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Tuesday, April 29, 2014
Sterling, Silver, and statutory interpretation

Allow me to add to Mike's analysis of NBA Commissioner Adam Silver's punishment of Clippers owner Donald Sterling, raising the possibility that the termination of ownership is on stronger footing than the fine and suspension.

Silver on Tuesday imposed three punishments: 1) A lifetime ban from all involvement with the Clippers or the league; 2) a $ 2.5 million fine; and 3) a call for the owners to vote to terminate Sterling's ownership. The NBA had previously kept its governing documents secret; at the time of Silver's press conference, no one outside the league knew the precise bases for these punishments (when asked, Silver said he would "leave that to the lawyers"). The league finally released its Constitution and By-Laws (H/T: Deadspin), although they still have not announced the precise bases for these decisions, so we are guessing as to exactly what Silver relied on and why. We may only know if Sterling challenges his punishments (presumably through a breach of contract action). Either way, you probably could get a nice legal analysis exam out of this.

The lifetime ban is most likely pursuant to Article 35A(d), which empowers the commissioner 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." The fine seems to be pursuant to Article 24(l), which gives the commissioner catch-all authority to make decisions "as in his judgment shall be in the best interests of the Association" when a situation is not otherwise covered; the maximum fine under that provision is $ 2.5 million. Finally, the call for termination of Sterling's membership triggers Articles 13, 14, and 14A. Article 13 enumerates ten bases for termination; the only one that might fit is (a), where an owner "Willfully violate[s] any of the provisions of the Constitution and By-Laws, resolutions, or agreements of the Association," which brings us back to Article 35A(d)'s conduct prejudicial or detrimental or Article 24(l)'s "best interests." The power to terminate rests with the NBA's Board of Governors, comprised of the other 29 owners, and requires a 3/4 supermajority.

First, it is interesting that Silver apparently split the source for the first two punishments. The suspension seems to have been under Article 35A(d) for conduct prejudicial or detrimental to the NBA. But 35A(d) also allows for a maximum $1m fine in addition to the suspension. Clearly Silver did not rely on that for the fine, however, since he imposed a fine 1 1/2 times larger than 35A(d)'s limit. Instead, the fine must have been under the Article 24(l) catch-all, given the amount. Why did he do it this way? Presumably to impose the larger fine under 24(l).

But there is a good argument that resort to the catch-all is inappropriate here. Article 24(l) expressly applies only "[w]here a situation arises which is not covered in the Constitution and By-Laws." This situation is covered by another part of the Constitution--Article 35A(d), already used for the suspension. In other words, since Silver found that Sterling violated Article 35A(d) (in suspending him), that also should have been the basis for the fine. Silver thus was wrong to resort to the catch-all.  Further complicating matters is Article 35A(c), providing for fines (again, maximum $ 1 m) specifically for statements prejudicial or detrimental to the best interests of the team, league, or basketball. That also seems to cover this situation--Sterling obviously said things contrary to the best interests of the NBA--again making resort to Article 24(l) inappropriate.

Second, and related: Why did Silver rely on Article 35A(d) for conduct prejudicial or detrimental rather than Article 35A(c) for a statement prejudicial or detrimental? Presumably because (c) does not allow for suspension, while (d) does. But Sterling is unquestionably being punished for statements, not conduct (whatever his racist views, he was not punished for acting on his views or operating his team in a way that implemented those views). While a provision prohibiting conduct could, standing alone, also reach statements, that argument does not work when there are distinct provisions, one regulating conduct and one regulating speech. Did the NBA Constitution intentionally set-up a situation in which conduct could be the basis for a suspension but statements only for a fine? If so, perhaps this means the suspension is improper.

Note that my analysis presumes a certain exclusivity--Article 24(l) by its terms cannot be in play if a different provision is; Article 35A(d) cannot be used to regulate statements because 35A(c) already does. Perhaps Silver would argue--and an arbiter would accept--that all of the provisions together allow for this range of punishments. But that is an odd form of statutory interpretation and would render many provisions of the NBA Constitution superfluous.

Third, expect some controversy when the owners attempt to terminate Sterling's ownership. The league would be basing termination on a willful violation of either of three broad, non-specific provisions ("conduct prejudicial or detrimental," statements prejudicial or detrimental, or conduct judged not in the "best interests'); either seems a very generic basis for this ultimate sanction. The other nine bases for termination are fairly specific, going to gambling and fixing games (forever the cardinal sin) and extreme mismanagement of the franchise, although none is in play here. Perhaps Sterling could argue that either 35A(d) or 24(l) is not a specific enough rule in the Constitution & By-Laws as to be willfully violated as to form a basis for termination under 13(a). Failing that, termination of ownership, if the owners must the necessary supermajority (and I imagine they will,  both to show support for Silver's leadership and to keep the players happy), appears proper under league rules. Note that I am disagreeing with Mike on this one, just based on the plain language of the laundry list in Article 13(a).

