Donald Sterling files new suit in attempt to block Clippers sale
JUL 22, 2014 10:57p ET
Donald Sterling, who vowed to sue the NBA until the day he dies, filed a new legal action Tuesday in his effort to hang onto the Los Angeles Clippers, a lawsuit in which he asserted he is the only one who can determine the team's future.
The new suit, which was filed even as his attorneys were in a courtroom in the same building fighting to scuttle his wife's effort to sell the team, asserts that Sterling is the only shareholder in the corporation that owns the franchise. As a result, Donald Sterling contends that he alone has the power to sell the team.
Sterling named the NBA, league commissioner Adam Silver, his estranged wife, Shelly Sterling, and the corporation that owns the Clippers, LAC Basketball Club Inc., in the suit.
The new suit by Sterling, who's under fire for his racially charged comments to an alleged mistress, is his latest effort to block the sale of the Clippers negotiated by Shelly Sterling, who accepted a $2 billion bid from former Microsoft executive Steve Ballmer.
Shelly Sterling took that step after removing her husband from decision-making authority in the family trust that held the shares of the team, a move she made after two doctors examined him and concluded that he was mentally incapacitated.
Then she went to court seeking a judge's confirmation of her right to do that, sparking the trial that is ongoing in a downtown Los Angeles courtroom.
One of Donald Sterling's attorneys, Bobby Samini, denied that the new suit was simply a last-ditch effort to scuttle that deal out of fear that Sterling is going to lose the ongoing court fight.
"It has nothing to do with derailing the sale or not," Samini said. "I don't think we've been coy about this: We've always said we're going to fight and we're not going to sell the team. We're not the ones who filed the probate petition. They filed it. We started in this courthouse by their action. So we're not the ones running to court proactively."
But Samini also acknowledged that he believes the sale of the Clippers to Ballmer, which must be completed by Aug. 15 under the terms of the contract he signed with Shelly Sterling, cannot be concluded until the new suit is settled.
"I don't think you can have a sale until the issues in our corporate lawsuit have been adjudicated by a jury," Samini said.
Attorneys for Shelly Sterling and Ballmer already had left the courthouse when the clerk's office confirmed the filing of the new suit, but attorney Pierce O'Donnell released this statement late Tuesday:
"Donald's latest lawsuit is a frivolous, last ditch act of desperation by a
delusional, bitter man. This action shows once more how obsessed he is with
ruining a record-setting $2 billion sale of the Los Angeles Clippers — a sale that
would solve the problems his racist rant started three months ago. As
testimony established today, Head Coach Doc Rivers doesn't want to coach for
him, the players don't want to play for him, the season ticket holders are about
to bolt and the major sponsors aren't willing to spend another dime until
there's a new owner. As Clippers CEO Dick Parsons made clear on the witness
stand: Donald's continuing ownership will put the franchise into a 'death
It is a complicated situation.
Donald Sterling bought the team in 1981 for $12.5 million and created LAC Basketball Club Inc. as the entity that controls the shares in the team.
According to Samini, Donald Sterling is the only shareholder in the corporation. At some point, he placed the company's shares in the Sterling Family Trust, which he jointly controlled with his wife.
But after his comments to a girlfriend became public in April — he told her to stop bringing African Americans to Clippers games and stop posting photos of herself with blacks on social media websites — Silver banned him from the NBA for life and initiated proceedings to strip him of ownership of the team.
Shelly Sterling, with her estranged husband's blessing, began the process of selling the team. After he refused to sign off on the deal with Ballmer, she had him removed as a trustee. Donald Sterling subsequently revoked the trust, which had the practical effect of dissolving it.
When a trust is dissolved, the assets in it are returned to the individuals who controlled them previously. As such, Samini said all the shares of LAC Basketball Club Inc. reverted to Donald Sterling.
The ongoing suit in probate court is scheduled to conclude on Monday. At that point, a judge is expected to rule on whether Shelly Sterling was proper in removing her husband of 58 years from a decision-making position in the trust — and, by extension, whether she can sell the team.
It wasn't at all clear Tuesday how the new suit will affect the ongoing trial.
In testimony Tuesday, the man appointed to run the Clippers in the wake of Donald Sterling's ban said that blocking the sale could hurl the team into a "death spiral" — with sponsors bailing out and its head coach and star players defecting to other teams.
That was the assessment Tuesday of Richard Parsons, the team's interim chief executive officer, whose career has included time as a White House attorney and as the head of Time Warner when it both bought and sold the Atlanta Braves, Hawks and Thrashers.
"If none of your sponsors want to sponsor you, if your coach doesn't want to coach for you, if your players don't want to play for you, what have you got?" Parsons testified in the sixth day of the current trial.
Parsons said he also was worried about how fans would react if Donald Sterling is still associated with the team when the new NBA season tips off in October.
