SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK

TCR SPORTS BROADCASTING HOLDING, LLP,

Petitioner,

-against-

WN PARTNER, LLC; NINE SPORTS HOLDING, LLC; WASHINGTON NATIONALS BASEBALL CLUB, LLC; THE OFFICE OF COMMISSIONER OF BASEBALL; and ALLAN H. "BUD" SELIG, AS COMMISSIONER OF MAJOR LEAGUE BASEBALL,

Respondents,

-and-

THE BALTIMORE ORIOLES BASEBALL CLUB and BALTIMORE ORIOLES LIMITED PARTNERSHIP, in its capacity as managing partner of TCR SPORTS BROADCASTING HOLDING, LLP,

Nominal Respondents.

Index No. 652044/2014 (IAS Part 41)

PETITIONER'S MEMORANDUM OF LAW IN SUPPORT OF ITS APPLICATION FOR A TEMPORARY RESTRAINING ORDER AND MOTION FOR A PRELIMINARY INJUNCTION

CHADBOURNE & PARKE LLP 30 Rockefeller Plaza New York, NY 10112 (212) 408-5100

Attorneys for Petitioner Thomas J. Hall Pamela J. Marple (pro hac vice pending) Rachel W. Thorn Benjamin D. Bleiberg

Of counsel

CPAM: 6785638.17

FILED: NEW YORK COUNTY CLERK 08/07/2014 01:34 PM INDEX NO. 652044/2014NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 08/07/2014

TABLE OF CONTENTS

PRELIMINARY STATEMENT 1

BACKGROUND 3

A. The Settlement Agreement Provides the Means for the Ongoing Compensation to the Orioles and MASN for the Harms Caused by the Nationals' Relocation to Washington, D.C. 3

B. The Arbitration Process and Award 5

PROCEDURAL HISTORY 7

ARGUMENT 8

PETITIONER IS ENTITLED TO A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION TO MAINTAIN THE STATUS QUO 8

A. MASN is Likely to Prevail on the Merits of Its Claims 8

1. Evident Partiality of the Arbitrators 8

2. The Arbitrators' Failure to Disclose and Refusal to Investigate 9

3. Financial Interest in the Award 13

4. Corruption, Fraud or Undue Means 14

5. Exceeding Power and Manifest Disregard of the Law 15

6. Persistent Misconduct by the RSDC 16

B. MASN and the Orioles Will Be Irreparably Injured Without Injunctive Relief 17

1. Loss of Partnership Viability 17

2. Loss of Markets, Destruction of Goodwill and Other Intangible Losses 19

C. The Equities Weigh in MASN's Favor 20

D. The Court Should Reject the Nationals' Argument That Injunctive Relief is Not Needed if MASN Pays the Amount Claimed 21

1. The Nationals' Argument Confuses the Irreparable Harm Test 21

2. The Award Is Not Yet Enforceable 22

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3 The Orioles Have Sought De Novo Review of the Award 23

4. Complications Caused by MLB's Taxation of Telecast Rights Fees 23

5. The Adverse Impact on MASN's Business and Creditworthiness 24

6. Delay and Prejudice 25

CONCLUSION 25

Petitioner TCR Sports Broadcasting Holding LLP, d/b/a Mid-Atlantic Sports Network

("TCR" or "MASN"), by its attorneys Chadbourne & Parke LLP, respectfully submits this

memorandum of law in support of its application for a temporary restraining order and motion

for a preliminary injunction pursuant to CPLR Article 65.

Submitted herewith in support of this application and motion are the following: the

Affirmation of Thomas J. Hall, August 7, 2014 ("Hall Aff."); the Verified Petition to Vacate

Arbitration Award, July 28, 2014 ("Petition" or "Pet."), attached at Ex. 2 to Hall Aff.; the

Affidavit of Michael J. Haley, July 25, 2014 ("Haley Aff."); the Supplemental Affidavit of

Michael J. Haley, August 6, 2014 ("Supp. Haley Aff."); the Affidavit of Hal J. Singer, Ph.D.,

July 18, 2014 ("Singer Aff."); the Declaration of Hal J. Singer, Ph.D., July 2, 2014 ("Singer

Decl."); and the Affidavit of Mark C. Wyche, July 22, 2014 ("Wyche Aff.").

PRELIMINARY STATEMENT

MASN finds it necessary to seek interim injunctive relief to preserve the status quo and

prevent Respondent, the Washington Nationals Baseball Club, LLC (the "Nationals"), from

improperly terminating the unique and valuable rights to telecast Nationals' baseball games that

MASN obtained as part of an overall settlement of claims arising from the Montreal Expos'

relocation to Washington, D.C. in 2005 ("Settlement Agreement"): The Nationals incorrectly

assert it can terminate MASN's telecast rights because MASN is purportedly in default of the

payment of certain additional telecast rights fees awarded on June 30, 2014 in an arbitration by a

committee of Major League Baseball ("MLB") called the Revenue Sharing Definitions

Committee ("RSDC"). Yet, the legitimacy and integrity of that award (the "Award") and the

This Cowl has jurisdiction under the federal and state statutes set forth in the Petition. Matter of Johnson, 22 Misc. 3d 631, 646 (N.Y. Co. 2008). Any argument this Court is deprived of jurisdiction based on a private entity's constitution or a private association's internal bylaws or agreements is baseless. See Hall Aff. Ex. 18.

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pervasive improprieties in the arbitral process is precisely the subject of this vacatur proceeding,

as well as parallel proceedings before the American Arbitration Association (the "AAA").

If the Nationals are permitted to terminate MASN's telecast rights during the pendency of

this and the parallel proceedings, the harms to MASN would be irreparable. MASN's primary

and essential programming -- the telecast and distribution of the Nationals' and Orioles' games --

cannot be replaced. MASN immediately would be in breach of nearly 30 affiliate agreements for

the distribution of Nationals' games and with advertisers and sponsors who have bought time for

their products during Nationals' telecasts. MASN's exclusive right to telecast the games of two

MLR clubs (the Orioles and the Nationals) within the same geographical television territory will

be forever lost. MASN will lose the synergy of a unified two-club regional sports network

("RSN") and will no longer be viable as a partnership; its good will will be destroyed; and, in

addition to other intangible losses, MASN will suffer losses to its credit-worthiness, markets and

fan base. These harms are irreparable; they cannot be avoided by simply paying the Nationals,

as the Nationals facilely suggest. The amounts it demands are so excessive as to be confiscatory,

would deprive MASN of cash reserves and drive its operating margins to an unsustainable level.

To preserve the status quo, pending the Court's ruling on the legitimacy of the Award

upon which the Nationals' default claim is based, MASN requests this Court (a) toll the running

of the period for MASN to cure the alleged default; and (b) enjoin the Nationals from

terminating MASN' s license to telecast the Nationals' games or taking any other action to

deprive MASN of that right.

