Today, the Supreme Court of New York--the trial court level in that state--ruled in favor of MASN and the Baltimore Orioles, overturning an arbitration award that had reset the Washington Nationals' rights fees earlier. If you want additional background details, check out our prior coverage here, here, here, and here.
If you don't want to read those tomes (and who could blame you), what you need to know is this: In order to win in court and overturn an arbitration award, MASN/Baltimore had to demonstrate something known as "evident partiality" during the arbitration process. The rules of the game in overturning an arbitration award are stringent; phrases like "notoriously difficult" summarize your odds when walking down this path.
But the Orioles did it. Justice Marks cogently analyzed MASN's various claims to show evident partiality. To the credit of the Nats' legal defense, he shot down the following arguments as grounds for reversing the award:
1. Corruption, fraud, or undue means
2. Arbitrators exceeded the extent of their authority to provide an award
3. Arbitrators engaged in prejudicial misconduct
4. Evident partiality with respect to a $25M loan from MLB to Washington
Then, on page 20, the grounds for reversal: evident partiality through participation by Proskauer Rose, a law firm that represented the Nationals, MLB, and the three teams on the arbitration panel--all during the course of the arbitration.
Here's what we said back in May, when the parties argued this case to the trial court:
"MASN and the Orioles argued for quite a while that evident partiality existed because the firm was essentially representing the judge and their opponents, along with MLB on top of that."
MASN atty Hall now going in on the Proskauer argument, ie, they argue not proper for law firm to rep MLB, Nats, RSDC members at same time— Eric Fisher (@EricFisherSBJ) May 18, 2015
Now pushing an hour on MASN's Proskauer argument, which to my admittedly untrained legal eye strikes as the weakest of their batch.— Eric Fisher (@EricFisherSBJ) May 18, 2015
I think Mr. Fisher is generally right on his observation, but may undervalue what MASN/Baltimore had to do to win.
Remember, you've got to get to evident partiality. This argument lays that necessary groundwork for Justice Marks in showing how the panel could have been biased: one firm represented everyone in the room but MASN/Baltimore.
That this was an essential element of proof is also shown by the fact that two sophisticated legal teams took over an hour of time to pitch Justice Marks this argument.
Importantly though, Proskauer wasn't running from the arbitrators' decision room, to the Nats' war room, and over to MLB's conference room during the arbitration hearings. Nor was the firm literally making the decision--representatives from the Rays, Pirates, and Mets did that.
Justice Marks, as judges are wont to do, got right to the heart of it from the get-go:
Judge Marks asking a lot back re MASN's Proskauer arguments. "Did it just look bad or was it actually bad?"— Eric Fisher (@EricFisherSBJ) May 18, 2015
Did it just look bad or was it actually bad. That's him saying, 'tell me how this rises to evident partiality and not just something that seems shady. Because they can get away with something that may seem shady.'"
Justice Marks determined that it was actually bad, even though the Orioles and MASN knew and agreed that this was an "inside baseball" process, where everybody would know everybody, as the Nats' attorney argued. He explained,
what they did not agree to, however, was a situation in which MASN's arbitration opponent, the Nationals, was represented in the arbitration by the same law firm that was concurrently representing MLB and one or more of the arbitrators and/or the arbitrator's clubs in other matters.
In other words, this was more Black Sox than not.
So what would it have taken to win? "The [governing law] might have dictated a simple decision from this Court to confirm the award if MLB, as administrator of the arbitration, had taken MASN's objections seriously, and actually done something about it." Basically, hire a different lawyer.
Instead, MASN's concerns were "simply ignored."
Where the argument turned, to me, is where the Court peppered the Nats' counsel with questions about Proskauer and the inside baseball idea:
It's a 147 page transcript months before the decision, but it's insightful nonetheless: a leading question asking, "isn't that a problem?" from the only person whose opinion matters foreshadowed this result, with successive following up statements--not even questions.
The Court noted it did not have the authority to re-write the arbitration agreement between the parties. It suggested that the Nationals return to panel with new counsel "who do not concurrently represent MLB or the individual arbitrators or their clubs."
What this decision isn't is a referendum on what the Nats agreed to when they came to town.
It also does not represent some comeuppance for Baltimore or its fans. If someone--anyone--had merely told MASN about the extent of Proskauer's representation, or if the Nats had hired a different lawyer, we'd be talking about finally getting resolution to an issue that has earned far more print than it deserves.
And practically speaking, it's unclear this will have a material effect on the award as it was provided, unless you believe Proskauer's legal talent was solely responsible for the value of the reset (there are a lot of good lawyers out there, believe it or not). So, while the MASN and Baltimore can take solace in their victory , the saga will continue to the next panel, and the next award, and the next round of complaints from either side.
It's possible the next reset period will be here before that is worked out. And almost certainly we'll have meaningful games being played by then, too.