How strong is Glendale's legal case in canceling deal with Coyotes?
The Glendale City Council's decision to end a 15-year, $225 million lease agreement with the Coyotes was a formality. Mayor Jerry Weiers, Vice Mayor Ian Hugh and councilmembers Lauren Tolmachoff and Bart Turner had made up their minds long before Wednesday's litany of speakers used the session's open forum to voice their opinions.
Far less clear, however, is whether the city has a legal leg to stand on after it voted 5-2 to void the deal. Glendale's sole basis for the move is Arizona Statute 38-511, which allows an agency to cancel a contract if an employee directly involved with the agreement becomes an employee or agent to the other party.
Craig Tindall resigned as Glendale City attorney in late February 2013 (the resignation became official on April 1 of that year). He became general counsel for the Coyotes the following August.
Per the statute, Glendale must prove that Tindall was involved in creating the current arena lease agreement.
"One of the words that they will need to focus on in that statute is the word 'significantly,'" said Rodney Smith, director of the sports law and business program at ASU's Sandra Day O'Connor College of law. "They're going to have to prove that he had a significant level of involvement and I think it will be a very uphill battle for the City of Glendale."
Tindall left the city well before negotiations with Renaissance Sports & Entertainment (now IceArizona) began on the arena lease agreement in late May. However, Glendale kept Tindall on a six-month retainer and he was paid his full salary through September 2013, so the city likely will argue he served a role in creating the lease agreement.
Two sources familiar with the situation said Tindall had no role in drafting the current agreement, although it is similar to one he helped draft when Greg Jamison attempted to buy the team. One source said Tindall had a limited role as an advisor on the current agreement.
In November 2013, then-Councilman Phil Lieberman filed an ethics complaint with the State Bar of Arizona concerning Tindall. Lieberman alleged Tindall went to work for the Coyotes in 2013 while he was still paid the Glendale severance. The State Bar dismissed that claim.
"The fact that there was a complaint and the State Bar found no violations can be very persuasive. But the statute only says that there has to be conflict of interest," said Monica Lindstrom, KTAR's legal analyst. "If council can show any kind of fraud on the part of Coyotes or IceArizona or Tindall then its case strengthens."
The majority of the speakers during the open forum on Wednesday criticized the council for its impending action, but Weiers said those in attendance didn't have all the facts.
Coyotes outside counsel Nick Wood delivered a potentially damaging blow to the council's effort when he reminded it that it had waived any conflict of interest concerns for Tindall, a point that councilmember Gary Sherwood confirmed Wednesday night from Salt Lake City, where he was attending a League of Cities meeting.
"If they waived the conflict of interest issues then the Coyotes will have a firm leg to stand on," Lindstrom said.
Lindstrom also questioned how Glendale would prove Tindall had significant involvement in the deal.
"This was a contract that was negotiated in and out, up and down and sideways for at least two months during June and July when Tindall was not working for the City of Glendale or the Coyotes so he wasn't involved during the lion's share of the work for this particular contract," she said.
During the open forum, Wood said the city would face a $200 million lawsuit from the Coyotes if it chose to void the deal. That was part of the process he outlined afterward.
"Our litigation team will be filing injunctive relief (Thursday), a temporary restraining order and we'll also be going after the city for a couple hundred million dollars in potential damages," Wood said.
When asked if negotiating with the city was still possible, Wood said: "At this point the damage has been done. How do we negotiate our way out of being shot in the head by the city?"
Glendale released a statement Wednesday morning saying it was open to renegotiating the contract, but Coyotes president, CEO and co-owner Anthony LeBlanc also dismissed that out of hand.
"Why would we even negotiate a deal that is less than two years old and has 13 years remaining?" he said. "What we witnessed here tonight is possibly the most shameful exhibition of government I have ever witnessed.
"I don't want to be viewed as just a bunch of people that are looking to take legal action. It is our right; it is a necessity. We have been absolutely wronged this evening by a group that is acting in incredibly bad faith."
Smith, who once served as city attorney for Bishop, Calif., said Glendale should be concerned with another potential ramification of its actions.
"With my limited understanding of the details and facts, the city also needs to be very careful about its brand. Even if they eke out a victory in the short term -- and I find that unlikely -- they could still lose in the long term by damaging their brand for future negotiations.
"I don't want to disparage the members of council. They are probably doing what they consider to be in the best interest of the city but politics are so often short-term driven. They're looking at the next election and that's regrettable because this needs to be analyzed from a long-term perspective."
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