Tuesday, September 21, 2004

The Washington area’s pursuit of the Montreal Expos, now at a breathless stage of expectation, faces yet another complication from a group of 14 former limited partners of the team threatening to seek a legal injunction blocking any relocation.

The 2-year-old racketeering lawsuit, filed in the U.S. District Court in Miami against Major League Baseball commissioner Bud Selig and current Florida Marlins owner Jeffrey Loria, long has been a nuisance to baseball. The suit claims Selig and Loria conspired to destroy the Expos’ market value and reduce the partners’ equity in the club.

MLB executives have claimed the lawsuit is baseless since it was filed and insist it will not interfere with efforts to relocate the Expos. Attorneys for the plaintiffs, in turn, have promised to pursue the injunction preventing any permanent move out of Quebec pending a trial.

Now the issue is fast approaching a potentially nasty period, particularly as local officials expect MLB to render its long-awaited decision on the Expos in a matter of days. A preliminary ruling in the suit requires MLB to provide 90 days formal notice before moving or selling the club, something it did Sept.14. But Jeffrey Kessler, the partners’ New York-based attorney, said any lease deal involving the Expos with another city that arrives before mid-December likely will violate that notice.

“I would think anything that enjoins or formally binds baseball to a new city is going to be a problem,” Kessler said.

Last week’s filing from baseball did not specify a relocation target date or destination for the Expos. But MLB officials are just as eager to resolve one of their biggest headaches as local officials are to get the team.

Meanwhile, a decision on the lawsuit itself is close to arriving on two fronts. Judge Ursula Ungaro-Benages last year referred the case to arbitration, and hearings to satisfy that ruling were held earlier this year. A decision from the arbitrator is expected in a matter of weeks, which will then influence whether and when the case is heard back in federal court.

“We are anxiously awaiting the arbitrator’s decision,” Kessler said.

Industry sources said MLB may try to get around Kessler’s claims by making a lease deal with the District or Northern Virginia contingent on the resolution of all legal claims outstanding against the Expos.

That move, however, would require a leap of faith on the part of either Northern Virginia or the District, both of which are facing internal deadlines before their opportunities for the Expos run out.

The District — again being seen as the strong front-runner for the team after an intense, 11-hour negotiating session last week with MLB’s relocation committee — must introduce ballpark financing legislation to the D.C. Council by early next month. Otherwise, it will run out of time before the terms of three key supporters on the council expire and will have difficulty preparing RFK Stadium for baseball.

Northern Virginia, meanwhile, loses the ability to retain stadium-related sales and use taxes to help construction on Dec.31.

“The issue of the lawsuit is there,” said one local source connected to the pursuit of the Expos. “It’s certainly something we’re all cognizant of.”

For all the recurring drama and worry over the lawsuit, many legal observers believe a settlement could put the issue to rest. MLB executives think their case is solid, particularly since the limited partners ignored several cash calls from Loria in 2000 and 2001 that diluted their equity in the team. Then in 2002, Loria sold the Expos back to MLB and used the cash to help fund a purchase of the Florida Marlins. The limited partners’ equity now lies in that team, baseball’s defending World Series champions.

MLB, however, has little interest in a formal discovery process that could place parts of its closely guarded business operations open for public review.

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