Franklin County Ohio Clerk of Courts of the Common Pleas- 2018 Apr 19 5:40 PM-18CV001864

IN THE COURT OF COMMON PLEAS

FRANKLIN COUNTY, OHIO

STATE OF OHIO ex rel. )

OHIO ATTORNEY GENERAL )
MIKE DEWINE, et al., ) Case No. 2018 CV 001864
)
Plaintiffs, ) Judge Jeffrey M. Brown
)
v. )
)
PRECOURT SPORTS VENTURES, LLC, )
et al., )
)
Defendants. )

MOTION OF DEFENDANTS TO DISMISS

PLAINTIFFS’ FIRST AMENDED COMPLAINT

Pursuant to Ohio Rule of Civil Procedure 12(B)(6), Defendants Precourt Sports Ventures

LLC, Major League Soccer, L.L.C., Team Columbus Soccer, L.L.C., and Crew Soccer Stadium

Limited Liability Company hereby move this Court to dismiss the First Amended Complaint for

Declaratory Judgment and Preliminary and Permanent Injunctive Relief of Plaintiffs State of

Ohio ex rel. Ohio Attorney General Mike DeWine and City of Columbus, for failure to state a

claim upon which relief may be granted.

A Memorandum in Support of this Motion is attached.

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Respectfully submitted,

/s/ Dan L. Cvetanovich /s/ Marc J. Kessler

Dan L. Cvetanovich (0021980) Marc J. Kessler (0059236)
James G. Ryan (0030274) Jeffrey A. Yeager (0068062)
BAILEY CAVALIERI LLC HAHN LOESER & PARKS LLP
One Columbus 65 East State Street, Suite 1400
10 West Broad Street, Suite 2100 Columbus, Ohio 43215
Columbus, Ohio 43215 Tel: (614) 233-5168
Tel: (614) 221-3155 E-mail: mkessler@hahnlaw.com
E-mail: dcvetanovich@baileycav.com jyeager@hahnlaw.com
jryan@baileycav.com
Bradley I. Ruskin (pro hac vice pending)
Attorneys for Defendants Precourt Sports Mark D. Harris (pro hac vice pending)
Ventures, LLC, Team Columbus Soccer, LLC, Jennifer E. Tarr (pro hac vice pending)
and Crew Soccer Stadium Limited Liability PROSKAUER ROSE LLP
Company 11 Times Square
New York, New York 10036
Tel: (212) 969-3000
E-mail: bruskin@proskauer.com
mharris@proskauer.com
jtarr@proskauer.com

Attorneys for Defendant

Major League Soccer, L.L.C.

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MEMORANDUM IN SUPPORT

The Ohio Attorney General and the City of Columbus bring suit against four Delaware

entities, Precourt Sports Ventures LLC (“PSV”), Major League Soccer, L.L.C. (“MLS”), Team

Columbus Soccer, L.L.C., and Crew Soccer Stadium Limited Liability Company, attempting to

use an untested Ohio statute to impede Defendants’ interstate business operations and improperly

force the sale of equity in a Delaware limited liability company. At its core, Plaintiffs are

unhappy that Columbus Crew SC, an MLS club, might relocate, and want to use the heavy hand

of the state to prevent that possibility. The Court should reject that attempt and promptly dismiss

this case. As explained below, the statute both does not apply to Defendants by its terms and is

blatantly unconstitutional.

The statute on which Plaintiffs rely, Ohio Revised Code (“R.C.”) 9.67, purports to

prevent the “owner of a professional sports team” that both (a) plays in a “tax-supported facility”

and (b) receives government-provided “financial assistance,” from relocating the team unless the

owner either receives permission to relocate from the local government where the team plays, or

gives the local government at least “six months’ advance notice” of the team’s “intention” to

move and provides the local government or local residents the “opportunity to purchase the

team” during the notice period. See R.C. 9.67.

R.C. 9.67 does not apply to Defendants. By its terms, R.C. 9.67 applies only to a team

“owner” that meets both of two, separate, criteria. First, the owner’s team must play in a “tax-

supported facility.” Second, the owner must “receive[] financial assistance” from the state or a

political subdivision. As Plaintiffs allege and admit, MLS is the “owner” of Columbus Crew SC.

Thus, under the terms of the statute, MLS is the only Defendant that could be subject to R.C.

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9.67. Yet the Amended Complaint (“Complaint”) makes no allegation that MLS receives any of

the financial support necessary to trigger the statute. Moreover, even assuming that the

Complaint made the necessary allegations against MLS or could be expanded to cover a non-

owner of the team, the Complaint would still fail to allege any facts that would support the

conclusion that any Defendant currently receives the financial assistance required by R.C. 9.67.

Absent the preconditions necessary to trigger the applicability of R.C. 9.67, none of the

Defendants have any obligations under the statute and the case should be dismissed.

R.C. 9.67 is also blatantly unconstitutional. The statute violates the dormant Commerce

Clause of the United States Constitution because it both discriminates against out-of-state

residents and impermissibly interferes with Defendants’ abilities to conduct their business

operations in interstate commerce. The statute also violates the Privileges and Immunities

Clause of the United States Constitution because it limits potential prospective purchasers to

Ohio citizens at the expense of the citizens of every other state.

In spite of these clear infirmities and the Complaint’s statement that the statute is

“narrowly written,” Plaintiffs ask this Court to interpret and apply R.C. 9.67 in a manner that is

neither narrow nor supported by the text of the statute. The Complaint asks this Court to engage

in “continuing oversight” to “ensure that PSV and MLS negotiate in good faith” with any

interested buyers so as to afford them a “reasonable opportunity” to purchase the team. But the

statute does not provide for such oversight and does not require Defendants to afford interested

buyers any more than notice and an “opportunity.”

Under Plaintiffs’ interpretation of the statute, R.C. 9.67 would also be void for vagueness,

would violate the Ohio Constitution and Ohio law to the extent Plaintiffs seek the authorization

of the unconstitutional taking of intangible property, and would violate the Contracts Clause of

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the United States Constitution and its Ohio counterpart by attempting to interfere with the

ownership structure of MLS, a Delaware limited liability company.

This Court should decline Plaintiffs’ invitation to weaponize R.C. 9.67 and should

instead dismiss the Complaint for the reasons herein.

