More News on Sonics Lawsuit

You may be absolutly right. And like you, I'm kind of sick of it myself. And it will end, one way or another, at some point in time.

Most likely where you and I will defer is that, if they (the Sonics) get here fine. But if they don't, then I'm fine with that also. I can only speculate that the Citys determination on wether or not the use of public funds would be a worthwhile civic expenditure was made after they weighed all of their options. If that is correct, then I would assume they concluded that the rewards far out weighed the risk. Anyway, the cost to the Citizens of Seattle associated with this lawsuit will have little if any impact on the City's Budget. So what the hell, they went for it.

Here's a condensed version of a story in this mornings P-I. The full story is here......Sonics tried to limit interest in team in Seattle, city says


Sonics tried to limit interest in team in Seattle, city says
By GREG JOHNS
P-I REPORTER

By limiting exposure of its players and denying media access through radio interviews, the Sonics have intentionally tried to minimize public interest in their team in Seattle over the past year, according to a motion filed Tuesday seeking to allow testimony of KJR-AM radio personality Mitch Levy.

In the city of Seattle's response to the Sonics' motion to exclude Levy and The Stranger writer Sherman Alexie from the witness list for the upcoming trial to determine the franchise's fate at KeyArena, attorney Michelle Jensen outlined numerous reasons the two media members should be allowed to appear.

Levy would be asked by the city's lawyers to explain how Clay Bennett's Professional Basketball Club has undercut its own marketing efforts in Seattle by severely limiting player and coaches interviews on KJR-AM sports radio, thereby "adding to its self-inflicted financial wounds."

Alexie, an award-winning writer as well as a 10-year Sonics season-ticket holder, would be asked to testify to the "intangible benefits" the team provides Seattle, in contrast to the "near-zero" cultural value once professed by City Councilman Nick Licata.

U.S. District Judge Marsha Pechman will rule on that motion and others in a pretrial conference Friday. The six-day trial is scheduled to open June 16.

The Sonics filed several motions Tuesday, too, asking Pechman to allow a survey showing the Sonics rank third in popularity behind the Seahawks and Mariners among Seattle sports fans; as well as evidence regarding the PBC's efforts to find a new arena in the region.

Both matters go to the "heart of why this matter is in litigation," according to the team's attorneys, noting that the city has conceded KeyArena is inadequate for an NBA team and the PBC was unable to obtain a successor venue in a city that previously had funded new facilities for pro baseball and football.

"Now, on the eve of trial, and after forcing taxpayers, the PBC and several third parties to collectively spend several hundred thousand dollars conducting discovery on these issues, the City claims that whether the PBC acted in good faith is not relevant," the Sonics motion states.

Additionally, the team is asking Pechman to include evidence showing the "dysfunction" between the city and owners that would make any specific-performance ruling difficult to carry out

It's laughable because of the remedy it seeks, and that its most damning statement in the complaint is half a sentence.

That is where we differ...I know I'll wake up the next day if we end up without the Sonics, and OKC will be better off with the sales tax anyway with the new Ford Center...but I will be really, really disappointed.

Nice post, but shortened because you seem to go on and on about the ill feelings you have for the PBC. Let's look at it like this -- city leases a car factory to a car manufacturer. Said manufacturer provides thousands of jobs and has a huge economic impact. Manufacturer then is acquired by another company who seeks to consolidate. As part of the consolidation plan, the manufacturer wants to move the operations of this leased plant to Mexico. The city sues to stop the company from doing this citing 'economic impact' and demanding specific performance of the lease.

What, exactly, do you think would happen here?

-- I'll tell you.

The only issue here is cash. With suits in equity, when cash is all that's at issue, there is no equitable remedy (e.g., specific performance) granted. With every single business contract, lease or what have you we have, especially when it is the government acting as the landlord, the performance of the lease is a public benefit and there is always an economic impact. Those things, however, are too amorphous to demand equitable remedies. If this were the case, just about every lease would be subject to specific performance demands upon the ground that the lease provides an irreplaceable economic impact which cannot be replaced by cash damages.

That is why all of this 'hurt feelings' stuff is so important. Seattle's likely best argument, and one which has worked before in a different jurisdiction (I could get a cite, but you probably wouldn't know what to do with it, so just recall the Minnesota Twins situation) is that the team provides an irreplaceable sense of pride to the community and that the public benefit here is not necessarily economic but emotional -- something which absolutely can't be compensated for with cash damages.

