Columbus response to motion-to-dismiss Crew suit

IN THE FRANKLIN COUNTY COURT OF COMMON PLEAS STATE OF OHIO ex rel.

OHIO ATTORNEY GENERAL MIKE DEWINE, et al.

Plaintiffs, v.

PRECOURT SPORTS VENTURES, LLC, et al.

Defendants.

: : : Case No. 2018 CV 001864 : : Judge Jeffrey Brown : : : : : :

MEMORANDUM CONTRA OF PLAINTIFFS STATE OF OHIO AND CITY OF COLUMBUS TO DEFENDANTS’ MOTION TO DISMISS FILED APRIL 19, 2018 No one is required to accept taxpayer money. The choice to accept government funding, however, comes with a corresponding obligation to comply with the conditions attached to the receipt of those funds. Precourt Sports Ventures, LLC, Team Columbus Soccer, LLC, Crew Soccer Stadium, LLC (collectively “PSV”) and Major League Soccer, LLC (“Defendants”) wish to benefit from their use of public dollars but be freed from any attendant burdens. It was their own choice to accept funding from the State of Ohio and the City of Columbus and that choice— like it or not—made them subject to the requirements of R.C. 9.67.

The General Assembly adopted R.C. 9.67 in June 1996 in the wake of then-Cleveland Browns owner Art Modell’s decision to relocate the Cleveland Browns to Baltimore earlier that year. First Amended Complaint (“Complaint”) ¶ 5. The law is a narrowly written, commonsense requirement that protects public investment in a professional sports team. R.C. 9.67 was in effect at the time that the Crew accepted a variety of taxpayer-funded benefits—including accepting public financing for Mapfre Stadium, a property tax exemption, infrastructure improvements, and $5,000,000 worth of parking lot paving and improvements. Complaint ¶ 44.

By choosing to accept those benefits, Defendants bound themselves to the terms of the statute.

Seeking to avoid the legal consequences of their decision to take public funds, Defendants argue that they should be released from their obligations under R.C. 9.67. They first argue that, despite the fact that they have enjoyed the benefits of taxpayer support for years, R.C. 9.67 still does not apply to them. Motion at 7-10. They also offer a variety of reasons why they believe that the notice and opportunity to purchase requirements that flow from their decision to accept taxpayer money violate the Ohio and United States Constitutions. See Motion at 10-18.

Neither Defendants’ statutory arguments nor their constitutional arguments have merit, and the Motion to Dismiss should be denied.

A. Defendants are subject to the requirements of R.C. 9.67 because they use a taxsupported facility and have received financial assistance from Ohio and the City of Columbus.

Ohio is a notice pleading state. As long ago noted by the Ohio Supreme Court, under notice pleading, “a plaintiff is not required to prove his or her case at the pleading stage.” York v. Ohio State Highway Patrol, 60 Ohio St. 3d 143, 144-45 (1991). Instead, “as long as there is a set of facts, consistent with the plaintiff’s complaint, which would allow the plaintiff to recover, [a] court may not grant a defendant’s motion to dismiss.” Id. A motion to dismiss under Civ. R. 12(b)(6) “tests the sufficiency of a complaint, and, therefore, a trial court must limit its consideration to the four corners of the complaint and accept as true all factual allegations in the complaint.” DeMarco, Inc. v. Johns-Manville Corp., 2006Ohio-3587, ¶ 16 (10th Dist.) (citing Ritchie v. Ohio Adult Parole Auth., 2006-Ohio-1210, ¶ 16 (10th Dist.)). For a court to dismiss under Civ. R. 12(b)(6) “‘it must appear beyond doubt from the complaint that the plaintiff can prove no set of facts entitling him to recovery.’” DeMarco, 2006-Ohio-3587 at ¶ 16 (quoting State ex rel. Hanson v. Guernsey Cnty. Bd. of Comm’rs, 65 Ohio St.3d 545, 548 (1992)). Defendants have failed to carry that weighty burden.

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R.C. 9.67 is not confusing. It imposes certain requirements on the “owner of a professional sports team that uses a tax-supported facility for most of its home games and receives financial assistance from the state or a political subdivision thereof.” See R.C. 9.67 (emphasis added). To state a claim under the statute, a complaint needs to allege only that a professional sports team playing in a tax-supported facility receives financial assistance from the state or a political subdivision. The Complaint here does so.

1. The requirements of R.C. 9.67 apply when a team receives public financial support.

Taking a “not it” stance, Defendants now contend that Major League Soccer (“MLS”) is the true owner of the Crew and argue that the Complaint fails to allege that MLS itself received taxpayer funds. See Motion at 7-8. But Defendants misread the statute. R.C. 9.67 does not require that the owner of a team receive taxpayer support. Instead, the statute applies to owners whose teams have been given public dollars. That is clear from the language and structure of the statute itself. It states that “[n]o owner of a professional sports team that uses a tax-supported facility for most of its home games and receives financial assistance from the state shall cease playing most of its home games at the facility” without meeting specified conditions. R.C. 9.67 (emphasis added). Defendants appear to concede that “uses” applies to “team.” See Motion at 8 (stating that Plaintiffs must allege that the Crew plays in a tax-supported facility). The restrictive word “that” references the team, it applies to both “uses” and “receives”; those verbs are in parallel. The fact that R.C. 9.67 applies when most home games are played in a tax-supported facility confirms that interpretation. It would make little sense to require an owner, as opposed to a team, to play those games.

Even if R.C. 9.67 is read as the Defendants prefer, the Complaint still alleges a claim under it. The Complaint identifies a variety of ways in which taxpayer dollars have been used to 3

support the Crew and Mapfre Stadium, see Complaint ¶ 44, and it alleges that it is the “Crew owners” who receive those benefits, Complaint ¶ 43. The Complaint also alleges that MLS is the “owner” of the Crew. Complaint ¶ 12. Those allegations are more than adequate to defeat Defendants’ Motion to Dismiss.

Yet further still, for purposes of deciding the Motion to Dismiss, the Court cannot and should not rely on Defendants’ representations about who owns the Crew. First, the only court to have considered the issue in detail concluded that MLS is not a single entity and instead has a hybrid ownership structure. See Fraser v. Major League Soccer, 284 F.3d 47, 58 (1st Cir. 2002).

That same court found that MLS “negotiates all stadium leases and assumes all related liabilities.” Id. at 53.

Second, Defendants’ own representations provide cause to question their claims. Even after the Defendants filed their motion to dismiss, Anthony Precourt continued to hold himself out as the “owner” of the Crew. See Anthony Precourt (@APrecourt), Twitter (Apr. 19, 2018, 9:55 pm) available at https://perma.cc/L2YT-2T5A (referring to himself as “Owner/Chairman of Columbus Crew SC and MAPFRE Stadium”). And, although he has subsequently altered that description, other so-called “operator/investors” have continued to refer to themselves as “owners.” See Sounders FC Front Office, Seattle Sounders FC (Apr. 20, 2018) available at https://perma.cc/AUA9-ZR5Q; Ownership, Los Angeles Football Club (Apr. 20, 2018) available at https://perma.cc/X2AK-EX32; Arthur Blank, Atlanta United FC (Apr. 20, 2018) available at https://perma.cc/R8KC-PZX2.

