Tuesday, December 28, 2010

Pro Basketball Legal Cases 1946-69

This is the first part of a series to cover the major legal cases in pro basketball history.

In 1946, George Mikan was the biggest name in basketball.   Upon turning professional after the conclusion of his college career at DePaul Mikan signed a contract with the National Basketball League’s Chicago American Gears on March 16, 1946.  While the NBL had a salary limit of $7,000, the Gears agreed to pay Mikan an addition $5,000 for working once a week in the company’s legal department.  In December Gears owner Maurice White was experience financial trouble and asked Mikan to renegotiate his contract down to $6,500 a year.  Mikan refused and then walked out on the team on December 11, filing a lawsuit in Cook County Circuit Court, claiming his contract was one-sided and that the team's dismissal privileges left him unprotected since NBL contracts were not guaranteed.  On January 20 the Gears counter-sued Mikan for $102,250 ($100,000 for violation of his contract and $2,250 in fines for failing to play).  After six weeks of holding out, Mikan returned to Chicago and eventually both lawsuits were withdrawn.

Jack Molinas was banned after signing a confession to having bet on NBA games, including those of his own club, Fort Wayne. Molinas brought suit in New York State Supreme Court alleging that NBA President Maurice Podoloff violated the leagues by-laws in that Molinas did not receive notice of the charges against him or grant him a hearing.  The court ruled that Molinas’ written confession as well as his admittance to the court that his confession was truthful was sufficient for taking action against Molinas.

After Washington lost its NBA franchise in 1951 a group headed by Morris Fox looked for an opportunity to bring the league back to the nation’s capital.  After failing to lure the Hawks to Washington when they moved to St. Louis in May, 1955, the group threatened litigation, claiming they had a letter from the league promising a franchise to Washington.  Days later the group failed in an effort to purchase the defunct Baltimore franchise and explored the possibility of forming a rival league (with Brooklyn, Chicago and Cleveland under consideration for franchises).  The group then went forward and filed a $1 million antitrust suit against the NBA claiming the league conspired to prevent it from buying the bankrupt Baltimore club.  Eventually, despite ruling that the NBA was subject to the Sherman Act because it operated on an interstate basis, the suit was denied because there was not proof that a contract existed.

After being banned in 1954 for admitting to betting on NBA games while playing for the Fort Wayne Pistons, Jack Molinas filed a $3 million antitrust suit against the NBA contending that they were depriving him of the opportunity to earn a living as a professional basketball player. After a four-day trial, Federal Judge Irving R. Kaufman dismissed the suit, ruling that Molinas "has not established any violation of the antitrust laws" citing the NBA "was justified in determining that it was absolutely necessary to avoid even the slightest connection with gambling." Molinas would go on to become a central figure in the college basketball fixing scandal of 1960-61.

Banned by the NBA in 1953 after being connected with a point-shaving scandal at the University of Kentucky, Bill Spivey (who was acquitted of all charges and had been playing mostly in the Eastern League) signed a contract with the Cincinnati Royals in 1959. After pressure from the league office due to concerns over Spivey’s possible involvement, Cincinnati withdrew their contract offer. Spivey then filed a lawsuit against the league, league President Maurice Podoloff and the Royals asking for $820,000 in damages. Spivey’s suit was settled out of court for $10,000 and he went on to play in the rival American Basketball League in 1961.

With the arrival of the American Basketball League in 1961 the players of the NBA had an alternative to resigning with their own club, and the New York Knicks’ two-time All-Star Kenny Sears jumped at the chance to join the ABL team in his native California and joined the San Francisco Comets (soon renamed the Saints), signing with them on April 25, 1961.  The Knicks quickly countered with lawsuits against both Sears and the Comets (for $175,000 in damages) claiming that the option clause in his contract gives him exclusive rights to him in 1961-62, making this the first court test for the option clause.  Sears countered with an antitrust suit against the Knicks claiming he was not free to negotiate with prospective employers each of the past four years, costing him an estimated $30,000.  In June a federal judge in San Francisco denied New York’s request to issue an injunction to prevent Sears from playing in the ABL, clearing the way for him to play for the Saints.  In October a Superior Court in San Francisco denied a petition by New York to prevent Sears from playing for San Francisco, as Judge Byron Arnold stated that the Knicks hurt their own case by withdrawing a suit filed against Sears in Federal Court in New York.  In December New York and San Francisco came to an agreement which allowed Sears to play in the ABL in exchange for a cash payment.  Sears would go on to finish the 1961-62 season with the Saints, but returned to the Knicks in 1962-63.

