Kentucky Speedway Notches Discovery Victories in Antitrust Suit Against NASCAR

Mar 2, 2007

A federal judge in the Eastern District of Kentucky has granted various discovery motions filed by the Kentucky Speedway, LLC, which is suing NASCAR and the International Speedway Corporation (ISC) for antitrust violations.
The Kentucky Speedway sued NASCAR and the ISC in 2005, claiming that the defendants conspired to assure that the majority of NASCAR’s races were awarded to ISC racetracks, so that ISC racetracks receive the greatest financial benefit from NASCAR-sanctioned racing events.
The Plaintiff had also alleged that NASCAR and ISC “have instituted policies and procedures that have the purpose and effect of restraining the ability of non-ISC racetracks to develop competing products by scheduling and realigning NASCAR NEXTEL Cup Series races to maximize current revenue to ISC racetracks and injure competing racetracks, such as Kentucky Speedway.”
In addition, the Kentucky Speedway claimed that the defendants acted in the manner in which they did because they have both a personal and financial interest in conspiring with one another, since NASCAR is the beneficial owner of more than 10 percent of ISC stock, and the two companies, while distinct legal entities, share or have shared common officers.
Finally, the plaintiff argued that:
• “absent NASCAR’s and ISC’s illegal conduct, NASCAR fans would be paying lower ticket prices and have more options to watch their favorite drivers;
• “the sponsors would have more options to sponsor premium stock car races at lower prices;
• “NASCAR and ISC’s illegal conduct drives down the driver’s income due to monopoly power and limits driver safety and choice by limiting the number of venues where drivers choose to compete; and
• “absent the alleged conduct of NASCAR and ISC, television and radio broadcasters would have more options to televise or broadcast premium stock car races at lower costs, and independent racetracks would either have the ability to host NEXTEL Cup Series or host their own competing premium stock car races.”
The Kentucky Speedway is seeking an injunction “to cease NASCAR’s monopolization activity, to require NASCAR to eliminate or modify its rules and practices to permit full and fair competition in the right to host premium stock car races, to require NASCAR to institute a competitive bidding process for the NEXTEL Cup Series Races, and to award Kentucky Speedway a NASCAR NEXTEL Cup Series race for the year 2006 and each year thereafter.”
The plaintiff is seeking damages in excess of $400 million.
Defendants Challenge Discovery Motions
Among the motions that were in dispute was the plaintiff’s motion to compel Mike Helton, NASCAR president, to answer questions regarding his total compensation. While the defendants’ argued that the information was irrelevant, the court disagreed, finding “that the compensation of the referenced witness may be relevant to show bias. See e.g., Hayes v. Compass Group U.S.A., Inc., 202 F.R.D. 363 (D. Conn. 2001). However, due to the sensitivity of the information, it must be treated by the parties as ‘highly confidential’ under the existing protective order.”
Second, the plaintiff moved to compel the disclosure of certain financial documents, an argument it had lost a few months later, which it subsequently refilled. This time the court found that the plaintiff had carried the burden to show the relevance of the requested information. Specifically, it found that plaintiff “has now carried that burden in part with respect to market definition. The defendant disputes plaintiff’s definitions of the market in question. Plaintiff argues persuasively at this juncture that revenues, expenses, and other financial information relating to at least some of NASCAR’s businesses outside of the NEXTEL Cup is relevant to define and distinguish premium stock car racing from other motorsports within and outside NASCAR. See e.g., International Boxing Club of N. Y., Inc. v. United States, 358 U.S. 242, 79 S. Ct. 245, 3 L. Ed. 2d 270 (1959) (comparing revenues from championship boxing contests to revenues from non-championship boxing programs to define relevant market as championship contests); NCAA v. Board of Regents of University of Oklahoma, 468 U.S. 85, 104 S. Ct. 2948, 82 L. Ed. 2d 70 (1984)(defining college football as separate market by reviewing broad information relating to broadcasters, advertisers and viewers).