Third, and dispositively, the Defendants’ efforts to introduce evidence regarding their corporate structure are wholly inappropriate in the context of a motion to dismiss. See State ex rel. Keller v. Cox, 85 Ohio St. 3d 279, 281 (1999). That is particularly true here, where

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Defendants are attempting to block all discovery about that very structure. See Defendants’ Motion to Stay Discovery.

2. The Complaint alleges that the financial assistance precondition of R.C. 9.67 is satisfied.

The Complaint also pleads R.C. 9.67’s public-support requirements.

Defendants

grudgingly concede, as they must, that the Complaint alleges facts necessary to establish that Mapfre Stadium is a tax-supported facility. See Motion at 9 (“At best, Plaintiffs allege facts sufficient […] to enable Plaintiffs to argue that the Stadium is a ‘tax-supported facility.’”). It was, after all, the direct receipt of taxpayer financing for the stadium that has made them eligible for a tax exemption under R.C. 5709.081(B)(2)(b). Instead, Defendants assert that they do not receive “financial assistance” from the State or a political subdivision.

The Complaint, however, expressly alleges the tax support and financial assistance that the Crew receives and has received from Ohio and the City of Columbus. See Complaint ¶ 4344. These are merits-based factual allegations sufficient to state a claim under R.C. 9.67. At the motion to dismiss stage, they must be accepted as true.

The Complaint also alleges, in the present tense, that the Crew—which MLS now claims to own—leases the land for Mapfre Stadium at a below-market value, that the parking lot that Ohio paid $5 million to improve is used by Crew fans, Complaint ¶ 44, and that the land on which the Stadium sits is currently tax exempt, Complaint ¶ 9. These allegations are sufficient to state a claim that R.C. 9.67 applies to MLS and PSV. The Defendants’ Motion to Dismiss should be denied on that basis alone.

Despite the plain allegations of the Complaint, Defendants attempt to create statutory ambiguity where none exists.

They assert, for example, that the requirement that a team

“receives financial assistance” is satisfied only when the team is receiving a direct subsidy at the 5

very moment of an announced move. Motion at 8-9. Not so. The use of the present tense of the verb “receive” shows only that the General Assembly intended R.C. 9.67 to operate prospectively. See State v. Consilio, 114 Ohio St. 3d 295, 2007-Ohio-4163, ¶ 17. That is, it indicates that the requirements of R.C. 9.67 are triggered only by financial assistance that was provided after the statute became effective.

Defendants are similarly wrong that the term “financial assistance” as used in R.C. 9.67 excludes all public money that might relate to a stadium in some way. See Motion at 9. Their argument ignores the requirement that when a broad term follows a specific term, the broad term “will be read as embracing only things of a similar character as those comprehended by the preceding limited and confined terms.” Ohio Grocers Ass’n v. Levin, 123 Ohio St. 3d 303, 2009Ohio-4872, ¶ 29 (quotation omitted). But, even were “financial assistance” to exclude the direct subsidization of stadium construction, Defendants’ receipt of other public benefits makes the statute applicable here.

Such benefits include parking improvements, infrastructure

improvements funded through tax increment financing arrangements, and below market land leases. See Complaint ¶ 44.

A property tax exemption—like the one that the Crew also receives—similarly qualifies as “financial assistance” under R.C. 9.67. The property tax-exemption statute, R.C. 5709.081, proves the point. To be eligible for an exemption, a team must show that its stadium was paid for in whole or in part with public funds. R.C. 5709.081(B)(2)(b). Therefore, because public financing necessarily must predate an exemption, the exemption itself is an independent form of taxpayer assistance that is unrelated to other tax support for a facility.

Tellingly, Defendants offer no other interpretation of what “financial assistance” means, or any authority for the notion that it excludes benefits that may relate to a stadium in some way.

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The Statute itself is not so limited, see R.C. 9.67, and the usual, ordinary meaning of the words “financial” and “assistance” underscore why such limitation would be required before the Defendants’ interpretation would make sense. See American Heritage Dictionary of the English Language (5th ed. 2011) at 659 (defining “financial” as “relating to finance” and “finance” as “monetary resources”) and 108 (defining “assistance” as “the act of helping” or “aid;; help”).

Those are broad terms; it cannot be questioned that improved parking facilities or the benefits of a tax exemption “help” a team’s “finances.” When interpreting a statute, a court must look to the plain language of the statute and the words used must be accorded their “usual, normal and customary meaning.” State ex rel. Pennington v. Gundler, 75 Ohio St.3d 171, 173 (1996).

If anything, the cases on which Defendants rely confirm that they have received financial assistance.

They cite Cleveland Electric Illuminating Co. v. Cleveland, 37 Ohio St. 3d 50

(1988) and State ex rel. Fostoria Daily Review Co. v. Fostoria Hosp. Ass’n, 40 Ohio St. 3d 10 (1988) for the principle that the term “tax support” has a broad meaning. See Motion at 9. That may be true, but Defendants’ argument depends on a broad reading of “facility,” not on a broad reading of “tax support.” To the extent that the cases they cite do matter, it is to show that financial assistance can take a variety of forms. Those cases say nothing about whether that support goes to a facility or to a team.

Even if there were a question about the statute’s core meaning—and there is not—R.C. 9.67 should not be interpreted to reach the result for which Defendants advocate. It is wellsettled that “when interpreting a statute, courts must ‘avoid an illogical or absurd result.’”

Brooks Capital Servs., LLC v. 5151 Trabue Ltd., No. 12AP-30, 2012 Ohio App. LEXIS 3901, ¶ 20 (10th Dist. Sept. 27, 2012) (citations omitted)). A court “must seek to construe the statute to operate sensibly.” Brooks Capital Servs. at ¶ 20 (quoting State ex rel. Saltsman v. Burton, 154

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Ohio St.262, 268 (1950)).

The Court must interpret a statute “in a manner that most readily

furthers the legislative purpose as reflected in the legislation,” Brooks Capital Servs. at ¶ 19 (quoting State ex rel. Toledo Edison Co. v. Clyde, 76 Ohio St.3d 508, 513 (1996)), by looking to its plain language and to the usual and customary meanings of the words used, see R.C. 1.42.

Construing “financial assistance” to exclude any history of public subsidization and to exclude those benefits that might in some way be linked to a facility does the exact opposite.

Under the Defendants’ theory, it would not matter how much public money a team had accepted or how recently it received those subsidies. Instead, the only question would be whether the team was receiving a direct infusion of taxpayer money at the moment an intent to relocate is announced. That is not what the statute says. Regardless, the Complaint alleges current and ongoing financial assistance; Defendants’ motion to dismiss cannot rewrite these allegations.

B. The notice and opportunity to purchase requirements under R.C. 9.67 are consistent with the Ohio and United States Constitutions.

Ohio statutes are presumed to be constitutional. See R.C. 1.47(A); City of Cleveland v.

