Mastercard Intern. v. Visa Intern. Service Ass'n

• Decision Date: 18 December 2006
• Docket Number: Docket No. 06-4947-cv(CON).,Docket No. 06-4433-cv (L).
• Citation: 471 F.3d 377
• Parties: MASTERCARD INTERNATIONAL INCORPORATED, Plaintiff-Appellee, Federation Internationale De Football Association, Defendant-Appellee, v. VISA INTERNATIONAL SERVICE ASSOCIATION, INC., Non-Party-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

471 F.3d 377

MASTERCARD INTERNATIONAL INCORPORATED, Plaintiff-Appellee Federation Internationale De Football Association, Defendant-Appellee, v. VISA INTERNATIONAL SERVICE ASSOCIATION, INC., Non-Party-Appellant.

Docket No. 06-4433-cv (L).

Docket No. 06-4947-cv(CON).

United States Court of Appeals, Second Circuit.

Argued: November 3, 2006.

Decided: December 18, 2006.

COPYRIGHT MATERIAL OMITTED

Marc E. Ackerman, White & Case LLP (Daren M. Orzechowski, White & Case LLP, and Jay G. Safer, Lord, Bissell & Brook LLP, on the brief), New York, N.Y. for Non-Party-Appellant.

Martin S. Hyman, Golenbock Eiseman Assor Bell & Peskoe LLP, New York, N.Y. (Adam C. Silverstein, Elizabeth A. Jaffe, Shira Franco, Golenbock Eiseman Assor Bell & Peskoe LLP, New York, N.Y. and Noah Hanft, Eileen Simon, Cheryl Givner, Mastercard International Incorporated, Purchase, NY, on the brief) for Plaintiff-Appellee.

Before MINER, POOLER, and KATZMANN, Circuit Judges.

POOLER, Circuit Judge.

Non-party movant-appellant Visa International Service Association ("Visa") moved to dismiss the underlying action contending that it is a necessary and indispensable party under Federal Rule of Civil Procedure 19. Visa also moved to intervene in the action under Federal Rule of Civil Procedure 24. Both motions were denied by the United States District Court for the Southern District of New York (Preska, J.). The district court concluded that Visa was neither necessary nor indispensable to the underlying breach of contract action between plaintiff-appellee MasterCard International Incorporated ("MasterCard") and defendant¹ Federation Internationale de Football Association ("FIFA"). The district court further concluded that Visa failed to satisfy the conditions for intervention under Rule 24. Due to the expedited nature of these proceedings, this court issued an order indicating its disposition in this case on November 6, 2006. As we stated in our order, the appeal originally filed by Visa in docket no. 06-4433 is dismissed for lack of jurisdiction and the district court's decision is otherwise affirmed. We now issue this opinion explaining our disposition.

BACKGROUND

FIFA is the worldwide governing body of soccer (or football, as it is known outside the United States), and the organizer of the World Cup soccer tournament held every four years. The underlying lawsuit is a breach of contract action brought by MasterCard against FIFA seeking enforcement of an alleged contractual provision giving MasterCard "first right to acquire" exclusive sponsorship rights in its product category for the FIFA World Cup event in 2010 and 2014. MasterCard's complaint alleges as follows.² For the past sixteen years, MasterCard has had a contractual relationship with FIFA to act as a sponsor for the World Cup. MasterCard served as an official sponsor of the World Cup event in 1994, 1998, 2002, and 2006. Although soccer is still catching on among American television audiences, the World Cup is the most-viewed sporting event in the world. The 2002 World Cup drew a cumulative television audience of 28.8 billion viewers from over 200 countries.

In 2002, MasterCard and FIFA entered into a contract by which MasterCard acquired exclusive sponsorship rights in its product category for FIFA competitions between 2003 and 2006, including the 2006 World Cup ("the MasterCard Contract"). This contract also allegedly contained a "first right to acquire" provision that gave MasterCard a right of first refusal to sponsorship rights during the next FIFA sponsorship cycle, covering FIFA competitions from 2007-2010. According to MasterCard, under this provision, FIFA may not offer these sponsorship rights to another entity within MasterCard's product category without first providing MasterCard the opportunity to purchase these rights on comparable terms. Pursuant to this provision, FIFA allegedly offered MasterCard exclusive sponsorship rights for all FIFA competitions between 2007 and 2014, including the 2010 and 2014 World Cups. Negotiations between the parties continued over several months and allegedly culminated with FIFA sending MasterCard a 96-page "final" agreement on March 3, 2006, which MasterCard signed and returned to FIFA.

