NBA has indemnified itself against lawsuit by Donald Sterling
MAY 31, 2014 5:05a ET
Donald Sterling won't get to fight for his Los Angeles Clippers in front of NBA owners next week. His only chance now is in court.
But the NBA, when it announced the agreed sale of the team by Sterling's estranged wife on Friday, has moved to protect itself. The league said that Shelly Sterling and The Sterling Family Trust also ''agreed not to sue the NBA and to indemnify the NBA against lawsuits from others, including Donald Sterling.''
That means whatever monetary damages Donald Sterling may receive under the suit — filed on behalf of Sterling and The Sterling Family Trust — may go out one pocket and back in the other, unless he is reinstated as a trustee and can nullify the agreement. Sterling can try to reinstate his trusteeship by appealing to the California Probate Court.
Or he could just pocket about $1 billion, his share of the proceeds from the record-breaking sale of the Clippers. But don't count on it. His lawyers say he'll fight the league and his family to keep the team he bought for just $12 million in 1981.
Shelly Sterling negotiated the deal to sell the Clippers for $2 billion to former Microsoft CEO Steve Ballmer, saying she owns half the team and controls the family trust. A person close to the family told The Associated Press that she took over the family's assets because Donald Sterling, 80, was stripped of his ability to act as a co-trustee after two neurologists determined he was suffering from dementia.
The individual, who is familiar with the trust and the medical evaluations but wasn't authorized to speak publicly, said Sterling was deemed ''mentally incapacitated'' according to the trust's conditions because he showed ''an inability to conduct business affairs in a reasonable and normal manner.''
''There is specific language and there are protocols about what to do, and steps in order to get a sole trustee position, and that's what took place in the last couple of days,'' the individual said.
The medical evaluation was made earlier this month when Donald Sterling made voluntary visits to two neurologists who conducted tests, including brain scans, the individual said. Though Donald Sterling is no longer a co-trustee of The Sterling Family Trust, he still retains his 50 percent ownership and still receives proceeds from the sale, the individual said.
But Sterling, already a billionaire, seems uninterested in the cash. His lawsuit seeks the elimination of his lifetime ban from the NBA.
On Friday, when the NBA canceled next week's hearing to oust Sterling, instead moving forward to vote on whether to approve the sale to Ballmer, Sterling's attorneys filed a federal lawsuit against the league and Commissioner Adam Silver, asking for damages in excess of $1 billion.
The lawsuit says Donald Sterling is still a co-trustee and doesn't want to sell the team.
''The assertion that Donald Sterling lacks mental capacity is absurd,'' attorney Bobby Samini said. He would not give more details on Donald Sterling's condition.
The suit alleges that the NBA violated Sterling's constitutional rights by relying on information from an illegal recording that publicized racist remarks he made to a girlfriend. It also says the league committed a breach of contract by fining Sterling $2.5 million and that it violated antitrust laws by forcing a sale.
''Mr. Sterling's lawsuit is predictable, but entirely baseless,'' NBA general counsel Rick Buchanan said. ''Among other infirmities, there was no 'forced sale' of his team by the NBA — which means his antitrust and conversion claims are completely invalid. Since it was his wife Shelly Sterling, and not the NBA, that has entered into an agreement to sell the Clippers, Mr. Sterling is complaining about a set of facts that doesn't even exist.''
Shelly Sterling said that she had agreed to sell the team to Ballmer ''under her authority as the sole trustee of The Sterling Family Trust, which owns the Clippers.''
The NBA said Friday that the league, Shelly Sterling and The Sterling Family Trust had ''resolved their dispute over the ownership of the Los Angeles Clippers.''
''Under the agreement, the Clippers will be sold to Steve Ballmer, pending approval by the NBA Board of Governors, and the NBA will withdraw its pending charge to terminate the Sterlings' ownership of the team,'' it said.
The ownership hearing had been scheduled for next Tuesday after the NBA charged Sterling with damaging the league with his racist comments. A three-quarters vote of owners to support the charge would have terminated the Sterlings' ownership, and the league would have sold the team.