FACTUAL BACKGROUND

Columbus Crew SC (“Crew SC”) is one of 23 professional soccer teams owned by MLS,

a Delaware limited liability company.1 (Compl. ¶¶ 1, 12.) The team is managed by PSV, a

Delaware limited liability company that holds a minority equity interest in MLS through its

status as Crew SC’s “operator/investor.” (See id. ¶¶ 1, 11, 25.) In turn, PSV holds a

membership interest in Team Columbus Soccer, L.L.C., a Delaware limited liability company

that has the rights to operate Crew SC, (see id. ¶¶ 13, 25) and Crew Soccer Stadium Limited

Liability Company, a Delaware limited liability company that owns Crew SC’s stadium and is

the lessee of the land on which the stadium sits.2 (Id. ¶ 14.) Crew SC currently plays most of its

home games at MAPFRE Stadium (the “Stadium”) in Columbus, Ohio. (Id. ¶¶ 10, 11.)

The State of Ohio and the City of Columbus allege that, over the years, they have

provided support to Crew SC “and its affiliates” in the form of various steps to support the

facility, including (1) $5 million in state taxpayer-funded improvements to the parking facilities

at the Stadium, (2) a state property tax exemption for the land on which the Stadium sits, (3) a

1
For purposes of this motion to dismiss only, the factual allegations in the Complaint are accepted as true.
See Volbers-Klarich v. Middletown Mgmt., Inc., 125 Ohio St. 3d 494, 2010-Ohio-2057, 912 N.E.2d 106,
at ¶ 12 (Ohio 2010). Legal conclusions couched as factual allegations are not factual allegations and need
not be accepted as true. See Stainbrook v. Ohio Sec’y of State, 2017-Ohio-1526, 88 N.E.3d 1257, at ¶ 11
(10th Dist. 2017). This “factual background” section is a statement of Plaintiffs’ allegations.
2
The Complaint acknowledges that it states no independent claims against Team Columbus Soccer,
L.L.C. and Crew Soccer Stadium Limited Liability Company and that they are being sued only because of
R.C. 2721.12(A)’s requirement that Plaintiffs name all entities with claims or interests in the declaratory
judgment as parties to the case. (See Compl. ¶ 15.) Thus, a dismissal of the claims against PSV and MLS
should also mandate dismissal of the case against Team Columbus Soccer, L.L.C. and Crew Soccer
Stadium Limited Liability Company.

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below-market lease for the land on which the Stadium sits,3 (4) over $300,000 in city taxpayer-

funded reimbursements of the cost to move a storm sewer and construct a water line in order to

serve the Stadium, and (5) a Tax Increment Financing and Economic Development Agreement

between the City of Columbus and a third party which resulted in the extension of Silver Drive

“to increase access to [the] Stadium.” (See id. ¶¶ 9, 10.)

In October 2017, PSV’s CEO, Anthony Precourt, announced that PSV was seriously

considering moving the team from Columbus. (See id. ¶¶ 2, 11, 28.) MLS Commissioner

Donald Garber allegedly endorsed the proposed move in a December 2017 speech. (Id. ¶ 2.)

Although Plaintiffs dispute that those statements constituted “notice” of an intent to move the

team, they prompted the Attorney General on December 8, 2017 to write a letter to Mr. Precourt

accusing him of “exploring … potentially relocating the Club.” (Id. ¶ 3.) During its

consideration of relocating the team, PSV has been open to hearing offers from interested buyers

and Mr. Precourt engaged in discussions with at least one potential local investor regarding

keeping Crew SC in Columbus. (Id. ¶ 30.)

3
The Complaint makes no specific allegation that the lease was below market at the time it was executed.
Nor could it. The amount Crew SC pays to lease the Stadium increases according to the consumer price
index and provides the Ohio Expositions Commission with a hefty 30% of the parking revenue collected
by Crew SC on land that would otherwise barely be used. See Ohio Expositions Commission Annual
Audit, June 30, 2016, https://ohioauditor.gov/auditsearch/Reports/2017/Ohio_Expo_Commission_16-
Franklin.pdf at Note 5. In fact, according to the 2016 Annual Audit, the Stadium lease earns the
Expositions Commission significantly more than other leases that the Expositions Commission entered
into at around the same time. See id. The Ohio Expositions Commission indicated its satisfaction with
the lease in its operating budget report for FY 2002–2003, stating that “[t]he agreement with the
Columbus Crew Stadium Corporation is continuing to meet the EXPO’s expectations as it continues to
attract new events.” See Legislative Service Commission Red Book, Ohio Expositions Commission, FY
2002–2003, https://www.lsc.ohio.gov/documents/budget/124/mainoperating/redbook/house/EXP.PDF at
Page A2. The Court may take judicial notice of such public records. See, e.g., Ohio R. Evid. 201;
Fischer v. Kent State Univ., 2015-Ohio-3569, 41 N.E.3d 840, at ¶ 14 (10th Dist. 2015). In any event,
even were one to accept this allegation as true for the purposes of this motion, Plaintiffs’ claims are
equally moribund.

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In March 2018, nearly five months after Mr. Precourt’s announcement and over three

months after Mr. Garber’s speech, Plaintiffs brought this lawsuit, seeking (1) a declaratory

judgment that R.C. 9.67 applies to PSV, Team Columbus Soccer, L.L.C., Crew Soccer Stadium

Limited Liability Company (collectively, the “PSV Entities”), and MLS, as well as (2) a

preliminary and permanent injunction preventing Crew SC from relocating “absent compliance

with R.C. 9.67” and (3) “continuing oversight by the Court to ensure that PSV and MLS

negotiate in good faith . . . a reasonable opportunity to buy the Crew.” (See id. ¶ Claim for

Relief.)

ARGUMENT

I. PLAINTIFFS DO NOT STATE A CAUSE OF ACTION UNDER R.C. 9.67

BECAUSE THAT STATUTE DOES NOT APPLY TO THE PSV ENTITIES
OR MLS.