Meanwhile, FIFA was also in negotiations with Visa regarding these sponsorship rights. On March 30, 2006, MasterCard learned that FIFA had decided to finalize an agreement with Visa. On April 5, 2006, MasterCard received a letter from FIFA's president stating that FIFA had entered into a contract with Visa granting Visa the exclusive sponsorship rights to FIFA competitions, including the World Cup, through 2014 ("the Visa Contract"). The Visa Contract becomes effective January 1, 2007. Upon learning of the FIFA-Visa deal, MasterCard notified both FIFA and Visa that it considered FIFA's actions a violation of the right of first refusal provision in the MasterCard Contract and MasterCard would seek legal redress if FIFA went forward with the Visa Contract.

On April 10, 2006, Visa issued a press release announcing its contract with FIFA for exclusive sponsorship rights in the World Cup through 2014. On April 20, 2006, MasterCard filed suit in the Southern District of New York for breach of contract and sought injunctive relief "enjoining FIFA from consummating, effectuating or performing" any terms of the Visa Contract and ordering FIFA to perform its obligations under the alleged contract granting MasterCard exclusive rights through 2014. Federal jurisdiction is premised solely on diversity of citizenship.

On June 15, 2006, MasterCard filed a motion for a preliminary injunction. After FIFA's motion to dismiss for lack of personal jurisdiction and motion to compel arbitration were both denied, the district court scheduled the preliminary injunction hearing for September 18, 2006, and later adjourned it to September 26, 2006. Email communication produced in this case indicates that Visa has been in contact with FIFA regarding this litigation since the time it was filed. On September 11, 2006, two weeks before the preliminary injunction hearing, Visa sent a letter to the district court stating that it was a necessary and indispensable party to the litigation because of its contractual entitlement to the FIFA sponsorship rights. Visa claimed that because it was an indispensable party, the case must be dismissed for lack of subject matter jurisdiction. Since MasterCard and Visa are both incorporated under the laws of Delaware, Visa's joinder would destroy diversity jurisdiction — the sole basis for federal jurisdiction.

The district court construed Visa's letter submission as a motion to dismiss under Federal Rule of Civil Procedure 19 and scheduled a hearing for September 21, 2006. At the conclusion of that hearing, the district court denied Visa's motion, finding that Visa was not a necessary party under Rule 19(a), and even assuming that it were, Visa was not an indispensable party under Rule 19(b) requiring dismissal of the action ("Rule 19 Order"). The district court reasoned that because the underlying litigation involved the MasterCard Contract and whether FIFA had breached that contract, Visa's presence was unnecessary to decide the dispute between MasterCard and FIFA. Moreover, even if MasterCard prevailed in this lawsuit, Visa's right to sue FIFA for breach of the warranty provision in the Visa Contract would not be prejudiced. Finally, since Visa conceded that it had no knowledge of the negotiations between MasterCard and FIFA or the MasterCard Contract, it would have nothing to contribute to the outcome of that lawsuit. Thus, the district court found that the case could proceed without Visa.

On September 25, 2006, Visa filed a notice of appeal of the district court's Rule 19 Order. Visa also filed a motion to stay the district court proceedings and a motion for expedited appeal with this court. In addition, Visa filed in the district court a motion to stay and a motion to intervene in the MasterCard-FIFA litigation under Federal Rule of Civil Procedure 24. Visa apparently hand-delivered these papers on Friday, September 22, 2006, but they were not received by the district court until Monday, September 25th. On September 25th, the district court denied Visa's motion to stay. That same day, the district court held a telephonic hearing on Visa's motion to intervene, and denied that motion as well. The district court also promptly issued a written decision regarding Visa's motion to intervene ("Rule 24 Order"). See Mastercard Int'l Inc. v. FIFA, No. 06 Civ. 3036, 2006 WL 3065598 (S.D.N.Y. Sept. 26, 2006).

Meanwhile, also on September 25th, this court in response to Visa's emergency motion temporarily stayed the proceedings in the district court pending hearing of Visa's motion. After hearing oral argument, this court granted Visa's motion to stay the proceedings for the remainder of the appeal, set an expedited briefing schedule, and placed the appeal on the court's calendar for November 3, 2006. Approximately ten days before this court was scheduled to hear Visa's appeal of the Rule 19 Order, Visa filed its notice of appeal of the district court's Rule 24 Order.³ Recognizing the overlap of issues presented by these appeals, we ordered consolidation and heard oral argument as scheduled on November 3rd.⁴ Cognizant of the impending January 1, 2007 trigger date for the Visa Contract and the need for expeditious resolution of the underlying lawsuit, this court issued an order on November 6, 2006, indicating its disposition in this case, vacating the stay previously granted by this court, and remanding the matter to the district court. We now explain the basis of our decision.

DISCUSSION

I. Jurisdiction

Before we can discuss the merits of Visa's appeal, we must first establish that we have jurisdiction to do so. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) ("On every writ of error or...