Tuesday, September 28, 2010

Day twelve preview: closing arguments.

Long ago--about ten and a half months ago, to be exact--we were just a couple weeks into a conflict that is nearly certain to last over a calendar year. Each McCourt had filed their opening salvo, and, in between jokes about Jamie's pool demands, we were just beginning to get a grasp on the issues involved in the divorce. On November 10, I wrote:
From my perspective, unless Jamie can prove that Frank was misleading, fraudulent, or otherwise acted in bad faith, she's going to have a difficult time getting out of the agreement. Just because she later decided she gave up too much in the deal doesn't mean she can just get out of it. See Juan Pierre, 5 years, $44 million. The kind of smoking gun I'd look for is Frank concealing the fact that the Dodgers were included in the agreement. Because of her heightened burden [as a lawyer], I don't think she can win on this unless Frank took active steps to hide the fact that ownership of the club was involved.
Well, here we are. And, what do you know: Jamie has found and relied upon evidence that something terrible took place: a switcheroo. Yes, the substitution of the "corrected" Exhibit A is just the sort of event we long ago knew might lead to a Jamie victory. But, on the eve of closing arguments, the switcheroo is hardly Jamie's only theory.

While sexy and media-friendly, Jamie's lawyers just haven't been able to get to the bottom of the switcheroo. Larry Silverstein contends it was a minor mistake--to him, anyway--that he cured without thinking twice about it. Yes, it would have been "best practice" to inform the couple of the "correction," but he was simply acting in accordance with the couple's wishes. And Frank's lawyers have certainly done a good job laying out Jamie's role in the separation of the couple's assets. I still strongly believe that "the only textual version of the MPA Jamie understood to exist in 2004 was the only one she even suspected to exist when she filed for divorce last Fall."

But the facts might not be enough to carry the day for Frank. For as difficult a time Jamie has has fighting the contention that she was wary of the risk, Frank's had just as dreadful a time proving Jamie knew the implications of the MPA. If that was all Jamie had--that she never meant it to be this way--I'd give this one to Frank tonight. She's a lawyer. She doesn't get the protection of not knowing what simple documents mean. But that's not all she has.

She has a lawyer who put an Exhibit in an agreement the couple signed that is completely opposed to another Exhibit attached to another signed agreement. And that lawyer never sought permission to correct the error nor acknowledgement of the correction. She has lawyers who either acted directly against her best interests or, at least, without the diligence she had every right to expect. And there were other ways to protect the homes without having the drastic effect of divesting her of the Dodgers in the event of divorce. And she has very much won the point that divorce, while mentioned, was never considered during the construction of the MPA. It was a document for happier people in happier times.

As we go into closing arguments, the legal question is whether a valid, enforceable contract ever existed. Tomorrow, Frank's lawyers will say that Jamie got exactly what she wanted in the post-nup. And that she shouldn't be allowed to benefit from the protection she needed early in McCourt ownership and now, in retrospect, also share in the upside of what turned out to be a good investment. And Jamie's attorneys will say that her inadequate (at best) representation and the entire stain of the switcheroo raises serious doubt as to whether the parties ever agreed to the terms of the MPA Frank tries to enforce.

As Judge Gordon has 90 days from tomorrow to issue a decision, I am not going to guess as to the outcome prior to hearing the closing arguments, except to say: each party very much knows it might lose. And each party very much knows that the litigation in McCourt v. McCourt won't end here, unless the parties and their representatives come together to end it on their own terms. I still believe that a settlement is the only reasonable outcome, and that, eventually, we will see that the McCourts are reasonable people.

Day eleven wrap, part two.

The first of two former Bingham lawyers of the day, Aaftab Esmail, headed up the real estate due diligence connected to the McCourts' acquisition of the Dodgers. He also did some work for Jamie personally, mostly related to the two Charing Cross homes purchased in her name. On the stand, Esmail testified that the residential real estate was always intended to be Jamie's sole and separate property, and the businesses were held by Frank alone. Esmail also noted that Jamie was concerned about the Dodgers purchase, due to the club's recent history of losing money and the high degree of leverage required in the acquisition. Esmail also found Jamie to be "smart, sophisticated, and well-informed."

After the noon break, Reynolds Cafferata, also formerly of Bingham McCutchen, retook the stand. The bottom line Jamie's attorneys wanted to hammer home was that no one walked Jamie through the consequences of the MPA in a divorce. Her representatives also used Cafferata's return to the stand to demonstrate several flaws in the process of creating the MPA, including the lack of alternatives to the MPA presented to Jamie. As her argument goes, there were other ways to protect the home than simply to give her the real estate and Frank the team. Lawyers and law students would recognize Jamie's approach here as something similar to strict scrutiny: she says the MPA, as drafted, went beyond the scope of the problem being addressed and failed to take advantage of less drastic means.

The other two witnesses of the day offered information perhaps more interesting to Dodger fans. Peter Wilhelm, the club's CFO, took the stand in the morning. He described documents showing that the Dodgers lost more than $140 million from 2000 to 2002 under Fox ownership. He characterized the work required of the McCourts as "a Herculean effort to turn [the club] around." Among the risks of the acquisition, Wilhelm listed expenses that exceeded revenues, Fox's practice of raising ticket prices, and a bloated payroll. Wilhelm testified that Jamie felt Frank was being too aggressive in his bid for the Dodgers, and that she was unsure about the viability of the turnaround.

Jamie's lawyers, on cross-examination, elicited testimony that the Dodgers outperformed Wilhelm's projections. By this, they meant to show that Wilhelm's forecasts had been unduly gloomy. They also attempted to get Wilhelm stuck between points; if he thought the acquisition was inappropriately risky, the question went, why did he recommend it? Wilhelm countered with a question in return: "Appropriate for me? Frank? Jamie? The fans? Who?" He noted that, while he found the risk level tolerable, Jamie was against the deal as late as the waning weeks of 2003.

The final witness of the day (and, indeed, the trial) was a McCourt financial advisor named Jeff Ingram. He'd been with the family businesses since 1999, and described the McCourts as consistently "asset-rich, cash-poor." He characterized his job as mining that asset value to generate cash flow. It wasn't always easy; in 2001, he informed the McCourts that they had six to eight months before they ran out of cash. He also wrote, on an itemized list of McCourt to-do's, "Stock smelling salts in the office. I'm going to need them." As far back as 2001, the McCourts were spending $75,000 per month while bringing in just $68,000. "Don't rely on the company as a bottomless source of money," he wrote.

Just months before the McCourts finalized their bid for the Dodgers, Ingram titled an email to the couple "Here we go again," referring to their cash-flow issues. He recounted Jamie as saying at the time, "[Frank] could make a billion dollars or lose a billion dollars, as long as I have my nest egg, I don't care." Ingram recalled that Jamie was unwilling to expose her assets to the risks associated with Frank's business ventures.

The debate of the day was Jamie's comfort level with the riskiness of the Dodgers acquisition. Frank's lawyers used their witnesses to document both risk of the transaction itself and Jamie's consistent desire to be insulated from that risk. Jamie's attorneys fought to show that, first, the purchase wasn't as risky as it looked and, second, that Jamie was ok with the risk. To which Frank's lawyers would say: Of course she was! Her homes were protected. She, herself, risked nothing. Jamie would say that's misleading; the couple protected the homes so the couple could engage in risky ventures. She cared deeply that the businesses succeeded.

Day eleven wrap, part one.

It seems odd to say this, but: we're pretty much done. With this round of litigation anyway. On Monday, lawyers for Frank and Jamie McCourt buzzed through six witnesses. Consider that it took six days just to get through Frank McCourt and Larry Silverstein (combined). For those who have been in the courtroom for the majority of the trial, the day was, at least, a refreshing change of pace.

