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Power Ranking of Precourt and MLS’s arguments against Columbus

We take an in-depth look at PSV’s motion to dismiss.

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After a month of waiting, Precourt Sports Ventures and Major League Soccer have finally filed their official “response” to Attorney General Mike DeWine’s lawsuit.

After some rabble-rousing on social media as to whether the motion was leaked to the Austin Statesman before it was filed, and whether PSV and MLS beat the 11:59 pm filing deadline, the Franklin County Courts online site updated the case this morning to show that PSV had filed it’s first motion to dismiss.

From the official copy of the filed motion, we can see that the motion was actually filed at 5:40 p.m. ET yesterday, nearly two hours before the Statesman went live with their story.

The motion to dismiss can be found here. Additionally, the Statesman was nice enough to post their leaked copy (conspicuously without timestamps) after other members of the media received official copies.

When reading this motion or any other legal argument, it’s important to remember that when submitting these documents, attorneys throw every single argument at the issue that they can and hope that one or more arguments stick. This means you’ll occasionally get a weak or potentially silly line of reasoning. One weak argument among many is not necessarily a reflection of a poor legal strategy, but instead a way to cover all the bases and not prevent the party from making that argument further down the road.

This motion itself does not preclude future motions to dismiss or future motions for summary judgment. It would not be surprising for PSV and MLS to file another motion to dismiss arguing that they are already in compliance with the law and the suit is no longer necessary.

In total, there are two overarching arguments:

1. ORC 9.67 is unconstitutional

2. ORC 9.67 does not apply in this situation

Let’s get right to the motion.

Instead of a chronological review of the motion, I’ve made a power ranking of each argument’s strength from most likely to succeed to least likely to succeed.


1. Taking

PSV and MLS claim that a reading of ORC 9.67 that forces a sale of the team via judicial oversight of a process that requires PSV to accept any offer that the judge deems “reasonable” would constitute an unconstitutional taking of PSV/MLS’s “intangible” property.

There are two big points here: 1. PSV/MLS argue that Crew SC is not a physical property but rather an “intangible” property and, 2. PSV/MLS argue that the lack of an enforcement structure in the law could result in judicial oversight that would result in the unconstitutional taking of that intangible property. That’s a mouthful. Simply, the argument is that PSV/MLS would be forced to sell something that they don’t want to sell.

Above is PSV’s argument and it’s pretty compelling. Without going too far, the argument is that Crew SC itself is an intangible asset. The team has physical property, but itself is not physical. This is compelling.

For the second part, this is more or less PSV/MLS’s response to what I am calling the Ohio Statutory Construction theory.

In brief, this theory suggests that the Ohio laws of Statutory Construction mandate that ORC 9.67 be read in a way that requires a judge to oversee the process of PSV providing offerors who “reside in the area” with a “reasonably opportunity” to purchase the team and would force PSV to accept any offer that the judge deems to be “reasonable” or of some yet-to-be-determined fair market value.

This is both the most interesting and most compelling of PSV’s arguments. While I disagree that the law should at all be read this broadly, if it is then it’s clearly an unconstitutional taking. Allowing this law to be read as such and then enforcing the law with this broad of a reading would result in a private entity (PSV/MLS) being forced to sell their private property (the team) to another private entity (local offerors) for a value determined by a judge. Using eminent domain to this is absolutely an unconstitutional taking of intangible property, clearly in violation of Ohio law.

2. Dormant Commerce Clause

PSV and MLS allege that ORC 9.67 violates the Commerce Clause of the U.S. constitution and is thus unconstitutional. As the motion sates, the doctrine of the dormant Commerce Clause prevents states from making laws that directly regulate interstate commerce, discriminate against interstate commerce or favor in-state interest over out of state interests.

Specifically, PSV/MLS argue that this law favors citizens of Ohio over citizens of other states by giving Ohioans first opportunity to purchase the team and limiting the movement of private property by preventing the team from moving whenever it wants.

The test as to whether a law violates this doctrine is two-pronged: 1. does the law discriminate on its face against interstate commerce and, 2. if not overtly discriminatory, does the law’s burden on interstate commerce outweigh the local benefits. If both answers are “no” then the law passes constitutional muster.

So, is this law discriminatory against interstate commerce on its face? That is a tough question. The law is narrow and only applies in limited circumstances (playing in a tax-supported stadium, receiving financial support, AND wanting to move the team). If Antony Precourt had no desire to move Crew SC, this law would not apply and he would be free to sell to any ownership group regardless of which state they lived.

From a narrow reading of the law, there are only two burdens to PSV’s desire to sell the team to an out of state investor after announcing that he intends to move the team OR to move the team itself. Those are the six-month waiting period and the requirement that the owner give those in the area the “opportunity” to purchase the team.

It’s a tough argument either way, and it will be at the judge’s discretion whether this law is discriminatory. Realistically, there are compelling arguments on both sides. Personally, I lean toward this aspect of the law NOT being discriminatory because it only applies in narrow circumstances and doesn’t actually prevent the team from being moved or sold to an out of state buyer. That said, this could easily be the cannonball that sinks DeWine’s lawsuit.

3. The Modell Law does not apply because PSV does not own Crew SC (MLS does) and MLS is not currently receiving financial assistance from Ohio or Columbus

In this argument, MLS and PSV argue that for ORC 9.67 to take affect, two conditions must be met for the “owner” of a professional sports team: 1. the team must play “most” of its home games in a “tax-supported” facility and, 2. the owner “receives financial assistance from the state or a local political subdivision.”

