Gilder v. PGA Tour, Inc., CIV 89-1980 PHX PGR.
| Decision Date | 26 December 1989 |
| Docket Number | No. CIV 89-1980 PHX PGR.,CIV 89-1980 PHX PGR. |
| Citation | 727 F. Supp. 1333 |
| Parties | Bob GILDER; Ken Green; John Inman; Rafe Botts; Bob Erickson; George Lanning; Dean Refram; Walter Zembreski; Agim Bardha; Karsten Manufacturing Corporation, an Arizona corporation, Plaintiffs, v. PGA TOUR, INC., a Maryland nonprofit corporation; Deane R. Beman; E. Mandell deWindt; Roger E. Birk; Hugh E. Culverhouse, Defendants. |
| Court | U.S. District Court — District of Arizona |
Leonard Decof, Decof & Grimm, Providence, R.I., Daniel Cracchiolo, Burch & Cracchiolo, P.A., Harry J. Cavanagh, O'Connor, Cavanagh, Anderson, Westover, Killingsworth & Beshears, P.A., Phoenix, Ariz., for plaintiffs.
William F. Bennett, Case & Bennett, Scottsdale, Ariz., Jerry Markham, Rogers & Wells, Washington, D.C., for defendants.
FINDINGS OF FACT, CONCLUSIONS OF LAW AND PRELIMINARY INJUNCTION
1. The Plaintiffs are nine professional golfers and members of PGA Tour, Inc. and Karsten Manufacturing Corporation, an Arizona corporation, which designs, manufactures, markets, and sells PING EYE2 iron golf clubs with U-shaped grooves ("PING EYE2" clubs).
2. The Defendants are the PGA Tour, Inc. ("Tour"), Deane A. Beman, the Commissioner and Chief Executive Officer of Tour, E. Mandell deWindt, Roger E. Birk, and Hugh E. Culverhouse, members of the PGA Tour Tournament Policy Board ("Board"). The Tour co-sponsors and coordinates professional golf tournaments in various states including Arizona. There are approximately 200 professional golfers who play in Tour-sponsored events.
3. The Tour is governed by the Board which is composed of 10 directors. Four of the Board directors are professional golfers who compete on the Tour as direct competitors of Plaintiffs Green, Gilder and Inman. Three of the directors are officers of the Professional Golf Association of America, and three are outside directors who are businessmen, not professional golfers.
4. The Tour By-Laws, prior to December 5, 1989, provided that in all matters other than the amendment of the By-Laws, decisions were to be made by a majority of the directors present in person at the meeting, a quorum being present. The Tour's Tournament Regulations required amendments to such regulations to have the affirmative vote of a majority of the Board, including not less than three of the four player directors.
5. At the Board meeting on February 28, 1989, with all directors present, the Tour V™-Rule was passed, requiring the use of traditional V-grooves in irons and concomitantly prohibiting the use of U-groove irons in Tour-sanctioned events commencing January 1, 1990. Seven of the Board members abstained from voting on adoption of the regulation based upon advice of Tour's counsel, because of possible conflicts of interest. Only the three outside directors voted in favor of the resolution.
6. The validity of the Board's action in contravention of its own By-Laws and Tournament Regulations has been challenged by the Plaintiffs' Complaint filed December 1, 1989. There is a serious question as to this issue which should be resolved at a hearing on the merits.
7. The By-Laws of Tour can be amended only by the unanimous consent of all directors. Upon receiving copies of Plaintiffs' Complaint, Defendant Beman gave two days' notice to the members of the Board of a special meeting to be held for the express purpose of amending Tour's By-Laws to enable Tour to re-pass the Tour V™-Rule challenged by Plaintiffs.
8. On December 5, 1989, the Board held its special meeting at which the Board voted unanimously to amend its By-Laws to permit amendments to Tournament Regulations by a majority of members actually voting, without considering the vote of those members who abstain because of an actual or potential conflict of interest. The effect of this amendment was to eliminate the requirements that a majority of a quorum present approve the amendment of a Tournament Regulation and that the approval include the affirmative vote of at least three of the four player directors. At the time of the unanimous vote to amend the By-Laws, the directors were fully aware that the amendment was for the purpose of allowing the three outside directors to adopt the Tour V™-Rule banning U-groove irons.
9. At the December 5, 1989 Board meeting, following the amendments to the By-Laws and Tournament Regulations, only the three outside directors again voted to adopt the Tour V™-Rule. The remaining seven Board members abstained from voting, declaring they had conflicts of interest.
10. Following the actions of the Board on December 5, 1989, Plaintiffs filed an Amended Complaint in which they challenged the validity of the Board's actions at the December 5, 1989 meeting. Plaintiffs allege that the vote to amend the By-Laws by seven directors admitting a conflict of interest on the issue of the U-groove ban is improper and void in that the directors were effectively voting to permit the Tour V™-Rule to be adopted. There is a serious question as to this issue which should be resolved at a hearing on the merits.
11. The Tour Regulations provide that tournaments co-sponsored by the Tour shall be conducted in accordance with the United States Golf Association ("USGA") Rules of Golf, except as modified by Tour. Since January 1, 1984, both the Tour and the USGA have permitted the use of both V-shaped grooves and U-shaped grooves in iron golf clubs.
12. Plaintiff Karsten manufactures and sells only PING EYE2 clubs with U-grooves. Most other golf club manufacturers market both V-groove and U-groove irons.
13. There is a dispute as to whether U-grooves impart more spin to a ball than V-grooves under certain conditions with higher lofted clubs. This is a serious question which should be resolved at a hearing on the merits.
14. There is no evidence that groove shape significantly affects ball spin with the 1 through 6 irons.
15. Whether or not U-shaped grooves have changed the nature of the game is a serious question which should be resolved at a hearing on the merits.
16. The player Plaintiffs will be irreparably harmed if they are forced to abandon their PING EYE2 clubs and use different clubs in that they would have a competitive disadvantage due to playing with clubs to which they were unaccustomed and in which they had no confidence. This would adversely affect their physical and mental capacity to play the game and to compete to the best of their ability.
17. The ability to use the clubs of their choice would likely affect Plaintiffs' placement in Tour-sponsored tournaments. Placement and winnings from tournaments are the measure for qualifying for future events. If prevented from using the clubs of their choice pending a determination of the merits of this action, Plaintiffs may not be able to maintain their competitive position. In addition, Plaintiffs would not be able to ascertain their damages because they could not prove they would have won more money using PING EYE2's.
18. The sand wedge, a major innovation introduced approximately 50 years ago, has never been banned by the Tour or the USGA Rules of Golf. There is a question raised as to the degree to which technological advances in golf equipment should be limited and the point at which the "integrity of the game" should be frozen.
19. Whether amateur golfers like to use the same equipment as professional golfers, their "heroes", and whether use of golf clubs by the public correlates to the use of golf clubs by Tour professionals is a serious question that should be resolved at a hearing on the merits.
20. Since enactment of the Tour ban of U-groove clubs on February 28, 1989, a number of players on the Tour have stopped using PING EYE2 clubs. During this same period, Plaintiff Karsten claims its market share of iron golf club sales has dropped from 28.2% to 20.9%, and that there has been a...
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Gilder v. PGA Tour, Inc.
...grounds. After a three day hearing, the district court granted a preliminary injunction enjoining the PGA from implementing the rule. 727 F.Supp. 1333. The PGA appeals. We FACTUAL AND PROCEDURAL BACKGROUND This action concerns a rule change implemented by the PGA that bans all clubs on whic......