Game over? Plaintiffs lawyers banned from Madison Square Garden by MSG

May 28, 2022; New York, New York, USA; General view of Madison Square Garden before game six of the second round of the 2022 Stanley Cup Playoffs between the New York Rangers and the Carolina Hurricanes. Brad Penner-USA TODAY Sports

(Reuters) – The billionaire family that owns majority stakes in the New York Knicks, New York Rangers and the teams’ arena, Madison Square Garden, has never been shy about controlling access to the venues in its empire. Just ask one-time Knicks superstar Charles Oakley, who was famously banned from MSG for about a year after he was ejected from a Knicks game in 2017.

But MSG has escalated its access game: It is now using bans from its venues as a litigation tactic.

At least two shareholder firms engaged in litigation over the 2021 merger of Madison Square Garden Entertainment Corp and MSG Networks Inc have received letters from an MSG lawyer advising that they are barred from entering Madison Square Garden, Radio City Music Hall, the Beacon Theatre and other MSG venues until the shareholder suits are resolved.

The justification? Professional conduct rules prohibiting contact between shareholder lawyers and MSG employees, the letter said. (Reuters obtained a copy.)

“Because of the adversarial nature inherent in litigation proceedings, and because of the potential for contact with the company’s employees and disclosure outside proper litigation discovery channels that could result from the presence of any of your firm’s lawyers at the company’s venues, neither you, nor any other attorney employed at your firm, may enter the company’s venues,” wrote Hal Weidenfeld, an in-house lawyer for MSG Entertainment, in a June 24 letter to shareholder lawyer Joel Fleming of Block & Leviton.

Block & Leviton is one of the shareholder firms leading a breach-of-duty derivative suit in Delaware Chancery Court against MSG Entertainment board members who approved the 2021 merger. The suit contends that the Dolan family, which controls all of the various pieces of the MSG empire, forced through a deal that was detrimental to MSG Entertainment shareholders in order to enhance the family’s economic and voting stake in the combined entity. In separate answers to the complaint, the Dolan-connected defendants and independent directors have denied any breach of duty to shareholders, citing approval of the merger by a special board committee.

Grant & Eisenhofer also received a letter banning its lawyers from MSG concert halls and sporting arenas. The firm is co-lead counsel in a Delaware Chancery Court shareholder class action alleging that the merger harmed MSG Networks’ minority shareholders. The companies have denied those allegations as well. Discovery is under way in both the derivative and class action suits.

I was unable to confirm that other plaintiffs firms leading these cases, including Bernstein Litowitz Berger & Grossmann and Chimicles Schwartz Kriner & Donaldson-Smith, have already received letters similar to those sent to G&E and Block & Leviton.

But based on the email statement I received from an MSG spokesperson, all of the firms suing MSG in Delaware Chancery Court — or anywhere else, for that matter — should expect to be cordially disinvited from MSG arenas and theaters.

“MSG has both a right and an obligation to protect itself during litigation procedures,” said MSG spokesperson Natalie Ravitz in the email. “With that in mind, we have instituted a policy that precludes attorneys from firms engaged in litigation against the company from attending events at our venues.”

The company said the new policy may be “disappointing” to some of the now-banned plaintiffs lawyers, but that’s simply an unfortunate consequence of “our need to protect against improper disclosure and discovery.” The lawyers will be welcomed back, the statement said, when their cases against MSG entities are resolved.

If MSG was hoping that the ban would incentivize shareholder lawyers to settle, it’s going to be frustrated by the reaction from Block & Leviton’s Joel Fleming. He told me by email that he’s never received a letter remotely like the MSG missive announcing the new ban — but that being excluded from New York venues is not much of a deterrent for a firm that originated in Boston.

“We’re a firm full of Celtics fans,” Fleming said. “If we want to watch the Knicks lose, it’s a lot more fun to see it happen at TD Garden.”

Eric Zagar of Kessler Topaz Meltzer & Check, co-lead in the derivative case, was equally blasé about the ban. (Zagar said his firm hadn’t yet gotten the ban letter, but, based on MSG’s statement to me, it’s only a matter of time.)

“Everyone in my firm is a fan of either Philly or San Francisco teams, so I doubt anyone will care about being banned from Madison Square Garden,” said Zagar.

I didn’t hear back from shareholders lawyers at Bernstein Litowitz and Friedman Oster & Tejtel, the two New York-based firms that are co-counsel with Kessler Topaz and Block & Leviton in the derivative suit against MSG. The ban might hit harder for lawyers in New York, who are presumably more likely to go to Knicks and Rangers games or attend shows at the Beacon or Radio City.

Unfortunately for any banned shareholder lawyer who happens to be a fan of the Knicks or the Rangers, the two MSG shareholder cases aren’t slated for trial in front of Chancellor Kathaleen McCormick until early 2023 – a couple of months after the pro basketball and hockey seasons begin.

On the other hand, shareholder lawyers might be too consumed with preparing for trial against MSG to care that they can’t go to games in person.

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