Donald Sterling Refuses to Go Quietly, Suing NBA for $1B

Source: Mike Licht (NotionsCapital.com) / Flickr Creative Commons

We were more than happy learn about the $2 billion bid that former Microsoft CEO Steve Ballmer placed on the Los Angeles Clippers, in part because its great to see the National Basketball Association flourishing amid an unprecedented influx of popularity and national attention, and in part because it meant that we’d be done talking about Donald Sterling, who has been a blight on the league for the past 30 years — almost from the moment he bought the team in 1982. Naturally, almost as soon as that story went public, news broke that Sterling had filed a motion to sue the NBA. So here we are, still talking about Donald Sterling.

Sterling, who was deemed mentally unfit to have a say in matters of the Sterling Family Trust in May by his wife, Shelly, is suing the NBA for “invasion of (Sterling’s) constitutional rights, violation of antitrust laws, breach of fiduciary duty and breach of contract,” his lawyer told ESPN. In a statement, NBA Executive Vice President Rick Buchanan called the suit “predictable and baseless,” adding that “[a]mong other infirmities, there was no ‘forced sale’ of his team by the NBA — which means his antitrust and conversion claims are completely invalid. Since it was his wife Shelly Sterling, and not the NBA, that has entered into an agreement to sell the Clippers, Mr. Sterling is complaining about a set of facts that doesn’t even exist.”

This comes on the heels of one of the more interesting facts to be unearthed during the Ballmer sale: that one of the conditions of the sale was that Shelly Sterling would “absolve the league of litigation by others, including Donald Sterling.” This is, fundamentally, a desperate maneuver by the Sterling Trust (i.e., Shelly Sterling), signaling an acquiescence inspired, perhaps, by an effort to take the money and run, as it were. If the sale does go forward as planned, the Sterling Family Trust would be footing the bill for any legal action Donald Sterling took against the NBA.

Per CNN, Sterling’s lawsuit explicitly alleges that “the forced sale of the Los Angeles Clippers threatens not only to produce a lower price than a non-forced sale, but more importantly, it injures competition and forces antitrust injury by making the … market unresponsive to … the operation of the free market,” and that “the NBA’s forced sale … would create damages of at least $1 billion, which includes capital gains taxes, unnecessary and increased investment-banking fees, legal and transactional costs, and the loss of all future appreciation in the Los Angeles Clippers franchise value.”

The most interesting parts of this whole debacle are the twin snakes of discovery and the possible NBA response. An antitrust suit, also known as competition law or antimonopoly law, is not foreign to the league — Spencer Haywood lodged one in 1971 over the age limit, and Oscar Robertson did, too, regarding free agency — but might have vast, unexpected consequences as far as what kind of skeletons are drudged up during discover, or what kind of response the NBA has to the antitrust filing.

As Mark Edelman put it for Forbes, while “the NBA should win its case based on a very narrow antitrust exception related to Sterling’s exposure of the league to industry-wide liability, it is far more likely the NBA’s lawyers would argue the case more broadly — attempting to create precedent that could erode antitrust law’s ability to perform necessary checks and balances over professional sports leagues.” In other words, Sterling might wind up condemning the building to spite the tenants. How very appropriate.

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