Baseball at Trotwood, LLC v. Dayton Professional Baseball Club, LLC

204 F. App'x 528
CourtCourt of Appeals for the Sixth Circuit
DecidedNovember 7, 2006
Docket05-4295
StatusUnpublished
Cited by8 cases

This text of 204 F. App'x 528 (Baseball at Trotwood, LLC v. Dayton Professional Baseball Club, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Baseball at Trotwood, LLC v. Dayton Professional Baseball Club, LLC, 204 F. App'x 528 (6th Cir. 2006).

Opinion

STAFFORD, District Judge.

Plaintiffs, Baseball at Trotwood, LLC (“BAT”), Rock Newman, Inc. (“RNI”), and Sports Spectrum, Inc. (“SSI”) (collectively, “Plaintiffs”), appeal the district court’s entry of summary judgment for The Cincinnati Reds, LLC (“Reds”) and the City of Dayton, Ohio, (“Dayton” or “City”) (collectively, “Defendants”) in this action arising from Plaintiffs’ unsuccessful effort to locate a Class A minor league baseball franchise in Dayton, Ohio. We AFFIRM.

I. BACKGROUND

A. Factual

By the mid-1990s, Dayton had become one of the most sought-after markets in the country for minor league baseball teams seeking to relocate. 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”), a would-be owner of a minor league team must obtain a territorial waiver from the “local” major league team before locating a minor league team in a new locale. The territorial rights to the Dayton market are owned by the Reds. At all times relevant to this lawsuit, John L. Allen (“Allen”) was the person designated by MLB to make the decision about whether the Reds would grant a territorial waiver.

Starting in 1996, two separate groups approached Allen and expressed an interest in purchasing and moving a minor league baseball team to Dayton: a group from SSI, including principals Matt Perry (“Perry”) and Richard Ehrenreich (“Ehrenreieh”), and a group led by husband and wife Tom Dickson (“Dickson”) and Sherrie Myers (“Myers”). Each group wanted the Reds to grant it a territorial waiver. Throughout 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 addition to obtaining a territorial waiver from the Reds, a would-be owner of a Dayton-based minor league team had to survive a rigorous approval process by MLB, by NAPBLI, and by the Midwest League of Professional Baseball Clubs, Inc. (“Midwest League” or “League”), a Class A minor league that operates in the geographical area encompassing Dayton and several abutting and non-abutting states to the west and northwest. Specifically, to purchase a team within the Midwest League, a would-be owner must file a Control Interest Transfer Application (“CIT”) with the League. The CIT must identify all prospective investors in the team to be purchased and must provide evidence of the owner’s plans to finance and operate a team. If approved by the League after intensive review, the CIT is forwarded to NAPBLI for its consider *531 ation, which in turn forwards it to MLB for its evaluation and recommendation. The ultimate decision rests with NAPBLI, but NAPBLI cannot act until it has received MLB’s recommendation.

A related process exists on the seller’s end of a transaction that results in the relocation of a team to another city. In essence, the seller of an existing team must submit an Application for Relocation (“AFR”) to the Midwest League. That application must be approved first by the Midwest League, then by NAPBLI and by MLB.

In 1996, having learned that Dayton and the Downtown Dayton Partnership (“DDP”) 1 had formed a task force to explore options for bringing a minor league team to downtown Dayton, Dickson, then owner of a Midwest League minor league franchise located in Lansing, Michigan, contacted City officials and the DDP. Dickson was not at the time seeking to move his Lansing team, the Lansing Lugnuts (“Lugnuts”), to Dayton. Instead, he and his wife sought to operate, either individually or in concert, both a Dayton team and the Lugnuts, provided they could do so without violating the League’s rule prohibiting anyone with an ownership, management, or employment interest in one team from having an ownership or proprietary interest in any other team in the same league.

In early January 1997, SSI executed an option to purchase the Michigan Battle Cats (“Battle Cats”), an existing team in the Midwest League. On January 13, 1997, SSI talked with Allen, informing Allen about its option to purchase the Battle Cats, and again discussing the waiver. According to SSI, Allen told Perry and Ehrenreich that if the Reds waived its protected territory, which it was not obligated to do, the waiver would benefit SSI exclusively. SSI also approached the DDP at or about the same time, discussing options for locating a minor league team in downtown Dayton. Given Allen’s purported promise to SSI, SSI was not concerned that it might be competing with other groups for the privilege of locating a team in Dayton.

On March 7, 1997, relying on Allen’s purported promise, SSI executed a Memorandum of Understanding (“MOU”) with Hara Complex, Inc. (“Hara”) for a stadium project in Trotwood, a suburb on the north side of Dayton. On March 21, 1997, SSI bought the Battle Cats for $3,300,000, executing an asset purchase agreement to that effect and paying a non-refundable earnest money deposit of $495,000.

In the meantime, the DDP selected Dickson and Myers as the City’s partner in bringing baseball to downtown Dayton. On March 28, 1997, the DDP formalized that selection by signing a binding MOU with Dickson and Myers to that effect. On April 10, 1997, Dickson wrote to Allen, confirming that DDP had selected Dickson and Myers over SSI in the bid for locating a minor league baseball team in downtown Dayton. At Allen’s direction, DDP, Dickson, and Myers thereafter met with Marge Schott, then owner of the Reds, regarding a waiver. Notably, the DDP’s selection of Dickson and Myers did not affect SSI’s continuing efforts to locate a team in Trot-wood.

On April 15, 1997, SSI and Rock Newman (“Newman”), an African-American and sole shareholder of RNI, agreed that Newman would purchase a controlling interest in the Battle Cats, the team that *532 SSI was still attempting to bring to Trot-wood, provided SSI’s effort to relocate the team succeeded. A few days later, an SSI representative wrote to Allen, advising Allen that SSI had sold a majority interest of its team to an African-American. The name of the African-American was not disclosed to Allen until some months later.

By letter dated May 30, 1997, after months of discussions with various parties, Allen advised the DDP that the Reds would “consider waiving its territorial rights for a major league affiliated minor league baseball team to play in Downtown Dayton provided certain conditions are met.” J.A. at 708. Specifically, Allen wrote:

In order to waive the Reds territorial rights to permit a downtown minor league baseball team, at least the following conditions need to be met by August 15, 1997 and until then the Cincinnati Reds will work exclusively with the Downtown Dayton Partnership:

• An agreement to purchase an acceptable Midwest League Team (A level) and relocate it to Dayton by April 1999....

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Bluebook (online)
204 F. App'x 528, Counsel Stack Legal Research, https://law.counselstack.com/opinion/baseball-at-trotwood-llc-v-dayton-professional-baseball-club-llc-ca6-2006.