Editor's Note: This is written by Mary Henderson, a licensed attorney who deals with contracts for a living. She is not a NBA CBA expert.
Let's take a look at the legalities of the situation with the Mavs and DeAndre Jordan
(I respectfully requests that the NBAPA hot link the Table of Contents for the next Collective Bargaining Agreement like a civilized legal body)
First up, the facts -- and how the rules apply.
Part 1: There's no written contract
Article 2 Section 1 requires that any player must enter into the "Uniform Player Contract" (which is Exhibit A to the CBA) before they are bound to play for a team.
The general terms for contracts, which are found under Article 2 Section 12 give us more details (and make us think the League Fax machine's likely to be blowing up tomorrow!):
Subject to Section 14 below, any oral or written agreement between a player and a Team concerning terms and conditions of employment shall be reduced to writing in the form of a Uniform Player Contract or an amendment thereto as soon as practicable. Immediately upon the consummation of any such oral or written agreement, the Team shall notify the NBA by facsimile or e-mail and provide the NBA with all economic terms of such agreement.
So why didn't the Mavs sign DeAndre when he committed? This is going to become Mavs' fans least favorite word for the next 12 hours -- the NBA has a "Moratorium Period," which is detailed in Article 2, Section 14.
Except as permitted in the next sentence, notwithstanding any other provision of this Agreement, no player and Team may enter into any oral or written agreement concerning terms and conditions of the player's employment, or reduce any such agreement to writing in the form of a Uniform Player Contract or amendment, during the Moratorium Period. The following shall be permitted during the Moratorium Period: (i) a player may accept any Required Tender, Qualifying Offer, or "Maximum Qualifying Offer" (as defined in Article XI, Section 4(a)(ii)) that is outstanding; (ii) a player and a Team may negotiate over the terms and conditions of a Player Contract or Offer Sheet that may be entered into following the conclusion of the Moratorium Period; (iii) a First Round Pick and the Team that holds his draft rights may enter into a Rookie Scale Contract; and (iv) a player and a Team may enter into a Player Contract, not to exceed two (2) Seasons in length, that provides for a Salary for each Salary Cap Year equal to the Minimum Player Salary applicable to the player (with no bonuses of any kind).
What does that mean? Unless one of the exemptions listed above applies, no one can sign free agents until the NBA closes their books, finalizes salary caps and luxury tax numbers and communicates those to teams. (Read: The NBA needs more and/or faster accountants.)
So one of those exemptions applies to the Mavs, right?
Unfortunately, no -- because DeAndre Jordan was an unrestricted free agent, not a previous member of a Mavs team, a restricted free agent or a rookie, they were ineligible to sign him during the Moratorium period.
The rules on this are under Article 11, Section 1 (a) (i):
"An Unrestricted Free Agent is free at any time beginning on the first day of the Moratorium Period to negotiate, and free at any time after the last day of the Moratorium Period to enter into, a Player Contract with any Team."
Part 2: But there was a verbal agreement!
Article 2, Section 14, on the "Moratorium Period" expressly forbids oral agreements during this time from being binding. Therefore, DeAndre's commitment to the Mavs was more of a gentleman's agreement than a binding one.
So what comes next? DeAndre signs with the Mavs and Dallas fans everywhere rejoice or he signs with the Clippers and Mavs fans fall into a pit of despair.
Obviously, if he signs in Dallas, there's not much else to talk about. But if he goes back to Los Angeles, and the Mavs or Mark Cuban were to seek some kind of recourse, there are a few possible options for what could come next.
Like most employment agreements, the CBA contains very strict provisions on the procedure that must be used if someone wants to challenge any of the provisions. The CBA has a whole Section (32, if you were curious) on the procedures and terms.
First, you have to go through arbitration. Arbitration is a form of alternative dispute resolution that is used instead of suing and going to court. Basically, when you have an issue with the CBA, you and the NBAPA go to sit in front of "The System Arbitrator" who basically serves as a judge. The System Arbitrator can compel witness testimony, production of documents, basically everything you'd do in a lawsuit.
Second, you get a decision. Maybe. The System Arbitrator has the ability to render a decision based on the facts gathered. This decision is binding upon the parties, unless they decide they aren't the right person to decide the issue (for the legal types out there: they don't have jurisdiction), in which case they bounce it to the U.S. District Court for the Southern District of New York (also known as the federal trial court for the NBAPA's home base).
So what do the Mavericks do?
Generally, the CBA applies only to the relationship between the League and the players. So, if the Mavs wanted to challenge under the CBA -- which is a very big if -- this is how it'd go down.
If Cuban wanted to do it personally, he has more options. I'm going to throw out a couple of ideas. (Disclaimer here, I'm not barred in TX but I can Google search and read code.)