MLS doesn’t argue that that the stadium itself is not a tax-supported facility. Instead, they argue that: 1. PSV doesn’t own the team, MLS owns the team; and, 2. MLS does not receive financial assistance from MLS.

Owner?

The conjecture that PSV doesn’t actually own Crew SC is the most shocking (and the butt of many a joke) but it more or less makes sense for the sake of argument. MLS does operate under a unique single-entity structure where the league owns all contracts and that grants licenses to run teams to it’s individual “investor/operators,” similar to the way fast food franchises run.

You’ve by now probably seen that Precourt labeled himself as the “owner” of the team on his personal Twitter until early Friday afternoon.

All jokes aside, this argument does not play a particularly large role in determining whether the “owner” of Crew SC “receives” financial assistance. Precourt is more likely than not an owner of the team if not the owner, and as an owner who was permitted to make financial decisions and operate the team, the statute could be read in a way that includes Precourt’s relationship with the Crew into the definition of “owner.”

Financial Assistance

MLS/PSV argue that the “receives financial assistance” provision should narrowly be read to be currently receiving financial assistance and not to have at one time received financial assistance. This makes sense. Read literally, “receives” does indicate that the “owner” is actively receiving financial assistance.

Where this argument takes an interesting turn is whether MLS (or PSV for that matter) currently receives financial assistance from Ohio or Columbus. MLS argues that all current financial assistance relate to the stadium, and therefore only fulfill the “tax-supported facility” clause of ORC 9.67. They run through all of the types of assistance received including funds for the parking lot, a new sewage system and the stadium’s lease. However, is the parking lot considered part of the stadium? Does the lease on the Obetz training facility count as receiving financial assistance? Is there another form of financial assistance that we don’t know about? These questions likely need more evidence to evaluate and while interesting, are not likely to be the reason this motion might be granted.

4. Privileges and Immunities

The defendants claim that ORC 9.67 violates the Privileges and Immunities clause of the U.S. Constitution and is therefore unconstitutional. The Privileges and Immunities Clause prevents a state from treating residents of other states differently than residents of that state.

The easiest way to think of this clauses’ impact is in terms of a driver’s license. The Privileges and Immunities Clause is what makes other states accept your driver’s license.

Specifically, PSV/MLS argue that because ORC 9.67 gives Ohio residents the “opportunity” to purchase the team before the team can be moved, it discriminates against citizens of other states.

As with the dormant Commerce Clause, there is a two-pronged test to determine whether a law violates the Privileges and Immunities clause: 1. does the law discriminate against people from out of state regarding a fundamental right (purchasing property is one of those rights); and, 2. is the discrimination justified.

The same basic reasoning applies here as did our dormant Commerce Clause analysis — nothing prevents citizens from other states from also negotiating on the purchase of the team, it only mandates that Ohio residents have the opportunity to purchase the team during this period.

Because this law only applies in specific circumstances and does nothing more than mandate that the potential seller of the team listen to an offer from Ohio residents when intending to move the team, it’s hard to argue that this law discriminates against out of state residents to any substantial degree.

5. Contracts

PSV and MLS argue that a forced sale under the Ohio Statutory Construction theory would be a violation of the Contracts Clause of the U.S. Constitution and the Ohio constitution. The Contracts Clause prevents states from making laws that impair the obligations of contracts.

Specifically, MLS and PSV argue that the forced sale of PSV’s rights to Crew SC to a third party would violate the contract between other MLS “investor/operators” where they have the ability to determine who is permitted to become an MLS owner.

Again, I think the Ohio Statutory Construction theory reading of this law is way too broad, and I doubt that a judge will read it as such. That said, if it is read this broadly, I would imagine that this is not one of MLS’s strongest arguments.

6. Vagueness

This specific portion of the motion is of particular importance. MLS and PSV provide a citation in which an Ohio court recently held that when a law uses undefined terms, those terms should be given their “plain and ordinary meaning.” This makes a lot of sense and pokes a giant hole in the State’s contention that this law must be read in concert with some convoluted Ohio laws of statutory construction. It also pokes some giant holes in PSV/MLS’s own claims that specific portions are vague.

The contention here is that ORC 9.67 is vague in three specific areas and should thus be deemed unconstitutional: 1. notice; 2. local area; 3. opportunity to purchase.

Notice

For “notice,” PSV and MLS volley back Columbus and Ohio’s claim that notice hasn’t actually been given and argue that if “notice” is such a vague term that they have no idea to whom to give notice. Unfortunately for the defendants, the text of the law itself shoot this down, as does the “plain and ordinary meaning” language from earlier. This is probably the worst argument that both the Plaintiff and Defendant have made. Notice has much more likely than not been provided in this situation and the term itself is likely not vague.

Local Area

PSV and MLS also argue that the phrase “who reside in the area” is so vague that the case must be dismissed. This is also nonsense. From it’s plain meaning, “area” can easily be interpreted to mean the metropolitan area in which the team plays. This one is going nowhere.

Opportunity to Purchase

Finally, PSV and MLS argue that the phrase “opportunity to purchase the team” is also too vague. From a plain reading, opportunity to purchase simply means actually listening to offers. Of course, if an offer is not up to the standards that PSV wanted, there would be no requirement to sell. Even if an offer was for much more than PSV wanted, the decision to sell is up to the owner of the team, though that has become much less clear.


Thanks for reading all that. Thoughts? Questions? Where do you rank these arguments?