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MLB and Dodgers in Fee Dispute Over Team's Bankruptcy

April 9, 2012 | Posted in : Bankruptcy Fees / Expenses, Expenses / Costs, Fee Clause, Fee Dispute

A recent NLJ story, “MLB wants Dodgers to Cover League’s Legal Costs in Team’s Bankruptcy” reports that the settlement between Major League Baseball and Los Angeles Dodgers owner Frank McCourt didn’t resolve all their difference: Baseball Commissioner Bud Selig now wants the league’s $7.6 million in legal bills and costs paid for by the team before it emerges from bankruptcy.  The Dodgers filed for Chapter 11 protection last year.

On March 20, Dodgers counsel Donald Bowman, an attorney at Young Conaway Stargatt & Taylor in Wilmington, Del., filed a notice declaring that the team owes no money on contracts, leases or other agreements with Major League Baseball that the Dodgers must assume under the reorganization plan.  Attorneys for the league filed an objection, saying that under the Major League Constitution, the Dodgers are liable for all “fees, costs and expenses incurred by [the league] associated with disputes and litigation between [the team] and [the league] including, without limitation, those arising from enforcement of the Baseball Agreements.”

The league cited $115,110 in legal fees, costs and expenses charged in anticipation of the team’s bankruptcy filing.  Of that, White & Case, the league’s lead counsel in the bankruptcy, charged nearly $3700.  Proskauer Rose, which served as general counsel to the league before the filing, handling labor and employment matters including collective bargaining agreements, charged $111,437.  After the filing, the league racked up another $7.78 million in professional fees and expenses.  Of that, $7.5 million was for legal fees and costs.

“As is made clear in its previous filing on this matter, the debtor does not owe MLB the fees in question,” insisted Robert Siegfried, spokesman for the Dodgers, in a prepared statement.  The Dodgers are expected to file their response to the league’s filing.  Of the legal fees associated with the bankruptcy proceedings, White & Case charged more than $6.15 million and Proskauer Rose charged nearly $888,000.  Longtime league counsel Paul Weiss charged almost $235,000 to review bidder application and other agreements, and Fox Rothschild, the league’s Delaware counsel, billed $231,200.  The fee dispute now goes before retired U.S. District Judge Joseph Farnan, the mediator in the case.