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Dumped by NBPA, Billy Hunter and Quinn Emanuel Team Blast Paul Weiss Report
The Am Law Daily
UPDATE: 2/16/2013, 6:00 p.m. EDT. Following the publication of this story, the NBPA voted unanimously to replace Billy Hunter as executive director of the union, according to The Associated Press.
G. William Hunterthe embattled executive director of the National Basketball Players Association placed on an indefinite paid leave amid accusations of nepotism and mismanagementhas hired Quinn Emanuel Urquhart & Sullivan to challenge allegations leveled against him in a $5 million independent report released last month by Paul, Weiss, Rifkind, Wharton & Garrison.
While not accusing Hunter of criminal wrongdoing, the 229-page Paul Weiss report claims he committed ethical lapses and was not transparent when conducting certain NBPA business during his tenure atop the union. In the wake of the Paul Weiss probe the New Yorkbased NBPA has retained Orrick, Herrington & Sutcliffe with an eye toward overhauling its operations, according to our previous reports. The move may also set the stage for Hunter's permanent removal from a post he has held since 1996.
Players representing each of the NBA's 30 teams are scheduled to attend an NBPA meeting hosted by union president and former player Derek Fisher on Saturday afternoon. The session has been called to brief players on the Paul Weiss report, which the firm's lawyers prepared after interviewing some three dozen individuals and sifting through thousands of pages of emails and financial records. A source familiar with the matter says that 100 people are expected to attend the meeting, and that Hunter's future with the NBPA will be a key topic of discussion.
Hunter needs the support of two-thirds of the 30 team player representatives to hold on to his job. While he won't be in Houston to defend himself in personthose close to the 70-year-old former federal prosecutor say they've been told he isn't welcome at the players' meetinghis lawyers went on the offensive late this week in a bid to turn the tide back in their client's favor.
As part of that effort, Hunter's legal team, which besides Newark-based solo practitioners Thomas Ashley and Randy Davenport now includes Quinn Emanuel head of complex litigation Michael Carlinsky and of counsel Corey Worcester in New York, set up a website aimed at rebutting many of the key allegations contained in the Paul Weiss report. Among the materials posted on the site: a 21-page preliminary response to the report, a three-page executive summary, supplemental exhibits, and a 15-slide PowerPoint presentation.
Not surprisingly, Hunter's four-pronged defense takes issue with several of the findings arrived at by the team of Paul Weiss investigators, which was led by litigation department cochair Theodore "Ted" Wells Jr., partner David Brown, and associate Amy Gold. Hunter notes, for example, the NBPA's lack of both an antinepotism policyHunter himself has acknowledged hiring relatives for in-house jobs and steering union business to firms that employed his son and daughterand a policy barring employees from being paid for cashing out unused vacation time.
Hunter's lawyers referred all requests for comment Friday to statements posted on the newly launched website. As part of his defense, Hunter and his legal team claim his decision to hire outside legal and financial advisers benefited the NBPA's bottom line. Hunter's camp insists that many of the investments made on his watch generated profits for the union, which he says went from being $5 million in debt at the time he took over in the late nineties to having net assets of $80 million today. (The union's latest LM-2 filing with the U.S. Department of Labor shows it had net assets of $78.7 million at the end of the one year prior to June 30, 2012, a period during which Hunter was paid nearly $3.2 million.)
Hunter's legal team also notes that Paul Weiss's probe failed to find a single example of Hunter breaking the law. They also scoff at the report's claim that Hunter can be dismissed without financial penalty to the union because he failed to obtain proper approval for his five-year, $15 million contract extension in 2010.
"[The Paul Weiss report] makes a hyper-technical argument that [Hunter] failed to 'check a box' by getting 2/3 of the Board of Player Representatives to approve the 2010 contract extension," states Quinn Emanuel's Worcester. "Critically, it concedes that [Fisher] signed the contract and that the Executive Committee approved the contract. That is consistent with how the previous contract extensions were done. And under Delaware law, that is more than enough." (The NBPA is incorporated in Delaware.)
Hunter's legal team also takes aim at other technicalities invoked by Paul Weisswhose lawyers have engaged in their fair share of litigation battles with Quinn Emanuelas insufficient to scuttle his current contract. They also decry Hunter's inability to defend himself at Saturday's NBPA meeting and obliquely raise the specter of litigation if the union's player representatives vote to fire their client for cause this weekend.
"While we are terribly disappointed that the NBPA will not afford [Hunter] the opportunity to address the players directly, we stand ready to press his claims in the appropriate forum," states Carlinsky, who was a partner at Orrick before leaving the firm in 2002 to join Quinn Emanuel's then-nascent New York office.