State, 128 Ohio St. 3d 135, 2010-Ohio-6318, ¶ 6. A party challenging the constitutionality of a statute bears the burden of overcoming that presumption. Id. “A court’s power to invalidate a statute is a power to be exercised only with great caution and in the clearest of cases.” Columbia Gas Transmission Corp. v. Levin, 117 Ohio St. 3d 122, 2008-Ohio-511, ¶ 41 (quotation omitted).

All “doubts regarding the validity of a legislative enactment are to be resolved in favor of the statute.” State v. Smith, 80 Ohio St. 3d 89, 99-100 (1997) (quotation omitted). And in the context of a facial challenge, the heavy burden is on the challenging party to show that a statute is unconstitutional in all of its applications. Harrold v. Collier, 107 Ohio St. 3d 44, 2005-Oho5334, ¶ 37 (“A facial challenge to a statute is the most difficult to bring successfully because the

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challenger must establish that there exists no set of circumstances under which the statute would be valid.”).

Defendants have failed to carry their burden of showing that R.C. 9.67 violates any provision of the Ohio or United States Constitutions—let alone that all provisions of R.C. 9.67 are unconstitutional in all instances.

1. The notice and opportunity to purchase requirements contained in R.C. 9.67 do not violate the dormant Commerce Clause doctrine.

The Commerce Clause empowers Congress “[t]o regulate Commerce . . . among the several States.” U.S. Const. art. I, § 8, cl. 3. As a grant of Congressional authority, the Commerce Clause imposes no restrictions on the states directly. See id. Despite that fact, courts have interpreted the Commerce Clause as preventing states from adopting “regulatory measures designed to benefit in-state economic interests by burdening out-of-state competitors.” New Energy Co. v. Limbach, 486 U.S. 269, 273-74 (1988). That interpretation has come to be known as the negative, or dormant, Commerce Clause. See Dep’t of Revenue v. Davis, 553 U.S. 328, 337-38 (2008).

The Court should deny Defendants’ dormant Commerce Clause claims for at least three reasons. First, the dormant Commerce Clause doctrine does not apply to R.C. 9.67 because the statute applies only when Ohio or the City act as market participants, not as market regulators.

Second, any incidental burdens that R.C. 9.67 may impose on interstate commerce are outweighed by the significant public interests that the statute is designed to protect. See Pike v.

Bruce Church, 397 U.S. 137, 142 (1970). Third, even if the Court were to apply the most stringent standard of review available under the dormant Commerce Clause doctrine—applicable to laws that intentionally discriminate against interstate commerce—R.C. 9.67 would still pass constitutional muster.

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a. The dormant Commerce Clause doctrine does not apply because Ohio and the City acted as market participants when they provided financial assistance to the Columbus Crew.

The dormant Commerce Clause has no relevance when a government acts as a market participant: nothing “in the purposes animating the Commerce Clause prohibits a State . . . from participating in the market and exercising the right to favor its own citizens over others.”

Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 810 (1976) (footnotes omitted).

A

governmental entity need not “supply[] a uniquely public product” to qualify as a market participant. Davis, 553 U.S. at 348 n.16. Nor does a governmental entity lose its market participant status simply because its engages in commercial activities and regulatory efforts that “complement[] each other in some way.” Id. at 347. That remains true even when the regulatory component in question explicitly “favor[s] its own citizens over others” (even though R. C. 9.67 does not). See Hughes, 426 U.S. at 810; see also White v. Mass. Council of Constr. Emp’rs, 460 U.S. 204, 210 (1983) (“Impact on out-of-state residents figures in the equation only after it is decided that the city is regulating the market rather than participating in it.”).

As is relevant here, a governmental entity acts as a market participant when it expends its own funds. White, 460 U.S. 204 at 214-15. In such cases, the government is free to impose conditions on the receipt of its taxpayers’ dollars or on how those dollars are used. “[T]he Commerce Clause establishes no barrier to conditions” that a governmental entity may demand for its participation as a financier. See id. at 210. A government may freely impose conditions “within the market in which it is a participant,” although it may “go no further” by imposing conditions outside the scope of its participation. South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 97 (1984); see also Hotel Emp. & Rest. Emp. Union, Local 57 v. Sage Hospitality Res., LLC, 390 F.3d 206, 215-17 (3d. Cir. 2004) (state may impose conditions in its role as

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financier). For example, the dormant Commerce Clause did not limit the ability of the city of Boston to require that contractors receiving city funds for a construction project hire Boston residents. White, 460 U.S. at 205-06. Nor did it apply when the State of Kentucky exempted municipal bonds from taxation. See Davis, 553 U.S. at 341-48.

The dormant Commerce Clause doctrine does not apply in this case because Ohio and the City of Columbus act as market participants when they provide financial support to Defendants—for the purposes of constructing Mapfre Stadium, for example, and when they provide on-going taxpayer support to the Crew in the form of a tax-exemption through R.C. 5709.081 (which the General Assembly modified specifically for their benefit). Taxpayer funds were not the only funds available to the Defendants.

The financial services industry is a

competitive market and, had Defendants wished to avoid the requirements of R.C. 9.67, they were free to seek funding from private banks or other financial firms. Rather than rely on the private sector, however, the Defendants sought—and obtained—taxpayer money.

The Defendants have benefited from their choice. Unlike private financing, the public funds that they have received bear no interest and come with no repayment obligation. Instead, R.C. 9.67 (which was in effect at the time they accepted those funds) secured to the State and the City of Columbus the benefit of their bargain: It imposed requirements to help protect the public’s investment in the Crew should the team seek to relocate. Cf. Metro. Sports Facilities Comm’n v. Minn. Twins P’ship, 638 N.W.2d 214, 223 (2002) (benefit of bargain made by city sports commission was a promise by the Minnesota Twins to play their home games at the Metrodome). In that respect, the requirements of R.C. 9.67 are little different from a contractual purchase option or a right of first refusal for which a private party might negotiate before making an investment.

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Only by ignoring the fact that their own behavior triggered the requirements of R.C. 9.67 are Defendants able to argue that the statute runs afoul of the dormant Commerce Clause doctrine. See Motion at 10-14. To that end, Defendants would have this Court focus on R.C. 9.67’s requirements, without taking into account the reason that the statute is at issue here in the first place. But the statutory limitation that the Defendants ask the Court ignore is significant.

By restricting the notice and opportunity to purchase requirements only to teams that have accepted public funds, R.C. 9.67 ensures that its requirements do not “reach beyond the immediate parties with which the government transact[ed] business.” See White, 460 U.S. at 211 n.7. The statute’s limited scope confirms that the State and the City of Columbus acted as market participants, not as regulators, when they provided the funds that brought Defendants under the umbrella of R.C. 9.67.

The fact that the Defendants had the choice about whether to subject themselves to the requirements of R.C. 9.67 makes the cases cited by Defendants inapplicable here. See Motion at 10-14. Ohio and the City of Columbus agree that R.C. 9.67 could raise serious constitutional concerns if it also applied to professional sports teams that have not accepted public money. But that is not what R.C. 9.67 does; it limits the notice and opportunity to purchase requirements only to those teams (like the Crew) that chose to accept taxpayer assistance.

