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The pleadings continue to come at a quick pace, with the City of Columbus and State of Ohio filing their response to Precourt Sports Ventures and Major League Soccer motion to dismiss the lawsuit. As a brief recap, PSV and MLS cited a number of legal arguments to explain why this matter should be dismissed.

The viability of the arguments is a bit tougher to gauge than normal, as this is the first time the law has been tested (and why I’ve been reluctant to make a prediction; you can read my story on the USSF/NASL preliminary injunction, where I was more comfortable making a call). So in some ways, the response motion takes on more significance, since we get to see how the plaintiffs are going to defend the law. Now that it’s been filed, let’s take a look.

Summary: The law was narrowly written and is common sense, and defendants did not have to accept public funding.

The opening neatly summarizes the plaintiffs’ position. The law is narrowly written, and by accepting public funding, they became bound to compliance with the statute. None of the arguments by the defendants have merit, and thus this motion should be denied.

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Easy enough to understand here. So let’s get to the meat of the matter.

Argument: Plaintiffs have failed to carry high burden required for a Motion to Dismiss:

Coming out strong out of the gate, the plaintiffs argue that under Ohio law, the burden for prevailing under a motion to dismiss is high, and defendants have failed to clear that hurdle.

Screen Shot 2018-05-02 at 7.07.03 AMWeighty indeed. Under that standard, it’s difficult (but not impossible) to have matters dismissed outright. The premise makes sense: You want plaintiffs to have their days in court. Yet of course, there is a basic level of facts and law which must support a complaint, which is why there is the “remedy” of a motion to dismiss to get rid of truly frivolous causes of action. I immediately recalled the USSF/NASL motion for a preliminary injunction. The standard for NASL to obtain the injunction was to show that were clearly likely to prevail in their case. Under this standard, the hurdle for PSV/MLS is even higher.

Argument: ORC 9.67 applies when a party avails themselves of public financial support:

One of the arguments by the defendants was that not only must the owner play in a tax-supported facility, but that the owner (we’ll get into that later) itself receive public assistance. The plaintiffs spend quite some time attempting to dispel this argument. The argument itself is an exercise in understanding word construction.

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I called the PSV/MLS argument in this case “hyper-technical.” Is there a level about that? Maybe ultra-technical. If I had to make a call at this point, I’d probably side with the plaintiffs on this point, mainly because as the plaintiffs state, it would be silly for the statute to read as the owner to be playing the games, but PSV/MLS gets a chance to reply.

Argument: Defendants’ convoluted (my word) ownership structure provides basis to defeat motion to dismiss.

Talk about turning an argument back against you. The plaintiffs argue that due to the byzantine nature of the MLS ownership structure, it’s impossible for the defendants to provide a clear definition of who the owner truly is, and therefore that itself provides a claim which necessitates denial of the motion to dismiss.

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Obviously, Mr. Precourt and MLS generally were roundly mocked for attempting to change the description of Twitter handles partway through this litigation, as if it wouldn’t be noticed. I’ll be interested if they respond to this rather silly ploy. Finally on this point, plaintiffs point out that given that the defendants are attempting to stay discovery, attempting to introduce evidence through this motion is inappropriate, since plaintiffs are unable to verify their claims.

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Argument: The “financial assistance” provision of the statute is satisfied.

The plaintiffs point out that the defendants have conceded that Mapfre is a tax-supported facility, so the main argument is over whether there is “financial assistance.” The plaintiffs argue that since Mapfre is on tax-exempt land and the lease is at below market value, and the parking lot which received a $5 improvement is used by Crew fans, that this element of the statute is satisfied. And since these allegations must be accepted as true in the context of a motion to dismiss, that motion must be denied.

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I do have a question about including the fact that the parking lot is used by Crew fans; I’m not sure the relevance of that in this context. That aside, it seems to me this issue will turn on whether the examples above can be defined as MLS/PSV receiving “financial assistance.” The plaintiffs take on that issue here (and at length, let me tell you):

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Seems fairly persuasive to me, frankly. I was wondering how the plaintiffs would address this issue, and it seems to me they’ve done a pretty good job. But of course, one should exhaust all viable arguments, so we’re not quite done. The plaintiffs next attempt to shore up issues regarding the construction of the statute (which has been questioned in various places).

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This has a lot to do with statutory construction (I know I said I’d get to that, sorry!). The basic premise is that legislatures don’t intentionally pass laws that don’t make sense. Now, as I said before we all know of laws that are passed that get subsequently smacked down, and in relatively short order even. But as I also said, you’ve got to go through the fight to get them taken off the books, whether through repeal or through the court. So that’s where we’re at here, as to the substance of the argument here, again, the plaintiff’s argument is persuasive, and even if it weren’t, they’ve seemingly at least raised a viable claim, so getting it dismissed at this stage seems premature (and thus fatal to a motion to dismiss). But the defendants get the last word.

