In April of this year, Peter Trematerra, the owner of the Atlanta Blaze lacrosse franchise, filed a lawsuit on behalf of himself and the franchise against Major League Lacrosse, league commissioner David Gross, and other individuals and entities. The lawsuit is another issue in what has already been an eventful offseason for the MLL.
Whether it was accidentally leaking personal information of every player in its player pool, to the on-again/off-again relocation rumors involving the Rochester Rattlers and their flirtation with Dallas, and to who would replace Gross as the new commissioner, Major League Lacrosse has been in the news a great deal recently, but not always for the best reasons.
Now let’s back it up a little and give everyone some context. A little under a week ago, College Crosse contributor and Moneyball Lacrosse founder Joe Keegan tweeted out that he heard some rumblings that Blaze owner Peter Trematerra sold the franchise back to the league. Joe followed up his original tweet with some more details about possible ownership for the team.
When reached for comment, Kellen Flatt, the Director of Communications for the Blaze, could not confirm anything regarding Trematerra selling the team back to the league.
Keegan’s original tweet was quite interesting: Trematerra acquired the team less than three years ago and it seemed surprising that he would sell the franchise back to the MLL shortly after getting the team. We wanted to see if there was anything else to the story besides a simple change in ownership and so we started digging.
Though we didn’t find much information besides Joe’s tweet about the sale of the Blaze, we did discover that Trematerra filed a lawsuit in April of this year in Suffolk County Superior Court in Massachusetts against Major League Lacrosse, MLL Commissioner David Gross, & other parties. If you do a Google search of “Peter Trematerra” & “MLL” and restrict your results to things from this past month, one of the first results you’ll find is a court memorandum & order granting in part and denying in part a Motion to Dismiss filed by the MLL, Commissioner Gross, & the other co-defendants in the case against Mr. Trematerra.
After we found the memorandum & order we then went to the Massachusetts Trial Court Electronic Case Access page to see what else we could find. After a quick search, we found the public court records for Trematerra, Peter vs. Major League Lacrosse LLC, et al, case number 1784-CV-01140, in Suffolk County Superior Court before the Hon. Judge Sanders. We’ll get into the nitty-gritty of the case later, but first, let’s meet our parties.
Plaintiffs
Peter Trematerra, Owner of the Atlanta Blaze
Atlanta Lacrosse Club LLC
Defendants
David Gross, Commissioner of the MLL
Major League Lacrosse LLC
Lax United Marketing, LLC d/b/a Lax Sports Network
New Balance Athletics Inc.
James Davis, chairman of New Balance and co-founder of Major League Lacrosse
MLL Founding Members LLC (Owned by James Davis, and controls 35.72% of membership equity in MLL)
Important Filing Dates
Complaint Filed: The Complaint was filed on April 13, 2017
Defendants’ Motion to Transfer: Defendants filed a Motion to Transfer to the Business Litigation Session of the Suffolk Superior Court on June 7, 2017
Defendants’ Motion to Dismiss: Defendants filed a Motion to Dismiss pursuant to Mass R. Civ. P. 23.1 and 12(b)(6) on August 18, 2017
Court rules on Defendants' Motion to Dismiss. The Court ruled on Defendants’ Motion to Dismiss on October 13, 2017
Defendant’s Answer: Defendant MLL filed an answer to the original complaint on October 30, 2017
Memorandum & Order
Massachusetts doesn’t provide public PDFs or Word documents of court filings, as you have to go to the actual courthouse to make copies of whatever you are looking for, so unfortunately we don’t have the original complaint or the MLL’s October 30th answer. However, Judge Sanders provides many details of the inner-workings of the MLL and its complex ownership structure in her memorandum, based in large part on Mr. Trematerra’s Complaint. You can find a link to the memorandum & order here, provided by Massachusetts Legal Resources.
Facts & Background
Judge Sanders' memorandum first begins by going into the backstory of how Trematerra and the MLL began their negotiations in 2014. Shortly after those early negotiations, Trematerra formed Atlanta Lacrosse Club, LLC and purchased equity interest in the MLL. The Court actually does a really good job breaking down the ownership structure of the MLL, in the memorandum from page one:
MLL currently has ten members, including Atlanta Lacrosse and MLL Founding Members LLC (MFM). MFM owns five of the League’s fourteen Teams Units, which equates to 35.72 percent of the membership equity in MLL. The remaining nine Team Units are each owned by Atlanta Lacrosse and eight other LLCs, which operate the League’s nine lacrosse teams. Defendant James Davis holds interests in some of these LLCs.
Each MLL member elects one individual to serve on MLL’s Board of Managers (the Board). Members approve or deny Board actions in proportion to their respective shares of equity. MLL is a Delaware LLC.
