Free Motion for Miscellaneous Relief - District Court of Arizona - Arizona

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Rosenquist & Associates Anders Rosenquist, Jr., Esquire Bar No.: 002724 Florence M. Bruemmer, Esquire Bar No.:019691 80 E. Columbus Phoenix, Arizona 85012 Attorneys for Plaintiff Lemon Morgan & Morgan, P.A. 20 N. Orange Avenue, 16th Floor Orlando, FL 32801 Clay M. Townsend, Esquire Bar No.: 023414 Brandon S. Peters, Esquire Bar No.: 022641 Keith R. Mitnik, Esquire Bar No.: 436127 Attorneys for Neal Plaintiffs IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA MEADOWLARK LEMON, a married man, Plaintiff, vs. HARLEM GLOBETROTTERS INTERNATIONAL, INC., an Arizona corporation; HARLEM GLOBETROTTERS INTERNATIONAL FOUNDATION, INC., an Arizona corporation; MANNIE L. JACKSON and CATHERINE JACKSON, husband and wife; FUBU THE COLLECTION, LLC, a New York limited liability company doing business in Arizona; GTFM, LLC, a New York limited liability company doing business in Arizona; Defendants. MOTION TO DETERMINE CONFLICT OF INTEREST IN REPRESENTATION AT SETTLEMENT CONFERENCE (Not to be filed without Order of the Court)
(Contains

Case No. CV-04-0299 PHX DGC & CV-04 1023 DGC

Highly Confidential Information)

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HARLEM GLOBETROTTERS INTERNATIONAL, INC., an Arizona corporation, Counter-claimant, vs. MEADOWLARK LEMON, a married man, Counterdefendant.

COMES NOW THE PLANTIFFS, through undersigned counsel and, pursuant to Settlement Conference Order No. 8, moves the Court to determine if there will be a CONFLICT OF INTEREST in representation at the Settlement Conference set in this case.

FACTS
The Harlem Globetrotters International Inc. (hereinafter referred to as the HGI Organization) was sold on September 27, 2005 to two investment groups (hereinafter referred to as the "Disney Group") for Seventy Million Dollars. The two corporations comprising the HGI Organization, HGI of Minnesota and HGI of Arizona were merged into a new corporation, HGI of Nevada, and then dissolved. All the employees and board members, who were transferred from HGI of Arizona to HGI of Nevada, through the merger, resigned, and all the stock of HGI of Nevada was transferred to a new corporation, HGI Holdings, Inc. Eighty percent of the stock in HGI Holdings, Inc. went to the "Disney Group," and the remaining twenty percent went to Mannie Jackson, the previous owner of the HGI Organization. Mannie Jackson is an individual Defendant in
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this case along with the HGI Organization that was sold. Through stipulation HGI of Nevada was substituted for HGI of Arizona as the corporate defendant in this case because of the merger and dissolution of HGI of Arizona. In the sales agreement Mannie Jackson was to be employed as CEO and Chairman of the Board of HGI of Nevada for three years, however he serves at the pleasure of the stockholders of HGI Holdings, Inc., and can be terminated at any time, without cause. The sales agreement further provides for a management agreement with Shamrock Capital Advisors Inc., the investment arm of the "Disney Group," to manage HGI of Nevada, a wholly owned subsidiary of HGI Holdings, Inc. Also, in the sales agreement Mannie Jackson provided the purchasers with an Indemnification Agreement covering any losses that result from this lawsuit. Attorneys for HGI, and Mannie and Catherine Jackson, with the concurrence of Plaintiffs, requested and were granted a Settlement Conference. The Honorable Lawrence Anderson was assigned to handle the Conference. Judge Anderson held an informal telephonic conference with the attorneys for the parties. On July 14, 2006 Judge Anderson issued an Order setting out the requirements for the Settlement Conference, which is to be held on September 28, 2006. During the informal telephonic conference with Judge Anderson, attorneys for Plaintiffs asked attorneys for Defendants Mannie Jackson and HGI if a separate representative is going to attend the Settlement Conference to represent the new "owners" of HGI of Nevada. They responded that no representative of the new owners will attend the Settlement Conference.
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The issue of the new owners being a necessary party who needed an independent representative was then raised with Judge Anderson. Counsel for HGI stated that the new owners were not going to be involved because the transaction was just a transfer of stock ownership with no change in the ownership of assets. Judge Anderson told Plaintiffs to submit the issue to this Court in the form of a Motion, and not to file it with the Clerk's Office. In previous conversations with counsel for Mannie Jackson and HGI an additional reason was given for the non-participation of the new owners in the resolution of the case. The reason was that Mannie Jackson had an Indemnification Agreement with the new owners. One of the requirements set out in Judge Anderson's Order is that, "An uninsured or selfinsured corporate party shall physically appear at the aforesaid Settlement Conference through its authorized representative with full and complete authority to discuss settlement of the case." The meaning of full and complete authority was defined in footnote No. 2, which states, "Full and complete authority within this Order means that the individual appearing for, or on behalf of, the Defendant(s) shall have the express authority and discretion to authorize the payment to, or accept the terms of, Plaintiff's last settlement demand.

