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Field v. National Collegiate Athletic Association

Supreme Court of Hawaii

November 20, 2018

DANE S. FIELD, TRUSTEE OF THE BANKRUPTCY ESTATE OF ALOHA SPORTS INC., Petitioner/Plaintiff-Appellant,
v.
THE NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, AN UNINCORPORATED ASSOCIATION, Respondent/Defendant-Appellee.

          CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-15-0000663; CIV NO. 06-1-1832).

          Amy T. Brantly, Frederick W. Rohlfing, III for petitioner.

          Gregory L. Curtner, William C. McCorriston, Jordon J. Kimura for respondent.

          RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.

          OPINION

          POLLACK, J.

         This case arises out of the uncompleted sale of one business to another. The plaintiff alleges that the defendant engaged in an unfair method of competition to terminate the transaction in violation of Hawai'i antitrust law. At issue in this case is what a plaintiff must demonstrate to withstand summary judgment on a claim for an unfair method of competition under Hawaii Revised Statutes (HRS) Chapter 480. In particular, we address the plaintiff's requirement of showing that the defendant's conduct would negatively affect competition or harm fair competition. Consistent with our case law, we conclude that to raise an issue of material fact as to the nature of competition requirement of an unfair method of competition claim following the close of discovery, a plaintiff must demonstrate that the defendant's alleged anticompetitive conduct could negatively affect competition but need not prove that the defendant in fact harmed competition. Further, we reaffirm that in order to withstand summary judgment, a plaintiff may generally describe the relevant market without resort to expert testimony and the plaintiff need not be a competitor of or in competition with the defendant.

         I. BACKGROUND AND PROCEDURAL HISTORY

         A. Factual Background

         The National Collegiate Athletic Association (NCAA) is a non-profit, unincorporated voluntary association of approximately 1, 200 colleges and universities, athletic conferences, and sports organizations. The NCAA regulates and controls Division I-A postseason college football bowl games in which qualifying NCAA Division I-A members may participate. Independent businesses (bowl sponsoring agencies) organize and promote the bowls subject to annual recertification[1] by the NCAA Football Certification Subcommittee (the Subcommittee). The Subcommittee is composed of representatives from NCAA member schools, as well as NCAA staff that serve as non-voting liaisons.

         Aloha Sports, Inc.[2] (Aloha Sports) is a former bowl sponsoring agency that produced Division I-A NCAA postseason college football bowl games. Aloha Sports organized, produced, and promoted the NCAA-certified Aloha Bowl in Honolulu from 1982 to 2000. In 1998, Aloha Sports established and received NCAA certification of the Oahu Bowl and began to promote the two bowl games together. For various reasons unrelated to this appeal, Aloha Sports relocated both bowls to the continental United States following the 2000 season. In the 2001 season, Aloha Sports sought and received NCAA recertification of the Aloha Bowl as the San Francisco Bowl and of the Oahu Bowl as the Seattle Bowl. The Seattle Bowl was also recertified by the NCAA and presented by Aloha Sports during the 2002 season.

         Several concerns arose with the management of the 2002 Seattle Bowl, including failures to timely submit a letter of credit to the NCAA and to make outstanding payments to participating teams and vendors. Subsequently, Aloha Sports decided to sell its business. In February 2003, Aloha Sports signed a letter of intent to transfer ownership and control of its business to Pro Sports & Entertainment, Inc. (Pro Sports) for the sum of $2, 031, 000. The sale was contingent upon NCAA recertification of the Seattle Bowl for the 2003 season. On April 1, 2003, Aloha Sports submitted an application for recertification of the Seattle Bowl for the 2003 season to the NCAA.

         In April 2003, the Subcommittee met over four days to make certification decisions for the 2003 season. At an unknown date, an NCAA internal memorandum titled "Seattle Bowl Issues" was created that provided information regarding the pending Seattle Bowl recertification. The memorandum stated that ongoing issues existed with the management of the Seattle Bowl, including a submission of an inaccurate audit report, a failure to pay the required certification fee, and a late letter of credit. The memorandum also noted the intended sale of Aloha Sports to Pro Sports, including that the sale was contingent upon recertification of the 2003 Seattle Bowl, and listed outstanding debts from the 2002 Seattle Bowl as "Feller Debts" in apparent reference to the president of Pro Sports, Paul Feller. Finally, under a section titled "Penalties" it stated "1) Withhold certification one year. 2) Impose financial penalty - fine up to 50% of gross receipts."

