MSG Networks Inc. shareholders asked a judge to punish the broadcaster for destroying emails and texts that could have helped them prevail in a lawsuit over its $900 million acquisition by James Dolan’s Madison Square Garden Entertainment Corp.
(Bloomberg) — MSG Networks Inc. shareholders asked a judge to punish the broadcaster for destroying emails and texts that could have helped them prevail in a lawsuit over its $900 million acquisition by James Dolan’s Madison Square Garden Entertainment Corp.
The investors said in a filing Friday in Delaware Chancery Court that executives and board members at the broadcaster of New York Knicks games should have preserved the communications over the 2021 deal. They asked Judge Kathaleen St. J. McCormick to sanction MSG Networks by holding its handling of the communications against it when she rules on the case after a trial set to start April 10. The Chancery Court decides business disputes without juries.
The officials “intentionally or recklessly — and repeatedly — destroyed evidence,” the shareholders said in the filing. When defendants “deliberately destroy evidence, the court may simply presume that the evidence would have helped the plaintiff,” they said.
MSG Entertainment said in a statement Tuesday that its document retention policy “is consistent with public companies of our size and accepted best practices.”
Read the filing here
Dolan had said the purchase of MSG Networks was designed to provide tax savings and more financial flexibility to the entertainment business, which was hammered when the pandemic shut down its concert venues. The shareholders who sued said they weren’t getting enough for their holdings.
More recently Dolan has come under fire for banning lawyers for firms representing plaintiffs in the merger and other disputes from attending events at Madison Square Garden, Radio City Music Hall and other Dolan venues and for using facial recognition software to enforce the ban. In a November hearing on the MSG Networks case, McCormick called the ban “the stupidest thing” she had ever read, according to court filings.
Read More: MSG Networks Merger Challenge Gets Delaware Court Fast-Track
About a dozen directors and executives of MSG Networks either personally got rid of the communications or allowed them to be automatically deleted, according to Friday’s filing. The investors said the emails and texts might have bolstered their arguments that the deal was an insider transaction by Dolan that shortchanged them.
Among those accused of failing to properly hand over the documents to the plaintiffs are directors Charles Dolan and Kristin Dolan. Her lawyer acknowledged that she had “manually deleted her text messages every day,” while Charles Dolan “failed to turn off auto-deletion on his inbox,” according to the filing.
In addition to Knicks basketball, MSG Networks broadcasts pro hockey’s New York Rangers, New York Islanders, New Jersey Devils and Buffalo Sabres.
The case is In Re Madison Square Garden Corp. Stockholders Litigation, 2021-0468, Delaware Chancery Court (Wilmington).
(Updates with company comment in fourth paragraph.)
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