The good faith issues come into play because in order to seek an equitable remedy (which specific performance is), a party must have clean hands. In other words, if the City has, itself, interfered with the lease, conspired against the PBC with third parties to devalue the team and force a sale, etc., even though an equitable remedy may be in order, the city would lack clean hands and thus would receive no equitable remedy.

Try the actual language of the sales agreement stating that the sales agreement encompasses the entire sales agreement. Try the fact that no one but Schultz even really should have standing to sue? There are too many issues to list here. Fortunately, I don't have to. Our own Doug Loudenback has spent considerable time and energy combing through the relevant paperwork.

Doug Dawgz Blog: April 2008

You can find his work above. I recommend you read it. Apparently you don't have a firm grasp on the legal or factual issues involved here. This will help.

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It's a friendlier OKCTalk!

I understand, and respect your position. On the issue of the City being better off with a new and inproved Ford Center, with or without the Sonics, we can both agree.

*high five for Andy127

Just read on the PI board that PJ Carlesimo (Sonics Head Coach) told ESPN radio that he was looking forward to the move and the greater fan support...That will go over real well in Seattle if the team stays

Guess it does win him some brownie points with his bosses....Needs all he can get after last year's performance

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City of Seattle, Sonics make their case
Posted by Eric Williams @ 11:23:38 am

Several filings were made by both the city of Seattle and the Sonics regarding the upcoming June 16 trial late Tuesday.

They included a pretrial order, which outlines the arguments both sides will make in presenting their cases, including witnesses they plan on calling to the stand and evidence they will present during the trial. http://blogmedia.thenewstribune.com/...trialorder.pdf

The city’s argument is pretty straight forward: The Sonics signed a lease to play all of its games in KeyArena until Sept. 2010. The KeyArena lease contains a specific performance clause stating that fact, and the city wants the team to honor its contractual obligation.

The city does not want to let the Sonics buy their way out of the lease because the city believes they are a unique tenant that cannot be replaced, and they bring intangible benefits to the city that cannot be reasonably calculated.

The Sonics will argue that the city will not be impacted economically by the team leaving and a buyout of the lease can be reasonably calculated. They also will argue that the city has unclean hands, pointing to its relationship with Microsoft CEO Steve Ballmer’s group that tried to get Clay Bennett’s ownership group to sell the Sonics to them. The Sonics also will argue that the specific performance clause would impose undue hardship on the franchise.

The city and the Sonics also presented motions responding to previous filings by both parties designed to limit evidence presented during the six-day trial.

In its motion the city argued the importance of having nationally renowned Seattle author Sherman Alexie and KJR-AM radio talk show host Mitch Levy testify during the trial. http://blogmedia.thenewstribune.com/...evy-Alexie.pdf

In the filing, Michelle Jensen, an attorney representing the city, states that Levy will present testimony that shows the Sonics have limited their opportunities for free advertising for its players and franchise by limiting the opportunities players and coaches are available to KJR for on-air interviews compared to past seasons.

Jensen also argues that Alexie, a member of the Coeur d’Alene Indian Tribe and a 10-year season ticket holder, can talk about the unique, cultural benefits the Sonics offer the city.

The Sonics also filed several motions, arguing the importance of presenting evidence that shows the dysfunctional relationship between the franchise and the city http://blogmedia.thenewstribune.com/...ationship.pdf; their pursuit of a successor venue to KeyArena http://blogmedia.thenewstribune.com/...inseattle.pdf; a field survey that shows the Sonics behind the Seahawks and Mariners in fan popularity http://blogmedia.thenewstribune.com/...eldsurvey.pdf; and testimony from Seattle council member Nick Licata http://blogmedia.thenewstribune.com/...ams/Licata.pdf, who uttered the now famous words that the Sonics have very little cultural value and no economic value to the city.

Sonics Insider

From the Seattle P-I.......

"The city's case is easily defined. Seattle officials believe the lease agreement assumed by Clay Bennett's ownership group requires the Sonics to play their home games at KeyArena through the 2009-10 season.

Less understood are the lines of defense being assembled by the Sonics' attorneys, who will attempt to show why the franchise should be allowed to pay the remaining rent and expenses on the final two years of the lease and be free to play elsewhere as soon as next season.

