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The former owner of the New England Patriots football team has won a partial reversal of his lost antitrust case. The 2nd U.S. Circuit Court of Appeals reinstated the case of Victor K. Kiam against a Jacksonville, Fla., football booster group that Kiam claims conspired with the National Football League to prevent him from moving the Patriots franchise to Florida. The decision in VKK Corporation v. National Football League, 99-7876, overturns a grant of summary judgment by Judge Milton Pollack of the U.S. District Court for the Southern District of New York in favor of the group Touchdown Jacksonville Inc., which first sought to lure the Patriots to Jacksonville but then backed off after being told by the NFL to cease negotiations with Kiam. But in the same ruling, the 2nd Circuit refused to disturb a jury verdict in favor of the NFL and against Kiam on his claim under the Sherman Antitrust Act. After losing money for two years with the Patriots, Kiam began talks with Touchdown Jacksonville Inc. (TJI) in 1991. But after learning that the NFL frowned upon the idea of the Patriots relocating, the Jacksonville group broke off talks. Later in 1991, a new entity was created, Touchdown Jacksonville Ltd. (TJL), which absorbed some of the previous group’s assets and went on to win a franchise for Jacksonville in 1993 — the Jacksonville Jaguars. Kiam continued to lose money, and he eventually informed the league in 1992 that he would sell the team to James Busch Orthwein, a member of the family that produces Budweiser beer and a resident of St. Louis. The NFL demanded that Orthwein sign an “ironclad” commitment not to move the team to St. Louis. Another prerequisite to league approval of the sale was that Kiam sign a release of all claims against the league, including antitrust claims. Two years later, in 1994, Kiam sued the league and Touchdown Jacksonville Inc., claiming a conspiracy that illegally lowered the value of the Patriots and had anti-competitive effects in several markets. Kiam had claimed that he signed the release only under economic duress. He said the release was invalid because it was “part and parcel” of the antitrust conspiracy. At the trial, Judge Pollack limited the issue before the jury to economic duress, and the jury returned a verdict for the defense. Pollack then granted summary judgment for all the defendants on the remaining issues, holding that the release was not unenforceable as “part and parcel” of the Sherman Act violations. He also held that the release included any claims against Touchdown Jacksonville. APPEAL UPHOLDS JURY On appeal, the 2nd Circuit upheld the jury’s findings against the NFL as to economic duress, with Judge Robert D. Sack writing that Kiam waited two years to claim duress, when he should have immediately sought to have the release voided. The court also rejected his claim on the “part and parcel” doctrine, saying “[n]o United States Court of Appeals has ever applied its part and parcel theory to invalidate a release.” “The conspiracy of which VKK complains is the NFL defendants’ scheme to prevent franchise relocation,” Sack said. “But insofar as VKK is concerned, the conspiracy was complete when it agreed to sell the Patriots to Orthwein because VKK could not move the team.” As to the release, Sack said that the claims against both Touchdown Jacksonville groups could not be dismissed based on the release because the release does not cover either group. Judge Pollack had found that “the release was intended to cover all member clubs of the NFL, including member clubs at the time any ‘future … claims’ might be brought by the plaintiffs.” But Judge Sack disagreed, saying that the “release does not say that Kiam and the two VKK corporations release clubs that are not members at the time of the release is signed but become members at the time future claims are brought.” “The NFL and its member clubs are sophisticated commercial actors who could have specifically referred to future member clubs had they intended to include them in the release,” he said. “Finally, TJI has never been a member or affiliate of the NFL or a successor or affiliate of a member club.” Sack said that Pollack, as an alternative ground for granting summary judgment to TJL and TJI, found there was no evidence of a conspiracy among the two groups and the NFL. “We hold that that was an issue of fact that could not be resolved by means of summary judgment on the current record,” Sack said. “A rational trier of fact could conclude that TJI was involved in a conspiracy with the NFL to thwart the Patriots’ relocation.” And as for TJL, the court said, the district court did not address the possibility that the subsequent group could be “held liable as a successor to TJI, despite the fact that the two entities had common management and that immediately after TJL was formed,” assets were transferred between the two groups.

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