Sonics allege ‘forced bleeding’ by city

6-20-08 -- The SuperSonics said in court Friday that the city of Seattle tried to make it too expensive for them to leave town.

The “forced bleeding” accusations stemmed from a previously sealed document that was admitted Friday as an exhibit in the city’s lawsuit against the team. It discussed “locking them into losses” and exposing “the league to embarrassment in a market they like.”

In another newly revealed document, the man spearheading the city’s efforts to keep the Sonics—former U.S. Sen. Slade Gorton—acknowledged that failing to win government support for a KeyArena renovation this year would “considerably undercut” the city’s legal arguments.

Sonics owner Clay Bennett, who bought the team in 2006 for $350 million, is trying to move the Sonics to Oklahoma City, his hometown. He says the team could lose $60 million if forced to stay for the final two years of its lease at KeyArena, the NBA’s smallest venue.

The city is asking U.S. District Judge Marsha Pechman to enforce its terms, hoping two more years would be enough time to find a way to keep the Sonics—or at least another NBA team—in town.

A document titled “The Sonics Challenge, Why a Poisoned Well Affords a Unique Opportunity,” was carried by Gorton to a meeting at the home of former Sonics president Wally Walker last September. Also present were Microsoft Corp. chief executive Steve Ballmer and former Safeco Corp. CEO Mike McGavick.

The hour-and-a-half meeting and e-mails about it were the focus of questioning when Walker took the witness stand Friday.

“You wanted to make it too expensive to leave?” Sonics lawyer Paul Taylor asked Walker.

“Oh, I think that’s true, yes,” he answered. “I would have been fine with whatever it took to keep them from moving the team.”

But encouraging Bennett to sell was option B, Walker said, because the first choice was for him to keep the team in Seattle.

Citing the “poisoned well” strategy, Sonics attorneys argued that the city brought its lawsuit in an attempt to bleed Bennett’s ownership group, the Professional Basketball Club, hoping that the expense of litigation would induce him to sell to a local owner. Because the lawsuit was brought in bad faith, the city has “unclean hands,” and should not be allowed to reap the benefits of its actions in court, they say.

In response, the city insisted that by definition, suing to enforce its rights under the lease cannot be considered bad faith. Furthermore, its lawyers argued, the city cannot force the team to sell.

Courts are often reluctant to force parties to fulfill contract obligations against their will; instead, they require monetary damages to be paid to the injured party. But in this case, the lease says either side may “specifically enforce” its terms.

But on Feb. 13, Gorton wrote an e-mail to others working to keep the Sonics in town. He acknowledged the failure to win public and government support for a KeyArena renovation would make it less likely that a judge would force the Sonics to stay.

“The governor has spoken directly to the mayor … who feels that the attitude of the voters is so negative that he no longer plans to put a Seattle Center issue on the ballot this fall,” Gorton wrote. “This makes a final decision even next year dubious.

“I told the governor that this schedule almost inevitably means that the NBA will approve the transfer in April, subject to the lawsuit, and that it would considerably undercut our chances of specifically enforcing the KeyArena lease.”

Asked after court whether he agreed with Gorton’s assessment, Seattle lawyer Paul Lawrence said, “No. Absolutely not.”

Lawrence objected to the admission of the “poisoned well” document as an exhibit, saying the city had no hand in creating it. Walker testified that it was primarily drawn up by McGavick, who was working on his own as a concerned citizen and basketball fan.

Lawrence was overruled: At the time of the meeting, Gorton had been hired as Seattle’s lead counsel, Walker had been retained as a consultant, and Ballmer was considered a potential buyer for the team.

Friday was expected to be the final day of testimony, but Seattle City Councilman Nick Licata’s turn on the stand had not concluded by day’s end. The trial is scheduled to resume Thursday, with Licata to be followed by a rebuttal witness for the city, Deputy Mayor Tim Ceis, and closing arguments.

If Pechman rules that the team can leave, a separate trial would be held to determine what damages the team must pay the city for breaking the lease.