run their course.

The glass half full perspective might be that Davis has simply become a better, healthier, more effective player and that with Cousins, he would have another weapon that could help catapult the Pelicans ever further toward the top of the Western Conference. But the half-empty glass might yield another conclusion.

At the end of the day, although he still hasn’t appeared in a single playoff game, Cousins is regarded as a game-changing talent and is one of the few players available on the free agency market this summer that could justify an annual average salary of $30 million. In all likelihood, the Pelicans will re-sign him for a sum that approaches that, but that doesn’t mean it’s the best move.

In the end, the Clippers traded Griffin for Avery Bradley, Tobias Harris, Boban Marjanovic, a first round pick and a second round pick. All things considered, it was a great haul for the Clippers when you consider that, just a few months prior, they could have lost Griffin as a free agent and gotten nothing in return.

Remarkably, after seeing Griffin dealt to Detroit, in the Western Conference, the Pelicans are on a collision course with the Golden State Warriors. Their health a constant concern, the team will have to deal with the pesky perimeter defense of Holiday and Rondo and versatility and two-way effectiveness of Davis.

Nobody gave New Orleans a chance against Portland, and for sure, not many people are going to believe in their ability to score an upset over the defending champions. But believe it or not, New Orleans has become a different team. And they’ve done so without Cousins.

Indeed, believe it or not, the Clippers gave us a blueprint for what a team should do when it has a superstar who might not be the best long-term fit for their program.

And if the Pelicans were wise, they’d be smart to follow it.

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NBA Daily: Rookie Contributors Lifting Playoff Teams

This year’s impressive rookie class has translated their regular season performances to the playoff stage.

Dennis Chambers

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This past NBA season had the luxury of an incredibly entertaining and high-powered rookie class. Every other day it seemed like the feats of either Donovan Mitchell, Jayson Tatum, Lauri Markkanen, Dennis Smith Jr., Kyle Kuzma, or Ben Simmons were dominating the discussion about how advanced the league’s crop of newbies appeared to be.

As a result, the 2017-18 Rookie of the Year race was a much more heated discussion than the year before.

With the impressive campaign these NBA freshmen put together, it should come as no surprise that on the on bright stage of playoff basketball, three of the aforementioned crop are helping lead their team’s in tight first-round battles.

Donovan Mitchell has been the leading scorer for the Utah Jazz through two games in their series against the Oklahoma City Thunder. Jayson Tatum is stepping up for the Boston Celtics to help fill in the void of Kyrie Irving as they take on the Milwaukee Bucks. Ben Simmons is nearly averaging a triple-double through three games for the Philadelphia 76ers in their matchup with the Miami HEAT.

Lottery pick talents are expected in today’s NBA to come in and have some level of impact for their clubs. Usually, they play the role as a foundational building block that shows flashes of promise with an expected up-and-down first season. While these three playoff contributors haven’t been perfect all year long, under the pressure of the postseason, they’ve stepped up their play and appear to be avoiding the learning curve.

With that, let’s highlight further what Mitchell, Tatum, and Simmons have been able to do thus far in the postseason.

Donovan Mitchell, Utah Jazz

All season long Mitchell threw the entire scoring load of Salt Lake City on his back for the Jazz and helped carry them to a 5-seed in the Western Conference when early season projections suggested they should head towards in the wake of Rudy Gobert’s injury.

However, the 13th pick out of Louisville had no intentions of missing out on the postseason. And from the looks of his production so far, who can blame him?

Through the first two games of the Jazz-Thunder series, Mitchell yet again placed his name in the same breath as Michael Jordan. Mitchell’s 55 points in his first two playoff games broke Jordan’s record of 53 for most points scored by a rookie guard in that scenario.

Mitchell’s 27 points in Game 1 and 28 points in Game 2 led the Jazz to even the series and steal home court advantage from the Thunder. While he hasn’t been responsible for setting up the team’s offense, tallying just five assists through those two games, Mitchell is fulfilling the role of Gordon Hayward as the team’s primary scorer.

In a series against a team that features the likes of Russell Westbrook, Paul George, and Carmelo Anthony, Utah needs Mitchell to go out there and get as many buckets as he possibly can.

So far, he appears to be welcoming the challenge.

Jayson Tatum, Boston Celtics

When it was announced that Kyrie Irving would be lost for the entire postseason due to injury, the Boston Celtics’ hold on the 2-seed seemed a lot less intimidating than it once was in the Eastern Conference.

However, three games into the first round series against the Bucks, the Celtics hold a 2-1 lead. A lot part of that has to do with the role Tatum has been able to step in and play right away with the Celtics down their main scorer and playmaker.

Throughout the first three games of the series, Tatum 12.3 points, 7.3 rebounds, 2.3 assists, and 2.3 steals. The third overall pick in the 2017 draft started the series off with 19 points, 10 rebounds, and three steals to help Boston start off the matchup with a 1-0 lead.

At just 20 years old, Tatum is matching his age number with his usage percentage thus far against Milwaukee. For some perspective, Jaylen Brown managed just 12 minutes a night for the Celtics last season as a rookie when the playoffs rolled around.

Granted, injuries and missing players are helping in Tatum being on the court as much as he has, but the rookie is earning his time out there on the court.

Ben Simmons, Philadelphia 76ers

The perceived frontrunner for Rookie of the Year, Ben Simmons has taken control in his first ever playoff series.

