Foreman v. George Foreman Associates, Ltd.

• Decision Date: 09 May 1975
• Docket Number: Nos. 74-2143,74-2216,s. 74-2143
• Citation: 517 F.2d 354
• Parties: George FOREMAN and Charles R. Sadler, Plaintiffs and Appellees, v. GEORGE FOREMAN ASSOCIATES, LTD., Defendant and Appellant. GEORGE FOREMAN ASSOCIATES, LTD., Plaintiff and Appellant, v. George FOREMAN et al., Defendants and Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 354

517 F.2d 354

George FOREMAN and Charles R. Sadler, Plaintiffs and Appellees, v. GEORGE FOREMAN ASSOCIATES, LTD., Defendant and Appellant.

GEORGE FOREMAN ASSOCIATES, LTD., Plaintiff and Appellant, v. George FOREMAN et al., Defendants and Appellees.

Nos. 74-2143, 74-2216.

United States Court of Appeals, Ninth Circuit.

May 9, 1975.

Rehearing Denied June 2, 1975.

Frederick P. Furth (argued), San Francisco, Cal., for defendant-appellant.

Stephen V. Bomse, San Francisco, Cal., for plaintiffs-appellees.

OPINION

Before VAN OOSTERHOUT, ^* WALLACE and SNEED, Circuit Judges.

SNEED, Circuit Judge:

George Foreman Associates, Ltd., appeals from a judgment holding a 1972 agreement between Associates and George Foreman void as a boxing management contract which fails to comply with California law in numerous respects. We affirm.

The facts are fully set out in the opinion of the district court which is reported at 389 F.Supp. 1308 (N.D.Cal.1974). We agree that California law renders the 1972 agreement void and adopt the reasoning of the opinion below. We find no merit in Associates' argument that our decision gives extraterritorial effect to California law and thereby violates the Commerce Clause. The method of determining applicable law is the only point which merits further discussion.

In this diversity case the district court effectively functioned as another court of the forum state California and was obliged to apply the same substantive law as would a court of that state. We concur in its choice of California law as the law governing the contract.

The 1972 agreement provides in paragraph 15 that "This agreement shall be construed in accordance with the laws of the State of California." The district court accordingly applied the law of California, having first determined that there was a reasonable basis for the parties choice of such law as evidenced by certain relationships between that state, the parties, and the transaction. See Restatement (Second) Conflict of Laws § 187 (1971).

The district court opinion finds the requisite relationship in "the facts that the Agreement was negotiated and signed in California, that Foreman resides in California, and that many of the principal obligations of the Agreement are to be performed in California (e.g., payments of money) . . .." 389 F.Supp. 1308. Associates argues on appeal that there was conflicting evidence in the record relevant to such "facts" and that the district court erred in resolving them on a motion for summary judgment. We find that summary judgment was the proper course. The record clearly shows that Foreman resides in California the unresolved issue is whether he is domiciled there or in Texas. The contract was signed in California as a means to terminate litigation in a California court. The contract also provides that all promotional receipts are to be deposited in an escrow account in a California bank. While it is true that the place of performance is not confined to California and that it was certainly contemplated that Foreman would engage in boxing and related activities in other states or countries, it is reasonable in such circumstances for the parties to fix the controlling law as that of the state of the contract's execution. Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. Olvera, 119 F.2d 584, 586 (9th Cir. 1941). The record presents undisputed facts which are more than sufficient to allow the contractual stipulation of California law to be given effect.

But having seen that application of California law renders the contract void, Associates now argues that the stipulation is more honored in the breach than the observance. It relies on the principle that the chosen law of the parties is not to be applied if that law would declare the contract invalid, Restatement (Second) Conflict of Laws § 187, comment e (1971), and urges this court to follow the "Rule of Validation" and to seek out the law of some interested state which would validate rather than void the contract. See Ehrenzweig, The Statute of Frauds in the Conflict of Laws: The Basic Rule of Validation, 59 Colum.L.Rev. 874 (1959).

We are therefore presented with the question whether the courts of California would look beyond the stipulation in search of some validating law. We do not believe that they would do so. The comprehensive regulatory scheme which California imposes on boxing reflects a public policy which is "unusually strong." Hudson v. Craft, 33 Cal.2d 654, 659, 204 P.2d 1, 4 (1949). It is evident that one of the principal purposes of these regulations is to protect boxers from improvident arrangements. The regulations governing the conduct of matches are designed to "provide safeguards for the protection of persons engaging in the activity" and to protect them "against their own ill-advised participation in an unregulated match." 33 Cal.2d at 659, 204 P.2d at 4. The regulations governing boxing...