The alleged racist and misogynist rants of Los Angeles Clippers owner Donald Sterling will test the leadership of new NBA commissioner Adam Silver. Sterling's apparent misconduct raises legal questions about Silver's authority and possible punishments to be assessed against Sterling:
Q: Can Silver force Sterling to say whether the voice on the tapes is his?
A: Yes. Under the terms of Paragraph 24(m)(ii) of the "constitution" that governs the 30 owners of NBA teams and establishes the authority of the owners' commissioner, Silver can require Sterling to respond under oath to questions. The commissioner has "the right to require testimony and the production of documents and other evidence from any Member." As an owner, Sterling is a "member" of the NBA. Sterling and his lawyers could delay answering questions from Silver, but if Sterling refuses to admit or to deny that it is his voice on the tapes, he is in violation of the constitution and would face termination. He has no protection from the U.S. Constitution's Fifth Amendment guarantee against self-incrimination, because he is not facing any charge of any crime.
Q: What penalties can Silver issue?
A: Under the provisions of the bylaws, Silver has two sets of powers that he may use. Under either, he can issue a lifetime suspension and a substantial fine. Under Paragraph 24(l) of the constitution that was adopted by the NBA owners on Oct. 26, 2005, he can issue a fine of up to $2.5 million, can suspend an owner indefinitely and can order the forfeiture of draft picks. This provision applies to situations that are not covered by specific rules within the constitution. In another provision, Paragraph 35(A)(c), Silver can issue an indefinite suspension and a fine of $1 million to any owner who "makes ... a statement having or designed to have an effect prejudicial or detrimental to the best interests of basketball." If Silver wants to hammer Sterling, he can assert that Sterling's statements are so egregious that they go beyond the misconduct contemplated in Paragraph 35 and allow Silver to assess the greater penalties found in Paragraph 24. Sterling can argue that he merely made a statement, but the statement at a minimum allows a lifetime suspension and a $1 million fine.
Q: Is it possible for Silver and the NBA to terminate Sterling's franchise ownership?
A: Yes. Under the terms of Paragraph 13 of the constitution, the owners can terminate another owner's franchise with a vote of three-fourths of the NBA Board of Governors, which is composed of all 30 owners. The power to terminate is limited to things like gambling and fraud in the application for ownership, but it also includes a provision for termination when an owner "fails to fulfill" a "contractual obligation" in "such a way as to affect the [NBA] or its members adversely." Silver and the owners could assert that Sterling's statements violated the constitution's requirements to conduct business on a "reasonable" and "ethical" level.
Any owner or Silver can initiate the termination procedure with a written charge describing the violation. Sterling would have five days to respond to the charge with a written answer. The commissioner would then schedule a special meeting of the NBA Board of Governors within 10 days. Both sides would have a chance to present their evidence, and then the board would vote. If three-fourths of the board members vote to terminate, then Sterling would face termination of his ownership. It would require a vote of two-thirds of the board to reduce the termination to a fine. Terminating a franchise would obviously be a drastic remedy, but the potential of the termination procedure gives Silver and the other owners vast leverage in any discussion with Sterling about an involuntary sale of his team.
Q: Sterling is notoriously litigious. Can he go to court to stop Silver from punishing him?
A: Not effectively. When Silver issues his punishment to Sterling, the decision is final. The constitution provides in Paragraph 24(m) that a commissioner's decision shall be "final, binding, and conclusive" and shall be as final as an award of arbitration. It is almost impossible to find a judge in the United States judicial system who would set aside an award of arbitration. Sterling can file a lawsuit, but he would face a humiliating defeat early in the process. There is no antitrust theory or principle that would help him against Silver and the NBA. He could claim an antitrust violation, for example, if he were trying to move his team to a different market. But under the terms of the NBA constitution, he has no chance to succeed in litigation over punishment.