For starters, Simmons is averaging nearly a triple double over his first three games against the HEAT; 20 points, 10 rebounds, and 9.7 assists.

On top of his triple double ways, Simmons has upped arguably his biggest weakness so far in the playoffs, shooting 75 percent from the charity stripe. During the regular season, Simmons struggled from the line, hitting only 56 percent of his attempts.

With the offensive prowess of Simmons obvious, it’s the job he’s doing on the defensive end of the court against an aggressive and tough Miami squad that’s elevating his play to the next level.

Simmons’ ability to switch all over the defensive end of the court has placed his responsibilities from Goran Dragic to Justise Winslow to James Johnson, and seemingly everywhere in between.

Now with Joel Embiid back in the fold for the Sixers and Simmons, the rookie point guard has his defensive partner on the floor to help ease the workload on that end. A two-way performance each night will be imperative for Simmons in helping lead the young Sixers past the experienced HEAT team.

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Pelicans Role Players are Key to Success

The supporting cast in New Orleans is a big part of their playoff surge, writes David Yapkowitz.

David Yapkowitz

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The New Orleans Pelicans have taken a commanding 3-0 lead in their first-round playoff series again the Portland Trail Blazers. While surprising to some, the Pelicans only finished one game behind the Blazers in the standings. The Pelicans have the best player in the series in Anthony Davis and the defensive duo of Rajon Rondo and Jrue Holiday have stifled Portland’s backcourt.

The truth is, the Pelicans have been a good team all season long. A lot of attention and recognition has been given to Davis, Rondo and Holiday this season and playoffs, and rightfully so. But New Orleans wouldn’t be where they are without the important contributions of some of their role players.

Take E’Twaun Moore, for example. Moore bounced around the NBA early in his career, with stops in Boston, Orlando and Chicago before finding long-term stability contract wise with the Pelicans. He’s primarily been a bench player with them before this season, his second in New Orleans, his first as a full-time starter.

He’s given the Pelicans a huge boost, especially from the three-point line. He’s put up 12.5 points per game on 50.8 percent shooting from the field, both career-highs. He’s shooting 42.5 percent from three-point range.

“I think it’s just our style of play,” Moore told Basketball Insiders. “We play fast and open. Coach [Gentry] gives us a lot of freedom, a lot of confidence. That’s why my game is up, my shooting is up.”

It’s not just offensively though. Moore has always been one of the more underrated defensive guards in the league. Paired up alongside Rondo and Holiday, the trio form a solid wing defensive unit. They’re a big reason for Portland’s offensive struggles.

Moore is the type of role player that every playoff contender needs to succeed. He knows that his role may change from game to game. Some nights he may be asked to score a little more. Other nights his defense is going to be called upon. Whatever it may be, he’s always ready to do what’s asked of him.

“I bring the energy. I bring a spark,” Moore told Basketball Insiders. “It’s knocking down shots, playing defense, getting out in transition. Just trying to be a spark.”

The Pelicans bench has also been a huge factor all season long. Their depth took a major hit early in the season with the injury to Solomon Hill. Hill has since returned to the lineup, but his absence paved the way for other players such as Darius Miller to step up.

This is Miller’s second stint with the Pelicans after spending two years overseas. Drafted 46th overall in 2012, he didn’t play much his first three years in the NBA. In 2014, he was cut by the Pelicans only about a month into the season. This year was different, he was thrown into the rotation from the get-go.

“This is a huge opportunity,” Miller told Basketball Insiders. “I just come in and try to work every day, try to get better every day. My teammates have done a great job of putting me in situations where I can be successful.”

Miller has given the Pelicans a capable stretch four in the second unit who can slide over to small forward if need be. He’s averaging a career-best 7.8 points per game, the most out of any of New Orleans’ reserves. He’s their best three-point shooter off the bench, connecting on 41.1 percent of his long-range attempts.

While he acknowledges that he’s enjoying his best season yet as an NBA player, he’s quick to praise his teammates for allowing him to flourish.

“I just try to bring a spark off the bench. I come in and try to knock some shots down,” Miller told Basketball Insiders. “My teammates do a great job of finding me when I’m open, I just try and knock down shots and compete.”

Sometimes time away from the NBA helps players grow and mature. The NBA game is fast paced and it can take awhile to get used to it. While some players have begun to use the G-League as a means of preparing for the league, Miller took an alternate route of heading to Germany.

For him, it’s a big reason why he’s been able to make an easier transition back to the NBA. His contract for next season is non-guaranteed, but he’s probably done enough to warrant the Pelicans keeping him around. He’s a much different and much-improved player. If not, he’s sure to draw interest from other teams.

“It was a lot to learn for me personally,” Miller told Basketball Insiders. “I had to learn a lot of different things like how to take care of my body, how to manage my time, a whole bunch of stuff like that. The time overseas really helped me to mature and grow up and learn a few things.”

These Pelicans have most certainly turned quite a few heads since the playoffs began. We shouldn’t deal too much with hypotheticals, but it’s interesting to wonder what this team’s ceiling would’ve been had DeMarcus Cousins not been lost for the season due to injury.

This is a confident bunch, however. They’ve beaten both the Golden State Warriors and Houston Rockets during the regular season. They’ve already shattered a lot of expert predictions with their performance in the first-round. The Pelicans feel like they can hang with anyone out West.

“As far as we want to go,” Miller told Basketball Insiders. “I feel like we’ve competed with all the best teams in the league this whole season. We just got to come out, stay focused and do what we do.”

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