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Donald Sterling:
Racial & Legal Issues
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38 June 12 • 2014
JN
ver the last several weeks, we've
endured the Donald Sterling
story. To me, the affair is frus-
trating as a Jew and a reminder that our
nation still struggles with racism.
Let's be honest; we all know individu-
als who in private are guilty of making
inappropriate racially pathetic state-
ments. As a people, we have aligned our-
selves with those that fight for civil rights
and liberty — and abhor fascism and
racial bias. We do this collectively and
are united in that pursuit as a people.
Nonetheless, the Sterling episode
should be a lesson to all — that until we
do in private what we maintain to be
right in public, we will not
root out and end the distrust
that permeates racial divides.
Fortunately, our children
have been raised in an era
of greater acceptance and
less ignorance. Let's hope the
Donald Sterlings will fade out
as they reach their makers.
As a lawyer, however, I
find fascinating non-racial
legal issues presented by the
Sterling case. Does Shelly
Sterling have the right to
succeed Donald as trustee of their trust
and sell the team to Steve Ballmer? Is the
NBA acting within its rights in forcing
a sale of the team and imposing a $2.5
million fine? While the media blitz and
many commentators are satisfied to say
"yes" to both questions based on the
abhorrent conduct of Donald Sterling,
the outcome of legal issues is not a mat-
ter of race.
The common estate plan involves a
revocable living trust to provide for the
distribution of assets outside of probate
following death and to identify a suc-
cessor to act for you while living if you
are incapacitated. When you create the
trust, you name yourself as trustee —
as the person who makes decisions con-
trolling your life while living. You also
then name a successor to act upon your
death or to take charge if you become
incapacitated.
Typically, we name a spouse as the
successor, just as Donald named Shelly.
Most trusts contain rather standard lan-
guage that the successor trustee steps in
upon the opinion of two physicians that
you are incapacitated.
The reported sale of the Clippers is
predicated on Shelly Sterling's posi-
tion that she gained the authority to
contract on the trust's behalf (the trust
owns the team) because Donald has
been declared incapacitated. The story
cannot end
so quickly.
In cases
where there
is a dispute
as to capacity,
Sterling, as
the grantor of Donald Sterling
the trust, can
certainly challenge the successor's claim
that he is incapacitated.
The NBA's claim against Sterling
to force him to sell the team and fine
him $2.5 million is also at issue. The
NBA constitution and bylaws are the
documents that define the rights of the
league, the players and the
owners in cases of miscon-
duct.
When the Sterling story
first broke, I was annoyed
by the national legal pundits
opining as to the NBA's rights
when none of them had the
benefit of reading the key
documents, which now are
public. A review indicates
the NBA may have stepped
beyond its rights by relying
on a provision of its constitu-
tion that does not apply. The $2.5 mil-
lion fine and forced sale of the franchise
imposed by the NBA relies on the catch-
all language of Article 24(1) that applies
"where a situation arises that is not cov-
ered in the constitution and bylaws:'
The problem, however, is that Article
35(c) specifically covers statements by
the owner, which means that Article
24(1) would not apply to the racist
statements made by Donald. If so, the
maximum fine under Article 35(b) is
$1 million and indefmite suspension
rather than a lifetime ban and forced
sale of the franchise as the remedy.
Donald Sterling is an old man, cut
from a racist era. For him, he can't put
Prince Albert back in the can. Perhaps
others can learn from him — and shed
their long-rooted demons. The right
and wrong of his legal issues, however,
are a different story.
That story, however, will not be told
because Sterling is competent and smart
enough to take advantage of Ballmer's
willingness to pay $2 billion for a $500
million franchise. We know who the
racist is — but who's the fool?
❑
Ken Gross is an attorney with Thav Gross
and host of the Financial Crisis Talk Center
show that airs weekly at 9 a.m. Saturdays
on WDFN 1130 AM, "The Fan" and 11 a.m.
Sundays on MyTV20.