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Editor’s note: This story was updated Dec. 23 to include information on court order.
The latest turn in the dispute between Washington Football team majority owner Dan Snyder and the franchise’s three co-owners remains largely under seal in a federal court located in Maryland.
At least, it was supposed to be that way. On Dec. 23, Judge Peter J. Messitte ordered Snyder along with the team’s co-owners real estate exec Dwight Schar, FedEx chief executive Fred Smith, and investor Robert Rothman to appear in court. The order comes after stories in The New York Times and The Washington Post published details a confidential sexual harassment settlement between Snyder and a former team employee.
The hearing on Jan. 7 will attempt to determine whether anyone involved in the lawsuit “provided or know of any person who may have provided such information to the press” in violation of a confidentiality and non-disparagement issued by Judge Messitte on Nov. 19.
The case is largely under seal as details — including tightly held financial dealings — would almost certainly be revealed, something that sports leagues and teams have largely kept hidden through the arbitration process.
“I think there are going to be two attacks to keep this out of the public eye,” said Jeffrey P. Burke, an employment law attorney at firm MacElree Harvey. “One of which will be by Snyder. He will try to defend against this thing and say, ‘This carve out language [in the arbitration clause of the ownership contract] is very minimal, so the court should send the owners’ dispute to arbitration.’ The NFL, presumably, is going to go in there and say these owners have an obligation to privately arbitrate this matter under the NFL arbitration agreement that they’ve all signed [with the league].”
The NFL, which filed a motion to intervene in the case, declined to comment when reached by Front Office Sports. While the filing is sealed, the NFL filed a memorandum of law to claim it has “exclusive jurisdiction to arbitrate” the case on Nov. 24.
“They are going to make the case that their arbitration clause supersedes [the lawsuit],” Burke said. “I wouldn’t be surprised, given how powerful the NFL is, that [the co-owners] are bound by overarching arbitration language.”
Schar, Smith and Rothman were already in arbitration as they look to sell their respective interests in the Washington Football Team before the lawsuit was filed, according to the redacted complaint.
Front Office Sports previously reported the tumult started in May when Snyder told the co-owners the team would suspend the annual dividend disbursement amid the pandemic.
California billionaires Behdad Eghbali and Jose Feliciano have offered to purchase the 40% stake in the Washington Football Team held by the three co-owners, The Washington Post reported. While Snyder had agreed on the sale of the portion of the team held by Smith and Rothman, Snyder blocked Schar from selling his. Snyder has the right of first refusal, according to court documents.
Snyder and the NFL are seeking to avoid the issues created in an ownership dispute with the Atlanta Hawks and Atlanta Thrashers that began in 2005 and weren’t settled until 2012. The financial losses of the Thrashers — who eventually were sold and relocated to Winnipeg — totaled more than $130 million as the infighting among ownership was on full display in legal filings.
While lawsuits can sometimes slow arbitration cases, they typically land up back before an arbitrator.
Legal experts expect that to be the case this time before the already messy affairs of the Washington Football Team — that includes accusations Schar led a disinformation campaign to force Snyder to sell the team — gets even messier.
“They knew what they were doing when they signed the arbitration agreement,” said Tammi Gaw, a Washington-based sports attorney. “It’s different from something like a click agreement like you’d find in the terms of service of iTunes where you don’t have a choice. In my opinion and experience, that will probably be the largest procedural reason that doesn’t fly.”
