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Racketeering Suit Names Baseball Execs

Kelli Grant, Senior Consumer Reporter for SmartMoney.com.
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Fourteen former owners of the Montreal Expos baseball team have filed a $200-million fraud and racketeering lawsuit against Major League Baseball executives, accusing them of conspiring to eliminate big-league ball in Montreal.

The lawsuit strikes at the heart of baseball's plan to contract by eliminating two financially troubled teams. The plan drew criticism from fans and players and spurred talk that Congress might strip baseball of its valuable antitrust exemption.

The suit, filed Tuesday in U.S. District Court in Miami, alleges that baseball Commissioner Bud Selig and Florida Marlins owner Jeffrey Loria intentionally undermined the viability of the Montreal Expos franchise.

Major League Baseball issued a statement calling the lawsuit "frivolous" and said it would defend itself vigorously. Loria also said the suit was without merit.

The allegations were brought under the U.S. Racketeering Influenced and Corruption Organizations Act, which was designed to aid police in the pursuit of organized crime and drug cartels.

"We're not going to stand by idly as the people of Montreal are deprived of their team," said Sam Minzberg, a Canadian lawyer representing the plaintiffs. "Selig's and Loria's actions represent the arrogance and disloyalty that have alienated so many of the game's fans."

The suit seeks compensatory damages of more than $100 million and punitive damages of $100 million, plaintiff's lawyer Jim Quinn said. Under RICO statutes, compensatory damages can be tripled, bringing the total possible award to nearly half a billion dollars, he said.

Baseball owners voted last November to fold two sagging franchises before the current season started - the Expos and Minnesota Twins - allowing them to share revenues from television contracts and stadium receipts among fewer teams.

But an outcry from legislators, state attorneys general and the Major League Baseball Players Association forced the owners to put off contraction until at least next year. U.S. lawmakers also talked about stripping baseball of antitrust exemptions.

The plaintiffs in the new lawsuit are former owners of the Expos who allege that Loria tricked them into allowing him to become managing partner of the franchise in December 1999 by claiming he was committed to keeping the team in Montreal.

The suit also alleges that Loria then sabotaged plans to build a new ballpark in Montreal, undermined efforts to attract financing and alienated sponsors in a plot to allow him to buy the Marlins, another struggling franchise in Miami.

Loria bought the Marlins for $159 million in a complex deal in which Major League Baseball took over the Expos and Marlins' owner John Henry became principal owner of the Boston Red Sox.

As a result, the partners, who wanted to keep the team in Canada, unwittingly became minority partners in the Marlins and ended up with 6 percent of the U.S. team, their lawyers said.

In a lengthy reaction to the lawsuit, Major League Baseball President Robert DuPuy chastised the Canadian partners, saying they repeatedly refused to invest more money in the struggling Expos and did not oppose the contraction of the franchise.

"This should be a private dispute between the partners. It has nothing to do with the Commissioner's Office, nothing to do with contraction and nothing to do with Major League Baseball's purchase of the Expos," he said. "It should be viewed for what it is — a shameless attempt to obtain through publicity what they know they are not entitled to legally."

Loria issued a statement saying the "claims of the Canadian limited partners are frivolous and completely without merit."

An attorney for Loria, Bradley Ruskin, called the case "thin as ice" and added that "plaintiffs are trying to wrap themselves in the Canadian flag when it is clear that all they really want is to hold up Mr. Loria and Major League Baseball for some U.S. dollars."

In addition to Selig and Loria, the suit names as defendants DuPuy; Marlins' President David Samson; and the companies set up to own and operate the Expos, Baseball Expos GP, Inc., and Baseball Expos L.P.

Plaintiffs are BMO Nesbitt Burns Inc.; BCE Inc.; Cascades Inc.; Esarbee Investments Ltd.; Fairmont Hotel & Resorts Inc.; Federation des caisses Desjardins du Quebec; Fonds de Solidarite des Travailleurs du Quebec; Freemark Holdings Inc.; Loblaws Inc.; M&S Sports Inc.; Provigo Inc.; Telemedia Communications Inc.; 98362 Canada Inc.; and 114114 Canada Inc.

By Jim Loney