Bowers v. Fédération Internationale De L'Automobile , 489 F.3d 316 ( 2007 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 06-2718
LARRY BOWERS, ALAN G. SYMONS,
CAREY JOHNSON, et al.,
Plaintiffs-Appellants,
v.
FÉDÉRATION INTERNATIONALE DE L’AUTOMOBILE,
FORUMLA ONE ADMINISTRATION LIMITED,
INDIANAPOLIS MOTOR SPEEDWAY CORPORATION, et al.,
Defendants-Appellees.
____________
Appeal from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. 1:05-cv-00914-SEB-VSS—Sarah Evans Barker, Judge.
____________
ARGUED DECEMBER 4, 2006—DECIDED MAY 25, 2007
____________
Before EASTERBROOK, Chief Judge, and CUDAHY and
SYKES, Circuit Judges.
CUDAHY, Circuit Judge. The defendants organized a
car race. Although twenty cars were originally scheduled
to race, fourteen of the twenty did not participate after
it was discovered that a flaw in their tires rendered
them dangerous for use at full speed on one part of the
track. Disappointed fans sued, seeking their expenses
in attending and viewing the race. The district court
dismissed the complaint for failure to state a claim on
2 No. 06-2718
which relief can be granted. The plaintiffs appeal; we
affirm.
I. Background
The Fédération Internationale de l’Automobile (FIA) is
an international body that governs certain types of auto-
mobile racing. The most famous is Formula One, which
uses single-seat cars specially designed for high-speed
racing. The sport has traditionally been popular in Europe,
but Formula One races (often referred to as “grand prix”
races) have been held elsewhere in an effort to spread their
popularity. One such race, the 2005 United States Grand
Prix (2005 USGP or “the race”), was scheduled to be run
at the Indianapolis Motor Speedway (IMS) in Speedway,
Indiana, on June 17 through 19, 2005. Grand prix races
are multi-day events, with two days of practice driving
and qualifying laps that determine the position of the
cars at the start of the race, followed by the race itself
on the final day. Twenty drivers–ten teams of two, each
representing a different auto manufacturer–were sched-
uled to roll.
On June 17, during the first day of practice driving,
driver Ralf Schumacher crashed when his left rear tire
blew out on turn thirteen of the IMS track, a high-speed
banked turn, apparently unusual among Formula One
race courses. Sport reporters began to see a disturbing
pattern: Schumacher used tires manufactured by Michelin
ETC, and another driver using Michelin tires had suf-
fered a blow-out and crashed on that same turn the
previous year. The next day, Michelin sent a letter to the
FIA’s Race Director and Safety Delegate at IMS stating
that it had warned its teams that it might not be safe to
use its tires “unless the vehicle speed in turn 13 can be
reduced.” Michelin acknowledged that it was too late to
get different tires to the track for qualifying laps and that
No. 06-2718 3
the rules required cars to race on the same sort of tires
used to qualify. Since fourteen of the twenty cars sched-
uled to race used Michelin tires, this was a significant
problem.
The FIA shot back a letter dated June 19, the day of the
race, refusing to level the playing field (or, more precisely,
the race track) between cars using the questionable
Michelin tires and solid Bridgestone tires. It would alter
neither the rules (for instance, by permitting racers to use
different tires than those used to qualify) nor the course
(for instance, by adding a chicane ahead of turn thirteen
to force the Bridgestone teams to reduce their speed
prior to the turn as well). It was the Michelin teams’ own
fault they hadn’t brought suitable equipment to the track.
They had basically two options: race on different tires
and accept a penalty, or take turn thirteen slower than
the Bridgestone teams and hope to make up time on the
rest of the track.
The plaintiffs’ complaint claims that in the hours leading
up to race time, Michelin and its teams threatened not
to participate unless changes were made to help them.
Allegedly “[s]everal proposals were discussed . . . but no
agreement was reached as to a solution because the FIA
and [the] Ferrari” team, the latter armed with Bridgestone
tires and pressing its advantage, “refused to agree to any
solutions acceptable to the other teams.”1 The plaintiffs
claim that the racing teams, the FIA, Michelin and IMS
finally agreed that all the teams would participate in a
1
The plaintiffs’ brief claims that the parties used the tire
problem “to promote their own ends in an internecine struggle
over Formula One revenue.” (Br. of Appellants at 16.) We are
not sure what the plaintiffs mean and they do not explain
further; they may be referring to the winner’s purse. At any
rate, this consideration is irrelevant to our resolution of the case.
