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MASN, MLB continue to squabble over discovery in more court filings

In the ongoing legal saga between the Nationals and the Mid-Atlantic Sports Network, both sides continue to squabble over discovery procedures. MASN, which is majority operated by the Baltimore Orioles, has argued in court filings that it should be granted access to documents in order to prove claims at the heart at its legal challenge over television-rights fees. Major League Baseball has disagreed.

In court documents filed Tuesday night, MASN attorneys struck back with their final rebuttal before a Dec. 15 hearing. MASN’s most telling argument hinges on a $25 million payment from MLB to the Nationals. MLB advanced the money to the Nationals, the difference between what MASN was willing to pay in rights fees and the amount an MLB arbitration panel had ruled this summer that the Nationals were owed by MASN. That payment, MASN attorneys argued, is proof of the motives of MLB and incoming commissioner Rob Manfred, who was then acting as Bud Selig’s top lieutenant.

“MLB had a vested financial interest in the arbitration’s outcome: it advanced the Nationals $25 million in a secret deal, which provided that MLB would recoup its funds from the inflated proceeds of the award,” MASN attorneys wrote in the most recent filings. “In doing so, MLB acquired a direct financial stake in the Award and with it a powerful incentive to ensure that the [MLB panel] would return an Award more favorable to the Nationals.”

The disagreement over discovery is an underlying issue in the main dispute. A New York Supreme Court judge is weighing the validity of the June ruling by the MLB’s arbitration panel. The panel ruled the Nationals are due nearly $300 million in rights fees during the “reset period” of 2012-2016, but MASN has argued, among many things, that the arbitration process was tainted and laced with conflict-of-interest concerns because of a legal firm involved with the MLB panel.

In order to prove that, MASN has asked for documents from MLB about Manfred’s role and the panel’s correspondence. MLB has claimed that Manfred provided only administrative help to the three arbiters who made MLB’s ruling — Pirates President Frank Coonelly, Rays owner Stuart Sternberg and Mets Chief Operating Officer Fred Wilpon. MASN has argued instead that Manfred played a larger role and that MLB had an interest in the ruling.

In a Nov. 7 motion asking for discovery, MASN lawyers requested all correspondence between Manfred and the arbiters to prove Manfred’s role. MLB has disagreed, stating their argument for a denial of discovery in Nov. 19 filings.

“In a summary proceeding to vacate an arbitral award, discovery is permitted only in extraordinary circumstances where it is absolutely necessary to protect a party’s rights; that is not the situation here,” MLB attorneys wrote in the counter-filing. “Furthermore, fishing expeditions are prohibited in any case; yet MASN’s discovery requests are nothing more than that. MASN has produced no evidence to support its claim that MLB corruptly controlled the [MLB panel] members and fraudulently predetermined the outcome of the proceeding. All of the [MLB panel] members have submitted affidavits attesting that they reached their decision independently of MLB and exercised their own judgment in determining the fair market value of the Nationals’ telecast rights. MASN has offered no competing evidence. Nor has MASN offered any evidence that MLB acted fraudulently.”

As MLB tried to negotiate a solution to the issue, such as finding a third-party buyer for MASN such as Comcast, MLB agreed to make two payments to the Nationals. The commissioner’s office paid the Nationals $13,488,825 before August 2013 and then $11,085,313 on Aug. 23, 2013, according to a letter from Manfred to Nationals principal owner Ed Cohen that was filed in court. Manfred wrote in the letter that the MLB must be re-paid with any interest if the panel ruled or if Comcast bought MASN.

“I understand that in this litigation, MASN and the Orioles claim that it was improper for MLB, beginning in August 2013, to have advanced funds to the Nationals to make up the difference between, on the one hand, what MASN was willing to pay the Nationals for their telecast rights and, on the other, what the [MLB panel] had internally decided MASN should pay based on the fair market value of those rights,” Manfred said in a court filing. “These advances were fully justified, were done with the Orioles’ and MASN’s knowledge and encouragement, and were intended to allow additional time for the parties to negotiate a settlement. …

“Given the ongoing hardship to the Nationals, and to allow the settlement discussions to continue and avoid possible litigation by the Clubs or MASN, Commissioner Selig decided to alleviate that burden by advancing funds to the Nationals to reflect the difference (post-revenue sharing) between what MASN was then willing to pay and what the [MLB panel] had internally decided the Nationals should be paid under the March 28, 2005 Agreement. MASN and the Orioles were advised of the advances to the Nationals and were enthusiastic and supportive of the Commissioner’s actions, because they avoided possible litigation over the delayed [MLB panel] Decision and allowed the settlement discussions to continue.”

Because of the hangup over discovery, the MASN dispute will drag for months longer than previously expected. A New York judge will grant or deny discovery on Dec. 15, the date originally scheduled for a hearing on whether to vacate the MLB panel’s award. If discovery is granted, MLB will have until the end of December to hand over the requested documents. The hearing over the arbitration award’s validity, the original legal dispute, has been pushed back to March 2.