The Team and its Owners
by Daniel B. Garrie the Senior Managing Partner at Law & Forensics LLC. He focuses on e-discovery, digital forensics, cyber security and warfare, data privacy, and predictive coding working with law firms, governments, companies, and non-profits globally.
Part 3 of 4: In this third installment on e-discovery and league sports, we look specifically at the relationship between the team and its owners.
Just as an agent is a fiduciary to its clients, the owners of a team may well have fiduciary duties to the team itself, including the duty to produce personal emails involving team issues. This was the holding of the recent case, City of Seattle v. Professional Basketball Club, a case resulting from the relocation of the Seattle Supersonics from Seattle, Washington to Oklahoma City, Oklahoma, where the team was renamed the Oklahoma City Thunder.
In City of Seattle, plaintiff City of Seattle (“City”) alleged that it had the right to compel defendant Professional Basketball Club LLC (“PBC”) to remain in Seattle during the term of its lease. As part of discovery in the litigation, City issued requests for e-discovery directed at both the team and six of its eight team owners. PBC produced approximately 150,000 emails from two of the eight owners, and then argued that searching and producing emails from the remaining six members would be prohibitively expensive and generally produce either duplicative or irrelevant documents. The City responded by bringing a motion to compel production from the remaining six members. Even while acknowledging the information sought might not even be admissible as evidence at trial, the court agreed with the City and ordered the additional production:
Because a [member] is an agent as determined by Oklahoma statute, the requisite principal-agent relationship exists to establish that PBC has the legal right to obtain documents upon demand from its members. Accordingly the City has met its burden in establishing that PBC has “possession, custody, or control” over the at-issue documents . . .
PBC argues that the substance of the emails – information regarding the formation of PBC and the Sonics’ finances – is irrelevant or duplicative of discovery PBC already produced. But, as established above, [the owner members] of PBC are agents of the PBC. Thus, communications within PBC, as well as communication by PBC members with third parties, may be relevant to the underlying issues. Given the liberal discovery rules, the Court will not limit the City’s inquiry on relevancy grounds. Whether such evidence warrants admissibility is a distinctly separate question that the Court will address when the time arises.
Thus any team owner or significant shareholder should be aware that ownership responsibility may well include the expensive and disruptive duty of personally preserving and producing individual emails and information as part of discovery.
As a final note, the point at which an owner’s duty to preserve and produce information applies is generally a matter of state statute. For example, in Oklahoma, that duty applied to any team member who had the power “to manage and control the business and affairs of the limited liability company.” Since each of the eight members at issue owned enough stock to be entitled to a seat on the Sonics’ Board of Directors, the City of Seattle court had little difficulty in holding that each of them to be “managers” and “agents” to the team.
The rest of this blog series explores three specific scenarios involving e-discovery and sports, and provides some practice insights. In the next installment I will discuss the legal relationship between players and agents and how this impacts e-discover