In the end, the conditions imposed by R.C. 9.67 are hardly unique. States frequently provide private companies with tax incentives and other forms of taxpayer support. See Rick Rouan, Documents detail Columbus’ bid to lure Amazon’s 2nd HQ, Columbus Dispatch, Oct. 19, 2017, available at https://perma.cc/8398-KS5G.

Those public subsidies often come with

conditions. See id.; see also Jay Miller, ‘Clawback’ is sought on several tax credits in Northeast Ohio, Crain’s Cleveland Business, Dec. 11, 2016, available at https://perma.cc/9ZS3-M3BU.

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The Attorney General is authorized by statute to take action against parties that fail to comply with those conditions. See, e.g. R.C. 125.112(G). If the Court were to accept Defendants’ argument here, its decision could call into question the ability to continue to impose and enforce all sorts of conditions related to local performance. The United States Supreme Court has rejected an interpretation of the Commerce Clause that would limit the ability of state and local governments to place conditions on the use of their own funds, see White, 460 U.S. at 209-10, and this Court should do so as well. b. Even if the dormant Commerce Clause doctrine applies, R.C. 9.67 is constitutional because the law’s benefits outweigh any incidental burdens on interstate commerce.

The entirety of Defendants’ dormant Commerce Clause argument is based on their mistaken belief that R.C. 9.67 on its face impermissibly discriminates against out-of-state parties.

See Motion at 10-14. But R.C. 9.67 does not involve “discrimination for [a] forbidden purpose,” and even assuming that the dormant Commerce Clause doctrine applies here, the Court should review the statute under the well-established Pike-balancing standard. (Tellingly, Defendants do not allege that the statute is invalid under Pike; they reference that decision only for the purpose of saying that it does not apply. See Motion at 11 n.4.)

A Pike analysis has two parts. A court must first consider whether a challenged law discriminates against interstate commerce for a forbidden purpose and, if it does not, whether an incidental burden on commerce is excessive in light of the “putative local benefits.” See Pike, 397 U.S. at 142.

1. R.C. 9.67 is not a discriminatory law intended to disfavor interstate commerce.

R.C. 9.67 does not impermissibly discriminate against “in-state and out-of-state economic interests” in a way “that benefits the former and burdens the latter.” See United 13

Haulers Ass’n v. Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330, 338-39 (2007) (quotation omitted). Defendants challenge both the relocation provision and the opportunity to purchase provision, but neither was motivated by “simple economic protectionism.” See id.

And each applies to in-state as well as out-of-state entities and moves alike.

Begin with the relocation provision. R.C. 9.67 states that “[n]o owner of a professional sports team that uses a tax-supported facility for most of its home games and receives financial assistance from the state or a political subdivision thereof shall cease playing most of its home games at the facility and begin playing most of its home games elsewhere.” (Emphasis added).

By its own terms, the statute applies any time a team seeks to stop using a facility that was paid for in part with taxpayer funds. Because the relocation provision is tied to playing at a specific facility, the requirements of R.C. 9.67 would apply even if a team sought to move to a different city in Ohio or even within the same city. See R.C. 9.67. Attempting to ensure that a team actually uses a facility for which taxpayers expended money hardly reflects an improper intent to burden interstate commerce.

The opportunity to purchase requirement similarly lacks any discriminatory purpose. In fact, that portion of the statute does not burden out-of-state parties at all. R.C. 9.67 gives “the political subdivision or any individual or group of individuals who reside in the area the opportunity to purchase [a] team.” R.C. 9.67(B). It ensures that local entities are not denied the opportunity to purchase a publicly supported team. Nowhere does it prohibit the team’s owner from entertaining offers from other individuals—including those located outside the State. See id. (To be sure, should a team be sold pursuant to an offer made under R.C. 9.67, any new owner would be held to the requirements of that statute in the same way that the previous owner had

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been.) Defendants are therefore wrong when they claim that the statute denies “the benefits of increased competition” by limiting “prospective offers to local residents.” See Motion at 13.

Defendants are similarly wrong when they contend that R.C. 9.67 burdens interstate commerce by imposing a “six-month waiting period.” See Motion at 24. But the fact that the statute requires notice of a publicly subsidized team’s intent to relocate does not mean that it impermissibly burdens interstate commerce. The Kentucky Supreme Court, for example, upheld under Pike a state statute that prevented certain purchasers of racing horses from taking those horses out of state for a defined period of time. See Jamgotchian v. Ky. Horse Racing Comm’n, 488 S.W.3d 594, 605 n.7 (Ky. 2016). Likening the statutory transfer limitation to a contractual term, the court wrote that the restriction was constitutional under Pike in part because it was “the legal consequence of a particular type of business transaction, not an unavoidable governmental regulation affecting all commerce.” Id. at 610-11. A similar logic applies here. Any limitations that R.C. 9.67 imposes on Defendants’ ability to relocate the Crew were avoidable and exist entirely because of Defendants’ decision to engage in their own type of business transaction— the acceptance of taxpayer funds.

2. Any incidental burdens that R.C. 9.67 has on interstate commerce are outweighed by significant public benefits.

When a statute (like R.C. 9.67) has only incidental burdens on interstate commerce, it will be upheld “unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.” Pike, 397 U.S. at 142. This Pike-balancing reflects the fact that the Commerce Clause does not prevent states from legislating for the benefit of their citizens even “though the legislation might indirectly affect the commerce of the country.” Huron Portland Cement Co. v. Detroit, 362 U.S. 440, 443-44 (1960). The validity of a state statute under Pike

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depends “on the nature of the local interest involved, and on whether it could be promoted as well with a lesser impact on interstate activities.” Pike, 397 U.S. at 142.

Under Pike, state laws are “presumed valid.” Byrd v. Tenn. Wine & Spirits Retailers Ass’n, 883 F. 3d 608, 624 (6th Cir. 2018). Pike established a forgiving standard of review and statutes “frequently survive . . . Pike scrutiny.” Davis, 553 U.S. at 339. A party bringing a dormant Commerce Clause challenge “bears the responsibility of proving that the burdens placed on interstate commerce outweigh the law’s benefits.” Garber v. Menedez, ___ F.3d ___, No. 173992, slip op. at 9 (6th Cir. May 1, 2018). Whether it is ever possible to carry that burden at the motion-to-dismiss stage is questionable, see id. at 8, but what cannot be questioned is that Defendants have failed to carry it here. The nature of the local interests that R.C. 9.67 is designed to protect are significant and the statute’s corresponding burdens are limited.

At its most basic level, R.C. 9.67 was designed to ensure that taxpayer money is not wasted. By placing conditions on when a sports team may stop using a facility supported in part with public funds, the statute helps see that those funds are not squandered. The need for such guarantees is particularly acute given the nature of public financing for stadiums. Elaine S. Povich, Why should public money be used to build sports stadiums? PBS NewsHour, Jul. 13, 2016, available at https://perma.cc/449F-JS6L. There is a compelling governmental interest in ensuring that when public funds are provided for such a purpose, the stadium is actually used and is not prematurely abandoned and allowed to stand empty. See e.g. id. (city of St. Louis still paying down debt on unused stadium). This same interest is one reason why eligibility for a tax exemption depends on the facility being used for a “significant portion of [a team’s] home schedule.” See R.C. 5709.081(B).

