Denver Rockets v. All-Pro Management, Inc.

• Decision Date: 22 March 1971
• Docket Number: Civ. No. 70-2575.
• Citation: 325 F. Supp. 1049
• Parties: The DENVER ROCKETS, a general partnership, and Ringsby Truck Lines, Inc., a corporation, Plaintiffs, v. ALL-PRO MANAGEMENT, INC., a corporation, and Al Ross and Marshall Boyer, individuals, Defendants. Spencer HAYWOOD, Cross-claimant, v. The DENVER ROCKETS, a general partnership, Ringsby Truck Lines, Inc., a corporation, First Northwest Industries, a corporation, doing business as Seattle Supersonics, and National Basketball Association, an unincorporated association, Cross-defendants.
• Court: U.S. District Court — Central District of California

325 F. Supp. 1049

The DENVER ROCKETS, a general partnership, and Ringsby Truck Lines, Inc., a corporation, Plaintiffs, v. ALL-PRO MANAGEMENT, INC., a corporation, and Al Ross and Marshall Boyer, individuals, Defendants.

Spencer HAYWOOD, Cross-claimant, v. The DENVER ROCKETS, a general partnership, Ringsby Truck Lines, Inc., a corporation, First Northwest Industries, a corporation, doing business as Seattle Supersonics, and National Basketball Association, an unincorporated association, Cross-defendants.

Civ. No. 70-2575.

United States District Court, C. D. California.

February 2, 1971.

Opinion Granting Partial Summary Judgment March 22, 1971.

COPYRIGHT MATERIAL OMITTED

Frederick P. Furth, John H. Boone, San Francisco, Cal., Sommer, Tinkham, Barnard & Freiberger, William C. Barnard, Indianapolis, Ind., Hutchinson & Irwin, Richard H. Hicks, Los Angeles, Cal., for plaintiffs.

Kadison, Pfaelzer, Woodard & Quinn, Morris Pfaelzer & John J. Quinn, Jr., Los Angeles, Cal., for Spencer Haywood.

Wyman, Bautzer, Finell, Rothman & Kuchel by Frank Rothman, Beverly Hills, Cal., for First Northwest Industries.

Ball, Hunt, Hart, Brown & Baerwitz, Joseph A. Ball & Robert Payson, Beverly Hills, Cal., for All-Pro Mgmt, Inc., Al Ross and Marshall Boyer.

McCutchen, Black, Verleger & Shea, G. Wm. Shea & Jos. R. Austin, Jr., Los Angeles, Cal., for National Basketball Assn.

FINDINGS OF FACT AND CONCLUSIONS OF LAW IN RESPECT TO CROSS-CLAIMANT'S MOTION FOR PRELIMINARY INJUNCTION AGAINST CROSS-DEFENDANT NATIONAL BASKETBALL ASSOCIATION

FERGUSON, District Judge.

This matter came on for hearing on January 18, 1971, pursuant to the Court's Order to Show Cause re Preliminary Injunction and Temporary Restraining Order and Order Shortening Time made on January 14, 1971, on the Motion of Cross-claimant Spencer Haywood ("Haywood") for a Preliminary Injunction Against the National Basketball Association ("NBA") as prayed for in his Motion for Temporary Restraining Order and for Order to Show Cause re Preliminary Injunction filed January 14, 1971. The Court, having considered the verified Amended Counter-claim and Cross-claim, the Affidavits in Support of the Motion and the Affidavits in Opposition Thereto, and having heard argument in open Court, and having considered all of the evidence presented in prior hearings in this matter, and having considered the Findings of Fact and Conclusions of Law proposed by Haywood, the written response of NBA to such proposed Findings and Conclusions and the Supplemental Proposals of Haywood, and having heard argument in open court on January 29, 1971, with respect to the form and content of such Findings and Conclusions, and having given careful study to the matter, and having made such revisions to the Findings and Conclusions proposed by each party as the Court has deemed proper, the Court makes the following —

FINDINGS OF FACT

1. Haywood had been a spectacular basketball player while in high school in Detroit, Michigan, and was named as "All-Detroit", "All-Michigan" and "All-American" high school basketball player. Following graduation from high school in 1967, Haywood attended Trinidad Junior College, where he was a junior college "All-American" during the 1967-68 season. In the summer of 1968, he played on the U.S. Olympic Basketball Team, was named the outstanding player in the Olympic basketball games and led the United States team to victory and a gold medal. In the fall of 1968, Haywood enrolled at the University of Detroit where he played basketball during the 1968-69 season and was named an "All-American".

2. On or about August 16, 1969, Haywood and the Denver Rockets ("Denver"), a professional basketball team in the American Basketball Association ("ABA"), entered into a written contract whereby Haywood was employed by Denver as a skilled professional basketball player. He played as a member of the Denver team during the 1969-70 professional basketball season and was named "Rookie of the Year", and "Most Valuable Player in the ABA" for the 1969-70 Season. He led all other players in the ABA in scoring and rebounding. As a result of his performance during his first season as a professional basketball player, Haywood has become, in the parlance of the professional basketball industry, a "Super Star".

