Intercollegiate Women's Lacrosse Coaches Ass'n v. Corrigan Sports Enters., Inc.

546 F.Supp.3d 440

The INTERCOLLEGIATE WOMEN'S LACROSSE COACHES ASSOCIATION, Plaintiff,

v.CORRIGAN SPORTS ENTERPRISES, INC. and Richard Lee Corrigan, Jr. in his individual and corporate capacities, Defendants.

1:20-cv-00425

United States District Court, M.D. North Carolina.

Signed July 1, 2021

Robert C. Ekstrand, Stefanie Anne Sparks, Ekstrand & Ekstrand, LLP, Durham, NC, for Plaintiff.

Andrew R. Shores, Robert Van Arnam, Williams Mullen, Raleigh, NC, David P. Corrigan, Melissa Y. York, Harman, Claytor, Corrigan & Wellman, Glen Allen, VA, for Defendants.

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, Chief District Judge.

This is a dispute over the unwinding of a relationship between the parties related to sponsorship of high school lacrosse tournaments nationwide following the impact of the novel coronavirus in 2020. Before the court is the motion of Plaintiff Intercollegiate Women's Lacrosse Coaches Association ("IWLCA") to dismiss all counterclaims against it pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. 68.) Defendants Corrigan Sports Enterprises, Inc. ("CSE") and Richard Lee Corrigan, Jr. filed a response in opposition (Doc. 70), and IWLCA filed a reply (Doc. 71). For the reasons set forth below, the motion will be granted in part and denied in part.

I. BACKGROUND

A. Factual Background

The facts as outlined in CSE's counterclaims, which are taken as true for the purposes of the present motion, show the following:

CSE is an event hosting company that is experienced in organizing, promoting, and operating sporting events across the country, including lacrosse tournament events. (Doc. 66 countercls. ¶¶ 18-22.) Corrigan is CSE's founder and president. (Id. ¶ 18.) IWLCA is a professional association whose membership is comprised of college lacrosse coaches within the National Collegiate Athletic Association ("NCAA") and the National Association of Intercollegiate Athletics ("NAIA"). (Id. ¶ 24.)

In or around July 2009, CSE entered into discussions with Gothard Lane, the then-Executive Director of IWLCA, regarding a potential partnership to hold high school women's lacrosse tournaments.¹ (Id. ¶¶ 25-26.) As part of these discussions, CSE and Lane agreed that IWLCA would sponsor the tournaments while CSE would organize, promote, plan, and operate them. (Id. )

Following these discussions and initial negotiations, CSE presented IWLCA with a proposal for CSE to organize and host the Presidents Cup in Naples, Florida in 2010 and 2011 — with an option for 2012 — and the Capital Cup outside of Washington, D.C. in 2011, 2012, and 2013. (Id. ¶ 28.) In exchange, IWLCA would sponsor and promote the tournaments to its member coaches. (Id. ¶ 30.) IWLCA accepted the proposal, and the organizations agreed to split the net profits of the tournaments 50-50. (Id. ¶¶ 29-30.)

In November 2013, CSE and IWLCA executed a contract ("the 2013 contract") to formalize the terms for the organization, promotion, and hosting of several high school women's lacrosse tournaments, including the Champions Cup from 2013 to 2015; the Capital Cup from 2013 to 2016; the Western Cup from 2013 to 2015; and the Presidents Cup from 2013 to 2015. (Id. ¶ 32.) Per the contract, CSE's responsibilities included, among other items, organizing, processing, and executing the registration of all teams; advertising and marketing the tournaments using the IWLCA logo; creating and maintaining a website for the tournaments; and hosting and administering the tournaments, including securing event locations and equipment, staffing officials, researching insurance, facilitating sponsorships and vendors, collecting fees, paying tournament expenses, and accounting for all revenues and expenses for each tournament. (Id. ¶ 33.) In exchange, IWLCA agreed to promote the tournaments to college coaches, to facilitate the establishment of sponsorships for and vendors at the tournaments, to timely communicate with CSE, and to grant CSE the exclusive right to organize and host the tournaments. (Id. ¶ 34.) The contract further indicated that where circumstances may require the cancellation of any tournament, "IWLCA and CSE shall decide together to cancel a Tournament." (Id. ¶ 35.)

In April 2014, CSE and IWLCA executed an addendum to the 2013 contract ("the 2014 addendum") that extended the terms of the 2013 contract to the 2016 Champions, Capital, Western, and Presidents Cups and added the 2014 through 2016 New England Cups to the agreement. (Id. ¶ 36.) In April 2017, the parties executed a second addendum ("the 2017 addendum") that extended the terms of the 2013 contract to the New England, Champions, Midwest, Capital, and Presidents Cups for 2017 and 2018. (Id. ¶ 37.)

In 2017, IWLCA issued a Request for Proposals ("RFP") for the 2018, 2019, and 2020 tournaments, to which CSE responded. (Id. ¶ 41-42.) IWLCA accepted CSE's proposal, but the parties did not execute a new contract or addendum for these tournaments. (Id. ¶¶ 42, 53.)