When the American Basketball League began play in 1961 the two leagues were set on a legal collision course as soon as NBA players began to sign with the new league.  Dick Barnett of Syracuse was one of those players, signing with George Steinbrenner’s Cleveland Pipers in August, 1961.  Syracuse, citing the option clause in his contract, responded by filing a lawsuit in Common Pleas Court in Cleveland seeking a restraining order to prevent Barnett from joining the Pipers.  The Nationals got their temporary restraining order in October, and a permanent injunction in December, but the two clubs then reached an agreement to allow Barnet to play with Cleveland in 1961-62.

After being waived by St. Louis in 1963 after disciplinary problems with Hawks’ coach Harry Gallatin, Woody Sauldsberry signed with Boston in November, 1965 after spending two years out of the league, but NBA President Walter Kennedy announced that he was refusing to approve Sauldsberry’s contract due to “his record while he was formerly a player in the association.”  Days later Sauldsberry filed a lawsuit against Walter Kennedy and each of the NBA’s clubs excluding Boston in U.S. District Court in Boston.  The next day U.S. District Court Judge George C. Sweeney issued a temporary injunction ordering the NBA and Boston Celtics to honor Sauldsberry‘s contract and allowing him to play pending the resolution of his lawsuit.  In December Kennedy approved Sauldsberry’s contract after he agrees to “certain provisions.”

Larry Jones was a fringe NBA player in 1964-65 who found himself out of the league midway through his rookie season with Philadelphia.  Jones landed in Wilkes-Barre, Pennsylvania, where he became one of the top players in the Eastern League with the Wilkes-Barre Barons.  When the ABA arrived on the scene Jones signed with the Denver Rockets franchise in August, 1967.  Wilkes-Barre then filed suit in Allegheny County Common Pleas Court against Jones claiming they had an exclusive option to renew his contract through October 31 and received a preliminary injunction against Jones (similar injunctions were issued against other players such as Willie Somerset of Houston and Levern Tart of Oakland).  Jones continued to play with Denver however as the Rockets felt the decision was “of no force or effect outside of Pennsylvania.”  In April, 1968 the decision to grant the preliminary injunction was overturned on appeal.

With his named mentioned in connection with the 1960-61 NCAA point-shaving scandals Connie Hawkins found himself booted from the University of Iowa team and blacklisted by the NBA. After playing for Pittsburgh of the ABL and with the Harlem Globetrotters (and going undrafted by the NBA in 1964), and expressing a desire to play in the league, Hawkins was officially placed on the NBA’s ineligible list until an investigation by NBA Commissioner Walter Kennedy had concluded. Hawkins then filed a lawsuit against the NBA in November, 1966 in hopes resuming his playing career. In 1967 he joined the upstart ABA, signing a contract without an option clause with Pittsburgh which would allow him to leave to join the NBA immediately. When the details of the allegations were investigated for the trial and his innocence came to light, the NBA finally settled with Hawkins. Phoenix won his rights in a coin flip with Seattle and signed him to a five-year, $1 million contract in June, 1969.

With the arrival of the American Basketball Association NBA players like San Francisco’s Rick Barry were presented with another employment option.  After months of a ‘hands off’ policy Pat Boone, the owner of the ABA’s Oakland franchise agreed with Barry to a “signing option” beginning June 19, 1967, and expiring October 2, 1967, and come to terms on a three-year, $225,000 contract to begin in 1967-68 unless Barry was forced to honor the option year of his San Francisco contract, in which case it would begin in 1968-69.  The next day San Francisco notified Barry that they are exercising their option for the 1967-68 season, but he refused to sign and maintained that he would not play for San Francisco in the upcoming season.  On August 8 San Francisco filed suit against Barry seeking an injunction to prevent his from playing any team other than San Francisco until September 30, 1968.  A week later a California court ruled in favor of San Francisco and the NBA, and Barry elects to sit out season as an announcer for Oakland rather than playing his option year with San Francisco.  Oakland then signed Barry to a three-year contract on September 29, 1967.

