Why NBA may need to lawyer up if it proceeds to kick out Donald Sterling

No shrinking violet when it comes to litigation, Donald Sterling has gotten the better of the NBA before. An NBA committee is to convene next week to consider forcing the Clippers owner to sell the team.

Richard Drew/AP
NBA Commissioner Adam Silver addresses a news conference in New York, Tuesday, April 29, 2014. Silver has vowed to do 'everything in his power' to remove Clippers' owner Donald Sterling.

Now that the NBA has banned Donald Sterling for life and fined him $2.5 million, the proverbial ball is in other team owners' court as they begin what could be a tortuous process to divest the Los Angeles Clippers chief of his billion-dollar team.

An advisory committee of 10 NBA owners conferenced by phone on Thursday to begin the process of terminating Mr. Sterling’s stake in the Clippers, which he has owned for 33 years, a longer tenure than any other owner.

NBA action has been swift and decisive since audio tapes last week revealed that Sterling made racist comments to his then-girlfriend, V. Stiviano, who has denied that their relationship was romantic.

“The committee unanimously agreed to move forward as expeditiously as possible and will reconvene next week,” said NBA executive vice president Mike Bass, in a statement.

To oust Sterling, 23 of the NBA’s 30 owners must agree to force his divestment, according to NBA bylaws. Commissioner Adam Silver, who has vowed to do “everything in his power” to remove the Clippers' owner, or another owner must first file written charges against Sterling, who then has five days to respond. After a hearing of the evidence, the NBA’s board of governors would then vote to remove him – which appears to be likely.

This isn’t the first time the NBA’s advisory committee, after hearing Sterling’s words on an audio recording, has voted unanimously to boot Sterling from the NBA's ranks. Indeed, the whole incident elicits a 30-year case of déjà vu – and perhaps a sign of the legal battle to come.

In September 1982, Sterling was recorded telling an audience that the Clippers, then in San Diego, needed to finish last so the team could draft Ralph Sampson, a college basketball legend from the University of Virginia. The committee was also in the process of investigating allegations that the notoriously stingy owner was late making contractual payments to players, hotels, and even the team’s program printers.

Soon afterward, the six owners on the NBA advisory committee voted unanimously to force Sterling to sell the team, and they fined him $10,000 for his Sampson comment. "He's as good as gone," an unnamed NBA source told the Los Angles Times afterward. 

That vote, however, was set amid the backdrop of an already-acrimonious battle of lawsuits and countersuits between Sterling and the NBA that year, after the Clippers owner contracted with the Los Angeles Coliseum Commission in June 1982 to move the team to L.A.

In response, the NBA sued the commission, seeking $10 million for its meddling in league affairs by wooing the Clippers to relocate. “This was done because of its actions in trying to persuade the San Diego team to move without NBA approval,” said then-NBA Commissioner Larry O'Brien. The league argued that it alone, using its best judgment, should be able decide whether the team could move.

According to the NBA constitution, a three-fourths vote was required to approve the move, and any owner whose team was geographically close to the new locale could veto it. That owner would have been Jerry Buss of the Los Angeles Lakers – a close friend and neighbor to Sterling. In fact, Mr. Buss is the one who suggested that Sterling buy the Clippers, and he even waived his right to veto the team's move to Los Angeles.

When the NBA sued in June, also announcing that it was investigating Sterling’s alleged late payments to players and vendors, the Clippers owner and the coliseum commission immediately countersued. Their $120 million antitrust lawsuit against the NBA and 12 of its then-23 teams challenged the NBA’s right to establish exclusive territories for teams and to keep a private business from choosing its location.

This spooked the NBA. The L.A. Coliseum Commission earlier that year had won a landmark antitrust case against the NFL, which had refused to allow the Oakland Raiders to move to Los Angeles.

Eventually, each side dropped its case, but the NBA continued to try to oust Sterling. After the unanimous vote of the advisory committee, Sterling said he would agree to sell the team at the end of 1982. But it turned out to be a stalling tactic, and the bid to force him out fizzled.  

Sterling, of course, did move the team to Los Angeles, thumbing his nose at the NBA. The league responded by fining him $25 million. After the Clippers owner threatened to sue again, the league dropped the fine to $6 million, which he agreed to pay.

More than 30 years later, a similar legal battle similar may ensue. Given Sterling’s character and history, many believe he is likely to fight in court any bid to force a sale.

He could argue that his private comments, however vile, do not amount to any concrete violation of the NBA’s constitution and bylaws. He could even bring another antitrust lawsuit against the NBA team owners, saying they are violating his rights as a competitive owner.

“The key issue, assuming an antitrust lawsuit, is a cognizable injury to competition,” says Jeffrey Shinder, managing partner of the New York office of Constantine Cannon, a specialist in antitrust law.

“But at the end of the day, selling a valuable franchise in a marquee market like Los Angeles,” he continues, “someone out there will buy it, and that will be in the greater interest in the Clippers and the competition between the teams.” Several wealthy individuals have been chomping at the bit to buy the team, including Oprah Winfrey, Magic Johnson, and boxer Floyd Mayweather.  

Still, some owners hope Sterling, who is in his 80s, will opt to sell the team without a protracted legal battle.

“I don't want to talk about kind of the legal side of it because I can't really comment on it, but my feeling is that I have faith in people," said Sacramento Kings owner Vivek Ranadive to the Associated Press. "And I would hope that at some point Mr. Sterling would come to his senses and do the right thing. That he would apologize to Magic Johnson, that he would apologize to the fans, the league, the black community and he would do the right thing and he would accept what Commissioner Silver has suggested, he would put the team up for sale and perhaps even take a very small portion of the substantial profits and donate them to a good cause.”

“It's not going to be easy to own a team where the fans don't welcome you, where the sponsors shun you and where you're not welcomed by the other owners,” Mr. Ranadive continued. “And I think he can do the right thing and hopefully good sense will prevail at some point.”

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