Metropolitan Sports Facilities Com'n v. General Mills, Inc.
| Decision Date | 04 September 1990 |
| Docket Number | No. C1-90-123,C1-90-123 |
| Citation | 460 N.W.2d 625 |
| Parties | METROPOLITAN SPORTS FACILITIES COMMISSION, Respondent, v. GENERAL MILLS, INC., Appellant. |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
1. The existence of Minn.Stat. Sec. 473.568 (1982) was not a condition precedent to performance of General Mills' contractual obligations; the repeal of that statute did not prevent the performance of those obligations.
2. The contract's provision relating to the repeal of section 473.568 did not grant the legislature powers it could not constitutionally assume by itself since that provision merely allowed for a conditional repeal which would leave the contract obligations in force.
3. By continuing after the repealer to accept the benefits of the contract, appellant waived any objections it might have due to the repeal of section 473.568.
4. The repeal of section 473.568 did not frustrate the essential purpose of the contract as the repeal was an event contemplated by the parties in the agreement.
David R. Knodell, Wayne H. Olson, Minneapolis, for respondent.
J.D. Jackson, Juan C. Basombrio, Dorsey & Whitney, Minneapolis, for appellant.
Considered and decided by WOZNIAK, C.J., and FOLEY and SCHULTZ, * JJ.
General Mills, Inc. appeals the trial court's ruling that the ticket purchase agreement it entered into with the Metropolitan Sports Facilities Commission continues in effect following the repeal of Minn.Stat. Sec. 473.568 (1982). General Mills asserts that the existence of section 473.568 was a condition precedent for its obligations to arise and that the contract's repeal provision could not grant the legislature sole power to bind it, a private entity, to remain a party to the contract. General Mills also asserts that the repeal of section 473.568 frustrated the essential purpose of the contract. We disagree and affirm.
In 1977 the legislature passed the Metropolitan Sports Facilities Act, Minn.Stat. Sec. 473.551-.595 (1978), creating the Metropolitan Sports Facilities Commission (Commission) to build and operate what is now the Hubert H. Humphrey Metrodome (Metrodome) in Minneapolis.
The legislature's concerns went beyond the people who could attend professional baseball, football, or soccer games at a new, publicly-provided sports facility. The legislature wanted Minnesotans who could not attend the games in person because of financial or other reasons to be able to watch them on television. To that end, it prohibited any major league professional team tenant of the sports facility from participating in a league television contract that would prevent the telecast in Minnesota of a game played at the sports facility if (1) the game were to be telecast elsewhere, and (2) 90 percent of the tickets for the game available 120 hours before the game had been sold 72 hours before the game. Minn.Stat. Sec. 473.568 (1978).
However, the National Football League (NFL), then and now, prohibits local telecast except when 100 percent of the tickets to a home game have been sold 72 hours before the game. Thus, in 1979 it appeared unlikely that a major league professional football team would sign a use agreement to play at the new sports facility planned by the Commission.
To enable the Commission to enter into a use agreement with a professional football team and go forward with the new sports facility, the legislature developed an approach assuring that all Minnesotans could watch the professional football team's home games on television when 90 percent of the tickets had been sold. The legislature added a precondition to building the new sports facility by mandating that the Commission enter into a 20-year agreement with a last-resort ticket purchaser requiring the purchase of all unsold tickets to a professional football game 72 hours before the game whenever more than 90 percent of the tickets had been sold 120 hours before the game. Minn.Stat. Sec. 473.581(3)(m) (Supp.1979). Such an agreement would ensure that a game otherwise only 90 percent sold out would be telecast in all of Minnesota despite the NFL's 100 percent sellout policy.
The legislature provided such an agreement would "free the professional football organization [contracting to use the sports facility] from the prohibition otherwise imposed on it by section 473.568." Id.
On August 21, 1979, General Mills entered into a 20-year ticket purchase agreement with the Commission which is the subject of this litigation. The agreement states:
[I]n order to satisfy the requirements of section 473.568 * * * and of section 473.581, subd. 3(m) * * * the parties agree as follows:
1. This Agreement * * * shall be effective * * * provided, however, this Agreement shall not be effective and General Mills shall have no further purchase commitments in the event that Section 473.568 is finally determined to be unconstitutional and void, or * * * is otherwise ineffective except in the case of a repeal thereof based solely upon the continued effectiveness of this Agreement.
