Could Bryan Colangelo Still Face Legal Consequences After Parting Ways With 76ers?

After Bryan Colangelo and the Philadelphia 76ers mutually agreed to part ways Thursday, could Colangelo still face legal action from the team and the NBA?

Bryan Colangelo, the Philadelphia 76ers president of basketball operations, resigned Thursday in the wake of Colangelo’s wife, Barbara Bottini, admitting to creating burner Twitter accounts and using them to influence public opinion about her husband and his rivals. Bottini registered accounts with such usernames as “Eric jr”, “Still Balling”, “Enoughunkownsources” and “HonestAbe.” She tweeted under those accounts in ways that criticized current and former 76ers players; lambasted coach Brett Brown; and ridiculed her husband’s predecessor, Sam Hinkie. Further, Bottini relayed what could be considered proprietary team information as well as insights and impressions about confidential player health matters.

Colangelo’s resignation comes a week after The Ringer’s Ben Detrick broke the story of the accounts, which were initially linked to Colangelo. The 76ers retained a prominent New York-based law firm, Paul, Weiss, Rifkind, Wharton & Garrison (Paul Weiss), to investigate possible ties between the accounts and Colangelo. The law firm reviewed data on iPads, iPhones and other electronic devices. It also assessed witness statements and witnesses’ degree of cooperation. Paul Weiss concluded that Bottini authored the tweets and that Colangelo was “careless and in some instances reckless” in how he safeguarded confidential team information.

Notably, Weiss declined to opine on whether Colangelo was aware of his wife moonlighting as a social media harasser. Colangelo vehemently denies having any such knowledge. In a statement, Colangelo describes Bottini’s actions as “a seriously misguided effort to publicly defend and support me.” While embarrassed by Bottini’s tweets, Colangelo stresses that she “acted independently and without my knowledge or consent.” Further, no available forensic evidence appears to refute Colangelo’s disavowal.

Yet Colangelo’s role is muddled by the destruction of evidence. Weiss emphasizes that Bottini “impeded” the investigation by, among other things, deleting the contents of her iPhone through a factory reset. She took suspicious steps with sensitive evidence prior to turning over materials to the law firm. Bottini’s actions invite speculation that she could have removed implicating data in order to eliminate a potential digital nexus between herself, her husband and the tweets.

Sixers Should Follow Sam Hinkie's Process When Finding Bryan Colangelo's Successor

Colangelo’s resignation averts a legal controversy with the team

By resigning, Colangelo ostensibly—but not really—leaves his employment with the 76ers on his own accord. His employment contract likely contains language that contemplates the impact of a resignation and the extent to which the team and owner Josh Harris may owe him any money going forward.

Colangelo and the 76ers probably also negotiated a termination agreement that sets the terms of his departure. Such an agreement might, for instance, extinguish the team’s ability to bring potential legal claims (discussed below) against Colangelo. In exchange, Colangelo may have pledged to take full and sole responsibility for the disclosure of information to his wife and absolved everyone else who works for the 76ers. He may also have agreed to cooperate in any subsequent investigations, including those launched by the NBA and any state and federal agencies. Further, he may have consented to defending the 76ers in any third-party litigation (such as if a player sues the team over the tweets and information disclosure).

In reality, resigning was the least bad of several bad choices for Colangelo. If Colangelo had refused to resign, the 76ers would have almost certainly fired him. To that point, Colangelo admits that his quitting was not entirely his own doing. It was, using his words, part of a “mutual” decision with the 76ers. The 76ers would not only have fired Colangelo but most likely done so “for cause”—which means the team could have lawfully refused to pay him any remaining amount on his contract on account of him engaging in improper conduct. Firing Colangelo would have also preserved the opportunity for the team to sue him.

Along those lines, had Colangelo forced the 76ers to fire him, the team could have considered different types of legal action against Colangelo and potentially Bottini. For starters, like other states, Pennsylvania prohibits the disclosure of “trade secrets.” Such secrets are more colloquially thought of as company confidences and include an employer’s classified strategies.

Here, the account “Still Balling” liked a tweet prior to the 2017 NBA draft that suggested the 76ers planned to trade the third overall pick in the 2017 draft, along with the rights to the 2018 Los Angeles Lakers first-round pick or the Sacramento Kings 2019 first-round pick, to the Boston Celtics in exchange for the first pick in the 2017 draft (days later this very trade happened).

