Shane Doan: IT'S A TRAP! (Updated)

"IT'S A TRAP!"

Star Wars fans will immediately recognize those words as the declaration of Admiral Ackbar from Return of the Jedi.  However, any false sense of confidence regarding yesterday’s “deadline” regarding the Phoenix Coyotes should elicit a similar response. 

As has been reported by many different sources, yesterday was supposed to be the deadline by which taxpayers were required to submit their petition for a referendum to be placed on the November ballot for a vote on the City of Glendale’s lease and management deal with the group led by Greg Jamison.[1]  Hanging in the balance is not only the future of the Coyotes as a franchise, but also the face of the franchise, captain Shane Doan.  Through his agent, Terry Bross, Doan had placed a deadline of July 9, 2012 before listening to offers from other teams for his services. The clear intention was to wait and see if the petition seeking a referendum was filed.  If it was, then he would probably field offers due to the uncertainty surrounding the Coyotes’ ownership.  Without it, he appears to be positioned to resign in Phoenix. Looks like the sale to Jamison’s group, which is contingent upon the lease and arena management agreement, will be able to proceed and Doan can remain with the franchise. Coyotes fans rejoice!

If that’s what you think, then you have fallen into the trap.  There is still a laundry list of reasons why the deal to Jamison could fall through.

Relying on the July 9 deadline passing? IT’S A TRAP! The referendum-seeking taxpayers, led by Ken Jones and Joe Cobb, believe that they actually have until July 15 to file their petition.  As Mr. Cobb explained in his interview with Puck and Gavel, he and his attorneys, the Goldwater Institute, believe that the deadline is July 15, because it was not until June 15 when they “actually were allowed to obtain blank petition forms by the court order overturning the claim of ‘emergency” status.’”[2] Coyotes fans should take some heart that the petition wasn’t filed yesterday. Certainly, if Cobb and Jones had sufficient signatures to file the petition, there would be no reason to gamble on the filing deadline for the sake of getting unnecessary additional signatures.  But if Cobb and Jones can get sufficient signatures before next Monday, expect the petition to be filed and cast the Coyotes’ future into doubt.

Relying on Cobb and Jones having to obtain 1,800 signatures? IT’S A TRAP!  In order for the petition to be successful, it must contain a number of signatures equal to 10% of the last vote.  The number often cited by Glendale is slightly more than 1,800, which is based on voter turnout of slightly more than 18,000 for a 2008 Mayoral election.  However, as was recently stated by Mr. Cobb in an interview with Mike Sunnucks of the Phoenix Business Journal, and later confirmed to Puck and Gavel, the total number of votes he belives that is required is much lower.  According to Mr. Cobb, the most recent election was in November 2010 for two city council seats, an election which totaled only 11,309 votes, ten percent of which would be only 1,131, less than 2/3ds of the 1,800 cited by Glendale.  According to Mr. Cobb, he was informed by Connie Wilhelm, a proponent of the recently submitted petition seeking to have a referendum on a proposed sales-tax increase placed on the November ballot, that the minimum signature requirement was only 1,131.[3] If Cobb and Jones come in with under 1,800 signatures, expect further litigation.

Let’s assume the petitions aren’t filed or that Glendale is successful in challenging their validity either because they are filed late or because they have an insufficient number of signatures.  Then everything will be sorted out, right?  IT’S A TRAP!  In his interview with Puck and Gavel  “[i]f the contract is signed, even in mid-November after an upholding Referendum vote, we would ask the courts to apply the Gift Clause prohibition to the subsidy.” In other words, the contracts can be signed, the team can be sold, Doan can resign…only to then have the lease and management agreement overturned as against the Arizona State Constitution.  Honestly, I can’t even begin to process the chaos that would ensue from invalidating the lease and management agreement overturned.

Let’s assume everything with Cobb and Jones’ petitions goes away, never to be heard from again. Surely then, everyone can relax. IT’S A TRAP! The recent submission of petitions to have a referendum on an ordinance approving a sales-tax increase placed on the November ballot could be a further complication to the approval of the lease and management agreement. It has been stated that the sales-tax increase is required in order to help finance the lease and management agreement. In other words, if the tax increase does not go through, then the sale to the Jamison group could be in jeopardy because Glendale will be without the money to help pay for the team.

Also, be careful not to miss the forest for the trees. The key issue not whether the Goldwater Institute is successful in having the referendum placed on the November ballot. It is also not whether the ballot is successful in having the ordinance overturned. Finally, it is not whether the ordinance is overturned in court as a violation of the Arizona Gift Clause.  It is just the specter of risk over the possibility of any one of these outcomes coming to fruition that casts the future of the Coyotes in doubt. We have seen a similar threat already kill a deal for the Coyotes, and it could do so again.

