Fishman v. Estate of Wirtz
| Decision Date | 22 June 1984 |
| Docket Number | 78 C 3621.,No. 74 C 2814,74 C 2814 |
| Citation | 594 F. Supp. 853 |
| Parties | Marvin L. FISHMAN and Illinois Basketball, Inc., Plaintiffs, v. ESTATE OF Arthur WIRTZ, William Wirtz; Lester Crown; Philip Klutznick; James Cook; Albert Adelman; Chicago Professional Sports Corporation; Emprise Corporation; Chicago Blackhawk Hockey Team, Inc.; and Atlanta Hockey, Inc., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
COPYRIGHT MATERIAL OMITTED
COPYRIGHT MATERIAL OMITTED
Bruce S. Sperling, Paul E. Slater, Sperling, Slater & Spitz, P.C., Chicago, Ill., for plaintiffs.
Donald R. Harris, Jenner & Block, Chicago, Ill., for defendants.
TABLE OF CONTENTS
Findings of Fact
1. Background ......................................................... 857
2. Summary of the Parties' Respective Damage Theories ................. 858
3. Proper Approach to Measuring IBI's Compensatory Damages ............ 858
4. The 1982 Fair Market Value of the Chicago Bulls NBA Franchise ...... 861
A. The 1982 Value of the Chicago Bulls Basketball Assets .......... 861
1. Comparable Sales ........................................... 862
a. Transactions Considered ................................ 862
b. Computation of Sale Price .............................. 863
c. Closeness of Comparability ............................. 865
1. Size of City ....................................... 865
2. Population Growth .................................. 866
3. Market Interest in Basketball ...................... 866
4. Existing Versus Expansion Franchise ................. 866
2. Trend in Value ............................................. 867
3. Profits and Losses of NBA Clubs, and Trends of Profits and
Losses ..................................................... 867
4. Profits and Losses of the Bulls ............................ 869
5. Testimony of NBA Franchise Owners .......................... 869
6. Tax Law .................................................... 870
7. Pay TV ..................................................... 870
8. Arenas ..................................................... 872
9. Free Agent Rules ........................................... 872
10. Other Assets of Comparables ................................ 873
B. The Value of CPSC's Other Assets ............................... 873
C. Value of Liabilities ........................................... 873
D. Adjustments for IBI's Costs and Expenses in Owning and Operating
the Franchise .................................................. 874
1. Overview ................................................... 874
2. Litigation Expenses and IBI Lower Purchase Price ........... 874
3. Arena Expense .............................................. 874
4. Differences in Executive Compensation ...................... 875
5. Interest Expense ........................................... 875
E. Cost of Capital ................................................ 878
F. Invested Capital ............................................... 879
G. Summary of Yardstick Measure of Damages â The Value of the
Chicago Bulls NBA Franchise .................................... 879
5. Disregard of IBI as Plaintiff ...................................... 880
6. Plaintiff Marvin Fishman's Damages ................................. 883
7. Equitable Relief ................................................... 885
8. The Settlement with the NBA Defendants ............................. 886
9. Punitive Damages ................................................... 886
10. Incorporation of Conclusions ....................................... 887
Conclusions of Law
1. The Legal Measure of Plaintiff's Damages ........................... 887
2. Opportunity Cost ................................................... 890
3. Equitable Relief ................................................... 891
4. Abatement of Punitive and Treble Damages Upon Death ................ 892
5. Summary ............................................................ 892
Before the court is an action brought by plaintiffs to recover damages resulting from the acts of defendants which prevented Illinois Basketball, Inc. ("IBI") from purchasing the Chicago Bulls basketball franchise in 1972. After extensive discovery and disposition of numerous pretrial motions, this case was brought to trial February 28, 1979. This court ordered bifurcation of the trial, and after 8 weeks of testimony the liability portion of the trial was completed on April 20, 1979. The filing of post-trial briefs and proposed findings of fact and conclusions of law was completed by the parties on March 18, 1980. On October 28, 1981, this court entered judgment in favor of plaintiffs on Counts I, II, III, V, VI, VII, and VIII, and in favor of defendants on Count IV. The judgment for plaintiffs included judgments on six counts for violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, and one count for violation of Illinois common law (tortious interference with business or economic advantage and tortious interference with contractual relations).
After extensive unsuccessful settlement negotiations, the damages portion of the trial was conducted February 22 through March 8, 1983. Post-trial briefs, proposed findings of fact and conclusions of law, various motions and other materials were submitted to this court, the last of which was received February 1, 1984. The following are the courts' findings of fact and conclusions of law on the remedies to which plaintiffs are entitled.
The Findings of Fact entered by this court on October 18, 1981 are incorporated by reference herein. Those findings included the following findings as to the injury to plaintiff IBI:
The October 18, 1981 order also included the following finding concerning the injury to plaintiff Fishman:
The acts of the defendants also directly caused injury to Marvin Fishman, who was a foreseeable victim of defendants' conduct and was within the target area of the defendants' acts. More specifically, Marvin Fishman had a contract to be the chief executive officer of IBI for a minimum of three years, which contract provided that Fishman would receive a substantial salary for his services. (Opinion of October 28, 1981 at 53).
Plaintiffs contend that the damages for IBI's injury are to be measured by the "lost appreciation in value" of the Chicago Bulls franchise, measured as of May 31, 1982. Plaintiffs calculate these damages through the use of their "basic yardstick measure of damages." Essentially, the "yardstick" measures the difference between the appraised value of the assets of the Chicago Bulls as of May 31, 1982, and Chicago Professional Sports Corporation's ("CPSC") costs and expenses of purchasing and operating the Bulls since 1972, with certain adjustments to reflect IBI's hypothetical ownership of the Bulls. (Pl. Post-Trial Memorandum at 19; PX 647).1 Plaintiffs also contend that IBI is entitled to the basketball assets of CPSC in exchange for $4.3 million, the sum of CPSC's purchase price for the stock of the Bulls and the liabilities that CPSC assumed in 1972. (Pl. Post-Trial Memorandum at 34, 55-56). Plaintiff Marvin Fishman seeks $318,000 in damages, representing the salary that he allegedly would have earned as chief executive officer of the Bulls between 1972 and 1982 had IBI acquired the franchise. Finally, plaintiffs week a trebling of those sums and an award of punitive damages, as well as costs and attorneys fees.
Defendants submit that plaintiffs' damages properly are measured by the lost benefit of plaintiffs' bargain as of 1972, i.e., the difference between the fair market value of the Chicago Bulls' stock in 1972, and the 1972 purchase price IBI had negotiated for the stock. They dispute the legal validity and applicability of plaintiffs' "lost appreciation in value" theory, but offered rebuttal evidence concerning the proper calculation of damages pursuant to that damage theory. Defendants also offered evidence relating to their contention that damages on plaintiffs' "lost appreciation in value" theory should be awarded solely to Fishman and not to IBI, and should be limited to 20% of any appreciation proved in order to...
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Fishman v. Estate of Wirtz
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