4 No. 06-2718
low-speed “formation lap” (also known as a “parade lap”)
that takes place prior to the start of racing proper, but
that afterwards the Michelin teams would exit from the
track, leaving only the Bridgestone teams to drive the race.
That is precisely what happened. Everyone was furi-
ous. Representatives of the FIA, Michelin, IMS and the
racing teams rained accusations and recriminations
upon one another, calling the race a “farce” and saying
that the fans had been cheated. The racing crowd dubbed
the affair “Indygate.”
Several fans who attended the 2005 USGP separately
filed purported class actions against the FIA and some
related organizations governing Formula One racing, IMS,
the racing teams and Michelin. They alleged that the
defendants owed them the price of their tickets and the
cost of travel and other expenses they had incurred in
attending the race (only the latter is now relevant, since
Michelin has been permitted to give the fans a full refund
of the ticket price). The cases were consolidated in the
Southern District of Indiana, where the district court,
without certifying a class, dismissed the plaintiffs’ third
amended complaint for failure to state a claim. The
plaintiffs now appeal.
II. Discussion
We review a dismissal for failure to state a claim de
novo. Moranski v. Gen. Motors Corp., 433 F.3d 537, 539
(7th Cir. 2005). A plaintiff ’s complaint need only contain
“a short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a). The
statement must give “fair notice of the claims against [the
defendant] and a reasonable opportunity to form an
answer.” Pratt v. Tarr, 464 F.3d 730, 732 (7th Cir. 2006).
Dismissal is appropriate if a plaintiff does not allege
No. 06-2718 5
such a claim or if it appears beyond doubt that the plain-
tiff can prove no set of facts that would entitle her to re-
lief. Edwards v. Snyder, 478 F.3d 827, 830 (7th Cir. 2007).
The plaintiffs seek to recover from the various defen-
dants under several different theories: breach of contract
(and tortious interference with the same), promissory
estoppel and negligence. We discuss each theory in turn.
A. Breach of the Ticket Contract
The plaintiffs allege first that IMS (and, somehow, the
other defendants) breached a contractual obligation to the
race attendees when only six cars drove. Whenever it
sold a ticket to the 2005 USGP, the plaintiffs claim, IMS
(and somehow the other defendants) “promised a regula-
tion Formula One Racing League race” in exchange for
the ticket price. The plaintiffs then claim that in light of
the rules governing Formula One racing, a grand prix has
to have at least twelve cars in it. Only six cars participated
here, breaching the contract.
This claim arguably should fail because IMS promised
only to admit the plaintiffs to the race grounds on the
days of the grand prix. While we are unaware of any
Indiana case addressing the nature of a contract formed by
the sale of an admission ticket, cf. Skalbania v. Simmons,
443 N.E.2d 352 (Ind. Ct. App. 1982) (addressing a class
certification question in a beach of contract action by
season ticket holders against a hockey franchise, but
explicitly reserving the merits), most states agree that the
seller contracts only to admit the plaintiff to its property
at a given time. The plaintiff buys the ticket, of course,
in order to see an event that is scheduled to occur on the
ticket-seller’s grounds, but the seller does not contract
to provide the spectacle, only to license the plaintiff to
enter and “view whatever event transpire[s].” Castillo v.
6 No. 06-2718
Tyson, 701 N.Y.S.2d 423, 423 (N.Y. App. Div. 2003); see
also Petrich v. MCY Music World, Inc., 862 N.E.2d 1171,
1180 (Ill. App. Ct. 2007); Yarde Metals, Inc. v. New
England Patriots Ltd. P’ship, 834 N.E.2d 1233, 1236
(Mass. App. Ct. 2005); Sweeny v. United Artists Theater
Circuit, Inc., 119 P.3d 538, 540-41 (Colo. Ct. App. 2005);
Six Flags Theme Parks, Inc. v. Dir. of Revenue, 102 S.W.3d
526, 533 (Mo. 2003); Wichita State Univ. Intercollegiate
Athletic Ass’n v. Marrs, 28 P.3d 401, 403 (Kan. Ct. App.
2001). But see Miami Dolphins, Ltd. v. Genden & Bach,
P.A., 545 So.2d 294, 296 (Fla. Dist. Ct. App. 1989) (holding
that a provision of a season ticket agreement requiring
a refund when games were cancelled due to labor strikes
was triggered when a football team played a game using
strikebreakers).
The plaintiffs provide us no reason not to construe
their tickets this way. While one could contract to pro-
vide a spectacle, one wonders why an exhibitor like IMS
would do so, given that it has control over its grounds
but not over the performers and their scheduled perfor-
mances. Further, a spectator could reasonably decide to
do without a contractual right to the spectacle itself,
trusting that the exhibitor will work with the performers
to ensure that the spectacle goes off lest both develop a
bad reputation that could damage their future business.
