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12/30/82 NELSON SKALBANIA AND INDIANAPOLIS RACERS

filed: December 30, 1982.

NELSON SKALBANIA AND INDIANAPOLIS RACERS 1977, INC., APPELLANTS (DEFENDANTS BELOW), AND WORLD HOCKEY ASSOCIATION, NEW ENGLAND WHALERS, QUEBEC NORDIQUES, WINNEPEG JETS, CINCINNATI STINGERS, EDMONTON OILERS, AND BIRMINGHAM BULLS, APPELLANTS (DEFENDANTS BELOW), AND INDIANAPOLIS RACERS, INDIANAPOLIS RACERS LIMITED, HOCKEY MANAGEMENT INC., AND HOCKEY WORLD, LTD., NON-APPEALING DEFENDANTS
v.
AL SIMMONS, KEITH MARSHALL AND MICHAEL KELLY, APPELLEES (PLAINTIFFS BELOW).



APPEAL FROM THE MARION SUPERIOR COURT CIVIL DIVISION ROOM NO. 1 The Honorable Charles W. Applegate, Judge Cause No. S178-1491

Buchanan, C.j. Shields, J. Concurs Sullivan, J. Concurs IN Part and Dissents IN Part with separate opinion.

Author: Buchanan

BUCHANAN, C.J.

CASE SUMMARY

The Indianapolis Racers Hockey Team (Racers), its owner, Nelson Skalbania, the World Hockey Association, and its constituent hockey teams bring this interlocutory appeal from the certification of a class of plaintiffs consisting of 1978-79 Racers season ticket holders, arguing that the trial court abused its discretion in granting class certification because individual questions predominate over matters common to the class.

We affirm.

FACTS

This case arose from the collapse of the Indianapolis Racers professional hockey franchise during the 1978-79 season. At the time the team ceased operation, only 13 of 40 scheduled home games had been played.

Plaintiffs are a class of persons comprising 1978-79 Racers season ticket holders. Through their representatives Al Simmons (Simmons) and Michael Kelly (Kelly), they brought suit against the various corporate entities owning and operating the Racer franchise.[Footnote 1] They also sued Nelson Skalbania (Skalbania), the owner of the racers, the World Hockey Association (WHA), the league in which the Racers competed, and the constituent teams which comprised that league during the Racers' final season.

In their complaint, plaintiffs request damages from Skalbania and the Racers for breach of contract (Count II, R. at 16); breach of warranty (Count III, R. at 17); and negligent operation of the Racer franchise (Count VI, R. at 18-19). Against the WHA, its constituent teams, Skalbania, and the Racers, plaintiffs request damages for common law fraud (Count I, R. at 15); common law fraud and breach of fiduciary duty (Count IV, R. at 17-18); tortious interference with the rights of the Racers and plaintiffs in the services and contracts of Racer players (Count V, R. at 18); negligent and reckless operation of and negligent failure to disclose facts indicative of the negligent and reckless operation of the Racer franchise (Count VII, R. at 19-20); tortious interference with the contractual relationship between plaintiffs and the Racers based upon merger negotiations which were conducted between the WHA, the Racers, and the National Hockey League (Count VIII R. at 20); and conduct supporting an award of punitive damages (Count IX, R. at 21).

For clarity we list these various claims on the following scorecard:

COUNT DEFENDANTS CLAIM

I All Fraudulent disclosure and

failure to disclose the

poor financial condition

of the franchise.

II Racers and Skalbania Breach of contract.

III Racers and Skalbania Breach of express and implied

warranties.

IV All Conspiracy to misappropriate

and misappropriation

of season ticket funds;

breach of fiduciary duty.

V All Conspiracy to interfere

with and interference with

Racer player contracts.

VI Racers and Skalbania Negligent operation of

Racer franchise.

VII All Failure to supervise Racer

franchise; nondisclosure

of poor operation of the

franchise.

VIII All Negligent conduct of merger

negotiations.

IX All Punitive damages.

On May 22, 1981 plaintiffs filed a "motion to determine the propriety of class action" (R. at 26). On December 4, 1981 a hearing was held upon that motion to determine whether the class should be certified. During that hearing the depositions of Simmons and Kelly were published. Evidence elicited at the hearing established that out of 40 promised games, only 13 were played (R. at 270) and that the proposed class consists of 1,140 persons (id.), holding about 3,500 season tickets (R. at 269). Supporting Kelly's appointment as a class representative is his purchase of two season tickets at a total cost of $580. (Id.). Simmons bought four tickets for $1,160 (R. at 275).

Evidence before the court, included in the depositions, indicates that Racers' advertising appeared which featured the WHA logo (R. at 351) and that the WHA was the sanctioning body for the Racers franchise (R. at 380). The WHA, as the sanctioning league, permitted the team to exist and operate (R. at 432). By allowing the Racers to embark upon the 1978-79 season, plaintiffs allege that at the least, the league implicitly asserted that the Racers possessed the economic wherewithal to complete the season (R. at 444). Such representations were made prior to the purchase of season tickets by members of the class (R. at 384). The WHA itself continued operation after the Racers folded and the league completed the season in question. (R. at 272).

Plaintiffs also allege that the WHA and member teams received Racers players for inadequate or non-existent compensation (R. at 457). Such player transfers, which commenced after the season began, were detrimental to the Racers because the player sales constituted the disbanding of a competitive team. (R. at 358).

Insofar as Skalbania's conduct vis-a-vis the WHA is concerned, the evidence shows that, at the time he acquired the Racers, Skalbania also owned the Edmonton Oilers. Despite the conflict of interest ramifications of such dual ownership, the WHA let Skalbania own the two teams at once. (R. at 353).

Plaintiffs also testified that merger negotiations between the WHA, the Racers, and the National Hockey League were harmful to the Racers because the uncertainty regarding the team's continued operation which those negotiations engendered depressed attendance at Racers games. (R. at 401).

Both Simmons and Kelly testified that they want their season ticket expenditures back (R. at 403, 435). Kelly described all season ticket holders as "being in the same seat as I'm in that as far as having lost the dollars that they invested." (R. at 441).

Following the hearing, the trial court, on February 12, 1982, certified this case as a class action pursuant to Ind. Rules of Procedure, Trial Rule 23:

Order CERTIFYING CLASS ACTION

This matter, having come before the court on December 4, 1981, for a hearing to determine the propriety of permitting this action to proceed as a class action, and the court having heard the evidence now makes the following findings and entry:

1. The named plaintiffs, Al Simmons and Michael Kelly, are owners of season tickets for the Indianapolis Racers 1978-79 hockey season.

2. There were approximately 1, 140 individual season ticket owners and a total of approximately 3,500 season tickets purchased for the Indianapolis Racers 1978-79 hockey season, including the aforementioned plaintiffs, and joinder of all such owners of 1978-79 season tickets is impracticable.

3. A class action is superior to other available methods for the fair and efficient adjudication of the controversy between the 1978-79 season ticket owners and the named defendants.

4. The plaintiffs Al Simmons and Michael Kelly seek to represent the class of 1978-79 season ticket owners in their claims against defendants to recover compensatory damages plus interest and punitive damages as a result of the cessation of operations of the 1978-79 Racers.

5. The claims of plaintiffs are typical of the claims of all 1978-79 season ticket owners, and involve common questions of law and fact which predominate over any questions involving only individual members.

6. The plaintiffs Al Simmons and Michael Kelly fairly and adequately represent the interests of all 1978-79 season ticket owners.

7. There is no other known litigation pending wherein a 1978-79 season ticket owner is seeking damages from any of these defendants as a result of the ...


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