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USA Track & Field, Inc. v. Leach

United States District Court, S.D. Indiana, Indianapolis Division

November 7, 2016

USA TRACK & FIELD, INC., Plaintiff and Counter-Defendant,
v.
LIONEL LEACH, RON MASCARENAS, KENNETH FERGUSON, DOROTHY DAWSON, LINDA ELLIS, LINDA PHELPS, NORINE RICHARDSON, HENRY MCCALLUM, DAVID REINHARDT, INEZ FINCH, MARC JONES, MARY ELIZABETH AUDE, and JACQUELINE WHITE, Defendants and Counter-Claimants.

          ORDER ON DEFEND ANTS' MOTION FOR PRELIMINARY INJUNCTION

          TANYA WALTON PRATT, JUDGE.

         This matter is before the Court on a Motion for Preliminary Injunction filed pursuant to Federal Rule of Civil Procedure 65(a) by Defendants Lionel Leach, Ron Mascarenas, Kenneth Ferguson, Dorothy Dawson, Linda Ellis, Linda Phelps, Norine Richardson, Henry McCallum, David Reinhardt, Inez Finch, Marc Jones, Mary Elizabeth Aude, and Jacqueline White (collectively the "Youth Executive Committee" or "Defendants") (Filing No. 10). In May 2016, the USA Track & Field Board of Directors voted to immediately suspend each of the Defendants from their positions as members of the USA Track & Field, Inc. ("USATF") Youth Executive Committee. On June 3, 2016, Plaintiff USATF initiated this action by filing a Complaint in state court seeking declaratory and injunctive relief as well as damages against the Youth Executive Committee, asserting claims for tortious interference with contract, conspiracy to interfere with a business relationship, tortious interference with prospective business relationships, common law conversion, criminal conversion, violation of Indiana's Uniform Trade Secrets Act, and declaratory judgment regarding the interpretation of USATF's bylaws and regulations (Filing No. 1-1). On July 8, 2016, the Youth Executive Committee removed the action from state court to this Court based on diversity jurisdiction.

         Thereafter, the Youth Executive Committee filed the instant Motion for Preliminary Injunction and supporting brief. They seek a preliminary injunction for: (1) reinstatement to their positions as members of the Youth Executive Committee; (2) reinstatement of their USATF memberships and ability to serve as coaches, mentors, volunteers, officials, or local association leaders; and (3) a defense and indemnification from USATF for USATF's claims against the Youth Executive Committee. For the following reasons, the Court DENIES the Youth Executive Committee's Motion for Preliminary Injunction.

         I. LEGAL STANDARD

         "A preliminary injunction is an extraordinary remedy never awarded as of right." Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 24 (2008). Granting a preliminary injunction is "an exercise of a very far-reaching power, never to be indulged in except in a case clearly demanding it." RolandMach. Co. v. Dresser Indus., Inc., 749 F.2d 380, 389 (7th Cir. 1984) (citation and quotation marks omitted). When a district court considers whether to issue a preliminary injunction, the party seeking the injunctive relief must demonstrate that:

(1) it has a reasonable likelihood of success on the merits of its claim; (2) no adequate remedy at law exists; (3) it will suffer irreparable harm if preliminary injunctive relief is denied; (4) the irreparable harm it will suffer without preliminary injunctive relief outweighs the irreparable harm the nonmoving party will suffer if the preliminary injunction is granted; and (5) the preliminary injunction will not harm the public interest.

Platinum Home Mortg. Corp. v. Platinum Fin. Group, Inc., 149 F.3d 722, 726 (7th Cir. 1998). The greater the likelihood of success, the less harm the moving party needs to show to obtain an injunction, and vice versa. Girl Scouts of Manitou Council, Inc. v. Girl Scouts of the United States of America, Inc., 549 F.3d 1079, 1086 (7th Cir. 2008).