Also, in response to widespread Twitter criticism of Colangelo for the Nerlens Noel trade, "Enoughunkownsources" tweeted that Brown “wanted [Noel] gone” because Noel was a “punk.” This insight suggests that Brown has limited patience for supposedly difficult players—an insider’s impression of a coach that rival general managers and coaches can pocket away for future reference. With these and other examples in mind, the 76ers could have argued that Colangelo misappropriated trade secrets. The team would have asserted that Colangelo breached contractual duties by unlawfully sharing basketball operations strategies with his wife and not adequately convincing her of the need to keep such information private.

The team could have also asserted that Colangelo engaged in tortious inference with contract relations through the confidential disclosures to Bottini. Consider the impact of this embarrassing controversy on the 76ers’ chances to sign LeBron James as a free agent this summer. While it’s not clear how highly James, 33, ranks the 76ers among his list of expected suitors, he might now be less likely to consider the 76ers as the team where he could finish his storied career.

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Lastly, if Colangelo used company property, such as team-issued computers or iPhones, to relay information to his wife that she then tweeted, the team could have sued him for misuse and damage to company property.

Bottini’s alleged decision to destroy data could have advanced any misappropriation, tortious interference or misuse lawsuit. Courts prohibit “spoliation of evidence,” which refers to intentional efforts to discard or alter evidence that could prove liability or guilt in a legal proceeding. Parties that engage in such spoliation are more vulnerable to losing accompanying lawsuits.

All of this legal fallout, however, will probably be avoided. By resigning and most likely resolving any potential legal claims, Colangelo likely avoids the risk of a legal showdown with the 76ers.

Players critically referenced by the tweets could take Colangelo and Bottini to court

Players targeted by Bottini’s tweeting could explore the possibility of bringing defamation and invasion of privacy lawsuits against her and her husband.

To illustrate this risk, Bottini tweeted that Noel was a “selfish punk” who behaved “like a vulture.” One might argue that these statements are defamatory, since they negatively portray Noel. Indeed, these kinds of unflattering characterizations might harm Noel’s brand and potential endorsement opportunities. On the other hand, defamation requires a statement that is relatively specific and measurable, and is expressed as a fact. A statement of mere opinion, in contrast, is not a valid ground for defamation. For that reason, Bottini calling Noel a “selfish punk” and ranting that he acts “like a vulture” are statements probably more along the lines of harsh opinion than asserted fact.

Other tweets by Bottini may be more debatable. In February, Bottini tweeted that Markelle Fultz, who struggled with health issues during most of his rookie season, “supposedly . . . just had some really traumatic family personal experience which really messed him up.” This statement suggests the author was cognizant of the risk of defamation. The wording creates distance from a potential defamation by using the adverb “supposedly,” but it does reference an alleged fact—Fultz having a personal experience that interfered with his play.

Even if Bottini’s tweets technically constitute defamation, it’s not clear how damaging they were to anyone’s reputation. After all, not many people followed these burner Twitter accounts. Also, presumably very few people were aware that someone with inside information was authoring the tweets. In fact, both the substance and the style of the tweets mimicked the kind of unremarkable banter and unfounded innuendo one often sees—and then forgets—on Twitter. This apparent lack of impact likely deters players from seriously contemplating any action for defamation.

While a defamation lawsuit may be unappealing, some of the players targeted by the tweets could consider invasion of privacy litigation against both Bottini and Colangelo. Tweets about the health of Fultz and Jahlil Okafor, for example, concerned their medical status. Colangelo apparently telling his wife about players’ health, and then not persuading her of the sensitive quality of that information, could be considered an invasion of privacy. Likewise, Bottini publishing the medical information furthers the invasion.

There has also been speculation that Colangelo and Bottini may have violated the Health Insurance Portability and Accountability Act—HIPAA, for short. HIPAA prohibits certain healthcare and human resource professionals from disclosing medical information without patient consent. This law, however, does not contain a private right of action. That means patients harmed in ways that violate HIPAA cannot use HIPAA to sue. Instead, the U.S. Department of Health and Human Services (DHS) enforces HIPAA. Speaking of DHS, in 2002 the agency issued an opinion expressing that HIPAA likely does not contemplate pro sports teams and their employees as “covered entities.” Persons who are not classified as “covered entities” fall outside the scope of HIPAA. This indicates HIPAA probably does not apply to Colangelo situation.

There Was No Way Bryan Colangelo Could Remain Employed in Philadelphia

The NBA can still punish Colangelo and the 76ers

While the NBA is likely pleased that the 76ers retained an experienced law firm to investigate and that Colangelo has resigned in the wake of the findings, the league could still consider the matter to be open.

