Appeal from an order entered in the United States District Court for the District of Vermont, Coffrin, C.J., granting the motion for summary judgment of plaintiffs-appellees Robert A. Crouch and Glen A. Wright seeking declarative and injunctive relief against the National Association for Stock Car Auto Racing, Inc. (NASCAR) and Randy LaJoie for NASCAR's alleged breach of its duties to manage a stock car race fairly and to comply with the rules and regulations of the NASCAR membership contract.
Feinberg, Chief Judge, Meskill and Mahoney, Circuit Judges.
The dispute in this case arises out of an August 1985 stock car race in Vermont that was sanctioned by the defendant-appellant National Association for Stock Car Auto Racing, Inc. (NASCAR). Plaintiff-appellee Robert Crouch, driving a car owned by plaintiff-appellee Glen Wright, was originally awarded first place in the race, but that decision was overturned on review by national NASCAR officials, who declared defendant-appellant Randy LaJoie the winner of the race. The plaintiffs then brought this diversity suit*fn1 against NASCAR alleging that the national NASCAR officials had no authority to overturn the local track officials' decision that Crouch had won the race. The United States District Court for the District of Vermont, Coffrin, C.J., denied both parties' first motions for summary judgment. The court later granted plaintiffs' second motion for summary judgment, however, concluding that in light of a NASCAR rule that accorded finality over race procedure decisions to local officials, national NASCAR officials acted unreasonably by overruling race procedure decisions made by the local track officials and declaring LaJoie the winner of the race.
We conclude that the district court did not apply the correct standard for judicial review of NASCAR's decisions. In addition, we hold that under the correct standard, the district court erred in granting the plaintiffs' motion for summary judgment, rather than entering judgment in favor of the defendants.
NASCAR is a for-profit corporation that is dedicated to the promotion of stock car racing. This case arises out of a 100 lap NASCAR-sanctioned stock car race that took place at Catamount Speedway in Vermont on August 11, 1985. Two incidents took place during the course of this race that gave rise to the controversy between the parties. The first incident occurred at the beginning of the race, when there was a restart because of an accident involving the LaJoie car. During this restart, the LaJoie car remained in the pit area behind the start/finish line. As the other cars on the track approached the start/finish line at the beginning of the second lap, the LaJoie car crossed the start/finish line in the pit area and then entered the track with the rest of the cars. Gordon Nielsen, the official scorer of the race, ruled that LaJoie could not receive credit for laps completed until he had first crossed the start/finish line on the track, rather than in the pits. LaJoie contends that Nielsen's decision was wrong because it was contrary to NASCAR scoring procedures used throughout the rest of the country, and that his car was scored throughout the race with one lap less than it would otherwise have been given because of Nielsen's erroneous ruling.
The second incident occurred during laps 68-71. During lap 68, a yellow caution flag was displayed to the drivers because of another accident. Under Rule 12-4(a) of NASCAR's rulebook, "after cars receive [the] yellow flag at the start and finish line, all cars must hold [their] position until either the green flag is again displayed, or the red flag which would automatically stop the race [is displayed]." According to Thomas Curley, the local NASCAR track official, LaJoie improperly passed several cars after the yellow flag was displayed, in violation of Rule 12-4(a). LaJoie contends that if the local officials had made the correct decision with respect to the first incident, then he would have been positioned on the lap 68 restart ahead of the vehicles that he passed under the yellow flag. He thus believed that he had a right to pass the cars because of Nielsen's scoring error during laps 1 and 2.
There is a dispute between the parties as to what happened next. Curley asserts that a black flag was displayed to the LaJoie car for four consecutive laps, although Bob Johnson, LaJoie's crew chief, maintains that he saw the black flag only once. Under Rule 12-6 of the rulebook, a driver is to report to the NASCAR official at the pit immediately after a black flag is displayed to him or her. Rule 12-6 also provides that after a car has been black-flagged for three consecutive laps, "scoring on [the] car involved will be discontinued until [a] pit stop has been made and [the] car is released by a NASCAR official to resume racing." Curley maintains that after the LaJoie car failed to obey the black flag on the third lap, he told Nielsen to stop scoring the LaJoie car and informed Johnson either directly or indirectly that scoring had been stopped on the LaJoie car. Johnson and LaJoie deny that they were ever told that their car had been disqualified or that scoring on their car had been stopped. No black flag with a white cross was displayed to LaJoie, although Rule 12-6 provides that such a flag is to be displayed to inform a driver that scoring of his or her car has been discontinued. Despite Curley's instruction to Nielsen to stop scoring the LaJoie car as of lap 71, Nielsen continued to record the LaJoie car on the scoring tapes.
It is undisputed that LaJoie finished the 100 laps of the race before any of the other competitors. There is some controversy concerning whether Curley announced that Crouch had won the race, however; Curley contends that he did announce that Crouch had won the race, while LaJoie and Johnson maintain that no final decision was announced by Curley.
LaJoie requested a scoring check pursuant to Rule 11-2 of the rulebook, and Curley sent the scoring tapes and a transfer memorandum to the national office of NASCAR. The memorandum asked for NASCAR's immediate review of the initial lap penalty imposed on LaJoie, and stated that in Curley's opinion, "the issue to be dealt with in this instance is not necessarily a scoring decision, but rather a race procedure decision." J. App. at 53. Nielsen also submitted a lengthy memo to NASCAR headquarters describing his scoring of the race at issue, including his scoring of the LaJoie car after the lap 68 incident. See id. at 68-72.
The national NASCAR officials then reviewed the materials concerning the race. As one official noted in his affidavit, the referral from Curley was "the kind of request which we are frequently asked and routinely answer as part of the administration of NASCAR sponsored events." J. App. at 46. Based upon the materials presented, NASCAR decided that upon correction of the scoring errors that had been made, LaJoie should be declared the winner of the race. In addition, NASCAR officials concluded that LaJoie had violated the black flag rule, and that a penalty should be imposed for this violation. They thus issued a penalty notice to LaJoie pursuant to Rule 13-2 and fined him $1,200.
Plaintiffs then brought this action in court alleging that the lap 1-2 decision and the lap 68-71 alleged disqualification dealt with "race procedure" decisions of local NASCAR officials that could not be reviewed by NASCAR headquarters under Section 11 of the rulebook. Rule 11-1 provides that "decisions of NASCAR officials assigned to an event with respect to the interpretation of the NASCAR Rules, as they may pertain to race procedure, shall be final and there shall be no appeal or protest thereof." Under this rule, race procedure decisions "include, but are not necessarily limited to, the line up of the cars, the start of the race, the control of the cars, the election to stop or delay a race, the positioning of cars on re-starts, and the assessment of lap and time penalties." NASCAR moved to dismiss or for summary judgment on the ground that its official decisions are not subject to judicial review. NASCAR contended that its decisions were not reviewable under Rule 9-2, which provides that "by submitting his entry application and/or taking part in any activity relating to the event, a competitor agrees to abide by the decisions of those officials relating to the event, and agrees that such decisions are non-appealable and non-[litigable] except as provided in Section 13 and 14 of this Rulebook [which provide for an internal review and appeal process]."
In the first of its three opinions in this case, which was dated December 1, 1986, the district court asserted that "the crux of the case at bar is whether the defendant association abided by its own procedures for resolving disputed track decisions." J. App. at 100. It also noted that while courts are generally reluctant to interfere with the internal proceedings of private associations, courts may intervene when an association enforces its rules in a manner that is "unreasonable or arbitrary." Id. It thus limited its review to the issue of whether NASCAR acted unreasonably or ...