Did the NBA violate its own Constitution in punishing Donald Sterling?

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Today’s digitally interactive environment enables a herd-mentality that exhorts unprecedented pressure that is immediate and unforgiving. So when the infamous recording of Donald Sterling, the embattled owner of the Los Angeles Clippers, surfaced last month, the outrage rapidly snowballed.

Not satisfied with ranting against the blatantly racist remarks, we were looking to exert some punishment to quell our rage – only to realize that no criminal or civil recourse is available. As the only venue with any jurisdiction to address Sterling’s conduct, the public turned to the NBA. The response was prompt – but did the NBA’s discipline of Mr. Sterling violate its own Constitution?

The NBA has been a league whose success has been demonstratively linked with its image. From its inception through the 1970s, the league was plagued by low interest, low attendance and, consequently, low revenues. The overwhelming majority of the paying public, which was white, viewed the NBA as a racial subdivide. The perception of the league was that of selfish black players looking to dominate the ball to the detriment of the team game.

The revitalization of the league in the 1980s, spurred on by Bird, Magic and Jordan, saw a positive shift to the image of the NBA product, resulting in skyrocketing the popularity. As the financial valuations of its franchises multiplied exponentially, the NBA commissioner’s office was given a mandate by the owners to protect this image, so crucial to the success and value of the franchises. Every on- or off-the-court action or comment of anyone involved with the organization became scrutinized and controlled.

Instances of controversy that threatened the image of the league were seen as destructive forces to be dealt with in the most stringent manner (see: Malice at the Palace). It is within this context that NBA commissioner Adam Silver confronted the ensuing media firestorm upon the release of the Sterling tape on April 25th.

Facing a revolt by fans and a potential boycott by the players, the very employees incumbent to the mainstay of the NBA, Mr. Silver acted swiftly. On April 29th, merely four days after the release of the recording, a lifetime suspension of Mr. Sterling was issued along with the maximum allowable fine of $2.5 million. In addition, Mr. Silver announced the he would force a sale of Mr. Sterling’s ownership stake in the Clippers based on the willful violation of the NBA constitution.

The players, fans and the general public met Mr. Silver’s pronouncements with broad approvals and a common relief that justice was, somehow, served. The commissioner’s actions appeared to be duly warranted in order to preserve the highly valued image of the NBA, especially in this time of year when its playoffs generate more eyeballs than the regular season. However, with respect to the penalty levied, did Mr. Silver overstep his authority based on the very source cited: the NBA constitution?

Until as recent as this year, the NBA constitution remained completely confidential. Its terms were generally known through various media reports and through previous sanctions levied out by the NBA commissioner. Curiously, the entire copy of the constitution suddenly became available to the public after the Sterling sanctions were announced. Mr. Silver did not specify which rules or regulations were violated and the existence of any other contracts or agreements between the NBA and Mr. Sterling remain unknown. However, the authority of the commissioner and his sanctions come down to just a few Articles of the constitution.

At the outset, it warrants mentioning that the NBA constitution does not explicitly contain language pertaining to the situation at hand. Rather, violations of the constitution are only explicit with respect to the operation of a team, such as failing to pay wages, selling the team without league permission, gambling on games, failing to field a team, etc. Article 24(e) provides the commissioner with “the right to investigate all charges, accusations, or other matters that may adversely affect the [NBA]”.

Article 24(l) further gives the commissioner authority to address situations “not covered in the Constitution” to make “such decision, including the imposition of a penalty, as in his judgment shall be in the best interest of the Association”. It is clear that the commissioner is given broad powers in sanctioning an owner in any matter, not just matters confined within the constitution itself. However, his power is then limited by the Constitution in several ways: (1) the penalty amount that may be levied on an owner, (2) the criteria by which to evaluate a violation, and (3) the process by which by the commissioner must carry out a termination proceeding.

The maximum monetary penalty of $2.5 million on any infraction of the constitution is solely outlined in Article 24(l). By issuing the maximum fine, the commissioner clearly indicates that he is acting in the “best interests” of the league for an issue where “no penalty is specifically fixed for violation thereof,” as noted by this subsection. However, Article 35A, addressing misconduct of persons other than players, does appear to “fix” the penalty for the situation specifically at hand.

Article 35A(c) caps the fine at $1 million any “person who gives, makes, issues, authorizes or endorses any statement having, or designed to have, an effect prejudicial or detrimental to the best interests…” of the NBA. The language of this subsection appears to be completely analogous to the situation ensnaring Mr. Sterling. In invoking his authority based on the “best interests” of the league, as well as the fact that the violation in question involves “statements” deemed to be detrimental to these best interests, the Constitution appears to limit Mr. Sterling’s monetary fine to $1 million. His attorneys are, rightly, contesting the fine.