“Despite carrying its burden to show the relevance of some of the financial data it seeks, plaintiff still falls short of carrying its burden to show the relevancy of the broad financial information plaintiff seeks relating to ISC. Plaintiff argues that the additional information might be relevant to demonstrate additional interrelationships between NASCAR and ISC. In light of the breadth of the requests and the sensitivity of the information and the fact that much information is already of public record through public filings by ISC, the court declines to require production outside of information previously produced relating to the premium stock car racing market.
“In addition, because plaintiff has barely crossed the threshold of making the showing of relevance required for production of such sensitive records at this time to better define the relevant market, the court will limit plaintiff to documents from no more than three calendar years, not to include data prior to 1997. If upon further analysis of this sampling of documents, plaintiff and plaintiff’s expert are able to make a much stronger showing of relevance, the court will reconsider plaintiff’s request for additional documents. All the financial information ordered to be produced by this Memorandum Order is subject to the previously entered protective order.”
Third, the plaintiff sought to compel four categories of documents which NASCAR and ISC have refused to produce: 1) documents in ISC’s possession prior to 1997; 2) documents in ISC’s possession concerning the formation of a joint venture with a non-party; 3) metadata concerning author and document creation information from ISC; and 4) documents relating to a prior antitrust case, Ferko v. Nascar, et al.
In a provocative argument, the defendant ISC accused the plaintiff “of engaging in a deliberate strategy ‘by exponentially increasing the time and money ISC must pay if it is to comply’ with discovery requests, in order to make discovery so expensive that the defendant will be forced into settlement. ISC bases its accusation upon a comment made by plaintiff’s banker in a commercial and industrial underwriting analysis: ‘one of the more likely outcomes of the suit is that the discovery phase continues for a period of time Until it becomes too uncomfortable for ISC and NASCAR and an offer is made to purchase the track. …’”
The court concluded otherwise, while promising that “should additional or stronger evidence of ill motive arise, the court may revisit this issue.”
Kentucky Speedway, LLC v. National Association of Stock Car Auto Racing, Inc. et al.; E.D.KY.; CIVIL ACTION NO. 05-138-WOB, 2006 U.S. Dist. LEXIS 92028; 12/18/06
Attorneys of Record: (for plaintiff) Arthur R. Miller, Harvard Law School, Cambridge, MA, US.; Fay E. Stilz, James Rubin Cummins, Paul M. DeMarco, Stanley M. Chesley, Waite, Schneider, Bayless & Chesley Co., LPA, Cincinnati, OH.; Justin A. Nelson, Susman Godfrey, L.L.P., Seattle, WA.; Stephen D. Susman, Vineet Bhatia, Susman Godfrey, L.L.P., Houston, TX.; W. B. Markovits, Markovits & Greiwe Co., LPA, Cincinnati, OH.; Mark D. Guilfoyle, Deters, Benzinger & LaVelle, P.S.C. – Crestview Hills, Crestview Hills, KY. (for defendant NASCAR) Helen M. Maher, Boies, Schiller & Flexner LLP – New York, Armonk, NY.; Kimberly S. Amrine, Matthew C. Blickensderfer, Frost Brown Todd LLC – Cincinnati, Cincinnati, OH.; Sheryl G. Snyder, Frost Brown Todd LLC – Louisville, Louisville, KY.; Stuart H. Singer, Boies, Schiller & Flexner, LLP – Fort Lauderdale, Fort Lauderdale, FL. (for defendant International Speedway Corporation) Chris W. Brophy, Guy I. Wade, III, Melissa J. Swindle, Rodney Acker, Jenkens & Gilchrist, P.C. – Dallas, Dallas, TX.; G. Jack Donson, Taft, Stettinius & Hollister, Cincinnati, OH.; Robert B. Craig, Taft, Stettinius & Hollister, LLP – Covington, Covington, KY.


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