As an initial matter, this Court should dismiss the Complaint because R.C. 9.67 does not

apply to the PSV Entities or MLS. By its terms, R.C. 9.67 applies only to the “owner of a

professional sports team that uses a tax-supported facility for most of its home games and

receives financial assistance from the state or a political subdivision thereof.” R.C. 9.67

(emphasis added); see also Compl. ¶ 6 (acknowledging that R.C. 9.67 “applies only to owners”).

As the Complaint acknowledges, MLS is the “owner” of Crew SC. (Compl. ¶ 12.) Yet nowhere

does the Complaint allege that MLS—as distinct from the PSV Entities—receives any support

from the State of Ohio or a political subdivision, as is necessary for R.C. 9.67 to apply. See R.C.

9.67; see generally Compl. ¶¶ 1–44. The Complaint therefore does not state a claim on which

relief can be granted. See Ohio Civ. R. 12(B)(6).

The Complaint’s allegation that “the Crew and its affiliates” have accepted support for

the Stadium (see Compl. ¶¶ 9, 10) does not cure this omission. First, as evidenced by references

to MLS elsewhere in the Complaint, Plaintiffs are perfectly capable of specifically identifying

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MLS where they mean to do so. (See id. ¶¶ 2, 8, 19–21, 25, 32.) If Plaintiffs could have

truthfully alleged that MLS receives financial assistance from the state or a political subdivision

(which they cannot, as MLS receives no such assistance), they would have done so. Cf. Spit

Shine A One Detailer LLC v. Rick Case Hyundai, 2017-Ohio-8888, --- N.E.3d ----, at ¶ 5 (8th

Dist. 2017) (dismissing case where complaint named a defendant but did not allege facts

necessary to explain the basis for suing defendant). Second, the ordinary meaning of the term

“affiliates” does not include an owner. See, e.g., Bond Safeguard Ins. Co. v. Dixon Builders I,

L.L.C., 2012-Ohio-3313, at ¶ 44 (Ohio 2012) (“affiliates” are companies that are “effectively

controlled by, associated with, related to, and/or under the common ownership or control” of

another company).

Likewise, the Complaint’s conclusory statement that MLS “ha[s] accepted ‘financial

assistance’ from Ohio and Columbus” is insufficient to state a claim against MLS. First, the

statute applies only to an owner that “receives financial assistance”—the statute’s requirement is

present-tense. R.C. 9.67 (emphasis added). That MLS allegedly “accepted” financial assistance

in the past is insufficient to trigger the statute today. Second, the statement is no more than a

legal conclusion couched as a factual allegation. The Complaint provides no facts to support its

claim that MLS “accepted ‘financial assistance’”—a term of art in the statute. As such, the

statement should be given no weight. See, e.g., Stainbrook, 88 N.E.3d 1257, at ¶ 11.

Even if the Complaint did allege that MLS specifically receives support from the State of

Ohio or a political subdivision or that R.C. 9.67 could be expanded to apply to non-owners (such

as a team operator and its affiliates), the statute still would not apply. As Plaintiffs acknowledge,

R.C. 9.67 sets forth two financial preconditions. Plaintiffs must demonstrate both that Crew SC

plays in a “tax-supported facility” and that the team owner “receives financial assistance from

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the state or a political subdivision.” See R.C. 9.67; Compl. ¶ 6. The wording and structure of the

statute, breaking these requirements into separate clauses, make clear that they are distinct

conditions that must be independently satisfied. See, e.g., N.E. Ohio Reg’l Sewer Dist. v. Bath

Twp., 144 Ohio St. 3d 387, 2015-Ohio-3705, 44 N.E.3d 246, at ¶¶ 12–13 (Ohio 2015) (reading

statute with an “and” between two relevant terms conjunctively).

At best, Plaintiffs allege facts sufficient to meet only the first of those requirements.

Each of the five instances of support alleged in the Complaint—taxpayer-funded improvements

to the Stadium’s parking facilities, a property tax exemption for the land on which the Stadium

sits, a below-market lease for the land on which the Stadium sits, taxpayer-funded construction

on the Stadium’s water supply, and a taxpayer-funded road that benefits the Stadium—

constitutes taxpayer support for the Stadium that could enable Plaintiffs to argue that the Stadium

is a “tax-supported facility.” See, e.g., Cleveland Elec. Illuminating Co. v. Cleveland, 524

N.E.2d 441, 444–45 (Ohio 1988) (broadly construing “tax support” to include indirect support

such as advancements from a tax-generated fund with no expectation of prompt or complete

repayment); State ex rel. Fostoria Daily Review Co. v. Fostoria Hosp. Ass’n, 531 N.E.2d 313,

316 (Ohio 1988) (broadly construing “tax support” to include a government entity’s provision of

rent-free use of public land to a private party).

But the Complaint fails to allege any facts sufficient to meet the second requirement. If

“tax-supported facility” and “financial assistance” are to mean something different, which they

must or the requirement that a team owner “receives financial assistance” would be rendered

meaningless, then the receipt of “financial assistance” must mean something different than

financial support for the Stadium. Yet the Complaint contains no allegations of financial support

that are unrelated to the Stadium. (See generally Compl. ¶¶ 1–44.) Accordingly, the

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requirements of the statute are not satisfied, and Plaintiffs have failed to state a claim.

II. ON PLAINTIFFS’ READING OF THE STATUTE, R.C. 9.67 IS

UNCONSTITUTIONAL ON MULTIPLE GROUNDS.

Plaintiffs read R.C. 9.67 as erecting numerous substantive barriers to any relocation of

Crew SC that appear nowhere in the statutory text. They contend that R.C. 9.67 requires

Defendants to afford interested buyers in Ohio a “reasonable” opportunity to purchase the team.

They also contend that the statute authorizes this Court to engage in “continuing oversight” to

“ensure that PSV and MLS negotiate in good faith” with prospective buyers. Apparently,

Plaintiffs believe the statute gives the State a role in monitoring the “negotiation” process and

potentially intervening whenever it believes appropriate.

The plain text of the statute does not support this reading. The word “reasonable” does

not appear anywhere in the statute, much less next to the description of the “opportunity” that

must be provided. See R.C. 9.67. The statute says nothing about “continuing oversight” or any

requirement to negotiate in good faith. Moreover, this reading would violate the United States

Constitution and Ohio law. At the very least, principles of Constitutional avoidance would

strongly counsel the Court to steer clear of an interpretation that raises so many Constitutional

difficulties. See, e.g., In re D.S., 2017-Ohio-8289, 93 N.E.3d 937, at ¶ 7 (Ohio 2017) (courts

should avoid reaching constitutional issues where other courts can resolve the case on other

grounds).

