SaveTheCrew: When is Notice, “Notice?”

Note: This story was inspired by a conversation I had on Twitter. See, it is good for something!

22538685_1951017788557463_2634825324857240516_o

We now know the deadline for PSV/MLS to respond to the complaint file by the City of Columbus has been rescheduled to April 19, 2018. At that point, we’ll get a real look at the legal strategies PSV/MLS intend to pursue in this case. While there may well be negotiations going on behind the scenes, we’re not privy to those at this point, so it’s pointless to speculate about it.

What isn’t pointless to speculate about are the legal strategies likely to employed by the defendants in this case. As has previously been discussed, this is a matter of “first impression,” so it is very difficult to really hypothesize the outcome at this point, or even which legal arguments PSV/MLS will use. However, one thing that is interesting to look at, in light of the language in the PSV/MLS letter, is the issue of “notice” as it pertains to the Modell Law statute. First, let’s take another look at the statute:

Screen_Shot_2018_03_07_at_7_47_44_AM

So we’ll move right to “Section B,” which requires that PSV/MLS gives the City “not less than six months” notice of intent to discontinue playing at the facility (Mapfre) before they move. We’ll deal with the second half of Section B later.

What is “Notice?”

The issue of notice, generally speaking, is pretty self-explanatory, so I won’t go into a long description here. It’s a heads-up. A requirement to give the potentially adverse party information regarding ones intentions prior to one taking action. We’ve all done it in some form or another in our lives: whether its when you’re moving out of your home or breaking up with someone or letting your employer know you’re leaving your job. The extent of your obligation of course depends on the situation, or on the obligation imposed by a contract or by law/statute.

What type of notice are we dealing with here:

Now this interesting thing here is that we’re not dealing with a contractual obligation per se. There is a lease between PSV/Columbus Crew and the City State, which is of course enforceable. The lease ends in 2024. However if PSV wants to break the lease, they are free to. They’ll be responsible for damages of course, but given that the yearly rent is relatively nominal, there is really no issue there; they can just cut a check. So the lease does not provide an impediment to PSV leaving.

What’s more interesting in the context of this case is the issue of when notice has been provided. The premise we’re dealing with here is that if notice is properly given, and the six month period expires with no substantive offers from prospective local ownership groups, then PSV will likely be found to have complied with the Modell law, and therefore will be free to move to Austin (or anywhere else, for that matter).

Timing is everything:

By my count, we have essentially three potential notice arguments the parties can argue: October 17 and November 15, 2017, as well as March 16, 2018. Let’s take them in reverse order.

 

March 16, 2018:

This is by far the easiest one to argue. That is the date that PSV/MLS sent a letter to the local government providing notice of intent to cease playing at Mapfre, and requesting bona fide offers from local groups. Doesn’t get much more official than this, and will be used as the default option in the event the other dates do not apply. It’s important to note that while PSV/MLS sent this letter on March 16, they specifically reserved the right to challenge all provisions of the law, as well as assert any other defenses or arguments. But by any reasonable measure, this satisfies the statutory requirement.

November 15, 2017:

This is the date where MLS/PSV met with local Columbus officials, including Columbus Mayor Andrew Ginther and Alex Fischer, head of the Columbus Business Partnership (CBP), to see if some agreement (maybe understanding is the better word) could be reached regarding the potential move to Austin. It…didn’t go well, according to PSV/MLS:

We were extremely disappointed that no concrete offer or proposal was presented and then told by the City of Columbus that it would not communicate with us past today.

Now, the Columbus group strenuously disputes this, arguing they provided several stadium and financing options. For purposes of this discussion, I’m not going to gauge the credibility of these conflicting statements (although, it’s to MLS’ benefit if CBP *did* make substantive offers); I’m more interested in the dates.

October 17, 2017:

The day after Grant Wahl’s story on the potential move to Austin, PSV released a statement confirming the intent to explore the move, going into some depth about the infamous “business metrics,” and the problems the ownership group was having sustaining a viable business model. This is what led to the November 15th meeting, where the parties “discussed” potential resolutions.

So where does that leave us? We have one clear-cut date (3/16/18), as well as two dates (10/17; 11/15) that are referenced in that March letter. Those dates aren’t included in that letter for no reason. It’s reasonable to infer that PSV/MLS will argue that those dates will be what triggers the six-month “purchase opportunity” period. If that’s the case, then the six-month period could expire either April 15, 2018 or May 14, 2018.

