Buss family engages in court battle over control of the Lakers

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In a saga that would give Game of Thrones a run for its money, the Los Angeles Lakers are in the aftermath of an attempted coup d’état.  Jeanie Buss, controlling owner and president of the Lakers, survived an attempt by her brothers, Jim and Johnny, to wrest control of the NBA team.  However, the battle is far from over.  Jeanie is now headed to Los Angeles County Superior Court, seeking a court order to solidify her control over the Lakers organization, to the exclusion of her brothers.

The Buss family acquired the Lakers in 1979…

The Buss family acquired the Lakers in 1979 when patriarch Dr. Jerry Buss purchased the NBA team.  The Lakers enjoyed some of their greatest success under Buss, including ten NBA Finals victories and growth into a corporation valued at over three billion dollars.  In the later years of his tenure, Dr. Buss incorporated Jim and Jeanie into management of the organization.  Jeanie in particular learned how to manage the Lakers’ business affairs, quickly becoming viewed as one of the most successful female executives in the country.

Dr. Buss died in 2013, and passed his controlling interest of sixty-six percent in the Lakers to his six children, held as an undivided whole in a trust.  Each child had a vote in the management of the company, and three spots on the board of directors were reserved for the children.  Jeanie, a fifteen year veteran in managing the team, was named head of business operations and representative of the team to the NBA Board of Governors in the trust document.  Also as part of the trust, Jeanie’s brother Jim was named head of basketball operations.  Both were members of the board.

Jeanie fired General Manager Mike Kupchak and removed Jim from basketball operations.

Jeanie became President of the Lakers organization in 2013, empowering her to control not only business operations, but basketball operations as well.  Jim stayed on as vice president of basketball operations, but seemingly chafed at his sister’s control over team affairs.  Furthermore, he promised to get the team back on track after three years.  But three mediocre seasons later, without any improvement, Jeanie fired General Manager Mitch Kupchak and removed Jim from basketball operations.  Both executives were replaced in February, 2017, by former Laker great Magic Johnson.  The move only served to spur Jim Buss into action against his sister.

Jim secured the support of his brother Johnny and reportedly scheduled a board of directors meeting to be held on March 7, 2017.  The brothers’ attorney claims the meeting was simply a yearly board meeting to discuss the fortunes of the company.  The catch is, they never invited Jeanie to attend, and apparently wanted to discuss control of the company.  Had Jeanie not attended, she could have been voted off the board.  Without being part of the board, Jeanie could no longer have held the position of company president.  In fact, alongside deposing Jeanie, the brothers put their own names up as possible replacements.

It is somewhat unclear from the facts at this moment how Jeanie discovered the plot.  What is clear is that she took decisive action to protect her interests.  Jeanie’s attorney, Adam Streisand, filed a motion for a restraining order against the brothers’ attempt to hold a board meeting and dethrone their sister in Los Angeles County Superior Court on Friday, March 3, 2017.  In the restraining order, Streisand referred to Jim’s ineptitude and the fact that he was unfit to control basketball operations for the Lakers.  The restraining order had its desired effect, forcing the brothers to cancel the board meeting.  After they called off the meeting, Streisand withdrew the motion for a restraining order.

Jeanie Buss is still pursuing a claim in probate against her brothers.

However, this fight is far from over.  Jeanie Buss is still pursuing a claim in probate against her brothers.  Her first claim is for breach of fiduciary duty to the trust for failing to “take whatever actions are reasonably available to have Jeanie Buss appointed as the new Controlling Owner” of the Lakers.  She is also  seeking a declaratory judgment from the probate court that would find a requirement in the terms of her late father’s trust that she be the controlling owner of the Lakers organization, and any attempt to remove her outside the terms of that trust.  There are some interesting issues raised by the second half of Jeanie’s complaint.

Taken to its extreme conclusion, Jeanie’s complaint would have the courts install her as president of the Lakers for life, by interpreting that as the designed purpose of Dr. Buss’s trust.  Jeanie was groomed for business management by her father, and the positions with which she was entrusted provided her with on the job education.  Jeanie has led the Lakers organization responsibly to all appearances.  Many in the sports world agree with her decision to replace Kupchak with Magic Johnson from a purely operational standpoint.  However, Dr. Buss’s trust does not seem to clearly provide Jeanie Buss with complete control over the organization.

For one thing, removing Jim Buss from his position in basketball operations may have overstepped the bounds set by Dr. Buss’s trust, if the argument presented in Jeanie’s complaint is taken to its logical conclusion.  Surely, if Jeanie is entitled to remain in control of the organization by the terms of her father’s trust, the same must be true of Jim’s control over basketball operations.  The same terms that made Jeanie the de facto face of the Lakers also conceded that she did not have any experience in the basketball operations, and provided for that reality.

Furthermore, the trust likely does not provide Jeanie with unilateral control over basketball operations at all.  Her siblings were each given a vote in controlling the total Buss family share of the Lakers organization, and that suggests a modicum of restraining force against Jeanie Buss’s individual power.  It is not as if Dr. Buss’s other children are inept.  Each of the Buss siblings are engaged in managing different portions of the Lakers organization.  Even Jim, though no longer an active member of the organization, still holds an eleven percent stake in the team and a vote among the siblings.

The claim seems to turn on whether there was any obligation created by the trust…

Ultimately, it seems as though Jeanie Buss has over pursued her claim, reaching for power beyond what the terms of her father’s trust provide.  That said, there are many who support her claim, or are merely just supporting her as the leader of the Lakers organization.  And the breach of fiduciary duty claim might be strong enough to have Jim and Johnny Buss removed as trust beneficiaries, in which case they could easily be removed from any role in managing the Lakers.  The claim  seems to turn on whether there was any obligation created by the trust and placed upon Jeanie’s siblings to keep Jeanie in place as controlling partner of the Lakers organization.

For their part, the brothers have claimed through their attorney that they had no intention of removing Jeanie as controlling owner.  Their defense seems to be focused on flat denial of any wrongdoing, instead of responding to the issue of construing the terms of the trust.

Unfortunately, these types of disputes tend to cause major rifts not only in families and organizations, but in the communities the teams represent as well.  Hopefully, this dispute can be resolved quickly and without much drama.  However, in a league (and city for that matter) still bitter over the Donald Sterling debacle over ownership of the Los Angeles Clippers, there are no guarantees.  Lakers fans just have to hope for the best.