As stated in the pretrial order, the Professional Basketball Club's legal defenses will include showing the city has "unclean hands" because it acted in bad faith by using the lawsuit to drive up the team's financial losses and attempt to force a sale to a prearranged group of businessmen. Sonics lawyers will argue that making the team play future games at KeyArena would impose "undue hardship" on the club.

Seattle's lawyers attempted to undercut the "unclean hands" issue with a motion last week asking Pechman to exclude as irrelevant all testimony regarding the city's efforts to put together the local group of buyers led by Microsoft CEO Steve Ballmer and developer Matt Griffin.

The Sonics came back with their rebuttal this week, arguing that the city used "improper conduct" in subverting Bennett's efforts to gain support for a new arena in Renton due to its desire to keep KeyArena as the sole solution.

Additionally, the lawyers laid out an extensive plan hatched by city leaders in conjunction with former Sonics president Wally Walker that was designed to make things as difficult as possible for Bennett's group both in Seattle and with the NBA, while pushing forward a solution built on forcing a sale to Ballmer and his three partners.

The Sonics charge that the city disclosed confidential financial information to the Ballmer group through Walker after he had been retained by the city to aid its efforts "in plain violation of his fiduciary duties" as a former team executive.

When it became clear Walker's actions might surface in the lawsuit's discovery process, the Sonics say city lawyers then wrote a letter to Walker retroactively making him a "consultant" to the Ballmer group and thus attempting to make his actions confidential.

Pechman will rule at a pretrial conference Friday on whether that type of testimony concerning the Ballmer efforts will be allowed. The Sonics argued this week that the city's motion to suppress that argument is really a veiled attempt to seek summary judgment on their entire line of defense.

The "undue hardship" issue might be even more critical, given the Sonics will contend Pechman shouldn't force the sides into two more years of an untenable working situation."

Sonics, Seattle outline their trial tactics

I would love for one of our resident legal experts to sum up all this in a few bullet points for us laymen.

Post # 305 above has a link to Doug's blog.

Sonics would be profitable in OKC, Bennett Says

Seattle SuperSonics owners told the NBA they expect to lose $60.9 million to $64.9 million during the next two years if forced to stay in Seattle, but believe they can turn an $18.8 million profit if allowed to relocate to Oklahoma City.

Sonics Chairman Clay Bennett confirmed the projections in a sworn deposition — most of which was made public for the first time Friday after previously having been withheld as confidential.

Bennett testified he has the financial ability to withstand the projected losses, but added "it's certainly no fun losing a lot of money."

Bennett's testimony was taken in connection with a federal lawsuit filed by the city of Seattle in an effort to force the team to play out the remaining two years on a 15-year lease at Seattle's KeyArena.

The Sonics' Oklahoma owners have asked the judge to allow them to buy their way out of the lease so they can move to Oklahoma City immediately.

"This is a losing proposition on all sides," Bennett stated.

The trial is scheduled to begin June 16 in Seattle.

Much of Bennett's testimony centered on whether the Sonics' Oklahoma owners fulfilled a written promise to spend at least a year making a good faith effort to keep the team in the Seattle area, before turning their attention elsewhere.

Bennett repeatedly insisted they did.

He was quizzed about some e-mails and news articles where various owners mentioned a potential move to Oklahoma City.

One of the most controversial remarks was made by fellow owner Aubrey McClendon, who was fined $250,000 by the NBA in August after telling an Oklahoma City business newspaper, "We didn't buy the team to keep it in Seattle; we hoped to come here."

"I was shocked, absolutely shocked," Bennett testified. "I was upset by it and it was difficult for me because it did not represent what I had spent a great amount of time working on and focused on, and I felt undermined my efforts and being a good friend, it was even worse, affecting another close associate, the commissioner, was even worse.... It was a very difficult experience for me."

Bennett wrote a subsequent e-mail to NBA Commissioner David Stern in which he said, "As absolutely remarkable as it may seem, Aubrey and I have NEVER discussed moving the Sonics to Oklahoma City nor have I discussed it with ANY other member of our ownership group."

Seattle's attorney questioned the truth of the statement, in light of e-mails in which Oklahoma City was mentioned.

"Well, I think what I'm referring to here is never in terms of a bona fide, full-blown process to move or even a decision to move," Bennett said. "Of course we've talked about options, as we did from the beginning."