In the present case, Formula One is struggling to take root
in the United States, where the racing of stock cars
(modified versions of cars designed for the general public,
governed by NASCAR) is the preeminent automotive
sport. “Indygate’s” potential damage to Formula One’s
American reputation was a serious concern for everyone
involved; some speculated at the time that the FIA might
never hold a race at IMS again.
Nonetheless, because we are sitting in diversity, “conser-
vatism is in order” in construing Indiana law, Lexington
No. 06-2718 7
Ins. Co. v. Rugg & Knopp, Inc., 165 F.3d 1087, 1092-93
(7th Cir. 1999), so we rest our decision on a narrower
ground. Even assuming, as the plaintiffs claim, that
they had a contractual right to a regulation Formula One
race (and further assuming a right to have the race
stewards properly interpret the applicable regulations on
the spot), they got such a race here. The plaintiffs claim
that certain provisions of the 2005 Formula One Sport-
ing Regulations (F1 Regulations)2 operate poorly with
fewer than eleven racers—the first eight finishers get
points towards the annual championship, F1 Regulations
¶ 21, and certain infractions may be penalized, in among
other ways, by moving the offending car ten slots back
in the starting grid, F1 Regulations ¶ 54(c). But while a
six-car race under the Regulations may be less rich,
interesting or challenging than a twelve-car race, it is
not prohibited or nonsensical under the rules (like a
soccer match between three teams or a basketball team
getting a first down). These rules cannot be interpreted
to impose a “minimum car” requirement. There is no
reason to claim, as the plaintiffs in all seriousness do, that
no race occurred.
Additionally, the regulations explicitly permit any
race for which fewer than twelve cars are available to
be cancelled. Any league sport must address common
complications that can prevent a contest from properly
occurring, including the non-appearance of contestants.
In baseball, for instance, a team that fails to field nine
2
The plaintiffs did not attach the F1 Regulations to their
complaint, but the regulations were central to its allegations
(it stated that the “tickets . . . necessarily incorporated the
FIA regulations”), and the Regulations were subsequently of-
fered into the record. The parties do not dispute their written
content and agree that they should be considered on a motion to
dismiss.
8 No. 06-2718
players (unthinkable, the plaintiffs suggest) forfeits
the game. Official Baseball Rules § 4.17, available at
http://www.baseball-almanac.com/rule4.shtml. In Formula
One racing, when fewer than twelve cars are available
for a race, officials may cancel it—no one gets points
towards the annual championship, even if they show up
ready to go. F1 Regulations ¶ 17. We are reluctant to
conclude that a six-car contest deprived the plaintiffs of
a Formula One race when, given the way the FIA has
chosen to address no-shows in its sport, the race could
properly have been cancelled and the plaintiffs quite
legitimately deprived of any race whatsoever. See Castillo,
701 N.Y.S.2d at 423 (holding that the fight in which Mike
Tyson was disqualified for biting Evander Holyfield’s
ear was nonetheless a regulation boxing match).
The plaintiffs urge that even if the race could have been
cancelled, the defendants were contractually required to
use “reasonable efforts” not to cancel it, and that all the
teams should have tried harder to put on a good race. But
while every competitive sport is built around the presump-
tion that the players will try hard to win, a contest is
not invalidated by a player’s poor effort. A team cannot
claim that a loss does not count because one of its mem-
bers was dogging it. And once it is established that the
plaintiffs received a regulation race, they admit that they
had no additional right to a race that was exciting or
drivers that competed well. See, e.g., Beder v. Cleveland
Browns, Inc., 717 N.E.2d 716, 720-21 (Ohio Ct. App. 1994);
see also Seko Air Freight, Inc. v. Transworld Sys., Inc., 22
F.3d 773, 774 (7th Cir. 1994) (“That the Chicago Cubs
turn out to be the doormat of the National League would
not entitle the ticketholder to a refund.”).
While the plaintiffs were upset (and perhaps justifi-
ably so if the complaint’s allegations are true) at the
Bridgestone teams for putting their desire to win ahead
of a taste for even competition, or at the Michelin teams
No. 06-2718 9
for deciding to take their ball and go home rather than do
the best they could, the plaintiffs had no contractual
right to a different performance. The dismissal of their
claim for breach of the ticket contract must be affirmed,
and with it the dismissal of their claim that some defen-
dants tortiously induced others to breach the contract.