THE ATTORNEYS WHO ARE REPRESENTING MANNIE JACKSON CAN NOT REPRESENT THE HGI CORPORATION AT THE SETTLEMENT

CONFERENCE. HGI MUST HAVE ITS OWN REPRESENTATIVE.
Ariz. Rules Prof. Cond. ER 1.7, 1.8, and 1.13 (1983)

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See e.g. In re Ireland, 146 Ariz. 340, 345; 706 P.2d 352 (1985)(conflict of interest arises when lawyer retained by corporation represents parties related to corporation, because attorney owes allegiance to corporation and not to a stockholder, director, officer, employee, representative, or other person connected with the corporation). The failure of Defendant HGI to have a representative independent of Mannie Jackson's attorneys present at the settlement conference, would be a failure on their part to participate in settlement negotiations in good faith, which would delay resolution of this matter and subject Defendants to sanctions. Pitman v. Brinker Int'l, 2003 U.S. Dist. LEXIS 26202 (D. Ariz. 2003)(sanctions upheld for failure to provide corporate representative with genuine settlement authority at the conference when defendant sent representative who did not have full settlement authority and could not modify settlement decisions based on Plaintiffs' presentations at conference). The authority of a federal court to order attendance of persons at settlement conferences and to impose sanctions for disregard of the court's orders is so well established as to be beyond doubt. Pitman v. Brinker Int'l, Inc., 216 F.R.D. 481, 484 (D. Ariz. 2003). This affirms the notion that meaningful and productive settlement conferences are vital to the judicial process in assisting district courts in managing their heavy case load. Id. The failure of a party to obey a court's order absent showing good cause warrants sanctions. Id. Sanctions are not only appropriate when the disobedience is intentional, but may also be imposed when the disobedience is unintentional. Id.

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AN INDEMNIFICATION AGREEMENT DOES NOT ALTER THE MANDATE OF THE ETHICAL RULES
An Indemnification Agreement does not substitute the indemnifier for the person or corporation it indemnifies. The indemnifier may act as a representative of the indemnified, and have certain rights in the resolution of any dispute. However, if there is a potential conflict between the indemnifier and indemnified, the indemnified has to have a separate representative to protect its interests. Matters will come up at the settlement conference which may be beneficial to the indemnified but not beneficial to the indemnifier, and matters will come up at the settlement conference where the indemnifier would not have the authority to bind the indemnified.

HGI SHOULD NOT BE ALLOWED TO WAIVE THE MANDATES OF THE ETHICAL RULES BY WAIVING ANY CONFLICT AND GIVING THE

ATTORNEYS FOR MANNIE JACKSON THE RIGHT TO REPRESENT THEM.
It is Plaintiffs' belief that the chances of reaching a settlement in this case will be significantly reduced if an independent representative of HGI is not present to listen to alternative resolutions the Plaintiffs may be willing to negotiate.

Based on the above, Plaintiffs' request the Court enter an Order: 1) Barring Manny Jackson and his attorneys from representing Harlem Globetrotters International, Inc. at the Settlement Conference.
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2) Baring Harlem Globetrotters International, Inc. from waiving their personal appearance at the settlement conference, and giving permission to Mannie Jackson and his attorneys to negotiate for them. 3) Directing a Representative of Harlem Globetrotters International, Inc. to personally appear at the Settlement Conference, and be prepared to participate in settlement negotiations, pursuant to Judge Anderson's July 14th Order. 4) Directing Mannie Jackson's attorneys to provide an appropriate representative of Harlem Globetrotters International, Inc. with a copy of your Order and a copy of Judge Anderson's July 14th Order, and to provide Plaintiff's attorneys with contact information on the Representative.

