Media & Entertainment Law

New Sports Illustrated Column on Tom Hicks post Liverpool Sale to Red Sox owner John Henry

By Rick Karcher, Michael McCann, Geoffrey Rapp, Greg Skidmore, and Howard Wasserman

The prospect of Hicks and Gillett pursuing a successful litigation strategy against RBS and NESV in Great Britain is dim. The London High Court unequivocally found nothing wrong in the RBS-NESV sale and in fact admonished Hicks and Gillett to accept it. While Hicks and Gillett profess a desire to return to the British courts, and while they might obtain new evidence that more favorably portrays their legal arguments, they would still have to overcome two adverse decisions from the London High Court. The odds would be stacked against them.

It is more likely that Hicks and Gillett would turn to courts in Texas, where Hicks resides, and Massachusetts, where NESV is based, to remedy any purported grievances. Both states offer laws that prohibit fraud, breach of contract and similar claims that Hicks and Gillett could allege invalidate actions taken by RBS and NESV. If in fact Hicks and Gillett were denied adequate input in the sale of Liverpool under Massachusetts or Texas law, they could obtain a judgment that contradicts that of the London High Court, thereby leading to a second round of conflicting judgments and choice of law uncertainties. The statutes of limitation for such claims under Massachusetts and Texas laws, moreover, are two to three years, meaning Hicks and Gillett could wait some time to collect evidence and build a case before filing a massive lawsuit in one of those states.

On the other hand, courts in Massachusetts or Texas may be disinclined to interfere with the RBS-NESV transaction now that it has occurred. Generally, courts are more likely to prevent a prospective sales transaction than to reject it ex post facto. Such a rejection in this matter would throw Liverpool into a legal quandary. Then again, Hicks and Gillett could insist that, irrespective of consequences to Liverpool, they are plainly entitled to recovery if they were illegally wronged.

Hicks and Gillett may have another goal in mind by threatening or insinuating a lawsuit: motivating RBS and NESV to agree to a financial settlement that would pay Hicks and Gillett millions to go away and to give up any potential legal claims against RBS and NESV. Keep in mind, even if NESV and RSB are confident in the legality of their actions, they could perceive significant value in gaining a clean and permanent break from Hicks and Gillett; a settlement could also save them millions of dollars in potential legal fees -- millions of dollars that could perhaps be used to sign Liverpool and Red Sox players or otherwise improve those teams.

Full post as published by Sports Law Blog on October 15, 2010 (boomark / email).