The trio of Orrick partners now advising the unioncommercial litigation partner Christine Sarchio in New York and labor and employment partners Lynn Hermle and Joseph Liburt in Silicon Valleyare scheduled to be in Houston for Saturday's meeting. (Sarchio joined Orrick last year from Patton Boggs, which Fisher sought to hire last year for a review of the NBPA's business practices under Hunter. She declined to comment when contacted Friday by The Am Law Daily.)
An NBPA spokesman did not respond to a request for comment on Hunter's claims. A spokeswoman for NBPA president Fisherwho has been at loggerheads with Hunter for more than a yeardeclined to comment on the matter.
A Paul Weiss spokesman declined to comment on the assertion put forth by Hunter's legal team that the firm's internal probe has cost the NBPA $5 million in fees. A special six-member union committee hired the firm last year to conduct its review after the U.S. attorney's office in Manhattan, which is conducting a parallel investigation of Hunter and the NBPA's various business dealings, subpoenaed union records.
Paul Weiss announced Thursday that it had decided to withhold information about Hunter's contract and related matters as a result of the government's ongoing inquiry. While stating that Hunter did not engage in any criminal conduct, the firm said in its supplemental statement that his "actions were inconsistent with his fiduciary obligations to put the interests of the Union above his personal interests, and that [Hunter] did not properly manage conflicts of interest."
Despite Hunter's forceful defenseand a promise to implement reformshe remains under fire on several fronts.
Bloomberg reported last month that the NBPA had moved to terminate two employees related to Hunterattorney and director of special events and partnerships Megan Natsuko Inaba (his daughter-in-law) and director of player benefits and services Robyn Hunter (his daughter)as part of its effort to move forward into a new era.
Meanwhile, Yahoo Sports reported this week that federal prosecutors are looking closely at the payment of more than $3 million to a Cleveland-based financial advisory firm called Prim Capital that employed Hunter's son Todd Hunter as a principal. The main focus of the inquiry are union documents bearing the signatures of late NBPA general counsel Gary Hall and NBPA director of player services Purvis Short that authorized payments to Prim, according to Yahoo.
Todd Hunter no longer works at Prim Capital, which did not cooperate with the Paul Weiss probe. Hall, a key consigliere and good friend of Hunter's who died in May 2011, was identified in the firm's report as not "an independent figure who would be responsive to concerns about Hunter's management of the Union."
Saturday's NBPA meeting will be run by Fisher and acting executive director Ronald Klempner, a former Weil, Gotshal & Manges associate who served as deputy general counsel of the union under Hunter. Klempner was named the interim replacement for his former boss earlier this month.
Since then several high-profile players and their agentsincluding former Manatt, Phelps & Phillips partner Art Tellemhave called on the union to fire Hunter. Should players heed that call, it could take several months to find a new executive director.
Potential replacements mentioned in recent media reports include B. Todd Jones, a U.S. Attorney for the District of Minnesota who is also serving as acting director of the Bureau of Alcohol, Tobacco, and Firearms, and Donald Fehr, the current head of the National Hockey League Players Association. (After the NHLPA ousted Fehr's predecessor Paul Kellywho was hired by Jackson Lewis last yearthe union eventually paid him $1.5 million in compensation and covered $200,000 in attorney fees to settle a dispute over the dismissal.)
One individual not interested in the position is the union's longtime outside counsel Jeffrey Kessler, a former former head of the global litigation group and cohead of the sports litigation practice at now-defunct Dewey & LeBoeuf. Kessler, who has advised the NBPA for nearly 30 years, left Dewey in its death throes last May and took 60 lawyers with him to Winston & Strawn. A source familiar with the matter says Kessler is not interested in an executive leadership position at the NBPA.
Kessler was mentioned sparingly in the Paul Weiss report, which stated that Hunter should have listened to him more instead of deferring to firms like Howrey and Steptoe & Johnson, both of which employed one of his daughters, Alexis Hunter. (Kessler declined to comment when asked earlier this week about a former client of hisSouth African double-amputee Olympic sprinter Oscar Pistoriuswho has been accused of murdering his girlfriend.)
In other NBArelated legal news, former Proskauer Rose partner and current league commissioner David Stern announced last week that an ownership group seeking to buy the Sacramento Kings for $525 million and move them to Seattle had filed relocation papers ahead of a March 1 deadline.
The Am Law Daily reported last month on the host of Am Law 100 firms involved in the potential deal, which could bring NBA basketball back to the Pacific Northwest for the first time since 2008.