Sunday, April 24, 2011

Pro Basketball Legal Cases 1974-84

After failing to meet approval by the NBA Board of Governors in 1972, who voted 13-2 against approving their purchase of the Boston Celtics franchise, Irving Levin and Harold Tipton failed an antitrust suit against the league in U.S. District Court, claiming their exclusion was based solely on their relationship with maverick Seattle SuperSonics owner Sam Schulman.  The court ruled that the exclusion of Levin and Tipton did not violate antitrust law based on their intent to become partners, rather than competitors.

After the NBA and ABA failed in their attempt to agree on a merger, the ABA revived their antitrust suit in January, 1974 seeking $100 million in damages against the NBA in Federal Court in San Francisco.  Claiming the NBA failed to act in good faith during the merger talks and had a monopoly on players, the ABA asked for an injunction to prevent the NBA from signing any college players for the next four years and preventing the NBA from enforcing all of its current player contracts beyond their expiration date.  The ABA also asked the court to prevent the NBA from signing any contracts not negotiated by or paid for by individual clubs.  The NBA Board of Governors responded by voting 18-0 against any merger with the ABA.  With the Oscar Robertson Suit already in place, the players effectively blocked a merger until their suit was settled and in 1976 after the suit was concluded and with the urging of Judge Robert L. Carter, the ABA and NBA resumed merger talks which culminated in four ABA franchises (Denver, Indiana, New York and San Antonio) joining the NBA for the 1976-77 season in a 22-team league and dismissal of the antitrust suit.

Filed December 8, 1975 in U.S. District Court separately from the NBPA’s suit on December 8, 1975, the ABA accused the NBA of participating in an unlawful conspiracy and combination to violate the Sherman Act by trying to eliminate the competition from the ABA, citing their imminent draft of ABA players who had signed as underclassmen (Mel Bennett, Charles Jordan, Moses Malone, Mark Olberding, Skip Wise.  Judge Robert L. Carter rules that there was no credible evidence that there was any conspiracy or that the applications by the Denver and New York ABA franchises for NBA membership resulted from any initiative on the NBA’s part.

After Marvin Webster completed his contract with Seattle in 1978, Webster signed a free agent contract with New York for five seasons at $600,000 a year. After Seattle decided not to match New York’s offer and upon failing to agree on compensation for Seattle, the case went before NBA Commissioner Lawrence O’Brien who awarded Seattle Lonnie Shelton, a 1979 first-round draft choice and $450,000. The NBPA then filed suit claiming the compensation was excessive, and after a four-day hearing the compensation award was found to be excessive based on an earlier compensation decision by O’Brien when Houston signed Rick Barry as a free agent. The Special Master then awarded a reduced compensation of Shelton and $200,000 to $250,000 in cash or New York's 1979 first round draft choice and $450,000.

In an infamous on-court incident, Rudy Tomjanovich of Houston was horribly injured (suffering facial and skull fractures, facial lacerations and a concussion) by a punch from Kermit Washington of Los Angeles during a December 9, 1977 game. Tomjanovich later filed a lawsuit against the Lakers citing vicarious liability for Washington’s actions. The jury awarded Tomjanovich $3.25 million in damages ($1.75 million in actual damages and $1.5 million in punitive damages), with the case then settled out of court for $2 million while the decision was waiting to be heard on appeal.

WALTON v. COOK [1981]
After numerous foot injuries during his playing career with the Portland Trail Blazers, star center Bill Walton (who had moved on to the San Diego Clippers as a free agent)  filed suit against Blazers team doctor Robert Cook and twenty additional physicians from the Oregon City Orthopedic Clinic for $632,000 in lost income and medical expenses and an additional $5 million in damages claiming negligent diagnosis and treatment of his broken foot while he played for the Blazers, and failure to provide accurate information on the nature of his injuries.  The case was settled in June, 1982 prior to trial for an undisclosed amount.

