MLB Opposition to MASN Motion for Stay

8/16/2019 MLB Opposition to MASN Motion for Stay

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SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF N W YORK

TCR SPORTS BROADCASTING HOLDING, LLP,

Petitioner,

-against-

WN PARTNER, LLC; NINE SPORTS HOLDING,

LLC; WASHINGTON NATIONALS BASEBALL

CLUB, LLC; THE OFFICE OF COMMISSIONER OF

BASEBALL; and ALLAN H. BUD SELIG, AS

COMMISSIONER OF MAJOR LEAGUE BASEBALL,

Respondents,

-and-

THE BALTIMORE ORIOLES BASEBALL CLUB and

BALTIMORE ORIOLES LIMITED PARTNERSHIP,

in its capacity as managing partner of TCR SPORTS

BROADCASTING HOLDING, LLP,

Nominal Res ondents .

Index No. 652044/2014

(IAS Part 41)

RESPONDENTS THE OFFICE OF COMMISSIONER OF BASEBALL

AND THE COMMISSIONER OF BASEBALL S MEMORANDUM OF

LAW N OPPOSITION TO MASN S CROSS-MOTION TO STAY

WILLIAMS CONNOLLY LLP

725 Twelfth Street, N.W.

Washington, DC 20005

Telephone: (202) 434-5000

LUPKIN AS SOCIA TES PLLC

26 Broadway, Floor 9

New York, NY 10004

Telephone: (646) 367-2778

ttorneys for he Office

of

Commissioner

of

Baseball

nd

the Commissioner

of

Baseball

ILED: NEW YORK COUNTY CLERK 05/27/2016 04:46 PM INDEX NO. 652044

SCEF DOC. NO. 746 RECEIVED NYSCEF: 05/27

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Respondents the Office of Commissioner of Baseball, d/b/a Major League Baseball

( MLB ),

1

and the Commissioner ofBaseball

2

submit this memorandum in opposition to MASN

and the Nominal Respondents' Cross-Motion to Stay (Dkt. No. 693).

PRELIMIN RY ST TEMENT

In Section 2.J.3

of

the March 28, 2005 Agreement (the Agreement ), the parties vested

the sole responsibility for determining the fair market value of future telecast rights fees with the

Revenue Sharing Definitions Committee ( RSDC )

if

MASN and the Nationals were unable to

reach agreement through negotiations. MASN acknowledges that this clause is valid and binding

and that, unless the Court enjoins the RSDC from proceeding, MASN will be required to

arbitrate the fees dispute before the RSDC. Mem.

Of Law

In Opp n To Mot. To Compel

Arbitration and in Support

Of

Cross-Motion To Stay, Dkt. No. 738, ( MASN Br. ) at 23. In an

attempt to prevent the

RSDC

from proceeding to determine the telecast rights fees, however,

MASN s Notice of Cross-Motion asks for an order pursuant to Section 2201 of the [CPLR]

staying any further arbitral proceedings in connection with this dispute pending resolution

of

the

appeals. MASN Notice

of

Cross-Motion, Dkt. No. 693, at 1-2.

The issue before the Court is a narrow one: Whether it can and should stay a new RSDC

proceeding. The answer is no.

The Commissioner of Baseball has recently reconstituted the RSDC with new members,

none of

whom were involved in the RSDC proceeding that led to the present lawsuit.

Affirmation of John J Buckley, Jr. (May 27, 2016)

ii

2 Ex. 1 MASN, the Orioles, and the

1

Unless otherwise indicated, all capitalized terms have the same meaning as defined

in

MLB's Memorandum

of

Law in Opposition to Petitioner's Amended Petition To Vacate Arbitration Award (Dkt. No. 285).

2

Allan H. Bud Selig

is

no longer the Commissioner of Baseball; Robert D Manfred, Jr became Commissioner

on January 25, 2015. MASN erroneously describes the Commissioner

of

Baseball in the case caption

as

the

Commissioner

of

Major League Baseball.