         II. BACKGROUND

         USATF is based in Indianapolis, Indiana and is the recognized national governing body and non-profit organization for "Athletics" (comprised of the sports of track and field, long distance running, and race walking). USATF is subordinate to the United States Olympic Committee ("USOC"). USATF selects, promotes, and oversees the USA Track and Field National Team that competes at the Olympics and at other international competitions in Athletics events. It helps develop future track and field athletes, promotes the sport of track and field, and establishes and enforces the rules of Athletics. It encompasses the No. 1 high school and junior high school participatory sport and more than 30 million adult runners in the United States. Led by President Stephanie Hightower and CEO Max Siegel, USATF is a volunteer-driven, not-for-profit organization with a staff of professional program administrators at the National Office in Indianapolis.[1]

         The individual Defendants were each members of the USATF Youth Executive Committee. The Youth Executive Committee is the executive committee of the USATF Youth Division. It includes the Divisional Chair, the Divisional Vice Chair, the Vice Chair of Operations, the Vice Chair for Administration/Treasurer, the Divisional Secretary, five Zonal Representatives, the immediate past Divisional Chair, and one ex-officio member. Lionel Leach was the Divisional Chair. On May 24, 2016, the USATF Board of Directors voted 11 to 1 to immediately suspend each of the Defendants from their positions as members of the Youth Executive Committee. (Filing No. 1-1 at 2.)

         Each of the Defendants has participated in track and field in various capacities. Some began their participation as athletes. Each has served their communities and the youth in their communities as coaches, managers, administrators, trainers, officials, or mentors. They have made serving their communities through sports participation a central part of their lives. Many of the members of the Youth Executive Committee have made it their life mission to serve youth through participation in track and field sports. Some of the Defendants have served for many years, some more than thirty years, having a positive impact on the youth in their communities. Many of the Defendants testified at the preliminary injunction hearing that the news of their suspensions and the abrupt termination of their life mission has made them physically sick and has led to loss of sleep.

         USATF is comprised of fifty-nine local associations, each with its own officers, board, and committees. The Defendants were not only members of the Youth Executive Committee but also active within their local associations.

         USATF's Governance Handbook provides the rules, policies, and procedures for USATF. The Governance Handbook also describes the roles of USATF's Board of Directors (the "Board") and the National Office. USATF is governed by the Board, which establishes policies, oversees all USATF committee programs, and selects a chief executive officer to lead the National Office. The Board and National Office direct and oversee USATF's programming. They are assisted by five divisions and one group that are led by volunteers, including the Youth Athletics Division, which is directed by the Youth Executive Committee.

         USATF Bylaw Article 12-A-7 requires that any commercial agreement or contractual obligation binding USATF must be signed by the USATF CEO or his designee, unless the Board otherwise directs. USATF Bylaw Article 18-1 requires USATF, through its CEO, to communicate the contents of all contracts affecting sports committees with those committees during the negotiation phase. USATF Bylaw Article 12-A-8 provides that the CEO shall be responsible for managing all commercial aspects of USATF. Regulation 15-C-l provides jurisdiction to the various USATF committees to institute, conduct, and manage all championships within their discipline and under their auspices.

         USATF Bylaw Article 18-D states,

USATF shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, administrative, or investigative, by reason of the fact that he or she is or was a director, officer, employee, or official representative of USATF against expenses, including attorney's fees, judgments, fines, and amounts actually and reasonably incurred by him or her in connection with the action, suit, or proceeding. To qualify for indemnity, he or she must have acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, USATF's best interests. . . . The termination of any action, suit, or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of USATF. . . . Any indemnification under this article shall be made by USATF after the Board determines that the officer, director, employee, or official representative has met the applicable standard of conduct. The Board shall make its decision by a majority vote of a quorum consisting of members of the Board who are not parties to the action, suit, or proceeding. If such a quorum is not obtainable, the CEO shall make the decision, after consulting with independent legal counsel.

(Filing No. 9-7 at 27).

         To operate a track and field meet, a meet organizer needs both timing software and event registration software. The two software programs must be compatible to link registrations with race results but particularly so for feeder events to national championships because an entrant's qualifications to register are determined by the race results of the timing software. Pertinent to this case, timing software vendors include Hy-Tek and Meet Pro, and event registration software vendors include Coach O, Direct Athletics, ...


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