A. R.C. 9.67 Violates the Dormant Commerce Clause.

The Commerce Clause of the United States Constitution both gives Congress an

affirmative grant of power to regulate interstate commerce and, by negative implication, restricts

the States’ ability to do the same. See Am. Beverage Ass’n v. Snyder, 735 F.3d 362, 369 (6th Cir.

2013); Int’l Dairy Foods Ass’n v. Boggs, 622 F.3d 628, 644 (6th Cir. 2010). In this second,

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“dormant” form, the Commerce Clause prohibits states from directly regulating interstate

commerce, discriminating against interstate commerce, or effectively favoring in-state interests

over out-of-state interests. See, e.g., Am. Beverage Ass’n, 735 F.3d at 369–70; State v. Eal,

2012-Ohio-1373, at ¶ 62 (10th Dist. 2012).

When a state statute does any of these things, courts “have generally struck down the

statute without further inquiry.” See Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth.,

476 U.S. 573, 579 (1986); see also, e.g., Camps Newfound/Owatonna, Inc. v. Town of Harrison,

Me., 520 U.S. 564, 575 (1997) (noting that such laws are “per se invalid”); Int’l Dairy Foods

Ass’n, 622 F.3d at 644–46 (same).4 Absent an “extraordinary showing,” the burden that such

protectionist laws impose on interstate commerce will “always outweigh their local benefits.”

Int’l Dairy Foods Ass’n, 622 F.3d at 645, 648 (quoting Tenn. Scrap Recyclers Ass’n v. Bredesen,

556 F.3d 442, 449 (6th Cir. 2009)); see also, e.g., Ecological Sys., Inc. v. City of Dayton, 2002-

Ohio-388, 2002 WL 125702, at *6 (2nd Dist. 2002) (“Obviously, the scrutiny utilized in these

cases is very difficult, if not impossible, to overcome.”).

As prohibited by the dormant Commerce Clause, discrimination simply means

“differential treatment of in-state and out-of-state economic interests that benefits the former and

burdens the latter.” Oregon Waste Sys., Inc. v. Dep’t of Envt’l Quality, 511 U.S. 93, 99 (1994);

see also, e.g., Am. Beverage Ass’n, 735 F.3d at 370; Eal, 2012-Ohio-1373, at ¶ 62. Such

differential treatment “is not limited to attempts to convey advantages on local merchants; it may

4
Where a court finds that a challenged statute is “neither discriminatory nor extraterritorial,” the court
should apply the balancing test outlined in Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970), and
uphold it “unless the burden it imposes upon interstate commerce is ‘clearly excessive in relation to the
putative local benefits.’” Am. Beverage Ass’n, 735 F.3d at 370 (quoting Pike, 397 U.S. at 142). Pike
does not come into play here because R.C. 9.67 on its face treats in-state residents differently from out-of-
state residents and discriminates against interstate commerce.

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include attempts to give local consumers an advantage over consumers in other states.” Camps

Newfound/Owatonna, Inc., 520 U.S. at 577–78.

1. R.C. 9.67 Unconstitutionally Discriminates Against Citizens of

Other States by Limiting Prospective Purchasers to Local Ohio
Residents.

By its terms, R.C. 9.67 unconstitutionally favors citizens of Ohio over citizens of other

states. Where a team owner fails to obtain permission to relocate, the statute prohibits relocation

unless the owner “gives the political subdivision or any individual or group of individuals who

reside in the area the opportunity to purchase the team.” R.C. 9.67 (emphasis added). Potential

purchasers who reside outside Ohio do not receive that privilege. And it is only the failure to

provide an opportunity to Ohio residents that can block a plan to relocate.

Policies designed to benefit citizens of one state to the detriment of citizens of other

states are classic violations of the dormant Commerce Clause. See, e.g., W. Lynn Creamery, Inc.

v. Healy, 512 U.S. 186, 194–95 (1994) (pricing order imposing a uniform fee on all milk sold in

Massachusetts violated the dormant Commerce Clause because its “avowed purpose and its

undisputed effect are to enable higher cost Massachusetts dairy farmers to compete with lower

cost dairy farmers in other States”); Beskind v. Easley, 325 F.3d 506, 509, 515 (4th Cir. 2003)

(statute that prohibited out-of-state wine manufacturers from shipping directly to North Carolina

violated the dormant Commerce Clause because the statute treated in-state manufacturers

differently from out-of-state manufacturers to the benefit of the former); Dayton Power & Light

Co. v. Lindley, 391 N.E.2d 716, 721 (Ohio 1979) (Ohio coal consumption tax was invalid where

it effectively encouraged the consumption of Ohio coal and discouraged the consumption of out-

of-state coal); Ecological Sys., Inc., 2002 WL 125702, at *7–8 (ordinance violated dormant

Commerce Clause where it prohibited the discharge of materials from “another state into the City

of Dayton’s wastewater facilities”). See also, e.g., Camps Newfound/Owatonna, Inc., 520 U.S.

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at 576 (Commerce Clause “precludes a state from mandating that its residents be given a

preferred right of access” to benefits “over out-of-state consumers”).

The local benefit offered by R.C. 9.67 also burdens interstate commerce by denying the

team owner (and operator) the benefit of increased competition for the team’s operating rights.

By limiting prospective offers to local residents, the statute necessarily eliminates the potential

for bids from citizens of the other 49 states, some of which might be higher than those made by

Ohio residents, and cuts off the potential for competition from non-Ohio residents that otherwise

might drive up the value of the club. Where a state statute or local ordinance “squelches

competition[,] . . . leaving no room for investment from outside,” that statute violates the

dormant Commerce Clause. C & A Carbone Inc. v. Town of Clarkstown, N.Y., 511 U.S. 383,

392 (1994).

Given that R.C. 9.67 is facially discriminatory and impermissibly favors local interests

over out-of-state interests to the detriment of the latter, it should be struck down without further

inquiry.