BACKGROUND

A. The Settlement Agreement Provides the Means for the Ongoing Compensation to the Orioles and MASN for the Harms Caused by the Nationals' Relocation to Washington, D.C.

For 35 years after the Washington Senators relocated to Arlington, Texas in 1972, the

Orioles served as the exclusive MLB club in the Baltimore and Washington D.C. areas. During

that period, with MLB's encouragement and support, the Orioles expended considerable

resources, and cultivated fan loyalty and commercial support throughout the region. By 2004,

the Washington, D.C. area accounted for more than one-third of the Orioles' revenues and a

significant portion of the viewership of the Orioles' games, their sponsors and advertisers. Haley

Aff.116. The Orioles also invested heavily in the development of its RSN called TCR to

broadcast and ultimately telecast Orioles' games throughout the Orioles' seven-state television

territory, which extends from Central Pennsylvania to Eastern North Carolina and includes all of

Maryland, Washington, D.C. and surrounding areas ("Orioles' Television Territory"). Id. 4.

Other than the Orioles, no MLB Club could telecast its games in the Baltimore-Washington,

D.C. area or the vast majority of the Orioles' Television Territory.

In 2002, MLB purchased the Montreal Expos for $120 million. In 2004, it decided to

relocate the team to Washington, D.C., renaming it the Washington Nationals. Id. 6. The

Orioles vigorously opposed the move. MLB, the Orioles and TCR recognized a competing team

in Washington would dilute the Orioles' market share, draw away fans and sponsors, and

cannibalize the Orioles' Television Territory. Id At the time of the relocation, the Nationals

had no rights or access to the Orioles' Television Territory for the telecast of its games.

In 2005, the Orioles, TCR and MLB (which owned the Nationals) reached a settlement

that set forth the means by which the Orioles and TCR would be compensated for the harms to

their market share, business and business opportunities and provided for the Nationals' access to

3

the Orioles' Television Territory for the telecast of its games. See id. Ex. 1 (Settlement

Agreement); see also id. 14. Section 2 of the Settlement Agreement describes the carefully-

crafted framework to achieve these objectives. It created a two-club RSN, built upon the

foundation of TCR. Id. 118. TCR was rebranded as MASN and was provided with the sole and

exclusive right to telecast and distribute both Orioles' and Nationals' games. Id. '18, 14.

Section 2 of the Settlement Agreement also established the framework for the Orioles' and

TCR's annual compensation, which would be achieved solely by and through the Orioles'

supermajority interest in MASN's profits. Id. 111113-17; Singer Decl. 15.

MASN's profitability, and thus the Orioles' and TCR's compensation, is highly

dependent on the amount of telecast rights fees paid to the Nationals and the Orioles. See Haley

Aff. 13, 17; Wyche Aff. 22. Thus, the arbitration clause in Section 2.J.3. of the Settlement

Agreement sets forth a specific methodology for the arbitrators to determine the fair market

value of telecast rights fees payable by MASN to the clubs. Id. 1115. It is only by strictly

adhering to that methodology, which by the time of the Settlement Agreement had been

employed by MLB for almost a decade, that MASN's profits and, thus, the Orioles' and TCR's

compensation are achieved and protected. Id. 11112-13.

The arbitration clause of the Settlement Agreement thus expressly requires the arbitrators

to apply "the RSDC's established methodology for evaluating all other related party telecast

agreements in the industry in determining the fair market value of the Club's telecast rights

fees." The RSDC's established methodology has been described by the RSDC in its written

precedents and by the Commissioner as the "time-tested" Bortz methodology, named after

MLB's long-standing consultant Bortz Media & Sports Group, Inc. ("Bortz").2 Id. 13-17

2 See the RSDC's Sixteenth and Eighteenth Reports issued in December 2004 and January 2005, during negotiations over the Settlement Agreement and adoption of Section 2.J.3 (Hall Aff. Exs. 19 and 20), and the Ruling of the

4

On at least 19 occasions over a decade and a half before the June 2014 Award, MLB

applied and accepted the Bortz methodology, including its most critical assumption of at least a

20% profit margin from baseball programming for related party RSNs. Wyche Aff. 13, 26,

29-30; Haley Aff.1116. Until the Award, MLB had never forced any RSN achieving greater than

a 20% profit margin from baseball programming to operate on less.' And several related-party

RSNs have been permitted profit margins from baseball programming well in excess of 20%.4

B. The Arbitration Process and Award

MASN has paid all of the required telecast rights fees to both the Nationals and the

Orioles. Haley Aff. 18. For 2007 through 2011, the Settlement Agreement specified the dollar

amounts to be paid by MASN. Id. Starting in 2012, the Settlement Agreement provides the fair

market value of the telecast rights fees shall be determined by the RSDC "using the RSDC's

established methodology for evaluating all other related party telecast agreements in the

industry." Hall Aff. Ex. 3, at Section 2.J.3.

In the Fall of 2011, MASN, with MLB's consent, retained Bortz to apply the established

methodology to determine the fair market value for telecast rights fees for the clubs for the next

five years. Id. 7116-17 ; Wyche Aff.'11118-9. The Nationals rejected the Bortz-prepared telecast

rights fees and demanded the matter be submitted to RSDC arbitration under Section 2.J.3 of the

Settlement Agreement. Haley Aff. 24. The RSDC arbitration was rife with procedural and

Administrator to the Eighteenth Report also issued in January 2005 (Hall Aff. Ex. 21), "endors[ingr the continued use of the Bortz methodology for the determination of the fair market value of related-party telecast rights fees.

3 During negotiations leading up to the Settlement Agreement, MLB provided the Orioles and TCR with several iterations of pro formas prepared by its financial consultant, Allen & Co., imputing at least a 20% profit margin for baseball programing, an overall profit margin in excess of 30%, and represented TCR would be able to achieve it. See Haley Aff.119.

At least two RSNs owned in part by MLB clubs have been permitted profit margins from baseball programing in excess of 30 to 35% by MLB and the RSDC, and in some instances, much higher. Singer Aff. 7 n.5; Wyche Aff. 1113.

substantive abuses and deficiencies. Pet. 11 54-75; Hall Aff. Ex. 4 (RSDC Award). Among the

most significant are:

The same outside counsel represented the Nationals, the clubs of all three arbitrators, the jurisdictional body that controls the RSDC, and MLB concurrently during the course of the arbitration. Neither MLB nor the arbitrators disclosed the nature or extent of these concurrent representations;

The three arbitrators, MLB and the Commissioner of Baseball, all had a direct and significant pecuniary interest in the outcome of the arbitration; and

The RSDC exceeded its authority by intentionally refusing to use its established methodology to determine the fair market value of the telecast rights fees as mandated by the arbitration clause in Section 2.

See Hall Aff. 115-15; Wyche Aff. 25-34.