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The benefits secured by R.C. 9.67 involve more than just money. When it comes to supporting a sports franchise, a “city’s real benefits of the bargain are the highly valued, intangible benefits . . . . The value of such benefits is virtually impossible to quantify and, therefore, is not recoverable for a team owner’s breach of contract.” Metro. Sports Facilities Comm’n, 638 N.W.2d at 225 (quotation omitted). That is why Ohio and the City of Columbus provided funds under R.C. 9.67. And that is why courts have been willing to require specific performance of a contract, even when it meant requiring a team to continue playing its home games in a specific facility located in a specific city. See Metro. Sports Facilities Comm’n, 638 N.W.2d at 221 (requiring Minnesota Twins to play their home games at the Metrodome); see also New York v. New York Jets Football Club, Inc, 394 N.Y.S.2d 799, 803 (N.Y. Sup. Ct. 1977) (failure to enforce a lease would have resulted in “injury to the welfare, recreation, prestige, prosperity and trade and commerce of the people of the City”).

The burdens of the statute are correspondingly limited in both their scope and effect. As discussed above, R.C. 9.67 applies only to a subset of professional sports teams: those that have accepted taxpayer funds. And even then, the statute does not impose a flat prohibition on attempts to relocate such teams. A publicly supported team remains free to negotiate with the city in which it is located and obtain a waiver of R.C. 9.67’s other requirements. See R.C. 9.67(A). Failing that, if the team receives no reasonable purchase offers after providing the requisite six-month notice, then that team is still at liberty to carry out its departure plans. See R.C. 9.67. Rather than discriminate against interstate commerce, these minimal burdens help ensure that the taxpayers who have supported a team have a seat at the table during any relocation discussions.

Cf. Editorial, Taxpayers deserve a say in pro sports franchises,

Columbus Dispatch, Apr. 20, 2018, available at https://perma.cc/SS2G-G3FL.

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Finally, there are no alternatives to the requirements imposed by R.C. 9.67 that would sufficiently advance the public interest and protect the benefits of the bargain made by the State and the City of Columbus. For example, it would not be enough to mandate a refund of any public money that a team may have received. When it comes to relocating a beloved sports franchise, “[n]o money damages can measure or assuage this kind of harm.” City of New York v.

New York Yankees, 458 N.Y.S. 2d 486, 490 (N.Y. Sup. Ct. 1983). “Much more is at stake than merely the loss of direct and indirect revenue to the City. . . . Any loss represents a diminution of the quality of life here . . . .” Id. at 489-90.

The facts of this case confirm that the threat of such harm is very real. When Defendants suggested that they were exploring the possibility of relocating the Crew, members of the Columbus community rallied to save the team. They have engaged in a massive effort to prevent it from being dragged away from Columbus. Among other things, community members have partnered with the Community Refugee and Immigration Services to provide tickets to international refugees living in Columbus, organized efforts designed to increase ticket sales and fill Mapfre Stadium, and developed an entirely fan-made jersey, which was supported and sponsored by local businesses. In toto, Crew supporters effectively have formed a shadow front office and conducted on a volunteer basis the same types of promotional efforts that would typically be performed by a paid staff. See Walker Evans, #SaveTheCrew Organizers Pen Letter to MLS Commissioner Don Garber, Columbus Underground, Apr. 9, 2018, available at https://perma.cc/PV83-AFSN. This level of community support and dedication confirms that any damages resulting from failing to comply with the statute are more than economic and would be impossible to measure in monetary terms alone.

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c. R.C. 9.67 is justified by valid factors that are unrelated to economic protectionism.

As discussed above, Defendants are simply incorrect when they claim that R.C. 9.67 facially discriminates against out-of-state interests in favor of in-state ones. But even if their interpretation of the statute is correct, it would still be constitutional.

Although discriminatory laws are almost always invalid, Courts must uphold such laws if “the discrimination is demonstrably justified by a valid factor unrelated to economic protectionism.” New Energy Co., 486 U.S. at 274. A state law that benefits in-state interests at the expense of out-of-state ones will be upheld if it “advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.” Id. at 278-79.

The same need to protect public investments that justifies R.C. 9.67 under Pike shows that the statute is similarly justified even under this more stringent standard. The State of Ohio and the City of Columbus have a compelling governmental interest in ensuring that taxpayer funds are protected. When it comes to public investment in a local sports team, enforcement of the requirements found in R.C. 9.67 is the least burdensome way to protect that interest.

2. The notice and opportunity to purchase requirements contained in R.C. 9.67 are not unconstitutionally void for vagueness.

A law will survive a void-for-vagueness challenge if it is written so that “a person of common intelligence” can understand it and if it “provides sufficient standards to prevent arbitrary and discriminatory enforcement.” Klein v. Leis, 99 Ohio St. 3d 537, 2003-Ohio-4779, ¶ 16. For purposes of a vagueness challenge, the type of law at issue matters. A “greater degree of ambiguity will be tolerated,” for example, “when [a] statute regulates the conduct of businesses.”

In re Application of Columbus S. Power Co., 134 Ohio St. 3d 392, 2012-Ohio-5690, ¶ 14 (quotation omitted). A civil statute (not involving the First Amendment) must be given the

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greatest leeway and is invalid only if it is “so vague and indefinite that it sets forth no standard or rule or if it is substantially incomprehensible.” Columbia Gas Transmission Corp, 117 Ohio St. 3d 122 at ¶ 46.

The need to interpret a statute does not make that statute impermissibly vague; “[m]any statutes require administrative and judicial construction to clarify specific language. Such statutes are not unconstitutionally vague.” In re Application of Columbus S. Power Co., 134 Ohio St. 3d 392 at ¶ 20 (quoting Minnesota ex rel. Alexander v. Block, 660 F.2d 1240, 1255 n.35 (8th Cir. 1981)). Nor is a statute “void for vagueness merely because it could have been more precisely worded.” State ex rel. Rear Door Bookstore v. Tenth Dist. Court of Appeals, 63 Ohio St. 3d 354, 358 (1992); see also Jordan v. De George, 341 U.S. 223, 231-32 (1951) (“Impossible standards of specificity are not required.”). A court interpreting a statute must give “words of ordinary usage . . . the meaning commonly attributed to them.” State ex rel. Rear Door Bookstore, 63 Ohio St. 3d at 358. The General Assembly has provided additional guidance that courts may use when interpreting statutes. See R.C. 1.42, R.C. 1.43, R.C. 1.47, and R.C. 1.49.

Applied here, these ordinary tools of statutory interpretation show that none of the

provisions of R.C. 9.67 are unconstitutionally vague.

Notice. The notice provision found in R.C. 9.67 is easily understood by individuals of common intelligence. Defendants’ own motion proves the point. After offering a variety of interpretations of the statute, Defendants ultimately concede that “on its face” R.C. 9.67 “simply requires six months’ notice before the team leaves.” See Motion at 17. Precisely.