2. R.C. 9.67 Unconstitutionally Limits the Movement of Property

in Interstate Commerce.

By its terms, R.C. 9.67 also unconstitutionally limits the movement of professional sports

teams in interstate commerce by imposing a six-month waiting period and other hurdles on team

owners wishing to relocate their teams. Plaintiffs’ reading of the statute imposes significant

additional roadblocks, including Court oversight of a “process” for the sale of the team (for

which there is no textual support in the statute).5 All those hurdles both make it more difficult

5
The City of Columbus’s motion to toll the six-month notice period provided for in R.C. 9.67 (Mot. to
Toll, Apr. 9, 2018, 0E096-R51) until after all appeals in this case have been resolved – which Defendants
will timely oppose – is yet another example of how broadly Plaintiffs would read the statute and of the
significant negative effects of both the statute and this lawsuit on interstate commerce.

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for team owners (and operators) to contract with out-of-state entities for stadium leases,

sponsorship rights, and more, and simultaneously infringe on the ability of individuals in other

states (and possibly those states and political subdivisions themselves) to make offers to

persuade the teams to relocate. Yet “[s]tate and local governments may not use their regulatory

power to favor local enterprise by prohibiting patronage of out-of-state competitors or their

facilities.” C & A Carbone Inc., 511 U.S. at 394.

For more than 90 years, the United States Supreme Court has held that states may not

restrict the movement of resources out of the state. See, e.g., id. at 390 (state statutes may not

impose barriers or otherwise discriminate against commerce “by reason of its . . . destination out

of State”); New England Power Co. v. New Hampshire, 455 U.S. 331, 339, 344 (1982) (state’s

attempt to “restrict the flow of privately owned and produced electricity in interstate commerce”

was inconsistent with the Commerce Clause); City of Philadelphia v. New Jersey, 437 U.S. 617,

627 (1978) (states cannot “prevent privately owned articles of trade from being shipped and sold

in interstate commerce on the ground that they are required to satisfy local demands or because

they are needed by the people of the State”); Foster-Fountain Packing Co. v. Haydel, 278 U.S. 1,

10 (1928) (state’s attempt to restrict export of shrimp from Louisiana violated dormant

Commerce Clause). There is no reason why sports teams should be treated differently.

As R.C. 9.67 discriminates against interstate commerce by attempting to impermissibly

restrict professional sports teams from moving out of state and interfering with interstate

business operations, the statute is per se invalid and Plaintiffs’ attempt to enforce it should be

dismissed. See, e.g., Int’l Dairy Foods Ass’n, 622 F.3d at 644–46.

B. R.C. 9.67 Violates the Privileges and Immunities Clause.

For similar reasons, R.C. 9.67 also violates the Privileges and Immunities Clause of the

United States Constitution. The Privileges and Immunities Clause bars “unreasonable

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discrimination by one state against the citizens of another state in favor of its own.” Alerding v.

Ohio High Sch. Athletic Ass’n, 779 F.2d 315, 317 (6th Cir. 1985); accord State v. Burnett, 755

N.E.2d 857, 870 (Ohio 2001) (citing Toomer v. Witsell, 334 U.S. 385, 396 (1948)); Raymond v.

O’Connor, 526 F. App’x 526, 529 (6th Cir. 2013) (same). The Clause was “intended to establish

a norm of comity among the various states, so as to fuse into one Nation a collection of

independent, sovereign states.” Alerding, 779 F.2d at 316–17 (internal citations omitted). The

Clause “thus seeks to promote interstate harmony” by preventing discrimination on the basis of

state citizenship. Id. at 317; see also Toomer, 334 U.S. at 398 (purpose of clause is to “outlaw

classifications based on the fact of non-citizenship”). The “right to pursue . . . economic

opportunities” is among the “privileges and immunities” protected by the Privileges and

Immunities Clause. See Alerding, 779 F.2d at 317.

Here, the statute attempts to create economic opportunities for Ohio citizens at the

expense of similar opportunities for citizens of other states. Consequently, R.C. 9.67 violates the

Privileges and Immunities Clause. See Alerding, 779 F.2d at 317.

C. R.C. 9.67 is Void for Vagueness.

To follow Plaintiffs’ preferred reading of the statute would render R.C. 9.67 void for

vagueness. Due process requires that states provide “meaningful standards” in their laws. City

of Norwood v. Horney, 110 Ohio St. 3d 353, 2006-Ohio-3799, 853 N.E.2d 1115, at ¶ 81 (2006);

see also In re Application of Columbus S. Power Co., 134 Ohio St. 3d 392, 2012-Ohio-5690, 983

N.E.2d 276, at ¶ 20 (Ohio 2012) (“The void-for-vagueness doctrine is a component of the right

to due process and is rooted in concerns that laws provide fair notice and prevent arbitrary

enforcement.”). This principle is not limited to criminal statutes. All laws must “give fair notice

to the citizenry of the conduct proscribed and the penalty to be affixed” in the event of a breach.

Norwood, 110 Ohio St. 3d 353, at ¶ 81; see also, e.g., Sessions v. Dimaya, 584 U.S. __ (2018)

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(slip. op., at 5) (concurring opinion of Gorsuch, J., at 3–10) (void-for-vagueness doctrine also

applies to civil statutes). “Implicitly, the law must also convey an understandable standard

capable of enforcement in the courts.” Norwood, 110 Ohio St. 3d 353, at ¶ 81. Vague laws are

unconstitutional because they “may trap the innocent by not providing fair warning” and because

they can “lead to arbitrary and discriminatory enforcement” by “judges, juries[,]” and others “on

an ad hoc and subjective basis.” Id. at ¶ 83; accord In re Application of Columbus S. Power Co.,

2012-Ohio-5690, at ¶¶ 20, 30. If such arbitrary and discriminatory enforcement is to be avoided,

laws “must provide explicit standards for those who apply them.” Norwood, 110 Ohio St. 3d

353, at ¶ 83.

Plaintiffs’ interpretation departs so far from the plain meaning of R.C. 9.67—adding

burdensome requirements that simply do not appear in the statutory text—that the statute cannot

be said to provide fair warning of its provisions. For example, Plaintiffs allege that “notice” has

not been given of Crew SC’s intent to relocate, even though in the same breath they admit being

aware for months that the team might move. (Compare Compl. ¶ 2 with Compl. ¶ 34.) There is

no way to divine from the statutory term “advance notice” what exactly Plaintiffs think

Defendants had to do, which raises the specter of arbitrary and discriminatory enforcement.