On June 30, 2014, the RSDC issued its Award purporting to establish the fair market

value of the telecast rights fees. In the Award, the arbitrators failed to apply the "established

methodology" as mandated by the arbitration clause. Wyche Aff. 1-1- 34-38. Instead, the Award

backed into artificially inflated numbers, thereby diverting MASN's profits to the Nationals and

MLB and reducing MASN to an economically unsustainable 5% profit margin. Singer Aff. 9

17-20. The net effect would deplete MASN's cash reserves so substantially that if any one of

MASN's major affiliates discontinues service, or if MASN encounters any other material

changes in its business, MASN would be on the brink of insolvency. See Singer Decl. 17-20;

Haley Aff. 48-50. Moreover, with such depleted cash reserves, MASN would be unable to

negotiate with its affiliates to achieve the most beneficial carriage terms. Singer Decl. 20. As

attested to by MASN's Chief Financial Officer, "without sufficient profit margin and cash flow

to protect MASN from periods of non-carriage, MASN will be in a position where it will be

forced to take lower than market affiliate fees." Haley Aff. 49.

6

PROCEDURAL HISTORY

On May 30, 2014, exactly one month before the RSDC issued its Award, the Nationals

sent to MASN a "Notice of Default," alleging a deficiency in the telecast rights fees payments

since 2012. See Hall Aff. 24, Ex. 23. As the RSDC Award has not yet been issued, Nationals

could not specify the amount owed or any actions needed for cure. Instead, it claimed that

absent an unspecific "cure" by July 2, 2014, the Nationals would seek termination of its telecast

rights. Id On June 30, 2014, the RSDC issued its Award. On July 2, 2014 and July 3, 2014, the

Nationals again threatened to terminate, this time setting forth certain dollar amounts from the

RSDC Award claimed to be owed ($10,037,204.50). Id. at Ex. 1.

Also on July 2, 2014, MASN commenced this proceeding noticing its intent to petition

the Court for vacatur of the Award. Separately, the Orioles and MASN demanded arbitration

against the Nationals and other respondents with the AAA. Hall Aff. ([ 17. On July 30, 2014,

MASN filed its Petition pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. 1, et seq.,

and Articles 4 and 75 of the New York Civil Practice Law and Rules ("CPLR"), seeking vacatur

on the grounds that the Award (a) was the product of proceedings tainted by fraud, corruption,

bias, evident partiality and undisclosed conflicts of interest, (b) was procured through undue

means, (c) exceeded the scope of the arbitrators' contractual authority and (d) manifestly

disregarded the law.5 See Pet. 76-95.

5 Although Section 2.J.3 of the Settlement Agreement purports to limit MASN's grounds to challenge the Award to "corruption, fraud or miscalculation of figures," the law is clear that "parties may not, by private agreement, relieve [the courts] of their obligation to review arbitration awards for compliance with 10(a)" of the Federal Arbitration Act. Hoeft v. MVL Group, Inc., 343 F.3d 57, 64 (2d Cir. 2003).

7

ARGUMENT

PETITIONER IS ENTITLED TO A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION TO MAINTAIN THE STATUS QUO

A. MASN is Likely to Prevail on the Merits of Its Claims'

I. Evident Partiality of the Arbitrators

MASN is likely to prevail on its claim that the RSDC Award should be vacated pursuant

to 9 U.S.C. 10(a)(2) because "there was evident partiality . .. in the arbitrators, or [any one] of

them" based on the facts surrounding MLB's long-time law firm's (the "MLB's Law Film")

representation of the Nationals in the arbitration, while concurrently representing the three

baseball clubs owned or managed by each of the arbitrators, and MLB, under whose auspices the

arbitration was conducted.

Arbitrators, like judges, "not only must be unbiased but also must avoid even the

appearance of bias." Commonwealth Coatings Corp. v. Cont'l Cas. Co., 393 U.S. 145, 150

(1968) (plurality opinion). "[E]vident partiality within the meaning of 9 U.S.C. 10 will be

found where a reasonable person would have to conclude that an arbitrator was partial to one

party to the arbitration." Morelite Constr. Corp. v. New York City Dist. Council Carpenters Ben.

Funds, 748 F.2d 79, 84 (2d Cir. 1984); U.S. Elec., Inc. v. Sirius Satellite Radio, Inc., 17 N.Y.3d

912, 914 (2011) (adopting reasonable person standard). Thus, the standard for evident partiality

"may be met by inferences from objective facts inconsistent with impartiality." Pitta v. Hotel

Ass 'n of New York City, nc., 806 F.2d 419, 423 n.2 (2d Cir. 1986).7

6 A plaintiff is entitled to a preliminary injunction when it can demonstrate "a probability of success, danger of irreparable injury in the absence of an injunction, and a balance of the equities in their favor." Aetna Ins. Co. v. Capasso, 75 N.Y.2d 860, 862 (1990). 7 j13-lecause it is usually impossible to prove 'outright chicanery' ... the challenging party is not required to show `proof of actual bias'" to establish evident partiality. Sun Refining & Mktg. Co. v. Statheros Shipping Corp. of Monrovia, Liberia, 761 F. Supp. 293, 299 (S.D.N.Y. 1991) (citations omitted). When evaluating whether evident partiality exists, courts often assess the following factors: (1) the extent and character of the personal interest,

Here, any reasonable person would have to conclude the arbitrators, whose clubs were

each represented by MLB's Law Firm during the arbitration, were biased and partial to the

Nationals, a party to the arbitration that was at the same time represented by the very same firm.

Haley Aff. 1126; Hall Aff. ari 5-15. The Law Firm also represented MLB, the Commissioner and

the MLB's Labor Relations Committee (the jurisdictional body that controls the RSDC) in no

less than 15 matters. Hall MK 4114ff 8-12, 15. Where the opposing party and the ultimate decision-

maker have confidential and fiduciary relationships with the same counsel, impartiality should be

inferred. See Tenaska Energy, Inc. v. Ponderosa Pine Energy, LLC, No. 12-0789, 2014 WL

2139215, at *1 (Tex. May 23, 2014) (vacating award for evident partiality when arbitrator's

company had a relationship with the law firm representing the opposing party). Because the

RSDC is an MLB ad hoc committee appointed by the Commissioner and functioning within the

Labor Relations Committee, MASN and BOLP challenged this as a conflict. Hall Aff. 116, Ex.

6. The RSDC denied their challenge and MLB took no action to address it. Id. at 7, Ex. 7.

2. The Arbitrators' Failure to Disclose and Refusal to Investigate

Worse still, neither MLB nor the arbitrators made full disclosure of their relationships

with MLB's Law Firm. The arbitrators failed to disclose that each had an attorney-client

relationship with MLB's Law Firm and the details of such representations. Pet. 56-59. As

arbitrators, they had an affirmative duty to assess and disclose to the parties any potential source

of bias. The Second Circuit has held an arbitrator's failure to disclose "a material relationship

with a party . . meets Morelite's 'evident partiality' standard. Applied Indus. Materials Corp. v.