The first witnesses of the morning were called by Frank to support his claim that Jamie was nervous about the riskiness of the Dodgers acquisition, and that she drove the creation of the MPA. Robert Leib, a consultant to entities in sports business, was engaged by Frank McCourt in 2001. He helped with bids for the Red Sox, Angels, and Dodgers. He claimed to have discussed community property with Jamie on two occasions, and that Jamie explained that they held assets in a way that protected her nest egg but also allowed him to engage in risky ventures. The Dodgers, Leib explained, had been able to sell just 11 of 36 suites in 2003, and that was just one example of the risks associated with the purchase.

Next came Corey Busch, another consultant in the sports business arena. Busch testified that Jamie expressed concerns about protecting her own assets. She refused to sign any indemnity agreement or personal guarantee related to the couple's acquisition of the Dodgers. "She really wanted to be separate from the deal," Busch said. She expressed those feelings in very public settings, leading Busch to conclude "this really was an issue between Mr. and Mrs. McCourt," and he noted that "a number of us were really taken aback" by the public tension. She had an interest in a management role, according to Busch, but not in personal ownership.

Jamie's attorneys cross-examined Leib and Busch using similar approaches. They noted that Frank McCourt was paying each witness' travel costs incurred in testifying. Leib never took any notes of his conversations with Jamie concerning community property, and he didn't display anything approaching expert-level competence in the relevant legal concepts. Leib testified that Jamie never mentioned divorce, and that Jamie never said the Dodgers acquisition was too risky.

On cross, Jamie's attorneys noted that Corey Busch wrote Frank last November offering his support in any way he might be helpful. Jamie's attorneys clearly wanted to characterize this communication as an offer to testify to Frank's side, but this backfired a bit when Busch explained his reasons for the note: he had heard about Jamie's affair with Jeff Fuller and felt sympathy for his friend, Frank. Busch also said "there was clearly risk involved" with the transaction, though, when deposed, he characterized the acquisition as not "very risky."

The four remaining witnesses of the day were two former Bingham McCutchen attorneys, Aaftab Esmail and Reynolds Cafferata, and two people close to McCourt finances, Peter Wilhelm and Jeff Ingram. We'll get to them in a bit.

Monday, September 27, 2010

Day eleven preview.

Good morning. First, a couple housekeeping matters. If you're new to the site, or would like a refresher on the basic issues, you can check out this trial guide I put together a few weeks ago. The basic issues are unchanged, though some details have certainly emerged since then. Next, I want to point out the long-overdue Twitter gadget on the left sidebar. I was dismayed to learn many non-Twitter users were having a difficult time accessing an updated feed last week, and the gadget on the side should solve that problem. It shows, in chronological order, my last ten tweets; about the most I'd ever get out after any session in court.

Today, Frank sets out to legally establishing the veracity of the factual background detailed in the post below this one. It's one thing, of course, to know the facts, but another altogether to prove them. To this point in the trial, Jamie has done a good job casting doubt on Frank's side of things. Her attorneys strongly implied Reynolds Cafferata was in the Dodgers' pocket, and they managed to characterize Larry Silverstein as either a man hiding a secret or a lawyer who made some pretty shaky decisions.

The fact is that, had Silverstein sought the parties' acknowledgment of the Exhibit A switch in April 2004 when, as Frank contends, both he and Jamie were on the same page, we probably wouldn't be here today. Most of Jamie's initial arguments, including the possibility of undue influence, have fallen through. The existence of that other Exhibit A, though, and the circumstances surrounding the switch, have given her a fairly strong position to argue from. It's only fitting that her best legal theory here--the switcheroo--and Frank's best defense--the facts--play in perfectly with how they've handled the divorce publicly. Jamie has been vocal and visible, Frank reserved and reticent.

Los Angeles Dodgers CFO Peter Wilhelm will take the stand today, and he is expected to be the first in a series of several witnesses testifying as to Jamie's knowledge and understanding of the MPA at the time of its creation and execution. Blessedly, this week's witnesses are supposed to be on and off the stand much quicker. Poor Larry Silverstein, between depositions and trial testimony, was under oath for a calendar week explaining to David Boies his role in the matter. Ouch.

The parties left trial last Thursday publicly optimistic about the possibility of settling the issue via mediation, but talks stalled out after a ten hour session Friday. The Times' Bill Shaikin reports that the sides are about $300 million apart, and also dealing with issues related to the timing of payments. This is in line with past settlement discussions, in which Frank's starting point was always what Jamie would get from his version of the MPA. Further, while Frank is willing--and might want--to spread payments over time, he has refused in the past to structure a settlement in any way that would have ramifications on the club. This means that giving her a chunk of the team or a hook in future revenue streams have been largely off the table.

While settlement talks haven't gone particularly well--this past Friday or in two other attempts this year--I still believe a settlement is the only reasonable option here. Frank might have the facts as they actually happened in his favor, but he's got several difficult hurdles to go in proving them and avoiding other land mines, such as Jamie's lack of independent representation. The risk of losing is still very real for both of them. And, among the several elephants in the room are multiple other legal theories, avenues, and disputes that would follow resolution of the issue on the table now. Unless settled, this litigation won't end here, and the parties both risk spending so much money unwinding the marriage that there is little left when all is said and done.

Saturday, September 25, 2010

So just what really happened?

We all know pretty well why we're here. The basics aren't tough. Frank and Jamie McCourt are getting divorced, and there's a question as to whether Jamie is entitled to half the value of the Los Angeles Dodgers. There's a document--a relatively simple one, really--that says everything titled in Frank's name shall be his in the context of a division of assets. Divorce counts. Seems simple enough, right?

But there's also something tacked onto that document. A couple things, actually. One, Exhibit A to the agreement, specifies assets that belong to Frank. Now, the main document itself sort of says that Exhibit isn't important. That it's for "courtesy" only. So, since the Dodgers are unquestionably in Frank's name, what's so hard about this? Problem is, as you likely know, two different agreements were signed, the difference being the content of Exhibit A.

One version says the Dodgers are Frank's. He wins, keeps the team, game over. The other version specifically excludes the Dodgers from Frank's separate property*. She wins, the Dodgers are the couple's community property*, the club must be sold, game over.

*You understand intuitively what these concepts mean. You do. But you wouldn't if you were on the stand. 

That's pretty much why we're here. And, eventually, Judge Gordon will either agree with Frank and uphold the first version of Exhibit A, or he'll agree with Jamie and toss the thing entirely. The reasons and mechanics that go into that decision are fodder for a different discussion, one we'll have here before trial resumes Monday. That's the legal part. What I'm after here is answering the question titling this post: so just what really happened?

I'm pretty well convinced on this point. Frank and Jamie meant to separate their assets prior to moving to California. The quickest, simplest way to preserve the protections they'd long ago given their homes was to allocate them to Jamie and the team to Frank. To simply cordon off the homes and leave the Dodgers in the community pot would likely have been ineffective. So they meant to split things as Frank's Exhibit A does it.

Never in the course of the creation and execution of the document did Jamie McCourt express concern that the businesses were being legally allocated solely to Frank. Indeed, she wanted that. I strongly believe that the first three copies of the document the couple signed on March 31, 2004 were precisely what they wanted. At that time, anyway. They were walked through that copy--which contained Frank's Exhibit A--and signed it. That day, Jamie was shown three seemingly identical copies, which she signed believing they contained the same Exhibit A. She had no reason not to: that was what she wanted.

Over the course of the next several months and years, Jamie was provided the documents multiple times for various reasons. The couple also ratified it in writing upon the acquisition of additional homes. As far as I've seen, at no point prior to the onset of significant marital strife did Jamie ever cause a fuss about the words or effect of the MPA and its exhibits. She knew what it said, and--as someone who practiced family law for several years--what it did. Really.

