Limits of the NBA Constitution

[footey]

I reviewed the NBA Constitution quickly this morning.  It was put online by the NBA.  Here are a few of my quick thoughts:

1.  Article 13 does not permit the Board of Governors to terminate an Owner's membership unless the Owner is accused of willfully violating the Constitution, By-laws, or "doing any of the following", which then lists certain other specified matters that do not pertain to his racist remarks.  So I see no grounds here at all, and if they were to try to do so, Sterling would have a very good defense.

2. Article 24 grants the Commissioner broad authority and duties to  "protect... the integrity of the game of professional basketball and preserving public confidence on the League." This grants the Commissioner authority to investigate, try, and decide any matter "that may adversely affect the Association or its Members."   Clause (l) of this Article, for example, gives the Commissioner the right to impose a penalty not to exceed $2,500,000, "wherever there is a rule for which no penalty is specifically fixed for violation thereof".  The problem for the Commissioner here is that Article 35A,  clause (c), which covers Owners, provides that "any person who ... makes .... any statement having .... an effect prejudicial or detrimental to the best interests of basketball or of the Association....shall be liable to a fine not exceeding $1,000,000".

My quick conclusion: I see no grounds for the NBA owners or Commissioner to force Sterling to sell the team for the racist statements that were made. I also think they probably fined him more than permitted under the Constitution, and that the fine will eventually be reduced to $1,000,000.

Bottom line:  It will be very difficult for the League to force Sterling out, and that if they attempt to do so, we can expect a long, protracted fight. 

[Roy H.]

I agree that the max fine should be $1 million, as it seems to fall squarely within enumerated language.

I also think that it was within the Commissioner's power to give a lifetime ban.

It's the question of whether the Board of Governors can terminate his ownership of the franchise.  To do so, they'll need to prove that Sterling did one of the following:

* Willfully violate any of the provisions of the Constitution and By-Laws, resolutions, or agreements of the Association.

* Fail or refuse to fulfill its contractual obligations to the Association, its Members, Players, or any other third party in such away as to affect the Association or its Members adversely.

I'm sure there's some "covenant of good faith and fair dealing" argument in there somewhere.  However, even without going that far, doesn't it break down like this:

1.  Sterling can lose his franchise if 3/4 of the Members find that he willfully violated the Constitution and By-Laws;
2.  The Constitution indicates that conduct detrimental to the league, including making detrimental statements, are prohibited

It's not rock solid, perhaps, but isn't this the NBA Constitution's "elastic clause"? 

[footey]

Here is one problem for the Board of Governors regarding the their right to remove: the wrongful owner must have "willfully violated" any of the provisions of Constitution, by-laws, etc.  I think it would be very difficult to prove anyone violated a rule "willfully" that was not set forth in writing. You may be able to prove a violation, but prove that he violated some unwritten, implied rule "willfully" would very difficult.  The fact that it was a private conversation would make the burden of proving willfulness that much more difficult.  and that is the standard of conduct that the Board must find before it can take any action.  I would imagine this is one of the things they are grappling with right now as they game plan their strategy.

Also, inasmuch as Article 35A addresses owner "misconduct" issues, and clause (c) deals with owner "statements" that are detrimental to the league, a very good case could be made by Sterling that this is the only provision in the Constitution that should govern his racist statements (let's not even get into whether private statements would qualify here).

Yes, I agree that the life-time suspension was permissible.

[Roy H.]

Here is one problem for the Board of Governors regarding the their right to remove: the wrongful owner must have "willfully violated" any of the provisions of Constitution, by-laws, etc.  I think it would be very difficult to prove anyone violated a rule "willfully" that was not set forth in writing. You may be able to prove a violation, but prove that he violated some unwritten, implied rule "willfully" would very difficult.  The fact that it was a private conversation would make the burden of proving willfulness that much more difficult.  and that is the standard of conduct that the Board must find before it can take any action.  I would imagine this is one of the things they are grappling with right now as they game plan their strategy.

Also, inasmuch as Article 35A addresses owner "misconduct" issues, and clause (c) deals with owner "statements" that are detrimental to the league, a very good case could be made by Sterling that this is the only provision in the Constitution that should govern his racist statements (let's not even get into whether private statements would qualify here).

Yes, I agree that the life-time suspension was permissible.