With the recent report from Dave Shoalts of the Globe & Mail that if they Coyotes sale does not go through, the team may be disbanded, it would behoove Shane Doan to at least consider leaving the Coyotes, even though no petition has been filed by the July 9 deadline.  Could you imagine signing a deal in warm, contending Phoenix, where you have built your life, only to then be picked up by wintry, fledgling Edmonton in a dispersal draft? I don’t mean to pick on Edmonton, but it and Phoenix could not be more different in climate -- both weather and hockey.  


The bottom line is that if certainty of ownership is important to Shane Doan, then he simply cannot sign with the Coyotes, as their ownership situation may not even be resolved by the end of this year, depending on the ballot and any legal challenges thereto. At least for right now, Doan has the right to choose his own destiny, even if the Coyotes may not be a choice he can safely make. Perhaps it's time for him to follow Admiral Ackbar's advice and take evasive action by finding the next best situation for him and his family, even if that situation is not with the Coyotes.

On a personal note, I am disappointed that I could not post this sooner as it seemed to be the topic du jour for many publications, and I wish I could have jumped out in front of it based upon my interview with Mr. Cobb. Unfortunately, actual lawyering got in the way. I am happy though that I got to post on something that focuses on actual hockey impact as opposed to just a purely legal issue.

Unfortunately, I only had time for one post today and I wanted to get this out there before it was too late.  That said, check back tomorrow for information on the upcoming Nassau Coliseum issues, discussed in the light of Land Use Law theories, which happens to be one of my absolute favorite topics of legal discussion.

Finally, check back later this week when I will have an interview with a representative of Glendale First!, a PAC formed in opposition to the Goldwater Institute’s efforts to stop the Jamison deal, as currently constructed.  

***UPDATE*** 9:40 AM


Sarah McClellan of The Arizona Republic has posted a story regarding the passing of yesterday's Doan-imposed deadline. She notes that his agent, Terry Bross, does not feel any closer to a resolution following the passing of Monday without the filing of the petition. According to Ms. McClellan,

"Two Glendale residents have been collecting signatures in hopes of adding the lease agreement to the November ballot. The city said signatures were due Monday, 30 days after the Glendale City Council approved the lease agreement with Jamison.

But organizers said they should have until next Monday to turn in signatures, because that's a month after they received paperwork to begin their efforts.

The signatures were not submitted to the city on Monday, and one of the organizers, Ken Jones, said he plans to keep gathering signatures and won't turn them in until next Monday. If the city doesn't accept them at that time, Jones said he would consider a legal challenge.

The uncertainty that continues to surround Jamison's bid has paused the negotiation process for Doan, but that could change soon should he decide to explore other teams. Bross planned to talk with Doan on Monday night to see if Doan would like to proceed with that option."

The takeaway here is that Doan understands that this could drag out for a while. Whether that means he will field other offers or even act upon them remains to be seen.  Check back here for continuing analysis of the ongoing Coyotes ownership issues.

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[1] I’m a bit of a stickler for technicalities, so I have to point out that this is a bit of a misnomer. What would go on the ballot is Glendale’s ordinance which grants the City Manager and City Clerk the authority to enter into a 20 year lease and management agreement, not the agreement itself, which has not yet officially been made with the Jamison group.

[2] There has also been mention of July 12 as the deadline, as it is 30 days after Judge Fink’s order.

[3] In the interview with the Phoenix Business Journal, Cobb states that he already had the 1,131 necessary, but would not comment on the amount of signatures collected when asked by Puck and Gavel.

Puck and Gavel Interviews Joe Cobb

Joe Cobb is one of the two named plaintiffs in the recent court challenge to the City of Glendale's ordinance granting its City Manager and City Clerk the authority to enter into a 20 year lease and arena management agreement for the Jobing.com arena. Mr. Cobb graciously consented to an interview which has been conducted via e-mail over the past two days. Because the interview was conducted via e-mail, follow up questions were not posed until other series of questions were answered. With permission from Mr. Cobb, the order of the questions has been rearranged to accommodate a better flow in reading. Please note that the views expressed by Mr. Cobb are his own. Puck and Gavel takes no position with regard to any of the views expressed by Mr. Cobb.

P&G: Can you briefly tell me about yourself (where are you from, what do you do, etc.)?

JC: I am retired, age 68. Born at USMA West Point, New York, 1944. See http://joecobb.com/front-page/about-2/

P&G: Why did you seek to have the Glendale City Council's approval of the Jobing.com lease/management agreement declared invalid?

JC: I believe it is fundamentally immoral to take tax money (with the tool of coercion, compulsory exaction) and give the funds to a private, for-profit organization. The Arizona Constitution, Article 9, Section 7, http://goldwaterinstitute.org/sites/default/files/Regifting%20the%20Gift%20Clause.pdf, prohibits giving tax money to corporations:

[N]either the state, nor any county, city, town, municipality, or other subdivision of the state shall ever give or loan its credit in the aid of, or make any donation or grant, by subsidy or otherwise, to any individual, association, or corporation, or become a subscriber to, or a shareholder in, any company or corporation, or become a joint owner with any person, company, or corporation, except as to such ownerships as may accrue to the state by operation or provision of law or as authorized by law solely for investment of the monies in the various funds of the state.

