Chris Paul of the Los Angeles Clippers. (Photo by Andrew Bernstein/Getty)
UPDATE: 6/12/14, 8:45 a.m. EDT. ESPN’s Ramona Shelburne reports that two Skadden lawyers representing the NBA attended a probe court hearing in Los Angeles, where a trial will determine control of the Sterling Family Trust.
As the National Basketball Association grapples with the lifetime ban handed down earlier this week against Los Angeles Clippers owner Donald Sterling over his racially insensitive comments about African-Americans, the league’s longtime outside lawyers at Skadden, Arps, Slate, Meagher & Flom are preparing for a potential court battle.
A source knowledgeable of the Sterling machinations told The Am Law Daily on Thursday that Skadden lawyers were working behind the scenes to ready a defense against any litigation filed by Sterling—who remains an active Beverly Hills–based member of the State Bar of California—in the event the league’s other 29 franchise owners reach the necessary 75 percent vote threshold to compel a sale of the team. The Associated Press reported Thursday that a 10-member committee met via conference call to discuss the potential termination of Sterling’s ownership.
It remains unclear whether the timetable layed out in the NBA’s constitution for removing an owner like Sterling has officially begun. Commissioner Adam Silver—a former Cravath, Swaine & Moore associate who replaced longtime league leader David Stern earlier this year—has said publicly he will do everything in his power to force a sale of the Clippers following the leaked audio of Sterling’s comments.
In reporting earlier this week on the legal woes facing Sterling ahead of his lifetime ban for the racist rant that was recorded by a mistress—players were poised to boycott playoff games if Silver didn’t deliver a stern enough punishment—The Am Law Daily noted that Winston & Strawn has been advising the National Basketball Players Association during the sordid affair. (NBPA president Chris Paul, a star point guard for the Clippers, reportedly fought back tears before taking the court this week for a key playoff game against the Golden State Warriors, who were prepared to boycott the game.)
Winston antitrust head and sports law cochair Jeffrey Kessler, a longtime adviser to the NBPA, which has come out strongly against Sterling over his controversial comments, told The Am Law Daily on Thursday that he doesn’t see a viable claim by Sterling against the league, which would likely proceed on breach of contract and antitrust grounds.
Sterling, who made his fortune in real estate but has said he has no plans to sell the Clippers, has a long history of litigation with various adversaries, including former team employees Elgin Baylor and Mike Dunleavy. Manatt, Phelps & Phillips advised Sterling and the Clippers in the latter two disputes, and firm partner and Clippers general counsel Robert Platt told The Am Law Daily earlier this week that it was handling a team investigation into the Sterling audio saga. Platt declined to comment Thursday on whether Manatt would advise Sterling in a potential challenge of his lifetime ban.
Federal court records show that Am Law 100 firms Dickstein Shapiro and Seyfarth Shaw have represented Sterling-related entities in past litigation, as have California shops Klinedinst and Manning & Kass, Ellrod, Ramirez, Trester. (The illicitly recorded audio of Sterling bad-mouthing minorities—first reported by TMZ and Deadspin—arose out of litigation between his estranged wife Rochelle Sterling and his alleged mistress, who goes by the name V. Stiviano.)
While Sterling’s penchant for litigation is well-documented, the NBA is no stranger to its own hard-fought courtroom battles. The league’s outside counsel roster is for the most part split among three Am Law 100 firms: Covington & Burling, Proskauer Rose and Skadden.
Covington handles mostly IP and media-related matters for the league, as well as some corporate work, while Proskauer’s expertise is in labor and employment and collective bargaining counsel. Stern, a former Proskauer partner, vacated the commissioner’s chair after 30 years in February by ceding the role to Silver, a son of late Proskauer chair Edward Silver. A Proskauer spokeswoman declined to comment Thursday on whether the firm is providing counsel on the Sterling matter.
NBA general counsel Richard “Rick” Buchanan is a former Covington associate who has found himself in the middle of a high-profile dispute with a litigious owner in Sterling, according to a report earlier this week by sibling publication Corporate Counsel. Buchanan and an NBA spokesman did not respond to a request for comment Thursday on whether the league’s lawyers from Skadden are poised to respond to any suit filed by Sterling.
Skadden has previously advised the NBA in antitrust litigation with players, as well as ownership disputes involving the sale and relocation of the Seattle SuperSonics and annual media rights payments in perpetuity to the former owners of the American Basketball Association’s Spirits of St. Louis. (The ABA merged with the NBA in 1976 after a protracted legal battle.)
Skadden litigation partner Jeffrey Mishkin in New York, who served as the NBA’s chief legal officer from 1993 through 2000, served as the league’s lead outside lawyer in all of those matters. The Litigation Daily, a sibling publication, named Mishkin a Litigator of the Week last year for his role representing the NBA and other pro sports leagues in litigation with New Jersey Gov. Chris Christie over his effort to bring sports betting to the Garden State. Stern harshly criticized Christie in the case, which is being appealed to the U.S. Supreme Court.
Mishkin did not respond to a request for comment Thursday about his potential role advising the league in litigation with Sterling. Another Skadden partner not commenting on the Sterling drama is litigation partner Michele Roberts in Washington, D.C., who joined the firm three years ago in a high-profile lateral move from Akin Gump Strauss Hauer & Feld.
Roberts is reportedly a finalist to become the next executive director of the NBPA, a role that has been vacant for the past 14 months following the ouster of G. William Hunter, a former federal prosecutor whose leadership of the union was questioned in a 230-page independent review conducted by Paul, Weiss, Rifkind, Wharton & Garrison. (Paul Weiss’ price tag for the report was nearly $3.6 million, according to our previous reports.) Roberts declined to comment Thursday on her potential NBPA candidacy or the Sterling affair.
Skadden isn’t the only firm that could benefit from a drawn-out battle between the NBA and Sterling. The Am Law Daily reported last month on the lawyers from Foley & Lardner, Quarles & Brady and Paul Weiss advising on the proposed $550 million sale of the Milwaukee Bucks to two New York financiers, the latest in a string of sales that point to the rising value of pro sports teams.
After the NBA unveiled its punishment of Sterling this week, a number of noteworthy individuals—Oracle billionaire Larry Ellison, Oprah Winfrey, NBA Hall of Famer Magic Johnson and boxing legends Floyd Mayweather and Oscar De La Hoya—have stepped forward to express their interest in buying the Clippers.
Robert Haymer, a partner in O’Melveny & Myers’ entertainment, sports and media practice in Los Angeles who advised on the $377 million sale of the NBA’s Memphis Grizzlies in 2012, says that his firm has been coordinating inquiries from potential clients interested in the Clippers, although nothing definitive has yet emerged.
Asked how he expected a potential sale process to proceed, Haymer likened the future of the Clippers to that of Major League Baseball’s Los Angeles Dodgers, which were sold out of bankruptcy in March 2012 for $2.15 billion, a record-setting sum for a pro sports franchise.
“I think this could be very much like the Dodgers deal, where you had a litigation aspect that played into the league approval process,” says Haymer, noting that like the Clippers, the Dodgers had a bevy of interested owners emerge as viable contenders seeking control of the troubled team.
Of course, before any new owners and their lawyers can begin negotiating over revenue-sharing agreements, arena deals and media rights contracts involving the Clippers, they’ll first have to contend with Sterling, who bought the team for $12.5 million in 1981. In January, Forbes valued the franchise at $575 million, although some estimates say the team could fetch double that sum.