Perhaps nothing is more telling about Jamie's understanding of the MPA than what she did not do at the outset of the divorce litigation. She did not say--because she did not know--that documents had been switched. She did not say--because she did not know--that the Exhibit A attached to the MPA was materially different from what she had meant to sign. But, if she believed that the only MPA she knew of was not confusing, not misleading, but flat-out contradictory to what she agreed to, wouldn't she have screamed that from Day One?

She didn't. In her filing for divorce, she claimed "it was never [her] understanding" that the MPA would divest her of any interest in the Dodgers in the event of divorce. She argued that she "had simply been told [she] needed to sign the document" upon the couple's move to California, and didn't consider its effect. I am not asserting that Jamie signed the MPA with divorce in mind. In fact, I'll bet she didn't. And I'm not asserting she doesn't have several viable arguments against the MPA, including, among other things, the lack of independent counsel and the incredible difficulty Frank is having credibly establishing his version of the timeline.

I am asserting, though, that if Jamie had any idea that the only Exhibit A she knew of at the moment of her filing was completely wrong, opposite to what she believed she signed, that she would have let us know right away. She didn't know that fact of the switch until much later. But she also didn't react in a way suggesting she even suspected the substance of the switch.

I want to be very clear here. I am not saying that, in the absence of a settlement, Frank will win. Heck, I'm not even saying he necessarily should. Jamie has several viable arguments against the enforcement of Frank's version of the MPA, not the least of which being the lack of independent representation and the seeming ineffectiveness of the counsel she had. Further, there are strong public policy reasons supporting an award to her of a substantial portion of the couple's assets, even if Frank's MPA is upheld. Finally, it cannot be ignored that Frank is having a devil of a time proving the facts that would lead to his victory.

This afternoon, in this post, I'm not saying Frank has the best legal position. If this was a jury trial, after what we saw this week, I'd put Jamie very far in the lead. For three of the signed copies, the Exhibit A was switched out after the fact, and Jamie was neither asked for permission in advance nor explicitly informed of the switch afterward. That's really bad, and I very much understand why many folks have called this for Jamie already.

And maybe they're right. This afternoon, though, in this post, I'm only saying I believe that the facts as they actually occurred--without regard for whether they can be legally established--are closer to Frank's telling than Jamie's. Eleven months after we started this litigation, I can't disregard that Jamie's initial response to Exhibit A just doesn't mesh with her contention that she agreed to something completely opposite.

Very bad things happened with respect to the creation and execution of the MPA. For a variety of reasons, both legal and in the interest of plain old fairness, Jamie has a strong case. Divorce, if it was considered at all in the context of the MPA, was not given much thought by either party. But if the question is, "So just what really happened," I strongly believe the answer is: the McCourts knowingly negotiated, approved of, and signed an agreement explicitly making the Dodgers Frank's, and the couple's residential real estate Jamie's.

Maybe they didn't know of alternatives. Maybe they didn't contemplate its effects. Maybe they were inadequately and ineffectively represented. Maybe the facts that can be proven aren't strong enough to carry the day. All of these things really do matter, and they are why this has lasted as long as it has. But, given the couple's history, the life cycle of the MPA, and how the parties always interpreted it, I can't conclude anything other than the conflicting version of Exhibit A was a complete accident, unknown and unrelied upon by Jamie until after the divorce was filed, when it became the strongest of her weapons against the document she reviewed and signed March 31.

Assuming the McCourts can't come to an agreement this weekend, the trial will resume Monday morning. And assuming the couple can't come to an agreement some time in the next three months, Judge Gordon will rule that Frank's version of the MPA holds, or that the entire thing is ineffective. When evaluating the case, Judge Gordon must and will consider much more than what he believes to be the true factual history of the MPA. For today, though, and in the narrowed scope of this discussion, I don't. I believe that the only textual version of the MPA Jamie understood to exist in 2004 was the only one she even suspected to exist when she filed for divorce last Fall.

Friday, September 24, 2010

Day ten wrap--mediation.

For tonight, this post will take the place of the MPA chronology. First, I was in court today much longer than expected. Second, the MPA chronology is turning into more of a review of everything we've learned, and I either need to trim it down or expand it further. In the mean time, some quick reflections on an atypical day in court.

Might as well get this out right away: today's mediation was unsuccessful. The parties, who expected to continue discussions tomorrow, left the courthouse at about 7:00 with no agreement. Further, tomorrow's talks are indefinitely postponed, to be resumed at a later date. Combined with a statement about two hours prior that the parties were not on the precipice of the agreement, and the general demeanor of the parties and their representatives, it looks like settlement talks have stalled. We'll be back in court Monday, according to a court spokesman.

Of course, I guess that could all be a smoke screen. The parties could have already agreed, or be so close that further formal talks aren't necessary. Or, perhaps discussions were fruitful, but there are many details about structuring a potential deal that the parties need time to explore. It's possible that we go back to court Monday and the parties announce a settlement.

But I doubt it. While appearances are easy to manipulate, everyone involved seemed to indicate talks were not progressing particularly quickly. And while Judge Lichtman is not known to stay after hours unless progress is being made, there are reasons to doubt the parties are close to a meaningful solution.

First, we're dealing with people that had their fair share of squabbles while married. Now they're locked in a billion-dollar divorce. Furthermore, Frank's side likely feels it is negotiating from an artificially weak position. He has yet to make the bulk of his case, while Jamie is coming off a week in which she created much doubt about the accuracy of what would be the strongest testimony yet in Frank's favor. If Frank's attorneys believe Jamie is abusing her position in terms of where we are in the litigation, they might not be in any sort of mood to negotiate.

And maybe that's the point: a settlement doesn't have to come now. It probably won't come now. After this trial comes to a conclusion, Judge Gordon will have 90 days to issue a ruling. You can bet he'll keep the parties well-informed to his progress, and that they will have ample time to reach a settlement. It's a hugely important case, one that could potentially create new California law, but the parties are unlikely to let it get that far. There's just too much to lose.

Day ten preview--mediation.

This morning, the sides will meet with Judge Peter Lichtman, who will mediate settlement discussions in the hope of ending this litigations. The lawyers' expectations vary wildly, even on the same side. I've heard we'll definitely be back Monday, and I've heard there's a small, but reasonable, chance this could be over shortly.

The process is expected to go as follows: each side prepared a brief settlement proposal to submit to Judge Lichtman. He will likely meet with representatives from each side individually. It was unknown whether Frank and Jamie McCourt would be present personally, but--as legal ethics are an important topic in this mess--we must note that the parties themselves have the ultimate say on their participation and any agreement.

Often, as the mediation progresses, the judge may encourage parties, or their representatives, to meet. This usually occurs after the judge has identified an issue--maybe even a minor one--on which the parties share common ground. Mediation is psychological; encouraging the parties to come together on inconsequential issues can foster meaningful discussions on the big-picture items.

Stephen Susman mentioned yesterday that this mediation will go best if Judge Lichtman has spoken with Judge Gordon about the case. Judge Lichtman would then have a strong sense of where each party is strong and weak. That knowledge would make it easier for him to put settlement discussions in context. The fear of losing drives these negotiations, and you can expect Judge Lichtman to ask each side hard questions about what a loss at trial would mean for their client.

For Frank, a loss would be a crippling blow to his decades-long string of luck, fueled by hard work. He survived bitter litigation concerning the Seaport property, so he's been here before. A loss at trial would cost him the Dodgers, of course, making unavailable the best route to redeeming his public image: winning on the diamond.

