The Nationals, MLB, Orioles, and MASN: Litigation knows no offseason

It's a pretty big day tomorrow for the Washington Nationals, but for reasons that aren't all that fun to watch or look forward to. According to James Wagner at the Washington Post, the Nats and MASN are in court to review some recent discovery in their ongoing litigation.

Background

To catch you up, when the Nationals moved to D.C., Major League Baseball created the Mid-Atlantic Sports Network (MASN) to appease Orioles' owner Peter Angelos. Angelos was not happy about the Nats coming to town and pulling from "his" market, so MLB routed majority ownership in the new network to Charm City. The Orioles would own no less than 2/3 of the network, while D.C. would never own more than 1/3.

Carriers (like Verizon and Comcast) pay MASN to broadcast O's and Nats games. After MASN pays its employees and the teams their rights fees with this money, they distribute leftover funds according to the network ownership percentage -- in other words, more goes to Baltimore than to Washington. But under the deal brokered by the MLB way back in 2005, the Nats can "reset" their rights fees to market rates.  This, of course, cuts into Angelos' bottom line.

When the Nats invoked their right to a re-calculation in 2012, the parties could not come to an agreement. I'll give you a minute to pick your jaw off the keyboard at this shocker, I know. Anyway, the teams went to arbitration, which is an out-of-court means to resolve disputes.  The original agreement likely required this (I say "likely" because I could not find that agreement publicly).

Last Year: Steps Forward, Steps Back?

In summer 2014, an arbitration panel ruled in favor of the Nationals. Foul! cried the Orioles. Seeking to stop the arbitration panel's ruling, the Birds sought (and obtained) a temporary restraining order from the Supreme Court of New York in New York County.  Both the Nats and MLB were parties to this action.

In August 2014, the Orioles were successful in removing the "temporary" from their restraining order, as the Court granted Baltimore a preliminary injunction. We last looked at why the Court would do this, and all in all, its ruling wasn't too surprising.

These decisions are preludes to the Angelos' desired end game: to overturn the arbitration panel's award. How can they do that? Show that there was "evident partiality" by the arbitrators.

To do that, the Orioles/MASN asked the Court to permit certain discovery against MLB. The Nationals gave up their documents without dispute, which I take to be a measure of confidence that nothing untoward was happening on their side.  Also, it's hard to block discovery.

A little more on that bit.  If you've spent your life doing something better than being a lawyer, or have been lucky enough to never go through it, discovery is the process where parties (and sometimes, as here, non-parties) to the litigation exchange information about the case -- think documents, depositions, other investigative actions. It often forms the backbone for evidence submitted at trial or during motions practice.

Remember the standard for overturning that arbitration award, evident partiality?  The Orioles put a full-steam-ahead argument against MLB on that issue to justify their request for getting certain information from the governing body; here's an excerpt from their table of contents in the brief linked above:

If you can read only a brief's table of contents and know what a party is looking for and why they should win, you're doing it right.

So that's where the Nats, O's/MASN, and MLB were on December 15, 2014: The Orioles/MASN told MLB, "hand over documents that we think might show evident impartiality," and MLB told them to pound sand.

As Wagner reported, the Court wasn't too amused with MLB, and it permitted certain of MASN's discovery. Most of MASN's requests seek internal MLB communications; it was careful to tread around case law prohibiting discovery in the actual arbitral process, a thoughtful legal maneuver.

If you're MASN, the hopeful payoff from this effort will be to obtain information substantiating evident impartiality.  Here's what they want the documents to prove, in a nutshell, per MASN's brief:

. . . Mr. Manfred – a Proskauer [the law firm that represents the Nats in this matter] client, both individually and as an MLB executive – asserts that his staff provided legal advice to the RSDC [the arbitration panel] and drafted its Award.* Through this intimate involvement with Proskauer and the RSDC, they had every opportunity to subvert the process.

And they had every incentive to, as well, supplied by a nearly $25 million loan that MLB made to the Nationals.

*By the way, Manfred's affidavit is a pretty fascinating look at the high-level negotiations that have gone on behind all this, and probably worth its own article.

Doubtless that MLB wanted to broker a deal (one way or another), whether through financial or altruistic motive.

And this is where a significant portion of MASN's argument will rest come the hearing on the merits this March: "Yes, your honor, MLB had access and financial incentive to unduly influence the arbitral panel.  How/why?  Because the law firm representing the Nats also represented MLB concurrently.  That same law firm represented teams who were on the arbitration panel.  Mr. Manfred admitted that they sometimes draft awards for the panel, and did so here.  And by the way Mr. Justice, the Nats owe MLB money, which was expected to be repaid through increased rights fees awarded by the panel.  Here are all the documents to prove it."

2015: Safe At Home?

That's the lead up and sort of look-back to today.  While long and probably boring, that case "architecture" is necessary to understand this point: Whatever MLB has turned over between December 15th and the January 8, 2015 conference (and likely beyond) is going to be very important to everyone involved, since it might hold the weight of evidence showing evident impartiality.  Or it might extinguish that notion.

Discovery is a long game. You know the one liners you get in a Few Good Men and Law and Order, when an attorney whips out a silver bullet zinger, wins the case, and reflects over a round of drinks at the bar with the attractive co-star? Those are earned through persistent, exacting discovery during long nights at the office. It's the most importantly mundane thing you'll hear about today, and it will cost someone in this case millions of dollars.

If you're the Lerners, you better hope that Manfred or anyone in his office didn't put anything too terrible on paper. Or, should I say, didn't do anything at all. Indeed, even opposing MASN's request could suggest to MASN that MLB has reason to protect something, something hurtful.  Importantly, though, that implication can't concern the Court at this juncture.  But it's there.

Justice Lawrence Marks has already indicated that a corollary to this issue -- fairness -- is what concerns him most of all, and that was back in August 2014. Justice Marks was at it again in December, per Wagner:

Marks took issue with the $25 million loaned to the Nationals that was expected to be paid back with the new rights fees, saying that it showed MLB "clearly" had a vested interest in the panel’s ruling. Buckley [MLB's attorney] said MLB was a multi-billion enterprise and $25 million was "not a material amount." Marks responded: "Well, it’s not beans."

It sure isn't, if you're a civil servant. In any case, a ruling won't come out of this conference, which is mostly to confirm that MLB has complied with the Court's order, if I'm reading Rule 7 of the New York Rules right.

As touched on briefly above, the March 2, 2015 merits hearing is the big one. Expect the things going on behind the scenes right now to feature prominently at that juncture; right now is the point where, like baseball over the summer, a team is trying to distance itself from the competition.  It's hard to overturn an arbitration award, but not impossible.

Hey, at least we'll have something to pass the time while thinking about the Nats' second base options.