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Nationals have been advised that the new RSDC will convene a hearing during the first week

of

August 2016 to determine the Nationals' and Orioles' telecast rights fees for the 2012-2016 time

period.

Id

at

i

4 Ex.

3

MLB respectfully submits that there is no basis for this Court to

enjoin the RSDC proceedings and that the RSDC should be allowed to determine the 2012-2016

rights fees as soon as possible. This is particularly true in light of the fact that the current dispute

is more than four years old and that the RSDC will likely soon be called upon to resolve the

parties' anticipated dispute over the rights fees for the next five-year period (2017-2021) as well.

ARGUMENT

I.

The

Agreement Requires a New RSDC Proceeding To Determine

the

Rights Fees,

As

Recognized

y the

Court s Decision and Order.

The Agreement requires the RSDC to determine the telecast rights fees of the Nationals

and the Orioles in the event the parties are unable to agree. In relevant part, section 2.J.3 states:

In the event that the Nationals and/or the Orioles and [MASN] are unable to

timely establish the fair market value

of

the Rights by negotiation and/or

mediation as set forth above, then

the fair market value o the Rights shall

be

determined by the Revenue Sharing Definitions Committee ( RSDC'') using the

RSDC s

established methodology for evaluating all other related party telecast

agreements in the industry.

TCR Sports Broadcasting Holding, LLP v WN Partner, LLC, 2015 WL 6746689, at *2 (Sup. Ct.

N.Y. Cnty. Nov. 4, 2015) (the Decision and Order ) (quoting the March 28, 2005 Agreement

§ 2.J.3) (emphasis added).

In accordance with the Agreement's plain meaning and the fact that re-writing the

parties' Agreement is outside of its authority, the Court' s November 4, 2015 Decision and

Order denied MASN and the Orioles' request for an order requiring further proceedings to be

held in a forum other than the RSDC. Decision and Order at *

13

n.21. The Court

emphasize[d] that so long as the Nationals retained new counsel who do not concurrently

represent MLB or the individual arbitrators and their clubs, the parties would thereby return to

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arbitration to the RSDC, however currently constituted, pursuant to the parties' Agreement. Id

(citing the March 28, 2005 Agreement§ 2.J.3).

Proskauer is no longer representing the Nationals before the RSDC. Affirmation

of

Stephen R Neuwirth (Jan. 21, 2016) if 13 Ex. 3 Furthermore, the Nationals' new counsel has

confirmed that it is not concurrently representing MLB, any new RSDC member, or any

of

the

new RSDC members' Clubs. Affirmation

of

Stephen

R

Neuwirth (May 27, 2016) at ifif 4-5.

MASN and the Nationals are therefore contractually obligated to return to arbitration before the

RSDC, however currently constituted, pursuant to the parties' Agreement. Decision and Order

at*

13

n.21.

There is no impediment to the RSDC fulfilling its mandate to resolve the fees dispute

under the Agreement, as the Court has already rejected all procedural challenges to the RSDC

process raised by MASN and the Orioles. The Court found no merit to their claims

of

alleged

bias or corruption on the part

of

MLB, including the allegation that

MLB s

$25 million advance

to the Nationals gave MLB an impermissible stake in the outcome.

Id

at *5, 8-9. The Court

similarly found no impropriety in

MLB s

support role, finding t akin to the assistance that the

staff

of

an established arbitration organization may provide to its arbitral panels, and which the

parties must necessarily have expected when they entered into the Agreement.

