The Work

April 21, 2011 8:19 PM

The Score: Spotlight on S&C as McCourt Out in Dodgerland

Posted by Brian Baxter

After months of divorce proceedings, lawsuits, and embarrassing newspaper headlines caused by the deteriorating ownership situation surrounding the Los Angeles Dodgers, the team was officially taken away from owner Frank McCourt by Major League Baseball on Wednesday when Commissioner Bud Selig ordered the franchise placed under league control.

Selig said he would appoint a trustee to oversee all business decisions and the day-to-day operations of the Dodgers, which in addition to their financial difficulties, are also struggling on the field. The Am Law Daily reported in February on McCourt's decision to part ways with Bingham McCutchen and hire Sullivan & Cromwell, which was initially retained as finance counsel for the franchise. McCourt obtained a $30 million loan from Fox last week in order to meet payroll. (Fox parent News Corp., which sold the Dodgers to McCourt for $430 million in 2004, wants to secure the team's broadcast rights.)

The Los Angeles Times reports that under the terms of that arrangement, if McCourt couldn't repay Fox, he promised the company $30 million from any settlement or judgment against Bingham, which drafted the invalidated marital property agreement that cost him sole ownership of the Dodgers. The fact that McCourt secured the loan with funds he doesn't have could be one reason MLB chose to intervene, according to the LAT. (Forbes reports the Dodgers are $459 million in debt.)

Bingham retained an all-star team of lawyers from Williams & Connolly, Foley Hoag, and Gibson, Dunn & Crutcher for a suit against McCourt last week in state court in Massachusetts seeking a judicial order absolving the firm of responsibility should McCourt lose control of the Dodgers. McCourt is expected to respond in kind, but Susman Godfrey name partner Stephen Susman, who handled the embattled owner's divorce case, told The American Lawyer earlier this year that "there is not enough money to get us to say bad things about the Bingham firm." It's unlikely S&C would be part of such a suit either, given its past record of distancing itself from cases against other professional services firms.

But McCourt could also be gearing up for a suit against MLB as a result of Selig's actions this week stripping him of control of the Dodgers. McCourt has reportedly engaged S&C for a suit against the league, according to The Associated Press, which cited an anonymous baseball executive familiar with the situation.

S&C chairman and corporate partner Joseph Shenker, who has been advising McCourt on financing issues for the team, did not respond to a request for comment. Nor did S&C litigation partner Robert Sacks, who heads the firm's L.A. office. Former L.A. mayoral candidate and civic leader Steve Soboroff, who McCourt hired this week to serve as vice-chairman of the Dodgers, lashed out at Selig on Thursday.

MLB has traditionally turned to Foley & Lardner and Paul, Weiss, Rifkind, Wharton & Garrison for outside counsel. A Paul Weiss source says the firm has not been retained for the latest McCourt drama. Mary Braza, who chairs Foley & Lardner's sports industry practice and is close to Selig, did not return a request for comment. Earlier this year, former MLB president and COO Robert DuPuy rejoined Foley & Lardner after a reported falling out with the commissioner.

Many observers, such as NBC HardballTalk's Craig Calcaterra, a former attorney at Thompson Hine and Squire, Sanders & Dempsey, believe that Selig's actions against McCourt were justified under the league's bylaws.

Last year Selig took over the Texas Rangers when former owner Thomas Hicks defaulted on bank loans and fell out of compliance with the league's debt rules. The team was put into bankruptcy and after several months of at times contentious Chapter 11 proceedings, the Rangers were sold to an ownership group led by Reed Smith counsel Charles Greenberg, who stepped down as owner last month after a rift with his partners.

Other major North American sports leagues have taken over franchises in recent months. The National Basketball Association's New Orleans Hornets were placed under the leadership of former Hogan & Hartson partner Jac Sperling in December after ongoing sale talks for the team collapsed. In late 2009, the National Hockey League's Phoenix Coyotes were sold out of bankruptcy to the NHL in a deal that saw Skadden, Arps, Slate, Meagher & Flom lace up for the league. Both teams are still owned by their respective leagues.

Barnes & Thornburg, Philly Firm Seek NFL Mediation Seats

News broke midday Wednesday about a mystery law firm seeking to represent a so-called breakaway group of National Football League players seeking a seat at the mediation table in the league's ongoing collective bargaining negotiations with players, who voted last month to decertify their union in order to file an antitrust suit against ownership.