In 2018, Lane stepped down as Executive Director of IWLCA. (Id. ¶ 44.) That same year, Samantha Ekstrand, IWLCA's counsel and leading business executive, informed CSE that IWLCA wanted to negotiate a new long-term contract and make significant changes. (Id. ¶¶ 10, 45.) In response, CSE prepared a draft proposal and sent it to Ekstrand. (Id. ¶ 45.) However, Ekstrand denied the proposal, allegedly without input or review of the IWLCA Board, and the parties did not execute a new contractual agreement. (Id. )

In December 2018, IWLCA began to more closely monitor the expenses associated with the tournaments and hired an outside firm to inspect CSE's accounting records. (Id. ¶¶ 46-48.) Although the outside firm found no irregularities, Ekstrand allegedly informed the IWLCA Board that CSE was taking advantage of IWLCA and that certain fees were improper. (Id. ¶¶ 48-52.)

The 2019 tournaments were conducted without a written agreement between the parties but performed "in accordance with the terms of the 2013 Contract and subsequent amendments and the course of performance and terms under which they had operated for several years." (See id. ¶ 54.)

Shortly after the 2019 tournaments, in August 2019, CSE opened registration for the 2020 tournaments.² (Id. ¶¶ 55-56.) As part of the registration process, registrants were required to submit a clearly identified, non-refundable deposit. (Id. ¶ 58.)

On April 18, 2020, IWLCA publicly announced, without any input from CSE, that it had decided to cancel the 2020 tournaments and that it had "directed" CSE to issue refunds to all registered teams. (Id. ¶¶ 60, 62.) By that time, over 1,100 teams had registered or were waitlisted for the tournaments and CSE had incurred significant expenses in planning the tournaments. (See id. ¶¶ 59, 64.)

Rather than cancelling the tournaments, CSE announced that IWLCA had decided to withdraw its sponsorship and official involvement in the tournaments, but that CSE would continue to host the tournaments to the extent possible in light of COVID-19 restrictions. (Id. ¶ 66.) CSE further gave registrants who could not participate in the tournament for which they had registered the option of transferring their registration to another 2020 tournament, requesting a deferment of their registration to a 2021 tournament, or requesting a partial refund, less their non-refundable deposit. (Id. ¶¶ 69-70.)

In the months following the April 2020 announcements, IWLCA allegedly began to actively lobby its member coaches not to attend CSE's tournaments or collaborate with CSE in any way. (Id. ¶¶ 72-83.) IWLCA also allegedly began interfering with CSE's relations with sponsors, local municipalities, and tourism boards. (Id. ¶¶ 84-86, 94.) Finally, IWLCA allegedly contacted players, teams, and coaches to discourage them from attending CSE tournaments and made false statements indicating that "CSE runs low quality tournaments," "CSE's president, Lee Corrigan, is dishonest," "participants w[ould] not receive the experience at CSE tournaments" that they were promised, and "there w[ould] not be many, if any, college coaches/recruiters in attendance." (Id. ¶¶ 87-91.)

Between July and November 2020, CSE hosted five high school women's lacrosse tournaments with COVID-19 protocols in place. (Id. ¶¶ 98–99.) Ultimately, though, the number of teams in attendance was significantly lower than prior years. (See id. ¶ 98.)

B. Procedural History

On May 6, 2020, IWLCA filed this action in a North Carolina state court seeking declaratory, monetary, and injunctive relief. (Doc. 1-1.) Defendants timely removed the lawsuit to this court (Doc. 1) and moved to dismiss for lack of jurisdiction (Doc. 14). IWLCA subsequently filed an amended complaint (Doc. 15), and the motion to dismiss for lack of jurisdiction was denied (Doc. 42).

Defendants also filed a motion to dismiss pursuant to Rule 12(b)(6) (Doc. 23), which this court granted in part and denied in part on December 4, 2020 (Doc. 63). Defendants then filed their answer, affirmative defenses, and counterclaims in response to IWLCA's amended complaint. (Doc. 66.) Defendants allege five counterclaims against IWLCA: (1) breach of contract; (2) tortious interference with contract; (3) tortious interference with prospective economic advantage; (4) unfair competition; and (5) violations of the North Carolina Unfair and Deceptive Trade Practices Act ("UDTPA"), N.C. Gen. Stat. § 75-1.1 et seq. (Id. countercls. ¶¶ 102-52.) IWLCA now moves to dismiss all counterclaims pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. 68.) Defendants oppose the motion, which is fully briefed and ready for resolution. (See Docs. 69, 70, 71.)

II. ANALYSIS

A. Standard of Review

Federal Rule of Civil Procedure 8(a)(2) provides that a pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. (8)(a)(2). Under Federal Rule of Civil Procedure 12(b)(6), a complaint — or as is the case here, a counterclaim — must contain "sufficient factual...