A United States District Court judge has ruled in favor of the Toronto Raptors in their legal battle with the New York Knicks over the alleged theft of confidential files.
Judge Jessica G. L. Clarke issued an order on Friday, referring the case to NBA Commissioner Adam Silver.
“The answer hinges on the arbitration clause in the NBA Constitution, which purports to give the NBA Commissioner exclusive jurisdiction over any dispute involving two NBA teams,” she wrote. “Based on Second Circuit precedent construing similarly broad arbitration clauses, the determination of whether this dispute is arbitrable is one for the NBA Commissioner, not the Court.”
The ruling elicited varied reactions from both teams.
“The Raptors and MLSE are pleased that the court agreed this should be resolved by the NBA, which we have maintained is the correct forum for disputes of this nature,” said a spokesperson for Maple Leaf Sports and Entertainment (MLSE), the Raptors’ parent company. “We hope this brings this matter closer to a resolution.”
Conversely, a spokesperson from Madison Square Garden Sports, the Knicks’ parent company, commented, “We were the victim of a theft of proprietary and confidential files in a clear violation of criminal and civil law and are continuing to evaluate our legal options. We don’t think it’s appropriate for the Commissioner of the NBA to rule on a matter involving his boss, the Chairman of the NBA, and his team.”
In August, the Knicks filed a suit in the U.S. District Court for the Southern District of New York, alleging that the Raptors and head coach Darko Rajaković used a “mole” to steal confidential information. They accused the Raptors of enlisting former Knicks staffer Ikechukwu (Ike) Azotam to pilfer “thousands of proprietary files” and provide them to Toronto, despite Azotam having signed a “confidentiality clause.”
In response, the Raptors and MLSE issued a statement denying any involvement in the alleged matters.
The Raptors had earlier filed a motion to dismiss the Knicks’ lawsuit or move it to arbitration, labeling the lawsuit a “public relations stunt.”
The initial lawsuit seeks unspecified damages and a ban on the further spread of the Knicks’ trade secrets. The Raptors argued that the lawsuit was baseless and noted that the Knicks had agreed that Silver has jurisdiction over such cases. They also suggested that resolving the case in court could take until 2025.
Judge Clarke has directed the court clerk to stay the case while arbitration proceeds and instructed the teams to file a joint letter updating the Court on the arbitration status by Dec. 13. If the NBA Commissioner decides the case is not arbitrable, the teams must inform the court within seven days.
Additionally, the court partially granted the Raptors’ motion to seal Azotam’s employment records, requiring a public version of the employment agreement with approved redactions.
With files from Kevin Jiang, Doug Smith, and The Associated Press.
