The Latest CSN Houston Lawsuit Makes For Fun Reading

Art Bell hosted the greatest conspiracy-laden, late-night radio talk show of all time. Comets as hollowed-out spaceships? That was a nightly discussion at one time. Area 51, government control of the weather, faces on Mars, and reverse-engineered alien technology being used for everyday life — all fodder for Bell’s show. His guests were shadowy figures on the edges of the space program, or retired from the Air Force, or former spies, all brandishing supposedly legit Top Secret security clearances. The show was never the same after the predicted Y2K apocalypse failed to come into being, and Bell ultimately retired, un-retired, retired again, etc. Late night radio’s never been the same since.

The trustee for the bankrupt Houston Regional Sports Network filed suit against Comcast, various Comcast entities, and employees/officers of Comcast last week. The suit revolves around the failed network previously known as CSN Houston, now operating as Root Sports Southwest. The suit accuses Comcast of fraud and various other related matters, alleging that Comcast sought to destroy the network so as to buy it, but then backed out of any possible deal, costing the network and the network owners millions of dollars.

Reading the 64 pages of the suit makes one wish for the return of Art Bell to the airwaves. It’s a conspiracy-laden suit of dark motives and nefarious means ignoring items that have already been established and settled by the courts — primarily by the same judge who will be hearing this lawsuit, should it actually make it to trial. Logic’s ignored, simple explanations tossed aside, and anything that doesn’t gibe with the intent of the suit is ignored.

Let’s not rehash the total history of the network. Just know that the network failed, failed miserably, and was eventually put into bankruptcy. The Astros, one of the network’s top backers under owner Drayton McLane, became a huge thorn in the side once Jim Crane assumed control of the Astros. Carriage agreements (the right to make the network available to subscribers) were never reached with most of the various cable and satellite providers in a five state footprint that had once aired Astros games. The Astros supposedly requested high carriage rates (not based in reality) while Comcast sought to have low value deals that would cost the networks lots of money in the short term.

The bankruptcy filing brought about talks of fraud with the Astros accusing Comcast and Drayton McLane of fraud for enticing Crane to spend too much to purchase the Astros. The Astros also accused of Comcast of fraudulently placing the network into bankruptcy. The judge found no fraud on the part of Comcast, and at one point, chastised the Astros for a shoddy knowledge of bankruptcy law:
The Astros’ futility argument turns ‘bad faith’ law on its head. It is true that the petitioning creditors [Comcast] may not sustain an involuntary chapter 11 bankruptcy petition if a chapter 11 case would be futile. In this case (and contrary to the evidentiary record), the Astros now argue that the Astros, by exercising veto rights through its appointed director, can render any hope of reorganization to be futile. In this case, the alleged “futility” arises only because of the Astros’ unsupported threats to cause a director to breach his duties. The Court is unaware of any case law that would support a dismissal based on futility that is engineered by the party seeking the dismissal.
So of course, in this lawsuit, the trustee has decided to attack the bankruptcy, once again calling it fraudulent. And once again, the trustee accuses Comcast of every type of fraud in the book, primarily alleging that after Comcast had forced the bankruptcy, and had then forced the value of the network to drop, and after having made several offers to buy all or part of the network — one attempt of which was blocked by the Rockets — and of backing out on a final deal to buy the network despite there never really having been a deal in place for Comcast to buy the network.

It’s a thing of beauty, this lawsuit. It asks the judge to completely ignore every ruling he made on the bankruptcy case while forgetting every piece of evidence he saw. The Astros are continuously the aggrieved and injured party, despite requesting carriage deals that completely ignored the market. It’s all the blame of Comcast and Comcast officials, despite, at one point, the Rockets rejecting a deal that would have gotten the Astros out of its ownership interest. It’s also puzzling that the Rockets are continuously absolved of blame despite being in on discussions that the Astros were cut out of, and despite, as Jim Crane has stated in his lawsuit against Drayton McLane, of being in the room with the Drayton McLane and Comcast officials as the alleged plan to defraud Jim Crane was devised.

A staple of first year law school classes is that if the facts favor a case, but not the law, then argue the facts. If the law favors the case, but not the facts, then argue the law. And if neither the law nor the facts are in a case’s favor, then argue emotion. There are lots of emotional-type arguments (including an opening statement linking Comcast’s historically awful customer service to supposed dishonesty against the Rockets and Astros), and lots of whining about actions previously ruled to be proper during the bankruptcy proceedings.

Comcast will file it’s answer at some point. Then there will be more briefs and actual evidence will be entered into the record. And it’s likely that the trustee will offer some legitimate arguments as to how the network (and most essentially the Astros) were victims of Comcast fraud. Until that time, this remains the type of thing that would best make for Art Bell and his special brand of conspiracy-spouting lunatics that made late night radio so much damn fun. 
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John Royal is a native Houstonian who graduated from the University of Houston and South Texas College of Law. In his day job he is a complex litigation attorney. In his night job he writes about Houston sports for the Houston Press.
Contact: John Royal