Lou Hudson preceded Rick Barry by becoming the first NBA stars to sign with the ABA in May, 1967.  Hudson jumped from the St. Louis Hawks to the Minnesota Muskies to sign a three-year contract, but he was still obligated to fulfill the option year of his St. Louis contract.  St. Louis Answered by filing a $3 million suit against the Muskies, Hudson and the ABA.  When the Hawks offered him a five-year contract in June, Hudson had a change of heart and returned to the Hawks.  Minnesota then filed suit against Hudson hoping the court would enforce their contract with Hudson.  St. Louis however, claimed that Minnesota had not entered into negotiations with “unclean hands.”  The court agreed with St. Louis and refused Minnesota’s request, in part because of Minnesota’s “unclean hands” when signing Hudson, and in part because Hudson had not yet received any benefits from signing with Minnesota.

When the ABA began play in 1967 the Oakland franchise signed Rick Barry of the San Francisco Warriors, making him the first star to jump to the new league.  Barry’s contract was for three years to begin when his contractual obligation to the Warriors ended (in either 1967-68 or 1968-69).  In August San Francisco filed a suit in Los Angeles County Superior Court against Oakland Owners Pat Boone and Ken Davidson and Oakland Coach Bruce Hale and one against the ABA (who was also Barry’s father-in-law) seeking $1.5 million in damages for "willful, deliberate and malicious" acts and "tortuous intent to injure the [Warriors] and appropriate the good will” generated by Barry's association with the club.  A court-ordering injunction prevented Barry from joining Oakland until 1968-69, and the courts sorted out the various suits.  Ultimately the court decided that Boone and Davidson had no knowledge if Barry’s option was valid or not, but even they had the contract would be valid due to the specific wording that it would take effect only when the Warriors no longer held his rights. The court ruled that the Warriors held his rights for 1967-68, and Barry chose to sit out the season, joining the Oakland broadcasting team instead and joining them as a player n 1968-69.

One of the intents of the organizers of the American Basketball Lleague was to ultimately force a merger with the NBA, following the example set by the American Football League, who parlayed a successful rival league into a merger with the established National Football League.  After two seasons of squabbling over talent rights and countless lawsuits, the ABA filed a March, 1969 antitrust suit in U.S. District Court in San Francisco claiming that the NBA used its economic resources to stifle competition by pooling its resources to sign college players and accusing the NBA of inducing players to break the contracts they had signed with ABA clubs and of “blacklisting” coaches and players who tried to jump leagues.  The ABA asked the court to void the “option contract” used by the NBA and that the NBA be prohibited from entering into contracts into players except on an individual team basis.  In August a group from the NBA consisting of NBA Commissioner Walter Kennedy and team owners Ned Irish, Sam Schulman and Richard Bloch met with representatives of the ABA including ABA President James Gardner and owners Ray Boe and Joe Geary met and agreed to the “possibility of exploring cooperative arrangements.”  These talks broke off soon after when the ABA induced Billy Cunningham to jump from Philadelphia to Carolina and Denver signed college underclassman Spencer Haywood.  In January, 1970 the talks resumed and intensified throughout the spring, despite the protests of the NBPA, and the problems of deciding what to do with players who had jumped to the ABA (Rick Barry, Zelmo Beaty, Dave Bing, Billy Cunningham and Luke Jackson among them), what indemnities should be paid to existing teams, what the price for admission would be and how to settle the ABA’s antitrust suit.  In April the merger appeared to be imminent with the ABA agreeing unanimously to pay $11.25 million to join, but the NPBA filed the “Oscar Robertson Suit” to block the merger on antitrust grounds, and receiving the injunction necessary to block it.  The leagues continued to work toward a merger throughout the summer and fall, but the efforts were abandoned in the fall after little progress at getting Congressional approval.

1 comment:

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