23 F.3d 1110 (6th Cir. 1994), 93-3884, Reynolds v. International Amateur Athletic Federation

Docket Nº:93-3884.
Citation:23 F.3d 1110
Party Name:Harry L. REYNOLDS, Jr., Plaintiff-Appellee, v. INTERNATIONAL AMATEUR ATHLETIC FEDERATION, Defendant-Appellant, The Athletic Congress, et al., Defendants.
Case Date:May 17, 1994
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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Page 1110

23 F.3d 1110 (6th Cir. 1994)

Harry L. REYNOLDS, Jr., Plaintiff-Appellee,

v.

INTERNATIONAL AMATEUR ATHLETIC FEDERATION, Defendant-Appellant,

The Athletic Congress, et al., Defendants.

No. 93-3884.

United States Court of Appeals, Sixth Circuit

May 17, 1994

Argued March 10, 1994.

Rehearing and Suggestion for Rehearing En Banc Denied July 7, 1994.

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David J. Young, John R. Gall (argued and briefed), and Philomena M. Dane, Squire, Sanders & Dempsey, Columbus, OH, for plaintiff-appellee.

Eugene D. Gulland (argued and briefed), Martin Wald, Covington & Burling, Washington, DC, and Charles R. Saxbe, Chester, Hoffman, Willcox & Saxbe, Columbus, OH, for defendant-appellant.

Before: KENNEDY and MILBURN, Circuit Judges; and LIVELY, Senior Circuit Judge.

LIVELY, Senior Circuit Judge.

The International Amateur Athletic Federation (IAAF) appeals the district court's denial

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of its motion to quash garnishment proceedings and vacate a default judgment and permanent injunction previously entered by the district court. As it did before the district court, the IAAF argues on appeal that the district court had neither subject matter jurisdiction nor personal jurisdiction over the IAAF in the proceedings resulting in the default judgment and permanent injunction.

I.

A.

Harry "Butch" Reynolds is a world-class sprinter who regularly participates in international track and field meets. Reynolds currently holds the individual world record in the 400 meters, is a member of the world record holding 4X400 relay team, and is a gold and silver medalist from the 1988 Olympics.

On August 12, 1990, Reynolds ran in the "Hercules '90" meet in Monte Carlo, Monaco. Immediately after the competition, Reynolds was tested for illegal performance-enhancing drugs as part of a random drug test conducted after all international track meets. Two different samples of Reynolds' urine were sent to Paris for analysis. Each sample contained trace amounts of the steroid Nandrolone, a drug banned by international track regulations created by the IAAF.

The IAAF is an unincorporated association based in London, England, and is made up of track and field organizations representing 205 nations and territories. Its purpose is to coordinate and control track and field athletes and competitions throughout the world. The IAAF has no offices in the United States, and holds no track meets in Ohio, where Reynolds brought this action. One member of the IAAF is The Athletics Congress of the United States, Inc. (TAC), the United States national governing body for track and field. 1

After Reynolds' positive drug test, the IAAF banned him from all international track events for two years, thereby eliminating his hopes for competing in the 1992 Olympics in Barcelona.

The IAAF issued a press release on November 5, 1990, stating that Reynolds was tested following the Monte Carlo meet and that "[t]he Paris laboratory revealed metabolites of the banned substance Nandrolone and a second analysis carried out on the 12th October 1990 confirmed their presence." The release went on to say that Reynolds had been suspended and offered a hearing by TAC, the date of which had not been set. American sports publications and newspapers picked up the release and reported Reynolds' suspension as news items.

B.

Reynolds immediately brought suit in the Southern District of Ohio, arguing that the drug test was given negligently, and provided an erroneous result. The court dismissed one claim and stayed the remainder of the case after finding that Reynolds failed to exhaust administrative remedies provided by the Amateur Sports Act, 36 U.S.C. Secs. 371-396 (1988) and TAC. Reynolds appealed the district court's decision. This court agreed with the exhaustion requirement but vacated the judgment and directed that the entire case be dismissed for lack of subject matter jurisdiction. Reynolds v. TAC, 935 F.2d 270 (6th Cir.1991)(Table).

In an attempt to exhaust his administrative remedies, Reynolds participated in an independent arbitration before an AAA panel in June of 1991. Reynolds took this action under the Amateur Sports Act and the United States Olympic Committee Constitution. The AAA arbitrator rendered a decision fully exonerating Reynolds; the arbitrator found strong evidence that the urine samples provided to the Paris laboratory were not Reynolds'. However, the IAAF refused to acknowledge the arbitrator's decision because the arbitration was not conducted under IAAF rules. Accordingly, the IAAF refused to lift Reynolds' two year suspension.

