Knicks argue lawsuit against Raptors should stay in court

The New York Knicks argued against the wishes of Maple Leaf Sports & Entertainment to move their lawsuit to an NBA-run arbitration and made its case to a U.S. judge as to why their lawsuit should remain in federal court in a filing Monday.

MLSE, the parent company of the Toronto Raptors and the defendants in this suit along with Raptors coach Darko Rajaković and assistant coaches Noah Lewis and Ikechukwu Azotam, asked Judge Jessica G. L. Clarke last month to let the NBA and commissioner Adam Silver determine their dispute and move their case into arbitration decided by the league, arguing that the NBA’s constitution binds both teams to that venue. The Knicks asked the judge to decline that request and keep the lawsuit in federal court.

The Knicks filed the suit in the Southern District of New York in August, also naming 10 John Does who remain unnamed. The franchise says that Azotam, a former team video coordinator, was recruited by Rajaković to go to the Raptors and to take scouting reports and over 3,000 video files with him to Toronto. He was hired by the Raptors in August. The Knicks filed their lawsuit nearly a week later.

The Knicks allege that those reports and files were the team’s proprietary information.

MLSE, Rajaković, Lewis and Azotam, responding collectively, have denied all accusations and said they were “baseless” in their October response to the lawsuit. The Raptors declined any further comment Monday; an MSG spokesperson reiterated the company’s position that there had been a violation of criminal and civil law. The Knicks claimed in their filing Monday that their damages exceed $10 million, and they will also seek to recoup attorneys fees — another reason why they argue that NBA arbitration is not the right forum for their suit since the NBA Constitution caps the penalty a commissioner can impose at $10 million.

The Knicks argue that the NBA Constitution arbitration clause is overly broad — claiming that the league’s arbitration is the kind of “infinite” clause that courts have previously chosen not to enforce — and that the constitution is meant to deal with issues pertaining to the league’s operations and not what the Knicks say is at issue here.

“Contrary to Defendants’ claims, this is not a dispute about basketball operations,” lawyers for the Knicks wrote in their filing. “There is no nexus between the claims and the NBA Constitution — it is a dispute about the theft of trade secrets by a disloyal employee, a scenario not contemplated by the NBA Constitution.”

The club said in its filing that Azotam’s contract states any legal dispute he is involved in must be held in the state of New York in U.S. federal court.

“The parties never contemplated matters falling outside the NBA Constitution — much less disputes concerning intellectual-property theft — to be arbitrable,” lawyers for the Knicks wrote in the filing Monday.

The Knicks argued that the NBA has already rejected an opportunity to try to decide this dispute. NBA general counsel Rick Buchanan sent a letter to the Raptors and Knicks in September after the Raptors tried to claim Silver’s jurisdiction, through the NBA Constitution, to settle the dispute — while the Knicks opposed that.

“The league will abide further proceedings in the S.D.N.Y. court for a determination of whether this dispute should be adjudicated in federal court or before the Commissioner,” Buchanan wrote to lawyers from both teams.

The club also claimed that Silver is incapable of properly holding a fair hearing between the two franchises if he were to serve as arbitrator. The filing takes aim at Silvers’ close relationship with Larry Tanenbaum, a MLSE minority owner and its chairman of the board. Tanenbaum is also the chairman of the NBA’s board of governors, a position he has held since 2017 and was re-elected to in 2022.

Silver, the Knicks claim, is “conflicted” and can’t replace himself as arbitrator. The filing cited quotes by Silver where he called Tanenbaum his boss and a role model.

“In practice, his elections have been performative,” the Knicks’ filing said. “It is the NBA — led by Commissioner Silver — that handpicks the candidate for Chairman, a selection that is submitted by the league to the Board of Governors without an opposing nominee, thus leaving the Governors with no other option. In his capacity as Chairman, Tanenbaum serves as Silver’s boss and exercises control over and heavily influences Silver’s continued employment and salary.”

The NBA has kept an arms-length approach in public. Silver declined to offer substantive comment on the suit in September. The NBA declined to comment.

“I think this ultimately may end up in front of me, so I think it’s appropriate for me to withhold judgment,” Silver said then when asked about the lawsuit.

The Knicks’ filing Monday took an acerbic tone. Along with claiming that MLSE’s case is “baseless,” it also described their previous motion to compel arbitration as “shrill.” This comes after MLSE called the Knicks’ initial lawsuit a “public relations stunt” that was wasting judicial resources, noted that defendants didn’t know about the lawsuit until it was reported on in the news, and took the effort to point out a typo by MSG Sports general counsel in one of its emails with the league.

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(Photo: Nathaniel S. Butler / NBAE via Getty Images)