Do either of the early dates constitute proper notice:

The short answer is: It depends. The statute does not specify how proper notice is given. It doesn’t even require written notice. In other statutes, there are specific written or public requirements for how notice is to be provided in various situations. I suppose the most analogous situation here would be under landlord/tenant law, which generally requires some type of written notice to terminate a lease. But again, we’re not talking about a lease or a breach of contract (and for purposes of this, we’re assuming that PSV will break the lease and simply pay out the damages and pay to tear down the stadium if required) here. In the absence of specific language, my guess is that a court would look to find the most analogous situation, and look to the statutory language or case law that applies, if any. Let’s not even think about if there isn’t…

It doesn’t appear that PSV/MLS sent the City of Columbus a formal notice of intent to cease playing at Mapfre prior to the March 16 letter, so we’re left to analyze whether either of the prior instances qualify as notice.

The October 16th statement was obviously a public one, and given that the Mayor and CBP CEO set up a meeting to discuss the matter, it would be hard to argue that they did not receive it. Further, at the 11/15 meeting, the CBP and the Mayor submitted ideas to keep the team, including stadium sites and funding proposals. However PSV/MLS at no point issued a request for offers from prospective owners or from the City. The statute doesn’t require PSV/MLS to affirmatively make that request; only give individuals or the City the “opportunity” to purchase the team. Finally, that statement did not formally state PSV’s intention to cease playing at Mapfre, and (as far as we know) it was not sent to the City directly.

Now, we don’t have much other information from the November 15th meeting; obviously though we can presume that the City had notice of PSV’s exploration of a move to Austin (why set up the meeting otherwise). Everything about what happened in October applies here: As far as we know, PSV did not provide any notice of intent to cease playing at Mapfre to the City, though I’m sure PSV will argue that all of their actions in lobbying Austin, combined with the previous statements, would qualify.

PSV/MLS argue in their post-November 15th meeting statement that they were prepared to listen to offers and whathaveyou, but that the City and the CBP basically told them they’d not entertain any negotiations while PSV was lobbying Austin. Now the statute definitely doesn’t say that PSV can’t negotiate with Austin while complying with the language. But if PSV ultimately declines a local offer, the plaintiffs may have a plausible claim that PSV was never going to give a local buyer a legitimate opportunity. But as to the notice requirement, the fact the parties met after the October 16th statement may strengthen an argument that notice was provided either on 10/16 or 11/15.

Bottom line:

It should be noted that this argument really only matters if you believe that PSV and/or MLS are dead-set on getting out of Columbus. Don Garber has said that it is his preference that the team stay in Columbus, but based on his other statements, he doesn’t have any real power to stop the move. And considering he’s been talking about Austin since 2015, I’m not sure I believe much of what he has to say.

If PSV/MLS are dead set on getting out of Columbus, then you’ll likely see an argument that those fall dates are when notice was provided. If they prevail, then that will potentially preclude a preliminary injunction from being secured, since the six-month period, in the case of the October date, will be up. In the case of the November date, it would basically be up as well, and would provide the City or CBP with an extremely tight timeline to come up with a bona fide buyer. In those situations, I don’t see how the plaintiffs could secure a preliminary injunction, since in this scenario, PSV would have complied with the statute.

If they don’t make those arguments, then it would lead one to believe that they’re at least open to staying, since with the March 16 date, they’d still have plenty of time to leave, in the event a local buyer cannot be found, and they can come to an agreement with Austin (let’s not forget they’ve got to come up with a deal there in any case). Granted, they could still make those arguments simply because they want to preserve all defenses and negotiating leverage, notwithstanding the public relations hit they would take.

So there are my thoughts on the notice issue. It’s important to note that while I’ve done some review of Ohio statutes, I don’t practice there and am just offering some thoughts on this potential argument. As the statute isn’t clear on the notice issue, there are plenty of arguments that are ripe to be made here, and we’re likely to see some interesting ones on April 19th.

Advertisements
  1. […] my last post regarding the notice issue, I speculated about potential legal strategies that PSV/MLS would use to fight the law. One of […]

    Like

    Reply

  2. […] in my previous story on the “Notice” issue, I listed some scenarios whereby the parties would argue about when notice was provided by Precourt […]

    Like

    Reply

  3. […] gone over that at length, so I won’t go over the letter itself here. But there is a reason my ears perked up when I saw PSV/MLS reference those October/November dates, and it obviously didn’t escape the […]

    Like

    Reply

  4. […] So I’ve been through this over and over and over again. Aside from noting that PSV/MLS apparently are fine disclosing the contents of […]

    Like

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Advertisements
Advertisements
%d bloggers like this: