While control of two branches of the federal government is the most important issue at stake in America this week, control of an NBA franchise and a WNBA franchise is also on the ballot—at least the ballots of three arbitrators tasked with deciding the future of the Minnesota Timberwolves and Minnesota Lynx.
Retired Hennepin County (Minn.) District Court Judge Thomas Fraser, retired Minnesota Supreme Court Justice Kathleen Blatz and Wilson Sonsini partner Joseph R. Slights III will preside over a confidential arbitration proceeding intended to resolve the disputed ownership of these two franchises. Current Timberwolves owner Glen Taylor and a group led by Alex Rodriguez and Marc Lore both claim they’re the controlling owners.
The dispute stems from an atypical purchase arrangement in 2021, when Lore and Rodriguez agreed to buy the Timberwolves and Lynx from Taylor for about $1.5 billion. Instead of a purchase-and-sale that, pending NBA approval, would have transferred a controlling interest to Rodriguez and Lore, the deal contemplated multiple stages of payment and a gradual conveyance of ownership. This arrangement has been called a tiered sale. The two sides successfully executed the first two stages, but the third part didn’t go so well. They disagree about whether Rodriguez and Lore made necessary payments in a timely fashion and, if not, the possibility of the deal being voided.
Their agreement contemplated alternative dispute mechanisms, including arbitration, to resolve any contractual conflict. Business owners usually prefer arbitration, which is confidential and usually overseen by experts, to litigation. The latter can compel individuals to give sworn testimony on sensitive topics and obligate the public sharing of emails, texts and other communications that individuals would prefer to keep private. Also, in litigation, a jury composed of individuals who lack familiarity with the subject matter or relevant knowledge can have final say.
The NBA is not a party to the Timberwolves dispute but has an obvious stake. While owners can agree to sell equity in NBA franchises to would-be buyers, the league and other ownership groups have final say over whether equity is transferred. The NBA constitution contains detailed procedures about the approval process, including the requirement that at least three-quarters of teams approve. As Sportico reported, Taylor subpoenaed the NBA a couple of months ago in hopes of obtaining evidence that supports his contractual interpretation. The Timberwolves’ ownership dispute could make the NBA more skeptical of tiered franchise sales, a relevant point as the Boston Celtics are up for sale.
The arbitration panel features one person picked by Taylor (Blatz), one by Rodriguez/Lore (Slights) and a neutral person (Fraser). All three have distinguished records as attorneys and legal experts. All have sports law ties, too. Blatz served as interim chair of the Minnesota Sports Facilities Authority in the late 2010s, Slights, as vice chancellor of Delaware’s Court of Chancery, presided over Roger Mason Jr.’s case against the Big 3, and Fraser was an attorney in Reggie White v. NFL, an antitrust case from the early 1990s that played an instrumental role in NFL players obtaining free agency rights.
Representatives for the parties will argue before the three arbitrators, who will attempt to recreate history as closely as possible. Most crucial to the arbitrators is ascertaining the parties’ intentions regarding their contract. While the dispute involves billionaires and the fate of an NBA franchise, it is an ordinary type of feud: disagreement about how to interpret contractual language.
Arbitration bears some resemblance to a courtroom proceeding in that rival parties argue competing points before a decision-maker, but there are many differences. For one, the setting will be a lot different. Arbitration usually takes place in an office or conference room and not the more intense, even intimidating, courtroom venue. Arbitration proceedings are usually less formalistic and more flexible, including in the admissibility of evidence. Arbitration can seem more akin to a facilitated discussion of competing viewpoints than the tightly structured and rule-intensive debate often found in courtrooms.
There will also be no judge or jurors for Taylor and Rodriguez/Lore’s attorneys to persuade. Their audience will be the three arbitrators, two of whom have been picked by rival sides and will be inclined to favor that side. The arbitrators are unlike ordinary jurors in a variety of ways. They are experienced attorneys with deep proficiency in the law and how it ought to apply to the facts. In contrast, an ordinary juror is not trained in legal reasoning—in fact, such a characteristic often leads a person who has been selected for possible jury duty to be dismissed because they might sway jurors. Attorneys for Taylor, Rodriguez and Lore will need to fashion their arguments and style of persuasion accordingly.
The arbitrators’ expertise will also become important if the losing party attempts to challenge the decision in court. A judge would be sure to give them deference.
While arbitration is intended to be a final resolution of a disputed matter, a party can petition a judge to vacate the arbitration award (decision). The petitioning party normally faces long odds and undertaking the effort can prove expensive. But given the financial wherewithal of Taylor, Rodriguez and Lore, and given the stakes—ownership of an NBA team and a WNBA team—it would not be shocking to see the loser mount an effort.
The loser would need to identify a viable rationale for a court to vacate the arbitration decision. One argument could be that the arbitrators exceeded their contractual authority. The arbitration agreement likely contains specifics on procedure and areas of dispute that can be considered by the arbitrators in reaching a decision. If it appears the arbitrators went outside those boundaries, a court might be inclined to vacate the decision.
Another possible argument is the arbitrators’ decision is irrational given the evidence and testimony or, similarly, the arbitrators relied on materials and insights that were inapplicable or vulnerable to bias. Arbitrator decisions to exclude pertinent evidence and other materials could also form the basis of a petition to vacate if those decisions appear egregiously wrong in light of basic legal principles.
To be clear, none of those rationales would likely succeed. Although courts are not supposed to “rubber stamp” the interpretations of arbitrators, judges have acknowledged the review process is “highly deferential.” The granting of motions to vacate have been described by judges as “rare” or “exceedingly rare.” Still, a challenge of the arbitration award would elongate the legal controversy over the Timberwolves’ ownership by months and possibly longer. Fans of the Timberwolves and Lynx, as well as the NBA itself, will be watching.
Eben Novy-Williams contributed to this column.