WILMINGTON, Delaware (Reuters) - The Los Angeles Dodgers are 0-for-2 in their bankruptcy fight with Major League Baseball.
A judge on Thursday refused the team’s request to force the league to produce a slew of documents relating to everything from the New York Mets’ dealings with convicted Ponzi schemer Bernard Madoff to emails with former Dodger manager Joe Torre.
The team wants evidence to prove that league commissioner Bud Selig is hostile to owner Frank McCourt and holds the Dodgers to a different standard.
Delaware bankruptcy Judge Kevin Gross, in hearing held by telephone on Thursday, said the team’s requests were too broad for the issue at hand — whether a proposed $150 million bankruptcy loan from a hedge fund unit of JPMorgan Chase & Co was appropriate.
He also said a July 20 hearing on the loan should not turn “into a trial of the commissioner,” though Gross indicated that the court may have to consider questions about the motivations and actions of the commissioner at some point.
The dispute stems from the Dodgers’ fight with the league over financing the team’s operations in bankruptcy, and with it the influence that could be exerted by the lender.
McCourt arranged a loan from the Highbridge hedge fund unit of JPMorgan. The league has argued that it can provide the loan more cheaply, and with fewer strings attached.
The Dodgers want the judge to reject the league’s proposed loan, saying it should not be forced to borrow from a hostile party.
In a statement after the hearing, the Dodgers said the team still expected Gross to approve the Highbridge loan.
“As the court indicated, there will be other opportunities in this bankruptcy case for the Dodgers to obtain the discovery that MLB does not want to share with the Dodgers and the court,” said the statement.
Gross said the Dodgers’ request for documents may come up again, but he said that strategy could raise problems for the team as well as for MLB.
“Doesn’t the commissioner have to then present evidence that their action and their attitude was in fact appropriate given mismanagement and doesn’t that open the door relating to the issue of mismanagement?” Gross asked the team’s lawyer.
“It might,” responded Dodgers’ lawyer Bruce Bennett. “There are serious issues to be litigated another day.”
Thursday’s decision is the second setback for the team in court.
In its first bankruptcy hearing, the Dodgers agreed to drop requirements in the Highbridge loan that set a deadline for selling the cable television rights. That had been a major bone of contention with the league, although the Dodgers say they still got everything they wanted from that hearing.
The Dodgers and the league have traded accusations of blame for the team’s bankruptcy. The Dodgers pin it on the league’s rejection of the team’s proposed cable deal with Fox Sports, which would have provided the team with funds to meet payroll.
The league shot back in court papers filed Wednesday saying that McCourt seemed unconcerned about looming payroll when he tried to get $20 million of team money weeks before the Chapter 11 filing.
The league has also accused McCourt, who is simultaneously waging a divorce battle with his ex-wife for control of the Dodgers, of diverting $100 million of team revenue for his personal use and “lavish” lifestyle.
The case is In re: Los Angeles Dodgers LLC, U.S. Bankruptcy Court, District of Delaware, No. 11-12010.
Editing by Dave Zimmerman, Ted Kerr and Bernard Orr