This is a significant development in the NBA’s probe into whether Phoenix Suns owner Robert Sarver used a racial epithet in conversation. He’s also accused of uttering lewd comments about women and directing a workplace where employees feared retaliation. Sarver unequivocally denies the claims, which, at the discretion of NBA commissioner Adam Silver, could eventually lead to fines or suspensions. The league retained the law firm Wachtell, Lipton, Rosen & Katz to investigate.
NDAs have become routine conditions of employment and severance in many industries. They typically appear in contracts and workplace handbooks, and forbid current and former employees from disclosing trade secrets and other proprietary information.
NDAs are common in the NBA given teams’ emphasis on analytics, playbooks, scouting reports, biometric measurements, player health records and other sensitive material that could advantage rivals. One recurring criticism of NDAs—as explored in Sportico’s book review of Mine!: How the Hidden Rules of Ownership Control our Lives by Michael Heller and James Salzman—is their sometimes excessive reach. Former employees often conclude it’s better to say nothing than to test an NDA’s boundaries.
To that point, an employer can sue a former employee for breach of contract and demand monetary damages. A former Suns employee is less likely to participate in a league investigation, or to share sensitive information about the Suns or Sarver, under the threat of litigation.
During Sarver’s 17-year ownership, Suns employees have already seen Sarver’s wife, Penny Sarver, send threatening Instagram messages and texts to three former employees. “If something happens to one of my children,” Penny Sarver wrote to a former employee, “I will hold you and [former Suns head coach] Earl Watson personally responsible. Think about your own child for a second and imagine the tables turned.” It wouldn’t be a stretch for a former employee, who might now work for another NBA team, to believe the Suns would sue.
That concern is extinguished with the NDAs being lifted, albeit for the limited purpose of complying with the NBA’s investigation. Wachtell Lipton will now be able to obtain a fuller understanding of the Suns workplace for the firm’s eventual report to the league.
Meanwhile, Congress has urged the Washington Football Team to lift NDAs that restrict former employees from disclosing information about alleged sexual harassment. House Committee on Oversight and Reform chairwoman U.S. Rep. Carolyn Maloney (D-N.Y.) and U.S. Rep. Raja Krishnamoorthi (D-Ill.) insist the team has “saddled” witnesses “with gag orders,” causing them to fear “retaliation.” As Sportico first reported, the NFL has not indemnified WFT witnesses for legal expenses and awards of damages should WFT successfully sue over breached NDAs. Those witnesses thus have stark financial incentives to remain silent.
Maloney and Krishnamoorthi have also demanded numerous files and points of clarification about the NFL’s investigation into WFT. The demand arose after damaging email leaks to The New York Times and The Wall Street Journal. The leaks led to the abrupt resignation of Raiders coach Jon Gruden, who later sued the league and commissioner Roger Goodell for what Gruden believes was a coordinated plot to ruin his career. While the league publicly released two reports totaling 221 pages in the “Deflategate” controversy over slightly under-inflated footballs, it declined to issue any pages of report on multiple years of alleged sexual harassment by WFT officials.
The NFL did not respond to the committee’s deadline of Nov. 4, leading to the possibility the committee could subpoena the league. Goodell insists the league can’t share materials given its assurance of witness confidentiality and its commitment to “protect those who came forward.” Lisa Banks, an attorney for 40 former WFT employees, blasted Goodell’s explanation as “disingenuous and false” since the NFL could presumably share redacted accounts.
Two leagues. Two workplace misconduct investigations. Two very different frameworks for handling NDAs, witness participation and public disclosure.