Similarly, the ordinary meaning of the phrase “opportunity to purchase the team” is

simply the opportunity to put forward an offer for Defendants’ consideration and nothing more.

See, e.g., State v. Mohamed, 151 Ohio St. 3d 320, 2017-Ohio-7468, N.E.3d 935, at ¶¶ 13–14

(Ohio 2017) (undefined statutory language is given its “plain and ordinary meaning”); Smith v.

Landfair, 135 Ohio St. 3d 89, 2012-Ohio-5692, 984 N.E.2d 1016, at ¶ 18 (Ohio 2012) (holding

that “[u]nless expressly defined, the words and phrases contained in Ohio’s statutes are to be

given their plain, common, ordinary meaning and are to be construed according to the rules of

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grammar and common usage”). But Plaintiffs attempt to expand the meaning of that phrase so as

to include a substantive requirement of continuing court oversight and enforcement.

Moreover, the statute ties its six month notice period to some unspecified point in time

after a team owner has the “intention to cease playing most of its home games at the facility,” a

phrase that is also vague. It could refer to any time after the owner begins to consider relocation,

to sometime after the owner believes that relocation is probable, or only to a time after the owner

has taken affirmative steps toward relocation. Plaintiffs use the statute’s ambiguity to argue that

this lawsuit is ripe because Crew SC is “more likely than not” to relocate. (Compl. ¶ 35.) Yet on

its face the statute does not require a team owner to give notice immediately upon determining

that it has the requisite “intention” to relocate under the statute—it simply requires six months’

notice before the team leaves once that “intention” arises. Relatedly, if notice required an owner

to have reached a firm and final intention to relocate, it would just exacerbate the burdens

imposed by the statute. Because the statute does not define what “intention” means, it provides

no notice for team owners of how to comply with the statute and leads to the possibility of

arbitrary and discriminatory enforcement.

Likewise, the statute’s requirement that a team owner give “the political subdivision or

any individual or group of individuals who reside in the area the opportunity to purchase the

team” is impermissibly vague because the statute does not define what “in the area” means. R.C.

9.67 (emphasis added). In theory, it could apply to residents who live in the city where the

team’s stadium sits, the county that encompasses the stadium, some grouping of nearby towns

and/or counties, or the state as a whole. Without a clear definition of who is entitled to

“opportunities,” a team owner could easily attempt to comply with the statute only to later find

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itself deemed noncompliant and unable to successfully participate in interstate commerce for

another six months.

That Plaintiffs themselves invite the Court to apply R.C. 9.67 in an “arbitrary and

discriminatory” manner demonstrates the inherent problems with the statute. See Norwood, 110

Ohio St. 3d at 1142–43. As interpreted by Plaintiffs, the statute does not provide fair notice to

individuals who might fall within its purview and does not provide explicit standards for the

Court to apply. Instead, Plaintiffs ask the Court to oversee a nebulous process for which the

statute does not provide.

This infirmity is all the more severe because of the serious nature of the interests at

stake—interests in avoiding interference with interstate commerce, preferential treatment of

Ohio citizens vis-à-vis citizens of other states, and so on. See Norwood, 110 Ohio St. 3d at, ¶ 85

(applying a “more stringent vagueness test” where statute “threatens to inhibit the exercise of

constitutionally protected rights”). Where constitutional interests like these are being burdened,

it is even more important that the governing statute be clear.

D. The Court Should Not Adopt an Interpretation of R.C. 9.67 That

Might Yield Further Unconstitutional Actions.

Although Plaintiffs’ endgame is not entirely clear (further highlighting the vagueness of

the interpretation they advance), they apparently envision some role for themselves and the Court

in performing “continuing oversight” over the bidding process, in order to “ensure” that PSV and

MLS negotiate in good faith and guarantee local purchasers a “reasonable opportunity” to

purchase PSV’s interest in Crew SC. Left unspecified is what form that “oversight” would take,

and what steps Plaintiffs would take (and urge the Court to take) to effectuate such opportunities.

To the extent that what Plaintiffs actually seek in the third numbered paragraph of their demand

for judgment is a process by which they can ask this Court to force a sale of Crew SC’s operating

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rights in the event that they learn of an offer that they deem “reasonable,” this Court should

reject such a request.

Any interpretation of R.C. 9.67 that could result in a forced sale of PSV’s operating rights

in Crew SC and equity interest in MLS would run headlong into additional serious difficulties,

both constitutional and statutory. Not only does Ohio law not permit the taking of intangible

property like that at issue in this case, but doing so would unconstitutionally be in violation of

the Contracts Clause of the United States Constitution and its Ohio counterpart.

1. Ohio Law Does Not Permit the Taking of Intangible Property.

First, Ohio law does not permit the taking of intangible property like Crew SC. Under

the Ohio Constitution, a chartered municipality such as the City of Columbus has home-rule

powers to determine its own regulations, including regulations over its eminent domain powers.

See Ohio Const. art. XVIII § 3; see also, e.g., Clifton v. Blanchester, 131 Ohio St. 3d 287, 2012-

Ohio-780, 964 N.E.2d 414, at ¶ 27 (Ohio 2012) (municipality can adopt eminent domain

regulations under its home-rule authority). Where the state’s laws conflict with an ordinance

adopted under home rule authority, the city ordinance controls. See, e.g., N. Ohio Patrolmen’s

Benev. Ass’n v. Parma, 402 N.E.2d 519, 521–22 (Ohio 1980) (it is “axiomatic” that an ordinance

enacted by a chartered municipality and “limited to a matter of substantive local self-

government” would prevail over a conflicting state law).

Chapter 909 of the Columbus Code of Ordinances authorizes the city to “acquire a fee

simple title or any less estate, easement, or use as determined to be necessary by city council.”

See Code of Ordinances § 909.01 (emphasis added). By expressly limiting the types of property

that can be appropriated to “fee simple title” and its related sub-uses, the City of Columbus has

tied its eminent domain power to the appropriation of real property alone. See, e.g., Masheter v.