According to Trematerra’s Complaint, he alleges that during the early negotiations, “Gross made several misrepresentations regarding MLL’s profitability and that he also failed to disclose, among other things, that the League had sold its broadcast and sponsorship rights at far below market value to companies owned or controlled by other MLL equity holders.”
Additionally, Trematerra also alleges that back in 2008, the MLL entered into a “Broadcast and Digital Rights License Agreement (the Broadcast Agreement) with defendant Lax United Marketing, LLC (LUM).” Lax United Marketing, LLC is the owner of Lax Sports Network. Trematerra’s Complaint states that Lax United Marketing was created to make, produce, and license television, internet streaming, and broadcast rights to MLL games and other promotional events. However, Trematerra also alleges the following:
At the time, Gross, the League’s Commissioner and COO, was the president of LUM. MLL Founding Members LLC (MFM), defendant New Balance Athletics, Inc. (New Balance), and James Davis, who had a controlling interest in New Balance, held equity interests in LUM. Under the Broadcast Agreement, the MLL engaged LUM (among other things) to produce all League games and events and create a League website.
The plaintiffs allege that, because of The League also held a 4.5% equity interest in LUM, interconnection between LUM, Gross, Davis, and MFM, the League sold its broadcast rights to LUM for consideration that was not commercially reasonable.
It seems that Gross has worn a lot of hats while with Major League Lacrosse.
Another interesting thing that Trematerra alleges in his complaint is that the league had a very close relationship with its sponsors New Balance, Warrior, and Brine, that was undislosed during the negotiations period. From page two of the Judge Sanders’ memorandum:
MLL also entered into Sponsorship Agreements with New Balance and two lacrosse equipment manufacturers, Warrior and Brine, Corp. This too took place before Atlanta Lacrosse became an MLL member. Warrior is a wholly owned New Balance subsidiary; Brine, Corp., which was founded by one of MFM’s members,is currently controlled by Davis. The plaintiffs assert that, due to the interconnection between New Balance, Warrior, Brine, MFM, and Davis, the League sold its sponsorship rights at far below market value.
In 2014, plaintiff Trematerra entered into negotiations to form an Atlanta based lacrosse team and join MLL. It is alleged that during these negotiations, Gross made various misrepresentations about the League’s profitability and presented Trematerra with information and documents that inaccurately reflected the League’s current and future prospects.
Trematerra alleges that Gross never disclosed the broadcast agreement, any of the sponsorship deals, or Davis’ control of the sponsors to him during the negotiations. He also alleged that the league forced the Blaze “to outfit Atlanta Blaze players in merchandise at commercially unreasonable prices.” Tematerra’s Complaint had 13 counts in total. You can find all 13 below.
In April 2017, plaintiffs filed this lawsuit. The Complaint asserts the following claims: misrepresentation against Gross and MLL (Count 1); fraudulent inducement against Gross and MLL (Count 2); violation of G.L. c. 93A, § 11 against MLL (Count 3); breach of the LLC Agreement against MLL (Count 4); breach of the TM Agreement against MLL(Count 5); breach of fiduciary duty against Gross (Count 6); aiding and abetting Gross’s breach of fiduciary duty against Davis, MFM, and LUM (Count 7); breach of fiduciary duty against MLL (Count 8); aiding and abetting MLL’s contractual breach of fiduciary duty against LUM and New Balance(Count 9); declaratory judgment against MLL (Count 10); conversion against MFM, Gross, Davis, LUM, and New Balance (Count 11); breach of the implied covenant of good faith and fair dealing against MLL (Count 12); and unjust enrichment against LUM and New Balance (Count 13). Defendants move to dismiss all of these claims.
Court’s Holding
Judge Sanders did an admirable job cutting through all the complex interrelationships involved in doing business with Major League Lacrosse in her memorandum. Trematerra’s Complaint must’ve been confusing as well, as Judge Sanders referred to it as a “sprawling thirteen count Complaint … pled in a disorganized fashion, making it difficult for the Court to analyze each claim separately.” You can certainly read the memorandum & order yourself, but if you are strapped for time, the gist of the Court’s holding is that Judge Sanders granted part of Defendants’ Motion to Dismiss & denied the rest.
Specifically, Judge Sanders granted Defendants’ Motion to Dismiss as to counts 6-9 and 11-13, meaning those counts are thrown out of the suit. She denied Defendants’ Motion to Dismiss as to counts 1-4 & 10, meaning those counts can proceed.
Judge Sanders held that count 5 (the claim that the league forced the Blaze to outfit players in merchandise at commercially unreasonable prices) was dismissed and sent to arbitration.
After Judge Sanders’ memorandum & order denying the Motion to Dismiss in part, Major League Lacrosse filed an answer to the original Complaint on October 30, 2017. The next Court date is a litigation conference set for December 6th, 2017.
We’ve reached out to Gross for comment, but he has yet to respond to our request.
Contributed by College Crosse
