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September 30, 2011 6:24 PM

The Score: Fox Sports Takes Cut at Dodgers Over Media Rights Deal

Posted by Tom Huddleston Jr.

Moving to block owner Frank McCourt's plan to rescue the Los Angeles Dodgers from insolvency by auctioning off the rights to broadcast the team's games, Fox Sports is suing the beleaguered Major League Baseball franchise, according to the Los Angeles Times.

In its suit—filed late Tuesday in federal bankruptcy court in Delaware by lawyers from Rutter Hobbs & Davidoff and Morris, Nichols, Arsht & Tunnell—Fox Sports Net West seeks a court order blocking any sale of Dodgers' TV rights that infringes on the network's existing contract with the team.

Under that pact, the network's exclusive rights to negotiate a new deal with the team extend through November 2012, according to the Times. McCourt's proposed auction—the linchpin of a planned restructuring of the financially hobbled franchise—would not preserve those rights. 

The Fox suit comes on the heels of Major League Baseball's move to disqualify the Dewey & LeBoeuf and Young Conaway Stargatt & Taylor lawyers representing the Dodgers in the bankruptcy case. MLB's argument: those lawyers have a conflict of interest because they are more interested in protecting McCourt's finances than the team's. (The Dodgers filed for Chapter 11 protection in June amid the turmoil created by the divorce battle between McCourt and his ex-wife Jamie.)

Am Law Daily sibling publication The National Law Journal reported Tuesday on the motion for disqualification filed by MLB's lawyers at Fox Rothschild on September 23. The filing is MLB's latest salvo in a campaign aimed at wresting control of the Dodgers and forcing a sale of the team rather than allowing McCourt to execute his restructuring plan. A hearing on the disqualification motion is set for October 12, according to the NLJ.

Meanwhile, a group calling itself the Ad Hoc Committee of the Los Angeles Dodgers Season Ticket Holders also entered the Dodgers' legal fray this week. In a motion filed in bankruptcy court, the group asked that an official committee be named to represent the interests of the team's 17,000-plus season ticket holders. The group originally sought appointment through the U.S. Trustee, but the Dodgers and an existing committee of general unsecured creditors resisted that move.

Steptoe & Johnson restructuring partner Robbin Itkin and counsel Katherine Piper are representing the ad hoc committee.

Mets Gets Partial Dismissal of $1 Billion Suit

The New York Mets may not have made the playoffs, but the team did a get a big win this week thanks to a decision by Manhattan federal district court Judge Jed Rakoff on Tuesday that reduced the potential legal claims against team owners Fred Wilpon and Saul Katz from $1 billion to a maximum of $386 million, according to sibling publication The Am Law Litigation Daily.

Those claims are part of a clawback suit brought last December by Baker & Hostetler partner Irving Picard, the trustee attempting to recoup money lost by victims of ponzi-schemer Bernard Madoff. Picard seeks to recover $300 million in "fictitious" net profits and $700 million in principal that Wilpon's family business, Sterling Equities, invested with Madoff.

Those claims, however, were based on more than six years worth of Sterling investments with Madoff, and Rakoff ruled that Picard is only entitled to pursue money invested with Madoff in the two years prior to his exposure as a fraud. Rakoff did uphold Picard's claim to profits the defendants earned through Madoff's firm, but only if Picard can prove that Wilpon and Katz "gave value" in return for those earnings, according to the Lit Daily. (The Mets owners are represented in the matter by Davis, Polk & Wardwell.)

The suit's narrowed scope should be welcome news for the Mets owners, who recently saw their planned sale of a $200 minority stake in the team collapse. As The Am Law Daily reported earlier this month, hedge fund billionaire David Einhorn backed away from a previously announced agreement to inject the large sum of cash into a franchise whose financial outlook is almost as bleak as its prospects for playing October baseball next year.

Chuck Greenberg Bidding on Dallas Stars

Reed Smith partner Charles "Chuck" Greenberg is reportedly interested in buying the National Hockey League's bankrupt Dallas Stars, according to Bloomberg.

Greenberg, who once headed the sports practice at Pepper Hamilton in Pittsburgh, stepped down as CEO and managing partner of the Texas Rangers in March after clashing with team president Nolan Ryan and some of the team's owners, according to our prior coverage. Greenberg, who sold his stake in the team back to the remaining owners, reportedly put up between $2 million and $3 million of his own money to acquire the Rangers out of bankruptcy last year

Now Greenberg is likely to face off against Toronto hotelier Tom Gagliardi for ownership of the Stars, whose sale via auction was approved after a September bankruptcy filing in Delware. Bloomberg reports that Greenberg plans to bid for the team at an auction in Dallas on November 21, with White & Case partner Thomas Lauria acting as outside counsel.

