An appeals court in Hawaii has delivered a significant legal victory to the NCAA, which was sued by a sports marketing company after it failed to certify a bowl game.
The events leading up to the dispute occurred more than a decade ago when Aloha Sports Inc. sold the Oahu Bowl to a new sponsoring entity, Pro Sports Entertainment, which planned to move the game to the mainland and call the contest The Seattle Bowl.
The deal, however, was contingent upon completion of the outcome of the NCAA’s certification process. After the NCAA released its list of bowl games for the coming year without including The Seattle Bowl, Aloha Sports was unable to execute the deal and soon after filed a lawsuit against the NCAA.
The two parties engaged in a decade-long legal battle involving antitrust, contract, and unfair competition theories, which spanned both federal and state courts.
On September 19, 2011, a Honolulu jury ruled in favor of the NCAA. On January 12, 2012, the circuit court entered a “Final Judgment” in favor of the NCAA. On January 23, 2012, Aloha filed a motion to vacate the final judgment and for a new trial. On January 31, 2012, the NCAA filed a motion for attorneys’ fees and costs. On May 8, 2012, the circuit court entered an order denying Aloha’s motion to vacate final judgment. On May 23, 2012, Aloha appealed, alleging that the circuit court erred when it:
(1) dismissed part of Aloha’s claim brought under Hawaii Revised Statutes (HRS) § 480-2 (1993) (unfair competition claim) on the grounds that it was barred by res judicata;
(2) dismissed part of Aloha’s unfair competition claim after finding Aloha lacked standing;
(3) dismissed part of Aloha’s unfair competition claim after finding it lacked a factual basis;
(4) admitted testimony from a NCAA witness despite objection for impermissible conclusion; and
(5) denied Aloha’s motion for new trial under Hawaii Rules of Civil Procedure (HRCP) Rule 60(b) and HRCP Rule 59, concluding that the newly submitted evidence would only serve to impeach or contradict a witness.
On the first point, the appeals court noted that the plaintiff’s Sherman Act and HRS claims arise from “the same nucleus of operative facts. These claims, as the circuit court found, were based on a conspiracy or combination to require bowl-sponsoring agencies to comply with the minimum payout obligation, which allegedly produced unfair methods of competition. Moreover, the applicable federal and state laws are effectively identical.
“All claims arising from an injury must be raised in a single action or they will be barred by res judicata, even if some claims arise under state law and some arise under federal law. See Silver v. Queen’s Hospital, 63 Haw. 430, 437, 629 P.2d 1116, 1122 (1981). The claims are thus identical, satisfying the first element for res judicata.
“The second element for res judicata asks whether the prior adjudication was a final judgment on the merits. The federal court granted Aloha’s motion to voluntarily dismiss the Sherman Act claim with prejudice. Under federal and Hawai’i law, a voluntary dismissal with prejudice constitutes a final judgment on the merits. See Concha v. London, 62 F.3d 1493, 1506 (9th Cir. 1995); Matter of Herbert M. Dowsett Trust, 7 Haw. App. 640, 645, 791 P.2d 398, 402 (1990). As such, the voluntary dismissal of Aloha’s Sherman Act claim constitutes a final judgment.
“The federal court’s dismissal of Aloha’s HRS claim without prejudice is of no consequence. The HRS claim, even if raised in state court for the first time, is barred by res judicata because it is identical to the previously adjudicated Sherman Act claim.
“The third res judicata element is clearly satisfied. The parties in both federal court and circuit court actions are the same. Because the circuit court action raised identical claims that were previously adjudicated on the merits between the same parties, the circuit court did not err by finding Aloha’s unfair competition claims against NCAA were barred by res judicata.”
The appeals court also agreed with the NCAA on Aloha’s appeal of the circuit court’s decision that Aloha lacked standing to pursue its unfair competition claim against the NCAA, agreeing with the lower court that the timing of the filing meant “Aloha had no private right of action.”
As for the determination that Aloha’s claim should be dismissed for lack of factual basis, the court agreed with Aloha that the court erred. The plaintiff’s complaint “provides a factual basis for Aloha’s claim that de-certification was an unfair method of competition in the Pro Sports transaction. Reviewing the motion to dismiss in light most favorable to Aloha, and accepting all factual allegations as true, the circuit court erred in dismissing Aloha’s claim for lack of factual basis.”
The appeals court sided with the NCAA on the next appeal, which involved the admissibility of NCAA Post-Season Football Certification Committee Chairman Tim Curley’s testimony.
“The circuit court did not abuse its discretion by allowing the opinion testimony because Curley testified from first-hand knowledge of observed facts and the opinion was helpful to the jury’s understanding of the committee process,” wrote the court. “Based on his experience during the Aloha Bowl certification process, Curley opined about the committee’s treatment of Aloha during the re-certification process for the Aloha/San Francisco Bowl in April 2001. The jury had great latitude in determining whether the NCAA engaged in unfair competition. Curley’s testimony was not an impermissible conclusion and did not invade the province of the jury.”
The next appeal, based on the court’s decision not to grant a new trial, was provocative in that it tried to draw in the scandal at Penn State University.
During introductory questions posed to Curley, then the athletic director at Penn State, he was asked how Joe Paterno was doing. “He’s doing well, he’s doing well,” said Curley. Aloha alleged Curley made a false statement that prevented Aloha from presenting its case to the jury.
The appeals court disagreed, noting that the Penn State scandal “bore no relevance to the instant case and evidence from that scandal was neither material nor controlling in this present matter.”
Aloha Sports INC., a Hawai’i corp. v. NCAA; Inter. Ct. App. Hawaii; NO. CAAP-12-0000512, 2013 Haw. App. LEXIS 616; 10/30/13