Argument: The notice and opportunity to purchase requirements are consistent with the Ohio and U.S. Constitution.

The plaintiffs begin with a restatement that statutes passed by the legislature are presumed to be constitutional.

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As I said early, this is a high hurdle to clear, though not (obviously) impossible. So with that in mind, we move on to I think it’s fair to say is the most contentious argument here: Notice and opportunity, and we start off with the plaintiffs defending the argument that the statute violates the dormant commerce clause. They argue three reasons (two of which I called!) why the defendants’ argument should fail.

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Market Participation:

One of the exceptions to the dormant Commerce Clause is when the government is participating in the market, not regulating it. Basically, when the government is deciding to use its funds to spur development locally, they are allowed more leeway in creating rules which limit out-of-market forces.

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To that point, the plaintiffs emphasize that the fact that they are spending their *own funds* as the distinguishing factor here.

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That last section is important, as it imposes limitations on the types of limitations/conditions on the government’s behavior. So you can probably guess where another point of emphasis is: Making sure the court does not find that the plaintiffs behavior is not outside the scope of the limitations authorized by in the dormant Commerce Clause.

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This is a very important beachhead for the plaintiffs to establish. The more restrictive the limitation, the more likely you’re going to run afoul of the dormant Commerce Clause.

Incidental limitations:

Next, the plaintiffs argue that even if the dormant Commerce Clause applies, the Modell law is in conformity with it because the burdens imposed by statute are incidental in light of the benefits.

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Using Pike (assuming the Court doesn’t find the law facially invalid) provides a useful lens through which to analyze the merits of the law on this point. On the law itself, the plaintiffs argue that the law was not motivated by economic protectionism, and was more designed to ensure that those who avail themselves of public funds in the use of local stadiums actually use those stadiums. On the relocation provision:

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On the face of it, a very persuasive argument. The one thing I’ll wonder about: Public funds were not used in the construction of the stadium. Public funds have definitely be used in support of the stadium (parking lot improvement, maybe favorable lease terms, tax exemption). It’s a distinction, and maybe one without a difference, but I’m going to guess that’s where the defendants try to attack this argument.

With regard to the “opportunity to purchase,” the argument put forth by the plaintiffs attempts to point out that this isn’t much of a limitation at all.

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This seems to me to be the lightest (not to say weakest) argument to this point. There just isn’t much meat behind this bone (no analogous case-law). On the merits, the law certainly doesn’t prevent out-of-state buyers from purchasing the team, but it gives something of a right-of-first-refusal on that score. What I’d have love to have seen is maybe a bit more fleshed out on whether such a restriction has been previously found to be valid, but I understand this law has never been tested, so there is no precedent. Perhaps I’ll inquire on this and try to dig into this a bit more.

The last point addressed in this section is with regard to the “six-month waiting period.” The argument posited here is that this limitation is based on the agreement of the defendants to accept public funding.

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Again, on the face of it very persuasive. My thoughts on the notice issue as a factual matter have been pretty forceful; fair to say I’ve given the defendants a hard time on it. Facially, I’d lean towards the validity of such a provision. Really I suppose we’re trying to determine if the time frame itself is unduly restrictive. Which leads (quite nicely) into the section where we need to decide of the burdens are incidental and outweigh by public benefits.

Argument: The burdens imposed by ORC 9.67 are incidental and outweighed by significant public benefits.

The plaintiffs begin their argument here with a discussion of the public policy reasons behind the implementation of such laws.

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This is designed to show the substantial public benefit of these laws; preventing white elephant stadiums (we’ve all seen them). Of course, this as a public policy argument is extremely persuasive, so we next move on to the supporting law.

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I haven’t had a chance to review the cases cited, so I’ll refrain from a specific opinion on the viability of this argument right now. Specific performance is usually a remedy when financial remedies are not sufficient. Sure, defendants could probably reimburse the government for the money expended, but that doesn’t allow Columbus to keep their team (we’ll get to this shortly). In some ways, I wish the Seattle Supersonics case hadn’t settled; it would have provided useful case-law for this matter.

That aside, the plaintiffs then move on to the point that the law is not particularly burdensome in that it does not prevent outright the relocation of the team.

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This is obviously a very important point: An outright ban is probably going to have you run afoul of the DCC. Next, As referenced earlier, the plaintiffs argue that a simple “refund” of monies expended is not sufficient.

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I suspect this will be an argument reserved by defendants as a last resort. Which is probably why the plaintiffs are trying to cut it off at the pass.