For Jamie, a loss at trial would be a financial disaster. In a year's time, she will have gone from practically limitless resources to owning little more than tough-to-move real estate. Make no mistake: she'd be quite wealthy. But she'd have to think about how she spends her money, and that's a big change. She, herself, poured a lot of hard work into the couple's businesses over time. Her testimony notwithstanding, I believe Jamie is a very intelligent woman who simply found herself in a cascading run of hard times.

For both Frank and Jamie, a loss represents the end of their shared hopes for their sons to own and run the Dodgers. No one involved in the trial disputes their concern for their children; they have declined to involve the kids whatsoever, even though it's likely the children know things relevant to the case. The McCourts have done several things in recent years leading us to question their decisionmaking, so I think it's important to acknowledge they've at least kept the kids out of this.

The mediation is probably welcome the least in the fans' eyes. Any settlement agreement would keep the Dodgers in the McCourt family, an outcome a very high proportion of fans fear. To me, that speaks to the tragedy of the entire situation; the fan base of the Los Angeles Dodgers is actively rooting for the trial to continue, because it is the path to new ownership. And, should the litigation continue, no definite end is in sight. This part will conclude next week, but we'd be months--if not a year or two--from anything approaching finality.

So we wait and watch. I'll certainly update as events warrant, and I'll also post later today about the disputed timeline concerning the creation, execution, and modification of the MPA.
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Thursday, September 23, 2010

A (not so) quick day nine wrap.

I'll be back very early tomorrow morning with first thoughts on the day's mediation proceedings. Also tomorrow, we'll dig deeper into the chronology of the Exhibit A's to the MPA, comparing the parties' conflicting stories. For tonight, a recap of the day that was.

The beginning of the morning session went quite well for Frank. Larry Silverstein, the McCourts' Boston attorney, described in detail the process of the creation and execution of the MPA. His testimony suggested that Jamie understood the agreement from the very beginning and, indeed, was a driving factor in its existence.

Perhaps the most important part of Silverstein's early testimony concerned the revisions made to Exhibit A and details of its execution. Silverstein explained the drafts which led to the "exclusion" of Frank's assets on a misunderstanding of his handwritten notes. He testified that he meant to be editing the Exhibit to detail assets "exclusively" belonging to Frank, but made an unfortunate error leading to the flawed Exhibit. He also asserted that he walked Frank and Jamie through the relevant portions of the MPA, including the Massachusetts Exhibit A, before signing it. The McCourts, according to Silverstein, never reviewed the California version of the MPA, which appeared to be identical to the one they examined in some detail.

There was commotion in the morning as the parties' lawyers haggled some over how much time each could have with Silverstein. As mediation talks begin tomorrow, it was extremely important to finish with Silverstein today. He is the last witness expected to offer heavily contested testimony (by both sides), and it would have been difficult for the parties to even begin to approach a settlement in the absence of his complete testimony. All told, Silverstein has given about a calendar week to this litigation between his depositions and appearances on the stand.

Late in the morning, and well into the afternoon, David Boies got his hands on Silverstein. Boies attacked Silverstein's credibility from every angle. Silverstein often confused dates and facts, and his testimony at trial often conflicted with that given during his depositions. Heck, even his depositions conflict a fair amount. He was not the image of a detail-obsessed lawyer, and, surely, his testimony to Boies will make Judge Gordon think twice before believing his accounts of the MPA confusion.

Perhaps the most difficult moment of the day for Frank's side was Silverstein's non-recollection of several events that turned out to be momentous in the trial's context. Silverstein had difficulty describing in detail the handling of the three copies of the MPA with the "wrong" Exhibit A. Further, he had no recollection of the actual when and how of substituting the "correct" Exhibit A into the document. His testimony was based on a reconstruction of the facts through a review of computer, telephone, and handwritten records. He may well be right, but it was a strong point by Jamie's side.

The day drew to a conclusion with Boies alleging that Silverstein did not submit the MPA for filing in April, as he testified, but at some time during the Summer. Boies eventually handed Silverstein back to Victoria Cook, but only after a rapid-fire series of questions and answers raising further questions about Silverstein as a witness. Cook closed the week, and Silverstein's presence at the trial, by eliciting testimony concerning Jamie's intent in the MPA. She never once, according to Silverstein, expressed a desire to own the team--much the opposite.

If much of this sounds repetitive, the balance of the day largely was; it was tough to tell who was on trial today, the McCourts or Silverstein. As Judge Gordon surely noted, there was little today that was all that new. Frank's story is the same: the parties only ever knew of and intended to execute the Massachusetts version of the MPA. A lawyer's mistake, however egregious, shouldn't be the focus of the court's decision. Jamie's main argument, too, is still mostly intact. The documents, when executed, conflicted as to a material term. The version less favorable to Jamie was made to disappear without any notice to her, before or after the switch.

The truly important part of today's proceedings is that there is plenty enough on the table to lead to a productive beginning of settlement talks. Each party's side has a glaring weakness; Jamie's is the aggregate course of events leading to and ratifying the MPA, Frank's is the screaming appearance of impropriety. In the public's eye, neither is winning the popularity contest; Anyone Else has a commanding lead. And that will only become more important as we inch toward a resolution.

A quick clarification.

The hazard of posting by Blackberry is it's tough to see necessary edits sometimes. I should be clear, regarding something below: if Judge Gordon throws out the MPA, Jamie absolutely has an ownership interest of sorts in the Dodgers. The question that has largely been resolved is that, as it concerns Major League Baseball's rules and related documents and concerns, Frank McCourt, through a couple different entities, is the 100% owner of the Dodgers.
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Day nine preview.

On what was once expected, and still may be, a short ninth day of the McCourt divorce trial, Larry Silverstein will again be subject to direct examination by David Boies. It is unknown how much time Boies needs; he seemed to be building to a crescendo yesterday, but couldn't quite fit the finale into the time alotted. Many are expecting a dramatic finish to his examination of Silverstein, in which Boies might seek an admission that would implicate Frank in some sort of wrongdoing.

Remember, it is ultimately Frank that Boies would like to accuse of wrongdoing. Laying the foundation for a possible consolation lawsuit against Silverstein and his firm is well and good, but pinning Frank to something nefarious would be ideal. Whether that can be accomplished is an item to watch today.

Afterwards, Frank's attorney Victoria Cook will resume her own time with Silverstein. Yesterday, she did a good job walking Silverstein through the process that led to what Frank's side characterizes a "mistake" on three copies of Exhibit A. Notably, according to Silverstein's testimony, Frank and Jamie were carefully walked through the MPA and the Massachusetts Exhibit A on the morning of the signing. As the next set of documents appeared identical, no party looked through those prior to signing, so none noticed the conflicting version of Exhibit A.

Once Silverstein is done, we will have most of the key issues on the table. Judge Gordon has already informed the parties that his mind is mostly made up on the issue of whether Jamie McCourt has any existing ownership interest in the Dodgers. The answer is no, and Frank's remaining witnesses supporting that conclusion have been provisionally excused.

That means the stage is pretty well set for settlement talks to resume in earnest this weekend. Indications from both sides are that these folks are serious: there is strong interest in taking the decision away from the court. The more difficult question to answer is how much money Jamie will get, and how Frank would be able to afford it and still run the team. If this works out, look for some combination of money now, money at regular intervals, and some mechanism for a portion of future revenue streams or proceeds from sale.

Edit: I am leaving the body of the post intact, as it has led to some confusion and I don't think that's best solved by switching out the evidence while no one is looking. The post above this one, and a comment to it, should hopefully resolve any issues.
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Wednesday, September 22, 2010

A morning of almost.

