Chancellor Ellen Hobbs Lyle sent Nashville Predators co-owner David Freeman's $250 million lawsuit against the franchise back to National Hockey League arbitration Friday, a significant win for the team.
Hobbs Lyle granted a motion made by the NHL to force Freeman back under the supervision of NHL Commissioner Gary Bettman. Freeman had previously begun the NHL arbitration process to address his grievances over being pushed aside by team leadership before suing the Predators June 23.
The Predators have been an important economic engine in downtown Nashville in recent years, and Friday's decision bodes well for the franchise's stability.
“We are pleased with the ruling of Davidson County Chancery Court, as it reaffirms our position from the beginning that Mr. Freeman’s claim was meritless, frivolous, and that this issue should be resolved by the NHL as mandated by the NHL constitution," said Predators spokesman Kevin Wilson.
Freeman's attorney Ed Yarbrough declined to comment on the decision.
The motion was argued in court July 20. The primary point of contention was whether the consent agreement Freeman signed when purchasing the club restricts him from now suing the team in court.
The decision is a major blow for Freeman. His lawyers and the Predators' lawyer both said in court that they expected Bettman to rule in the team's favor.
According to Freeman's lawyers, this is because Bettman is biased toward ruling in a way that is in the best financial interest of the franchise. If Freeman were granted his $250 million, they argued, it could destabilize the team and cause financial harm to the league.
Hobbs Lyle was not swayed by that argument. In her memorandum dismissing the lawsuit, she determined that Freeman had willingly consented to the arbitration provisions of the NHL constitution and the claims in his lawsuit fit within the arbitration criteria of league bylaws. Hobbs Lyle also said Freeman would have to wait until arbitration was concluded to seek an appeal on the grounds of bias by the NHL.
"With that informed and knowledgeable consent to arbitration, plaintiffs' remedy for bias under federal law is not processed until the conclusion of arbitration," she wrote. "Accordingly, institutional bias of the NHL commissioner is not a basis by law to keep this case in court."
In the lawsuit, Freeman had argued that he had been unfairly and illegally pushed aside by Predators co-owner and Chairman Tom Cigarran, and that Cigarran and the franchise had failed to honor loan guarantees which Freeman said are owed to him.
According to the suit, Freeman put up $31 million in 2007 to save the Predators, which was facing a potential sale to a Canadian buyer. By contrast, according to the lawsuit, Cigarran contributed $4 million to the effort "but later staged a coup to replace Freeman as chairman" of Predators Holdings LLC. The suit also details Freeman's efforts to help the team in 2008, when a co-owner filed for bankruptcy, exposing the team to its own risk of bankruptcy.
The suit goes on to accuse Cigarran of withholding financial details from Freeman. As a result, according to the suit, Freeman's shares in the team were diluted, while those of others were increased. According to the suit, Freeman had a 48 percent stake in the team prior to 2010, when his shares began to dilute. Now, according to the suit, Predators Holdings contends that Freeman and his Commodore Trust entity own less than 1 percent of the team.