Taking advantage of the opportunity to move into the vacant Los Angeles Coliseum, the San Diego Clippers relocated without seeking league permission in May, 1984.  The league then filed a $25 million lawsuit against the Clippers and the Los Angeles Memorial Coliseum Commission claiming the move was in violation of the NBA’s by-laws.   In March, 1986 Federal Judge Leland Neilsen dismissed the lawsuit citing a recent antitrust decision allowing the recent move of the NFL’s Oakland Raiders to Los Angeles, but a Federal Court in San Francisco ruled that the NBA could proceed with its lawsuit in April, 1987.  Finally, in September, the Clippers and NBA reached an out-of-court settlement with the Clippers agreeing to pay the Los Angeles Lakers a $5.5 million indemnity for moving into the Lakers' territory and to sign documents acknowledging the validity of league bylaws regarding franchise movement.

Joe Caldwell signed a guaranteed five-year contract, $1.1 million with the Carolina Cougars on October 30, 1970, after Caldwell played the first four seasons for Carolina the franchise was sold to Daniel and Ozzie Silna who moved it to St. Louis as the Spirits of St. Louis, where they added rookie Marvin Barnes.  St. Louis then alleged that Caldwell persuaded Barnes, who was unhappy with his contractual situation, to breach his contract by leaving the team in November, 1974 (Caldwell had provided Barnes with the names of three agents, one of which, Marshall Boyar, was Caldwell’s own agent, who Barnes contacted.  Caldwell testified that it was Boyar who had advised Barnes to leave the team, while Barnes, in a sworn statement claimed that he came to the decision after talking to both Caldwell and Boyar).  After Barnes returned to the team and the Spirits suspended Caldwell on December 3 and then ultimately terminated his contract.  After the Spirits did not make a payment for $70,000 in deferred compensation on January 15, 1980, Caldwell filed suit against the team for breach of contract.   In July, 1982 the court ruled in favor of Caldwell, awarding him his salary $220,000 plus interest.

As a reaction to the threat of the owners implementing a salary cap outside of the collective bargaining process the NBPA filed Lanier v. National Basketball Association in U.S. District Court on July 28 in an effort to block it.  The owners then held a press conference the following day to announce that they were filing a an unfair labor practices suit against the NPBA with the National Labor Relations Board, and were seeking give-backs from the players, including a reduction in the size of team rosters from 12 to 10, elimination of their obligation regarding player pensions and other benefits, rights to 75% of the player’s shoe endorsements and the elimination of guaranteed contracts.  The players responded with proposal for increased benefits to offset the cost of living, all contracts be guaranteed and a share of the league’s television revenues.  In September Special Master Kinston Brewster ruled in the players favor stating that a salary cap would violate the settlement of the Oscar Robertson Suit.  In October, the NBA offered a new proposal - a guaranteed compensation plan (a fixed 40% of gross revenues up to $250 million and 30% thereafter) and maximum and minimum team salaries, with NPBA General Counsel Larry Fleisher stating that any agreement must take effect after the expiration of the Oscar Robertson Suit settlement in 1987.  The NBA then floated the possibility of up to five franchises being eliminated (Cleveland, Indiana, Kansas City, San Diego and Utah), and then filed a petition with the Special Master to delay free agent rights if the players go on strike causing the players to set a April 1, 1983 strike deadline.  Finally, in March, the players agreed to allow the implementation of a salary cap and a collective bargaining agreement was reached on March 30 which included a salary cap guaranteeing the players 53% of the NBA’s gross revenues (an expected $3.6 million per team in 1983-84), increased minimum salaries for rookies and a guarantee that the league will maintain 253 player jobs.

When Leon Wood was drafted with the 10th overall pick by Philadelphia in 1984, he was offered a one-year $75,000 minimum salary due to salary cap limitations.  Wood refused the offer and instead filed an antitrust suit against the league on September 14, in an effort to overturn the salary cap.  In October it was ruled that the salary cap and college draft fell under the terms of the collective bargaining agreement and “At the time an agreement is signed between the owners and the players' exclusive bargaining representative, all players within the bargaining unit and those who enter the bargaining unit during the life of the agreement are bound by its terms.”


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