3. Prior to April 1, 1970, Haywood requested Denver to renegotiate the terms of his employment. During such negotiations Denver and Haywood agreed to rescind all prior employment agreements between them and Denver represented to Haywood that it would give Haywood a contract to play professional basketball for Denver for six years commencing October 1, 1970, for which services Haywood would receive total compensation in the amount of $1,900,000.

4. Haywood relied upon the representations of Denver and placed his trust in the managers of Denver who made such representations to him.

5. On April 1, 1970, Haywood, then not yet having attained the age of twenty-one (21) years, signed an ABA form of Uniform Player Contract with Denver. The contract provides for a term of employment of six years commencing on October 1, 1970, and provides for compensation in the amount of $47,000 for each of the first two years and $75,000 for each of the last four years.

6. On April 1, 1970, Haywood signed a written agreement with Ringsby Truck Lines, Inc. ("Ringsby"), which provides, among other things, that commencing on October 1, 1970, and on October 1 of each of the following nine years, Ringsby shall invest $10,000 in a "growth mutual fund" under the "Dolgoff Plan"; that the investment fund so created shall remain the property of Ringsby, and that Haywood shall have no property right or interest in the fund; that Ringsby shall apply for life insurance on Haywood's life with death benefits of no less than $100,000 payable to such beneficiary or beneficiaries as may be designated by Haywood; that such life insurance shall be the sole property of Haywood; that Ringsby may use all or any portion of the investment fund as collateral for loans to Ringsby; that Ringsby shall have the right to liquidate the investment fund within its discretion to pay federal and state income taxes in respect of the fund and interest charges for loans made to Ringsby secured by the assets of the fund. The contract further provides that at any time after the payment of the last installment of $10,000 into the investment fund on October 1, 1979, Haywood shall have the right to direct payment to himself of an amount equal to ten percent (10%) of the then value of the investment fund as of the date on which he gives such direction; that on the anniversary of the giving of such direction, until the investment fund is exhausted, there shall be paid to Haywood an amount equal to ten percent (10%) of the value of the fund on the date such direction was given; that the right of Haywood to have any such payments made to him is conditioned upon his performing services to Ringsby during all of the period commencing October 1, 1970, and ending October 1, 1979; that as long as payments are made to Haywood from the investment fund Haywood shall "render advisory and consulting services to Ringsby"; that Haywood has no interest in the investment fund other than the right to receive payments from the fund and should he assign, pledge or mortgage his interest in the fund, all of the rights that are then vested in him shall terminate.

7. The Uniform Player Contract and the contract between Haywood and Ringsby (herein jointly referred to as "the contract") were also signed by Ben Gibson, as Haywood's guardian. Bernard E. Gibson, the same "Ben Gibson" who signed the contract as guardian of the Estate of Haywood, petitioned the Probate Court in and for the City and County of Denver and the State of Colorado, for an Order approving said proposed employment contract "for gross salary and compensation of $1,900,000 for said six-year period". On April 1, 1970, the Court ordered that Bernard E. Gibson be authorized to enter into and sign and execute "an employment agreement and agreements for the compensation of the minor ward of this Estate for his services as set forth in the Petition herein".

8. The contract does not provide for compensation for Haywood's services for six years in the amount of $1,900,000. Compensation in excess of $394,000 is illusory and indefinite.

9. On April 22, 1970, Haywood attained the age of twenty-one.

10. On or about June 8, 1970, Haywood signed a purported ratification of the contract. He did so believing that the contract provided the compensation which had been represented to him by Denver to be in the amount of $1,900,000, for services as a basketball player for six years.

11. In the fall of 1970, Haywood consulted an attorney the defendant Al Ross ("Ross"), who advised Haywood that the contracts did not provide for compensation in the amount of $1,900,000, and that they did provide for the rendition of services by Haywood to Ringsby beyond the expiration of the six-year term referred to in the Uniform Player Contract.

12. Professional basketball is the only trade in which Haywood can employ his unusual talents and skills. Unless Haywood plays professional basketball, those skills and talents will depreciate.

13. The only opportunity for a professional basketball player to use his skills and talents is as a player on a member team of either the ABA or the NBA. There are no other leagues of professional basketball teams of comparable status.

14. On November 23, 1970, Haywood gave written notice to Denver that he considered his contract with Denver to be invalid by reason of fraudulent misrepresentations made by Denver to him, and that he disavowed and rescinded said contract.

15. Haywood has refused to and continues to refuse to render services as a professional basketball player to Denver, and states that he will not under any conditions play basketball for Denver.

16. The validity of the Denver and Ringsby...