So, as you can see, not only is my personal sense of Right vs. Wrong at issue here, I have our Constitution on my side.

More on my attorney's track record suing local governments that violate Arizona's Constitution, Art.9, Sec.7, "Gift Clause":

http://jaypgreene.com/2008/12/23/goldwater-institute-prevails-in-corporate-welfare-ruling/

We have a hammer and the smelly political insider cronyism of the Glendale government is an anvil.

P&G: It's interesting that you have cited Arizona's Gift Clause as the basis for your opposition, yet the complaint filed by you and Ken Jones on behalf of the taxpayers did not list a gift clause violation as part of the reason to invalidate the ordinance. Was there a reason that you and the Goldwater Institute chose to focus only on the grounds of the lease not being issued by proper ordinance or passed pursuant to the emergency clause, and the management agreement not being subject to competitive bidding, and not to focus on the state constitution issue that you just discussed?

JC: One files motions on the basis of the development of a case. The earlier Goldwater law suit, filed two years earlier as a Gift Clause action, is still active and in the Maricopa court, but the judge in that case was not available to hear the further – and new – arguments in this case. But this case has been joined with the older case and will next be heard in front of the original judge. The Gift Clause action will require the city “to sign” and then be ordered to defend its action; we cannot expect the court to issue a prior restraint. The Goldwater attorneys attempted a prior restraint before the city voted June 8 and the judge said he didn’t have the power to enjoin a legislative body not to vote. But everything goes back to the Gift Clause.

Judge Fink ruled (1) this is not an “emergency” law, thus it cannot take effect (the contract cannot be signed) until the period allowed by law for a Referendum petition has run, or a Referendum election has given approval; and (2) the court will not substitute its opinion/judgment over the claim by the city that “professional services” – which are exceptions to the city charter requirement for competitive bidding – does include “hockey arena management” in the same category as physician, attorney, architect, et al. services. The judge had asked the city attorneys whether a high-rise window washing company was an exempt professional service, too, but did not take that obvious play on the concept of “professional service” into his final order.

P&G: Hypothetically, if the management agreement alone, not including the lease, had been subject to competitive bidding, would you still have sought to oppose it?

JC: We would have sued after the fact on the grounds of Gift Clause violation. The city has never attempted to defend itself against the charges of gift violation, but has instead refused to release documents from the closed-door negotiations with team buyers.

P&G: While Judge Fink's opinion denied the relief you and Ken Jones sought in your complaint on behalf of the taxpayers against Glendale to invalidate the ordinance granting the City Manager and City Clerk the authority to enter into a 20 year lease agreement for the Jobing.com arena, the taxpayers were still free to collect signatures to refer the ordinance to the ballot via public referendum. How many signatures do you require, and how is that number calculated? When must you have the signatures by and how is that date calculated?

JC: 10% of the city vote for Council on November 2, 2010, which is 11,309 voters is needed as signatures on our Referendum petitions. The deadline is 30 days from (1) June 8 – city’s view; or (2) June 15 – our attorneys’ view. The later date is when we actually were allowed to obtain blank petition forms by the court order overturning the claim of “emergency” status.

P&G: Assuming the city's view is correct, the deadline would be July 8, which is a Sunday. Would the deadline be extended to Monday, July 9 as a result?

JC: That is common practice: “next possible business day.”

P&G: Do you think there will be legal action brought by Glendale over the filing date of your petition if it is filed after the July 9 date?

JC: Certainly. They fight hard.

P&G: I have seen Glendale state previously that the number of signatures required would be around 1800. Where did you get your number from, and what do you think forms the basis for the discrepancy in those numbers?

JC: Pam Hanna, city clerk, told us we had to use the voter turnout from the 2008 mayoral election, which is the number in the media you cite. She has been corrected, as we know when the anti-sales tax initiative was turned in on July 5 by a different group of Glendale taxpayers. The correct voter turnout is that of November 2, 2010 = 11,309.

P&G: How many signatures do you currently have?

JC: No comment.

P&G: Timing is often the best weapon in legal challenges such as this. If you are successful in getting the referendum on the November ballot, it could likely scuttle the proposed deal to the Jamison group without it ever being voted upon. Is there any provision in Arizona for a special election to have the voters decide sooner?

JC: No.

P&G: Let's assume that you are successful in getting a referendum on the Glendale City Council ordinance on the November ballot, that the Jamison group does not pull out prior to the vote, and the vote goes in favor of Glendale. What would be your next course of action?

JC: If the contract is signed, even in mid-November after an upholding Referendum vote, we would ask the courts to apply the Gift Clause prohibition to the subsidy. Arizona was set up as a republic in 1912 with many rights retained by citizens that under other U.S. state and federal constitutions are wrapped into the hands of government. Among them is the right not to have taxpayer’s money given to private parties as “gifts,” even if a majority did vote for it. A majority cannot vote away certain rights.