The NBA is no doubt embarrassed that a spouse of a team executive would become aware of propriety information about certain players, coaches and officials and then share it, anonymously, on Twitter. The NBA might use the Colangelo matter as a launching point into a broader investigation. The league will probably seek more insight and guidance on how exactly team employees treat confidential information and with whom those employees share such information. Likewise, the league will probably assess measures taken by employees to dissuade family members, friends and others with whom they confide from disclosing any privileged information. To that end, the league could adopt new policies that govern the duties of teams and their executives to safeguard information.

The NBA must also be mindful of any concerns of the National Basketball Players’ Association. The NBA, of course, seeks to maintain a positive relationship with the NBPA, the union with which the NBA collectively bargains. The NBPA could rightfully assert that the league should more sternly warn teams about the danger of impermissibly disclosed player information. Along those lines, the NBPA might view a spouse of a team executive using confidential materials to criticize players as harmful to those players’ careers and potential endorsement opportunities. It might also constitute a violation of federal labor law, particularly if it interferes with NBPA bargaining objectives.

As detailed last week in comments by Larry Coon, the well-known NBA analyst and general manager of Sports Business Classroom, the NBA might also be worried that sports bettors might eventually get their hands on sensitive information relating to player health and availability. To that end, the NBA’s 2017-18 Operations Manual contains a “no tipping” provision. This provision forbids team employees from revealing any “confidential information to anyone unless the employee is certain that the person has a legitimate need for the information.”

While it might seem strange for the NBA to punish Colangelo now that he is out of a job, the league could reason that a punishment is still appropriate. This is particularly true since the 53-year-old Colangelo is an influential figure in basketball and—once this controversy dies down and months have passed—he could conceivably be interviewed for jobs with other teams. Under Article 35A of the league constitution, NBA commissioner Adam Silver could suspend Colangelo for any length of time and/or fine him up to $1 million on account of Colangelo violating the “best interests” of the NBA.

Silver could also assign blame to the 76ers and punish them. The NBA will want to know whether the team used inadequate measures to warn executives of sharing confidential information with family members and friends. If Silver determines that the 76ers should absorb blame, Article 24 authorizes the commissioner to fine the team up to $2.5 million and take away their draft picks. The league might want to do its own digging on this topic since Paul Weiss was paid by the 76ers—a fact that creates at least the potential appearance of conflict when the team itself could be punished.

Sixers Deny Report That Jerry Colangelo Was Involved in Bryan Colangelo Investigation

Some commentators have opined that the NBA shouldn’t punish the 76ers because the league and several other teams’ owners reportedly encouraged the 76ers to hire Colangelo’s father, Jerry Colangelo, to the front office prior to Bryan Colangelo’s hiring. This occurred, it’s been reported, on account of league opposition to Hinkie’s strategy (dubbed by some “trust the process”) that included losing games to maximize draft position. The NBA might object to this characterization of facts. Regardless of whether the account is accurate, the league could reason it has an obligation to enforce its rules and ensure that the 76ers—and all teams—are adequately deterred from allowing a similar incident to occur in the future.

Spousal privilege not relevant to internal team and league investigation

One might wonder if the fact that Colangelo and Bottini are married accords them some degree of legal protection. The short answer: while the spousal privilege could be relevant in other contexts, it is not relevant here.

First, the privilege does not allow a spouse to breach fiduciary and contractual duties to an employer. If an employee pledges to keep trade secrets and health records in strict confidence, he or she must do so—even if their spouse wants to gain knowledge.

Second, the privilege is relevant in trials where witnesses testify. It is not relevant in internal company matters. Indeed, the privilege allows a spouse to refuse to testify against his/her spouse as a witness and to not testify about their confidential communications. But the privilege does not extend to interviews conducted as part of internal company investigations, including those that rely on a law firm.

To be sure, Bottini did not “have to” cooperate with the 76ers or Paul Weiss as she does not work for the team. Even Colangelo could have declined to participate in the investigation—he wasn’t subpoenaed by any court and wasn’t a witness in any trial. Had either done so, of course, the 76ers would have fired Colangelo, the consequences for which are explained above.

Michael McCann is SI’s legal analyst. He is also the Associate Dean for Academic Affairs at the University of New Hampshire School of Law and co-author with Ed O'Bannon of the new book Court Justice: The Inside Story of My Battle Against the NCAA.