Ovalar Makine Ticaret Ve Sanayi, A.S., 492 F.3d 132, 137 (2d Cir. 2007).

pecuniary or otherwise, of the arbitrator in the proceedings; (2) the directness of the relationship between the arbitrator and the party he or she is alleged to favor; (3) the connection of that relationship to the arbitrator; (4) the proximity in time between the relationship and the arbitration proceeding. Scandinavian Reinsurance Co. v. St. Paul Fire & Marine Ins. Co., 668 F.3d 60, 74 (2d Cir. 2012) (citations and quotations omitted).

Moreover, an arbitrator's duty to disclose and investigate continues throughout the life of

the arbitration and includes a duty to disclose any new potential conflicts that might arise. See

Applied Indus. Materials Corp. v. Ovalar Makine Ticaret Ve Sanayi, A.S., No. 05 Civ. 10540,

2006 WL 1816383, at *7 (S.D.N.Y. June 28, 2006) ("Reason dictates that there must be a

continuous obligation on the part of the arbitrator to avoid partiality or the appearance of

partiality. It defies common sense to suggest that only the business relationships entered into

before arbitration might affect the fairness of the arbitration process, and that any business

relationships pursued or entered into after that first hearing would not have an influence on the

arbitration process."). As the Supreme Court has observed, "[w]e can perceive no way in which

the effectiveness of the arbitration process will be hampered by the simple requirement that

arbitrators disclose to the parties any dealings that might create an impression of possible bias."

Commonwealth Coatings Corp., 393 U.S. at 149.8

Further, an arbitrator's failure to investigate once a potential conflict is brought to the

arbitrator's attention, "is indicative of evident partiality." Applied Indus. Materials Corp., 492

F.3d at 134, 138 (affirming vacatur where one of three arbitrators acted with evident partiality

"by failing to investigate what he knew to be a potential business relationship between his

corporation and one of the parties or inform them that he had walled himself off from learning

more"). Similarly, an award shall be vacated under CPLR 7511(b)(I)(ii) where the rights of a

party were prejudiced by the "partiality of an arbitrator appointed as a neutral." Under the

CPLR, arbitrators' disclosure obligations are unequivocal. The First Department has noted:

MASN was not obligated to seek judicial intervention before an Award issued in order to preserve its right to challenge the RSDC's bias and evident partiality. See Sanko v. Cook Indus., Inc., 495 F.2d 1260, 1264 n. 4 (2d Cir. 1973) ("refusal by the panel to compel an allegedly partial arbitrator to step down will generally be reviewable by a district court only after an award has been made"); Marc Rich & Co. v. Transmarine Seaways Corp., 443 F. Supp. 386, 387-88 (S.D.N.Y. 1978).

10

The 'basic, fundamental principles of justice require complete impartiality on the part of the arbitrator and mandate that the proceedings be conducted without any appearance of impropriety.' The appearance of impropriety or partiality is sufficient to warrant vacature of an award. Furthermore, 'it is only necessary to demonstrate the potential for bias to find misconduct.' Consequently, 'it is incumbent upon an arbitrator to disclose any relationship which raises even a suggestion of possible bias.'

Kern v. 303 E. 57th St. Corp., 204 A.D.2d 152, 153 (1st Dep't 1994) (emphasis added) (internal

citations omitted). Indeed, "an existing or past attorney-client relationship requires disclosure

. in order to afford the parties the opportunity to make an independent judgment as to whether

the past relationship should serve as a basis to challenge the arbitrator." Matter of Seligman v.

Allstate Ins. Co., 195 Misc. 2d 553, 557 (Nassau Co. 2003) (emphasis added) (vacating award

when arbitrator failed to disclose past long-term attorney-client relationship with respondent).

"Most observers would agree that a judge should not hear a case argued by an attorney

who, at the same time, is representing the judge in a personal matter. In re Cargill, Inc., 66

F.3d 1256, 1260 n.4 (1st Cir. 1995) (citing 13A Charles Wright & Arthur Miller, Federal

Practice and Procedure 3549 (1984)). The reasoning for recusal of a judge in these

circumstances due to the real risk of bias is similarly applicable to an arbitrator. Cf Morelite

Constr. Corp., 748 F.2d at 83 ("[T]he standards for disqualification of arbitrators have been held

to be less stringent than those for federal judges.").10

9 "[A]n attorney representing a party is as integrally related to the dispute as the party himself." Edmund E. Garrison, Inc. v. Int 'I Union of Operating Engineers, 283 F. Supp. 771, 773 (S.D.N.Y. 1968) (finding that even where a contract contemplates the appointment of non-neutral arbitrators, "the designation of counsel [to one of the parties] as a representative is as repugnant . as the self-representation of a party on the arbitration panel"). Instructive here then, courts have repeatedly found recusal appropriate where a judge was represented by counsel that additionally represented a party to a dispute before the judge. See, e.g., Catsimatidas v. Innovative Travel Group, Inc., No. 84 Civ. 5697, 1988 WL 3420, at *1 (S.D.N.Y. Jan. 13, 1988); Potashnick v. Port City Const. Co., 609 F.2d 1101 (5th Cir. 1980); Smith v. Sikorsky Aircraft, 420 F. Supp. 661 (C.D. Cal. 1976).

1 "[I]n addition to his other duties and obligations, a lawyer is bound to conduct himself as a fiduciary or trustee occupying the highest position of trust and confidence, so that, in all his relations with his client, it is his duty to exercise and maintain the utmost good faith, honesty, integrity, fairness and fidelity." Halter v. Farkas, 498 F.2d 587, 589 (2d Cir. 1974). "Attorneys owe fiduciary duties of both confidentiality and loyalty to their clients. The

11

MASN is likely to succeed in vacating the Award because the arbitrators failed to

disclose the attorney-client relationships between them and the Law Firm to the Nationals and

MLB and the details of those relationships. Since the RSDC proceeding, MASN has learned all

three arbitrators retained MLB's Law Finn during the pendency of the arbitration while the Law

Fif n was simultaneously representing the Nationals. Hall Aff.r19-15, Exs, 8-15; Haley Aff.

1127. The representations that MASN now knows about are summarized below:

6 Two salary arbitrations on behalf of one of the arbitrator's club. Haley AM!' 27; Hall Aff. 9-10, Exs. 8, 9.

Another one of the arbitrator's club, along with MLB, in the action captioned Garber v. Office of the Commissioner of Baseball, No. 12-cv-03704 (S.D.N.Y.). Haley Aff. 27; Hall Aff. 1111, Ex. 10.

The third arbitrator's company, which owns his club, and his father in the action captioned Elyse Goldweber v. Sterling Equities Assocs., 10-cv-5786 (S.D.N.Y.). Hall AfT1112-13, Exs. 11, 12.

All of the arbitrators' clubs, as well as MLB and the Nationals, in the action captioned Senne v. Office of the Commissioner of Baseball, No. 3:14-cv-00608 (N.D. Cal.). Haley Aff. 27; Hall Aff. 15, Exs. 14, 15.

