Donald Sterling Sues NBA for Antitrust After Team Sold

Donald Sterling, who has owned the Los Angeles Clippers since 1981, sued the National Basketball Association a day after his wife agreed to sell the team for $2 billion following the uproar over Sterling’s racist comments.

Sterling, 80, seeks more than $1 billion in damages, claiming the NBA violated his rights by banning him from the sport for life, fining him $2.5 million and taking steps to strip him of ownership of the team solely on the basis of a conversation with a friend that he said was illegally recorded.

The complaint, filed today in federal court in Los Angeles, was premised on the assumption the NBA would go through with a June 3 hearing to terminate Sterling’s ownership of the team. Sterling accuses the NBA of antitrust violations on the grounds that a forced sale would be anticompetitive. The NBA said today that the June 3 meeting was canceled.

“Mr. Sterling’s lawsuit is predictable, but entirely baseless,” Rick Buchanan, executive vice president and general counsel for the NBA, said in an e-mailed statement. “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, who has agreed to sell the Clippers, Donald Sterling’s lawsuit is based on non-existent facts, Buchanan said.

Steve Ballmer

Shelly Sterling said yesterday in announcing the agreement to sell the team to former Microsoft Corp. (MSFT) Chief Executive Officer Steve Ballmer that she was acting under her authority as the sole trustee of the Sterling Family Trust. Donald Sterling bought the then-San Diego Clippers 33 years ago for $12.5 million. It was put in the family trust in 2005, according to Donald Sterling’s complaint.

Two neurologists have deemed Donald Sterling to be mentally incapacitated, CNN reported, citing two people it didn’t identify. There is a provision in the Sterling family trust that if either Donald Sterling or Shelly Sterling become mentally incapacitated, then the other becomes the sole trustee, CNN said it was told by one of the people.

Today’s complaint lists Donald Sterling and the Sterling Family Trust as plaintiffs and names NBA Commissioner Adam Silver and the association as defendants.

A joint statement issued by the NBA and the Sterling Family Trust said Shelly Sterling and the trust have agreed to indemnify the NBA against lawsuits by Donald Sterling.

Antitrust Lawyer

Maxwell Blecher, a lawyer for Sterling, didn’t immediately respond to an e-mail seeking comment on reports of Sterling’s mental capacity and on the NBA’s statement that the cancellation of the forced sale procedure makes Sterling’s allegations moot.

Blecher previously represented Los Angeles Memorial Coliseum in a successful antitrust lawsuit in the 1980s when the National Football League tried to stop former Oakland Raiders owner Al Davis from moving the team to Los Angeles.

In other instances, federal judges have rejected antitrust claims by owners as a matter of law, Matt Mitten, a law professor and director of the National Sports Law Institute at Marquette University, said in phone interview before the lawsuit was filed.

The furor over Sterling began after TMZ.com on April 25 published recordings in which he told his friend, a woman named V. Stiviano, that he was bothered by her associating with black people in public and posting a photo on Instagram of herself and Hall of Famer Magic Johnson at a game.

‘Gorgeous’ Guys

“The impetus for the conversation in question was Stiviano telling Sterling that she was going to bring ‘four gorgeous black guys’ to a Clippers game,” according to today’s complaint. “Sterling, in a jealous moment, asked Stiviano, who is half African-American, not to bring black people to Clippers games and to refrain from posting pictures of herself with black people on Instagram.”

The recorded remarks drew condemnation from President Barack Obama and fellow NBA team owners including Microsoft co-founder Paul Allen.

Silver banned Sterling from the league for life on April 29. The league on May 9 installed former Citigroup Chairman Dick Parsons to run the Clippers until the ownership issue is resolved.

Ballmer, 58, outbid at least four other suitors. Each of the bids shattered the previous record sale price for an NBA team of $550 million paid in April for the Milwaukee Bucks. Ballmer, with a fortune of $18.9 billion, is the 39th-richest person in the world, according to the Bloomberg Billionaires Index. He stepped down as Microsoft CEO in February.

Conflicting Statements

Sterling has made conflicting statements about whether he would allow his wife to sell the franchise or fight their possible ouster in court. He signed a May 22 letter authorizing Shelly Sterling to negotiate with the league regarding all issues in connection with a sale of the team.

In a May 27 letter that served as his official response to the allegations against him, he called the proceedings a “sham” and said he should be able to keep the team.

Pierce O’Donnell, a lawyer representing Shelly Sterling, didn’t immediately respond to phone and e-mail messages seeking comment.

“A lawsuit would only delay the inevitable,” Daniel Lazaroff, director of the Sports Law Institute at Loyola Law School in Los Angeles, said in an interview before Sterling filed today’s complaint. “He has become a real problem for the league.”

Sexual Relationship

Shelly Sterling in March sued Stiviano, saying her husband had a sexual relationship with the woman and gave her a $1.8 million duplex, two Bentleys, a Ferrari and a Range Rover as well as $240,000 for her upkeep, all of which came out of community property, according to court filings.

Stiviano’s lawyer alleged in a court request to throw out that case that Shelly Sterling was complicit in her husband’s extramarital affairs and couldn’t ask for a return of the valuables that her husband freely gave away.

In today’s complaint, Donald Sterling said his right to privacy under the state constitution was violated when Stiviano made a recording of him without his consent.

“All the adverse effects to the NBA flow from the illegal recording,” Sterling said. “Accordingly, this entire proceeding violates substantive constitutional rights afforded Mr. Sterling by the California Constitution.”

The case is Sterling v. National Basketball Association, 14-cv-04192, U.S. District Court, Central District of California (Los Angeles).

To contact the reporter on this story: Edvard Pettersson in Federal court in Los Angeles at

epettersson@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Peter Blumberg

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