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TEAM OBSOLETE LTD. v. A.H.R.M.A. LTD.

March 24, 2003

TEAM OBSOLETE LTD., ET AL., PLAINTIFFS,
v.
A.H.R.M.A. LTD., ET AL., DEFENDANTS.



The opinion of the court was delivered by: I. Leo Glasser, United States District Judge

MEMORANDUM AND ORDER

Plaintiffs filed this action in March of 2001 making claims under the Sherman Act, the Racketeer Influenced and Corrupt Organizations Act, the Lanham Act, and California unfair competition laws, as well as other state law claims, against defendants A.H.R.M.A. Ltd. d/b/a American Historic Racing Motorcycle Association ("AHRMA"), and current and former named directors, officers, officials, or trustees of AHRMA (the "individual AHRMA defendants"), and claims under the Sherman Act and California unfair competition laws against the Bendelow Law Firm, f/k/a/ Bendelow & Darling P.C., and the American Motorcyclist Association ("AMA").

AHRMA, the individual AHRMA defendants, and AMA now move for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure. Bendelow Law Firm moves to dismiss all claims against it pursuant to Rule 12(b)(6). AHRMA separately moves for sanctions pursuant to Rule 11. Bendelow Law Firm also moved under Rule 11, but has withdrawn that motion.

In response. plaintiffs seek leave to amend their complaint to withdraw their RICO claims with prejudice, to drop their claims against the individual AHRMA defendants (thereby creating complete diversity), and to amend certain factual allegations. Although the claims against the individual AHRMA defendants are dropped in the proposed amended complaint, the caption continues to list them. Presumably this is an oversight. Defendants oppose the amendment of the complaint as futile.*fn1

For the reasons that follow, AMA's motion is granted with respect to the Sherman Act claims and with respect to the California unfair competition claims of plaintiffs Team Obsolete, Ltd., Team Obsolete Products, Ltd., Team Obsolete Promotions, Inc., and Robert I. Iannucci, but otherwise is denied. AHRMA's motion is granted to the same extent as AMA's motion, and therefore the Sherman Act claims and the same California claims of the same plaintiffs are dismissed. AHRMA's motion is denied as to the remaining claims. AHRMA's Rule 11 motion is also denied. As to Bendelow Law Firm, the motion is granted and all claims are dismissed.

BACKGROUND

Since plaintiffs seek leave to amend the complaint, the factual allegations in the proposed amended complaint ("Am. Compl.") will be taken as true for these motions. See Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals, 282 F.3d 83, 87 (2d Cir. 2002) (accepting as true for purposes of motions to dismiss all allegations in proposed amended complaint).

Plaintiffs Team Obsolete Ltd., Team Obsolete Products Ltd., and Team Obsolete Promotions, Inc. (collectively "Team Obsolete"), are New York corporations with a principal place of business located in Brooklyn, New York. Plaintiff Robert T. Iannucci ("Iannucci") is a resident of New York State and the President of Team Obsolete. The other named plaintiffs (the "individual riders") are individuals from other states or countries who either ride Team Obsolete motorcycles, ride on behalf of Team Obsolete in national races, or are otherwise associated with Team Obsolete. They include Jim Redman, MBE, a six-time Federation International de Motocyclisme ("F.I.M.") world champion; Don Vesco, who twice set the world land speed record for wheeled vehicles; Dave Roper, who has won Daytona over twenty times, has won many AHRMA national championships, and is the only American to ever win the Isle of Man race; Lon McCroskey, a surgeon who races his own collection of historic motorcycles; Erik Green, a well-known rider of historic motorcycles; and John Kain, also a rider of historic motorcycles.

In the late 1970's, Iannucci and Team Obsolete began organizing vintage motorcycle racing on paved closed circuit tracks. Most of these events were sanctioned by defendant American Motorcycle Association ("AMA"). AMA is an organization with about 270,000 members that "pursues, protects and promotes the interests of motorcyclists in the United States," and sanctions and promotes racing events. It is the largest general membership motorcycle organization in the world, and one of its divisions encompasses vintage motorcycle racing. AMA today promotes two historic racing events, Vintage Days at Mid-Ohio and Sonomafest at Sears Point, California. AMA also issues "Promoter Charters" to independent event promoters that permit them to stage events under AMA's sanction. AMA also provides insurance for participants in AMA sanctioned events under its ARMOUR policy. The lack of ARMOUR insurance at events not sanctioned by AMA allegedly discourages riders from competing.