Moreover the same partner from MLB's Law Film represented one of the arbitrator's_

Clubs and MLB in the Garber action, while simultaneously representing the Nationals in the

RSDC proceedings. Hall Aff. 11. Even after MASN alerted the arbitrators of its concern over

MLB's Law Firm's dual representations of MLB and the Nationals and challenged the conflict,

the arbitrators failed to disclose their own clubs' relationship with MLB's Law Firm and to

investigate. Hall Aff. 6-7, Exs. 6, 7; Haley Aff. 11126-27. Thus, the Award is likely to be

vacated for evident partiality.

Code of Professional Responsibility thus imposes a continuing obligation on attorneys to protect their clients' confidences and secrets." Tekni-Plex, Inc. v. Aleyner & Landis, 89 N.Y.2d 123, 130 (1996) (citations omitted).

12

3. Financial Interest in the Award

Pursuant to 9 U.S.C. 10(a)(2) and CPLR 7511(b)(h), an Award will be vacated

"where there was evident partiality or corruption in the arbitrators, or either of them. 9 U.S.C.

10(0(2). See Morelite Constr. Corp. 748 F.2d at 84. "It is axiomatic that a neutral decision-

maker may not decide disputes in which he or she has a personal stake." Pitta, 806 F.2d at 423

("As a permanent umpire, an arbitrator may decide arbitrable grievances that concern the office

he occupies. However, he may be disqualified from acting as permanent umpire when an

arbitrable grievance concerns him personally.").

Two of the three arbitrators had a direct financial stake in the outcome of the Award. Pet.

11 59-62. These arbitrators, one of whom sat as chair, own or manage two of the clubs that are

among MLB's largest beneficiaries of revenue sharing. Because the amounts MASN pays to the

clubs as telecast rights fees are taxable under the revenue sharing plan, but the amounts MASN

distributes to the clubs as profits are not, they had a financial motivation to inflate the telecast

rights fees: increasing the size of the revenue-sharing "pie" means each arbitrator's club receives

a larger slice. During the arbitration, the panel chair made no attempt to hide his agenda. Id. !I

61. At no point did MASN have an opportunity to challenge the suitability of the arbitrators,

whose identities were unknown at the time of the Settlement Agreement. Id. 11159, 62.

MLB and the Commissioner also had a clear financial interest in the outcome of the

arbitration. MLB receives a share of any funds diverted into telecast rights fees through the

revenue sharing tax. And, while the arbitration was ongoing, MLB paid the Nationals substantial

sums against its claims as to MASN to be repaid upon issuance of the RSDC Award. Haley Aff.

II 37. Whatever reasoning led to that payment, when MLB placed its wager on the Nationals and

tied repayment to an award in the Nationals' favor, MLB and the Commissioner forfeited any

conceivable claim to objectivity and fairness.

13

4. Corruption, Fraud or Undue Means

Pursuant to FAA 10(a)(1) and CPLR 751 1(b)(1)(i), an award should be vacated upon

clear and convincing evidence that there was fraud, corruption or undue means in the arbitral

process and the fraud had a nexus to the award. See Kolel Beth Yechiel Mechil of Tartikov, Inc.

v. YLL Irrevocable Trust, 878 F. Supp, 2d 459, 464 (S.D.N.Y. 2012), aff'd, 729 F.3d 99 (2d Cir.

2013); see also Morrow v. Jersey Capital Mkts. Grp., Inc., No. 90 Civ. 5305, 1995 WL 70630, at

*3 (S.D.N.Y. Feb. 17, 1995); Matter of Motors Ins. Corp., 221 A.D.2d 634, 635 (2d Dep't 1995).

MASN alleges MLB had a fraudulent intent when it instructed the arbitrators and issued

the RSDC Award. Pet. 11170-71. MLB's machinations stem from its sale of the Nationals to its

current owner's group. At the time of the sale, MLB informed the purchasers that despite the

terms of the Settlement Agreement, MLB would use its power over the arbitral process to control

the determination of the Nationals' telecast rights fees and thereby restructure the economics of

MASN to the Nationals' benefit. Id. 71. MLB made these promises to secure a high price for

the team and, indeed, MLB received a $340 million windfall when it sold the Nationals. Id.

At the very first opportunity to reset the telecast rights fees, MLB effectuated the scheme;

it instructed the RSDC to depart from the Settlement Agreement's charge to use the RSDC's

established methodology. In a telling moment during the merits hearing, the Nationals' counsel

stated the Nationals have been "waiting seven years to get our rights back." Haley Aff. 29.

Consistent with these instructions, the RSDC Award fails to apply the established

methodology the arbitration clause of the Settlement Agreement requires. Pet. IN 68-69; Wyche

Aff. 25-36. As discussed below (see Section 6, infra), the RSDC used assumptions and

calculations in its Award that disregard the established methodology and are illogical and

illegitimate under any economic practice. Singer Aff. 11 18-24; Wyche Aff. 25-36, 38.

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Other actions of Respondents also demonstrate the Award was procured by fraud. As

discussed above, MLB advanced significant monies to the Nationals during the arbitration, with

no expectation of repayment until the RSDC issued its Award. Haley Aff. 37. This side-deal

between MLB and the Nationals, coupled with MLB's control over the RSDC, evinces the

broader scheme. So too are MLB's repeated threats to MASN during the arbitration that, unless

MASN substantially restructured the partnership, the RSDC would issue an award that MASN

"wouldn't like," which would severely damage MASN's asset value. Id. 33. All are consistent

with effectuating MLB's and the Nationals' objective to allow the Nationals "to fly free" of the

MASN partnership." Id. 32.

5. Exceeding Power and Manifest Disregard of the Law

Under 9 U.S.C. 10(a)(4) and CPLR 7511(b)(iii), an award may be vacated where the

arbitrators exceed their authority or exhibit a "manifest disregard for the law." The "scope of

authority of arbitrators generally depends on the intention of the parties to an arbitration, and is

determined by the agreement or submission." 187 Concourse Assocs. v. Fishman, 399 F.3d 524,

527 (2d Cir. 2005). The arbitration award must draw from the agreement as an arbitrator is not

permitted to "dispense his own brand of industrial justice." See id. (citation omitted); see also

Harry Hoffman Printing, Inc. v. Graphic Commc 'n Int'l Union, Local 261, 950 F.2d 95, 98 (2d

Cir. 1991) (citations omitted).

Here, the plain terms of the arbitration clause in Section 2.J.3 of the Settlement

Agreement provide that the arbitrators "shall" use "the RSDC's established methodology for

evaluating all other related party telecast agreements in the industry." Hall Aff. Ex. 3 (emphasis

added). The directive to the arbitrators to use the "established methodology" is not discretionary

11 The fraudulent process of the Award is ongoing as it is evident the Nationals' demands and positions are part of this goal. See Hall Aff., Ex. 22 (press report and information regarding Monumental Sports Entertainment).