In conjunction, Articles 24(l) and 35A(c) provide the commissioner with irrefutable grounds upon which to suspend an owner for an indefinite period. Mr. Sterling’s attorneys have, to-date, not specifically contested Mr. Sterling’s suspension. On the other hand, the lack of due process has been contested – Mr. Sterling has still not been given the opportunity to challenge the fine or the suspension in the manner described by the NBA constitution itself.

It is unclear what official written notice was initially provided to Mr. Sterling and what formal discussions, if any, were held with the commissioner’s office on the matter of the fine or suspension. Clearly, no hearings were held, denying due process owed to an owner. When the Dallas Maverick’s Mark Cuban is hit by one of the many fines he has received to-date, for example, his due process rights to have an appeal or to have a hearing are preserved. No such rights seem to have been forthcoming in this case.

Most importantly, due process will matter with respect to the ultimate penalty: the termination of ownership. The NBA constitution provides clear due process procedures, as well as factors to be considered, with respect to terminating ownership. The hearing that was finally set by the NBA for June 3rd was cancelled by the NBA upon the forced sale of the Clippers. The urgent timing of this sale was peculiar. The NBA hastily approved the transaction with Mr. Sterling’s wife and/or trust as the seller, knowing that it would be heavily contested – likely in civil court. Even at that risk, was the league looking to avoid the hearing?

Article 13 limits termination, subject to a ¾ majority Board of Governors vote, to ten (10) instances where termination could be effected. In the case of Mr. Sterling, termination can only be based on one of two Article 13 applicable subsections:

- Subsection (a): “Willfully violate any of the provision of the Constitution and By-Laws, resolutions, or agreement of the Association;” or

- Subsection (d): “Fail or refuse to fulfill contractual obligations to the Association, its Members, Players, or any other third party in such a way as to effect the Association or its Members adversely”

Since no particular contracts between the NBA and Mr. Sterling have become known and since the commission himself cited Sterling’s “willful violation” of the constitution as the harm, it is safe to reasonably assume that the argument to terminate ownership is grounded only in Article 13(a). Whether Mr. Sterling’s statements can be considered “willful,” even in the aspect of harming the “best interests” of the NBA, is the real test of this standard. At best, the NBA’s legal case for termination under this standard can only be described as flimsy.

Faced with a hearing, the NBA owners would have approved the termination, bowing to public pressure. Rather than dealing with a “trial” that would scrutinize whether the NBA provided due process, whether the fine was valid and whether termination standards have been met – further sullying its image – the league chose to sidestep the controversy by approving a tenuous sale to put the onus on the civil courts.

Effectively, the NBA terminated Mr. Sterling’s ownership without a hearing owed to him by its constitution. Although, the Board of Governors’ decision, according to Article 14(j), would have been final on the merits of the case, Mr. Sterling is able to appeal based on the NBA’s failure to provide due process under its own rules. As such, the NBA is facing a substantial risk in being dragged into court on the matters of fining Mr. Sterling and terminating his ownership.

Mr. Silver was left with few choices facing the onslaught of the public, including a fierce campaign by the traditional, cable and social media, to sanction Mr. Sterling. He was strongly compelled to side with the public in issuing the sternest penalties contemplated by the NBA constitution. After all, the “best interest” of the league and its brand image are at stake. The public relations and marketing effects of an impending player, sponsor or fan boycotts would potentially spell a return to the mid-20th century status as a sports league pariah. Irrespective of any adverse legal outcome, the NBA pockets the appearance of having done all it could while, simultaneously, setting a precedent for organizational conduct. At the very least, the league astutely postponed the adjudication of the case by shifting it into the courts – allowing the fiercest ire and scrutiny to dissipate.

On the other hand, in placating the stampeding herd, Mr. Silver may pay a heavy price in the end. A civil court may determine that Mrs. Sterling is not the rightful owner or lacked the authorization to make the sale. The court could also find that the commissioner violated his authority in levying too large of a fine or having denied due process, both likely outcomes in analyzing the NBA constitution on its face. Consequently, Mr. Sterling may very well be reinstated as the Clippers’ owner.

No goodwill established by Mr. Silver will prevent an even bigger backlash resulting from such a reinstatement. The NBA’s best-case scenario is for Mr. Sterling to comprehend the public relations fiasco in remaining an owner and to work with the league on an amicable dissolution. Unfortunately, Donald Sterling’s notorious stubbornness, lack of self-awareness and litigious history tell us otherwise.

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