What sort of legal precedent is the NBA setting in banning and fining Clippers owner Donald Sterling over his racist rant ?
Relying on authority he says he has under the NBA Constitution, Commissioner Adam Silver fined Los Angeles Clippers owner Donald Sterling $2.5 million and banned Mr. Sterling for life from the Clippers and the NBA. Commissioner Silver also is seeking a vote of team owners, acting as the Board of Governors of the league, to force Mr. Sterling to sell the team.
Mr. Sterling is being punished for making racist comments to a woman widely identified as his girlfriend. The comments were made in private and were recorded either with or without Mr. Sterling's consent. Commissioner Silver's action raises a number of legal questions. Now the ball, legally speaking, is in Mr. Sterling's court.
Any rights Mr. Sterling has to challenge the commissioner's decision come first from the NBA Constitution and bylaws, which essentially operate as a contract between each owner and the league. A contract sets the rights and duties of the parties to the agreement in exchange for something of value. The NBA Constitution is a confidential document.
It has been reported that the constitution gives the commissioner broad powers to punish owners who act contrary to the interests of the league. But broad is not unlimited. In imposing the punishment, Commissioner Silver said that the constitution prohibits him from fining an owner more than $2.5 million.
What other relevant limits are there on the commissioner's powers? Do the governing documents deprive an owner of the right to challenge even the most arbitrary exercise of that power? In addition, if the conversation that led to the punishment was recorded without Mr. Sterling's consent, the recording violated California law. Mr. Sterling could sue whoever recorded the conversation. More importantly, though, how would the fact that the evidence on which the punishment was based was obtained illegally affect Mr. Sterling's rights against the NBA, if at all?
Do the owners have the legal power to force Mr. Sterling to sell the team? It has been reported that under the confidential NBA Constitution, a vote of three-fourths of the 30 team owners is required to force a sale. What if any limits does the constitution place on the grounds on which such a sale may be forced? If the constitution gives the owners the power to act where it is in the best interests of the league, who defines what is in the best interests of the league, the owners themselves with no right of independent review? Is the owners' power akin in this regard to the power of Congress to define for itself what constitutes "high crimes and misdemeanors" as a reason to impeach the president?
If the power of the owners to force a sale is indeed that broad, what if any power do the owners have to restrict to whom the team may be sold and on what terms? Do the owners have the right to veto the sale to a member of Mr. Sterling's family or to any other buyer the owners deem unsuitable, beyond the buyer's ability to fund the team? And who sets the sale price? If the league has the power to require the sale at "fair market value," who determines what the Clippers' fair market value is? What if any right would Mr. Sterling have to challenge that determination and to whom would such a challenge be made?
Before leaving this point, it is important to consider who exactly "owns" the Clippers right now given that Mr. Sterling has been banished from the league effective immediately. In response to Commissioner Silver's punishment, the Clippers issued a statement saying: "We wholeheartedly support and embrace the decision by the NBA and Commissioner Adam Silver today. Now the healing process begins."
Who is "we?" Does Mr. Sterling for the time being have all of the financial burden of owning a team with none of the corresponding rights?
Commissioner Silver's action was unprecedented. The decision now stands as precedent. In the law, a precedent is a ruling that guides the resolution of future incidents raising the same or similar facts.
The principle is rooted in fairness; like cases should be decided alike. When like cases are not decided alike, a claim may be made that the later decision is arbitrary or, worse, motivated by unlawful considerations. What enduring rule emerges from these facts and this decision? Is it that a lifetime ban and maximum monetary punishment is warranted for the expression of repugnant views, even if those views are expressed privately and, perhaps, recorded illegally? And repugnant how and to whom exactly? Alternatively, when a controversy like this inevitably arises again, will the ruling be considered one-of-a-kind, not really usable as meaningful precedent at all, limited to the uniquely disturbing facts of this episode?
No owner - no human - is entirely without sin. Before taking further action, the owners may wish to define the new Silver standard they appear to be on the verge of adopting - and to consider what that standard may mean to them in the not-too-distant future.
Commentary by Dan Eaton, a partner with the San Diego law firm of Seltzer Caplan McMahon Vitek where his practice focuses on defending and advising employers. He also is a professor at the San Diego State University College of Business Administration where he teaches classes in business ethics and employment law. Follow him on Twitter @DanEatonlaw.