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A New York judge on Friday ruled NBA commissioner Adam Silver should resolve a dispute between the New York Knicks and Toronto Raptors over the alleged theft of thousands of confidential files.
Less than a week after the Knicks sued the Raptors in August 2023 over the alleged theft, Toronto asked Silver to step in and help settle the dispute. The Raptors continued those efforts in court filings in the months that followed and argued that the lawsuit had "no business wasting judicial resources" given Silver's authority to adjudicate it.
The Knicks, who sought more than $10 million in damages in the lawsuit, pushed back on the Raptors' request, arguing that Silver shouldn't become involved partly because of his close relationship with Raptors governor Larry Tanenbaum, who also is chairman of the NBA board of governors.
On Friday, U.S. District Judge Jessica Clarke weighed in and sided with the Raptors, which now sends the matter to Silver, according to a court filing obtained by ESPN.
For now, the case, which had been playing out in the U.S. Southern District Court in Lower Manhattan, is on hold while the sides explore finding a resolution out of court.
If Silver finds that the case can't be arbitrated, the court has to be notified within seven days of that decision, according to the filing. All parties have until Dec. 13 to provide an update to the court about where the arbitration process stands.
"The Raptors and [Raptors owner Maple Leaf Sports & Entertainment] are pleased that the court agreed this should be resolved by the NBA, which we have maintained is the correct forum for disputes of this nature," a Raptors spokesperson said in a statement to ESPN. "We hope this brings this matter closer to a resolution."
A spokesperson for MSG Sports, which owns the Knicks, said in a statement to ESPN that the team is "continuing to evaluate our legal options."
"We were the victim of a theft of proprietary and confidential files in a clear violation of criminal and civil law," the statement read. "We don't think it's appropriate for the Commissioner of the NBA to rule on a matter involving his boss, the Chairman of the NBA, and his team."
The NBA declined to comment.
In the initial complaint, the Knicks alleged that the Raptors poached Ikechukwu Azotam, who worked for New York from 2020 to 2023, and ordered him to provide a trove of internal information after Toronto began recruiting him in the summer of 2023. The Knicks argued that this effort was geared toward giving the Raptors a competitive advantage.
"The truth or falsity of that allegation is not the question at this stage," Clarke wrote in Friday's filing. "Instead, the question before the court is where this case should proceed: either in this court or in arbitration before the Commissioner of the National Basketball Association."
The judge added that the answer to that question hinged on the language in the NBA's constitution, which according to bylaw "d" in Article 24, gives Silver broad powers over such disputes.
That bylaw states, "The Commissioner shall have exclusive, full, complete, and final jurisdiction of any dispute involving two (2) or more Members of the Association."
Based on similar court precedents involving other broad arbitration clauses, the judge wrote that "the determination of whether this dispute is arbitrable is one for the NBA Commissioner, not the Court."
The Knicks alleged that Azotam -- who worked for the Knicks as an assistant video coordinator, then as a director of video/analytics/player development assistant -- sent the Raptors thousands of confidential files, including play frequency reports, a prep book for the 2022-23 season, video scouting files and opposition research.
The Knicks also alleged that Azotam did so at the request of the Raptors, whom they said were trying to "organize, plan, and structure the new coaching and video operations staff," the August 2023 complaint stated.
The Raptors, Azotam, Toronto head coach Darko Rajaković, player development coach Noah Lewis and 10 "unknown" employees were listed as defendants in the lawsuit.
In an October 2023 court filing, the Raptors called the Knicks' allegations "baseless" and a "public relations stunt" while asking for Silver to step in. The Raptors also argued that the "alleged 'theft of data' involved little more than publicly available information compiled through public sources readily accessible to all NBA Members."
In a court filing one month later, the Knicks argued that Silver had a conflict of interest because of Tanenbaum's position as chair of the board of governors.
"Tanenbaum serves as Silver's boss and exercises control over and heavily influences Silver's continued employment and salary," the Knicks argued. Further, the Knicks pointed to a friendship between Silver and Tanenbaum.
"Among other things, Tanenbaum has been described as 'a close ally of Commissioner Adam Silver,'" the Knicks wrote. "Silver himself described Tanenbaum as 'not just my boss as the chairman of the board of governors, but he's very much a role model in my life.' If Silver were to preside over the instant dispute, he would be arbitrating a case for his boss and ally."
The Knicks also pointed to the limits on Silver's power regarding monetary penalties under Article 24 of the NBA's constitution, which states that the commissioner cannot issue a penalty above $10 million. The Knicks also pointed out that the league's constitution does not authorize Silver to award legal fees in disputes between two teams.
"As the Knicks intend to prove at trial, damages exceed $10 million," the Knicks said in the filing, adding that they also intended to seek attorneys' fees.
The lawsuit itself marks a rare instance of one professional team suing another. The only other instance ESPN research could uncover involving two NBA teams was a legal battle between the Knicks and Nets in 1977 over the Nets' attempts to move from Long Island to New Jersey.
The lawsuit between the Knicks and Raptors appears to be the first between two NBA teams that centers on basketball-related information.