B. Breach of Other Contracts
The plaintiffs also claim that the defendants breached
other contracts among themselves “which impact the
duty of each of the Defendants to present the 2005 USGP
as represented,” and of which the plaintiffs were third
party beneficiaries to the extent that the contracts are
“meant to control and determine: (i) the proper operation
of the Race; (ii) [the] application of the rules of Defendants
and the International Sporting Code; and (iii) the obliga-
tions of Michelin to provide safe and suitable tires for
the Formula One automobiles entered in this Race.” As
already noted, the complaint does not allege a violation of
the rules, and the plaintiffs have not argued the possibility
of a tire obligation in this court; their argument has
focused on portions of two contracts submitted in the
record—the Concorde Agreement and the FIA Commer-
cial Agreement. The plaintiffs claim that further dis-
covery will reveal that these Agreements give them the
right to have the defendants use their best efforts to
ensure that at least sixteen cars race in every Formula
One event.3 It is almost unthinkable that the defendants
granted fans of their sport the legal right to interfere
3
Again, neither party objects to the consideration of these
contracts on the motion to dismiss. The contracts were under
seal in the district court and the plaintiffs filed copies of their
initial brief and appendix under seal, but the contracts are now
public because neither party moved to reseal the record in this
court. See Seventh Circuit Operating Procedure 10(a).
10 No. 06-2718
with their private business relations, though the story is
not farfetched enough to make a Rule 12(b)(6) dismissal
appropriate on that ground. See Loubser v. Thacker, 440
F.3d 439, 441 (7th Cir.), cert. denied, 126 S. Ct. 2944(2006). It is clear from the language of the contracts,
however, that the three provisions upon which the plain-
tiffs rely do not grant them any such right.
One provision, Concorde Agreement § 5.3.1, imposes a
duty upon all teams to “use their best endeavours to
procure together that additional cars are entered into” any
race into which fewer than twenty cars have been entered.
But even assuming that “entry” means actually racing
rather than registering to race, the plaintiffs could not
have held rights under the provision as third party
beneficiaries. Under Indiana law,4 a contract grants a non-
party rights only if an intent to grant the rights “affirma-
tively appear[s] from the language of the instrument when
properly interpreted and construed.” Cain v. Griffin, 849
N.E.2d 507, 514 (Ind. 2006). The plaintiffs argue that
extrinsic evidence can be helpful to that interpretation and
construction, but that is true only insofar as the “back-
ground of the circumstances known at the time of execu-
tion” reveals the meaning of the “terms of the contract
itself.” Biddle v. BAA Indianapolis, LLC, 830 N.E.2d 76, 86
(Ind. Ct. App. 2005), aff ’d in relevant part, 860 N.E.2d 570(Ind. 2007). In the present case, section 5.3.1 explicitly
enumerates the parties that hold rights: the “Signatory
Teams jointly undertake to the FIA and to the Commer-
4
Although these contracts are between entities based outside
the United States and govern races that are mostly run in
Europe, the parties agree that Indiana law applies. See
Schlumberger Tech. Corp. v. Blaker, 859 F.2d 512, 514 (7th Cir.
1988) (holding that the parties’ silence forfeits choice-of-
law issues).
No. 06-2718 11
cial Rights Holder” to provide twenty cars per race (em-
phasis added); the fans are not among those listed.
The plaintiffs also point to two other provisions in
which all parties agree to try to ensure that at least
sixteen drivers participate in the annual Formula One
Championship—the racing league, not an individual
race—and grant the FIA the power to alter the car-design
limitations to let cars that would otherwise not meet
Formula One requirements participate. These duties
and powers do not relate to individual races. (It would
be strange if they did, given that Concorde Agreement
§ 5.3.1 already requires efforts to secure twenty rather
than sixteen cars; one of the two provisions, Concorde
Agreement § 10.4, explicitly says it is “[w]ithout prejudice
to Clause 5.3.”) Consequently, the contracts were not
violated in this case, and dismissal of the plaintiffs’ claims
as third-party beneficiaries of these contracts must
be affirmed.
C. Promissory Estoppel
Next, the plaintiffs claim that promissory estoppel
binds the defendants to pay them their expenses in
traveling to see the 2005 USGP. They allege that the
defendants “conspired and acted together to provide
advertising and promotion” that indicated ten teams
and twenty cars would drive in the race, and that they
did so with the expectation that the plaintiffs would rely
on the representations. The plaintiffs relied; fewer than
twenty cars drove; they want damages.
