Knicks seeking over $10 million in damages from Raptors, claim Adam Silver would be compromised as arbiter

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In court papers filed Monday, lawyers for the Knicks said they will be seeking more than $10 million in damages from the Toronto Raptors for what they allege is intellectual property theft. They also detailed why they believe NBA commissioner Adam Silver would be compromised as an arbiter of the case and again asked the court – and not Silver – to adjudicate the case.

“We were the victim of a theft of proprietary and confidential files, which is a clear violation of criminal and civil law, and we remain confident that the Court will decide in our favor in this matter,” an MSG Sports spokesperson said in a statement Monday.

Last month, the Knicks filed suit against the Raptors and several members of their organization, including former Knicks employee Ikechukwu Azotam, alleging that Azotam “illegally took thousands of proprietary files” from the Knicks and disclosed it to members of the Raptors, including new head coach Darko Rajaković and other members of the coaching staff.

Rajakovic has publicly denied any wrongdoing.

In a response to the Knicks, lawyers for the Toronto Raptors labeled the suit “baseless” and a “publicity stunt”.

They also want the matter to be arbitrated by Silver.

The Toronto lawyers cited the NBA Constitution, which states that the commissioner “shall have exclusive, full, complete, and final jurisdiction of any dispute involving two (2) or more Members of the Association.”

In Monday’s filing, the Knicks argued that the NBA Constitution does not cover the issues raised in its suit.

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“Contrary to defendants’ claims, this is not a dispute about basketball operations. There is no nexus between the claims and the NBA Constitution,” lawyers wrote in Monday’s filing.

“It is a dispute about the theft of trade secrets by a disloyal employee, a scenario not contemplated by the NBA Constitution. Trade secret misappropriation, breaches of contract, and tort claims are the types of issues routinely appearing before federal judges. We are unaware of the NBA Commissioner ever having handled something similar.”

In arguing against the court sending the case to arbitration, Knick lawyers also questioned Silver’s neutrality as a decision-maker in the case.

Jan 15, 2020; Oklahoma City, Oklahoma, USA; NBA commissioner Adam Silver (middle) watches the Toronto Raptors play the Oklahoma City Thunder during the second half at Chesapeake Energy Arena. Toronto won 130-121.

They reference Silver’s relationship to Raptors minority owner Larry Tannenbaum, who ‘currently serves as the Chairman of the Board of Governors, which is the head of the body that hired (and can fire) the Commissioner and sets his annual compensation.’

They go on to write that the commissioner is conflicted and ‘does not have the ability’ to assign a replacement for himself as the league’s lead arbiter due to his relationship with Tannenbaum. Tannenbaum has served as chairman of the Board of Governors since 2017 and was most recently elected as chairman in September 2022.

“In practice, his elections have been performative. It is the NBA—led by commissioner Silver—that handpicks the candidate for chairman, a selection that is submitted by the league to the Board of Governors without an opposing nominee, thus leaving the Governors with no other option,” Knicks lawyers wrote in Monday’s filing. “In his capacity as chairman, Tanenbaum serves as Silver’s boss and exercises control over and heavily influences Silver’s continued employment and salary.”

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The lawyers cite a SportsBusiness Journal article from 2020 in which Silver describes Tanenbaum as “not just my boss as the chairman of the board of governors, but he’s very much a role model in my life.”

The judge will ultimately have the final say on if the case goes to arbitration under Silver.

Previously, a lawyer for the NBA informed the Knicks and Raptors that the league would allow the court to determine whether the issue should be adjudicated in federal court or before Silver.

“Neither the NBA Constitution, the NBA By-Laws, nor the NBA Collective Bargaining Agreement (the three major governing documents), which explicitly cover many types of disputes, contain any reference to intellectual property crimes, trade secret theft, conversion, tortious interference, or breach of contract claims between NBA teams, let alone an employer and its own employee,” Knicks lawyers wrote on Monday, citing several prior rulings to support their belief.

The Knicks filed a suit in late August alleging that Azotam, under the instruction of the Raptors, illegally procured confidential information such as play frequency reports, a prep book for the 2022-23 season, video scouting files and materials (full information on the Knicks’ claims can be found here).

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Azotam informed the Knicks of an offer to work for the Raptors in July, at which time he began “secretly forwarding proprietary information from his Knicks email account to his personal Gmail account, which he then shared with the Raptors Defendants. These materials included scouting reports, play frequency reports, a prep book, and a link to third-party licensed software,” the lawsuit reads.

With Rajakovic serving as a first-time head coach, the lawsuit claims the Raptors “conspired to use Azotam’s position as a current Knicks insider to funnel proprietary information to the Raptors to help them organize, plan, and structure the new coaching and video operations staff.”

According to the suit, the Knicks’ cybersecurity team identified the theft. Its records show that the stolen files were accessed over 2,000 times by the Raptors.

“The Defendants’ actions have caused and will continue to cause damage to the Knicks and, unless restrained, will further damage the Knicks, the nature and extent of which may not be able to be proven with certainty,” the original suit reads.

The Knicks allege that Rajaković needed the information to prepare for his first season as an NBA head coach.

“As a first time NBA head coach, Defendant Rajaković would be expected to bring his own organizational structure and coaching method. Apparently, given his non-traditional path to his head coaching job, Defendant Rajaković did not have his own, so he chose to exploit the Knicks’ methods,” the suit says.

Lawyers for the Raptors must file a response to the Knicks’ latest filing by early December.

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