Cycle News - Archive Issues - 1990's

Edmondson Continued from page 17 says Roger owns this, we owned that. But as soon as they saw this wa~ a legal case, and it was going to trial, they adopted the stance tha t you can't own a class. And I said to them all along, forget about that issue. I had a business relationship. I had a joint venture. They would not ever, not one time in the trial, refer to the joint-venture contract as a joint venture. Th~y referred to it as an administrative agreement. They wrote the contract. ['ve learned some legal principles. One of them is that the people who write the contract are responsible for the ambiguities. There'.s nothing ambiguous about this - it is a joint-venture contract, it says so at the top. Down in the terminology it says this is a jointventurE; contract, not anything else, and it goes through all this stuff. They called it an administrative agreement because calling it a joint venture didn't suit their theory of defense. This is one of those examples of why they didn't win. So that was one of the problems. We had a jointventure contract. There was no question about it. We had a sanctioning agreement. In signing that sancqoning agreement, they reached out and tried to say that sanctioning agreement was jointly developed and therefore was theirs. One of the questions nobody answered was, "If it was yours, why didn't you sue him for stealing it from you?" It was never theirs. They never wrote one check, they never wrote one dime. "You can't own classes," is what they said. One thing they never did understand, because I said in my deposition, "If I announced a new supersport class tomorrow, would you sue me and say it was yours?" Absolutely not, but that's not what the AMA did. They took the one that I ran that had a history and records. This is really a matter of a difference of opinion, this is a matter about as close as you can get to a criminal case in a civil court. L accused these people of stealing from me, I accused these people of defrauding me, I accused these people of predatory practices in destroying my business, and they did everyone of these things. That's why they lost. Not because my guys were slicker, or I was more attractive or anything else. I'm not a Southerner. I live down South. Nobody's ever going to accuse me of having a Southern accent. I was raised in the Midwest. But I think it was a cumulative thing. I think probably, once the jury made their mind up, that our side was to be believed and the other was not, which was quite easy 'after Youngblood's testimony. We called him as our last witness. He was caught and embarrassed time after time. And the next day they called him as a witness and we caught him lying again. My guys told me something I'd heard before, and they said once we wrap our case, our case will never get any stronger. Well, it did. Because the AMA guys kept trying to torture these documents. My lawyers sent them a letter in June offering to settle for $2.7 million. They said, "You know, we could probably do this AMA/CCS thing, there's a potential to do good things over _here, but if you don't, bad things are going to happen over there." What's the judgement? $2.7 million and all the bad things we talked about, including airing it in the press. I hope I don't sound cocky. I don't mean to. I'm really very humbled by this because I saw the potential for. the promoters in the weekend, and I thought of all the advantages we brought. We showed them ways to do business. They were making money on road racing; they'd always lost money. Until that joint venture, they'd always run road racing in the red. I felt sure that they wouldn't do this. QShOuld the AMA be in pro racing? RASOR & HARRISON No. That's not their The A biggest thingpraise thefunction.for, is they've got, you look at what people AMA Continued from page 19 required to go to the appeals court, we have to post a bond which essentially those AAA functions. I said it five years ago to Youngblood, I said it seven years ago, I said it four years ago. I'll say it again, I'll probably say it till the day I die. Now, they can prove me wrong. They haven't proved me wrong yet. I've digged through a lot of carcasses and a lot of vice presidents. Probably they couldn't do what they needed to do. The . tools aren't there, the economy's not there. Right now they have this incestuous relationship between the AMA and all these people in the industry that needs to be taken over by a Bernie Ecclestone type, or a company that has that same mentality. I'm not trying to praise Ecclestone - I don't know enough about him. And I'm not thinking about the operational side. Can the AMA operate road races? Sure. But they can't operate the sport. There's a difference. The races aren't the sport. (Because of developments that occurred after the interview, we spoke with Edmondson again, this time in the Benny Kahn press room on March 6) The AMA has in fact filed a notice of appeal along with a bond. We objected to the bond as being inadequate both in terms of amount and in terms of form, and I can't give you all the details, but there are several elements that go into making a totally secure bond, and this bond didn't meet it. So we objected to it and, on Friday, the judge, Judge Thornburg, he upheld the objection of the bond and he turned down their request for stay. When they filed all of this, they automatically asked that in the event the bond wasn't acceptable tha t they be allowed a stay of execution, so to speak. And he denied those. So they now have to go back and redo the bond and in the meantime we're proceeding forward with collection activity. There's been no good-faith settlement offers from them at this point. You know,.I asked the question, "When do we formally ask for' the money?" The legal interpretation is, you asked for it four years ago. It's not like if you owed me money on a car, y.ou get a legal demand and then they repossess. Tftis is one of those situations wher~ the whole process has been that demand. So we're exerciSing our rights and moving forward with the collection process. I think (the bond was) $170,000 short on the amount of dollars, but I don't think tha t was the primary problem. I think the primary problem was that it was a