The agreement limits General Mills' total obligation to $1.5 million for the purchase of tickets during the 20-year life of the agreement. It further provides that General Mills receives convenient access for its shuttle buses between its facilities and the Metrodome, and one minute of free commercial advertising on the Metrodome scoreboard during each Vikings home game.
General Mills also entered into agreements with the Vikings giving General Mills preferential treatment in the purchase of Vikings tickets and possible Super Bowl tickets. General Mills also received special consideration in the selection of "skydome" suites, and the Vikings agreed to share in the ticket purchase costs incurred by General Mills in its agreement with the Commission.
The ticket purchase agreement satisfied the terms of Minn.Stat. Sec. 473.581, subd. 3(m), thus allowing the stadium bonds to be issued and for the Metrodome to be built. The Metrodome opened for use in 1982.
In late 1983, the Vikings and others lobbied for a repeal of section 473.568 because the NFL would not consider the possibility of having a Super Bowl in Minnesota without such a repeal.
On May 2, 1984, the legislature repealed section 473.568 as follows:
Minnesota Statutes 1982, section 473.568, is repealed. This repeal is based solely upon the continued effectiveness of the agreement or agreements entered into by the Metropolitan Sports Facilities Commission and the purchaser or purchasers of tickets * * *. Such agreements shall remain in effect throughout their terms * * *.
1984 Minn.Laws ch. 607, Sec. 2. The legislature also amended section 473.581, subd. 3(m), deleting all references to section 473.568. 1984 Minn.Laws ch. 607, Sec. 1.
Prior to the repeal, General Mills sent a letter dated February 27, 1984, to the Vikings' lawyers, noting that they "remained dubious that the statute can be repealed without voiding the agreement." Aside from this equivocal statement, there was no evidence before the trial court of pre-repeal statements by General Mills as to the effects of such a repeal.
On June 13, 1984, General Mills' general counsel wrote the Commission, stating that since section 473.568 was repealed, there is simply no statute in existence which would serve as the basis for determining whether or not the Vikings can or cannot comply with the provisions thereof, thus implying that the repeal nullified the contract.
On February 25, 1985, the Commission notified General Mills that it felt the agreement was still in effect. More than two and a half years later, on November 18, 1987, General Mills responded, confirming, as stated in the Commission letter of February 1985, that there had been no anticipatory breach, notwithstanding the repeal of section 473.568.
It was undisputed that after the repeal, General Mills continued to receive the one minute of advertising and shuttle bus access through the 1988-89 football season, benefits due them under the agreement.
Prior to the 1988 football season, General Mills was not called upon to purchase tickets under the agreement; all Vikings home games were sold out 72 hours before game time. Prior to the first regular season game in 1988, the Commission learned that more than 90 percent of the tickets had been sold, but that some tickets would remain unsold 72 hours before game time. By the 72-hour deadline, Red Lobster, Inc., a wholly owned subsidiary of General Mills, purchased the remaining tickets and the game was telecast locally. General Mills asserted that it purchased the tickets voluntarily and not pursuant to the agreement. After purchasing those tickets, General Mills had the Commission make changes in the one minute of advertising shown at Vikings home games.
The issue of purchasing unsold tickets did not arise again until the first home game of the 1989-90 season when, again, more than 90 percent of the tickets had been sold and it was unlikely that the remaining tickets would be sold by the 72-hour deadline. The trial court found that General Mills may have helped to purchase those tickets. The same problem surfaced again prior to the second home game of the 1989-90 season. General Mills eventually stated it would not buy the remaining tickets and the Commission commenced this lawsuit to enforce the obligations under the agreement.
The trial court ruled that the agreement was still valid and enforceable.
1. Was the existence of Minn.Stat. Sec. 473.568 a condition precedent to the performance of General Mills' contractual obligations which was prevented by the repeal of section 473.568?
2. Did the agreement's repeal provision grant the legislature powers it could not constitutionally assume by itself?
3. Did General Mills waive its objections to the continuing effect of the agreement by continuing to accept the benefits of the agreement after the repeal of section 473.568?
4. Did the repeal...
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