Most likely option: Tortious Interference with Prospective Contracts or Business Relations (as mentioned by Mark Cuban's brother Brian on Twitter today)
Jordan and the Mavs didn't have a contract -- but if there was the reasonable probability he would have signed but for the moratorium and/or actions of the Clippers, there could still be a case.
In Wal-Mart Stores, Inc., v. Sturges, 52 S.W.3d 711 (Tex. 2001), the Texas Supreme Court held "we conclude that to establish liability for interference with a prospective contractual or business relation the plaintiff must prove that it was harmed by the defendant's conduct that was either independently tortious or unlawful. By ‘independently tortous' we mean conduct that would violate some other recognized tort duty."
Okay, so do the Clippers or the NBA or the NBAPA have a duty to Mark Cuban and/or the Mavs?
Generally, there's no required duty of care, but Texas has a special rule that establishes "Special Relationships" as an exemption. Restatement 315 states "if a special relationship exists between an individual and the third party, the individual has a duty to control the third party's conduct." The NBAPA certainly could be seen as having a special relationship here because they control the third party's (in this case DAJ) conduct with the relationship to his employment agreement with the Mavs and the NBA certainly governs the conduct of Mark Cuban, with respect to the Mavs, as evidenced by numerous fines. This is a non-traditional application of law, but it doesn't mean there wouldn't be at least an issue of fact for a court to decide.
The Clippers are less likely to do have a special relationship because they're essentially on the same footing as the Mavs with respect to signing Restricted Free Agents. However, if the Clippers have engaged in something other than the traditional wooing and contract negotiation, there could be a breach of the duty of good faith and fair dealing- no special relationship needed. Cuban can certainly ask a court to decide these facts.
The nuclear option: Mark Cuban asks the US Government to look into the NBAPA and the Clippers (including possibly CP3, JJ Reddick, Paul Pierce, Doc Rivers and Steve Ballmer as individuals) on RICO allegations.
The RICO statute, which is most famously used to bust mobsters, actually has a whole range of uses and charges have been brought for everything from gang violence to improper handling of bodies by crematoriums and civil rights crimes.
To prove a RICO claim, you must general provide evidence on these four elements: "(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity." Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496 (1985).
Let's look at each of those:
Conduct: Just means that the individuals participated in whatever's being challenged. Here, the NBAPA and the Clippers would be a slam dunk- the CBA rules are what caused the moratorium and the Clippers are the team who lured DeAndre away.
An Enterprise: Defined under 18 U.S.C section 1961 (4) to include "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity", this is another slam dunk. The NBAPA is a union and the Clippers franchise is a legal entity, which individual players, coaches and owners associate themselves with.
Through a Pattern: "A ‘pattern of racketeering activity' requires at least two acts of racketeering activity... The acts must "amount to or pose a threat of continued criminal activity." H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 238-39 (1989). This continuity requirement can be established by showing either closed-ended or open-ended continuity. At minimum, the predicate acts for close- ended continuity must span a period of "at least one year." This is a tougher sell- to prove this against the NBAPA, the CBA or its activities would have to be deemed illegal and the terms would have to constitute criminal activity. The best chance at making this stick is a claim of fraud- but it's a long shot. It is, however, illegal to interfere with business activities in many states- it's a tort (or civil act of law). Unfortunately civil charges aren't criminal so this one may not pass muster unless there is a whole lot of dirt uncovered by Cuban and a hired team of investigators. I would say it's not impossible, but improbably. Also, this is where we probably lose the Clippers as an organization, unless they can argue that there was some sort of interstate commerce violation committed by the team funding the trip to convince DAJ to come back down to Houston. That's really the only thing I could possibly see as sticking. The best target here are the individuals- the players, coaches and owners could still be on the hook- depending on what they'd promised DeAndre in the past and continue to promise him- Bribery? Coercion? Gambling? Obstruction? The possibilities for individuals are almost endless.
Of Rackateering Activity: Very broad- any criminal activity really suffices here- fraud, forgery, trafficking, gambling, interstate commerce is frequently used. This is easy if you prove #3 for any of the parties.
(Thanks to Thompson Hall for their great analysis and some of the quotes above. You can read more here: http://thompsonhall.com/overview-of-racketeer-influenced-corrupt-organizations-rico-act/)
Sure, it's a stretch, but it's fun to think about. And Mark Cuban has never shied away from legal controversy -- preferring instead to use media coverage as a platform for his message. If he loses out on DAJ because of the Moratorium Period, my guess is he's going to have a lot to say about it, and the coverage of this kind of investigation would certainly provide a platform.