Orioles Defeat Nationals

Not on the field but in the courts.

The dispute between the two teams arising from their broadcast agreements was sent back to arbitration by the New York Appellate Division for the First Judicial Department.

This dispute between petitioner WN Partner LLC (the Nationals) and respondent Baltimore Orioles Limited Partnership (the Orioles) arises under a September 2005 partnership agreement pursuant to which Mid-Atlantic Sports Network has the exclusive right to broadcast the games of the Baltimore Orioles and Washington Nationals baseball teams. The agreement sets forth a multi-step dispute resolution process. Under section 19.1, the parties must first mediate any dispute. Should mediation prove unsuccessful, section 19.2 provides that the “dispute shall be arbitrated before the Commissioner of Baseball pursuant to the provisions of the Major League Constitution; provided, that [Major League Baseball] MLB does not have any ownership or financial interest in a Partner or the Partnership at the time that the dispute that is the subject of the arbitration arose.” If that is the case, the dispute is to be resolved pursuant to section 19.3, which provides that if MLB had such financial interest at the time the dispute arose, the parties must arbitrate “any disputes” under the Partnership Agreement before the American Arbitration Association (AAA), pursuant to AAA Rules of Arbitration, “[n]otwithstanding any provisions of the Major League Constitution or any MLB documents, rules or customs.” The logic of this provision is clear; to permit otherwise would, as the motion court observed, allow MLB, a potentially conflicted party, to determine whether it itself had a financial interest in one of the parties to the dispute at the relevant time. The question on this appeal is whether it is for the Commissioner, the AAA, or a court to determine the gateway issue of whether MLB had such financial interest at the time the dispute arose.

The Nats sought to stay the arbitration

The Nationals unpersuasively argue that the Orioles “waived” their right to arbitrate before the AAA. It is undisputed that the Nationals attempted to initiate an arbitration before the Commissioner without first complying with section 19.1, which provides that mediation before AAA or JAMS must precede any arbitration. The Orioles objected and asked that the demand be dismissed, including on the ground that the parties had not first engaged in mediation as required by the agreement, and reserved all of their rights. When the mediation failed, the Orioles promptly filed a demand for arbitration before the AAA. The record thus shows that the Orioles did not consent to any arbitration before the Commissioner, much less waive their right to arbitrate before the AAA in accordance with section 19.3. There is no basis in the record to find that the Orioles participated in the Nationals’ prematurely filed arbitration in any meaningful way so as to hold them bound to such proceeding (see Skyline Steel, LLC, 139 AD3d at 647; Rush v Oppenheimer & Co., 779 F2d 885 [2d Cir 1985]).

(Mike Frisch)