Id

at *7. The

Court also rejected MASN and the Orioles' challenges to procedures used during the prior RSDC

proceeding, including those related to discovery, cross-examination, and post-hearing

submissions. Id

MASN' s recent submission confirms that this Court is not required to take any action in

order for the RSDC to proceed to resolve the dispute. MASN agrees that the Commissioner

of

Baseball has the ability to convene the RSDC. MASN Br. at

8; see lso id

at

13

( it is

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MLB and MLB alone, not MASN, not the Orioles and not BOLP that is able to convene an

RSDC proceeding). MASN and the Orioles have confirmed that they have not taken actions

that disregard the application and effect of the arbitration clause (such as by bringing a

freestanding suit in court to determine the Nationals' telecast rights fees), and have not

demonstrated the unambiguous refusal to arbitrate that is a necessary precondition

to

an order

compelling arbitration.

d

at 9 MASN and the Orioles have also represented that,

notwithstanding their pending appeals and correspondence following the Decision and Order,

they have not refused to comply with an order of an arbitral form or made any unambiguous

refusal to appear at a new RSDC proceeding. d at 12 MASN agrees that, absent the issuance

of an order by this Court staying a new RSDC proceeding, MASN will be forced to arbitrate

before the RSDC. d at 24.

Consistent with the parties' Agreement and the Court's Decision and Order, the

Commissioner has informed the parties that he has reconstituted the RSDC by appointing three

new members: Mark Attanasio, the owner of the Milwaukee Brewers; Kevin Mather, the

president of the Seattle Mariners; and Mark Shapiro, the president of the Toronto Blue Jays.

Buckley Aff. -r 2 Ex. 1 As the parties were informed last December, MLB has retained

Sullivan Cromwell LLP and its Chairman, Joseph C. Shenker, Esq., to advise and assist the

RSDC in administering the forthcoming proceeding. Id -r 3 Ex. 2 Mr. Shenker has notified

the parties that, absent a court order enjoining MLB from proceeding, the RSDC will convene a

hearing during the first week of August 2016 to determine the Nationals' and Orioles' rights fees

for the 2012-2016 time period.

3

Id

-i

4 Ex. 3

3

Mr. Shenker's January 6, 2016 letter informed the parties that MLB would not make any

determinations about a reconvened RSDC process until the Court ruled on the Nationals' motion

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II.

There

Is No Basis To Stay a New RSDC Proceeding.

MASN cross-moves to stay any further arbitral proceedings in connection with this

dispute pending the resolution

of

the appeals from the Decision and Order. MASN Notice

of

Cross Motion, Dkt. No. 693, at 1-2. Yet MASN does not cite or invoke CPLR § 7503(b), which

is the sole provision authorizing stays

of

arbitral proceedings.

4

And MASN explicitly disclaims

reliance on CPLR § 5 519( c , which is the provision that allows a court to stay enforcement of its

own judgment or orders pending appeal. MASN contends that a Section 5 519 motion would be

procedurally improper because it asserts that the Court's Decision and Order does not order the

parties to return to the RSDC for a new proceeding.

5

MASN Br. at

17.

The result is that

MASN s

application to stay the RSDC proceedings relies exclusively

on CPLR § 2201. But that provision is inapplicable and simply permits a court to stay its own

proceedings. t does not grant a court the power to stay or enjoin proceedings of another court.

or the parties engaged in mediation. See Affirmation of Thomas J. Hall (May

6,

2016) Ex.

11.

The parties have since engaged in a two-day mediation on April 12-13, 2016, which did not

succeed in producing an agreement, and the pending motions will be fully briefed by June 17,

2016.

4

MASN s reasons for not relying on CPLR § 7503(b) are clear: t allows a court to stay an

arbitral proceeding only

if

(1) a valid agreement was not made or has not been complied with, or

(2) the claim sought to be arbitrated is barred by the statute of limitations.

t

is undisputed that

the Agreement contains a valid agreement to arbitrate. In its most recent brief alone, MASN

acknowledges that the Commissioner has the ability to convene the RSDC, MASN Br. at 8,

and that MASN has not take action that disregard the application and effect

of

the arbitration

clause,

id

at 9. Similarly, at no point has any party suggested that the claims at issue in this

action are barred by the statute

of limitations.

5

Moreover, a Section 5519 motion would not succeed. In Prudential Property nd Casualty

Insurance Company

v Dixon

161 Misc. 2d 87 (Sup. Ct. Nassau Cnty. 1994), the court granted a

stay

of

arbitration under CPLR § 7503, with the proviso that it would expire after 45 days.

