Jan 23 – The company that owns the New York Knicks, New York Rangers, Madison Sq. Backyard and Radio Metropolis Music Corridor has some distinctive concepts about litigation techniques.
You already learn about Madison Sq. Backyard Leisure Corp’s coverage of barring plaintiffs’ lawyers who’re suing the corporate from attending occasions at MSG, Radio Metropolis and different venues within the MSG portfolio. You’ve most likely additionally heard about MSG’s use of facial recognition technology to implement the ban, which has led to a spate of sympathetic information tales about plaintiffs’ legal professionals whose plans had been abruptly upended when MSG safety guards refused to permit them in to live shows and different occasions.
Chancellor Kathaleen McCormick of Delaware Chancery Court docket, who’s presiding over consolidated shareholder litigation stemming from the 2021 merger of MSG’s sports activities community and leisure enterprise, is on record describing the plaintiffs’ lawyer ban as “the stupidest factor I’ve ever learn,” and “completely loopy.”
However at a listening to scheduled for Tuesday, McCormick appears prone to delve into the extra severe matter of MSG’s dealing with of proof within the two shareholder fits she is overseeing. McCormick referred to as for the listening to on Friday, after receiving a letter from shareholder lawyer Christine Waterproof coat of Grant & Eisenhofer suggesting that MSG both has a “troubling” and “disturbing” coverage of rapidly erasing fired workers’ digital data — or that the corporate has misrepresented its proof retention insurance policies to keep away from producing proof from a former vp who was fired on the eve of an important audit committee assembly.
Waterproof coat’s letter asserted the “facial implausibility” of MSG’s purported coverage of instantly erasing the digital data of fired workers except the paperwork are topic to a litigation maintain. The shareholder lawyer additionally argued that MSG’s manufacturing of texts and emails from different fired executives belies its rationalization for the lacking digital proof from the previous VP.
A caveat: Waterproof coat’s letter was in response to a sealed letter to McCormick from MSG protection lawyer Raymond DiCamillo of Richards, Layton & Finger. On Monday, DiCamillo publicly filed a second letter disputing some statements in Friday’s submitting by Waterproof coat.
MSG’s coverage, he mentioned, isn’t instantly to erase fired workers’ recordsdata however to attend 90 days earlier than automated deletion of emails that aren’t coated by a litigation maintain. The fired VP’s data, DiCamillo mentioned, weren’t topic to a preservation order so had been erased in accordance with MSG coverage.
In a press release, MSG mentioned there’s nothing uncommon or improper about that coverage. “MSG Leisure’s doc retention coverage is per public corporations of our measurement and accepted greatest practices,” the assertion mentioned.
Right here’s the background on the Delaware discovery dispute. Shareholders from the once-separate MSG sports activities and leisure companies each accuse the corporate’s controlling buyers, the Dolan household, of ramming by way of a merger that benefited the Dolans on the expense of minority shareholders from every firm. On the time of the deal, the sports activities community was thriving however the leisure enterprise was weighed down by the expense of constructing a billion-dollar MSG advanced in Las Vegas.
Shareholders’ theories thereafter diverge. The sports activities community shareholders allege in a category motion that the Dolans underpaid to accumulate their shares within the merger with the leisure enterprise. The leisure shareholders, in the meantime, claim in a by-product go well with that tainted deal negotiations resulted in a merger that drove down the worth of their shares.
MSG, I ought to observe, contends the merger course of was truthful and that the 2 units of plaintiffs are positing irreconcilable theories.
The circumstances characteristic a slew of shareholder companies, together with Grant & Eisenhofer, Wolf Popper and Chimicles Schwartz Kriner & Donaldson-Smith within the sports activities community class motion; and Block & Leviton and Bernstein Litowitz Berger & Grossmann within the leisure by-product go well with.
Discovery was alleged to have wrapped up in November, however shareholders instructed McCormick at a hearing final week that MSG hadn’t turned over every kind of related proof, together with textual content messages from key executives. Plaintiffs’ legal professionals in each circumstances accused MSG of defying evidentiary guidelines and improperly deleting proof. Even MSG protection counsel DiCamillo conceded that the invention course of had been imperfect, though he and protection co-counsel Matthew Schwartz of Sullivan & Cromwell emphasised that MSG had already given huge troves of proof to shareholders.
The sports activities community plaintiffs particularly requested McCormick to order MSG to provide data from an govt on MSG’s inner audit group who was alleged to have attended a 2021 audit committee assembly about value overruns for the Las Vegas leisure advanced. She was as a substitute fired on the eve of the assembly. MSG mentioned she was terminated as a result of she had circulated a proprietary auditing template from her earlier employer. Shareholders mentioned the timing of the termination appeared suspicious so that they wanted discovery to test MSG’s story.
McCormick sided with shareholders and ordered MSG handy over digital discovery from the fired govt’s recordsdata, in addition to discovery on an investigation of her firing by MSG auditor Deloitte.
Two days later, MSG counsel DiCamillo submitted a letter to McCormick. His letter, as I discussed, is sealed. However the response by Grant & Eisenhofer companion Waterproof coat isn’t – and it’s blistering.
In response to Waterproof coat, MSG implied that it had deleted the fired VP’s emails instantly. That, she mentioned, “is – to place it mildly – troubling,” particularly with respect to the data of an inner auditing govt at a public firm.
Waterproof coat additionally forged doubt on the reality of the corporate’s “disturbing disclosure” that it truly has such a coverage. The corporate, she mentioned, had turned over digital data from at the very least two different senior MSG Leisure workers who weren’t recognized as doc custodians and had been subsequently presumably not topic to any litigation maintain. (DiCamillo mentioned in Monday’s response that the 2 different fired executives had been below a preservation maintain in numerous litigation.)
The forwards and backwards ought to make for fairly a spicy listening to on Tuesday.
Learn extra:
Madison Square Garden doubles down on plaintiffs lawyer ban, even after it backfires
Game over? Plaintiffs’ lawyers banned from Madison Square Garden by MSG
MSG merger vote gets greenlight from Delaware Chancery Court judge
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