very shoddy piece of legal work, is the way it was described to me. For example, there was a power of attorney that wasn't signed. There were - out of the five essential paragraphs that this type of case requires in a bond, it only had two. It appeared to be, according to my attorneys, just shoddy workmanship. says, "Yeah, we've set aside, we've made positions to pay this settlement if we're not successful on appeal." And , that bond, like any other bond, assures Roger that the money is accounted for or available in the event we do lose. So we've done that by securing the bond with association investment from retained earnings and by the acquisition of an insurance policy which is posted with the court. And that bond has been, as I understand it - the bond and the security for the bond - has been approved by the board in both amount and in form, as 1 understand it. We believe, I guess, that we're making wise decisions about protecting our mem~rship and association's interests while meeting our legal obligations to secure this judgment that we suffered at the lower court level. That's a longwinded ans~er. Sorry. NOW you're in the appeal process, which could tak,e 18 months? No, as I undersfand it, in the Fourth Circuit Court, typically eight to 11 months, that was the term. There is no appeal yet. All there is is a notice of appeal, which means it's 1lne of those things they !lad to do or they couldn't do. So they've spent maybe $10,000 so far, and now they have to decide whether to spend another $200,000. CIII Q A g BefOre this litigation, there were offers to be actually bought ou t be ore there was any settlement talk. RR: To settle the dispute, it was my understanding that a financial offer was made. A Roger contends that the discrepancies were very minor, that the A A wasn't being as flexible, that it seemed to him that they would have been willing to litigate. RR: [guess the information that I have suggests that we believe that, under the contractual agreement that we had with Roger, first of all, we didn't believe that we owed him anything in the separation, 1 guess. In the interest of trying to settle the dispute, we were making a financial offer which was rejected. And I guess from our perspective we didn't think he was as sincere perhaps in his desire to try and bring this to closure 'as we felt. GH: We'll all wait and find out in the a ppeals court. 'Fha t' s the bottom line. A A What's'the time on Q GH: The first step isframe the .the next step? to ask curA rent judge torarely happens. decireconsider his sion, which very the If judges says, "No, I'm not going to overturn my own decision," then we move to the appellate level, which goes to a federal district court in Richmond, Virginia. It's a three-judge panel. The AMA's been in this position before in a lot of government-relations issues, where we lose in a lower court and we appeal to a higher court. Will the interest Q GH: honestlyoriginalcontinue to accrue on the judgment? A don't know. When it was was Q $2.96 fees ofadjudicated, it like million, plus Roger's lawyers' something so many significant developments in a long period of time. But financially, this would be the biggest hit the AMA's ever taken in ltigation? GH: Well, that's based on the fact that we're going to lose in appeals court, which we don't think will happen. A But does the meter continue to run on the money throughout the entue appeals process? RR: I don't know the correct· answer. I do know that because of the way the bond is structured, investments that the association has secured the bond with continues to accrue interest with the association. So from a financial perspective from the association, it's been described to me as relatively invisible. We've provided for the payment in the event we lose,. because we were able to use securities, and we continue to draw interest on those. Our investments continue to draw interest. GH: We're making money at that level, and no money has been exchanged with Roger yet. I know that the clock continues to . tick from the day of judgment until today. And I didn't know if it stopped when the appeals process starts... and there's interest on the money not being paid. Q A A Does the appeals process Q involve your having to payalso his lawyers? RR: Like everything else, the ttorneys' fees is the A of aprocess. Also, therepart ofissue appeals is the issue regarding interest, which we would argue at appeal shouldn't be paid. As it stands right now, interest would accrue in the event judgment is upheld on a ppeal. It would accrue on the fees as well as the judgment. . GH: Candidly, I don't know about the fees. I know that it does accrue on the judgment. Presumably, the whole issue of fees both at the lower court and the appellate court would be at issue, so the fees would be involved. A Even if the AMA wins, the AMA's legal fees are expected to su stantial. Will this be public record, since it's a not-for-profit organization? My understanding is that it's around $1 million now. RR: Technically, it's probably not a matter of public record. As to what the~actual amount is, I don't know. You may know more than I do if that's what Roger's telling you. A I guess I'm mistaken - in a notfor~profit organization, aren't the boo s open to the members for operating costs? GH; Sure, it's included in our annual report. There's ongOing legal fees with the AMA that we can anticipate, like any company involved in motorcycling. I mean, there's litigation going on at different levels all the time. A I $400,000. Would it be fair to say this is the toughest battle the AMA's ever had to fight? GH: I don't know. In 75'years, there's been an awful lot of tough battles. I think we've learned from all those battles. We won some, we've lost some. 1 think we've learned each and every time. I wouldn't know how to characterize this, because there's been A I ~:;:!s~a:~, tt:;r~~l ~~:~~~~~I of ow this comes out? RR: Oh, sure. Lawyers are expensive. We all know that. GH: But they're a part of daily life, unfortunately. .. A A :iii Q IS the AMA currently in litigation with PACE Motor Sports? RR: Yes, we are, as a defendant. .1"'\.. The issues are really about who owns certain trademar}

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