Ohio and the City of Columbus agree with this interpretation of the notice requirement.

This lawsuit was filed not because there was any uncertainty about that requirement, but because there was uncertainty about whether the Defendants intended to comply with it. The only

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vagueness regarding notice in this case is reflected in Defendants’ conflicting statements about their intentions regarding the Crew.

See Jonathan Tannenwald, MLS commissioner Don

Garber’s ‘preference’ is for the Crew ‘to stay in Columbus’, Philadelphia Inquirer, Mar. 13, 2018, available at https://perma.cc/NNE2-73XY (representative of owner MLS stating that his preference “would be for the Columbus Crew to stay in Columbus”) and Update from Precourt Sports Ventures on Austin, TX, MLS2ATX, Feb. 27, 2018, available at https://perma.cc/2PUSZHBH (stating that “we are not in a position to move to Austin if the right site is not identified” and requesting attribution “to Anthony Precourt, chairman and CEO of Precourt Sports Ventures, which owns Columbus Crew SC”).

Opportunity to purchase.

Interpretation of R.C. 9.67’s opportunity to purchase

requirement is likewise straightforward.

Courts frequently use the phrase “opportunity to

purchase” in connection with option contracts and rights of first refusal. See Nat’l City Bank v.

Welch, 188 Ohio App. 3d 641, 2010-Ohio-2981, ¶ 13 (10th Dist.); Control Data Corp. v.

Controlling Bd. of Ohio, 16 Ohio App. 3d 30, 36-37 (10th Dist. 1983) (option in contract gave the lottery commission an “opportunity to purchase” certain equipment); cf. also Gress v. Ft. Loramie, 100 Ohio St. 35 (1919) (giving the public an “opportunity to purchase” a streetcar line).

This common ordinary usage is sufficient to defeat Defendants’ motion to dismiss. The Court need not decide more at this stage of the proceedings. Instead, it need only ask whether Defendants have carried their heavy burden of showing that R.C. 9.67 is “substantially incomprehensible” and cannot be understood by persons of common intelligence. They have not, and their motion must therefore be denied.

Area. The meaning of “reside in the area,” as used in R.C. 9.67 has a similar, commonlyunderstood meaning. Although Defendants complain that the statute does not define the relevant

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“area” for purposes of determining who must be afforded an opportunity to purchase, they consider that term only in isolation. They overlook the fact that it is used in connection with “political subdivision.” Read together, it is apparent that the term “area” as used in R.C. 9.67 refers to the area around the political subdivision in which a team is located. See Ohio Grocers Ass’n, 123 Ohio St. 3d 303 at ¶ 29. That concept is one with which courts have demonstrated their familiarity. See ex. Brentlinger Enters. v. Curran, 141 Ohio App. 3d 640, 652 (10th Dist.

2001) (reviewing number of car dealerships in the Columbus area).

Finally, Defendants point to the request by Ohio and the City of Columbus that the Court exercise continuing oversight in this case to ensure that the Defendants comply with the statute’s requirements. See Motion at 16-17. But that request is based in equity—not statute. The Defendants’ conduct thus far has raised legitimate questions about whether they intend to honor the requirements of R.C. 9.67 in good faith. It is Defendants’ conduct, not any requirement of R.C. 9.67, that makes the Plaintiffs’ request necessary. It is well-established that courts have “inherent authority—authority that has existed since the very beginning of the common law—to compel obedience of their lawfully issued orders.” Cf. Cramer v. Petrie, 70 Ohio St. 3d 131, 133 (1994) (discussing power to hold contempt proceedings). Ohio and the City of Columbus simply ask that the Court exercise that inherent authority here.

3. R.C. 9.67 does not violate the Privileges and Immunities Clause because the Clause only applies to individuals and the statute does not threaten the basic maintenance or well-being of the Union.

As an initial matter, Defendants lack standing to raise their privileges and immunities claim.

It is well-established that “the Privileges and Immunities Clause is inapplicable to

corporations.” W. & S. Life Ins. Co. v. State Bd. of Equalization, 451 U.S. 648, 656 (1981).

Furthermore, Defendants do not have standing to assert the rights of others. A party “generally

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must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties.” Kowalski v. Tesmer, 543 U.S. 125, 129 (2004). Although standing may be based on the rights of third parties in some limited circumstances, see id. at 12930, Defendants do not even attempt to make the showings necessary to establish such third-party standing here, see Motion at 14-15.

Even if the Court could consider Defendants’ privileges and immunities claim, that claim would fail.

The only rights protected by the Privileges and Immunities Clause are those

fundamental rights that are essential to the “basic to the maintenance or well-being of the Union.” McBurney v. Young, 569 U.S. 221, 234 (2013). Defendants assert a general right to pursue economic opportunities, and state that R.C. 9.67 improperly “attempts to create economic opportunities” for Ohio citizens at the expense of others. See Motion at 14-15. But that conclusory claim is hardly sufficient to carry their burden of overcoming the presumption that the statute is constitutional. See City of Cleveland v. State, 128 Ohio St. 3d 135, 2010-Ohio6318, ¶ 6. It also happens to be wrong. As already discussed, although R.C. 9.67 applies to current and future owners of a team, it in no way prevents out-of-state individuals from making an offer to purchase that team.

Defendants’ characterization of the “fundamental” right at issue here is also impermissibly broad. The relevant interest under the statute is not a general interest in “pursuing economic opportunities,” but a more specific interest in ensuring a true opportunity to purchase a sports team that has been supported with public tax dollars. To paraphrase, the relevant question for privileges and immunities purposes is therefore whether: “[T]he distinction made by [Ohio] between residents and nonresidents in establishing access to [an opportunity to purchase a professional sports team] threaten[s] a basic right in a way that offends the Privileges and

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Immunities Clause?” Cf. Baldwin v. Fish & Game Comm’n, 436 U.S. 371, 388 (1978). “Merely to ask the question seems to provide the answer.” Id. Even the cases cited by Defendants show it is “no.” Cf. Alerding v. Ohio High School Athletic Ass’n., 779 F.2d 315, 317 (6th Cir. 1985) (holding that the right to participate in sports is not “fundamental or basic to the nation’s vitality or interstate harmony”) (cited by Motion at 14-15).

Even when a fundamental right is involved, the Privileges and Immunities Clause “does not preclude discrimination against nonresidents where (i) there is a substantial reason for the difference in treatment; and (ii) the discrimination practiced against nonresidents bears a substantial relationship to the State’s objective.” Supreme Court of New Hampshire v. Piper, 470 U.S. 274, 284 (1985). For the reasons discussed above, that test is satisfied here.

Ohio and the City of Columbus have invested taxpayer dollars to support the Crew. They have a substantial interest in ensuring that those public funds do not go to waste. Protection of an opportunity to purchase is reasonably necessary to safeguard the public’s investment. Cf. McBurney, 569 U.S. at 228 (preference in access to public records justified in part because taxpayers helped “foot the bill”).