Gagliardi's bid for the Stars will be handled by Jim Rossiter, a partner in the Toronto office of Baker & McKenzie who also advised on the Ottawa Senators' sale out of bankruptcy to Capital Sports & Entertainment Inc., in 2003, according to Canadian Lawyer Magazine.

Game Suit (Still) On!

On Tuesday, a federal judge in California's northern district rejected Electronic Arts's motion to dismiss a fraud and breach of contract suit brought against the company by a man who claims it owes him royalties for designing the earliest version of the popular Madden NFL football video games.

The suit, filed March 30 by programmer Robin Antonick, seeks various damages and legal fees, as well as the "disgorgement of all profits" that EA has earned from sales of a game franchise that generated more than $3 billion in revenues over the years.

The suit alleges that Antonick was hired by EA in 1983 to develop a commercial football video game. In 1986, Antonick signed a new contract with EA to create the first Madden game for the Commodore 64, MS DOS, and Apple II platforms, and developed three versions between that time and 1990, according to his complaint.

Antonick further claims that the 1986 contract remains in effect and calls for EA to pay him royalties on the early versions of the game and on any subsequent versions. In his complaint, Antonick alleges that he is responsible for "virtually all the groundbreaking technology at the heart of the game" and therefore is owed royalties on all Madden games released since the 1986 contract.

EA claims that all versions of Madden released after 1990 have been based on a version created by a different programmer for the Sega Genesis gaming system.

EA filed a motion to dismiss Antonick's suit on September 16, claiming that it was filed past the proper statutes of limitations (four years for breach of contract and three for fraud). However, U.S. district judge Charles Breyer wrote in his ruling in support of Antonick's claims that he was not aware of EA's alleged breach of contract and fraud until 2009. Breyer also writes that Antonick's claims of EA's misappropriation of protectable elements are plausible enough to allow the case to proceed.

Antonick is represented by lawyers from Hagens Berman Sobol Shapiro, in Phoenix, and The Paynter Law Firm, in Washington, D.C. EA is represented by Keker & Van Nest.

Patriots' Beer Wars

Brewer MillerCoors is suing the National Football League's New England Patriots over the team's decision to sign a partnership agreement with Anheuser-Busch InBev, according to Bloomberg. The complaint, filed Monday in Massachusetts state court, alleges that the team reneged on a binding legal agreement to make MillerCoors its exclusive beer partner by signing a more lucrative deal with Anheuser-Busch instead.

In an e-mailed statement to Bloomberg, MillerCoors spokesman Pete Marino said the company is "left with no choice but to take legal action and ask the courts to uphold the integrity of our binding legal agreement."

Bingham McCutchen litigation partner Daniel Goldberg has represented the Patriots for years (and also serves as outside counsel to the Boston Red Sox). In an e-mailed statement to The Am Law Daily, Goldberg called the lawsuit "perplexing." 

"It is hard to see how launching a meritless lawsuit against the Patriots will allow MillerCoors to capitalize on what the complaint claims is the 'goodwill' MillerCoors has built up with the Patriots and their fans over many years," Goldberg wrote. He suggested that the suit could actually be a media strategy to attack MillerCoors's competitor, Anheuser-Busch.

NBC Sports also noted that MillerCoors could potentially seek a suit against Anheuser-Busch, if it can prove the latter knew of MillerCoors's deal with the team and intentionally interfered.

SEC Responds to Cuban's Misconduct Allegations

The Securities and Exchange Commission has responded to allegations by billionaire Dallas Mavericks owner Mark Cuban that the the agency has engaged in misconduct while pressing an insider trading case against him regarding the sale of shares in Mamma.com in 2004.

A report by the SEC inspector general H. David Kotz related to those allegations was posted online Friday. In the report, Kotz writes that the Office of the Inspector General's (OIG) investigation of the SEC's handling of Cuban's case did not find sufficient evidence to substantiate Cuban's claims of misconduct.

As we have reported, a federal district court judge in July barred Cuban from accusing the SEC of engaging in misconduct in the insider trading case, which began in 2008. U.S. district court judge Sidney Fitzwater dismissed the SEC's initial complaint in the matter in July 2009. That led Cuban to seek sanctions against the commission. An appellate court reinstated the case in September 2010. Since then, Cuban has alleged that the SEC intended all along to bring the insider trading action against him regardless of what its investigation turned up.

The OIG's report refutes that claim, stating that no evidence could be found to suggest that the investigation into Cuban's activities was "motivated by politics or other improper motives or that Mr. Cuban was targeted by the enforcement staff because he was a high-profile or recognized individual." The report also refutes Cuban's assertion that he was not given the opportunity by the SEC to argue against his insider trading charges via what is called a Wells process.

In July we reported that Cuban's so-called unclean hands defense had been struck down by the court because of the billionaire's inability to demonstrate the existence of any actual prejudice in the SEC's investigation.

As we have noted, Cuban is represented by Dewey & LeBoeuf partner Lyle Roberts.

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