The New York Knicks have argued against their desire to move their lawsuit against Maple Leafs Sports and Entertainment to an NBA-led arbitrator and presented the case to a U.S. judge Monday as to why their lawsuit should continue in federal court.
MLSE, the parent company of the Toronto Raptors and the defendants in the lawsuit, along with Raptors coach Darko Rajakovic and assistant coaches Noah Lewis and Ikechuchu Azotam, asked Judge Jessica G. L. Clark last month to let the NBA and Commissioner Adam Silver settle their dispute. It was decided by the league that the NBA constitution binds both teams to that position. The Knicks asked the judge to deny that request and keep the lawsuit in federal court.
The Knicks filed the lawsuit in August in the Southern District of New York, naming 10 unnamed John Dons. Azotam, a former team video coordinator, was hired by Rajakovic to go to the Raptors and take scouting reports and more than 3,000 video files with him to Toronto, the franchise says. He was hired by the Raptors in August. The Knicks filed their lawsuit about a week later.
The Knicks allege that the reports and archives are the team’s proprietary information.
MLSE, Rajaković, Lewis and Azotam, in a joint response, denied all the allegations and said they were “baseless” in their response to the lawsuit in October. The Raptors declined further comment Monday; An MSG spokesperson reiterated the company’s position that there was a breach of criminal and civil law. The Knicks said in Monday’s lawsuit that their damages exceed $10 million and they want to recover attorney’s fees – another reason why they argue that NBA arbitration is not the proper forum for their lawsuit because the NBA constitution limits the fines a commissioner can impose.
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The Knicks argue that the NBA’s constitution’s arbitration clause is overly broad — the league’s arbitration clause is an “unlimited” clause that courts have previously chosen not to enforce — and that the constitution is intended to address issues related to the league’s operations. And not the Knicks in this case.
“Contrary to Defendants’ claims, this is not a dispute about basketball operations,” Kink’s attorneys wrote in the filing. “There is no connection between the questions and the NBA Constitution – it is a dispute about the theft of trade secrets by a dishonest employee, which is not contemplated by the NBA Constitution.
The club said in its filing that any legal dispute involving the azotam contract must be brought in US federal court in the state of New York.
“The parties never intended that matters falling outside the NBA’s constitution — disputes involving intellectual-property theft — would be subject to arbitration,” Knicks’ attorneys wrote in Monday’s filing.
The Knicks argued that the NBA had already denied them an opportunity to resolve the dispute. NBA general counsel Rick Buchanan sent a letter to the Raptors and Knicks seeking to resolve the dispute through the NBA constitution in September after the Raptors tried to question Silver’s authority — but the Knicks opposed that.
“The league will pursue further proceedings in SDNY court to determine whether this dispute should be filed in federal court or before the commissioner,” Buchanan wrote to attorneys for both teams.
The club also said that if Silver were to serve as an arbitrator, he would not be able to provide a fair hearing between the two franchises. The filing takes aim at Silvers’ close relationship with Larry Tanenbaum, MLSE’s minority owner and chairman of the board. Tannenbaum has served as chairman of the NBA Board of Governors since 2017 and is up for re-election in 2022.
Silver, the Knicks claim, is “conflicted” and cannot replace himself as a judge. The record quotes Silver, who calls Tannenbaum his boss and role model.
“In practice, his choices were effective,” Kink’s archive notes. “The NBA, led by Commissioner Silver, selects a candidate for chairman. The election is presented unopposed to the league’s board of governors, leaving the governors with no other option. In his role as chairman, Tannenbaum serves as Silver’s boss and has significant influence over Silver’s continued employment and salary.
The NBA has publicly adopted an arms-length approach. Silver declined to comment on the matter in September.
“I think this may ultimately end up in front of me, so I think it’s appropriate to withhold judgment,” Silver said when asked about the charges.
The Knicks filing took an acerbic tone Monday. He said the MLSE’s case was “baseless” and also described its earlier request to compel arbitration as “disturbing”. This comes after MLSE called the Kinnicks’ original lawsuit a “public relations” waste of judicial resources, said the defendants didn’t know about the lawsuit until it was in the news, and tried to point out a typo. In one of MSG’s sports general counsel’s emails with the league.
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(Photo: Nathaniel S. Butler / NBAE via Getty Images)