Washington Capitols Basketball Club, Inc. v. Barry

• Decision Date: 26 September 1969
• Docket Number: Civ. No. 52229.
• Citation: 304 F. Supp. 1193
• Court: U.S. District Court — Northern District of California
• Parties: WASHINGTON CAPITOLS BASKETBALL CLUB, INC., a District of Columbia corporation, Plaintiff, v. Richard F. BARRY III, also known as Rick Barry; Lemat Corporation, a Delaware corporation and the general partner of a limited partnership doing business under the name of San Francisco Warriors; and San Francisco Warriors, a limited partnership, Defendants.

304 F. Supp. 1193

WASHINGTON CAPITOLS BASKETBALL CLUB, INC., a District of Columbia corporation, Plaintiff, v. Richard F. BARRY III, also known as Rick Barry; Lemat Corporation, a Delaware corporation and the general partner of a limited partnership doing business under the name of San Francisco Warriors; and San Francisco Warriors, a limited partnership, Defendants.

Civ. No. 52229.

United States District Court N. D. California.

On Motion to Increase Bond. October 3, 1969.

On Motion for Preliminary Injunction September 26, 1969.

COPYRIGHT MATERIAL OMITTED

Frederick P. Furth, San Francisco, Cal., for plaintiff.

Bancroft, Avery & McAlister, San Francisco, Cal., Loeb & Loeb, Los Angeles, Cal., Morrison, Foerster, Holloway, Clinton & Clark, San Francisco, Cal., for defendants.

OPINION AND ORDER

LEVIN, District Judge.

This action was commenced by Washington Capitols Basketball Club, Inc., (hereafter "Washington") for declaratory and equitable relief and for damages. The relevant facts which are undisputed are as follows:

On June 19, 1967, Richard F. Barry III (hereafter "Barry") granted to Charles E. "Pat" Boone (hereafter "Boone") and S. D. Davidson (hereafter "Davidson") an option to acquire his services as a professional basketball player for the 1967-68 season, and received an assignment for the transfer of a certain undivided interest in the Oakland franchise of the American Basketball Association (hereafter "ABA"), a Delaware corporation, organized and existing for the purposes, among others, of forming, managing, operating and advising a professional basketball league with member clubs in various cities of the United States.

On the same date Boone executed a guaranty and agreement guaranteeing, among other things, certain earnings to Barry for his services and also agreeing to cause Oakland Basketball, Inc., (hereafter "Oaks") to indemnify and hold Barry harmless from any and all liability Barry may incur by reason of his execution of the option. Such an indemnity agreement was executed on September 29, 1967, by Barry, Boone, Davidson and Oaks.

Pursuant to the option Barry signed an ABA Uniform Player Contract with Oaks, the owner and operator of the ABA franchise for Oakland, California, of a professional basketball team under the name of Oaks. Barry also signed an amendment to the aforesaid ABA contract, dated October 31, 1967, which provides that the term of the employment of Barry by Oaks is for three years commencing on October 2, 1968,

"or such earlier date as Player's services as a basketball player are not enjoined by order or decree of any court of competent jurisdiction and there is no adjudication by such a court denying Player the right and freedom to contract for his services without restraint or damages by others."

This agreement, as amended, provides "for a salary of $75,000.00 per year plus an amount equal to the lesser of (a) Five (5%) per cent of all gross gate receipts received by the Club per year in excess of the sum of $60,000.00¹ plus Player's compensation, or (b) $15,000.00." The agreement also provides in paragraph 6 thereof:

"The Club shall have the right to sell, exchange, assign and transfer this contract to any other professional basketball club in the Association and the Player Agrees to accept such assignment and to faithfully perform and carry out this contract with the same force and effect as if it had been entered into by the Player with the assignee Club instead of with this Club."

On August 28, 1969, Washington and Oaks entered into an agreement of purchase which provides, among other things, for the sale by Oaks and the purchase by Washington of all of Oaks:

"property and assets of every kind and nature whatsoever related to operation of the SELLER'S professional basketball team * * * all of the SELLER'S right and interest in and to contracts with all professional basketball players * * * as well as all other right and interest the SELLER has in and to any and all basketball players whether or not such players are under written contract with the SELLER."

After recitation of the purchase price the agreement contains the statement:

"The above described purchase price is allocated as follows:

* * * * * *

"2. $750,000.00 For Rick Barry Contract."

A bill of sale dated September 8, 1969, from Oaks to Washington was executed by the president and secretary of Oaks and an assignment from Oaks to Washington as of the same date was similarly executed. On August 29, 1969, Barry entered into a contract to play professional basketball with defendant San Francisco Warriors (hereafter "Warriors"), a limited partnership, organized and existing under the laws of the State of California, the owner of a professional basketball team franchise of the National Basketball Association (hereafter "NBA") for a term of five years commencing October 2, 1969, and terminating October 1, 1974. Defendant Lemat Corporation (hereafter "Lemat"), a Delaware corporation qualified to do business in the State of California, is the sole general partner of the aforesaid limited partnership.

