Jump Ball in Los Angeles Clippers Dispute; Sterling to Press On with Suit

July 24, 2014

As most of us have heard, Donald Sterling, owner of the Los Angeles Clippers, became embroiled in a much publicized scandal, after an offensive audio recording involving Sterling was leaked to the media. After a brief investigation, NBA Commissioner Adam Silver ordered Sterling to pay $2.5 million in fines and banned him from the NBA for life. Silver also announced that the NBA Board of Governors would vote to force Sterling to sell the Los Angeles Clippers. Facing pressure to sell the team, Sterling agreed to authorize his wife to begin negotiating a sale. On May 29, 2014, Sterling’s wife entered into an agreement with former Microsoft CEO Steve Ballmer to sell the Los Angeles Clippers for $2 billion. The next day, however, Sterling filed suit against the NBA, alleging violations claims for denial of constitutional rights, breach of contract, antitrust violations, conversion, and breach of fiduciary duty. Sterling argues that because the charges against him are based solely on an illegal recording, they are in violation of his right to privacy under the California Constitution. Sterling also contends that the $2.5 million fine, the ban of participation as an owner for life, and the commencement of procedures to force the sale of the LA Clippers, are not authorized under the NBA Constitution and By-Laws. In early June, Sterling announced that he would withdraw his suit and accept the proposed sale of the Los Angeles Clippers. On June 10, 2014, however, Sterling announced that he was not going to sell the Los Angeles Clippers and that he was going to move forward with his lawsuit. The dispute is currently pending in the U.S. District Court for the Central District of California. In response, the NBA is apparently considering countersuing for tortious interference with contractual relations, based on Sterling’s alleged interference with business relations between the NBA and one of its franchises for the sale of the Los Angeles Clippers. The NBA has until August 11, 2014 to answer Sterling’s complaint.