A panel of judges on the 6th U.S. Circuit Court of Appeals has affirmed a summary judgment ruling of a district court, which found the Cincinnati Reds and the City of Dayton were within their legal rights to thwart the efforts of a would-be owner of a Class A minor league baseball franchise in the suburbs of Dayton.
Dayton was one of the most sought-after markets in the country for minor league baseball teams in the mid-1990s. But to locate a team there, a would-be owner had to obtain a territorial waiver from the “local” major league team – in this case the Reds – under the rules and agreements of Major League Baseball (MLB) and the entity that governs minor league baseball, the National Association of Baseball Leagues, Inc. (NAPBLI).
John L. Allen was the person designated by MLB to make the decision about whether the Reds would grant a territorial waiver.
Beginning in 1996, two separate groups approached Allen and expressed an interest in purchasing and moving a minor league baseball team to Dayton: one (SSI) that wanted to put a team in the suburbs of Dayton and another (DDP), which had the support of the City, that wanted to place a team in the City’s downtown.
The court wrote that throughout the discussions, “Allen made clear that the Reds would only grant a waiver to a group if the group (1) reflected the Reds’ commitment to achieving minority participation in team ownership; (2) had an achievable and realistic plan to finance a new stadium; and (3) had a team to put in the stadium. The team, moreover, had to become a minor league affiliate of the Reds.”
In 1997, SSI agreed to purchase a team that it planned to relocate. It also gave Rock Newman, an African-American, a controlling interest in the club.
At the same time, the Reds’ Allen was moving down the path with DDP. Ultimately, Newman met with the would-be owner of the downtown team to work on a compromise. The meeting ended without an agreement.
Allen and the Reds granted a conditional waiver to DDP in 1997. His rationale, given in an affidavit, was that the principals in that group “had an excellent reputation and a proven track record as operators of a very successful Midwest team, the Lansing Lugnuts, which was in a market similar to Dayton. They also “had the overwhelming support of the Dayton financial, business, and governmental communities.” Finally, Allen believed that the group “would offer more long-term ownership stability and would more likely be able to achieve a realistic stadium financing plan.”
Even so, that deal fell apart because DDP “had difficulties acquiring the necessary approvals from the baseball authorities, largely because of the dual ownership issue.” In 1998, a corporate suitor — Mandalay Sports Entertainment – emerged, having bought the assets of the Rockford Cubbies. Mandalay worked out a deal with the City to bring baseball to downtown Dayton.
Later that year, SSI and Newman filed a nine-count complaint against 27 defendants, including the City of Dayton and the Reds. Among other things, the plaintiffs sued the Reds for: (1) tortious interference with existing and prospective contractual and business relations (Count III); (2) civil conspiracy (Count V); (3) promissory estoppel (Count VII); (4) contract discrimination in violation of 42 U.S.C. § 1981 (Count VIII); and conspiracy to discriminate in violation of 42 U.S.C. § 1985 (Count EX). Plaintiffs sued the City of Dayton for: (1) tortious interference with existing and prospective contractual and business relations (Count III); (2) detrimental reliance (Count IV); (3) civil conspiracy (Count V); (4) contract discrimination in violation of 42 U.S.C. § 1981 (Count VIII); and conspiracy to discriminate in violation of 42 U.S.C. § 1985 (Count IX).
The City and the Reds successfully moved for summary judgment as to all claims. The plaintiffs appealed on October 6, 2005.
The court addressed the plaintiffs’ § 1981, civil conspiracy and § 1985 conspiracy, promissory estoppel, and tortious interference claims,
“The plaintiffs appear to challenge the district court’s conclusion that (they) failed to demonstrate pretext. The record, however, more than adequately supports that district court’s decision in this regard. The evidence demonstrates, for example, that the DDP is comprised of Dayton’s business and civic leaders, including the City’s mayor; that the DDP’s Baseball Task Force led the effort to bring a minor league team to downtown Dayton; that the DDP selected (an ownership group) over plaintiffs as its partner in bringing baseball to downtown Dayton; that the DDP selected the group following an extensive review of several groups, including plaintiffs; and that community leaders expressed their enthusiasm to Allen about the DDP’s plan to bring baseball to Dayton through a partnership with (the group). Plaintiffs produced little if anything to challenge Allen’s quite understandable desire to work with an ownership group that had the support of the DDP and its membership of business and community leaders.
“In addition, plaintiffs offered no evidence to refute Allen’s belief that ownership stability could become an issue with SSI, based on SSI’s history of buying and selling minor league franchises. … The record is clear that the Reds wanted franchise stability, and Plaintiffs presented nothing to undermine the legitimacy of Allen’s belief that the DDP-backed group was a safer bet for achieving that stability.
“Plaintiffs, moreover, failed to refute Allen’s belief that the stadium financing plan proposed by (the group), a plan that then included both actual and near commitments of significant public funds, was more realistic and achievable than SSI’s largely vague and speculative financing plan.”
“Finally, of particular relevance to their claim of race discrimination, plaintiffs failed to controvert the Reds’ evidence that diversity in team ownership was significant to the Reds’ organization; that the Reds expected every group interested in locating a minor league team in Dayton, including the DDP-backed group, to include African Americans in the team’s “ownership, employment and other matters;” that the DDP acknowledged and addressed the Reds’ interest in diversity by seeking the financial participation of African Americans; and that African Americans (Archie Griffin and Magic Johnson) are, in fact, part owners of the Reds minor league team that ultimately settled in Dayton. Such evidence greatly undermines plaintiffs’ claim that the Reds discriminated against them on the basis of race.”
Baseball at Trotwood, LLC et al. v. Dayton Professional Baseball Club, LLC, et al.; 6th Cir.; No. 05-4295, 2006 U.S. App. LEXIS 27584; 11/7/06
Attorneys of Record: (for plaintiff-appellant) Anne Frayne, Myers & Frayne, Dayton, OH. (for defendant-appellee Cincinnati Reds) James E. Burke, III, Jason M. Cohen, Keating, Muething & Klekamp, Cincinnati, OH. (for defendant-appellee City of Dayton) Wayne E. Waite, Neil F. Freund, Lisa A. Hesse, Freund, Freeze & Arnold, Dayton, OH.