At most, Defendants’ arguments purport to show that the limitation on who must be given an opportunity to purchase the team is unconstitutional. But even if they were correct— and they assuredly are not—the relief available to them would be limited. Rather than hold that R.C. 9.67 is unconstitutional, the appropriate remedy would be to sever the offending provision.

The General Assembly has made clear that the invalidity of one portion of a statute does not affect other provisions or applications. See R.C. 1.50; see also Geiger v. Geiger, 117 Ohio St. 451, 466 (1927).

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C. Because they are raised only as a matter of constitutional avoidance, the Court need not address the Defendants’ takings or Contract Clause claims.

In a seeming admission that R.C. 9.67 should be subject to reasonable judicial interpretation, Defendants argue that the Court should construe the statute in a way that would avoid raising constitutional concerns. See Motion at 18. Although somewhat ambiguous, the Defendants appear to be advancing a series of constitutional avoidance arguments. See Motion at 18-24. Such claims are different from substantive claims that R.C. 9.67 is unconstitutional; the canon of constitutional avoidance “is not a method of adjudicating constitutional questions by other means.” Clark v. Suarez Martinez, 543 U.S. 371, 381-82 (2005).

Because the statute is subject to only one interpretation when its terms are given their reasonable and ordinary meaning, the canon of constitutional avoidance does not apply. That canon “comes into play only when, after the application of ordinary textual analysis, the statute is found to be susceptible of more than one construction.” Clark, 543 U.S. at 385. It is particularly inapplicable here, where Defendants appear to contend that the statute would be unconstitutional even under their preferred interpretation. See Motion at 24. And because the statute poses no constitutional concerns, the Court need not consider Defendants’ avoidance arguments.

Defendants’ avoidance claims are also premature. Their contingent arguments address what remedies might be available should they fail to comply with the requirements of R.C. 9.67.

The question of whether and how the Court will need to enforce the statute is entirely speculative, however, making that question unsuitable for resolution on a Motion to Dismiss.

See Winget v. JP Morgan Chase Bank, N.A., 537 F.3d 565, 581-82 (6th Cir. 2008) (claim is not ripe if it depends on contingent future events that may not occur); City Nat’l Bank v. WBP Invs., LLC, 2011-Ohio-6129, ¶¶ 15-16 (10th Dist.) (claim premature where sale of property was 25

contingent on future events). Only if Defendants choose to violate the statute will the issue of the available relief become ripe.

Defendants’ challenge to the speculative remedy also presumes that a party (or parties) will make a purchase offer and that MLS will find that offer unacceptable and reject it. See Motion at 23.

That argument at least implicitly concedes that the statute would pose no

constitutional problems if MLS approves of the offer or if no offer is made. That concession alone defeats Defendants claim here: “In order for a statue to be facially unconstitutional, it must be unconstitutional in all its applications. . . . [Where] the statute has at least some valid application [it] . . . will survive the facial challenge.” Oliver v. Cleveland Indians Baseball Co. Ltd. P’ship, 123 Ohio St. 3d 278, 2009-Ohio-5030, ¶ 13 (2009) (citations omitted).

1. The requirements of R.C. 9.67 are not takings and do not involve an exercise of eminent domain power.

The Court need not consider Defendants’ takings arguments because R.C. 9.67 does not involve the exercise of eminent domain power. The requirements imposed by the statute are best understood as limitations that Defendants agreed to when they accepted public funds. They are, in that respect, little different than terms imposed as part of a contract. Cf. Jamgotchian, 488 S.W.3d at 606 (state regulation was “essentially a contract term that [was] knowingly and voluntarily agreed to” by a purchaser). It is well-settled that the power to enter into a contract is unrelated to the power of eminent domain. See Albrecht v. United States, 329 U.S. 599, 603-04 (1947) (existence of contract meant that transactions “passed out of range of the Fifth Amendment”). As is relevant here, the government’s exercise of a purchase option raises no constitutional concerns. Honolulu Rapid Transit Co. v. Dolim, 459 F.2d 551 (9th Cir. 1972).

Significantly, Defendants do not allege that R.C. 9.67 violates Article XVIII, Section 3 of the Ohio Constitution or the Fifth and Fourteenth Amendments to the United States Constitution.

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They argue only that the statute is superseded by a local ordinance limiting how the City of Columbus may exercise its eminent domain power. See Motion at 19-20. Their argument fundamentally misunderstands the relevant law. An opportunity to purchase the Crew exists solely by operation of R.C. 9.67. If the City of Columbus were to seek to avail itself of that opportunity, it would do so entirely independent of its eminent domain power. See Honolulu Rapid Transit Co., 459 F.2d at 553.

The ordinance that Defendants cite therefore has no bearing here. A city ordinance cannot extinguish a right created by state law. When there is conflict between state and local laws, it is the State that prevails. See Am. Fin. Servs. Ass’n v. City of Cleveland, 112 Ohio St. 3d 170, 2006-Ohio-6043, ¶ 46; see also Ohio Const., Art. XVIII, § 3. Thus while local ordinances might limit how the City of Columbus may independently exercise its power of eminent domain, that limitation is irrelevant for determining whether the State may demand that a team owner provide a purchase opportunity under R.C. 9.67 as a condition of accepting taxpayer funds.

Finally, the Court need not (and cannot at this juncture) address the arguments that Defendants make about where they, and their intangible assets, are located. See Motion at 21-22.

In support of those arguments, Defendants make a variety of assertions that go well beyond the facts as pled in the Complaint. And their arguments are not supported by the authorities on which they rely. For example, the decision in Mayor & City Council of Baltimore v. Baltimore Football Club, Inc., 624 F. Supp 278 (D. Md. 1985) largely turned on the fact that the Baltimore Colts had infamously packed up in the dark of night and moved to Indianapolis. See also id. at 287 (questioning comparisons to escheat). Even if they were, a court considering a motion to dismiss may not rely on allegations outside of those contained in the Complaint. See State ex rel.

Keller, 85 Ohio St. 3d at 281.

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The Complaint in this case alleges that the Crew plays most of its home games at Mapfre Stadium, Complaint ¶¶ 11 and 42, that the Defendants “[have] had continuous and systematic business contacts with Ohio,” Complaint ¶ 17, and that Defendants play in a tax-supported facility and receive financial assistance from the state or a political subdivision, Complaint ¶¶ 43-44. Those allegations are sufficient to establish that the Court has jurisdiction and that it may issue orders necessary to ensure compliance with R.C. 9.67. The Defendants introduce new facts in an effort to support their Motion to Dismiss. Although inappropriate for a motion to dismiss in any circumstances, the addition of unpled facts is even more inappropriate here because Defendants have sought to deprive Ohio and the City of Columbus of an opportunity to conduct the discovery necessary to test those facts. See Motion to Stay.

2. Defendants cannot bring a facial Contracts Clause challenge to a hypothetical remedy, particularly when the contract or contracts at issue are not in evidence.