         Paul Feller attended the Subcommittee certification meeting as a potential purchaser of Aloha Sports, along with James Haugh, president of Aloha Sports and executive director of the Seattle Bowl. Terry Daw, owner of Aloha Sports, also participated by phone during the portions of the meeting related to the Seattle Bowl. In a discussion regarding the Seattle Bowl's recertification, Pro Sports presented the Subcommittee with information regarding Pro Sports' plan for addressing outstanding issues from the 2002 Seattle Bowl, as well as the company's financial capacity and relevant experience with event management and promotion. During that meeting, Dennis Poppe, an NCAA staff liaison to the Subcommittee, expressed concerns about Daw's prior management of the Seattle Bowl and sought assurance that Daw would not be involved after a transfer of Aloha Sports to Pro Sports.

         In a second meeting, Poppe and members of the Subcommittee informed Feller, Haugh, and Daw[3] that the Subcommittee had decided to decertify the Seattle Bowl. Haugh was then asked to leave the room, and Feller was privately informed by Poppe and the Subcommittee members that Pro Sports could independently submit an application to certify the Seattle Bowl for the 2004 season.

         The Subcommittee's decision to decertify the Seattle Bowl was formally announced the following day.[4] Following the announcement, Aloha Sports requested that the NCAA instead place the Seattle Bowl on one-year probation as it had done with two other bowl games that had failed to submit timely letters of credit. The NCAA rejected Aloha Sports' request, and the Seattle Bowl was decertified as announced.

         At the time, the NCAA's Postseason Handbook contained conflicting provisions concerning the consequences of a sponsoring agency's nonfulfillment of certification requirements. A new provision added in the 2002-03 Handbook stated, "If a sponsoring agency fails to meet the certification requirements, it shall be placed on probation for one year. If the sponsoring agency has not complied with the requirements by the end of the probationary period, the bowl shall lose its certification."[5] (Emphasis added.) The provision was also included nearly verbatim in two locations on the 2003 bowl recertification application form and in a November 18, 2002 memorandum sent to all executive directors of bowl games. The Handbook also retained a provision from previous years, however, which stated as follows:

If the management of a certified game fails to comply with Bylaw 30.9, the requirement for an audited financial report for the immediate past game, or the NCAA's approved policies and procedures, the subcommittee has the option to withhold certification for the postseason bowl game for one year or fine it a percentage of its gross receipts, not to exceed 50 percent, from the contest involved in the noncompliance, with the amount to be determined by it and approved by the Division I Championships/Competition Cabinet.

         As a result of the NCAA's decertification of the Seattle Bowl, the sale of Aloha Sports to Pro Sports was not completed and the 2003 Seattle Bowl was not held. On October 20, 2005, Aloha Sports filed a complaint and demand for jury trial against the NCAA in the Circuit Court of the First Circuit (circuit court).

         B. 2005-2013 Court Proceedings

         In its second amended complaint, Aloha Sports alleged four causes of action, including multiple unfair method of competition violations under HRS § 480-2 (1993 & Supp. 2002), [6] tortious interference with prospective economic advantage, and two breach of contract claims.[7] Aloha Sports contended that the NCAA violated HRS § 480-2's prohibition on unfair methods of competition by, inter alia, "refusing to permit a transfer of ownership of Plaintiff's NCAA Certified Postseason Football Bowl Games without good cause" (UMOC claim).[8]

         The NCAA filed a motion to dismiss the second amended complaint with prejudice, contending, among other things, that Aloha Sports did not plead sufficient facts to support its UMOC claim. On February 26, 2008, the court entered an order granting in part and denying in part the NCAA's motion, dismissing with prejudice the UMOC claim for the reason cited by the NCAA and dismissing several of Aloha Sports' other claims for relief. (Order Dismissing UMOC Claim).

         The remaining claims proceeded to jury trial in September 2011.[9] On September 8, 2011, at a hearing on a motion in limine prior to trial, Aloha Sports indicated that the intentional interference with prospective economic advantage claim was the sole grounds upon which it wished to proceed, as the company did not believe it was likely to prevail on its remaining claims (including the alleged violations of HRS § 480-2 that had not been previously dismissed) .[10]

         On September 19, 2011, the jury returned a verdict in favor of the NCAA on Aloha Sports' claim for tortious interference with prospective business advantage. On January 12, 2012, the court entered final judgment in favor of the NCAA as to all claims. The final judgment stated that the UMOC claim was dismissed with prejudice pursuant to the February 26, 2008 order. It further stated that claims in the second amended complaint that had been dismissed by the "2/28/08 Dismissal Order"[11] but repeated in the third amended complaint were equally dismissed, and that Aloha Sports' "remaining" HRS § 480-2 claims in the third amended complaint were dismissed with prejudice pursuant to Aloha Sports' September 8, 2011 oral motion.