15

and leaves no room for interpretation. The RSDC's "established methodology" was and remains

the "objective and consistent," "time-tested" Bortz methodology, which has been repeatedly and

consistently applied and endorsed by the Commissioner of Baseball and the RSDC, and in the

Commissioner's words, "has served the industry so well." Hall Aff. Exs. 19, 20, 21; Wyche Aff.

im 10- 1 1; 17; Haley Aff. 10-17; Singer Aff. rT18-24.

The RSDC ignored the directive from which it derived its authority. In the Award, the

RSDC admits it did not use the established methodology. Pet. 67. What is more, the RSDC's

refusal to use the Bortz methodology was intentional. The RSDC has consistently used the Bortz

methodology to determine the fair market value of telecast rights for related party agreements for

close to a decade and a half. Wyche Aff. 11. Yet, here, the RSDC jettisoned it and adopted

assumptions that depart from the methodology in profound and obvious ways. Id. 11 25-38. As

the Managing Partner of Bortz attests: the panel's "determination [is] so grossly different from

its established methodology . . . that it completely corrupts the established methodology and the

RSDC's ultimate decision. Id. 38; see also Singer Aff. 111 18-24. The RSDC's "brand of

industrial justice" cannot stand."

6. Persistent Misconduct by the RSDC

Vacatur of an award is warranted when the process is prejudiced by a panel's persistent

misconduct before, during, and after an arbitral proceeding. See 9 U.S.C. 10(a)(3); CPLR

7511(b)(1)(i). A court will find arbitrator misconduct when there is a "denial of fundamental

fairness" in the proceeding. Roche v. Local 32B-32J Serv. Emps. Int '1 Union, 755 F. Supp. 622,

624 (S.D.N.Y. 1991); see also Tempo Shain Corp. v. Bertek, Inc., 120 F.3d 16, 20 (2d Cir. 1997);

12 See 187 Concourse Assocs. v. Fishman, 399 F.3d 524, 527 (2d Cir. 2005) (vacating award because the arbitrator

exceeded its authority by "fashion[ing] an alternative remedy" which directed that employee be reinstated for a probationary period where arbitrator determined just cause for termination and arbitration agreement provided that employee could be terminated for just cause).

16

Matter of Home Indem. v. Affiliated Food Distribs, Inc., No. 96 Civ. 9707, 1997 WL 773712, *4

(S.D.N.Y. Dec. 12, 1997); In re Engel, 193 Misc. 2d 91, 108-09 (N.Y. Co. 2002).

Here, the RSDC engaged in a pattern of misconduct that prejudiced MASN's ability to

present its case. Among other things, the RSDC refused to allow discovery in advance of the

hearing, to permit cross examination of witnesses, and to allow the hearings to be transcribed,

and permitted the Nationals to submit additional information after the hearing that MASN had no

opportunity to challenge or otherwise rebut. Pet.! 64. These deficiencies show an additional

likelihood that MASN will succeed in its vacatur petition. See Tempo Shain Corp, 120 F.3d at

20; see also Matter of Home Indem., 1997 WL 773712, at *4; Riko Enter., Inc. v. Seattle

Supersonics Corp., 357 F. Supp. 521 (S.D.N.Y. 1973).

B. MASN and the Orioles Will Be Irreparably Injured Without Injunctive Relief If permitted to claim default, dissolution, or termination of its telecast rights, the

Nationals will interfere substantially with the Court's review of the underlying Petition and with

the pending arbitration proceeding. These actions will cause irreparable harm to MASN,

including incalculable damage to MASN's goodwill in the marketplace, its contracts with

affiliates with whom MASN has contracted to provide Nationals' and Orioles' games, and its

relationships with advertisers and sponsors who have contracted to advertise on MASN during

Nationals' games. See Singer Decl. 11116, 24-27; Haley Aff. 49-50. Because these actual

harms are not capable of calculation or compensable with money damages, injunctive relief is

appropriate. See Yemini v. Goldberg, 60 A.D.3d 935, 937 (2d Dep't 2009).

1. Loss of Partnership Viability

The threatened loss of one's business or partnership warrants injunctive relief. See

Yemini, 60 A.D.3d at 937 (holding where money damages are insufficient, the party has

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established irreparable injury); room HD Holdings LLC, v. Echostar Satellite LLC, No.

0600292/2008, 2008 WL 1999520, at *3 (N.Y. Co. April 23, 2008) ("A complete loss of a

business constitutes irreparable harm.") (citing Semmes Motors, Inc. v. Ford Motor Co., 429 F.2d

1197 (2d Cir. 1970))13; Mr. Natural, Inc. v. Unadulterated Food Prods., Inc., 152 A.D.2d 729

(2d Dep't 1989) (termination of an exclusive distributorship agreement placed plaintiff in real

danger of losing its business or suffering dissolution); Larson Wulff & Co. v. Margulies, 94

Misc. 2d 847, 849 (N.Y. Co. 1978) ("A court of justice cannot sit idly by, while a defendant

despoil[s] a partnership for his own self-interest."). Indeed, courts have recognized the loss of

one's business is more than simply lost profits, and it cannot be fairly compensated through

monetary awards, alone. See, e.g., Staples Inc. v. Moses, 9 Misc. 3d 1102(A) (N.Y. Co. 2005)

(threatened lease termination warranted injunctive relief where the time and difficulty in

obtaining similar space sufficiently harmed petitioner's business).

On July 3, 2014, the Nationals stated that in light of MASN's nonpayment of the

purportedly owed telecast rights fees, it was entitled at any time to exercise all remedies,

including termination of MASN's right to telecast Nationals' games in the Orioles' Television

Territory. Hall Aff. Ex. 1, at 2. The Nationals continued to make these threats to MASN in

I3 Semmes Motors, Inc. is cited as authority in both federal and state cases within New York and elsewhere. En Semmes Motors, an automobile dealership sought to enjoin the manufacturer from interfering with its customers and terminating the dealership. Id. at 1200-01. The Second Circuit rejected Ford's contention on appeal that the dealer had not shown irreparable harm from the proposed termination because its past profits would provide a basis for calculating damages should it prevail. Id. at 1205. The Second Circuit recognized the loss of a business represents an intangible harm that is not quantifiable in monetary terms:

Of course, Semmes' past profits would afford a basis for calculating damages for wrongful termination, and no one doubts Ford's ability to respond. But the right to continue a business in which William Semmes had engaged for twenty years and into which his son had recently entered into is not measurable entirely in monetary terms; the Semmes want to sell automobiles, not to live on the income from a damages award.... Moreover, they want to continue living.

Id. (citation omitted). The Second Circuit further noted that "a judgment for damages" was "small consolation" to someone whose business has been "obliterated." Id. (quotations and citation omitted). It is noteworthy that the court, consistent with Maryland law, held the injunction did not depend on a showing the dealer had a likelihood of success; only that questions had been raised going to the merits that were "fair ground for litigation." Id. at 1205-06.

