The Grizzlies signed Miles to a 10-day contract late Friday, a league source said. The Memphis Commercial Appeal first reported the deal.
If Miles plays in two games for the Grizzlies, the $18 million remaining on his previous Portland contract returns to the Blazers' salary cap.
Miles' agreement with the Grizzlies ends a wild 24 hours that began with the Blazers sending an email threat to the NBA's other 29 teams. Late Friday afternoon, the Players Association filed a grievance against the Portland franchise, alleging collusion.
"We are shocked at the brazen attempt by the Portland Trail Blazers to try to prevent Darius Miles from continuing his NBA career," the union's executive director, Billy Hunter, said in a statement released early Friday evening. "Their attempt to intimidate the other 29 NBA teams by threatening frivolous litigation merely for signing this capable NBA veteran is a clear violation of the anti-collusion and other provisions of our Collective Bargaining Agreement. We will vigorously defend Darius' rights."
The Blazers sent an email to rival team executives late Thursday threatening legal action to any franchise that signs Miles for the "purpose of adversely impacting the Portland Trail Blazers' salary cap and tax positions."
The email cites Wednesday's Yahoo! Sports report that if Miles plays in two more games this season, the remaining $18 million on his contract goes back on the Blazers' payroll.
"The Portland Trail Blazers are aware that certain teams may be contemplating signing Darius Miles to a contract for the purpose of adversely impacting the Portland Trail Blazers Salary Cap and tax positions," Blazers president Larry Miller wrote in the email to representatives of every NBA team. "Such conduct by a team would violate its fiduciary duty as an NBA joint venturer. In addition, persons or entities involved in such conduct may be individually liable to the Portland Trail Blazers for tortuously interfering with the Portland Trail Blazers contract rights and perspective economic opportunities.
"Please be aware that if a team engages in such conduct, the Portland Trail Blazers will take all necessary steps to safeguard its rights, including, without limitation, litigation."
Miller told reporters in Portland on Friday that the team was not trying to block Miles' return to the NBA, but sending a message to rivals who wanted to intentionally hurt their financial interests.
"We were hearing a lot of rumblings and rumors that there were teams out there planning to sign Darius Miles specifically and maliciously to hurt our organization," Miller said. "This was our way of responding to that and letting folks know that we were not going to take it sitting down."
An NBA spokesman said the league had no comment on the threat. But the league did notify teams on Friday morning that Miles had cleared waivers and was eligible to be signed to a standard contract.
"Any such contract," the league wrote in the memo, "would be approved by the NBA."
Teams had been under the impression the collective bargaining agreement demanded that Miles play 10 regular-season or postseason games for the $18 million – which is split evenly between this and next season – to return to the Blazers' payroll. But the league office confirmed to Yahoo! Sports that the six preseason games that Miles played for the Boston Celtics counts toward the 10. Before the Grizzlies waived him on Tuesday night to avoid guaranteeing his contract for the rest of the season, Miles played two regular-season games that pushed him to eight total.
"They're daring someone to sign him now," said one Western Conference GM who had seen the email from the Blazers.
If the Grizzlies play Miles two more games, they will punch out one of the summer's top free-agent destinations. The Blazers are a prime destination for free agents, and the cap space also made them a fierce competitor for sign-and-trade deals. If Miles returns to the salary cap, he also will push Portland into the luxury tax. That means every team under the tax would benefit with about $250,000 of revenue sharing from Portland.
"The point that everybody is missing is that this isn't about Portland's salary cap. It's about whether this guy [Miles] is healthy enough to play or not," said an Eastern Conference executive. "He obviously is healthy enough to play. It doesn't matter how good he plays. He can still play, and they said he couldn't.
"Portland received benefits when [Miles'] injury was ruled career-ending. If he can play, they don't deserve to have those benefits."