Jon Wertheim and Jessica Luther’s feature SI story on a culture of sexual harassment in the Dallas Mavericks front office raises a number of important legal issues. The Crossover's legal expert Michael McCann examines what's next for the Mavericks and Mark Cuban. He also evaluates the NBA's options to respond.
Allegations against Mavericks undermine NBA efforts to promote gender equality
Sexual harassment allegations against the Mavericks will certainly draw the attention and ire of NBA commissioner Adam Silver. The 55-year-old commissioner has made gender equality and enhancing leadership opportunities for women key priorities of his administration. This has been shown on a number of occasions since Silver became commissioner in 2014.
A few years ago, for instance, Silver moved the 2017 All-Star Game from Charlotte to New Orleans because of the league’s objections to North Carolina enacting a statute, HB2 (better known as “the bathroom bill”), that limited anti-discrimination protections. More recently, in a December interview with Page Six, Silver noted that “[W]e have been doing sexual-harassment training for several years at the league offices, and we will do it again this year. It is just something that we have to remind people of what the appropriate rules and etiquette are in the workplace.”
Silver has actively supported opportunities for women to obtain high-ranking positions with teams. To that end, Silver has partnered the NBA with LeanIn.org and publicly discussed strategies for recruiting more women for NBA coaching, front office, and referee positions. In an interview last March with ESPN W, Silver expressed, “I have become much more aware of issues that impact women in our workplace . . . there are things that the league can and should be doing to accelerate the move toward a woman being a head coach in the league.”
The league’s statement on diversity and inclusion captures this same sentiment. The statement stresses that basketball “is a sport that transcends culture, race, language, gender and socio-economic levels” and that the league is an “inclusive workplace.” Allegations of discrimination and harassment against women employed by an NBA franchise betray the NBA’s mission statement.
The NBA and the National Basketball Players’ Association have also been designing workplace policies to curb violence and harassment against women a core objective. Their collective bargaining agreement contains a new joint policy on domestic violence and sexual assault. The policy makes clear that acts constituting sexual assault “are prohibited at all times and regardless of where they occur” and that “sexual assault” is defined broadly to include “any actual or attempted sexual contact or act to which one party has not consented.” While the policy only applies to players, it nonetheless signals an increased awareness of sexual misconduct and a desire to prevent such acts.
Can—and will—the NBA punish Mark Cuban and the Mavericks?
The league’s constitution makes clear that Silver can severely punish any franchise, owner or team employee who, in Silver’s opinion, is guilty of conduct prejudicial or detrimental to the NBA. Whether, and to what degree, Silver exercises that authority in the context of Cuban and the Mavericks is less certain.
Cuban, of course, is no stranger to league punishment. By all accounts, he has been fined more than any other NBA owner. Since becoming the Mavericks’ principal owner in 2000, Cuban has reportedly paid approximately $2 million in NBA fines. The fines have usually arisen in response to Cuban’s critical comments about referees. For instance, in 2002, then-NBA commissioner David Stern fined Cuban $500,000 for opining that the league’s director of officials, Ed Rush, “might have been a great ref, but I wouldn't hire him to manage a Dairy Queen.” Cuban has also been fined for (technically) tampering in hopes of the Mavericks signing LeBron James and for “improper interaction” with an opposing team’s player—in 2009, Cuban walked onto the court and yelled at Denver Nuggets guard J.R. Smith. Cuban’s lengthy history of NBA fines continued to Wednesday, when Silver fined Cuban $600,000. This time Cuban was in trouble for suggesting that tanking for a higher draft pick would benefit the Mavericks, who are 18-40 this season and headed for the 2018 NBA draft lottery.
While Cuban has been repeatedly fined, those fines have not necessarily damaged his brand or caused people to question his ethics. The common thread of his misconduct has been Cuban’s competitive, if at times overzealous, spirit. Many fans greatly admire Cuban for his genuine fandom, particularly when contrasted to the more placid or even milquetoast appearance sometimes exhibited by other teams’ owners. Cuban, who Forbes estimates is worth $3.7 billion, has also used his fines to do good—he has matched the fine he pays the NBA with dollar-for-dollar donations to charities of his choosing.
In the context of sexual misconduct allegedly committed by his employees, Cuban could face a very different and more reputation-damaging line of criticism. As Wertheim and Luther stress, although Cuban is not accused of any personal conduct, multiple witnesses believe that Cuban had some degree of awareness of Mavericks CEO Terdema Ussery’s misconduct or at least should have been aware. They further insist Cuban failed to meaningfully correct wrongdoing in his team. One longtime Mavs employee told Wertheim and Luther, “Trust me, Mark knows everything that goes on. Of course Mark knew [about the instances of harassment and assault]. Everyone knew.”