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addition to seeking other remedies. Id. at 1127, Ex. 1, at 2.

If the default notice becomes effective and the Nationals terminate the telecast rights,

MASN's economic viability will be threatened. See Singer Decl. 11115-7, 16-23. MASN has

nearly 30 agreements with cable providers in place, requiring MASN to provide and broadcast to

those providers both the Nationals' and Orioles' baseball games. Haley A 11.1150. Termination

of the Nationals' telecast license would place MASN in breach of these agreements and could

ultimately result in the termination of MASN carriage altogether. Singer Dec1.111117-20. Other

affiliates would likely seek renegotiation with MASN and MASN would be in an exposed and

weakened position. Id.111118-20. MASN's ability to televise the Orioles' games would also be

jeopardized. The Nationals' threatened action will cause uncertainty for MASN, for its affiliates,

for the telecast rights of the Nationals moving forward, and for fans of baseball in the Orioles'

Television Territory. Id. 8, 21-23. These types of harms cannot be cured through monetary

damages alone and threaten the livelihood of MASN itself. Id. 41 24-27; Haley Aff. 1150. Once

destroyed, MASN cannot he rebuilt at any reasonable price, and money simply cannot remedy all

of the harms that will result from MASN's diminishment or demise. Singer Dec1.11115, 24-27.

2. Loss of Markets, Destruction of Goodwill and Other Intangible Losses

A threat that, if executed, would harm a business' programming distribution and unique

markets can warrant injunctive relief. See Voom, 2008 WL 1999520, at *3-4. In Voom, this

Court held a company operating 15 channels faced irreparable harm when a satellite

broadcasting company threatened to terminate its non-exclusive broadcasting rights. Id. The

Court found that if the threat were executed, it would "foreclose any opportunity to ensure

national distribution of [its] programming," notwithstanding its other distribution agreements

with respondent's competitor Cablevision. Id. at *4-5. The Court concluded that "Voom's

assertions regarding the potential for loss of its business sufficiently demonstrates that it will

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suffer irreparable harm in the absence of injunctive relief.' Id.

Similarly, the Nationals' termination of MASN's rights to telecast the Nationals' games

would confiscate MASN's irreplaceable markets, including the Orioles' Television Territory,

and substantial portions of the Orioles' fan base and goodwill, built up over decades of effort and

investment in the Washington metropolitan area. Singer Decl. Ifir, 21-23, 27; Haley Aff. Irf 48.

MASN exists in its current form precisely because the parties to the Settlement Agreement

recognized a substantial portion of the economic harm to the Orioles caused by relocating the

Expos to Washington was incalculable. See Haley Alf. irf 7-8. The parties also recognized a

unified RSN created a vehicle that allowed for maximized profitability and distribution. Id. 1111- 7-

8. If the Nationals carry out its threat, the synergies achieved through the unified enterprise of

MASN would be lost. See Singer Decl. 5-7, 15-16. MASN requires injunctive relief to

preserve its goodwill and prevent substantial and irreparable noneconomic harm.

C. The Equities Weigh in MASN's Favor

The balancing of the equities in this case tilts heavily in favor of MASN. MASN's

request for injunctive relief seeks to maintain the status quo, and the prejudice MASN will suffer

if injunctive relief is denied far outweighs any prejudice the Nationals might suffer if injunctive

relief is granted. San Thi Ma v. Xaun T. Lien, 198 A.D.2d 186, 186-87 (1st Dep't 1993) ("[T]he

`balancing of equities' usually simply requires the court to look to the relative prejudice to each

party accruing from a grant or denial of the requested relief."); see also Lichtenberg v. Besicorp

Grp. Inc., 43 F. Supp. 2d 376, 384 (S.D.N.Y. 1999); Gramercy Co. v. Benenson, 223 A.D.2d

14 Because the petitioner's channels had limited popularity and brand loyalty, the Court found the loss of goodwill was not an independent basis for granting injunctive relief in that case. That reasoning does not hold here. MASN's popularity and goodwill are beyond question, and their threatened loss provides another basis for injunctive relief. See Singer Decl. J 22; Alside Div. ofAssociated Materials Inc. v. Leclair, 295 A.D.2d 873, 874 (3d Dep't 2002); CanWest Global Comm's Corp. v. Mirkaei Tikshoret Ltd., 9 Misc. 3d 845, 859-60 (N.Y. Co. 2005).

20

497, 498 (1st Dep't 1996) (balance of equities weighs in favor of party seeking to maintain the

status quo); Gray v. Serbalik, 257 A.D.2d 869, 870 (3d Dep't 1999).

Under the status quo, the Nationals receive quarterly payments of telecast rights fees

calculated in accordance with the Bortz methodology and profits distributions from MASN in

accordance with its shareholding interest. Under the narrowly-tailored relief MASN seeks,

payment of the Bortz-calculated rights fees and profits distributions would continue pending

review of the Award. If injunctive relief is granted, MASN is willing to post a bond to fully

secure payment to the Nationals. If the Court decides the Award is valid, MASN will pay the

additional rights fees imposed by the Award and the Nationals will be made whole.

When viewed against the threatened harm to MASN if injunctive relief is denied, there is

no contest. The continued telecast of the Nationals' games is essential to MASN's ability to

operate on a day-to-day basis. See Singer Deel. 5-7; 24-25. For MASN, the threatened harm

is thus not merely irreparable; it is potentially the end of the enterprise. See id.; Haley Aff.1116.

D. The Court Should Reject the Nationals' Argument That Injunctive Relief is Not Needed if MASN Pays the Amount Claimed The Nationals argue injunctive relief is not required because its threat to terminate

MASN's telecast rights will end if MASN just pays the amount the Nationals contend is due

pursuant to the Award. There are several reasons why this argument is meritless.

1. The Nationals' Argument Confuses the Irreparable Harm Test

The Nationals' argument that MASN can avoid the threat of termination by paying the

Nationals millions in cash turns the irreparable harm test on its head. The test is whether MASN

faces the threat of irreparable harmhere the termination of the telecast rightsif it fails to cure

the alleged default by the end of the purported cure period. The test is not whether the Nationals

will stand down on its threat to impose irreparable harm if MASN buckles to the Nationals'

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threat. MASN does not seek to enjoin the payment of money; it seeks to enjoin the termination

of the telecast rights under the Settlement Agreement. It is the Nationals that assert the payment

of money, in lieu of injunctive relief, alleviates the need for injunctive relief. But that puts the

cart before the horse and ignores the equitable purposes of injunctive relief.'

2. The Award Is Not Yet Enforceable

Even if the Nationals already had a money judgment against MASN, MASN would still

have the absolute right to post a bond and challenge that judgment on appeal. See C.P.L.R.

