June 22, 2011 6:19 PM
Fish & Richardson, Mark Cuban, and a Trash-Talking Summary Judgment Motion
Posted by Brian Baxter
Dallas Mavericks owner and billionaire entrepreneur Mark Cuban is no stranger to legal disputes.
One thorn in Cuban's side: litigation filed against him in 2009 by Hillwood Investment Properties, a company controlled by H. Ross Perot, Jr., son of the twotime presidential candidate of the same name. In its suit, Hillwood accuses the Mavs majority owner of mismanaging the team and certain real estate assets. (Perot, who owns a 5 percent stake in the team, sold Cuban a controlling stake in the Mavs in 2000 for $285 million.)
Now, less than two weeks after the Mavs won their first NBA championship by beating the Miami Heat, Cuban's lawyers from Fish & Richardson have filed a summary judgment motion that lets Perot know just how wrong they think he is about Cuban's handling of the team. (The Dallas Observer has a copy of the four-page filing.)
The summary judgment motion filed by Fish & Richardson partners Thomas Melsheimer and H. Brett Johnson contains a large photo of Cuban and the Mavs celebrating their upset victory over the Heat. It also claims that during Perot's tenure as majority owner, the franchise's fate was far worse.
"Under Hillwood's ownership, the team was deemed the 'worst franchise' in all of professional sports," states the motion. "Under Cuban's stewardship the Mavericks have become one of the league's most successful teams and are now NBA champions. Accordingly, there can be no genuine question that Hillwood's claims of mismanagement lack merit and Hillwood's claims should be disposed of on summary judgment."
When asked by sports Web site Deadspin.com about the motion, Cuban was quick to give his lawyers credit. Melsheimer himself told Deadspin that the decision to draw on the Mavs' championship run was a virtual no-brainer.
"You don't have that many cases when you're watching television and a game ends, and you think, 'Wow, this is really great for my lawsuit,'" he said. "It's a humorous twist, but it has legal force. It makes a serious point that allegations of mismanagement are ridiculous. A substantial part of our defense is that the Mavericks are successful, and what more obvious success for an NBA team than an NBA championship?"
Filed in Texas state court, Hillwood's suit against Dallas Basketball Limited--which operates the Mavs--claims that Cuban pushed the team to the brink of insolvency. Perot and his lawyers from Dallas's Figari & Davenport allege that the Mavs are $200 million in debt. They want a court-appointed receiver to run the team instead of Cuban.
Asked by Deadspin whether as a minority partner, Perot might have an argument that Cuban violated his fiduciary duties by putting a premium on winning over maximizing profits, Melsheimer scoffed.
"Fundamentally in sports the most valuable franchises are the ones that win," said Melsheimer, the managing partner of Fish & Richardson's Dallas office. "You build brand loyalty, you build your fan base, and you build a tradition. Winning is the key to doing that. It's a long-term thing, if Mr. Perot doesn't see that, he's clearly not a basketball guy."
In a separate 2009 suit, Perot and his lawyers accused Cuban of diverting millions in profits from the Mavs' arena to make up for shortfalls incurred by the team. Earlier this year, news emerged that an arbitrator had ruled against Perot in that case and ordered him to pay Cuban's attorneys' fees.
Melsheimer told Deadspin that he was confident this case will also be dismissed, especially after the team's success this year. "After this championship, I'd say this lawsuit has as much chance of succeeding in Dallas as a snowstorm in August," he added.
Figari & Davenport's Mark Davenport, who represents Hillwood in the suit, did not immediately return a call from The Am Law Daily seeking comment on the summary judgment motion and Melsheimer's interview with Deadspin. (A Perot spokesman told The Associated Press that while Perot was delighted with the recent title won by the Mavs, the business issues surrounding the team remain.)
Fish & Richardson has handled a half-dozen cases for Cuban over the years. Partner Steven Stodghill served as team counsel for the Mavs between 2000 and 2002 and is a longtime Cuban confidant. The firm represented Cuban earlier this year when he sued the United Football League over its alleged failure to repay a $5 million loan the Mavs owner extended the fledgling league last year. The case settled in March.
As noted in a recent issue of The American Lawyer, Cuban is no stranger to high-powered defense lawyers. Dewey & LeBoeuf successfully represented Cuban two years ago in getting a federal judge to toss Securities and Exchange Commission insider trading charges against the Broadcast.com founder. (Fish & Richardson also had a supplemental role in the SEC matter.)
But the SEC appealed that ruling and the case against Cuban was revived. Along the way, the agency rejected an offer by Cuban in December to pay the SEC for contract attorneys needed to expedite a public records request for files related to the government's case. Former Dewey white-collar cohead Stephen Best, who left the firm last year for Brownstein Hyatt Farber Schreck, is leading Cuban's defense team in that case, which has been sent back to U.S. district court for trial.
Last year Cuban also turned to Greenberg Traurig bankruptcy partners Clifton Jessup, Jr., and Bruce White for counsel on a Chapter 11 bid to acquire Major League Baseball's Texas Rangers. Cuban eventually failed in that effort and last fall sought reimbursement for $1.12 million in legal fees from his failed Rangers bid.
Perhaps to the dismay of Greenberg and Cuban's other outside lawyers, recent developments regarding the ownership situation for the Los Angeles Dodgers have apparently turned Cuban off to purchasing any potential stake in the struggling franchise.Make a comment