Brookins v. International Motor Contest Association

• Citation: 219 F.3d 849
• Decision Date: 12 January 2000
• Docket Number: No. 99-1657,99-1657
• Parties: (8th Cir. 2000) GAIL BROOKINS, DOING BUSINESS AS ERNIE GLIDE TRANSMISSIONS; ERNIE BROOKINS, PLAINTIFFS - APPELLANTS, v. INTERNATIONAL MOTOR CONTEST ASSOCIATION; KATHY ROOT; BILLY JOE BUSHORE, DOING BUSINESS AS BUSHORE RACING ENTERPRISES, DEFENDANTS - APPELLEES. Submitted:
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 849

219 F.3d 849 (8th Cir. 2000)

GAIL BROOKINS, DOING BUSINESS AS ERNIE GLIDE TRANSMISSIONS; ERNIE BROOKINS, PLAINTIFFS - APPELLANTS, v. INTERNATIONAL MOTOR CONTEST ASSOCIATION; KATHY ROOT; BILLY JOE BUSHORE, DOING BUSINESS AS BUSHORE RACING ENTERPRISES, DEFENDANTS - APPELLEES.

No. 99-1657

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

Submitted: January 12, 2000

Decided: August 3, 2000

Appeal from the United States District Court for the Northern District of Iowa. [Copyrighted Material Omitted] Before Bowman, Floyd R. Gibson, ¹ and Loken, Circuit Judges.

Loken, Circuit Judge.

Gail and Ernie Brookins commenced this action against the International Motor Contest Association ("IMCA"); its president, Kathy Root; and Billy Joe Bushore, a competitor of the Brookins. The dispute arose when IMCA amended its rules governing IMCA-sanctioned "modified class" auto races in a way that, at least for a time, barred the use in those races of two transmissions manufactured by the Brookins. The Brookins appeal the grant of summary judgment dismissing their antitrust conspiracy claim for failure to prove either market power in a relevant market or actual detrimental effect on competition. We affirm.

I.

Organized in 1915, IMCA is the oldest auto racing sanctioning body in the United States. IMCA franchises over 225 independent racing tracks in twenty-nine States and offers a variety of advertising and merchandising programs to companies that sponsor auto sport events. IMCA operates five racing divisions: modified, late model, sprint car, stock car, and hobby stock car. IMCA created the modified car class in 1979 to provide amateur auto racers an affordable but exciting racing opportunity. The concept proved extremely popular, and in 1997 nearly 4,000 drivers participated in IMCA-sanctioned modified races. For each racing class, IMCA promulgates uniform nationwide rules to provide, in the words of an IMCA brochure, "consistency and exciting competition from region to region." Specific car rules for each racing class are established by the IMCA executive committee.

In 1993, the Brookins introduced the "Ernie Glide" automatic transmission. It gained increasing use in IMCA modified races, and a car using an Ernie Glide transmission won the 1994 national championship race. Because of its novel design, many drivers and at least two competing transmission manufacturers (including defendant Bushore) questioned whether the Ernie Glide complied with IMCA's rule governing modified car transmissions. Prior to the 1995 racing season, IMCA officials concluded that the Ernie Glide met the letter but not the intent of the existing rule. IMCA's executive committee then revised the rule to require that all automatic transmissions have a functioning pump, a change that immediately affected only the Ernie Glide. In 1995 and 1996, the Brookins modified the Ernie Glide to include a functioning pump and developed a new "Ernie Slide" standard transmission. After IMCA's Director of Competition informally assured the Brookins that their transmissions complied with the amended modified car rule, and after the Brookins marketed the transmissions in reliance on those assurances, IMCA's executive committee responded with further transmission rule changes and interpretations rather obviously aimed at barring the use of Ernie Glide and Ernie Slide transmissions at IMCA-sanctioned modified car races.

The Brookins commenced this action in mid-1996 when IMCA issued an adverse last-minute pre-season interpretation of its latest transmission rule. The Brookins alleged that defendants violated Section 1 of the Sherman Act, 15 U.S.C. 1, when IMCA changed its rules in response to pressure from rival transmission manufacturers who were also IMCA sponsors. The district court ² granted a preliminary injunction allowing drivers to continue using Ernie Slide transmissions for a reasonable period. Following substantial discovery, the district court granted summary judgment dismissing the Brookins' antitrust claim, but denied summary judgment on their state law claim of intentional interference with prospective business advantage. That tort claim went to trial against defendant IMCA. The jury awarded the Brookins $109,000 in compensatory damages, finding that IMCA had improperly interfered with the Brookins' relationships with potential transmission buyers by creating and unfairly interpreting rules with the intent of harming the Brookins' business. IMCA does not appeal that verdict, but the Brookins appeal the dismissal of their antitrust claim. We review the grant of summary judgment de novo, viewing the record in the light most favorable to the Brookins. See Minnesota Ass'n of Nurse Anesthetists v. Unity Hosp., 208 F.3d 655, 659 (8th Cir. 2000).

II.

The Brookins contend that IMCA's adverse rule changes were the product of concerted action by IMCA and competing transmission manufacturers that unreasonably restrained trade in modified car transmissions. ³ To prevail on this Section 1 claim, the Brookins must prove that defendants' concerted action injured competition. Injury to competition requires proof either of market power in a relevant market, or of an actual adverse effect on competition. See FTC v. Indiana Fed'n of Dentists, 476 U.S. 447, 460-61 (1986). The district court concluded the Brookins failed to make the required threshold showing of injury to competition. Noting undisputed evidence that there are many racing classes and many competing auto racing sanctioning bodies, such as NASCAR, CART, and USAC, the court concluded that the Brookins had failed to offer evidence showing that IMCA has market power in the relevant racing market, defined in defendants' motion for summary judgment as the "oval track racing transmission market." The court also concluded there was no evidence that excluding the Ernie Glide and Ernie Slide transmissions from modified car races has had an actual adverse effect on competition in that market.

On appeal, the Brookins challenge both those conclusions. Their primary contention is that no proof of market power is needed under the "unique" antitrust analysis that applies when a private organization sets product standards that exclude certain producers or deprive consumers of a desired product. Citing cases such as Indiana Federation of Dentists and Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492 (1988), the Brookins argue that exclusion of the Ernie Glide and Ernie Slide transmissions from modified car races governed by the IMCA rules had an actual adverse effect on competition by depriving modified race car drivers of less expensive, safer, better-performing products. Alternatively, attempting to redefine the relevant market on appeal, the Brookins argue they presented sufficient evidence that IMCA has market power in the market for "IMCA-approved transmissions for modified racing."

The Brookins' analysis is flawed because IMCA is not a typical standard-setting organization. Its rules do not tell transmission manufacturers or drivers what types of products or services they may sell or use in an open market. Rather, the IMCA modified car rules help define a game or sport in which the end product is a form of competition among race car drivers. If the game as defined is exciting for participants and spectators, it will prosper in relation to other games with which it competes in the broad recreational marketplace. As the Supreme Court said in describing college football in NCAA v. Board of Regents, 468 U.S. 85, 101-02 (1984):

What the NCAA and its member institutions market in this case is competition itself -- contests between competing institutions. Of course, this would be completely ineffective if there were no rules on which the competitors agreed to create and define the competition to be marketed. A myriad of rules affecting such matters as the size of the field, the number of players on a team, and the extent to which physical violence is to be encouraged or proscribed, all must be agreed upon, and all restrain the manner in which institutions compete. . . . Thus, the NCAA plays a vital role in enabling college football to preserve its character, and as a result enables a product to be marketed which...