5519. That the Nationals seek to exercise more rights than it would have with a judgment

highlights its presumptuousness. The Award has not been confirmed by a court as required by 9

U.S.C. 9 and it is subject to attack in MASN's Petition herein. As Judge Duffy held in

Hatzlachh Supply, Inc. v. Moishe's Electronics Inc., 848 F. Supp. 25, 28 (S.D.N.Y. 1994):

[D]ecisions by arbitrators must be confirmed by a federal court in order for [sic] to be enforceable. 9 U.S.C. 9. Indeed, an arbitrator's decision is not final until it is confirmed. See 9 U.S.C. 13.

See also New York Air Brake Corp. v. Gen. Signal Corp., 873 F. Supp. 747, 753 (N.D.N.Y.

1995) (settlement agreement when parties settled after award was issued, but prior to

confirmation, because "[n]o 'final decision' existed because at the time of the [settlement

meeting], the award had not yet been confirmed by a federal court").

15 For example, in Casitu, LP v. Maplewood Equity Partners (Offshore) Ltd., 17 Misc. 3d 1137(A) (N.Y. Co. 2007) (Fried, J.), aff'd, 60 A.D.3d 488 (1st Dep't 2009), the plaintiff shareholder in the defendant company, agreed to make payments on calls for capital contributions under a subscription agreement. Id. The defendant alleged the plaintiff failed to fund seven capital calls and served a default notice, asserting that if the plaintiff failed to make the capital calls, it would be in default, lose the right to receive any distributions attributable to its class of shares, lose voting and decision making rights, and that its shares would be subject to a "forced sale." Id. The plaintiff argued that under the applicable contractual terms, it had no obligation to fund those capital calls and moved to enjoin the forced sale and other actions. Id. The court granted the relief on the grounds that if the default remedies were exercised, it would irreparably harm the plaintiff. Id. Notably, the plaintiff could have avoided such harm by simply making the capital calls and suing for a refund of the monies paid just as the Nationals argue here. Justice Fried, as affirmed by the First Department, nonetheless found irreparable harm and granted injunctive relief. Id.

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3. The Orioles Have Sought De Novo Review of the Award

Under the terms of the Settlement Agreement the Award is not binding on the Orioles,

who are entitled to and have sought de novo review. In his June 30, 2014 letter transmitting the

Award, the Commissioner acknowledged this fact, Hall Aff. 16, Ex. 16:

In the event that the Orioles disagree with the RSDC's decision, Section 8.C. of the Agreement provides that, after a period of mediation, any dispute is to be resolved pursuant to that express, detailed arbitration agreement [requiring arbitration before the AAA].

On July 2, 2014, the Orioles and MASN commenced arbitration before the AAA. Id. at

17. One issue in that arbitration is the Orioles' right to de novo review of the Award. Id. If

the Orioles prevail in the arbitration and the established methodology is properly applied, MASN

would not be required to make the payments now demanded by MLB and the Nationals, and a

termination of the telecast rights based upon a refusal to make those payments would be

improper. An injunction is therefore necessary to prevent the Nationals from terminating until

the Orioles have had an opportunity to obtain de novo review of the Award.

4. Complications Caused by MLB's Taxation of Telecast Rights Fees

If MASN were forced to pay the Nationals for the telecast rights in the amounts set out in

the Award, it would also be required to pay "the same rights fees" to Nominal Respondent

Orioles under the Settlement Agreement. See Hall Aff. 1118. The payments would penalize the

Orioles because under the MLB revenue sharing plan, MLB levies a "tax" of up to 34% on the

telecast fees clubs receive. Profit distributions from the RSN are not subject to this tax. See Pet.

44. After issuing the Award, MLB expressed its intention to "tax" the Orioles based upon the

telecast rights fees the Award would require MASN to pay to the Orioles if the Award is not

vacated. Because the Orioles would be taxed on monies it is challenging, requiring MASN to

pay the Nationals will trigger additional significant complications for other parties as well.

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5. The Adverse Impact on MASN's Business and Creditworthiness

Under New York law, damage to one's creditworthiness or credit rating is an irreparable

injury justifying injunctive relief. Four Times Square Assocs., L.L.C. v. Cigna Invs., Inc., 306

A.D.2d 4, 6 (1st Dep't 2003) (holding a "threat to [plaintiff's] good will and creditworthiness"

was sufficient irreparable harm to warrant an injunction). In Four Times Square, the mortgage

held on a building by plaintiffs required them to maintain certain levels of insurance coverage.

Id. at 5. After the events of September 11, 2001, the property's insurer proposed certain

reductions in the holder's insurance coverage, which led the property's mortgage trustee and

special servicer to declare an event of default. Id. On appeal, the First Department reversed the

trial court and deemed equitable relief proper to prevent the declaration of default. Id. at 5-6.

The court reasoned that "the threat to [plaintiffs] good will and creditworthiness is sufficient to

establish irreparable injury warranting the granting of injunctive relief." Id.

Similarly, in Wyler v. Wyler, No. 6803/04, 2005 WL 2941571, at *1 (Nassau Co. Dec. 13

2004), an officer and director of a closely held corporation increased his salary, and hired his

wife, without the consent of the other director. Id. at *1. The other director sought injunctive

relief enjoining payment of the salary increase and further payments to the director's wife. Id.

The court acknowledged that "[i]rreparable injury in this context means any injury for which

money damages are insufficient." Id. at *2. Nevertheless, the court found irreparable harm

because the money damage "does not take into account the corporate need to have a regular cash

flow." Id. at *3. The court found that because the alleged payments "negatively impacted" the

financial circumstances of the plaintiff director's business, irreparable harm was shown. Id. As

described in the Affidavit of MASN's Chief Financial Officer, enforcement of the Award

threatens MASN's operations, borrowing capabilities and continued vitality. Haley Aff. 1[ 48.

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6. Delay and Prejudice MASN seeks to pursue this proceeding promptly to a final determination. The amount of

telecast rights fees claimed by the Nationals in the default notice, even if paid, will not end the

matter. Payments are due periodically; the next will be due on October 1, 2014. If MASN is

forced to capitulate to the Nationals' threat of termination, the Nationals will have every

incentive to drag out this matter to delay vacatur of the Award, reaping all the while tens of

millions of dollars in telecast rights fees that are not due. At the August 1, 2014 conference

before this Court's Law Secretary, the Nationals and MLB showed they intend to prolong this

matter, indicating they would like to file a motion to dismiss, but briefing on that issue could be

delayed until October. Granting MASN's request for injunctive relief will help ensure all parties

will work to move this action forward promptly toward a final resolution.

CONCLUSION

For the foregoing reasons, Petitioner respectfully requests that its Motion for Emergency

Interim Injunctive Relief be granted.

Dated: August 7, 2014 Respectfully submitted,

CHADB LLP

By Thomas J. Hall Pamela J. Marple (pro hac vice pending Rachel W. Thorn Benjamin D. Bleiberg

30 Rockefeller Plaza New York, NY 10112 (212) 408-5100

Attorneys for Petitioner TCR Sports Broadcasting Holding, LLP

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