As with their takings claim, Defendants appear to challenge not the substance of R.C. 9.67 but the remedy available should the Court determine that they failed to comply with that statute. See Motion at 22-24. Their challenge is premature, speculative, and hypothetical, and it should be denied. See Winget, 537 F.3d at 581-82. If the Court decides to treat their claim as a substantive challenge to the statute, however, it should deny that challenge as well.

Article I, Section 10 of the United States Constitution and Article II, Section 28 of the Ohio Constitution both prevent the State from passing laws that impair the obligation of contracts.

The Ohio Supreme Court has held that the two constitutional provisions are

coextensive, Westfield Ins. Co. v. Galatis, 100 Ohio St. 3d 216, 2003-Ohio-5849, ¶ 10 and that both prohibit state laws that substantially impair existing contractual relationships, see General Motors Corp. v. Romein, 503 U.S. 181, 186 (1992). Significantly, however, it is impossible for a statute to unconstitutionally impair a contract if that contract did not yet exist when the statute 28

was enacted. See Texaco, Inc. v. Short, 454 U.S. 516, 531 (1982). Parties enter into contracts against the backdrop of the applicable law and “[t]he laws which subsist at the time and place of the making of a contract” form a part of it, even if not “expressly referred to or incorporated in its terms.” Home Bldg. & Loan Ass’n v. Blaisdell, 290 U.S. 398, 429-30 (1934).

When faced with a claim that a state action violates the Contracts Clause, a court may not speculate about the contents of the contract at issue. Util. Serv. Partners v. PUC, 124 Ohio St. 3d 284, 2009-Ohio-6764, ¶ 40. Review of the contract itself is required. After all, “[w]ithout evidence of the ‘obligation of contracts,’ it is impossible to determine whether they have been ‘impaired.’” Id. at ¶ 39. When a contract is not in evidence, any constitutional challenge based on that contract must be dismissed. See Hughes v. Wendel, 317 U.S. 134 (1942) (dismissing appeal because lease that formed the basis for Contracts Clause claim was not in evidence).

Settled precedent dictates that the Court must deny Defendants’ Contracts Clause claims.

First, facial challenges are the hardest to bring and Defendants have failed to carry their burden of showing that R.C 9.67 is unconstitutional in all instances. See Wymsylo v. Bartec, Inc., 132 Ohio St. 3d 167, 2012-Ohio-2187, ¶ 21. Additionally, because the case comes before the Court on a Motion to Dismiss, it goes without saying that the contracts on which Defendants base their claims are not in evidence. Nor could Ohio and the City of Columbus have attached those contracts. The Defendants are in sole possession of the contracts and have failed to provide them in response to discovery requests.

Furthermore, even though detailed pleadings could not

otherwise save their claim, the Defendants brief is incomplete even in that respect. It does not, for example, identify the date on which the alleged contracts were signed. See Motion at 22-24.

That omission makes it impossible to take even the threshold step of determining whether R.C. 9.67 could have impaired those contracts in any way.

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Equally fatal is the fact that the Motion does not provide the specific contract language that Defendants contend is now at issue. Motion at 22-24. The Defendants’ reference to the Delaware Limited Liability Company Act is of no assistance. Although that law may limit the ability of parties to become members of an LLC to the methods provided in a governing LLC agreement, Del. Code Ann. § 18-301(b)(1), Defendants’ citation of that law only raises the question of what the relevant LLC agreement actually provides. Because the Defendants have “failed to create a record sufficient for [the Court] to decide whether any obligation of its contracts has been impaired,” the Court must deny their Motion to Dismiss. See Util. Serv.

Partners, 124 Ohio St. 3d 284 at ¶ 39.

Finally, even if the Court could consider Defendants’ contract clause claims, those claims would fail. If there is conflict between the requirements of R.C. 9.67 and a contract entered into by any of the Defendants, that conflict was not created as a result of state action. R.C. 9.67 was adopted in 1996. It was in place when Defendants decided to seek and accept all of the forms of taxpayer support identified in the Complaint. See Complaint ¶ 44. Therefore, if anything created conflicting obligations on the part of Defendants, it was not R.C. 9.67 but Defendants’ own decision to accept public money. Whether that decision violates any contractual obligations the Defendants might have is an issue to be resolved not between the Defendants and the State, but between Defendants and their partners.

CONCLUSION For the foregoing reasons, the Court should deny the Defendants’ Motion to Dismiss.

Respectfully submitted, ZACH KLEIN Columbus City Attorney

MICHAEL DEWINE Ohio Attorney General

/s/ Joshua T. Cox JOSHUA T. COX (0029860)

/s/ Samuel C. Peterson SAMUEL C. PETERSON (0081432) 30

Chief Counsel CHARLES P. CAMPISANO (0095201) Assistant City Attorney Office of the Columbus City Attorney 77 N. Front Street, 4th Floor Columbus, Ohio 43215 Phone: (614) 645-7385 Fax: (614) 645-6949 jtcox@columbus.gov cpcampisano@columbus.gov DREW H. CAMPBELL (0047197) MATTHEW W. WARNOCK (0082368) BRYAN M. SMEENK (0082393) Bricker & Eckler LLP 100 South Third Street Columbus, OH 43215 Phone: (614) 227-2300 Fax: (614) 227-2390 dcampbell@bricker.com mwarncock@bricker.com bsmeenk@bricker.com

Deputy Solicitor, Appeals 30 E. Broad St., 17th Floor Columbus, Ohio 43215 Tel: 614-466-4320 Samuel.Peterson@OhioAttorneyGeneral.gov BRIDGET C. COONTZ (0072919) Assistant Chief, Constitutional Offices Section 30 E. Broad Street, 16th Floor Columbus, Ohio 43215 Tel: 614-466-2872 | Fax: 614-728-7592 Bridget.Coontz@OhioAttorneyGeneral.gov RANDALL W. KNUTTI (0022388) Assistant Attorney General Principal Attorney Court of Claims Defense Section 150 E. Gay Street, 18th Floor Columbus, Ohio 43215 Tel: 614-466-7447 | Fax: 866-771-4236 Randall.Knutti@OhioAttorneyGeneral.gov Counsel for Plaintiff Ohio Attorney General

Counsel for Plaintiff City of Columbus

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CERTIFICATE OF SERVICE I certify that on May 2, 2018 the foregoing was filed electronically and sent via U.S. mail and via email to the following: Marc J. Kessler Jeffrey A. Yeager Hahn Loeser & Parks, LLP 65 East State Street, Suite 1400 Columbus, Ohio 43215

Dan L. Cvetanovich James G. Ryan Bailey Cavalieri, LLC One Columbus 10 West Broad Street, Suite 2100 Columbus, Ohio 43215-3422

Bradley I. Ruskin Mark D. Harris Jennifer E. Tarr Prosckauer Rose, LLP 11 Times Square New York, New York 10036

Counsel for Defendants Precourt Sports Ventures, LLC; Team Columbus Soccer, LLC. and Crew Soccer Stadium, LLC

Counsel for Defendant Major League Soccer, L.L.C. Counsel entering an appearance in this matter will also receive service via the Franklin County Clerk of Courts electronic filing system. /s/ Samuel C. Peterson SAMUEL C. PETERSON Deputy Solicitor

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