Ferko v. National Ass'n of Stock Car Racing, Inc.
Docket: No. C.A. 4:02-CV-50
Court: District Court, E.D. Texas; April 2, 2003; Federal District Court
The court denied NASCAR's motion to realign Speedway Motorsports, Inc. as a plaintiff and to dismiss Francis Ferko as a plaintiff in this derivative action. The case centers on NASCAR's refusal to provide a second Winston Cup race to Texas Motor Speedway (TMS), which Speedway operates, despite prior assurances. Ferko, a Speedway shareholder, initiated the lawsuit after Speedway declined to file suit against NASCAR, seeking to enforce the company's rights for damages and other remedies. NASCAR argued that realigning Speedway as a plaintiff was warranted because it had adopted Ferko's claims, asserting no antagonism existed between them, and that Speedway could adequately represent its interests. The court's analysis focused on whether antagonism was present, referencing prior case law that defines the purpose of derivative actions as allowing shareholders to enforce corporate rights when management fails to do so. The court concluded that Ferko's continued involvement was necessary, and thus, denied the motion for realignment and dismissal. A company is generally the proper party to enforce its rights in derivative actions, rather than the shareholder. In this case, since antagonism exists between Ferko and Speedway, realignment to make Speedway the plaintiff is not appropriate. NASCAR contends that Speedway's admissions in response to Ferko's complaint indicate no antagonism; however, the court finds this argument unpersuasive. Speedway's admissions do not signify agreement with the lawsuit's best interests, as it did not initiate action against NASCAR and believed such action was unwise. The court acknowledges that management's reluctance to act against a close business associate does not negate the existing antagonism. Consequently, the court concludes that the antagonism is inherent to this derivative lawsuit, affirming that realignment is improper and rendering the motion to dismiss Ferko unnecessary. The motion for realignment and dismissal by NASCAR is therefore denied.