Gail Brookins, Doing Business as Ernie Glide Transmissions Ernie Brookins v. International Motor Contest Association Kathy Root Billy Joe Bushore, Doing Business as Bushore Racing Enterprises

Citations: 219 F.3d 849; 2000 U.S. App. LEXIS 18638Docket: 99-1657

Court: Court of Appeals for the Eighth Circuit; August 3, 2000; Federal Appellate Court

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Gail and Ernie Brookins sued the International Motor Contest Association (IMCA), its president Kathy Root, and competitor Billy Joe Bushore, after IMCA amended its rules to effectively exclude the Brookins' transmissions from modified class races. The Brookins claimed this constituted an antitrust conspiracy under Section 1 of the Sherman Act, asserting that IMCA's rule changes were influenced by rival manufacturers. The United States Court of Appeals for the Eighth Circuit affirmed the district court's summary judgment dismissing the Brookins' antitrust claim, citing their failure to demonstrate market power or harm to competition. IMCA, established in 1915, governs numerous racing tracks and classes, including modified races, which became popular with nearly 4,000 participants in 1997. The Brookins' Ernie Glide transmission gained acceptance but faced scrutiny regarding compliance with IMCA's rules. Despite modifications to meet requirements, IMCA continued to alter its rules in a manner that disadvantaged the Brookins. The district court had previously issued a preliminary injunction allowing the use of the Brookins' transmissions temporarily but ultimately dismissed their antitrust claim. However, the Brookins' state law claim for intentional interference with prospective business advantage proceeded to trial against IMCA.

The jury awarded the Brookins $109,000 in compensatory damages after finding that IMCA had wrongfully interfered with the Brookins' relationships with potential buyers by creating and misinterpreting rules to harm their business. While IMCA does not appeal this verdict, the Brookins contest the dismissal of their antitrust claim. The court reviews this dismissal de novo, favoring the Brookins' perspective. 

The Brookins argue that IMCA's rule changes were a result of collusion with competing transmission manufacturers, which they claim unreasonably restrained trade in modified car transmissions. To succeed on their Section 1 antitrust claim, they must demonstrate that this concerted action harmed competition, typically requiring proof of market power or an actual adverse effect on competition. The district court determined that the Brookins did not meet the necessary threshold, citing evidence of multiple racing classes and sanctioning bodies, concluding that IMCA lacked market power in the defined 'oval track racing transmission market' and that the exclusion of specific transmissions did not adversely affect competition.

On appeal, the Brookins challenge these conclusions, asserting that proof of market power is not necessary under the unique analysis applied to private organizations that set product standards. They argue that excluding certain transmissions negatively impacted competition by limiting options for modified race car drivers. Alternatively, they attempt to redefine the relevant market to argue that IMCA possesses market power in 'IMCA-approved transmissions for modified racing.'

However, the analysis is deemed flawed because IMCA does not function as a typical standard-setting organization; its rules are designed to define a competitive sport rather than dictate product availability in an open market. The IMCA rules are vital for establishing the competition's nature and ensuring its viability in the broader recreational marketplace, akin to the role of the NCAA in college football, which facilitates the marketing of competition through agreed-upon rules.

IMCA's definition of rules for modified car racing inevitably excludes certain types of equipment, a consequence of establishing the sport's framework. The impact on equipment manufacturers is influenced by the game's popularity and adherence to its rules. For instance, while major league baseball's ban on metal bats has limited effects due to their popularity at amateur levels, the US Golf Association's rejection of a high-performance golf ball has significant implications, as amateur golfers typically prefer uniform rules.

Courts have generally granted rule-makers leeway in shaping sports regulations, provided there is no significant market foreclosure demonstrated. In the case of M.H. Tire Co. v. Hoosier Racing Tire Corp., the court upheld a rule mandating a specific tire supplier, while in Gunter Harz Sports, Inc. v. United States Tennis Ass'n, a ban on certain tennis rackets was also upheld. The Brookins argue that competition was adversely affected due to the exclusion of their transmission, but unless coercion by suppliers is proven, this exclusion is merely a byproduct of rule definition.

IMCA has not prohibited the use of Brookins' transmissions in other racing formats. Should drivers find Brookins' products superior, it may prompt IMCA to adjust its rules or risk losing drivers to alternative racing leagues. Therefore, IMCA's regulations do not constitute the kind of severe competition restraint that would exempt them from standard market analysis under antitrust law.

The district court correctly required the Brookins to establish the relevant market and demonstrate IMCA's market power. While the Brookins initially accepted a broad market definition, they later proposed a narrower one focused on IMCA-sanctioned modified car racing. However, they must show that this niche market does not have cross-elasticity with other racing formats. Given the existence of various racing classes and sanctioning bodies, it is unlikely that a reasonable jury could determine IMCA's modified car racing constitutes a distinct relevant market for antitrust considerations.

Brookins alleged that IMCA colluded with rival manufacturers Bushore and TCI regarding transmission rules for modified cars. However, as long as IMCA's rule decisions align with its function as a sports organization, antitrust scrutiny regarding their fairness or rationality is unwarranted. The Supreme Court case American Society of Mechanical Engineers v. Hydrolevel Corp. is cited to illustrate that coercion by competitors alters the antitrust landscape. IMCA’s President, Kathy Root, explained the organization's goal to restrict technology in racing to avoid obsolescence of existing cars, thus maintaining a level playing field.

The Brookins did not provide sufficient evidence that Bushore or TCI coerced IMCA's decisions or that the rulings were influenced by anything other than the rationale provided by Root. Although Bushore and TCI questioned the compliance of new transmission technologies, such inquiries do not demonstrate collusion. The investigation by IMCA into rule compliance, which included consulting other manufacturers, was standard practice, and there was no incentive for IMCA to favor the Brookins' competitors.

The district court ruled that the Brookins failed to show injury to competition, leading to the dismissal of their antitrust claim. However, the jury addressed a violation of state law regarding the implementation of IMCA's rules. The district court's judgment is affirmed, noting that Brookins did not argue that the defendants’ actions constituted a per se unlawful group boycott, as such claims require evidence of direct collusion among competitors.