The entirety of the morning in court saw David Boies question Larry Silverstein under oath. Several times, Boies appeared to have Silverstein perilously close to a damning admission. Silverstein admitted to changing the Exhibit A in Frank's office the day before it was signed. Boies also caught Silverstein in an inconsistency regarding the preparation of copies of the MPA to be signed on March 31, 2004.

In neither case, though, did Boies press far enough to uncover what would be something of a smoking gun: that Frank conspired to have the documents surreptitiously switched, or that Silverstein pulled shenanigans of his own the night before.

Boies struggled to close his arguments by the noon break, and its entirely possible he might yet break out the theatrics with Silverstein tomorrow morning. Or maybe he doesn't have the sort of smoking gun it would take to effectively end the trial in one move. Assuming that's the case, the parties will head into mediation Friday with the outcome of the litigation very much still in doubt.
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Wrapping up seven, getting set for eight.

Perhaps no one had a worse day yesterday than Larry Silverstein. The Boston lawyer, who represented at least one McCourt during the time of the execution of the MPA, admitted under oath to switching out an exhibit to a signed, notarized document. He acknowledged that "it would have been better practice" to inform Frank and Jamie McCourt of the substitution, but he did not feel the ethical need to do so. He didn't meet with his firm's ethics or conflicts committees until well after this had become a problem.

And it's quite a problem. My gut feeling, the basics of which are shared by several close watchers, is that Frank and Jamie absolutely meant to execute the Massachusetts MPA--the one now extraordinarily favorable to Frank. Remember, it was not always so imbalanced. I believe that Frank wanted the upside and Jamie the stability. But, several years later, as the value of the team skyrocketed and the value of high-end real estate plummeted, Jamie's late discovery of the document switch might have given her legal team all it needs.

Their argument is simple: if you have two sets of documents which are completely opposite on a material term, how can you enforce either? Jamie isn't asking Judge Gordon to bless the California MPA. She wants the whole thing tossed, which would put into motion a series of events nearly certain to lead to the sale of the Dodgers.

Frank's counter is pretty simple itself. Jamie admits to not reading either version of the MPA--she had no knowledge of the California Agreement until this year. If she meant to sign the Massachusetts MPA, the argument goes, and she never knew of the discrepancy at the time of execution, shouldn't the court enforce the Agreement she meant to sign? Frank supports this case by trotting out witnesses who can testify to Jamie's knowledge of marital property law and intent to insulate herself from the risks associated with the Dodgers acquisition.

At the end of the day, the lasting question is this: What do you do when two parties signed a document they never read containing Exhibits conflicting as to the most important item in the document? If you believe they meant one thing, is that enough? Or do you have to throw it all out on its face?

Those questions aren't easy to answer, and each party risks a ton by leaving the issues up to Judge Gordon. That's why the parties will meet Friday morning at 9:30 in front of Judge Peter Lichtman in confidential, non-binding mediation. Both sides are expected to present Judge Lichtman with a brief summary of exactly what they would want and need in a settlement. If, to use a term of art introduced to this litigation in Silverstein's testimony yesterday, there is a nexus between the parties' needs and wants, I believe it's entirely possible this thing is resolved shortly.

There's still the matter of today. David Boies, who brought the trial's first true fireworks on his direct examination yesterday, will continue with Larry Silverstein. Should Silverstein be up to the task physically, he will also be cross-examined by Victoria Cook, one of Frank's attorneys. Jamie wants to pin Silverstein and Frank to a story of (at best) grievous error and (at worst) something worse. Frank wants to use Silverstein to show that Jamie really did mean to sign the Massachusetts MPA.

Assuming we get through Silverstein today, the case will be turned over to Frank's attorneys, and we will move on. It has been suggested we might add a bonus morning to this week's proceedings tomorrow, but that's to be seen. For now, before I head to the courthouse, some notebook clearing:

  • Silverstein recalled that, based on computer records, he must have been the one to make the switch. Upon pressure from Boies, the Bingham McCutchen attorney admitted that, in his 33 years of practice, he had never known of a situation in which a lawyer, after the signing and notarization of a document, has removed a schedule without express permission.
  • Judge Gordon had his most active day, interposing more objections of his own yesterday than the balance of the trial. It was clear from the beginning that Silverstein is a key witness in the matter, and Judge Gordon's activity level yesterday confirmed it.
  • Silverstein couldn't recall the existence of any unsigned copies of the draft executed in Massachusetts on March 31, 2004. No one has that document in any form other than an original or a copy of an original.
  • After considerable hedging, Silverstein finally admitted that the difference between the two Exhibit A's is "one of substance." Silverstein, however, contended that when one document has an error and one doesn't, he doesn't believe the one with an error is a final contract.
  • The most dramatic moment of the day? Boies: "Both parties never agreed to a change because you never even TOLD your client, Jamie McCourt!" (emphasis in original, transcribed for your enjoyment) "Whether you were lying or not, your testimony was false!
  • Reynolds Cafferata, another Bingham lawyer, took the stand later in the day. his testimony supported Frank's argument that Jamie knew full well what was going on; that she was the driving force. On cross, Mike Kump worked to impeach Cafferata by noting his ties to Frank and unfamiliarity with Massachusetts law.
Gotta get dressed and out the door. I was told that Twitter was balky yesterday. I sure hope that's not the case today, as it's the quickest way to provide updates.

Tuesday, September 21, 2010

The McCourts will go to mediation Friday.

As has been reported elsewhere by Yahoo!'s Tim Brown and the Times' Bill Shaikin, and according to a high-ranking person close to the situation, Frank and Jamie McCourt will take their case to mediation Friday morning at 9:30, in front of Judge Peter Lichtman. This represents a meaningful opportunity for the McCourts to keep the fate of the Dodgers from the uncertainty of the judicial process. The mediation's timing is appropriate, as all relevant issues are expected to be on the table by the time Larry Silverstein concludes his testimony, due tomorrow.
I understand that my Twitter feed was interrupted for some folks today, particularly unregistered users who tried to follow at www.twitter.com/dodgerdivorce. I hope it works better tomorrow. And, for those who don't follow me on Twitter or experienced an issue with the feed, reactions to today's events will be posted tomorrow morning, along with a preview of day eight.

Day seven preview.

Today, once David Boies finishes up with Jamie fairly early, her side is expected to rest. Then, it will be Stephen Susman's turn to call witnesses. Jamie could not recall several key meetings and events in her testimony yesterday, and you can be sure Frank's legal team has assembled an array of folks who will try to fill in the gaps.

First will be the to-this-point mythical Larry Silverstein, the Boston attorney who represented the McCourts in several matters, including the creation and execution of the MPA. While yesterday's action mostly bolstered Frank's claims concerning the effect of the MPA, Jamie's most potent challenge is to its enforceability. The existence of diametrically opposing Exhibits to the Agreement--one specifically including the Dodgers in Frank's separate property, the other specifically excluding the club--is the biggest hurdle Frank must overcome.

He will start today by eliciting testimony from Silverstein that the Dodgers were always meant to be included, Jamie knew it, and she never even knew of the mistaken Exhibit A. It's more than a little surprising that Silverstein elected to show up this week. As you can imagine, the events which led to his involvement in this litigation seem to be either an honest, but dreadful, mistake, or something far more nefarious. It's possible that whichever McCourt loses will believe Silverstein cost their side at least a half-billion dollars. His participation in this litigation is risky, to say the least.

Also expected in court today is Reynolds Cafferata, a lawyer from the same firm as Silverstein, Bingham McCutchen. Cafferata will likely testify to his role in the creation of the MPA. Further, Jamie kept notes from what seems to be a fairly detailed conversation with Cafferata concerning the effect of the MPA. Jamie claims she did not understand what she was writing down; she was merely keeping records. Cafferata may testify to knowledge of Jamie's true understanding of the MPA, which would help Frank's arguments in favor of enforcing the MPA.

