Miami Marlins

Marlins face an ‘uphill’ battle proving foreign ownership in Miami fight, judge says

Miami Marlins CEO Derek Jeter looks on before the start of a Major League Baseball game against the Chicago Cubs at Marlins Park in Miami on Friday, March 30, 2018.
Miami Marlins CEO Derek Jeter looks on before the start of a Major League Baseball game against the Chicago Cubs at Marlins Park in Miami on Friday, March 30, 2018.

The Miami Marlins lost their bid to stay out of a local courthouse in a fight over profit-sharing with Miami-Dade County, as a federal judge tossed the case back to Circuit Court with a warning that Derek Jeter and partners “face an uphill battle” proving foreign ownership in the case.

Lawyers for Jeter’s front office claimed the ownership of the team held corporate citizenship in the British Virgin Islands because a holding company with a stake in the franchise was based there. They then cited international contract agreements in trying to move the case away from an elected judge in Miami-Dade to the federal court system. In his ruling, U.S. District Judge Darrin Gayles sided with county lawyers and sent the proceedings back to the state level.

Gayles didn’t make any decisions that struck at the heart of the case, saying it was too early to say whether the dispute should go to the kind of arbitration that the Marlins and former owner Jeffrey Loria want. At issue is a 2009 profit-sharing agreement that Loria struck with the county and the city of Miami in exchange for public financing of Marlins Park and the surrounding parking garages.

Loria agreed to share 5 percent of certain profits from a sale of the franchise if the deal closed before the spring of 2018. Jeter and partners bought the baseball team from Loria for $1.2 billion last fall. Loria lawyers informed both governments that the formula used to calculate profits under the terms of the original deal actually yielded a paper loss, and there would be no profits to share.

Miami and Miami-Dade sued and demanded financial records to reveal more details about the transaction, including Loria’s tax returns. Lawyers for the Marlins filed papers that shifted the case to federal court, citing rules that apply to foreign-owned corporations.

Though the team is based in Little Havana, the Marlins lawyers said the franchise could claim foreign citizenship thanks to a cited holding company in the British Virgin Islands that controls the stake of minority owner Tobias Enrique Carrero. The Venezuelan’s company, Abernue, turned out to have a post office box on the island.

Gayles did not rule one way or the other on the foreign-citizenship claim. But he shared his skepticism about the argument. “The Court notes, however, that the Marlins face an uphill battle in establishing the requisite citizenship to confer jurisdiction under the Convention” that governs international business disputes, Gayles wrote.

He wrote that since Loria’s original ownership group had no foreign entities when the 2009 agreement was signed with Miami and Miami-Dade, the new owners “likely” can’t now evoke rules for international disputes. Gayles also questioned the entire premise of the argument.

Since other partners in the franchise are U.S. citizens, “the Jeter Marlins would have both United States citizenship and the citizenship of the foreign members,” Gayles wrote. “As a result, the Court could potentially disregard the Jeter Marlins’ foreign citizenship” when deciding whether international rules apply.

In a statement Tuesday, the Marlins said: “We look forward to the County and the previous ownership group finally having an opportunity to put this issue to rest. From day one, we have wanted a fair and efficient resolution to this dispute, which has nothing do with this current Marlins ownership group.”