The Donald Sterling Case: A Legal Q&A

Published: May 07, 2014 00:55am EDT
By Thomas Gersey, Sports Writer for Konsume Sports

Please Note: This article was updated May 07, 2014 @ 12:55am EDT

 

    At the end of 2013, the two states with the largest population of active attorneys were New York and California, with 166,317 and 163,163 lawyers respectively.  In the United States as a whole, over 1.2 million attorneys continued to pay their yearly dues to the American Bar Association.  But those numbers pale in comparison to the number of “lawyers” you can find pontificating on the intricacies of statutory law whenever a national news story hits the airwaves.  Be they on Twitter, Facebook, television, radio or podcast, it seems anyone with a Netflix account and a recent viewing of Law & Order feels qualified to dole out legal analysis.   

Now, don’t take this the wrong way.  This isn’t a complaint.  As people get more sophisticated and informed, and as the internet continues to provide useful tools to better understand complex issues, it’s quite reasonable for a lay person to provide an educated analysis of a national news story.  Of course, that presumes that said person has done the due diligence to understand the numerous angles of that story.  Unfortunately, this is rarely the case.  

As the story of Donald Sterling, and his desire to turn the Staples Center into Pleasantville, has made it’s way through the Twitterverse, a great number of issues, questions, and opinions have made their way to the surface.  Some border on the insane , while many others are merely mundane.  My goal in this article is to identify the key questions and opinions that are floating around, and to hopefully give a brief answer or rebuttal to help people better understand the truth.  And while I do find Sterling to be a repugnant human being and well-deserved of his punishment, the goal here is to give an unbiased, legal interpretation of the various issues at hand.

At the very least, now you’ll have some ammunition to take into your next debate at the bar.

 

A.  What gives Adam Silver and the NBA the right to punish Donald Sterling for statements made in private?

Let’s start with the basics.  The NBA is a not-for-profit Association which regulates, coordinates, and organizes the actions and interactions of its Members.  It’s actions are governed by a Constitution, which was recently released to the public, and each Member agrees to follow the terms of the Constitution as a prerequisite for inclusion in the Association.  Article 4(c) specifically states, “...if the application is approved by the Association, the applicant and each Prospective Owner shall be bound by the Constitution and By-Laws, rules, regulations, resolutions, and agreements of the Association, and any modifications or amendments thereof.”  As an Owner of a Member franchise, Sterling is obligated to adhere to the terms of this Constitution.

The powers to interpret the Constitution and to impose penalties pursuant to its terms rest solely with the Commissioner.  Article 24 covers the Authority and Duties of the Commissioner, and explicitly states the following:

  • Article 24(e) - The Commissioner shall have the right to investigate all charges, accusations, or other matters that may adversely affect the Association or its Members.

  • Article 24(l) - The Commissioner shall, wherever there is a rule for which no penalty is specifically fixed for violation thereof, have the authority to fix such penalty as in the Commissioner’s judgment shall be in the best interests of the Association.  Where a situation arises which is not covered in the Constitution and By-Laws, the Commissioner shall have the authority to make such decision, including the imposition of a penalty, as in his judgment shall be in the best interests of the Association.  The penalty that may be assessed under the preceding two sentences, may include, without limitation, a fine, suspension, and/or the forfeiture or assignment of draft choices.  No monetary penalty fixed under this provision shall exceed $2,500,000.

So, in an instance where the behavior of a Member threatens to have an adverse affect on the Association or its Members, Adam Silver is empowered by the Members (including Sterling) to conduct an investigation.  And where there is no specific rule in place to deal with the finding of that investigation, Silver has broad powers to decide on an appropriate punishment.  In fact, per Article 24(m), “all actions duly taken...pursuant to Article 24...shall be final, binding and conclusive…”  Silver not only has the power to determine Sterling’s fate with the Association, but he also reserves the right to not be questioned about it.  That said, Sterling will likely attempt to challenge this ruling with an appeal to the Board of Governors, but the success of that appeal would have to be considered speculative at best.

But what about his suspension?  Look no further than Article 35A(d), which states, “The Commissioner shall have the power to suspend for a definite or indefinite period...any person who, in his opinion, shall have been guilty of conduct prejudicial or detrimental to the Association.  It is certainly not up for debate that the actions by Sterling, regardless of their genesis, have proven to be extremely detrimental to the NBA.

B.  Some simple comments are detrimental to an entire league and all of its teams?  Seems like a broad interpretation.

That’s the point.  The league charter is no doubt written as vaguely as possible so that the Commissioner can have this kind of broad oversight.  Many arguments say that, if the the NBA really wanted to curtail this kind of behavior, then they would have enumerated it specifically in the Constitution.  But that is specious thinking.  In order to allow the league to punish its Members for this kind of behavior, it would be more dangerous to try and account for every possibility.  Better to create an umbrella of bad behavior and let the Commissioner, a chosen representative of the owners, decide when certain actions threaten the health and viability of the league as a whole.

In this case, there is little need for an overly broad interpretation - Sterling’s actions were detrimental both instantly and looking forward.  Outside of the public outrage, Sterling’s actions threatened the league on two fronts.  From a financial standpoint, the NBA was already being threatened with lost revenue from advertising and perhaps the voiding of local television and radio contracts.  In addition, the NBA brand itself would be tarnished if consumers saw Silver’s response as anything less than appropriate.  

On a second front, the very stability of the Clippers, and the league, were under siege.  Players involved in all three games on April 29th were prepared to boycott that night’s games if Silver didn’t deliver a proper verdict.  Separately, the Players’ Association was already looking for legal cause to sue for termination of the contracts of Clippers players - and they may have had reasonable standing to do so.  In addition to Sterling having potentially breached the terms of his employment contracts with ihs players, they may have also had standing to seek respite from a hostile work environment.  