Cuban categorically refutes this account. He asserts that he “did not know” about any misconduct and explains that his involvement with the team was purely on the basketball side. Wertheim’s reporting indicates that female employees regard the basketball side—particularly when in the presence of Mavericks players—as safe and respectful environment. To the extent Cuban was indeed on the “basketball” side, he operated in a space where female employees appear to have been treated well. Cuban’s attempt to create a bright line of demarcation between basketball and business also helps him deflect blame—it implies that he was not in a position to monitor the alleged misconduct of Ussery, who worked for Cuban from 2000 to 2015, or that of Mavericks.com writer Earl Sneed, who worked in different capacities for the team from 2010 until being let go today.
The NBA constitution would empower Silver and, potentially, Cuban’s fellow owners to punish Cuban. There are two key clauses within the constitution that Silver could draw upon.
First, Article 35A of the constitution would authorize Silver to suspend Cuban for any length of fine and/or fine him up to $1 million. Such a punishment would be appropriate if Silver concluded that Cuban engaged in “conduct prejudicial or detrimental to the Association.” In this context, Silver would surmise that Cuban had a responsibility as owner of the Mavericks to manage his team in a way that adequately deterred sexual harassment and prevented a hostile workplace. Here, the “conduct detrimental” would likely involve a failure to supervise and a failure to correct.
Alternatively, Silver could rely on Article 24 of the constitution. Article 24 spells out the authority and duties of the commissioner. One key authority is found in Section L of Article 24. It is the “best interests of the NBA” provision and stipulates that “when a situation arises which is not covered in the Constitution and By-Laws, the Commissioner shall have the authority to make such decisions, including the imposition of a penalty, as in his judgment shall be in the best interests of the Association.” Article 24 authorizes a suspension of any length, a fine of up to $2.5 million and the forfeiture of draft picks.
Silver employed Article 24 in punishing then-Los Angeles Clippers owner Donald Sterling. In 2014, TMZ.com published a private recording of Sterling telling his mistress, V. Stiviano, that “it bothers me a lot that you want to broadcast that you're associating with black people.” Sterling also asked Stiviano to not attend Clippers games with African-Americans.
Sterling’s patently racist comments triggered a massive controversy for the league, highlighted by President Barack Obama associating Sterling’s remarks to the “legacy of race and slavery” and the “vestiges of discrimination” in the U.S. A number of NBA players, including James and Steph Curry, also suggested that players might boycott games unless the NBA severely punished Sterling. Furthermore, a handful of companies, including Carmax, Virgin America and Mercedes-Benz, signaled that they could end their sponsorships with the Clippers. Silver banned Sterling for life from the league, fined him the maximum $2.5 million and recommended to owners that they terminate Sterling’s ownership.
It’s unlikely that fallout from the Mavericks controversy would be in any way comparable to that turmoil caused by Sterling. In this case, Cuban’s transgressions would be more along the lines of omissions rather than actions or statements. Cuban would have failed to adequately monitor the conduct of his executives and other employees; such oversight appears to have made it more possible for female Mavericks employees to experience a hostile work environment.
In that same vein, the NBA may wonder whether Cuban could have constructed the Mavericks’ organizational chart in ways that would have made it more likely he would have been informed of wrongdoing. For instance, the Mavericks’ current media guide, which lists the team’s staff, does not list a team general counsel or attorney. The same is true of the team’s 2015-16 media guide. NBA teams usually employ an attorney directly on the staff. The in-house attorney can work with human resources on ensuring that workplace conduct policies are enforced. It appears that the Mavericks instead use an attorney for the parent company of the Mavericks (Cuban Co.) and use an outside law firm as well. While this distinction may have made no difference, it is one that is noticeable in hindsight.
The role of a potential NBA investigation
Before Silver takes any action against Cuban or the Mavericks, he could call for an investigation. In a statement released Tuesday night, the Mavericks expressed that the team has “hired outside counsel to conduct a thorough and independent investigation.” The league may prefer to conduct its own investigation, particularly given that it may prove difficult for an outside law firm paid by the Mavericks to conduct a truly “independent” investigation into the Mavericks. In a statement released following publication of SI’s story, NBA spokesperson Mike Bass stressed that the league will “closely monitor” the Mavericks’ investigation. Bass further makes clear that the league regards the allegations as extremely serious. “This alleged conduct,” Bass says, “runs counter to the steadfast commitment of the NBA and its teams to foster safe, respectful and welcoming workplaces for all employees.”
Silver, an attorney by profession and former clerk to U.S. District Judge Kimba Wood, adopted an investigative approach in response to the Donald Sterling recording. Silver directed league general counsel Rick Buchanan and former assistant U.S. Attorney David Anders to interview witnesses and secure as much evidence as possible. After reviewing the evidence, Silver formulated his punishment of Silver and recommended that the NBA owners vote out Sterling.
NBA owners never got around to voting on Sterling. Sterling’s wife, Shelly Sterling, won control of the franchise in court and then sold it to Steve Ballmer. Had owners convened to vote, Article 14 of the league constitution—an article that concerns termination of ownership—would have come into play. It would have required that at least three-quarters of principal owners of other NBA teams voted to end Sterling’s ownership. Interestingly, one principal owner expressed concerns about kicking out Sterling. His name was Mark Cuban. Cuban feared there would be a “slippery slope” if owners could be kicked out of the league for remarks made in private.
