(CN) – An old rival from the American Basketball Association picked the wrong venue to face off against the Denver Nuggets and other NBA teams over television revenue, a New York appeals court affirmed.
The Spirits of St. Louis did not make the jump to the NBA when the two leagues merged in 1976. In exchange for folding, the Spirits agreed to receive a portion of NBA television revenue in perpetuity.
The Spirits filed suit in January 2009, claiming the Nuggets failed to pay the proper share of revenue from international television.
In an unsigned decision, the Manhattan-based division of the state appeals court agreed that the proper forum for the federal dispute is the Southern District of New York, according to a 1985 interpleader agreement.
“Emphasizing the word ‘Spirits’ in the interpleader agreement’s forum selection clause, plaintiff argues that this clause applies only to a third party’s entitlement to monies that rightfully belong to plaintiff,” the decision states. “Plaintiff argues that the clause does not apply to this dispute where the plaintiff seeks its own ‘basic right to its share of TV revenues from the NBA.”
“However, the forum selection clause applies to disputes about entitlement to future Spirits revenues TV revenues that plaintiff has not received,” the justices added.
Lasting from 1967 to 1976, the ABA featured stars like Julius “Dr. J” Erving, David Thompson, Artis Gilmore and Moses Malone.
The Denver Nuggets, Indiana Pacers, San Antonio Spurs and New Jersey Nets trace their roots to the ABA, which used a red-white-and-blue basketball and was the birthplace of the Slam Dunk Contest.
The Spirits and the Kentucky Colonels disbanded at the time of the merger, while the Virginia Squires went out of business less than a month before the merger.