Aside from the battle over the motion to dismiss filed by PSV/MLS, I think it’s fair to say that the biggest argument in the immediate future centers over the issue of discovery. […]
Aside from the battle over the motion to dismiss filed by PSV/MLS, I think it’s fair to say that the biggest argument in the immediate future centers over the issue of discovery. I’m not going to get into discussing much about discovery as a general legal process (you can read about it here); consider this story a “201” level course, instead of an “intro.”
By way of a bit of background however, the pending discovery fight is a result of a discovery request that was sent (by the State of Ohio) on March 16, 2018. That included interrogatories and requests for production. Per the request, MLS/PSV had 28 days to respond. They haven’t, and therefore are technically in non-compliance, which allowed the plaintiffs (again, the State of Ohio) to file a motion to compel discovery. If granted, PSV/MLS would be required to turn over the requested information, or be subject to fines and penalties, as well as attorney’s fees.
In response, MLS has filed a motion to stay the discovery process. If granted, that would put a hold on the discovery (or at least parts of it) until some as-yet determined date. Now, the plaintiffs have filed their motion opposing that. But the City and State have filed different versions of that opposition, so it’s a good time to take a look at what they filed, and what that portends going forward.
Both the City and the State are pushing “presumed constitutionality”:
As a general rule, Ohio law states that laws passed by the legislature are presumed to be valid and comply with state and constitutional standards. Which makes a lot of sense; why pass a law that you know is going to be stuck down? Now we can all think of laws that have been passed that have no chance of surviving constitutional muster (i.e., legislatures are just doing it to make a point), but you still have to go through the fight to challenge them.
To that end, since the laws are presumed valid at this point, the argument is that the defendants are required to comply with them until the law is declared unconstitutional, or a court orders that they don’t have to, by way of the stay the defendants are requesting (or via a restraining order or injunction). The State in its brief points out that the defendants have not cited any authority to justify them being allowed to entirely opt out of the discovery process. But of course, that’s what the motion to stay is about. But as is noted, PSV/MLS are asking to stay the *entire* discovery process, not just hold off on matters that are of immediate importance, such as disclosing financial documents that would allow prospective local buyers to make an offer to buy the team.
Plaintiffs argue that they’ve offered to narrow discovery and issue protective order:
The plaintiffs (the City in particular) have raised numerous concerns about the six-month notice period outlined in the statute. If the period elapses and there are no offers, in theory PSV/MLS would be relieved of his/their obligations, and could move the team to Austin (or wherever else, for that matter). Based on the letter PSV/MLS sent, time is moving quickly (or may be up). Thus, the need for those financial documents and other related discovery is necessary, in the view of the plaintiffs. To that end they’ve also argued that narrowing the requests for discovery and/or signing a protective order is more reasonable so that information is relevant to immediate issues in the lawsuit and won’t be released to parties not entitled to it (like pesky bloggers).
The plaintiffs are surely right that the court could narrow the scope of the discovery based on the time constraints associated with the six-month statutory period. There is also the issue of the motion to toll the six-month period. Granting that would mitigate the issue, though it wouldn’t answer the argument set forth by PSV/MLS that they shouldn’t have to provide *any* discovery until the motion to dismiss is argued. Interestingly, the City points out that it was the State that sent that discovery request and therefore a blanket stay would damage their rights to obtain evidence in this case.
Beyond the possibility of the City having more specific evidence they want to look at in the context of a sale (and pointing out that they have not loaded up PSV/MLS with discovery requests in addition to the State), I confess I was a bit confused as to what particular difference it made. Then I looked at section (i), “the corporate structure of Defendant Major League Soccer (the alleged owner of Screw SC)”
Opening the Door:
It goes without saying that MLS’ corporate/operating structure is probably the most secretive in all of professional sports that has a following of some kind. Beyond the SUM agreements and discovery rules and allocation, it’s difficult to discern what MLS even is. I’m not going to get into it for purposes of this story, but it’s pretty obvious that MLS wants to keep its skeletons hidden deep in the closet. But in the context of this story, have they left the door open?
It’s possible. Here is what MLS had to say about their organization (for lack of a better word) in their motion to dismiss.
Clear as mud, of course. Is this accurate? I don’t know, and neither does anyone outside the MLS collective. And this doesn’t cover the investor/operator/owner designations that MLS seems to go back and forth with, as the City points out (footnote 2):
The City is right that they have no ability to discern MLS’ true nature, because none of that information has been disclosed before; certainly not in the context of this lawsuit. And the City is right that this information does likely create a material issue of fact in arguing that MLS has not received any (current) financial benefit. Also interesting, the argument from MLS that the Modell law is unconstitutional on Contracts Clause grounds is made without providing the agreement (LLC) itself. So how can the plaintiffs respond to this argument, or the Court evaluate it, without reviewing a copy of the agreement? So it’s possible that MLS has opened the door to have this information disclosed to the plaintiffs at some future date, maybe very soon. I’m hoping to get some additional information here, so watch this space.
Sauce for the goose:
Finally (briefly) on the Motion to Toll the six-month timeline: In addition to issuing a writing award for whoever wrote the State’s brief, the motions to stay and the motions to toll are arguably different sides of the same coin. The City argues the plaintiffs and defendants are arguing that the same theory applies; due to the pending motion to dismiss, the court should put on hold discovery and the six-month timelines, so as to not prejudice the rights of the parties, and minimize expending time and money.
My initial hunch is that both parties will get something along the lines of what they want (discovery delayed to the extent the information doesn’t impact the dismissal motion; notice issue tolled based on the discovery delay), but I’m hearing that the response to the tolling motion from PSV/MLS is due sometime today. Likely after 5:00 p.m., as appears to be their method of operation. So we’ll have more to write about shortly, it looks like.