If the NBA investigates the Mavericks, the league would demand that the team turn over various records, including emails, employee reviews and other correspondences. The league would also likely arrange for in-person interviews with Cuban, Mavericks officials and former employees—including those who spoke with Wertheim and Luther. In addition, the league would evaluate to what extent the scandal harms the NBA’s image and business relations. If, for example, sponsors drop the Mavericks or the NBA in response to the allegations, the league would be more inclined to impose a severe punishment.
Cuban’s potential defenses
It will be interesting to see how Cuban would respond to the league launching an investigation or imposing a fine or suspension. Would Cuban accept responsibility for not detecting wrongdoing in his own organization? Or would Cuban, in spite of his reputation as a hands-on owner, insist that he had no formal obligation under league rules to know? Would he maintain that the league would be without grounds to punish him?
If Cuban “plays defense”, he could argue that it is not the place of the NBA to judge how owners run their own organizations. While Article 24 of the league constitution supplies Silver with a sweeping “best interest of the game” power, Cuban might contend that such language ought to concern league matters—not internal team issues. Along those lines, Ussery and Snead were employees of the Mavericks, not the NBA. Stated differently, those accused of wrongdoing had no direct contractual relationship with the NBA. Further, unlike NBA players, the league plays no role in approving employment contracts of team employees. Team employees are neither unionized nor in a collective bargaining relationship with the NBA.
Further, Cuban might bristle at the prospect of sharing emails and other electronic records with the NBA. He could term it an invasion of privacy and not one specifically authorized by any NBA rule.
It is very unlikely that any league investigation would lead to a recommendation by Silver that Cuban lose his franchise. As noted above, under the league constitution, a vote of at least three-quarters of the principal owners of other NBA teams would be needed to take the franchise away from Cuban. If such a penalty were imposed for failing to adequately oversee a franchise, it would create a precedent that could be used against other NBA owners. It stands to reason that the Mavericks are probably not the only team that has had issues with sexual harassment and misconduct.
At least at this stage, it does not seem that Cuban is going to play defense. In a phone interview with Wertheim, Cuban acknowledged “obviously there’s a problem in the Mavericks organization and we’ve got to fix it.” Cuban elaborated by saying that he felt “embarrassed” and repeatedly pledged that the problems in the organization must “be fixed.” Whether Cuban would offer a similar or different response to Silver remains to be seen.
Non-Disclosure agreements once again play a key role
As Wertheim and Luther note, the more than a half-dozen former female Mavericks employees he contacted were unwilling to allow their names to be published by SI. Some feared the potential legal ramifications of breaching non-disclosure agreements with the Mavericks. This is a point worth exploring.
As the #metoo movement has grown, non-disclosure agreements (“NDAs”) have generated significant attention and critique. NDAs are contracts negotiated by employers and departing employees. NDAs dictate that a departing employee is to be paid a certain amount of money in exchange for their silence. If the former employer later breaches the NDA, he or she will have breached the NDA contract and will then be obligated to refund the money. In some instances, the former employee will be contractually required to pay the former employer an additional amount of money as liquidated damages.
NDAs may sound suspicious but they are often used for legitimate reasons. This is true in the NBA. For instance, an employee of an NBA team may, in the course of his or her employment, learn certain trade secrets. Those secrets might include the team’s unique algorithms for player analytics or the team’s custom approaches to the sales of tickets and distribution of licenses. In that context, an NDA can supply reasonable protection for NBA teams (for more on this topic, check out a MIT Sloan Sports Analytics video of Roger Ford and me presenting on “Firewall: Protecting Sports Analytics and Data Through the Law”).
Yet with the Mavericks, it appears that NDAs have at least in part been used to limit public detectability of sexual misconduct in the workplace. This dynamic has played out in other high-profile contexts involving female employees who suffered harassment and abuse in the workplace. For instance, employees of film producer and accused rapist Harvey Weinstein were reportedly required to sign NDAs as a condition of receiving financial compensation. In sports, NDAs have played a critical role in keeping quiet sexual abuse committed by USA Gymnastics physician Larry Nassar and in silencing sexual misconduct allegations against outgoing Carolina Panthers owner Jerry Richardson.
When NDAs are used to prevent accountability of sexual misconduct in the workplace, they make it more likely that a perpetrator will commit future harm. Some state lawmakers, such as New York State senators Martin Malavé Dilan and Brad Hoylman, have proposed legislation that would prevent the enforceability of NDAs when they conceal sexual harassment and misconduct in the workplace. Perhaps the Mavericks story will lead to a similar legislative effort in Texas.
Michael McCann, SI's legal analyst, provides legal and business analysis for The Crossover. He is also the Associate Dean for Academic Affairs at the University of New Hampshire School of Law and co-author with Ed O'Bannon of the new book Court Justice: The Inside Story of My Battle Against the NCAA.