June 18, 2013
In this third installment on e-discovery and league sports, we look specifically at the relationship between the team and its owners.
The Team and its Owners.
Just as an agent is a fiduciary to its clients, the team owners may have a fiduciary duty to the team, including the duty to produce personal emails involving team issues. This was the holding of City of Seattle v. Professional Basketball Club, a case resulting from the relocation of the Seattle Supersonics to 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 owners. PBC produced approximately 150,000 emails from two of the eight owners, and then argued that the remaining six members’ emails would be prohibitively expensive and produce duplicative and irrelevant documents. The City responded with a motion to compel production from the remaining owners. While acknowledging the emails may not be admissible, the court 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 . . .
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.
In our next, and final post on league sports and e-discovery, I will discuss the relationship between the individual teams and the leagues that govern them.