At this stage of the proceedings plaintiff seeks a preliminary injunction to enjoin Barry from playing professional basketball with any team other than plaintiff "for so long as Barry remains in default under his contract with plaintiff."

The grant or refusal of injunctive relief is a matter of equitable jurisdiction. 43 C.J.S. Injunctions § 12, p. 419. A Court of Equity will grant the relief when it determines it essential to restrain an act contrary to equity and good conscience. 43 C.J.S. Injunctions § 1, p. 405.

I.

The purpose of the preliminary injunction is to maintain the status quo between the litigants pending final determination of the case. Hamilton Watch Co. v. Benrus Watch Co., 206 F. 2d 738, 742 (2d Cir. 1953). In order for plaintiff to succeed in its motion for a preliminary injunction, it is fundamental that it show at least first, a reasonable probability of success in the main action and second, that irreparable damage would result from a denial of the motion. Speedry Products, Inc. v. Dri Mark Products, Inc., 271 F.2d 646, 648 (2d Cir. 1959).

A. The Status Quo

The status quo is the last, peaceable, uncontested status between the parties which preceded the present controversy. Tanner Motor Livery, Ltd. v. Avis, Inc., 316 F.2d 804, 809 (9th Cir. 1963) cert. den. 375 U.S. 821, 84 S.Ct. 59, 11 L.Ed. 2d 55 (1963); see generally 43 C.J.S. Injunctions § 19, pp. 432, 434.

The parties have differed in their interpretation of the meaning of the status quo in this case. It seems exceedingly clear that the status quo of the parties to the action was that peaceable state of affairs existing when Barry was under contract to Oaks and, prior to his injury, playing professional basketball for that team during the 1968-69 season. Although it is manifest that Barry cannot now play basketball for Oaks, their assets having been sold to Washington, the assignment of Barry's contract to Washington makes his obligations to them the closest to the status quo that can be attained. Most assuredly, permitting Barry to play with Warriors, which Barry indicated he would do if the preliminary injunction were not granted, would not be preserving any semblance of the situation as it existed just prior to the commencement of the present litigation.

B. Probability of Success at Trial

It is uncertain whether plaintiff will prevail at the trial on the merits; however, it is clear that plaintiff need not prove its case with absolute certainty prior to the trial in order to succeed in its motion for a preliminary injunction. The issuance of a temporary injunction was affirmed on appeal in the Hamilton Watch case, supra 206 F.2d at 740, wherein the Court noted that "* * it will ordinarily be enough that the plaintiff has raised questions going to the merits so serious, substantial, difficult and doubtful, as to make them a fair ground for litigation and thus for more deliberate investigation." Moreover, "The burden of showing probable success is less where the balance of hardships tips decidedly toward the party requesting the temporary relief." Checker Motors Corporation v. Chrysler Corporation, 405 F.2d 319, 323 (2d Cir. 1969), cert. den., 394 U.S. 999, 89 S.Ct. 1595, 22 L.Ed.2d 777 (1969), citing Dino De Laurentiis Cinematografica, S. p. A. v. D-150, Inc., 366 F.2d 373, 374-375 (2d Cir. 1966).

Defendants have not shown that the contract between Oaks and Barry, which was assigned by Oaks to Washington, is itself unconscionable, unenforcible or otherwise void. It is under this contract that Washington seeks to assert its rights to Barry's services and the protection of this Court from violation of those rights. The precedents for granting injunctive relief against "star" athletes "jumping" their contracts — and certainly defendants do not deny that Barry is a unique, a "star" athlete — are numerous. Houston Oilers, Inc. v. Neely, 361 F.2d 36 (9th Cir. 1966), cert. den. 385 U.S. 840, 87 S.Ct. 92, 17 L.Ed. 2d 74, reh. den., 385 U.S. 942, 87 S.Ct. 285, 17 L.Ed.2d 74 (1966); Winnipeg Rugby Football Club v. Freeman, 140 F. Supp. 365 (N.D.Ohio 1955); Dallas Cowboys Football Club, Inc. v. Harris, 348 S.W.2d 37 (Civ.App.Tex.1961); Central New York Basketball, Inc. v. Barnett, 181 N.E.2d 506 (Ohio Com.Pl. 1961); American League Baseball Club of N. Y. v. Pasquel, 187 Misc. 230, 63 N.Y.S.2d 537 (Sup.Ct.1946).

C. Showing of Irreparable Injury

Plaintiff must also make a showing of irreparable injury in order to be awarded injunctive relief. Although Rule 65 of the Federal Rules of Civil Procedure does not by its terms so state, it is well settled in equity jurisprudence that such a showing of injury must be made in order to support the granting of a preliminary injunction. Barron and Holtzoff, Federal Practice and Procedure § 1433, p. 490.

Irreparable injury is that which cannot be compensated by the award of money damages;...