Finally, it will be interesting to see how the owners approach termination of ownership. Typically, under Article 14A(c), terminating a franchise transfers control to the league. But the media seems to be talking in terms of the owners giving Sterling an opportunity to sell the team outright to some outside owner. While not specifically provided for, that might be a potential negotiated resolution.


I was actually about to post many of the same sentiments. While the legality of the termination of Sterling's ownership has generated the most attention to date, it's not clear to me that Silver had the authority to suspend Sterling under the league constitution. Article 35A(c) is clearly the applicable provision, and as you note, that caps punishment at a $1 million fine. Given the specific applicability of 35A(c), any reliance on 35A(d) or 24(l) is misplaced in my opinion.

For that same reason I don't think ownership termination is authorized either. While 13(a) authorizes it for any willful rule violation, and Sterling undoubtedly violated Article 35A(c), it would seem odd to me to allow 13(a) to supersede the specific punishment authorized in 35A(c). In other words, I think Sterling can persuasively argue that 35A(c) deals with offensive statements, and clearly intends to limit punishment for such conduct to a $1 million fine; to use 13(a) to circumvent that proscribed level of punishment would be improper.

Blogger Nathaniel Grow -- 4/30/2014 7:57 AM  

I'm so glad to see I'm not alone on the island.

But I disagree with your second paragraph. As the rules are structured, they enumerate lots of different wrongful acts and impose individual punishments for each of them. Then 13(a) comes along and throws-in one big additional punishment for any of those acts, but only for a willful violation and only on a finding by 3/4 of the BoG.

That said, as I'm writing this, a different thought came to mind: Does "willfully" require specific intent (as willfully often does)--he made the statements with the intent of being prejudicial or detrimental the league? if so, termination arguably is a tougher sell.

Blogger Howard Wasserman -- 4/30/2014 8:44 AM  

I wouldn't be surprised if a court adopted your view of Article 13(a), but I'm still not convinced. 35A(c) lays out the specific punishment for prejudicial statements. Other rules specifically allow for ownership termination. Those provisions would appear superfluous if 13(a) could result in termination for any rule violation irrespective of the specific punishment delineated in the rule. A broad interpretation of 13(a) could also then theoretically allow an owner to be terminate for even minor rule violations, such as Mark Cuban criticizing the referees. That can't be right.

Blogger Nathaniel Grow -- 4/30/2014 9:21 AM  

Unless they're relying on the procedural protections to do the work-3/4 of the owners are not going to kill one of their own for minor violations. That's why you give the owners that power, not the commissioner.

Blogger Howard Wasserman -- 4/30/2014 9:24 AM  

How about a different scenario: letting Sterling continue to own the team.

But create a 31st franchise, the California Slippers. Release Clipper players from their contracts, who then magically sign identical ones with the Slippers. The Clippers forfeit all draft picks permanently. Schedule games with the Slippers but "forget" to do so with the Clippers.

The Lakers, owners of the Staples Center, note that Sterling has no players or games scheduled, evict him (which he seemingly likes to do.)

In short, leave Sterling with a paper franchise and a lot of unsellable merchandise.

Is that possible under the NBA constitution & by-laws?

Blogger Robert -- 4/30/2014 11:13 AM  

Does it matter? Silver decided to accede to the lynch mob, and was tough in doing so. Sterling is an ass and all the people who knew about his mouth (and I am sure that this was not the first time that he said such things, and apparently everyone, including the NAACP and Al Sharpton was agreed to headline his award dinner knew all there was to know about him. And if he was good enough for the NBA partners, Doc Rivers, Al Sharpton and the NAACP on his public record then, he should be good enough for them now. Or is there some sort of hypocracy involved?

Blogger Barry -- 4/30/2014 3:21 PM  

How, if at all, does the fact that the Clippers are owned by a trust, not Sterling alone, factor into this whole thing?

Can the other members of the trust (Sterling's wife and two children) sue to prevent the sale of the team on the basis they are being unlawfully punished for his actions?

Can Sterling somehow remove himself from the trust? Would that negate the ability of the league to force a sale since he no longer owns it?

Anonymous Trent DePonte -- 5/05/2014 9:45 AM  

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