New York Knicks v. Maple Leaf Sports & Entertainment LTD. d/b/a Toronto Raptors

Background

The New York Knicks sued Maple Leaf Sports & Entertainment LTD. d/b/a Toronto Raptors; Darko Rajaković; Noah Lewis; Ikechukwu Azotam; and John Does 1–10. The Knicks alleged that Azotam, a former Knicks employee who later worked for the Raptors, transferred confidential and proprietary Knicks information to the Raptors at the direction of Rajaković and other Raptors defendants. The alleged information included scouting reports, game-film files, opposition research, play tendencies, and the Knicks’ preparation book.

The Knicks asserted claims under the Computer Fraud and Abuse Act and the Defend Trade Secrets Act, as well as New York claims for trade-secret misappropriation, breach of contract, tortious interference with contractual relations, conversion, unfair competition, and unjust enrichment.

The NBA Constitution is a contract among NBA members. It states that the NBA Commissioner has “exclusive, full, complete, and final jurisdiction” over disputes involving two or more NBA members. It also provides that the Commissioner’s covered actions are final and binding as an arbitration award. Azotam’s employment agreement with the Knicks separately required him to follow the NBA Constitution and included a New York court forum-selection clause.

Arbitration Ruling

The defendants moved to compel arbitration. The court held that the NBA Constitution contains a valid arbitration agreement even though its jurisdiction provision does not expressly use the word “arbitration.” The court relied on the provision granting the Commissioner exclusive jurisdiction and the provision stating that the Commissioner’s actions are enforceable as arbitration awards.

The court next considered who should decide whether the dispute is arbitrable—a court or the arbitrator. It held that the NBA Constitution’s broad reference to “any dispute” involving two or more NBA members was clear and unmistakable evidence that the parties agreed to have the Commissioner decide that threshold issue. The dispute directly involved the Knicks and Raptors and concerned alleged efforts to obtain information for a basketball-related competitive advantage.

The court rejected the Knicks’ arguments that the arbitration clause was too broad, that the Knicks’ statutory rights under the Defend Trade Secrets Act and Computer Fraud and Abuse Act could not be effectively vindicated before the Commissioner, and that Commissioner Adam Silver’s alleged relationship with a Raptors owner made the clause unenforceable. The court also held that Azotam’s employment agreement did not override the NBA Constitution’s arbitration clause for disputes involving the Raptors, because the Raptors were not a party to that employment agreement.

The court therefore granted the defendants’ motion to compel arbitration. The Commissioner will decide the threshold question of arbitrability, and the case is stayed while the parties arbitrate. The court did not decide the truth of the Knicks’ allegations or the merits of the asserted claims. The court stated that the parties must notify it if the Commissioner determines that the case is not arbitrable.

Motion to Seal

The defendants also moved to seal Azotam’s employment agreement. The court treated the agreement as a judicial document subject to a strong presumption of public access. It found that Azotam’s privacy interest in compensation and bonus information narrowly outweighed that presumption because those details were not material to the arbitration motion or the public’s ability to understand the ruling.

The court therefore granted in part and denied in part the motion to seal. It permitted redaction of the compensation and bonus information but rejected further sealing or redaction. The defendants were ordered to publicly file a version of the agreement conforming to that ruling by July 5, 2024.

Disposition

The motion to compel arbitration was granted. The motion to seal was granted in part and denied in part. The case was stayed while the parties arbitrate, and the court directed the clerk to stay the case and terminate the two motions.