Some Seattle residents have questioned whether the Bennett group's failure to bring Seattle investors into their group was a sign they never intended to keep the team in Seattle.

Bennett testified the possibility of bringing in Seattle investors was discussed, but it was decided that might actually hinder the owners' effort to obtain public funding for an arena in the Seattle area because the previous ownership group of 58 local people had failed in two previous attempts.

Bennett said the Oklahoma owners believed they "could bring new focus, new energy, new perspective to the process and that for the time being, it makes sense to keep our group put together and keep it small. We knew this would be a dynamic process with a lot of decisions to be made and so ... the tighter the better."

If successful, the Oklahoma owners felt they could bring in Seattle investors later, he said.

Coming from Oklahoma City, which strongly supported the temporary hosting of the New Orleans Hornets after Hurricane Katrina, Bennett expressed surprise at the lack of similar support for the Sonics by Seattle residents, politicians and news media.

"What I will naively admit to was our shocked reaction to the media response to the announcement," Bennett said of the reaction to the announcement that Oklahoma investors would be purchasing the team and pursuing a world-class multipurpose facility in the Seattle area. "And so we immediately began to think... this is not being met with the excitement and pleasure that we might have thought it would be."

Bennett said he thought people would view the Sonics as a valuable asset to the state of Washington.

"I just assumed they were," he said. "I guess as a fan of professional sports and especially the NBA, I assumed they would be highly valued and important to the broad community and I now understand that there's a very diverse population that has very varied interests and it may not be as broadly powerful as I suspected at that time."

"This deal sucks," Bennett wrote in an e-mail to a Sonics lobbyist, after efforts to obtain public funding to support a new arena became bogged down in the Washington Legislature.

Bennett described the blunt comment as "an emotional response to getting bogged down in the process."

He said Washington's governor told him that most of the legislative leadership had little interest in his project, except for the Washington House speaker "who is against it."

Seattle's attorney questioned Bennett about whether the Sonics' efforts to obtain public funding for a $500 million multipurpose facility failed because of the owners' unwillingness to commit personal money to the project.

"We committed to $100 million," Bennett said, indicating that part of that private money would have come from the sale of "founding sponsorships" and part from the owners' personal cash.

Seattle's attorney also questioned Bennett about why Ed Evans, former president of Oklahoma City-based Dobson Communications, dropped out of the ownership group after helping negotiate the purchase of the team.

The attorney asked if it wasn't true that Evans dropped out after being told during a private jet ride to a news conference to announce the purchase of the team that Evans would not be the operating manager of the Sonics and that Bennett would be the spokesman.

"I can't recall that it was at that time," Bennett said. "I can't recall when it was. It was in this time frame but I don't recall specifically being on the flight."

Bennett summed up the owners' reasons for wanting to move from Seattle to Oklahoma City as follows:

"It's become ugly.... It's become a very negative element in the lives of many people.... We have met our obligations to attempt to have a successor venue developed. We've failed in our efforts....We have a binding obligation now with the city of Oklahoma City. So there are two years left to be together in Seattle and my hope is that we can find a way to come to some mutually beneficial position that brings certainty and stability to the many that are involved in this."

The Sonics owners are willing to pay Seattle enough money to improve KeyArena for other purposes in exchange for terminating the lease two years early, he said.

"That's the notion and that's the proposition," he said. "It's nothing more than that."

Since the deposition the City of Seattle lawyers have decided not to focus on the good-faith aspect. Seems the wasted a lot of discovery time trying to build that case only to drop it 10 days before the trial. I think I smell a deal coming.

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Judge lays down the law in Sonics case

I don't think they're going to get to limit the case they way they wanted to.

I would love to see a settlement worked out before the trial. I just can't imagine what it could be where the SOS types don't go completely nuclear.

Of course, what are we talking, a couple of dozen guys?

I dunno...this sucker just seems bound for trial. There's no rumor of the two sides even talking, you know?

Mallen, do you think Seattle not being allowed to focus the suit on specific performance helps the Sonics' case much? Does this mean they get to include the "unclean hands" argument?

I would hope this would help push Seattle towards considering a settlement. I have heard rumors, but just on this side of the case, nothing out of Seattle. The SOS guy, while somewhat off the wall at times, does seem to have close enough connections to Seattle politics that I would have expected him to mention something if those rumors were true.