I'm not sure that I agree with the above.  First, I haven't read the entire Constitution, so I could be missing something.  However, it seems to me that the Commissioner's right to discipline is separate and apart from the Board of Governor's right to terminate ownership.

If that's the case, then I don't think that 35A would be the exclusive remedy.  Nothing in the Constitution that I've read implies that the Commissioner's suspension / fine limits the Board of Governor's from acting.  Rather, I think the plain language suggests that any violation of the Constitution can result in termination.

As far as "willfully", I think that the argument is going to similar to what we see with "intent" in the law:  Sterling willfully / intentionally made a racist statement.  It doesn't matter if he intended for it to become public, any more than it matters if you intended to kill anybody when you fire a gun.  Whether you intended the result doesn't necessarily matter.  Rather, it's the commission of the instigating act in the first place (pulling the trigger, saying the statement).

[Ogaju]

the man was having a fight with his girlfriend. He is a lawyer trying to get the girlfriend to do what he wants therefore he uses a certain degree of hyperbole in his attempt to 'win'  the argument. 'Don't bring them to my games', a direct order to the gf not to bring her male friends to his games. Why did he call it 'his games'? Because he owns the team and she probably gets her friends in the exclusive areas of the arena -- that is probably why they befriend her to begin with.

Bottom line is DTS never said he did not want blacks at his games which is how the mob interpreted his words. He simply commended his gf not to bring her other boyfriends to his games. Not enough to force him out, in my opinion.

Now the other stuff he did to employees and to tenants --- now that is a different issue.

[footey]

I appreciate your point of view on the "willfulness", but do not think it would hold up in a law suit.  I am not a litigator, but have been a corporate contract lawyer for 30 years, and have a pretty good feel for interpreting legal documents.  I rushed through my reading of the constitution, so I will take a more careful review this weekend, to study your points more. 

You may be right that 35A is not exclusive manner to deal with wrongful statements, but a plain meaning of the entire document left me the impression that this was the intent.  Again, let me further review this weekend. Need to go away for a couple of days, will check back in on Sunday.

The fact that there is, at a minimum, ambiguity on these points make any action taken by the League to remove or cause him to sell the team subject to protracted litigation.  Sterling's background as a litigator only increases this likelihood.  This is what he thrives at doing.

[Roy H.]

the man was having a fight with his girlfriend. He is a lawyer trying to get the girlfriend to do what he wants therefore he uses a certain degree of hyperbole in his attempt to 'win'  the argument. 'Don't bring them to my games', a direct order to the gf not to bring her male friends to his games. Why did he call it 'his games'? Because he owns the team and she probably gets her friends in the exclusive areas of the arena -- that is probably why they befriend her to begin with.

Bottom line is DTS never said he did not want blacks at his games which is how the mob interpreted his words. He simply commended his gf not to bring her other boyfriends to his games. Not enough to force him out, in my opinion.

I think that's a pretty charitable interpretation.

Regardless, I'm not sure that it matters.  He made a statement that caused prejudice to the league.  That's a violation of the Constitution, and if the owners want to terminate for that, they're probably allowed to.

[footey]

the man was having a fight with his girlfriend. He is a lawyer trying to get the girlfriend to do what he wants therefore he uses a certain degree of hyperbole in his attempt to 'win'  the argument. 'Don't bring them to my games', a direct order to the gf not to bring her male friends to his games. Why did he call it 'his games'? Because he owns the team and she probably gets her friends in the exclusive areas of the arena -- that is probably why they befriend her to begin with.

Bottom line is DTS never said he did not want blacks at his games which is how the mob interpreted his words. He simply commended his gf not to bring her other boyfriends to his games. Not enough to force him out, in my opinion.

I think that's a pretty charitable interpretation.

Regardless, I'm not sure that it matters.  He made a statement that caused prejudice to the league.  That's a violation of the Constitution, and if the owners want to terminate for that, they're probably allowed to.

Your interpretation should address the willfulness element required for the owners to terminate him.  To say he willfully made the (private) statements constitutes willful violation of the Constitution is arguable, and will be made by the league, but it is a legal argument that will be disputed by Sterling.  To say the owners are "probably allowed to" remove him, based on my (albeit quick) view of the Constitution, exaggerates their legal position. To say they have a supportable legal position, I would concede that.  But I think this story will develop that it is by no means a strong case for the league to do this. 