Diver, 253 N.E.2d 280, 283 (Ohio 1969) (“It is commonly understood that a fee simple is the

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highest right, title and interest that one can have in land.”) (emphasis added); City of Westerville

v. Taylor, 2014-Ohio-3470, at ¶¶ 14–15 (10th Dist. 2014) (noting that Masheter is the “leading

case” on fee simple title). This self-imposed limitation is consistent with Chapter 719 of the

Ohio Revised Code, which authorizes a municipal corporation to “appropriate, enter upon, and

hold real estate within its corporate limits,” R.C. 719.01 (emphasis added), and with Chapter 163

of the Ohio Revised Code, which restricts the state’s eminent domain powers to the taking of real

property. See R.C. 163.01 (defining “property” to mean “any estate, title, or interest in any real

property that is authorized to be appropriated by the agency in question”).

Given the clear limits on the City of Columbus’s eminent domain powers and the fact

that its Code of Ordinances trumps any conflicting state laws, any attempt to read R.C. 9.67 to

authorize the forced sale of Crew SC must fail. Unlike the real property referenced in the

Columbus Code of Ordinances, Crew SC is largely made up of intangible property. See, e.g.,

Mayor & City Council of Baltimore v. Baltimore Football Club, Inc., 624 F. Supp. 278, 285–86

(D. Md. 1985) (with exception of small amount of tangible goods, Indianapolis Colts franchise

was intangible property); Stan-Clean of Lexington, Inc. v. Stanley Steemer Int’l, Inc., 2 Ohio

App. 3d 129, 130 (10th Dist. 1981) (franchise agreement constituted intangible property).

Moreover, PSV’s interest in Crew SC and its accompanying equity interest in MLS are entirely

intangible property.

As the City of Columbus lacks the authority to force a sale of intangible property and the

State of Ohio is not a “political subdivision” capable of purchasing a team under the statute, this

Court should reject any interpretation of R.C. 9.67 that would require PSV to sell its interest in

the team.

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2. Plaintiffs Cannot Effect the Taking of the PSV’s Interest in

Crew SC and Equity Interest in MLS, Which Are Not Subject to
Ohio’s Jurisdiction.

Second, even if Plaintiffs were somehow entitled to use R.C. 9.67 to force a sale of

intangible property generally, they would still lack the capability to force the sale of PSV’s

interest in Crew SC and its equity interest in MLS. It is “axiomatic that a sovereign state’s

power to condemn property extends only as far as its borders and that the property to be taken

must be within the state’s jurisdictional boundaries.” Mayor & City Council of Baltimore, 624 F.

Supp. at 284 (citing 1 Nichols on Eminent Domain § 2.12); Britt v. Columbus, 309 N.E.2d 412,

413 (Ohio 1974) (“The powers of local self-government, granted to a municipality by Section 3

of Article XVIII of the Ohio Constitution, do not include the power of eminent domain beyond

the geographical limits of the municipality.”). Here, intangible assets that comprise Crew SC are

not located within Ohio’s jurisdictional boundaries. Any attempt by Plaintiffs to force a sale of

Crew SC – or any of the interests held by the PSV Entities – would thus be an unauthorized and

unconstitutional taking. See, e.g., Britt, 309 N.E.2d at 413.

The law of escheat provides a useful analogy for determining the situs of intangible

property where multiple states could seek to claim that property but only one state can prevail.

See Mayor & City Council of Baltimore, 624 F. Supp. at 285–86 (“only one sovereign may

properly condemn property”); Texas v. New Jersey, 379 U.S. 674, 677 (1965) (only one state

may escheat property). As explained by the United States Supreme Court, for purposes of

escheat, intangible property is located in the state of its owner’s last known address. See, e.g.,

Delaware v. New York, 507 U.S. 490, 499 (1993). The principle on which the Supreme Court

relied in making its determination, mobilia sequuntur personam (intangible property is “found at

the domicile of its owner”), see id. at 503, has been accepted by the State of Ohio in determining

where property is located for purposes of taxation. See Goodyear Tire & Rubber Co. v. Tracy,

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710 N.E.2d 686, 689 (Ohio 1999) (“The general theory of the taxation of intangibles is that they

are taxed at the residence of the owner (mobilia sequuntur personam).”).

As described above, Crew SC is one of the 23 teams that comprise MLS and is, in effect,

a piece of MLS itself. Through its ownership of Team Columbus Soccer, L.L.C., a Delaware

limited liability company, PSV, a Delaware limited liability company, has the contractual right to

operate an MLS club and has a corresponding minority equity interest in MLS, a Delaware

limited liability company. Thus, the intangible rights at issue here are properly located in either

Delaware, under whose law MLS exists, or New York, where MLS is headquartered. Cf. In re

Blixseth, 484 B.R. 360, 366–69 (Bankr. 9th Cir. 2012) (finding that for venue purposes, debtor’s

intangible equity interests in Nevada LLC and Nevada LLLP were located in Nevada). In no

case are the intangible rights at issue here located in Ohio for purposes of evaluating whether

Plaintiffs have any right to take PSV’s interest in Crew SC or its equity interest in MLS. Thus,

Plaintiffs cannot force a sale of PSV’s interest in Crew SC or its concomitant equity interest in

MLS.

3. A Forced Sale Would Violate the Contracts Clause of the

United States Constitution and its Ohio Counterpart.

Finally, any interpretation of R.C. 9.67 that results in the forced sale of Crew SC would

violate the Contracts Clause of the United States Constitution and its Ohio counterpart. The

Contracts Clause prohibits states from passing any law “impairing the Obligation of Contracts.”

U.S. Const. art. I § 10. If a state law substantially impairs a contractual relationship, the law is

unconstitutional unless the state “has a significant and legitimate public purpose behind the

regulation” and the adjustment of “the rights and responsibilities of contracting parties [is based]

upon reasonable conditions and [is] of a character appropriate to the public purposes justifying”

the state action. See Energy Reserves Grp., Inc. v. Kan. Power & Light Co., 459 U.S. 400, 411–

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12 (1983). The Ohio Constitution likewise prohibits the passage of “laws impairing the

obligation of contracts.” Ohio Const. art. II § 28; see also, e.g., Util. Serv. Partners, Inc. v. Pub.