Id.

at

87. The petitioner requested the arbitration be stayed indefinitely pending the appeal, invoking

to CPLR § 5 519(c . Id. at 88. The court refused to do so, finding that additional delay of the

arbitration would frustrate the very purpose arbitration is designed to achieve, namely

expeditious dispute resolution. Id. at 89.

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Nor does it grant a court the power to stay

an

arbitral proceeding.

As

explained in McKinney 's

commentaries to the statute, CPLR 2201 does no more than allow a court on a proper showing

to suspend an action or proceeding before it. CPLR § 2201 (McKinney 's Commentaries

C2201 :3); see also CPLR § 2201 (McKinney's Commentaries C2201 :2) ( [T]he CPLR 2201

stay is one that the court imposes on the action or proceeding before it. ); Siegel, N.Y. Practice

§ 255 ( The word stay

in

New York practice usually connotes a

court's

suspension of its own

proceedings, not those

of

another court Pursuant to CPLR 2201, any court in New York can

stay its own proceedings 'in a proper case, upon such terms as may be just. ' (quoting CPLR

§ 2201)).

Courts have repeatedly held that Section 2201 does not authorize a motion to stay arbitral

proceedings. For example, the Fourth Department recently held that, Inasmuch as a court's

participation

in

the [arbitration] process is limited to the provisions contained in

CPLR

article 75,

plaintiffs' reliance on

CPLR

2201 in support

of

their motion [to stay arbitral proceedings] is

misplaced. Rather,

an

application to stay arbitration is governed by CPLR 7503(b). Palladian

Health

LL v.

Summer Street Capital II LP

105 A.D.3d 1441, 1442 (4th Dep't 2013) (internal

quotation marks and citations omitted) (alteration in original); see also Dolomite Sp.A. v.

Beconta Inc. 129 Misc.

2d

857, 860 (Sup. Ct. N.Y. Cnty. 1985) ( It would appear however, that

§ 7503(b)

of

the CPLR entitled 'Application to compel or stay arbitration; is the rule most

applicable here rather than the far more general § 2201. ).

MASN has not cited a single decision in which a court has invoked CPLR § 2201 to stay

an arbitral proceeding. Rather, all

ofMASN's

cases involve situations in which New York

courts stayed their own judicial proceedings in light

of

related actions in federal court or earlier-

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filed state court actions in New York or elsewhere.

6

Apparently realizing this fact, MASN

attempts to re-cast its cross-motion as only seeking to stay the Court's consideration of the

Nationals' Motion to Compel Arbitration. MASN Br. at

5.

Putting aside that its Notice of

Cross-Motion asks only for a stay of the RSDC proceeding, a stay of the Court's consideration of

the Nationals' Motion to Compel would accomplish nothing in light of the fact that the

Commissioner of Baseball has reconstituted the RSDC and that the RSDC will convene a

hearing the first week of August 2016 to determine the rights fees. MASN repeatedly

emphasizes that it is not challenging the Commissioner's right to do so and is not denying that it

must comply with the arbitration clause. See

e.g.,

MASN Br. at 8-9, 12-13, 24.

Moreover, there is no basis for the Court to stay its own proceedings.

t

is black-letter

law that, notwithstanding an appeal, a lower court continues to have jurisdiction over the action

and may entertain and decide motions, even where the outcome

of

such motion practice may

impact the pending appeal. Rospigliosi

v.

Abbate, 31 A.D.3d 648, 650 (2d Dep t 2006). This

rule is no different in the arbitration context. See Prudential,

161 Misc. 2d at 89; f

SSL lnt l,

PLC v. Zook, 44 A.D.3d 429, 430 (1st Dep t 2007) (noting that the court had previously denied

petitioners' application for a stay of arbitration pending the appeal of an order compelling

arbitration).

6

See OneBeaconAm.

Ins.

Co.

v.

Colgate-Palmolive Co., 96 A.D.3d

541

(1st

Dep t

2012)

(earlier-filed state court action in Massachusetts); Belopolsky

v.