As the sport of vintage motorcycle racing grew in popularity during the 1980's, Iannucci and Team Obsolete believed that a national body was necessary to administer the sport, and thus became founders of AHRMA. AHRMA is a not-for-profit organization organized under the laws of Ohio that conducts a large national and international program of vintage motorcycle racing and has about 5000 members. Iannucci helped create AHRMA in order to standardize racing rules and classes to permit racers to participate in different events while working towards a nationally recognized point tally that would in turn encourage the sport of racing and facilitate its promotion.

AHRMA is the only vintage motorcycle racing association in the United States that conducts a national competition series. In other words, anyone who wants to compete for a national title in vintage motorcycling must race in AHRMA events. AHRMA promotes and organizes ten to fourteen vintage motorcycling races annually. and sanctions another four — two of which are promoted by the AMA.

On the advice of AMA, in 1988 Iannucci retained Edward Bendelow, Esq., and his law firm Bendelow & Darling P.C. (a predecessor to defendant Bendelow Law Firm), to reorganize AHRMA. Bendelow provided legal assistance to help AHRMA change from a privately held business into a not-for-profit association. Bendelow today is general counsel to AHRMA and allegedly controls AHRMA along with AHRMA Executive Director Jeff Smith. Upon Bendelow's advice, AHRMA was reorganized to create a Board of Trustees comprised of 12 trustees elected under an "at-large" system. Plaintiffs allege that this new system of governance permitted Bendelow and Smith effectively to take control of AHRMA.

AHRMA's Efforts to Eliminate Team Obsolete

Iannucci was originally appointed as "Special Advisor" to the Board of Trustees for a five year term, but was forced out of this position at some unspecified time under pressure from AHRMA, Bendelow. and the AMA. When Iannucci was forced out, AHRMA agreed to accredit him as a founder of AHRMA for ten years, but breached this agreement by 1998. AHRMA also barred Iannucci from all appointed positions in AHRMA and terminated his membership.

AHRMA and AMA allegedly have agreed that all vintage motorcycle racing events held at AMA promoted locales (of which there are two — the previously mentioned Mid-Ohio and Sonomafest) will be organized and controlled by AHRMA, and that all AHRMA events are sanctioned by AMA. Plaintiffs allege that AHRMA, acting in collusion with AMA, has engaged in a fifteen year long campaign to destroy competition in the business and sport of vintage motorcycle racing by eliminating Team Obsolete as a major competitor and by reducing the number of events, entrants and available motorcycles that can be used in competition.

Plaintiffs point to a number of incidents that allegedly support this claim. The complaint devotes almost two hundred paragraphs to detailing these incidents, which can be divided into certain categories. For example, plaintiffs allege that AHRMA officials have organized group boycotts of a number of Team Obsolete events by refusing to attend or publicize them, and in one case punishing riders who competed in a non-AHRMA sanctioned event promoted by Team Obsolete by subsequently assigning them poor post positions, a term which is undefined in the complaint but presumably refers either to how far from the inner ring of the track (as in horse racing) or how far back from the starting line (as in auto racing) a rider is placed before the race.

Other incidents alleged by plaintiffs include:

• publicizing false statements about the safety of one track where Team Obsolete staged an event;
• publicly disqualifying plaintiff Vesco;

• distributing anti-Iannucci stickers at one event;

• causing a test rider on an extremely rare motorcycle to lose his concentration and crash;
• falsely reporting that a fifteen time world champion would appear at an AHRMA event in order to draw attention away from his appearance the next day at a Team Obsolete event;
• improperly demanding that Team Obsolete pay AHRMA's legal fees under threat of revocation of Iannucci's membership and license after Team Obsolete and AHRMA settled a trademark dispute. and then falsely reporting that Iannucci paid the fees without protest;
• refusing to permit plaintiffs Roper and Green to post-enter (presumably referring to a late entry) contrary to AHRMA's own rules and its practice at that event;
• making false statements to the Patent and Trademark Office regarding a mark*fn2 ("SUPER MONO") that Team Obsolete had been using for some time;
• deliberately confusing spectators and competitors by announcing, immediately after Team Obsolete announced its intention to revive the defunct "Trans-Atlantic Match Race" series, AHRMA's own intention to revive the series, thus scooping up sponsors, and also falsely stating that AMA had licensed the TAMR trademark to AHRMA; and
• announcing to promoters of "Sound of Thunder" events (which involve a specific subclass of vintage motorcycles) that AHRMA had a court order forbidding Team Obsolete from racing similar types of races, leading to the revocation of a planned Team Obsolete event in October 1998 by the promoter.*fn3
AHRMA Refuses to Renew Iannucci's Membership

In early 1999, AHRMA Executive Director Smith rejected Iannucci's application to renew his AHRMA membership. On February 4, 1999, the Board of Trustees affirmed this decision. Smith informed Iannucci of this and confirmed that AHRMA would not do business with Team Obsolete, and told Iannucci he had a right to be heard by the Board of Trustees.*fn4 As a result, all riders and motorcycles affiliated with Team Obsolete cannot compete in AHRMA events unless they disassociate themselves from Team Obsolete.

