AUDL: Our Territory License Agreement Is “Unenforceable” And “Unreasonable”

Earlier today, Ultiworld obtained a copy of the American Ultimate Disc League’s lawsuit against the Connecticut Constitution and the Rhode Island Rampage from the Michigan court where it was filed.

The lawsuit — 91 pages in length — explains for the first time the league’s argument for the legality of placing new franchises in New York and Boston, which Connecticut and Rhode Island contend breach their agreement with the league.

As expected, the main discussion surrounds Section Five of the Territory License Agreements between the teams and the AUDL, which says that the league will not “establish…, run, and/or operate…” a new franchise within a 100-mile radius of the existing teams.

The league’s main contention is that Section Five is unenforceable. The lawsuit says, “A restrictive covenant must be ‘reasonable’ to be enforceable, regardless of whatever the parties agreed, under [Nebraska] law…The 100-mile radius is unreasonable because it is injurious to the public…, greater than reasonably necessary to protect the legitimate business interests of the Hartford team and the Rhode Island team…, [and] unduly harsh and oppressive on the AUDL.”

Although the argument is legally permissible, it is unusual to see the organization that drafted the contract claiming that in fact that contract is unenforceable. They are essentially arguing that the 100-mile radius they granted the teams does not actually count.

Additionally, before the suit was filed, the AUDL compensated the Philadelphia Spinners for the New Jersey and New York franchises because both fall within 100 miles of Philadelphia’s territory. Jeff Snader, the General Manager and part-owner of the Spinners team, confirmed that both with Pro Disc News and today in an interview with Ultiworld. When asked why the League did not offer a similar deal to Connecticut and Rhode Island, Snader said, “I just don’t know. I know this has been a concern of everyone – the territory agreement…[I think it is] poor communication and poor management.”

That may help to explain how this situation escalated to where it is now.

On June 12th, Bryan Ricci and Emerson Kilgore, the owners of Connecticut and Rhode Island, respectively, sent an email to the league that included the following:

[quote]Boston and New York franchises] are not acceptable based on our territory agreement contract and we implore you to immediately rescind those territory sales inasmuch as they have come to exist within our territory and without our territory ownership approval. We intend to enforce our rights should you not cancel those new territory agreements. Our enforcement to protect our territory will include, but not be limited to, legal action and cease and desist orders.[/quote]

The league’s lawyer responded to the teams on June 15th explaining the league’s position and proposing a “meeting of team owners…to discuss the restrictive covenants in the TLA,” hoping that “a compromise can be reached agreeable to all concerned.”

The team owners responded later that day with this email:

[quote]The League’s response is interesting reading, but it really says nothing more than “we don’t care what your contract says.” Mr. Moore and the League may not care, but a court will. We will respond further in due course. In the meantime, we do not intend to speak with Mr. Moore over the weekend. Mr. Moore or the AUDL should not assume, in the absence of a response this weekend, that we have no interest in calling a meeting of the owners or taking further action.[/quote]

Two days later, on June 17th, the league filed suit against the teams.

Ultiworld will have much more on this lawsuit in the next 24 hours, after we reach a thorough understanding of the relevant law and background on the case. We will post the full lawsuit and a legal analysis, along with a deep explanation of how we got here and what it means. Stay tuned, and follow us on Twitter for the latest breaking news.