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Oral arguments held in Ohio’s case against PSV and MLS

What went down in Tuesday’s hearing involving the “Modell Law”?

San Jose Earthquakes v Columbus Crew Photo by Jamie Sabau/Getty Images

Tuesday was finally the day when Anthony Precourt, MLS, Columbus and the state of Ohio took their arguments to court. Oral arguments were held today on Precourt Sports Venture and MLS’s April motion to dismiss Ohio and Columbus’s lawsuit to invoke the “Modell Law” in Ohio Revised Code 9.67. For a full rundown of the hearing, check out Miki Turner’s excellent live blog of the proceeding.

As the moving party, the arguments began with PSV and MLS. In these oral arguments, each side is given 45 minutes to make their case. PSV and MLS set aside 35 minutes to argue their reasoning and then asked to reserve 10 minutes for rebuttals to Ohio and Columbus’ arguments.

PSV and MLS began by summarizing their reasoning for dismissing this lawsuit. As they said in the motion brief filed in April, PSV and MLS have two key arguments for dismissal: 1. the statute does not apply; and, 2. the statute is unconstitutional. For a more in depth look at PSV’s arguments check out our review of the initial motion to dismiss.

Argument 1: ORC 9.67 does not apply because MLS has received no financial benefits from Columbus or Ohio

The crux of PSV and MLS’s argument that the statute does not apply is that the owner of Crew SC, MLS, has not received any non-stadium related financial benefits. ORC 9.67 applies to owners of a sports team that plays in a tax supported stadium (which all parties concede applies to MAPFRE Stadium) and that receives financial benefits from the public. MLS and PSV argued that MLS, the owner of the team, did not receive any financial benefits from the public for the operation of Crew SC and that even if Precourt did receive benefits, those benefits did not actually impact MLS.

Judge Brown easily saw through this argument. The Judge asked MLS and PSV how Precourt receiving financial benefits would not actually benefit MLS, and after a few minutes of hemming and hawing there was no real response. By asking this question, Judge Brown provided a slight hat tip as to his feelings on the benefit issue. From this line of questioning, it seems that Judge Brown thinks this benefits issue is more an question of fact rather than an question of law. Issues of fact, while important, are not to be determined in a motion to dismiss and should be handled by a jury.

During Columbus and Ohio’s response, they raised the “question of fact” issue with Judge Brown. The plaintiffs do offer that there was at least one non-stadium benefit given by Columbus to PSV (a tax abatement) and that discovery would be necessary to determine whether any other local municipalities (such as Obetz with the Crew’s training facility) provided PSV with financial benefits.

Potentially catching the blunder-bug from PSV, the MLS attorney made a hilariously ineffective argument that any benefits Precourt received did not even indirectly benefit MLS. MLS’s attorney argued that Precourt receiving benefits is akin to the attorney’s daughter receiving a scholarship, it’s nice but it ultimately doesn’t benefit the attorney. Judge Brown immediately disagreed with this absurd conjecture quipping “Oh, yes you do.” The Judge seems to suggest that any benefits received by PSV would at the very least indirectly benefit MLS. Whether there were any benefits would be determined at trial.

Argument 2: ORC 9.67 is unconstitutional

PSV and MLS also pushed their multi-part argument that ORC 9.67 is unconstitutional. In the hearing, this argument appeared in two parts: 1. the statute is vague; and, 2. the statute violates the dormant commerce clause.

The defendants have a very high burden to prove in their unconstitutionality argument, and the Ohio rules of statutory construction presume constitutionality.

There was no particularly compelling argument that the statute was vague. In their response, Ohio and Columbus clearly articulated that a statute is only vague if it is incomprehensible to someone of common intelligence. Under this reading it is very unlikely that the statute is deemed unconstitutional due to being too vague.

PSV and MLS’s most compelling argument of the afternoon centered on their contention that ORC 9.67 violates the dormant commerce clause. The defendants argued that the statute represents an unconstitutional interference into commerce by Ohio in the portion of 9.67 that limits the offering of the team to “local” buyers during the six-month notice period. The dormant commerce clause prevents a state from benefiting its own citizens over citizens from another state.

Ohio and Columbus’ responded to this contention by arguing that PSV’s acceptance of local funds justifies the government market participation. By accepting funds, PSV and MLS agreed to the terms of ORC 9.67 even if they didn’t read the law. Ignorance of the law is not a defense in this or any situation.

What’s next?

Ohio and Columbus mentioned multiple times that PSV and MLS have not met the high burden of proof to show that this lawsuit should be dismissed before it goes to trial. This is what Judge Brown must decide as he waits to make his decision on the motion. From today’s hearing, it seems unlikely that PSV and MLS have met their burden to prove that this lawsuit should be dismissed, but we’ll have to wait for Judge Brown’s decision (due within 90 days).

If the motion is dismissed, the discovery phase will start with both parties then making their arguments for summary judgment. If the motion is granted, it’s up to Ohio and Columbus to decide whether they would like to appeal or whether they will let this decision sit. Either way, stay tuned for a full analysis of Judge Brown’s decision.