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Did Donald Sterling’s Antitrust Claim Against the NBA Have Legs?

06.06.14

The well-publicized battle between the National Basketball Association and Donald Sterling recently, and predictably, found its way into court. Late last month, Mr. Sterling filed suit against the NBA in the Central District of California, seeking over $1 billion in damages arising out of the NBA’s decision to ban Mr. Sterling from all NBA activities, fine him $2.5 million and, importantly, force him to sell the Los Angeles Clippers. While most of Mr. Sterling’s lawsuit centered around the propriety of the secret recording which precipitated the entire episode, he also made a claim that the NBA violated Section 1 of the Sherman Antitrust Act by forcing him to sell his team.

Mr. Sterling alleged that the NBA and the owners of the other 29 franchises have made a “collective decision” to force the sale of the Clippers and, in so doing, deprived Mr. Sterling of his “guaranteed” right to determine whether to retain or sell his team. He further alleged that the forced sale threatened to produce a lower price for the Clippers and involved the “unfettered subjective discretion of Sterling’s direct competitors who each stand to gain financially from Sterling’s exclusion from the market.”

On June 4, Mr. Sterling announced that he would not challenge the sale, and would be dropping his lawsuit. The weakness of Mr. Sterling’s anti-trust claims no doubt played some part in his capitulation. For example, Mr. Sterling is not the actual owner of the Clippers, who are owned by the Sterling Family Trust (of which Mr. Sterling is co-trustee), which raised an immediate hurdle for Mr. Sterling’s anti-trust claim, as he may have lacked standing. Further, the “injury,” if any, would presumably have been suffered by the actual Clippers franchise, as opposed to beneficiaries several steps removed. What’s more, it is difficult to see how any injury could have been proven when the franchise sold for $2 billion, almost four times the previous high for an NBA franchise, set just a few weeks ago when the Milwaukee Bucks sold for $550 million.

In the end this case will still prove to be noteworthy, as antitrust cases involving major sports associations often are, for the fact that an “insider” breached, even if momentarily, the antitrust glaze covering our nation’s most popular monopolies. Indeed, it was an antitrust lawsuit by legendary basketball player Oscar Robertson, and the ensuing injunction temporarily stopping the NBA-ABA merger in the 1970s, that led to the modern-day NBA draft and free agency.

For additional information or to discuss any issues regarding antitrust law, please contact Gardere Attorneys Randy D. Gordon (rgordon@gardere.com or 214.999.4527), Mark W. Bayer (mbayer@gardere.com or 214.999.4521) or Thomas Haskins (thaskins@gardere.com or 214.999.4014).

The publications contained in this site do not constitute legal advice. Legal advice can only be given with knowledge of the client's specific facts. By putting these publications on our website we do not intend to create a lawyer-client relationship with the user. Materials may not reflect the most current legal developments, verdicts or settlements. This information should in no way be taken as an indication of future results.

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