"It's a serious concern," Parsons said. "It's a serious concern because what do you do? You're going to have a lot of people show up wanting their money back."
Tuesday's testimony came a day after Donald Sterling and Ballmer met for 90 minutes to discuss the impasse. A source close to the case told FOX Sports that little was accomplished, and attorneys on both sides returned to court Tuesday.
On the witness stand, Parsons said that head coach Doc Rivers has told him on multiple occasions that if Donald Sterling is still involved with the team, Rivers did not believe he could or would stay.
"He is troubled, maybe moreso than anybody else, because he's the guy who's had to stand up with the media," Parsons said of Rivers. "He has told me that he doesn't think he can continue to stand up to that."
Asked the impact of Rivers leaving, Parsons did not mince words.
"If Doc were to leave, that would be a disaster," Parsons said. "Doc is the father figure to the team."
Parsons also indicated that the team's captain and star point guard, Chris Paul, has hinted that he, too, would want out if Donald Sterling remains with the team.
And he said sponsors have said of Donald Sterling, in effect, "we're in if he's out, and we're out if he's in."
Under cross-examination from Donald Sterling's longtime attorney, Max Blecher, Parsons acknowledged that only one sponsor has actually ended its relationship with the team. Still, Parsons said, he considers others effectively lost if Donald Sterling remains.
He referenced car maker KIA, which has a long-term relationship with the Clippers — star forward Blake Griffin jumped over one of the company's autos in the 2011 NBA dunk contest.
"KIA has basically said we're ready to roll, but we're not signing anything until the all-clear is sounded," Parsons testified. "We have several sponsors who have said that kind of thing. Are they lost? You tell me ... they are in limbo pending the resolution."
Donald Sterling's attorneys initially fought to undercut Shelly Sterling's case with multiple arguments — including that his medical privacy was violated when records of the examinations by two doctors were turned over to his wife and her lawyers. But in rulings last week, Judge Michael Levanas threw out many of the arguments of Donald Sterling's attorneys. Now, Donald Sterling's lawyers are fighting to block the sale on a single legal question — whether Los Angeles Superior Court has jurisdiction to effectively bless the sale.
Their position is simple: On June 9, Donald Sterling dissolved the Sterling Family Trust, two days before Shelly Sterling sought the court's approval of the sale. As a result, Donald Sterling's lawyers have argued, the court has no jurisdiction to consider the question.
Judge Levanas has indicated he will ultimately consider three questions:
-- Whether the probate court is the appropriate place to determine the actions that should be taken to wind down the trust.
-- Whether Donald Sterling's removal as a trustee was proper.
-- Whether the court should issue an order allowing the sale to proceed even though Donald Sterling would likely pursue an appeal.
Shelly Sterling must prevail on all three questions for the judge to sign off on the sale. If Donald Sterling prevails on any one of them, he will effectively block the sale.
Much of Tuesday's testimony, including that of Parsons, was aimed at answering the question of the deal negotiated by Shelly Sterling and Ballmer and the potential financial impact blocking the sale would have on the business empire controlled by Donald and Shelly Sterling.
That question is important, because Levanas can order that the sale proceed while appeals are going on only if he concludes that stopping the transfer of the team would financially harm those who have an interest in the trust.
Donald and Shelly Sterling, who amassed a business empire worth billions on the strength of real estate investments, have not lived together for some time but have, until recently, continued to enjoy an amicable business relationship.
Donald Sterling has long been a controversial figure in Los Angeles — twice he was sued for housing discrimination. But it wasn't until the recording of Sterling talking to a mistress, V. Stiviano, that public opinion galvanized against him. Within days, NBA commissioner Adam Silver announced that he would ban Sterling from the league for life and fine him $2.5 million. And he threatened to have other NBA owners vote to strip him of the team and sell it if he didn't sell it on his own.
The witnesses called by Shelly Sterling's lawyers helped underscore their argument: That if this deal is scuttled, it's possible a future sale would not come close to getting the same amount of money.
"Based on my experience in both buying and selling sports franchises and having been pretty close to this process, I think it's a knockout price," Parsons said. "There is no way you can get to this price on any financial metric basis. It's not a financial transaction in fact."
"It's like buying a Faberge egg," Parsons said. "What is its value? Its value is established by the person who wants to own it, who wants to buy it."
And Anwar Zakkour, an investment banker with Bank of America, said that the group that prepared the team for sale initially concluded it could bring between $1 billion and $1.3 billion. In the end, bids of $1.2 billion, $1.6 billion were made in addition to Ballmer's winning bid.
"We were doing backflips when we got that offer," Zakkour said.
Both Parsons and Zakkour said they believed that if the deal with Ballmer is killed, and the NBA confiscates the team and auctions it off, as Silver has threatened, that it's likely to bring far less money.
That assertion was countered by Dean Bonham, a sports marketing consultant who testified for Donald Sterling and said he believed the team might actually bring more if it is auctioned off.