NBA lacks authority to force Donald Sterling to sell the Clippers
(Clay Travis is also a lawyer and offers his take on the NBA's punishment of Los Angeles Clippers owner Donald Sterling.)
A close examination of the NBA's bylaws raises serious questions about whether the NBA has the legal authority to strip Donald Sterling's ownership of the Los Angeles Clippers and force a sale of the franchise. Indeed, when you examine all of the relevant bylaws relating to termination of a franchise interest, I don't believe the NBA has the legal authority to take away Sterling's team and force the sale of the Los Angeles Clippers franchise.
Let me show you why.
A couple of days ago the NBA posted its bylaws on the official league website.
Here is Article 13 of the NBA's bylaws in full, the provision of the league's rules that deals with termination of an owner's interest.
There are ten specifically enumerated provisions that can justify the NBA terminating an owner's interest.
Here they are:
ARTICLE 13
TERMINATION OF OWNERSHIP OR MEMBERSHIP
The Membership of a Member or the interest of any Owner may be terminated by a vote of three fourths (3/4) 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.
(b) Transfer or attempt to transfer a Membership or an interest in a Member without complying with the provisions of Article 5.
(c) Fail to pay any dues or other indebtedness owing to the Association within thirty (30) days after Written Notice from the Commissioner of default in such payment.
(d) Fail or refuse to fulfill its contractual obligations to the Association, its Members, Players, or any other third party in such a way as to affect the Association or its Members adversely.
(e) Wager or countenance wagering by its officers or employees on any game in which a Team operated by a Member of the Association participates.
(f) Willfully permit open betting, pool selling, or any other form of gambling upon any premises owned, leased, or otherwise controlled by the Member or an Owner, except, subject to Article 8(a), for gambling activities that are lawful in the applicable jurisdiction and do not involve in any way, directly or indirectly, gambling with respect to any aspect of the Association’s games, events, property, players, or other personnel.
(g) Offer, agree, conspire, or attempt to lose or control the score of any game participated in by a Team operated by a Member of the Association, or fail to suspend immediately any officer or any Player or other employee of the Member who shall be found guilty, in a court of law or in any hearing sanctioned by this Constitution and By- Laws, of offering, agreeing, conspiring, or attempting to lose or control the score of any such game or of being interested in any pool or wager on any game in which a Team operated by a Member of the Association participates.
(h) Disband its Team during the Season, dissolve its business, or cease its operation.
(i) Willfully fail to present its Team at the time and place it is scheduled to play in an Exhibition, Regular Season, or Playoff Game.
(j) Willfully misrepresent any material fact contained in its application for Membership in the Association.
...
On its face eight of these provisions don't apply here -- so let's toss out b, c, e, f, g, h, i, and j as legal rationales to justify the league taking away Sterling's ownership interests.
So that leaves only two possible ways for the NBA to take Sterling's team, prong A or prong D.
Let's examine both:
Here's Prong A, again, (I have added the bold.)
(a) Willfully violate any of the provisions of the Constitution and By-Laws, resolutions, or agreements of the Association.
Sterling hasn't "willfully" violated anything. "Willfully," means there is an intent requirement embedded into this prong. That is, the NBA wanted to ensure a measure of intentional undertaking behind the actions. That's why the word "willfully" begins four of these ten prongs. Sterling didn't willfully broadcast these statements. He was secretly taped in a private residence engaged in a conversation with one other person. Then that tape was leaked to TMZ without his involvement or consent. Regardless of how inappropriate the NBA might find his comments, it's fair to say that they were in no way intended to be official comments that were made to willfully violate NBA rules and regulations.
I can't imagine any judge in America finding that Sterling willfully violated any NBA directive via a secret taping in a private residence. So prong A is out the window as well.
Here's Prong D, once more I've added the bold:
(d) Fail or refuse to fulfill its contractual obligations to the Association, its Members, Players, or any other third party in such a way as to affect the Association or its Members adversely.
The first half of this prong doesn't apply at all. The latter half is very tenuous, but I've bolded it anyway. This is probably the NBA's only legal ground under the bylaws to argue that Sterling's ownership interests can be terminated. Sterling hasn't violated any contractual obligations to the league, its members or the players -- that is, he's continued to pay these partners and is not in breach of their contracts -- but could you argue that Sterling failed to meet his contractual obligations to the Clippers' sponsors? (Sponsors here would be "any other third party.")
Maybe.
But this is incredibly tenuous legal standing.
Many local sponsors pulled advertisements from the Clippers in the wake of the controversy surrounding Sterling's remarks. Could that constitute a failure of the Clippers contractual obligations to a third party? That's the NBA's only argument under these bylaws.
And when you examine it, the rationale isn't there unless you're willing to read this phrase in an incredibly broad manner.
Does any owner actually believe if local advertisers pull sponsorship deals with a team that an owner could lose his team for this fact? That seems to fly in the face of the intent of the provision, which is clearly designed from a financial perspective -- for instance if an owner became insolvent -- more than it is a public relations response to outrage.
Put it this way, does any NBA owner actually believe that if, for example, a shoe company decided a team wasn't living up to its end of the bargain and pulled a local sponsorship deal that the "failure" of that relationship could impact his team ownership? That's laughable, right? In the 33 years that Sterling has owned the Clippers there have probably been hundreds, perhaps even thousands, of local sponsorship deals that have failed for a variety of reasons.
The fact that this is probably the NBA's only -- incredibly weak -- legal argument for how Sterling can be stripped of his team shows you how lacking in authority the league actually is.
Put simply, when you actually examine the NBA's posted bylaws, I don't believe Adam Silver or the league has the legal authority to take Donald Sterling's team from him. As a highly trained lawyer Silver probably knows this as well -- in fact, I think it's why he looked so nervous at the press conference, because he knew he didn't have the legal authority to support his announced penalties. The failure of most media to even examine the bylaws to determine whether or not Silver has the authority to undertake the actions he's proposed, is a glaring flaw of the reporting surrounding this story. In the end, Silver got his bold headlines praising him for taking a strong stand, but the underlying support in the bylaws for taking Donald Sterling's team just isn't there.
While Sterling may be racist, there's nothing in the termination clause of the NBA bylaws that allows the league to take his team for that reason.