On cross, expect David Boies to find out just why Silverstein handled the "mistake" as he did. I don't think it's unfair at all to suggest that, if it was an honest mistake, a more thorough and immediate remedy might have prevented the litigation from dragging out this long. Of course, Jamie's side does not believe it was a mistake. Rather, they contend that her version of Exhibit A was always intended to be executed, and the substitution of the more-favorable-to-Frank Exhibit A was in bad faith.

It will be interesting to see how Silverstein answers Boies on cross. If Frank's story is true, Silverstein might be forced to throw himself under the bus. If Jamie's is true, it's at least possible that we might be steaming toward a conclusion this evening. Susman v. Jamie was expected to be the highlight of the litigation, but her sudden unfamiliarity with basic legal terminology took the wind out of Susman's sails. Frank's side needs today's witnesses to strike a blow, and he needs to avoid land mines in the process. Jamie, represented by the ultra-competent David Boies, will search out those land mines.

Should be a fun day. Stay tuned.

Monday, September 20, 2010

Recapping day six and looking forward to an important tomorrow.

If you've been following the McCourt divorce from the beginning (or maybe that's just me), you're quite familiar with the concept of leverage. Usually, it refers to the use of borrowed money; it might cost me 5% to borrow money for my house (or baseball team), but I expect the asset's appreciation to outpace the accumulation of interest. Tomorrow, though, leverage is used more in the baseball analysis sense: it's going to be an extraordinarily important day.

I'll get more in depth about it tomorrow morning before trial, but here's the takeaway: the trial, to this point, has largely been about supporting the briefs. For as much commotion as the last several weeks have seen, we're largely back where we started: the Marital Property Agreement, if enforced, strongly favors Frank. His problem is winning on the question of its validity. Tomorrow, we hit a key phase in that battle. Two attorneys who had a hand in the execution of the document are expected to testify, and tomorrow's events will greatly shape things to come. In the mean time, some bullets about today's proceedings:

  • Jamie spent much of the day playing coy. Or, many would say, dumb. Several times, she expressed the sentiment that she didn't even know enough to know the couple needed a postnup to preserve their creditor protection upon a move to California. This goes directly against Frank's argument that she was, herself, behind the postnup.
  • From the earliest days of McCourt control, working at least one of the children into the Dodgers payroll was a priority.
  • Speaking of finances, it came out that the McCourts once sought to put aside $250 million, the interest from investment of which would support their $15+ million annual budget. Unable to find the cash and unwilling to sell a piece of the team, Jamie's notes read: "[R]ather, we will bake the annual number into operating budgets." This was accomplished through salaries, dividends, and other distributions.
  • The McCourts bought their second Charing Cross house because they believed it would make a great guest house. "Or bloggers' quarters during the trial," Jamie McCourt did not say.
  • Jamie said that "in many ways" she believed the Dodgers acquisition was "a less risky transaction" than Frank's other business endeavors. Susman proceeded to hammer her for saying recently that the Dodgers acquisition wasn't risky.
  • Jamie has no recollection of, well, lots of things. I guess she and Frank have that in common. Anyway, among the things she can't remember are several meetings related to the creation of the MPA, as well as its execution.
  • Jamie said that, as a lawyer and a "normal person," she believes people should be bound by what they sign. Interesting strategy. She also "never considered" the MPA "a post-nuptial agreement."
  • Many times throughout the day, Jamie tried to distinguish between sole ownership as a legal concept and sole ownership in the context of a day-to-day marriage. A valid point, in practicality. But we are, after all, in a courtroom.
  • Jamie noted that signing documents without reading them "seems to be my downfall." Of course, she also added later that she doesn't spend time reading most legal documents because "it's boring," and if she finds something she doesn't understand, "I don't bother reading it because it's over my head."
  • Susman seemed to restrain himself several times from giving Jamie elementary reading lessons. She was claiming no knowledge of some concepts that you learn in the first two weeks of law school, let alone in several decades of legal and business experience.
  • "I'm assuming it's correct because we signed it." Those words were about a personal balance sheet, not the MPA. Because that would be too easy.
  • Much of the afternoon was spent walking Jamie through several documents listing Frank as the sole of the owner of the Dodgers and Jamie as, well, not. Boies countered by noting that none of those documents mention divorce, including the MPA Jamie didn't read at the time. But she has now, I'm sure.
That's about half of the interesting stuff I could dump from my notes tonight. It's important to note that, just like Frank a couple weeks ago, we shouldn't jump to conclusions on the night after Jamie faced opposing counsel. She struggled a bit. Frank probably struggled more, and yet we're right where we began. I've got to run, though. See you all early tomorrow morning!

Sunday, September 19, 2010

Setting the stage for week two.

If you're new to the site, or would like a refresher on why we're here, you can check out the sort-of comprehensive trial guide I put together on the eve of the first day. Otherwise, let's take a few moments to talk about things to come this week and beyond.

The day will start with Jamie McCourt under direct examination from her own superstar trial attorney, David Boies. This was very much by design. By hammering Frank on the stand during the latter half of the first week and keeping Jamie to himself by the week's end, Boies effectively won the week. Frank, as would be expected of any of us, wilted some under direct, and Jamie hasn't had to suffer the same experience.

Until this week, that is. While Boies prefers to run at a pretty steady pace and use fatigue as a weapon, you can expect Frank's attorney, Stephen Susman, to attack aggressively. He'll use every available opportunity to force Jamie to concede that, yes, she was indeed concerned about the viability of the couple's business activity, and, yes, she did push for the MPA at the heart of this matter. At least that's what Susman will need to do to put his client in a position to own the Dodgers for the long run.

That's maybe a bigger issue than the trial itself. Yes, this litigation will determine the validity of the MPA. But that's likely just the first step. Whatever Judge Gordon's ruling, there are several specters lurking. First is the threat of continued litigation; whether it is by appeal or perhaps a different legal theory, whichever party loses on the MPA will surely extend this issue in the court room well past the end of next week. Next comes the bigger question: if a McCourt ends up with the team, will he or she have the financial wherewithal and public support to make it work?

It's not likely Jamie can walk with the team. Her lawyers concede that, if she wins on the MPA (and assuming that's the end of the litigation), neither McCourt would have the resources to take the other out. Besides, neither McCourt seems likely to willingly let the other control the team, regardless of who wins. No, if Jamie McCourt intends to own the Dodgers, she'd need help in the form of outside investors. Even more daunting, she'd need to get through Major League Baseball's approval process, which doesn't seem particularly promising at the moment.

For Frank, it's a bit easier, in theory at least. Win on the postnup, survive on whatever comes next, and leave no questions about who owns the club. However, there are voices ranging in volume from whispers to screams saying Frank simply doesn't have the money to keep the club himself. Especially if he's saddled with a hefty obligation to Jamie, the liquidity required to rescue the team from its self-imposed decline might be more than Frank could raise and sustain.

Or maybe not; if nothing else, Frank is a fighter whose ability to make something out of nothing is truly remarkable; it's how he got the Dodgers. In my book, the biggest question facing his long-term ability to own the Dodgers isn't cash, it's credibility. This protracted divorce has cost the Dodgers dearly in the goodwill department, and there is no question that "Anyone Else" is the fan favorite to own the Dodgers. And, unfortunately for Frank, the one surefire fix--winning--doesn't appear especially likely. Not when the young, cheap talent is no longer as young, as cheap, and, well, as talented.

But short of financial ruin or MLB intervention, Frank would get his chance if he survives the litigation. And how he'd handle that chance would be scrutinized as closely as an owner's decisions have ever been.

