As the NBA continues it efforts to remove L.A. Clippers owner Donald Sterling from the league, we're starting to get a better understanding of the legal strategy they will deploy against him. The biggest weapon in their arsenal: Sterling signed moral and ethical contracts with the NBA. The NBA will be using these contracts in conjunction with its constitution and by-laws to force the Clippers' owner to sell his team. However, Sterling is still likely to sue to hang on and it could get messy.
The league's constitution provides the mechanism for removing an owner if the owner "fail(s) or refuse(s) to fulfill its contractual obligations to the Association." In that event, the other owners can vote to force a sale of the team, the threshold is 75 percent agreement. The owner's finance committee (consisting of ten owners) has already unanimously agreed that it will vote to force the sale. The full Board of Governors vote is expected in mid-May.
It is expected that Donald Sterling will fight the forced sale, even if the 75 percent vote passes. He's a billionaire, so he has ample resources to take on the NBA's legal team. A source close to him has said, "He’ll sue and it’ll take years to settle." Sterling's defense will likely be based on Article 13(a) in the league's constitution, which states:
"The Membership of a Member or the interest of any Owner may be terminated by a vote of three fourths (3/4) of the Board of Governors if the Member or Owner shall do or suffer any of the following:
(a) Willfully violate any of the provisions of the Constitution and By-Laws, resolutions, or agreements of the Association."
Sterling will likely argue that his actions were not "willful." The recording that was his undoing was obtained illegally, and leaked without his consent. California is a two-party consent state, meaning "California makes it a crime to record or eavesdrop on any confidential communication, including a private conversation or telephone call, without the consent of all parties to the conversation."
In the event Sterling does begin a legal battle, the NBA could take several courses. They could try to battle the lawsuit based on Article 14(j), which states:
"The decisions of the Association made in accordance with the foregoing procedure shall be final, binding, and conclusive, and each Member and Owner waives any and all recourse to any court of law to review any such decision."
If that tactic does not work, the NBA could use their secret weapon: the moral and ethical contracts. When Sterling purchased the Clippers in 1981, he signed a version of a morality contract, and has signed amended versions since then. According to a source that spoke with ESPN, the contract "states that an owner will not take any position or action that will materially and adversely affect a team or the league." The morality clause states "that [Sterling] will be upheld to the highest standard of ethical and moral behavior." In the event Sterling sues the NBA, it will be up to the court to determine the meaning of "willful," adverse actions and "ethical and moral behavior."
There is also the legal issue of the Clipper's co-owner, who happens to be Sterling's estranged wife. The Clippers are part of the Sterling family trust, of which Shelly Sterling owns half, according to California state law.
She has been supporting the actions of the league, issuing this statement: "I spoke with Commissioner Adam Silver this week to tell him that I fully supported his recent swift and decisive action. We also agreed at that time that, as a next step, both the league and the team should work together to find some fresh, accomplished executive leadership for the Clippers. I welcome his active involvement in the search for a person of the utmost character, proven excellence and a commitment to promoting equality and inclusiveness." The Clippers' team president Andy Roeser stepped down on Tuesday, which she also supported. Considering her support of the Commissioner's decision, it is unlikely she will intervene in the sale.
On the other hand, she could actually sue Donald Sterling to take independent control of her half of the Clippers, meaning then Donald Sterling would only have to sell half of the team. She could make the argument that Sterling's actions have damaged the value of the team (which they very well may have.) If a court sees fit, they could divide the assets so her half can be sold at a later time, for a better price. If Mrs. Sterling pursues a case against her husband, as she has with his alleged mistress, she could hold up the actions of the league. There is also the chance that the NBA could define a forced sale as passing 100% ownership from the Sterling family trust to just Shelly Sterling.
Of course, Donald Sterling could also choose to go peacefully, but we won't hold our breath.