This claim must fail because no reasonable promoter
or racing fan would have regarded a race’s “advertising
and promotion” concerning the number of cars scheduled
to roll as a promise upon which someone could reasonably
rely. Under Indiana law, a person will be estopped to deny
12 No. 06-2718
a duty to fulfill a promise only where the promise was
made with the expectation that it would induce, and it
does induce, reasonable reliance by the plaintiff. Brown
v. Branch, 758 N.E.2d 48, 51 (Ind. 2001). Whether a
statement could reasonably be taken as a reliable promise
“depend[s] on the knowledge that the promisee brings
to the table.” Garwood Packaging, Inc. v. Allen & Co., 378
F.3d 698, 704 (7th Cir. 2004) (applying Indiana law). If a
plaintiff, given her background and knowledge, should
have known that an event was doubtful and might not
occur, then it was not reasonable for her to rely on a
defendant’s “promise” that it would. Id. at 704 (holding
that a former investment banker’s reliance on a business-
man’s promise that a deal to save a failing company
would go through “come hell or high water” was unrea-
sonable); see also Sees v. Bank One, Ind., N.A., 839 N.E.2d
154, 164 (Ind. 2005) (holding that an attorney’s reliance
on a bank officer’s statement that a guaranty was unen-
forceable was unreasonable).
In the present case, sports fans had to understand that
numerous events could prevent a full complement of
twenty cars from racing at a particular location on a
particular day—dangerous track conditions, a driver’s
sudden illness, an accident in shipping a car to the track,
any number of things, including the possibility that, for
some reason, a driver might refuse to race. If the plain-
tiffs indeed went to Indianapolis only because they took
the defendants’ advertising as a reliable promise that
twenty drivers, no fewer, would compete, they acted
unreasonably.
The plaintiffs claim that this conclusion is inappropri-
ate on a motion to dismiss, arguing that the reasonable-
ness of a promise is a question of fact, Garwood Packaging,
378 F.3d at 705, and that their complaint does not specify
the nature of the defendants’ promises. But that is not
true; the plaintiffs assert that the “promises” were adver-
No. 06-2718 13
tisements for the race and other promotional materials.
The plaintiffs cannot seriously contend they were so naive
as to take an advertisement for a twenty-car race as a
reliable promise that twenty cars would roll. The dismissal
of the promissory estoppel claim must be affirmed.
D. Negligence
Finally, the complaint alleges that the non-IMS defen-
dants “assumed a duty to Plaintiffs to present the Race as
advertised and promoted.” The defendants had no duty to
provide a race to anyone, however, except insofar as they
took on a contractual obligation to provide one. See INS
Investigations Bureau, Inc. v. Lee, 784 N.E.2d 566, 576
(Ind. Ct. App. 2003).
In their briefs, the plaintiffs wisely abandon that theory
but argue instead that because the defendants attempted
to solve their disagreements concerning the race (the
language the plaintiffs use, taken from an FIA press
release, is that the defendants and in particular Michelin
undertook to “impose a solution” to the disagreement),
they were required to make the attempt with reasonable
care. Their attempt was negligent and led to the impasse,
damaging the plaintiffs. This claim is difficult to under-
stand. Indiana sometimes imposes a duty of care on a
defendant who voluntarily undertakes to perform a task
for a plaintiff, but only where the plaintiff relies to its
detriment on the defendant’s help (by failing to perform
the task itself, for instance), or where the defendant
otherwise leaves the plaintiff worse off than if the defen-
dant had done nothing. City of Muncie ex rel. Muncie
Fire Dep’t v. Weidner, 831 N.E.2d 206, 212 (Ind. Ct. App.
2005); Rose v. Sewell, 128 F.3d 1098, 1104 (7th Cir. 1997)
(applying Indiana law). Here it is unclear how the plain-
tiffs relied to their detriment on the defendants’ help, since
no one but the defendants even knew of the disagreement
14 No. 06-2718
before race time and it is doubtful what an outsider could
have done to resolve the situation if it had known. The
plaintiffs would have been no worse off if the defendants
threw up their hands as soon as the tire problem surfaced.
Even if the negligence claim made sense, Indiana’s
economic loss doctrine would still bar damages in tort for
a product or service that fails to perform properly. Gunkel
v. Renovations, Inc., 822 N.E.2d 150, 153-54 (Ind. 2005);
see also id. at 151 (holding that the doctrine applies
“whether or not the product or service is supplied in a
transaction subject to” the Uniform Commercial Code).
Because the plaintiffs seek to recover for a service (the
race) that was not up to snuff, the doctrine bars their
recovery. Dismissal of the plaintiffs’ final claim was
appropriate.
III. Conclusion
For the foregoing reasons, we affirm the judgment of
the district court.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—5-25-07