That's a conversation for a different day. Jamie's winning right now, and how she fares on the stand this week will go a long way toward telling us just how far in the future we should be talking. I checked into my hotel tonight, and I look forward to being at court bright and early tomorrow. Check back here for detailed, but infrequent updates. Follow me on Twitter (@DodgerDivorce) for immediate news and quick analysis.

Wednesday, September 15, 2010

Baseball weighing options, but will Selig act?

Spoiler: probably not. In an article running today in the LA Times and various outlets, Bill Shaikin explores the role of the commissioner's office in the McCourt divorce. Selig is reportedly "dismayed at the public spectacle surrounding the divorce and concerned about the potential for lasting damage to the league and its flagship West Coast franchise." Well, yeah. You're certainly not alone there, Commish.
Before I announce any decisions, I will consult with all appropriate parties, including our two unions and [a special committee].
That, of course, is not Bud Selig on the Dodgers' ownership situation. That was the Commissioner on the expansion of replay in baseball following the Galarraga/Joyce catastrophe in June. Just over a month later, Selig announced he was "comfortable" with the current system and would not hasten to make any sweeping changes. This is what Commissioner Selig does, especially on this long eve of retirement. He commissions studies. He taps committee thinking. He deliberates.

Proactive intervention has never been Selig's strength, and this has largely been to the game's benefit. To insert himself in the Dodgers' ownership situation would open a can of worms he can't hope to close by the end of his tenure in 2012. Yes, he could lean on Frank to settle or sell, wielding those intangible powers most often discussed when it comes to All Star Game venue selection. But I'm not sure we've ever seen that work. The Kansas City Royals will host the 2012 All Star Game, and--while this looks like a thing of the past--the Royals have been arguably the worst organization in the game during Selig's time in office.

So what else could Selig do? Maybe he invokes that bizarre "best interests of baseball" clause found in the MLB Constitution. Yes, that'd be a pretty effective way to force the McCourts out of the Dodgers. But, as Fay Vincent notes in Shaikin's article, "Nobody will want to buy into baseball if the commissioner can get upset and move to take away" a franchise. And there are other risks, too: you can bet that Frank McCourt, nothing if not comfortable with litigation, would sue the bejesus out of Major League Baseball the second Selig meddled.

And, of course, there's a bigger matter for another day: that delicious exemption from the nation's antitrust laws baseball enjoys despite a complete incongruity with the rest of the system. While it's pretty far-fetched to suggest that forcing Frank McCourt out of the Dodgers would lead to the revocation of Baseball's exemption, is it even worth taking the risk? Yes, the McCourt situation is ugly. And yes, this could go on for a long time. And yes, it'll probably get worse before it gets better.

But all of those things are equally true in the case of MLB intervention. The fallout would be hideous. It would take forever. And it would probably hurt the game and the Dodgers in the short term. So my guess is that Commissioner Selig will do what he's always done: sit back and let the situation play out. In some ways, that tactic has made him the most successful commissioner in the sport's history; the game exploded under his watch. Of course, so did home run totals, and that's going to be a big part of Selig's legacy, as well. Deliberately letting things play out is, for better or worse, Selig's M.O., and there's little reason to expect that to change now.

Friday, September 10, 2010

How not to interpret the divorce.

I suppose if anyone could be called an opportunist when it comes to the McCourt divorce, it's me. And we've seen a lot of weird stuff over the last several months. Faith healers, pool demands, a complex financial relationship with a Chinese bank--it's been strange, ok? But it looks like we're not done yet. I know that many of you are angrier than I am about everything surrounding McCourt ownership. But this, via TMZ, is a bit much:
The principal owners of the Los Angeles Dodgers, Frank and Jamie McCour [sic], are going through a much publicized divorce and, as a result, the Dodgers have cut spending on essential services, such as security at baseball games at Dodger Stadium. The Dodgers knew that having inadequate security at such games placed their patrons in danger and, despite this knowledge, deliberately chose not to spend the money necessary to safeguard their patrons, in order not only to save money but for Frank McCourt and the Dodgers to bolster the position of Mr. McCourt in the divorce proceedings that he and the Dodgers had fewer available assets than what was claimed by Jamie McCourt.
Several problems. First, the alleged incident happened on February 28, 2010. So this didn't happen at a Dodgers game, but rather (I suspect) at a USC/UCLA baseball game held at the Stadium. Which, of course, doesn't excuse the Dodgers from allegedly skimping on security. Still, I think the allegations are a tad misleading or, at least, incomplete.

Second, and more troublesome: how would it help Frank McCourt to skimp on security, if the goal was to show fewer assets? Wouldn't the goal be to spend as much as possible, to keep cash out of Frank's hands? Now if the Dodgers just didn't have the money to spend on security: fine, yeah, that's a problem. But I don't believe that was (or is) the case.

Somehow, I'm guessing that Perez v. Dodgers won't be quite as momentous as McCourt v. McCourt. And, while I wouldn't pretend to deny Albert Perez, Gerardo Rodriguez, and Alfredo Rodriguez their opportunity to sue the Dodgers for some sort of wrong which caused them harm, to couch it in terms of the divorce seems a bit...well...cheap. I'm quite certain the divorce has revealed more organizational problems that it has caused, and this allegation of lax security would, if true, just be another entry in that first column.

Thursday, September 9, 2010

Being at the trial.

This one’s a little about me. But it’s also about the site, and the trial. Still, it’s a little about me.

Over the last several days, I’ve been asked by several folks—from interviewers to emailers—about the value of being in court. Even more interestingly, I was asked by a Twitter follower how I could afford to attend the proceedings (hint: the same way I afford groceries). As I’m stuck in an airport tonight, I figure I might as well describe the experience of attending the McCourt divorce trial.

To begin with, I’ll note that I was fortunate enough to get a media seat in the courtroom. This only turned out to matter the first day, but was still both an affirmation of what I’ve done here and a significant help to my mental state; I was ready to pull some high-level chicanery to get in, and I was happy that wasn’t necessary. Of course, it turns out that being in the courtroom is a small part of the experience.

Without a doubt, the most meaningful part of attending the first few days of the trial was the hallway. It is in this small space I was able to interact with members of the media, which proved to be extremely helpful. Comparing notes, opinions, and information made everyone’s work better. And, of course, it’s always great to put faces to names. As a newly minted—if minted at all—member of the media, it was extremely helpful to follow others’ leads and at least pretend to know what I was doing.

For as helpful as speaking to reporters, anchors, and columnists was, the hallway was also a terrific place to speak to the parties and their representatives. Much of what I learned from those conversations has made Twitter; the availability of Larry Silverstein, the expected timetable of the trial, and the ability of either McCourt to buy out the other were items I was excited to report (see! I’m getting the lingo!) during the course of the trial.

The other benefit, of course, is the information I was able to pick up just by being around. Watching the McCourts interact with each other told me a little about how they feel about a settlement; seeing where the lawyers left off told me a lot more. (Hint: they’re not especially close) These folks might be in close discussions about ending this thing peaceably—I’ve heard from very close people that that’s the case—but, if so, they’re doing a terrific job of hiding it.

I don’t mean to say that you need to be in the courtroom to get a feel for how things are going. You don’t.  Bill Shaikin very much deserves some sort of award for his work on this issue, and several others have done a great job covering it. I certainly hope I’m in that group, and I know I was much more helpful to you on the days I was in court than the days I wasn’t.

On that note, I’m planning to be back in town when this circus resumes. It killed me to miss Thursday and Friday last week, but I’d promised my nephew, Cameron, that I’d take him on  a particular hunting trip several years ago. I hate that I wasn’t in court those days, but I would hate even more telling my nephew something he had been looking forward to for three years got cancelled because some rich people didn’t get along anymore.