[Ogaju]

but Roy he did not publish the statement. True he made the statement, but was it willful. I practice employment disability discrimination and in California 'willful' has been defined as more than negligence or gross negligence. It has been defined as wanton conduct in excess of gross negligence that borders on quasi-criminal conduct. In other words to get to willful, NBA will have to show that DTS had a history, had been warned, and in conscious or reckless disregard of prior warning he published the errant statement (I just do not believe that a statement made in the context of a man trying to stop his 50 year younger gf from parading with younger men qualifies to strip him off his ownership interest in his team.

Again, the other stuff of active discrimination against racial minorities in housing, yeah that should get him.

By the way, no one chimed in on my 'unclean hands' defense to any action brought by the NBA to force a sale.

[Roy H.]

the man was having a fight with his girlfriend. He is a lawyer trying to get the girlfriend to do what he wants therefore he uses a certain degree of hyperbole in his attempt to 'win'  the argument. 'Don't bring them to my games', a direct order to the gf not to bring her male friends to his games. Why did he call it 'his games'? Because he owns the team and she probably gets her friends in the exclusive areas of the arena -- that is probably why they befriend her to begin with.

Bottom line is DTS never said he did not want blacks at his games which is how the mob interpreted his words. He simply commended his gf not to bring her other boyfriends to his games. Not enough to force him out, in my opinion.

I think that's a pretty charitable interpretation.

Regardless, I'm not sure that it matters.  He made a statement that caused prejudice to the league.  That's a violation of the Constitution, and if the owners want to terminate for that, they're probably allowed to.

Your interpretation should address the willfulness element required for the owners to terminate him.  To say he willfully made the (private) statements constitutes willful violation of the Constitution is arguable, and will be made by the league, but it is a legal argument that will be disputed by Sterling.  To say the owners are "probably allowed to" remove him, based on my (albeit quick) view of the Constitution, exaggerates their legal position. To say they have a supportable legal position, I would concede that.  But I think this story will develop that it is by no means a strong case for the league to do this.

But see, if the league has a credible argument, this will be upheld.

The Constitution provides:

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.

The Federal Arbitration Act lists only a handful of narrow grounds on which an arbitration award can be vacated:

In any of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration
? (1) Where the award was procured by corruption, fraud, or undue means.
? (2) Where there was evident partiality or corruption in the arbitrators, or either of them.
? (3) Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.
? (4) Where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
? (5) Where an award is vacated and the time within which the agreement required the award to be made has not expired the court may, in its discretion, direct a rehearing by the arbitrators.
? (b) The United States district court for the district wherein an award was made that was issued pursuant to section 590 of title 5 may make an order vacating the award upon the application of a person, other than a party to the arbitration, who is adversely affected or aggrieved by the award, if the use of arbitration or the award is clearly inconsistent with the factors set forth in section 582 of Title 5.

As crazy as it sounds, the Supreme Court suggested that mistakes of law by the arbitrator aren't included in the above, and thus that legal mistake isn't enough to set aside an award.  The Circuit courts are split on that right now, but it just goes to show what an uphill battle Sterling has.

[Roy H.]

In other words to get to willful, NBA will have to show that DTS had a history, had been warned, and in conscious or reckless disregard of prior warning he published the errant statement (I just do not believe that a statement made in the context of a man trying to stop his 50 year younger gf from parading with younger men qualifies to strip him off his ownership interest in his team.

I don't think that's the standard that will be required.

Under New York law:

New York State Penal Law defines the term willfully as meaning ?deliberately?.  PENAL ? 250.05.  Criminal case law often defines the term willfully as possessing ?a culpable mental state equivalent to that required by the term ?knowingly?.?  People v. Einaugler, 208 A.D.2d 946, 948 (1994) and People v. Coe, 71 N.Y.2d 853, 855 (1988).  The word willfully also means ?deliberately.?  People v. Broady, 5 N.Y.2d 500, 506 (1959).  In People v. Broady, the court separated the term willfully from the term maliciously, and held that the New York State Legislature wanted the word willfully to mean ?deliberately? instead of ?maliciously? or ?viciously?.  Id.  The term willfully was also described as ?an act consciously and deliberately done??  Id. at 507.   

Link

Sterling deliberately made the statement.   He didn't need to intend to harm anybody or to have his words get out (although there has been a report that Sterling was having his "assistant" record these conversations for archiving purposes); rather, he simply needed to have intended to make the statements at all, and he clearly did.