Util. Comm., 124 Ohio St. 3d 284, 2009-Ohio-6764, 921 N.E.2d 1038, at ¶ 37 (Ohio 2009)

(applying Energy Reserves Grp., Inc. in determining whether state law operated as substantial

impairment of contractual relationship).

Any interpretation of R.C. 9.67 that would lead to the forced sale of PSV’s interest in

Crew SC or its equity interest in MLS would substantially impair MLS’s LLC Agreement, a

contract between MLS and its members. Under the Delaware Limited Liability Company Act,

MLS may not accept a new equity holder without the consent of MLS’s other members. See

Del. Code Ann. § 18-301(b)(1) (non-assignee may only become a member of a Delaware LLC at

the time provided in the LLC agreement or upon the consent of all members); see also, e.g., In re

Carlisle Etcetera LLC, 114 A.3d 592, 600–01 (Del. Ch. 2015) (noting that because “one is

generally entitled to select his own business associates in a closely held enterprise, like an LLC,”

it “makes sense that the [Delaware] LLC Act would require formal member action to accept a

new business partner”). Were the Court to force a sale of Crew SC without the consent of

MLS’s other members—who together own a league, after all—it would be a gross violation of

their contractual rights.6 This Court should not accept such a reading.

6
Courts have regularly recognized that sports leagues have the discretion to determine who their
members will be. See, e.g., In re Dewey Ranch Hockey, LLC (Dewey Ranch II), 414 B.R. 577, 591
(Bankr. D. Ariz. 2009) (recognizing league’s rights to admit only new members who meet its written
requirements, control where its members play, and receive a fee if a member team relocates); NBA v.
Minn. Prof’l Basketball, Ltd. P’ship, 56 F.3d 866, 870–71 (8th Cir. 1995) (upholding injunction
prohibiting sale and relocation of Timberwolves after NBA had disapproved transaction); Fishman v.
Estate of Wirtz, 807 F.2d 520, 543–44 (7th Cir. 1984) (reversing antitrust judgment against NBA owners
who exercised right in NBA by-laws to vote against sale of Bulls to particular ownership group); Levin v.
NBA, 385 F. Supp. 149 (S.D.N.Y. 1974) (dismissing antitrust challenge brought by two businessmen who
had agreement to purchase Celtics but then failed to receive affirmative vote of three-fourths of Board of
Governors, which torpedoed deal); Seattle Totems Hockey Club, Inc. v. NHL, 783 F.2d 1347, 1350 (9th
Cir. 1986) (affirming post-trial dismissal of claim alleging denial of admittance to NHL constituted

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As the application of Plaintiffs’ interpretation of R.C. 9.67 would lead to serious

Constitutional violations, the Court should decline to adopt Plaintiffs’ reading of the statute, and

should dismiss this case.

III. EVEN UNDER THE PROPER INTERPRETATION OF R.C. 9.67, THE

STATUTE IS STILL UNCONSTITUTIONAL.

While a proper reading of R.C. 9.67—according to which the statute simply requires

owners of sports teams to entertain bids from local residents for a period of six months before

relocating, without court “oversight” or similar obligations—renders the statute less blatantly

unconstitutional, it still has serious legal defects that cannot be remedied. As explained above,

statutes violate the dormant Commerce Clause when they engage in “differential treatment of in-

state and out-of-state economic interests that benefits the former and burdens the latter.” Oregon

Waste Sys., Inc., 511 U.S. at 99. On its face, R.C. 9.67 is unconstitutional because it affords

Ohio residents a special privilege to submit bids that is not enjoyed by residents of other states.

R.C. 9.67 also violates the dormant Commerce Clause by imposing a six-month waiting period

on such teams, which burdens interstate commerce to Ohio’s benefit. See, e.g., Int’l Dairy

Foods Ass’n, 622 F.3d at 644–46. Similarly, because the statute provides additional

opportunities for Ohio citizens and does not provide such opportunities for citizens of other

states, the statute facially violates the Privileges and Immunities Clause. See, e.g., Alerding, 779

F.2d at 317.

As any attempt to enforce R.C. 9.67 against Defendants would violate the Constitution,

the Complaint should be dismissed.

antitrust violation), cert. denied, 479 U.S. 932 (1986); Mid-South Grizzlies v. NFL, 720 F.2d 772, 787–88
(3d Cir. 1983) (affirming summary judgment dismissing claim alleging denial of admittance to NFL
constituted antitrust violation), cert. denied, 467 U.S. 1215 (1984).

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CONCLUSION

For the reasons set forth above, the Complaint should be dismissed in its entirety and

with prejudice.

Respectfully submitted,

/s/ Dan L. Cvetanovich /s/ Marc J. Kessler

Dan L. Cvetanovich (0021980) Marc J. Kessler (0059236)
James G. Ryan (0030274) Jeffrey A. Yeager (0068062)
BAILEY CAVALIERI LLC HAHN LOESER & PARKS LLP
One Columbus 65 East State Street, Suite 1400
10 West Broad Street, Suite 2100 Columbus, Ohio 43215
Columbus, Ohio 43215 Tel: (614) 233-5168
Tel: (614) 221-3155 E-mail: mkessler@hahnlaw.com
E-mail: dcvetanovich@baileycav.com jyeager@hahnlaw.com
jryan@baileycav.com
Bradley I. Ruskin (pro hac vice pending)
Attorneys for Defendants Precourt Sports Mark D. Harris (pro hac vice pending)
Ventures, LLC, Team Columbus Soccer, LLC, Jennifer E. Tarr (pro hac vice pending)
and Crew Soccer Stadium Limited Liability PROSKAUER ROSE LLP
Company 11 Times Square
New York, New York 10036
Tel: (212) 969-3000
E-mail: bruskin@proskauer.com
mharris@proskauer.com
jtarr@proskauer.com

Attorneys for Defendant

Major League Soccer, L.L.C.

CERTIFICATE OF SERVICE

I hereby certify that the foregoing Motion of Defendants to Dismiss Plaintiffs’ First

Amended Complaint was served on all parties on April 19, 2018 via the Court’s electronic filing

system.

/s/ Marc J. Kessler

Marc J. Kessler

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