The final argument goes along the lines of the law being constitutional, because the discriminatory intent (if any) is not related to “economic protectionism” and otherwise justified by a legitimate purpose that cannot be enacted with other reasonable, less restrictive means.

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So the question for everyone: Is there statutory language or remedies that could be enacted that could adequately protect the taxpayers that is less restrictive than the language here? As I mentioned above, recoupment of funds received by the private entity may qualify, which is why the plaintiffs went to such lengths to explain why simply repayment of funds in a sporting context are insufficient (it’s nice how this ties together).

Argument: The notice/opportunity provisions of the statute are not unconstitutionally vague.

The other oft-cited argument by the armchair attorneys (no offense; I include myself among the legions), I noted in my previous story is that the “vagueness” argument is a sort of catch-all. But that does not mean it isn’t a valid way to attack a claim.

The parties agree essentially (for once) on the definition of vagueness, though disagree on the standard.

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So the nuts and bolts here are probably going to revolve around opportunity to purchase, as I continue to believe that the notice portion of the statute is perfectly understandable. But before getting into that, plaintiffs reiterate the principle of statutory construction. In plain english, a statute need not spell out every little thing to survive a vagueness challenge, and the fact that interpretation may be needed is not fatal to a law (and in fact is what courts are for).

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This is basically the common-sense portion of the brief. In short, don’t make things too complicated; words mean what we think they mean. There are very few statutes that are so precisely worded that they could survive a strict reading of the vagueness principle. With that in mind, let’s take a look at what the plaintiffs have to say about the specific “notice” and “opportunity to purchase provisions.”

NOTICE:

My feelings aside, the plaintiffs cut to the quick here, arguing that the notice provision requires none of the gymnastics the defendants attempt to show, and essentially use the defendants’ own conclusion against them.

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As I’ve previously said, this really appears to be the most straight-forward part of the statute, and the only confusion centers around *when* the defendants are going to argue the six-month period started running. But the language in the statute itself is quite clear.

OPPORTUNITY:

I think most would agree that the “opportunity to purchase” is not nearly as straight-forward, and the plaintiffs appear to concede that point (though not the issue) in their argument, arguing that more that the defendants have not cleared the high-hurdle required to prevail, as opposed to defending the “vagueness” of the language.

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I think it’s fair to say this is where some weakness in the plaintiffs’ briefing lies. If the court agrees with the standard argued for by the plaintiffs, they’ll likely survive here. If not, there could be trouble on this argument. The defendants’ reply will prove instructive. Also, I’ll have to go back and look at “right-of-first-refusal” language. As the defendants will probably note, this isn’t a case involving contracts or options.

AREA (Local):

I almost skipped over this, because I really don’t see much of an argument for vagueness here. But in the interests of thoroughness, the plaintiffs address the issue, arguing that the defendants are being a bit obtuse.

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This seems pretty understandable and common-sense, which is a fatal combination for vagueness claim.

Finally, the plaintiffs address the issue raised by the defendants that the vagueness of the statute leads to judicial oversight which could lead to conflicting or discriminatory decisions.

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An interesting argument, essentially saying that it is the actions of the defendant which will necessitate the regulation/oversight from the court, and not the statute. Obviously courts have discretion to compel compliance with statutes and orders. I suppose I would wonder whether that inherent authority extends to the type of interpretation of language in the “opportunity to purchase” which is at issue here. But maybe I’m getting too much in the weeds.

Argument: Defendants do not have standing to challenge the law as a violation of the Privileges and Immunities clause, and even if they did, defendants reading of the law is overly broad and fails to state a claim.

Oh man, is this a mouthful. And it would break the scale on “obscure legal theories nobody argues.” Let’s try to get through this…down the home stretch!

CORPORATIONS…AREN’T PEOPLE?

As an initial matter, plaintiffs argue that defendants don’t even have standing to challenge the Modell law under this theory, because as a corporation, they aren’t allowed to raise this issue. Further, they haven’t made a showing that they’re able to assert a claim on behalf of another party.

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I haven’t done a deep dive on the case-law here (and I would question the life choices of anyone who has; I kid), so I will circle around to this at a later date. And aside from worrying that this case will come to the Supreme Court and they’ll further expand Citizens United, if the court sides with the plaintiffs on the standing issue, there won’t be any need to address the underlying merits of the claim. But as to that, the plaintiffs basically argue that the defendants misinterpret the law, saying that the protections under Privileges and Immunities go to those rights that essential to the fabric of the country (the right to travel between states).

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It’s absolutely true that the law does not prevent out-of-state buyers from making an offer. The law would essentially bind future owners to use of the stadium, absent an agreement to the contrary. Defendants try to stretch that to cover a “pursuit” of economic opportunities, and the limits imposed by the law, which is where the plaintiffs argue that the defendants are being overly broad. It’s not pursuit of economic opportunities generally, but more specific to the situation in this case: Purchasing a team that plays in a facility supported by public dollars.