[footey]

By the way, no one chimed in on my 'unclean hands' defense to any action brought by the NBA to force a sale.

You just did, Ogaju, LOL!!

[footey]

the man was having a fight with his girlfriend. He is a lawyer trying to get the girlfriend to do what he wants therefore he uses a certain degree of hyperbole in his attempt to 'win'  the argument. 'Don't bring them to my games', a direct order to the gf not to bring her male friends to his games. Why did he call it 'his games'? Because he owns the team and she probably gets her friends in the exclusive areas of the arena -- that is probably why they befriend her to begin with.

Bottom line is DTS never said he did not want blacks at his games which is how the mob interpreted his words. He simply commended his gf not to bring her other boyfriends to his games. Not enough to force him out, in my opinion.

I think that's a pretty charitable interpretation.

Regardless, I'm not sure that it matters.  He made a statement that caused prejudice to the league.  That's a violation of the Constitution, and if the owners want to terminate for that, they're probably allowed to.

Your interpretation should address the willfulness element required for the owners to terminate him.  To say he willfully made the (private) statements constitutes willful violation of the Constitution is arguable, and will be made by the league, but it is a legal argument that will be disputed by Sterling.  To say the owners are "probably allowed to" remove him, based on my (albeit quick) view of the Constitution, exaggerates their legal position. To say they have a supportable legal position, I would concede that.  But I think this story will develop that it is by no means a strong case for the league to do this.

But see, if the league has a credible argument, this will be upheld.

The Constitution provides:

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.

The Federal Arbitration Act lists only a handful of narrow grounds on which an arbitration award can be vacated:

In any of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration
? (1) Where the award was procured by corruption, fraud, or undue means.
? (2) Where there was evident partiality or corruption in the arbitrators, or either of them.
? (3) Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.
? (4) Where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
? (5) Where an award is vacated and the time within which the agreement required the award to be made has not expired the court may, in its discretion, direct a rehearing by the arbitrators.
? (b) The United States district court for the district wherein an award was made that was issued pursuant to section 590 of title 5 may make an order vacating the award upon the application of a person, other than a party to the arbitration, who is adversely affected or aggrieved by the award, if the use of arbitration or the award is clearly inconsistent with the factors set forth in section 582 of Title 5.

As crazy as it sounds, the Supreme Court suggested that mistakes of law by the arbitrator aren't included in the above, and thus that legal mistake isn't enough to set aside an award.  The Circuit courts are split on that right now, but it just goes to show what an uphill battle Sterling has.

If that is in fact the standard of review, that the Commissioner is free to interpret the Constitution in any manner he wants so long as he has requisite owner support, I shudder to think where this would end.  This is what Mark Cuban referred to as the slippery slope. He is right.  I still think that Sterling has very strong defenses, and that the misapplication of the arbitration powers is subject to protracted litigation. But you raise a very interesting point here.

[hwangjini_1]

thank you all for the thread, with its many hours of thought and posting. it is informative.

what is also informative is that the legal minds of cb can come to such different interpretations of the NBA constitution. if such a divergence of opinions is possible here, i can only imagine what sterling's lawyers will be doing.

yes, it does appear as if we now have our summer's entertainment all lined up for us. sterling et al appear to have the bases for litigation that will take a long, long time and embarrass the heck out of everyone involved...the NBA included.

could sterling be angling to have the NBA settle this in a way that provides more benefits to him than he currently faces, as opposed to angling to "win" a law suit? just a thought.

and while i have not, to date, thought this would help the celtics' draft pick next year, it just might play out in a way that shows me wrong and helps the celtics. a fine trade in my mind. 

[Roy H.]

The interesting thing will be whether Sterling can get an injunction to prevent the Board of Governors from issuing a ruling, or from enforcing any ruling that they do make.

In general, to grant an injunction a litigant needs to should irreparable harm and a substantial likelihood of success on the merits of the underlying litigation.  (There are a couple of other requirements, but they're slipping my mind.)

I think Sterling could probably show irreparable harm.  Once he loses the franchise, it's gone forever, and I'm not sure that money damages alone could make him whole.

However, he's got an uphill climb in terms of proving that he is substantially likely to win his court case.  Some courts grant injunctions in almost all instances of substantial irreparable harm, but it will be interesting.