Renew Data Corp., 41 A.D.3d

322 (1st Dep t 2007) (earlier-filed state court action in New York); Trinity Prods. Inc. v. Burgess

Steel LLC, 18 A.D.3d 318 (1st

Dep t

2005) (related federal court action); Asher

v.

Abbot Labs.,

307 A.D.2d

211

(1st Dep t 2003) (related federal court action); Minton

v.

Minton, 277 A.D.2d

103 (1st Dep t 2000) (earlier-filed state court action in New York); Schneider

v.

Lazard Freres

Co., 159 A.D.2d 291 (1st Dep t 1990) (earlier-filed state court action in Delaware); Wiener v.

Spahn, 2013 WL 6815198 (Sup. Ct. Bronx Cnty. Apr. 1 2013) (earlier-filed state court action in

Massachusetts).

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Finally, MASN s appeal is meritless and taken for delay. As the Court has already found,

MASN and the Orioles' request to transfer the arbitration to a forum other than the RSDC would

involve re-writing the parties' Agreement, which is outside of [the Court's] authority.

Decision and Order at* 13 n.21.

7

Any appeal

of

this holding is meritless given the weight

of

authority holding that arbitration agreements must be enforced according to their terms. The

overarching principle of the FAA is that arbitration is a matter

of

contract, which means that

courts must 'rigorously enforce' arbitration agreements according to their terms. Am. Express

Co v

Italian Colors Rest.,

133 S

Ct. 2304, 2309 (2012) (quoting Dean Witter Reynolds Inc

v

Byrd, 470 U.S. 213,

221

(1985)). Such enforcement extends to terms specifying the issues

[parties] choose to arbitrate, the rules under which any arbitration will proceed, and who will

resolve specific disputes. Stolt-Nielsen SA

v

Anima Feeds Int' Corp., 559 U.S. 662, 683

(2010). Here, Section 2.J of the March 28, 2005 Agreement reflects a detailed, multi-step

dispute-resolution procedure, culminating in adjudication

of

a specific issue (Future Rights

Fees), using a specific procedure (the RSDC's established methodology), before a specific body

(the

RSDC}--a

body with expertise in assessing technical, industry-specific questions

of

fair

market value for telecast rights. See Stolt-Nielsen, 559 U.S. at 685 (benefits

of

private dispute

resolution include the ability to choose expert adjudicators to resolve specialized disputes ).

Given that the RSDC has been reconstituted and will soon convene a hearing during the

first week of August 2016 to determine the telecast rights fees, and that the sole CPLR provision

7

MASN' s constant, out-of-context invocation

of

a comment Commissioner Manfred made at a

press conference last spring does not change this analysis. MASN complained about that remark

more than a year ago as a means to submit lengthy post-hearing letter briefing (see Dkt. Nos.

619-620, 633 ), MLB and the Nationals responded (Dkt. Nos. 626

631

), and the Court awarded

MASN and the Orioles no relief on that issue.

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relied on by MASN (Section 2201) does not authorize stays of arbitral proceedings, MASN s

cross-motion should be denied.

ON LUSION

For the reasons stated, the Court should deny

MASN s

cross-motion and not enjoin the

RSDC from convening a hearing to determine the fair market value

of

the telecast rights fees for

the Nationals and the Orioles in early August.

Dated: May 27, 2016

Washington, DC

WILLIAMS CONNOLLY LLP

John

J

Buckley, Jr.

C

Bryan Wilson pro hac vice)

725 Twelfth Street, N.W.

Washington, DC 20005

Tel: (202) 434-5000

Fax: (202) 434-5029

E-mail: [email protected]

[email protected]

Jonathan

D

Lupkin

Lupkin Associates PLLC

26 Broadway, Floor 19

New York,

NY

10004

Tel: (646) 367-2778

E-mail: [email protected]

Attorneys for The Office ofCommissioner

ofBaseball nd the Commissioner of

Baseball

9

MLB Opposition to MASN Motion for Stay

Documents

Transcript of MLB Opposition to MASN Motion for Stay