         After unsuccessfully moving the court to vacate the final judgment and grant a new trial, Aloha Sports filed a notice of appeal from the final judgment and other orders in the case, including specifically from the Order Dismissing UMOC Claim.[12]

         On October 30, 2013, the ICA issued a memorandum opinion.[13] As to the dismissal of the UMOC claim, the ICA found that a factual basis for the claim could be discerned from the facts alleged in the second amended complaint. Specifically, the ICA pointed to the complaint's allegations that the "NCAA knew about the pending sale to Pro Sports and the significance of certification to the pending transaction," and that "the NCAA disrupted the transaction by encouraging Pro Sports to abandon the deal with Aloha and apply for a bowl game independent of Aloha." The ICA held that, if true, these alleged facts would be sufficient to establish that the NCAA employed an unfair method of competition. Accordingly, the ICA vacated the Order Dismissing UMOC Claim and the circuit court's January 12, 2012 final judgment and remanded the case to the circuit court for further proceedings.[14]

         C. Circuit Court Proceedings on Remand

         On remand, the NCAA filed a motion for judgment on the pleadings, or in the alternative, a motion for summary judgment on the UMOC claim (Motion for Summary Judgment) .[15] The NCAA argued that the UMOC claim was barred by collateral estoppel because Aloha Sports relied on the same allegations underlying the UMOC claim to support its claim for tortious interference with prospective business advantage at the jury trial and the jury had decided these factual issues in the NCAA's favor. The NCAA contended that, because the facts were actually litigated, finally decided, and essential to the final judgment, Aloha Sports should be estopped from relitigating them on remand.

         The NCAA also maintained that Aloha Sports was judicially estopped from pursuing the UMOC claim because at the motion in limine hearing on September 8, 2011, Aloha Sports abandoned all claims other than the claim for tortious interference with prospective business advantage and conceded it could not meet the burden of establishing a violation of HRS § 480-2. The NCAA asserted that (1) Aloha Sports' present position was factually incompatible with its prior position; (2) the prior inconsistent position had been accepted by the court; and (3) permitting Aloha Sports to continue to pursue the UMOC claim granted Aloha Sports an unfair advantage.

         As to the merits of the UMOC claim, the NCAA argued that there was no dispute that the NCAA had legitimate business reasons not to certify the 2003 Seattle Bowl, including the 2002 Seattle Bowl's untimely letter of credit and lack of payment to teams and local vendors. The NCAA maintained that discovery had closed and Aloha Sports could not present any evidence that decertification was intended to induce Pro Sports to forgo the contemplated purchase of Aloha Sports. Thus, the NCAA argued, Aloha Sports could not prove that it was harmed as a result of actions by the NCAA that negatively affected competition. The NCAA also contended that it was entitled to summary judgment because Aloha Sports had not presented any facts demonstrating an anti-competitive impact on the bowl game market as a result of the NCAA's alleged actions.

         In its memorandum in opposition, Aloha Sports responded that the UMOC claim was not barred by collateral estoppel because the jury made no specific findings of fact when it decided in the NCAA's favor on the claim for interference with prospective economic advantage. Additionally, Aloha Sports asserted, the elements of an unfair method of competition claim are distinct from those of a claim for interference with prospective economic advantage. Further, Aloha Sports argued, no final judgment existed for purposes of collateral estoppel because it had been vacated by the ICA decision. The UMOC claim was also not barred by judicial estoppel, Aloha Sports contended, because the claim had already been dismissed in February 26, 2008. Therefore, Aloha Sports maintained, the claim could not have been abandoned or conceded at the September 8, 2011 hearing.

         Aloha Sports also argued that it presented sufficient evidence demonstrating that the NCAA denied recertification of the 2003 Seattle Bowl in order to induce Pro Sports to abandon its intent to purchase Aloha Sports. Aloha Sports contended that, contrary to the NCAA's assertion, it did not need to prove that its injury resulted from actions by the NCAA that were harmful to competition to withstand summary judgment.