That’s, of course, too simplistic: the takeaway thus far is that Frank’s lawyer screwed this up--or--that Jamie pounced on an opportunity to get something she never bargained for. I would call the race even at this point—Frank was killed on direct by David Boies, but it’s unfair to bury him for that until Jamie undergoes the same scrutiny.

And so I make plans to come back to Los Angeles prior to the resumption of trial. As always, I welcome emails, comments, tweets, and vibes (good and bad).

Friday, September 3, 2010

Wrapping up the week.

The first week of trial wrapped up this afternoon, and Jamie McCourt had yet to be subjected to the stylings of Steve Susman. That much-anticipated encounter will not occur now until September 20--assuming there is still an issue to be tried at that point. Sources are mixed on just how far Jamie and Frank are apart in settlement talks. While many--myself included--speculated that the two week break would be especially conducive to settlement talks, the pace of the trial has changed things a bit.

Because Jamie hasn't faced the same scrutiny on cross as Frank did on direct, it's not especially meaningful to say one party is ahead or behind. It's excellent strategy on Boies' part. While I imagined he would keep Frank on the stand through Wednesday to win the night's headlines before handing him back to Susman, I didn't think far enough ahead to recognize he'd make essentially the same play with Jamie. She goes into the break with the public still buzzing about Frank's admissions on the stand.

And some interesting admissions they were. In my absence, and in no particular order, Gene Maddaus, Bill Shaikin, Molly Knight, John Weinbach, Carla Hall, and several others kept you well-informed about the goings-on in trial. From Frank's not-so-subtle communication with Susman to Jamie's first answers on the stand to apparent drama in the room next door, the end of the week wasn't short on interesting occurrences.

I'll try to get much deeper into what we learned this week from a big-picture perspective once I return from the family obligation that has kept me away, but here is a quick rundown of the lay of the land: The parties break for two weeks to accommodate Judge Gordon's calendar and--ostensibly--attempt to make some progress toward a settlement. Because of where we're at in the proceedings, I'm not sure Frank's side is in a position to demand its goal in a deal--whatever that is. For the same reason, I wouldn't be surprised if Jamie's team is trying to negotiate from a stronger position than it might have earned.

Assuming we are back in court on the 20th, Susman will get his chance with Jamie and we will move on to Frank's witnesses. I've heard from several people that Larry Silverstein will indeed make an appearance early that week, but I'll believe it when I see it. The rest of Frank's witnesses are expected to testify as to Jamie's specific intention to remove herself from the success or failure of the Dodgers, and Jamie's attorneys will try to show that such statements are inconsistent with her actions and experiences. The trial is moving along slowly, and it will likely reach the week of the 27th, as well. Once it concludes, Judge Gordon will have up to 90 days to make a decision on the matter, and then the statutory deadlines are set for any potential appeals. We're not close to through yet.

Thanks for the encouragement and support this week. It's been exciting. Barring a settlement, I'll see you in LA on the 20th.

Thursday, September 2, 2010

Midday update.

This would be a good time to talk about Larry Silverstein, the Boston lawyer who drafted the MPA and both Exhibit A's. In attempting to rehabilitate Frank on the stand, Steve Susman basically threw Silverstein and his firm under the bus. Frank, you'll recall, needs to prove that the California Exhibit A, which makes the Dodgers community property, was truly a minor clerical error.

Of course, this minor clerical error could be monstrously costly, to many folks involved. It might cost Frank the Dodgers. And it might cost Silverstein and his firm dearly, as well.

Silverstein really ought to be here for this litigation, as his role in the creation and execution of the Marital Property Agreement is integral to the case. But the court doesn't have subpoena power over him, and, for obvious reasons, he's not eager to testify voluntarily.

We're still at least a day from being able to assess which McCourt, if either, is in the lead. But you can be sure no one is going to come out smelling like roses. It takes a series of massive catastrophes to get to this point, and unwinding everything is an ugly process.
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Day four preview.

Today's trial date was a bonus addition, scheduled just Monday morning. After spending all of yesterday examining Frank McCourt, David Boies is expected to finish relatively quickly this morning. Afterwards, Steve Susman will spend a significant amount of time on cross-examination, attempting to rehabilitate his client's image.

And that's a tall order. Yesterday was a rough one for Frank McCourt, particularly the afternoon session which revealed details about his long-term baseball operations plans, including a payroll very much below what most fans expect of a big-market team. Frank's legal team will play an elaborate game of 'so what'--yes, Wednesday's time on the stand was rough. But what did it really accomplish? That's their line of thinking, anyway.

After Susman finishes with Frank, Jamie McCourt is expected to take the stand. The plan is for Boies to wrap up her case--she, as the petitioner, went first--once Jamie is done. Then it will be Frank's turn to call witness and establish his claims. That won't likely happen until the trial resumes on September 20--if it resumes at all. The sides may hope to make significant progress toward a settlement in the down time.
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Wednesday, September 1, 2010

Frank on the stand.

I'll get this out of the way up front: because of an unavoidable family obligation, I'm typing this from the airport and won't be back this week. I'll still be around here recapping the day's news and putting it all in perspective, and I don't think we'll miss a beat. As for more breaking-type updates, be sure to follow @molly_knight, as she'll continue owning the scene.

Frank McCourt took the stand again, and has not had a terrific day. While, to this point, there has been no smoking gun, revelations about both the MPA and the way he wants to run the Dodgers have stung.

This morning, Frank confirmed that he'd been given at least one copy of the California Agreement for review. A revision to Exhibit B of that document, Jamie says, clearly shows that Frank read the contested Exhibit A. Since B was revised but not A, the thinking goes, he must not have had a problem with the "exclusive" language.

I anticipate his team to counter that he did not make the revision; fixing a typo is something anyone can do, and that person may not have had the knowledge to notice the need for a substantial change. Boies' style flustered Frank for a time; he is well-versed in backing witnesses into a corner.

Larry Silverstein's absence continues to be disappointing, but the court cannot compel his testimony and it would be unwise for him to come on his own volition. From multiple attorneys on both sides, I've heard he's coming...and that he's not coming. He gets the Brett Favre treatment from me: I'll believe it when I see it.

The afternoon's testimony largely concerned Frank's long-term plans for the Dodgers, and fans won't like this either. Reducing player payroll was a significant part of his strategy to turn a profit from the Dodgers. Squaring that concept with all the money they took out of the team is a tough one. As the afternoon wears on, I'm sure Boies will continue to try to get additional damaging admissions into the record.

It is very important to remember than Jamie was always going to win this day. Susman will have a chance to do some rehabilitation, and then will have his own shot at Jamie. I'm very hesitant to make a judgment on who is winning until both have been on the stand. Until that happens, it's not a fair fight.

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Day three preview.

Most, if not all, of today will feature Frank McCourt on the stand. David Boies will try to elicit testimony confirming Jamie's theory: the MPA was never meant to be used as he tries to today. When Boies is finished, Steve Susman will take over on cross examination. Susman is not expected to call Frank as a witness for their side of the case; why subject him to cross from Boies?

Boies and Susman take a much different approach. While Susman is a larger than life, rules are more like suggestions kind of guy, Boies is methodical and calculating. Frank's defensive tendencies--yes, no, I don't recall--seem to play right into Boies' strength. Expect him to try to get Frank into a corner, and strike with a crucial yes/no question that Frank can only answer one way.

If Frank does get done today, Jamie will take the stand. However, this is moving along at a gentle pace. Especially because the proceedings are beginning an hour late today, it wouldn't surprise me if we don't see Jamie until the middle of the day tomorrow. If you can only make it to one part of this trial, I'd strongly suggest Susman v. Jamie.
I'll be on ESPN's Outside the Lines program at noon Pacific.
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