Schmidt, Sethi & Akmajian Blog

How Can the NBA Force Don Sterling to Sell his Team?

Posted by Dev Sethi | Apr 29, 2014 | 0 Comments

LA Clippers (soon to be former) owner, Don Sterling has been handed a lifetime ban from the NBA and a $2.5 million fine in the wake of despicable, racist comments that came to light last weekend. In his press conference handing down these punishments, NBA Commissioner Adam Silver made it clear that he would press NBA ownership to strip Sterling of his ownership in the LA Clippers, and he would seek to have that accomplished as soon as possible.

All of this raises an interesting legal question – under what authority can owners force the sale of another, competing team? The internet exploded, okay that's a little hyperbole, but it did see a bump of comments bemoaning the death of the 1st Amendment. Just take a gander at Twitter…you will find a number of posts, all starting with the same sentiment (Sterling's comments are horrible) and asking the same question (but what about freedom of speech).

Here's a primer.

The 1st Amendment, like each one of the Bill of Rights, applies only to governmental action. Yes, you have the freedom to say what you want – even the dumb, offensive stuff. Subject to some minor considerations, the government cannot restrict your speech, even the speech that would embarrass your mother. But that does not mean your decision to speak is free of consequences. People can stop listening, and in the case of a business or brand, they can take action with their pocketbook – no longer supporting or sponsoring you.

In Sterling's case we saw just that. Within hours of the tape going up online, Clippers sponsors like Red Bull, CarMax and State Farm cut ties with the franchise.

Given Sterling's position as a franchise owner within a business entity, the National Basketball Association, his actions are subject to even more consequences. These are put in place under the authority of the NBA Constitution, bylaws and franchise agreement, each one of which he voluntarily submitted to as an owner. Essentially, Sterling has a contract with the NBA and his owner associates. Much of those agreements are shielded from public view, but some language has come out over the last few days. The short of it is that on a ¾ vote of the ownership, they can force the sale of a team if an owner “fails to fulfill” a “contractual obligation” in “such a way as to affect the NBA or its members adversely.” So if the ownership of 22 NBA teams comes together and decides that Sterling has acted to adversely affect the game, Sterling is gone. You don't need to be a billionaire owner to make that determination or conclude that Sterling is gone.

It's not a freedom of speech issue. And it is not a slippery slope. It is business partners enforcing the terms of a contract. Nothing more and nothing less. Certainly nothing that threatens the Republic.

About the Author

Dev Sethi

Dev Sethi litigates and tries a wide-range of complex injury and death cases throughout Arizona. He has Martindale Hubbell's highest rating, AV, and he is listed in "Best Lawyers." Dev is also recognized as an Arizona Super Lawyer in the area of plaintiff's products liability litigation.Dev has been at the forefront of auto product defect litigation. He played a key role in uncovering the Goodyear Load Range E tire scandal and worked to hold Ford Motor Company responsible for the danger posed by their now notorious 15-passenger vans. Dev is currently representing families in product liability suits against the nation's largest corporations including General Motors, Ford, Pentair Pools and Invacare.


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