Reynolds then appealed his suspension to TAC, as required by IAAF rules. TAC held

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a hearing on September 13, 1991. After thoroughly examining the evidence and deliberating for two weeks, the TAC Doping Control Review Board completely exonerated Reynolds, stating that

after hearing the matters before it, the testimony of witnesses and expert witnesses of both sides, documents and exhibits, [we] find that Mr. Harry "Butch" Reynolds has cast substantial doubt on the validity of the drug test attributed to him.

Still not satisfied, the IAAF reopened Reynolds' case pursuant to IAAF Rule 20(3)(ii), which allows the IAAF to conduct an independent arbitration where it appears that one of its member foundations such as TAC has "misdirected itself." The IAAF arbitration was held on May 10 and 11, 1992, in London, England (the London Arbitration). The parties to the arbitration proceeding were the IAAF and TAC. Reynolds attended and testified at the hearing, and Reynolds' attorneys participated in the proceedings before the IAAF arbitration board, including examining and cross-examining witnesses. At the conclusion of the hearing, the IAAF arbitral panel found that the drug tests were valid, and that there was "no doubt" as to Reynolds' guilt. As a result, the panel upheld Reynolds' two year suspension.

II.

A.

Soon after the IAAF made its final decision, Reynolds filed the present action in the Southern District of Ohio alleging four different state law causes of action: breach of contract, breach of contractual due process, defamation, and tortious interference with business relations. Reynolds sought monetary damages, and a temporary restraining order that would allow him to compete in races leading to the U.S. Olympic trials on June 20, 1992. The IAAF refused to appear in the case, stating in a letter to Reynolds' attorney that the district court had no jurisdiction over the IAAF. The district court issued a temporary restraining order that prevented the IAAF from interfering with Reynolds' attempt to make the Olympic tryouts. Despite IAAF threats to both Reynolds and TAC, Reynolds ran in a few races and qualified to compete in the U.S. Olympic trials in New Orleans.

On June 17, 1992, the district court held a preliminary injunction hearing to decide if Reynolds should compete in the June 20 Olympic trials. The IAAF refused to appear, but TAC intervened to oppose Reynolds. On June 19, the district court issued a preliminary injunction after finding that it had personal jurisdiction over the IAAF and that Reynolds was likely to succeed on the merits of his claims. That afternoon, TAC filed a motion with the Sixth Circuit Court of Appeals, asking for an emergency stay of the district court's decision. At 7:00 that evening, Judge Siler granted the stay. Reynolds v. IAAF, 968 F.2d 1216 (6th Cir.1992)(Table). The next morning, Reynolds filed an emergency motion with Supreme Court Justice John Paul Stevens, asking for an order vacating Judge Siler's emergency stay. Justice Stevens granted Reynolds' request, finding that the District Court's opinion was "persuasive." Reynolds v. IAAF, --- U.S. ----, 112 S.Ct. 2512, 120 L.Ed.2d 861 (1992).

Despite these rulings, the IAAF announced that every athlete who competed with Reynolds at the U.S. Olympic trials would be ineligible to compete in the Barcelona Olympics. Reynolds' events were temporarily postponed while TAC filed an application to the full Supreme Court to vacate Justice Stevens' stay. The Court denied TAC's request, and Reynolds was eventually allowed to compete in the Olympic trials, after an agreement was reached between the U.S. Olympic Committee and the IAAF. Reynolds made the Olympic team as an alternate for the 400 meter relay. However, the IAAF refused to let Reynolds compete at the 1992 Olympics, and TAC removed him from the U.S. Olympic team roster. Moreover, the IAAF increased Reynolds' two year suspension by four months as punishment for participating in the U.S. Olympic trials.

B.

On September 28, 1992, Reynolds filed a supplemental complaint with the district court, outlining the above events. The IAAF

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did not respond to Reynolds' complaint and TAC did not appear in the default proceedings. After the IAAF was given full notice, the court entered a default judgment in Reynolds' favor. Soon afterward, the district court held a hearing to determine damages. Again, the IAAF was provided notice but refused to appear. On December 3, 1992, the district court issued an opinion awarding Reynolds $27,356,008, including treble punitive damages. The district court found that the IAAF "acted with ill will and a spirit of revenge towards Mr. Reynolds." Particular acts by the IAAF cited by the district court included "the suppression of evidence, threats levied against Reynolds and his fellow athletes, and the extension of Reynolds' suspension for an additional four months." More than $20,000,000 of the award was punitive damages for these acts.

The district court found that it had diversity jurisdiction in this case because Reynolds is a citizen of Ohio and the IAAF is a foreign association. The IAAF is an unincorporated association, and the district court reasoned that the IAAF is deemed to be a citizen of all states where its members are domiciled. United Steelworkers of America v. R.H....

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