I should say, these cases would have been very difficult to win, but that isn’t what matters.  What matters is that they had sufficient basis for being brought, a scenario that would have created major unrest in the Association.

C.  But he was taped illegally.  How can the NBA punish him for that?

Let’s ignore for a second that, according to V. Stiviano’s attorney, Donald Sterling knew he was being recorded.  Were that to be true, it would obviously make this question irrelevant.  But let’s say he didn’t.  What then?

Assuming there was no consent to, or knowledge of, the recording on the part of Sterling, then it is a clear violation of The California Invasion of Privacy Act (Cal. Penal Code Secs. 630-837.5), which requires the consent of all parties to the conversation prior to the recording.  In that instance, Stiviano would be unable to use the recording in a civil action against Sterling, and instead would be susceptible to a civil action by Sterling against her.  It would also open Stiviano up to criminal prosecution, should the state pursue it.

That’s all nice and good, but does it mean Sterling got railroaded?  Unfortunately for him - no.  Regardless of how the recording was obtained, and regardless of how it was made public, neither of those things are sufficient to prevent Silver from using the information against Sterling - illegal or not.  The NBA is a private enterprise and is well within its rights to expel its Members using whatever evidence is available to them.  Once again, Sterling is failed by the very Constitution that he promised to be bound by.  

The standard rules of evidence would deem an illegally obtained recording to be inadmissible in a court proceeding, and one may argue that an inquiry of this nature should follow similar rules.  However, Article 24(m) of the Constitution anticipates any such argument, stating:  “In connection with all actions, hearing, or investigations taken or conducted by the Commissioner pursuant to this Article 24, (i) strict rules of evidence shall not apply, and all relevant and material evidence submitted may be received and considered…”  Simply put, once that recording became public, how it became public became irrelevant with regard to it’s use by the league in its investigation of Sterling.

D.  What about the First Amendment?

What about it?  The First Amendment protects the right to freedom of religion and freedom of expression (which includes freedom of speech) from government interference.  Private entities are not limited in their ability to regulate the speech and expression of their employees, executives, partners, members, etc.  So, while Donald Sterling is in no danger of being punished by the federal or state government, the NBA is well within its rights to take action against him for his words.  

E.  OK fine, but they can’t take his property!  I thought this was America.

Here is where we start to get into more of a grey area.  The Association and its Members have clear authority, again through the league Constitution, to vote an owner out of the league.  Article 13(a) states:  “The Membership of a Member or the interest of any Owner may be terminated by a vote of three fourths (¾) of the Board of Governors if the Member or Owner shall do or suffer any of the following:  (a) Willfully violate any of the provisions of the Constitution and By-Laws, resolutions, or agreements of the Association.”  

The real issue here is with the word “willfully.”  While we have already established that the league has reasonable grounds to declare that Sterling has violated the league Constitution, the question is whether or not his behavior is sufficient to rely on this Termination Clause.  One side of the argument is that Sterling’s violation of the league Constitution needed to be willful.  This reading of the clause would mean that the league would have to demonstrate that Sterling anticipated the release of his comments, with full knowledge that those comments would result in detrimental effects on the NBA and its Members.  This would be an impossible scenario to prove (especially since it is highly unlikely to be true), and would undercut the league’s ability to force Sterling out.

The alternative perspective, and a more reasonable one in my opinion, would be to separate the words “willful” and “violate,” and define them separately.  The NBA would seek to demonstrate that the Constitution does not require that a violation be willful, only that the actions which violate the Constitution were done willfully.  

The league Constitution most likely requires that any suit initiated by a Member against the league must be filed in New York.  For civil proceedings, New York case law defines “willfully” as “knowingly, intentionally, or deliberately” (see: Matter of Baywood Electric Corp. v. New York State Department of Law).

In this case, Sterling’s comments were clearly willful - they were conscious, intentional, and deliberate.  Seeing as the actions were done “willfully”, they are sufficient to be considered for any league punishment.  Only in an instance where Sterling was being punished for conduct he did not engage in willingly or knowingly, would said punishment seem inappropriate.  

That said, the league has a proper basis for seeking to terminate Sterling’s ownership stake.  But whether or not that will hold up in court is yet to be determined.  There are reasonable arguments on both side of this issue, but in the end the power of the league to vote Sterling out will come down to an interpretation of this one sentence.  Sounds ridiculous, but then again, isn’t all of this a bit insane?

E. How ugly is this going to get?

My guess - very ugly  This has the potential to drag out for a while.  Donald Sterling is a former litigator who is not afraid of a courtroom, and TMZ is already reporting that he has been shopping for a firm to take this case.  We’ve already established that he has a legitimate argument to prevent the forced sale of his franchise, but there is much more to this than the NBA and its fans being stuck with this gas bag.  

Any reasonable suit is going to allege that, not only is the NBA’s use of the Termination Clause inappropriate, but it is also capricious.  To prove such an allegation, Sterling will use discovery to try and prove that other owners have been guilty of similar transgressions without similar repercussions.  So, NBA owners with any skeletons in their closet (I’m looking at you, Rich DeVos), are sure to be hesitant when it comes time to vote on Sterling’s future as an owner.  This entire process could turn out embarrassing for some owners, and perhaps even the league, should anything remotely controversial see the light of day.   

Obviously this situation has many more issues surrounding it, and there is probably even more nuance to these few questions than I covered.  But hopefully this helped to clarify some of the topics currently being debated, and help eliminate some of the noise that is drowning out the facts.  

 

(Thomas Gersey is a sportswriter for Konsume.com and is also a licensed attorney with the State Bar of California.  The opinions here are not meant to be dispositive of any legal issues, and are offered solely as commentary.)


 


 

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