A U.S. District Court judge ruled the dispute between the New York Knicks and MLSE and the Toronto Raptors should be decided by the NBA and commissioner Adam Silver and not a federal court, and compelled arbitration between the two teams as directed by Silver.
The dispute between the two sides came out of an August lawsuit by the Knicks against MLSE, the parent company of the Raptors, and the team itself. The Knicks sued, saying a Raptors employee took proprietary team information with him before he left the Knicks organization and began working in a new job for Toronto. The Knicks alleged Silver was too conflicted, and too close to Raptors chairman Larry Tanenbaum, to be able to rule objectively on their issue.
“The Raptors and MLSE are pleased that the court agreed this should be resolved by the NBA, which we have maintained is the correct forum for disputes of this nature,” a Raptors spokesperson said. “We hope this brings this matter closer to a resolution.”
Federal judge Jessica G. L. Clarke ruled Friday that the disagreement was better suited for the NBA and to be handled by league-led arbitration instead of in the Southern District of New York, where the lawsuit was filed. Clarke said that NBA Constitution’s arbitration clause gives Silver jurisdiction over disagreements between NBA teams.
“The determination of whether this dispute is arbitrable is one for the NBA Commissioner, not the Court,” Clarke wrote in her ruling.
The Knicks sued in August because the franchise said Ikechukwu Azotam had taken more than 3,000 files like “scouting reports, play frequency reports, a prep book and a link to third-party licensed software” with him when he left the Knicks, where he worked as a video coordinator, for a job with the Raptors last summer. The Knicks also named Raptors head coach Darko Rajaković, Raptors player development coach Noah Lewis and 10 unnamed John Does as defendants. The team’s lawyers alleged that Azotam did so at the direction of Rajaković and to help him adjust to a new job.
The Raptors and defendants denied the allegations. In a rebuttal filing, they said the Knicks filed their lawsuit for public attention. They also raised the possibility of a countersuit.
The Raptors said their dispute should be determined by Silver and that it was governed by the NBA Constitution. The Knicks said it should be heard in federal court. The NBA stayed out of it and waited for the judge to determine who should hear the teams’ issues.
Clarke, the federal judge, said the league’s constitution gave Silver and the league that right.
“This case is about NBA competition and appears to fall squarely within the type of dispute about cheating to win over which the NBA Constitution vests the Commissioner with exclusive jurisdiction,” Clarke wrote. “The Court need not ponder the hypothetical boundaries of the NBA Constitution’s Arbitration Clause because this case appears squarely within its intended scope. The Knicks’ suggestion that a reasonable team would not see the present dispute as connected in some way to the NBA Constitution is an airball.”
Clarke also knocked down the Knicks’ allegations that Silver was unfit to hear the dispute because he was too close to Tanenbaum.
Tanenbaum is the chair of the NBA’s board of governors and works closely with Silver, and league owners also serve as quasi-bosses for Silver.
But Clarke said that was not a compelling enough case. The cases the Knicks cited to prove potential bias is disqualify “miss the mark,” Clarke said. The judge also said that if Silver is truly biased towards the Raptors, her court still holds the right to review Silver’s decision and vacate it.
“The attack on the fitness of Commissioner Silver to arbitrate this dispute is premature,” Clarke wrote. “It is akin to a complaint about the officiating before the game has even started.”
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