The AP reported on Thursday that the firm was Barnes & Thornburg. The Indianapolis-based firm won't be headed to court anytime soon though, as the NFL refused to grant Barnes & Thornburg a waiver to take on the matter since it had already handled music licensing work for the NFL Network and NFL Films. (Click here for a statement from the firm on the matter.)

Another lawyer, Bryan Clobes of Philadelphia-based Cafferty Faucher, told The AP that his firm held discussions with "additional players who want to have a voice in the matter," but were not displeased with their current representation. Clobes, who did not return an Am Law Daily request for comment, also spoke to The New York Times about a potential complaint his clients might file.

Players are already fielding a legal team led by lawyers from Dewey & LeBoeuf and Weil, Gotshal & Manges in their court fight against the league. U.S. district court judge Susan Nelson in Minneapolis ordered players and NFL officials into mediation last week. Discussions between both sides broke off on Thursday and aren't expected to resume until mid-May, according to The AP. In the interim, Nelson is expected to rule on a request by players to lift a 40-day lockout imposed by NFL owners and management last month. (The New York Daily News reports Nelson's ruling could come as soon as Monday.)

Whether or not Clobes and his group of players get a seat at any future mediation remains to be seen. One source close to the case, who requested anonymity in order to speak freely, says that he couldn't see any legal theory that would get the group a seat at the mediation table unless they filed an antitrust claim of their own. (Click here for an analysis on the split in player ranks from ProFootballTalk's Mike Florio, himself an attorney-turned-sports scribe.)

Around the Horn

-- Bingham's battle with Frank McCourt might be far from over, but the firm continues to advise on ownership matters, including the sale of landmark pro sports franchises. Thomas DiBenedetto, a minority owner of the Boston Red Sox, finalized a deal to take over Italian soccer team AS Roma. The Boston Globe reports that the transaction was concluded last week at the Boston offices of Bingham McCutchen. Corporate and tax partner Lawrence Silverstein, a central figure in the McCourt divorce, is part of a team from the firm representing DiBenedetto's group seeking to acquire AS Roma. Also advising on the deal are Bingham corporate partners Andrew White and Joanne Foley, securities partner Stephen Tirrell, investment management partner Steven Giordano, and tax partner Daniel Nelson.

-- The complete collapse of the New York Rangers last night means it may be awhile before we take in another hockey game. But the league itself has a new television contract, inking a $2 billion deal this week with NBC and Versus to broadcast games through the 2020-2021 season. Longtime NHL outside counsel Shepard Goldfein, head of the antitrust practice at Skadden, and Covington & Burling partner Peter Zern advised the league on the deal. Last year Zern was part of a Covington team that advised Turner Broadcasting on its $10.8 billion deal with the NCAA to televise March Madness. NHL in-house lawyers led by general counsel David Zimmerman took the lead negotiating with their counterparts at Versus and NHL, who were not immediately available by the time of this column.

-- DLA Piper has been ordered to turn over documents to a federal judge in the perjury case of Roger Clemens, according to The National Law Journal, a sibling publication. Lawyers for Clemens, led by Houston's Russell "Rusty" Hardin, Jr., and Cooley's Michael Attanasio, have disputed DLA's claims of privilege in holding on to documentation used in a performance-enhancing drug investigation commissioned by MLB. Specifically, Clemens's lawyers want to explore potential inconsistencies by lead government witness Brian McNamee, The NLJ reports.

-- Stikeman Elliott tax partner Richard Pound was one of six inductees named to Canada's Sports Hall of Fame this month, according to the Toronto Globe and Mail. Pound is best known for his work as a former vice president of the International Olympic Committee and was once a candidate to assume the organization's presidency. While elected as a builder, Pound, a former president of the World Anti-Doping Agency, was also once an athlete. He was a finalist as a swimmer at the Rome Olympics in 1960. Other inductees include former NHL star Ray Bourque and ex-CFL kicker Lui Passaglia.

-- U.S. track and field legend Carl Lewis wants to run for a state senate seat in New Jersey. But first the former Olympian needs to prove he resides in the Garden State. The Somerville News reports that an administrative law judge will try to resolve a dispute that has local Republicans--represented by Drinker Biddle & Reath counsel Mark Errico--objecting to Lewis's candidacy. William Tambussi of Brown & Connery in Westmont, N.J., is advising Lewis, who testified in administrative proceedings this week in nearby Mercerville.

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