Mammoth Antitrust Suit Involving NASCAR Will Remain In Kentucky

Feb 24, 2006

A federal judge in the Eastern District of Kentucky has concluded that a lawsuit brought by the Kentucky Speedway, LLC, against NASCAR and the International Speedway Corporation (ISC), alleging federal antitrust violations, should be heard in the Eastern District of Kentucky.
Specifically, the district judge dismissed the defendants’ motion to change venue, finding that “the great public interest in having this dispute decided locally tips the balance in favor of retaining the case here,” despite the fact that the parties had agreed to a forum selection clause that would have transferred the case to Florida in the event of a legal dispute.
The Kentucky Speedway sued NASCAR and the ISC last year, 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.
It 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.”
The plaintiff further 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.
In addition, 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 Move to Change Venue
Shortly after the claim was filed, NASCAR and the ISC moved to change venue. In analyzing their argument, the court noted that the parties have entered into 11 different sanctioning agreements, whereby NASCAR races would be held at the Kentucky Speedway.
The agreements each contain the following clause:
“’With respect to any litigation between the parties regarding the event or this Agreement, venue shall lie solely in Volusia County, Florida, and all parties hereto [*4] consent to service of process by, and the personal and subject jurisdiction of, the state courts in and for Volusia County, Florida.’”
NASCAR argued that the forum selection clause “controls all the allegations of illegal activity, even those claims that do not specifically involve these races.”
The court began its analysis by noting that the 6th U.S. Circuit Court of Appeals has held that a forum selection clause is “not determinative, but merely one factor to be thrown into the balance with other factors.” Kerobo v. Southwestern Clean Fuels Corp, 285 F.3d 531, 535 (6th Cir. 2002).
One of the “other factors” that apparently tipped the balance in the instant case was “the factor of strong public interest and the plaintiffs’ choice of a forum must outweigh the forum selection clauses.
“Auto racing is a national sport. Apparently, a NEXTEL race is the World Series or Super Bowl of that sport. Many members of the local community are fans who have a great interest in having such a race occur locally. Obviously, there would be a great shot in the arm to the local economy that would also result, as well as an enhancement to community prestige. The plaintiff claims, and the defendants have not denied, that the Commonwealth of Kentucky has certain investments or commitments which would be enhanced by having a NEXTEL race at plaintiff’s track.
“The forum selection clauses do not pertain directly to this controversy, although certainly under their terms they are marginally relevant and the present litigation falls within their language. It cannot be denied, however, that they were not entered into with the NEXTEL race in mind, but concerned a series of independent discrete events. Further, NASCAR has enjoyed the greater leverage in imposing the clauses. Lastly, no contracts containing such clauses exist with the co-defendant.
“Therefore, in the opinion of the court, the weight to be given these clauses must yield to that of the other factors mentioned immediately above. Particularly, the court concludes that the great public interest in having this dispute decided locally tips the balance in favor of retaining the case here. In none of the cases cited by the parties or found by the court is the public interest factor as great as it is here.”
Kentucky Speedway, LLC v. National Association of Stock Car Auto Racing, Inc. et al.; E.D.KY.; Civil Action No. 2005-138-WOB; 12/21/05
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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