RESPECTFULLY SUBMITTED this

1

day of September 2006.

ROSENQUIST & ASSOCIATES

By:

/s/Anders Rosenquist Jr. Anders Rosenquist, Jr. Esquire Florence M. Bruemmer, Esquire Attorneys for Plaintiff Meadowlark Lemon

MORGAN & MORGAN P.A. By: /s/ Clay M. Townsend Clay M. Townsend, Esquire Florida Bar No.: 363375 Keith Mitnik, Esquire Florida Bar No.: 436127
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Brandon S. Peters, Esquire Florida Bar No.: 965685 Attorneys for Plaintiffs Fred Neal, Larry Rivers, Robert Hall, Dallas Thornton, Marques Haynes and James Sanders

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CERTIFICATE OF SERVICE Florence M. Bruemmer declares as follows: 1. I am and was at all times mentioned herein a citizen of the United States and a resident of Maricopa County, Arizona over the age of 18 years of age and not a party to the action or proceeding. I am an attorney with Rosenquist & Associates. 2. I hereby certify that on September 1 , 2006, a true and correct copy of the foregoing MOTION TO DETERMINE NECESSARY REPRESENTATIVE FOR SETTLEMENT CONFERENCE was sent by postage-prepaid first-class mail, addressed to: Joel L. Herz, Esq. Law Offices of Joel L. Herz 3573 East Sunrise Drive, Suite 215 Tuscon, Arizona 85718 Telephone: (520) 529-8080 Attorneys for Defendants FUBU the Collection, LLC GTFM of Orlando, LLC d/b/a FUBU Company Store Ira Sacks, Esq. Safia A. Anand, Esq. DREIR, LLP 499 Park Avenue New York, NY 10022 Attorneys for Defendants FUBU the Collection, LLC, GTFM of Orlando, LLC and GTFM, LLC Clay Townsend, Esq. Morgan, Colling & Gilbert, PA 20 N. Orange Avenue 16th Floor Orlando, FL 32802 Attorneys for Plaintiffs Neal, Rivers, Thorton, Hall, Haynes and Sanders Robert W. Goldwater, III, Esq. The Goldwater Law Firm, P.C. 15333 North Pima Road, #225
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Scottsdale, Arizona 85260 Attorneys for Plaintiffs Neal, Rivers, Thorton, Hall, Haynes and Sanders Ray K. Harris Fennemore Craig 2003 North Central Avenue Suite 2600 Phoenix, Arizona 85012-2913 Attorneys for Defendants Harlem Globetrotters Int'l, Inc., Harlem Globetrotters Int'l Foundation, and Jackson Edward R. Garvey Christa Westerberg Garvey McNeil & McGillivray 634 West Mail Street Suite 101 Madison, WI 53703 Attorneys for Defendants Harlem Globetrotters Int'l, Inc., Harlem Globetrotters Int'l Foundation, and Jackson by placing same in a properly sealed, postage prepaid envelope and depositing same in a United States Postal Service mail box. Also a copy of the aforementioned Motion was e-mailed to: Honorable David Campbell Arizona District Court [email protected]

Honorable Lawrence Anderson [email protected] Arizona District Court 3. I declare under the penalty of perjury under the laws of the United States that the foregoing is a true and correct. Executed this 1 day of September 2006, at Phoenix, Arizona.

/s/Florence Bruemmer Florence Bruemmer
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ORDER GOOD CAUSE APPEARING, IT IS ORDERED: 1. Defendant Mannie Jackson and his attorneys are NOT to represent Defendant Harlem Globetrotters International, Inc. at the Settlement Conference in this case. 2. A Representative of Defendant Harlem Globetrotters International, Inc. MUST PERSONALLY APPEAR at the settlement conference in this case, and be prepared to participate in settlement negotiations, pursuant to the terms of Judge Lawrence O. Anderson's Settlement Conference Order, dated July 14, 2006. Harlem Globetrotters International, Inc. will NOT BE ALLOWED to waive their appearance at the settlement conference. 3. Mannie Jackson's attorneys are to provide an appropriate Representative of Harlem Globetrotters International, Inc. with a copy of this Order and a copy of Judge Anderson's July 14th Order, and provide Plaintiff's attorneys with contact information on the Representative. Entered this ____ day of September, 2006

By __________________________ Honorable David G. Campbell Judge of the District Court District of Arizona

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