         On June 9, 2015, the circuit court issued an order granting summary judgment to the NCAA on the UMOC claim (Order Granting Summary Judgment).[16] The court held that Aloha Sports was barred by waiver and judicial estoppel because Aloha Sports had implicitly surrendered the UMOC claim by its statements at the September 8, 2011 hearing. The circuit court reasoned that the UMOC claim required proof of an additional element under this court's precedents and thus would have been more difficult to prevail upon than the alleged HRS § 480-2 violations that Aloha Sports expressly abandoned. Aloha Sports therefore impliedly conceded that it was unable to prove the UMOC claim when it voluntarily dismissed its other HRS § 480-2 claims, the court concluded.

         The circuit court also held that Aloha Sports was collaterally estopped from proceeding on its UMOC claim. The court stated that, because Aloha Sports had not alleged one of the specific violations of HRS § 480-2(a) identified by statute, it fell to the court to identify the elements that must be satisfied to establish an unfair method of competition in this case. The court determined that the alleged unfair method of competition--the NCAA's interference with Aloha Sports' transfer to Pro Sports--was essentially a claim for tortious interference with prospective business advantage, and HRS § 480-2(a) therefore incorporated the elements of a tortious interference claim. Accordingly, the circuit court found that proving facts establishing tortious interference was a prerequisite to proving that the NCAA derivatively violated HRS § 480-2. Because the jury had entered a verdict in favor of the NCAA on the tortious interference claim and a final judgment had been issued, the court concluded that Aloha Sports could not now proceed on an unfair method of competition claim based on the same alleged conduct.

         The court further held that the NCAA had successfully demonstrated that it acted with a legitimate business purpose in denying the recertification of the 2003 Seattle Bowl, that Aloha Sports did not submit any evidence showing that the NCAA acted in an anticompetitive manner, and that Aloha Sports did not demonstrate that its injury resulted from the NCAA's alleged anticompetitive conduct. Final judgment was entered in favor of the NCAA on August 11, 2015, [17] from which Aloha Sports appealed to the ICA.

         D. Second ICA Appeal

         On October 30, 2017, the ICA issued a Summary Disposition Order affirming the circuit court's grant of summary judgment in favor of the NCAA.[18] The ICA held that Aloha Sports failed to present any evidence that the NCAA's alleged conduct affected competition, which was needed to satisfy the nature of competition requirement of a claim for an unfair method of competition in violation of HRS § 480-2(a). Specifically, the ICA held that Aloha Sports failed to (1) specify the relevant market; (2) provide evidence of the anticompetitive effect of the NCAA's conduct on that market; and (3) demonstrate how Aloha Sports, a bowl-sponsoring agency, was in competition with the NCAA. Further, the ICA stated that, in order to prove an anticompetitive effect, it was not sufficient for Aloha Sports to prove harm to its individual business. Rather, Aloha Sports was required to demonstrate an adverse impact to competitive conditions generally within the commercial field in which it was engaged.

         Additionally, the ICA held that the NCAA's conduct was not an unfair competitive act because the 2001-02 Handbook allowed for decertification of a non-compliant bowl, and the NCAA demonstrated that Aloha Sports had not complied with certification requirements pertaining to the 2002 Seattle Bowl.[19]

         Based on its holdings regarding the UMOC claim, the ICA did not reach the other reasons cited by the circuit court for granting summary judgment--waiver, judicial estoppel, and collateral estoppel. The ICA thus affirmed the circuit court's ruling granting NCAA summary judgment on the UMOC claim.[20]

         Aloha Sports timely filed an application for writ of certiorari from the ICA's January 24, 2018 Judgment on Appeal, which this court granted.

         II. STANDARD OF REVIEW

         This court reviews a trial court's grant or denial of summary judgment de novo. Anastasi v. Fid. Nat'l Title Ins. Co., 137 Hawai'i 104, 112, 366 P.3d 160, 168 (2016) (citing Bremer v. Weeks, 104 Hawai'i 43, 51, 85 P.3d 150, 158 (2004)).

         III. DISCUSSION

         On certiorari, Aloha Sports contends that the ICA erred in the evidence it required Aloha Sports to present to withstand summary judgment on its UMOC claim. In light of our resolution of this issue, we also address the circuit court's alternative grounds for granting summary judgment, including that Aloha Sports' claim was waived and that Aloha Sports was judicially and collaterally estopped from ...


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