Player contracts signed by Jackie Robinson with the Brooklyn Dodgers and a minor league affiliate, the Montreal Royals, are at the center of a U.S. Securities and Exchange Commission fraud lawsuit against online auction portal Collector’s Coffee Inc. (CCI).
A ruling by U.S. Magistrate Judge Gabriel Gorenstein on Monday makes it more likely a jury in the Southern District of New York will decide who, among a list of claimants, owns those contracts.
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The Jackie Robinson Foundation has intervened in the case and insists the Dodgers gave the rights to contracts to the nonprofit. CCI investors, who the SEC says CCI defrauded, have also weighed in. They contend the contracts were collateral for now-defaulted loans.
Gorenstein recommended denials of motions for summary judgment, concluding there are crucial “questions of fact as to who owns the contracts that must be resolved by a jury.”
The facts in SEC v. Collector’s Coffee, Inc. are extensive and cover numerous people, places and dates.
Robinson signed contracts with the Montreal Royals and Dodgers in 1945 and 1947, respectively, the latter pact making him the first black MLB player in the 20th century.
What happened to those contracts is oddly complicated, even mysterious.
As Judge Gorenstein’s more than 11,000-word opinion explored, newspaper evidence from the 1940s and 1950s suggests Dodgers executive (later owner) Walter O’Malley and team executive Branch Rickey shared—or loaned or abandoned— the contracts to the Brooklyn Hall of Records for exhibition.
By the 1970s, the contracts were housed at the James A. Kelly Institute for Local Historical Studies at St. Francis College in Brooklyn.
In 2009, institute director Arthur Konop passed away. Konop’s widow gave their son an envelope containing a key to a safe deposit box that housed the contracts.
There was also a message from her late husband saying, “my kids will know what to do with this.”
Three years later, Konop’s estate sold the contracts to a company called Gotta Have It Collectibles for $750,000. That company then sold the contracts to CCI for $2 million. CCI then used the contracts as collateral to obtain $6 million in loans.
CCI publicly displayed the contracts at events at Philadelphia’s Constitution Center and New York’s Times Square, and in 2018 retained the Goldin auction house to organize a sale.
But the auction never occurred. Instead, the Dodgers sent a demand letter to CCI claiming it owned the contracts and wanted them back. The team also assigned its rights in those contracts to the Robinson Foundation, which argues it is the “true owner.”
But did the Dodgers have any ownership rights to give?
CCI argues no. It insists the Dodgers forfeited any ownership interests on account of statements made during the team’s 2011 bankruptcy proceedings, through which MLB wrestled franchise control from Frank McCourt. The Dodgers didn’t list the contracts as assets or missing assets. But Judge Gorenstein wasn’t persuaded, noting the team didn’t list any historical player contracts, so Robinson’s omission was not necessarily indicative.
Gorenstein also addressed whether the contracts were “stolen” from the Dodgers. That finding would undermine the interests of investors who loaned money upon belief CCI had acquired lawful goods. The judge, who reasoned a jury could decide the issue either way, emphasized jurors would have several reasons to not find theft. The Dodgers voluntarily shared the contacts and were aware, or should have been aware, the contracts were marketed for public viewing. The Dodgers never filed action seeking their return, meaning the team might have “donated” or even “abandoned” them.
The judge also relied on witness testimony from the Dodgers and other industry professionals who explained MLB teams in the 1940s did not regard paper copies of players contracts “as items of value that needed to be safeguarded.” In fact, the Dodgers’ archive index “contained no contracts for players on the roster between 1945 and 1947.”
At the same time, Gorenstein acknowledged it “is certainly arguable that the team might have treated the Jackie Robinson contracts differently from any other player contracts.”
Gorenstein added that a jury might conclude the Dodgers could have–and perhaps should have–turned to “replevin,” a legal demand that property be returned to its rightful owner. The facts suggest the team waited nearly seven decades to take meaningful action.
The parties have a couple of weeks to file any objections to Gorenstein’s report, which is headed for review by U.S. District Judge Victor Marrero. The U.S. Marshals Service has taken custody of the contracts while the dispute plays out.
Investors who rely on collectibles as collateral might see the case as a reminder they should verify collectibles’ ownership before handing over any money.
Source: Yahoo Sports