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So will the Court buy the more limited argument of the plaintiffs here? It’s an interesting argument to be sure, and it turns on whether the Court believes the defendants interpretation is indeed overly broad. If it is, the plaintiffs look good here, and that again presumes the defendants can withstand the argument on standing.

BALANCING TEST:

In the event that the court were to hold that the defendants are pursuing something that could be characterized as a “fundamental right,” plaintiffs next argue that there is still a balancing test which could swing this argument in their favor. In the event the law were to run afoul of the Privileges and Immunities clause, it could still be held to be valid, where it was the (local) taxpayers who provided the funding in question.

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Huh. So I’m not going to pretend I’ve run though all of those cases, but that public records argument…that leaves me a bit intrigued. Without having gone in-depth, I took a quick look at McBurney, which has to do with priority for Freedom of Information Act requests. In that case, non-Virginia state residents attempted to get information from the State (Commonwealth, I know) of Virginia. After they were rejected, the sued and went to the Supreme Court, who held that non-state FOIA request were not “fundamental rights,” in a unanimous opinion no less. Huh…I think I’m impressed. Keep in mind since this is a case of first impression, you never know where the court will get its inspiration for a ruling from.

Argument: The Court should set aside defendants’ claims on Contract and “Takings” issues as they are raised as matter of constitutional avoidance.

So I’ll try to explain as best I can here (and I may end up confusing myself). First, the doctrine of constitutional avoidance basically says the court should avoid making determinations on constitutional grounds, when there are other “lesser” bases on which to make rulings. Even if there are valid constitutional claims. I’ve attached the argument from plaintiffs, as well as the section they reference from defendants’ brief.

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It’s an extremely technical argument (even if the plaintiffs characterizes them a substantive), and I didn’t think I’d be reviewing constitutional avoidance doctrine, well, ever. To try to illustrate the point, plaintiffs’ argue that the defendants claims on this issue are speculative and premature.

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This is an interesting way of turning PSV/MLS’ inability to formalize plans against them. Since there is at this point no actual plan to move the team (and thus implicitly no violation of the statute…yet), this claim is not yet ripe, and therefore not available for argument.

NO TAKING:

Plaintiffs next stress that there is no plan to seize the team through eminent domain, because the statute does not authorize such a thing. It should, plaintiffs argue, be seen as more of contract.

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It’s pretty straight-forward on this point; assuming the court agrees that by agreeing to accept public funding/assistance, PSV/MLS essentially entered into a contract of course. The other interesting point that I raised in my review of the defendants’ brief was on the issue of State law allegedly being superseded by local ordinances. This appears to be a case of the parties just arguing completely opposite things.

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If this isn’t an eminent domain case as to real property, then I’m not seeing the case here for the defendants. Of course, there is the issue of the “intangible property” of Crew SC/MLS, which is apparently located somewhere in Delaware or New York.

As to the issue of taking intangible property, the plaintiffs dismiss those arguments as beyond the scope of what was pled in the compliant, and therefore inappropriate to bring up in a motion to dismiss.

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The case-law is pretty solid here, especially in light of the fact that the facts pled by the defendants are not supported by any evidence (and, as defendants point out not subject to review through the discovery process). So, we move on to the final responsive section from the plaintiffs.

Contracts Clause:

Plaintiffs fire with both barrels on the Contracts Clause claim. First, they argue that the defendants aren’t challenging the substance of the law here but rather the remedies available. Thus, it is premature and speculative at this point. Further, the law couldn’t impair a contract, because the law was in effect before the contract (for purposes here, the acceptance of public funds).

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Assuming we are in fact dealing with a “contract,” it’s true that it (again, the acceptance of public funds) wasn’t in place when the Modell law was passed. So this seems to more turn on whether the court finds this “transaction” is a contract.

Probably the most persuasive (to me) argument on the Contract Clause issue is this simple fact: How is the court supposed to analyze if the statute impairs the contract, when the contract isn’t in evidence?

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I suppose I could have gone without highlighting most of it and just left it as is. It’s all pretty devastating to the defendants claim here on the Contracts Clause violation. Plaintiffs follow-up thusly:

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I would definitely consider this a high point of the brief, in terms of persuasiveness. It’s also the end of the brief, so good to go out on high-note, so to speak.

That is about it for my review of the plaintiff’s response to the motion to dismiss. Next, the defendants will get the last word by way of a reply. That reply must stick to addressing issues raised by the plaintiff’s responsive motion. So look to see if new facts are raised; that could cause things to get really messy. I hope this was helpful in providing some insight into the case. We’re not done yet.

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