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Judge rules in favor of MASN and Orioles, tosses out MLB panel’s ruling for Nats

Managing partner Ed Cohen, left, talks with General Manager Mike Rizzo. Cohen is the Lerner family’s point person on the MASN dispute. (Jonathan Newton/The Washington Post)

A New York State Supreme Court judge on Wednesday tossed out a Major League Baseball arbitration decision that gave the Washington Nationals millions more in annual broadcast rights fees, a significant victory for the Baltimore Orioles-controlled network in the protracted dispute.

In vacating the June 2014 MLB decision, Justice Lawrence K. Marks suggested the Nationals and the Mid-Atlantic Sports Network settle the issue through an independent arbitrator or, if the concerns of impartiality are fixed, that they return to MLB’s arbitration panel.

The immediate impact of the judge’s ruling means the Nationals will receive $40 million in annual TV rights fees from MASN per year, $20 million less than the amount awarded by the MLB panel.

MASN broadcasts both the Nationals and Orioles games but the Orioles have a controlling stake in the network as part of a 2005 agreement brokered by baseball and then-commissioner Bud Selig to allow the relocation of the Montreal Expos to Washington. The D.C. area had long been considered part of the Orioles’ broadcast market, and Orioles owner Peter Angelos opposed the relocation.

The dispute over the size of the Nationals’ broadcast fees dates back to 2012, when the clubs were unable to agree on the Nationals’ rights fees.

The Nationals’ choice for legal representation — the New York firm Proskauer Rose — was questioned by MASN, because the firm also represented Major League Baseball and the three teams that made up the arbitration panel: the Pirates, Rays and Mets. Marks agreed with MASN’s concerns.

“Had MLB, the abitrators, the Nationals and/or Proskauer taken some reasonable steps to address petitioners’ concerns about the Nationals’ choice of counsel in the arbitration — or indeed any step at all — the Court might well have been compelled to uphold the arbitral award,” Marks wrote in the ruling. “… But MASN and the Orioles have established that their well-documented concerns fell on entirely deaf ears. Under the circumstances, the Court concludes that this complete inaction objectively demonstrates an utter lack of concern for fairness of the proceeding that is ‘so consistent with basic principles of justice’ that the award must be vacated.”

The MLB panel ruling from June 2014 awarded the Nationals nearly $300 million in TV rights fees during the 2012-2016 “reset” period. But now, the Nationals will continue to receive the payments under the current contract — the payments they disputed in the first place.

Marks could have sent the case back to the MLB arbitration panel or to an independent organization, the American Arbitration Association. Marks did not mandate the next move by the sides, but urged them to seek redress from a “neutral dispute resolution process.”

“While we are very pleased that the court vacated the award, and did so for good reason, it is unfortunate that we had to bring this matter to the courts in the first place,” said Alan Rifkin, an attorney for the Orioles. “Contracts are meant to be honored, and that includes honoring the integrity of the rights fee-setting process. We look forward to a fair and neutral process before an objective decision-maker in the future.”

An MLB spokesman said the league was reviewing the decision and had no further comment. The Nationals, on Thursday morning, had this statement:

“The Court rejected all of the Orioles’ challenges to the merits and reasoning of the [MLB panel] decision. The Court vacated the [MLB panel] decision solely because of the Nationals’ law firm representation. The Court has stated that the parties can proceed to a new hearing before the [MLB panel].  The Nationals look forward to a prompt resolution, so that the Nationals finally can receive the TV rights payments required by the parties’ agreements.”