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8/16/2019 MLB Opposition to MASN Motion for Stay
1/10
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
2
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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
4
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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]
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