On February 11, 1999, AHRMA publicized its decision to reject Iannucci's application to renew his membership. The next day, Iannucci asked for details of the decision and requested a hearing before an impartial panel. In a letter dated March 26, 1999, Bendelow informed Iannucci that his membership was terminated for the "conduct" described in the BEARS trademark infringement litigation (in which the district court had just granted a permanent injunction against Team Obsolete after noting Team Obsolete's "shifty behavior" and possible bad faith, see n. 2, supra). Bendelow further informed Iannucci that AHRMA would no longer do business with Team Obsolete in part because of the BEARS litigation and in part simply because AHRMA was choosing not to do so. Bendelow also informed Iannucci that he could appear at the next board meeting in August 1999 in Phoenix, Arizona.

Iannucci hired counsel to speak on his behalf. When Iannucci's attorney discovered he was scheduled to be on trial at the same time as the Phoenix meeting, his attorney requested that the board meeting be rescheduled. AHRMA refused to reschedule the board meeting and also refused to permit a stenographer to attend, but did tape record the board meeting. Iannucci's attorney appeared before the board for five minutes, but objected solely to the after-the-fact nature of the hearing process.

The expulsion of Iannucci and Team Obsolete resulted in AHRMA rejecting race applications from riders who listed an affiliation with Team Obsolete. For example, in January 1999 eight riders applied to participate in vintage races at Daytona, but either were rejected or had their entries revoked because Team Obsolete sponsored them. When plaintiff Green retained an attorney (the same attorney who would represent Iannucci at the board meeting in August), AHRMA assessed Green legal fees for the time Bendelow spent reading the letter from Green's attorney. Although AHRMA initially barred these eight riders, the Daytona International Speedway intervened and persuaded AHRMA and AMA to permit Team Obsolete to continue racing for the season by creating a "Promoter's Option." Under this option. the riders applied to Daytona International Speedway and submitted application fees, and the speedway in turn forwarded the application and fees to AHRMA.

At the 1999 Sonomafest event, AHRMA again refused to process the applications of Team Obsolete riders, but inconsistently permitted Stuart Carter, who does not ride for Team Obsolete, to compete using a Team Obsolete bike. Unlike Daytona International Speedway, AMA (as the actual promoter for Sonomafest 1999) would not permit these applicants to race without AHRMA's approval. The same problem occurred at the 1999 Mid-Ohio event (which AMA also promotes) for a number of riders, and again at an AHRMA race in Park City, Utah, that plaintiff Vesco sought to enter. Finally, in 2002, plaintiff Roper applied and was accepted to race at an AHRMA event in Grattan, Michigan, but the acceptance was revoked by AHRMA when they discovered that his sponsor was Team Obsolete.

Lost Sponsors for Team Obsolete

Plaintiffs allege that as a result of AHRMA's efforts a number of sponsors have either cancelled or curtailed their support. Although it is not entirely clear from the proposed amended complaint, it appears that sponsors will support teams both by directly contributing cash and also by providing parts for motorcycles used at races. In 1998, Megacycle Cams (with which Team Obsolete had worked since 1990) cancelled the financial part of their support following a personal request from one of AHRMA's trustees. Plaintiffs allege that at least three other sponsors have all either stopped sponsoring Team Obsolete or at least withdrawn cash support. Plaintiffs allege that all of these terminations were a direct result of AHRMA's efforts to disrupt Team Obsolete.

AMA Appeals Process

Iannucci is a member of the AMA. On February 3, 1999, the AMA President stated that AMA viewed the AHRMA decision not to renew Iannucci's membership as a private dispute between Iannucci and AHRMA. At an AMA Board meeting in August 1999, the board again adopted this position of neutrality, although it continued to sanction all AHRMA events. An AMA resolution was adopted shortly thereafter, however. that provides "any current AMA member who had been denied the ...


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