IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION COMPLAINT

Transcription

1 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION CHICAGO NATIONAL LEAGUE ) BALL CLUB, LLC ) ) CIVIL ACTION NO. Plaintiff, ) ) v. ) ) UNDER ARMOUR, INC. ) JURY TRIAL DEMAND ) Defendant. ) COMPLAINT Plaintiff Chicago National League Ball Club, LLC complains of defendant Under Armour, Inc. as follows: THE PARTIES 1. Chicago National League Ball Club, LLC (the Chicago Cubs ) is a Delaware limited liability company with its principal place of business located in Chicago, Illinois. The Chicago Cubs are a Major League Baseball team and the 2007 and 2008 National League Central Division Champions. 2. Under Armour, Inc. ( Under Armour ) is a Maryland corporation with its principal place of business in Baltimore, Maryland. Under Armour is an athletic apparel company. JURISDICTION AND VENUE 3. The Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. 1332(a)(1) in that the amount in controversy exceeds $75,000, exclusive of interest and costs, and is between citizens of different states. 4. Venue is proper in this judicial district under 28 U.S.C. 1391(a)(2) in that a substantial part of the events and transactions giving rise to the claim occurred in this district.

2 GENERAL BACKGROUND ALLEGATIONS 5. The Chicago Cubs are a successful professional baseball team and member of Major League Baseball. In both 2007 and 2008, the Chicago Cubs won the National League Central Division championship title and earned a berth in the Major League Baseball playoffs. 6. One of the Chicago Cubs principal sources of revenue is sponsorship fees it receives from its marketing partners. 7. In February 2007, the Chicago Cubs and Under Armour entered into an historic marketing agreement whereby the Chicago Cubs agreed to place Under Armour signage on the outfield doors amid the brick and ivy outfield walls of Wrigley Field. This agreement continued through the 2007 and 2008 baseball seasons and generated significant publicity for Under Armour. 8. In August 2008, the Chicago Cubs and Under Armour negotiated Under Armour s future sponsorship of the Chicago Cubs. The parties negotiated regarding the essential terms, including the sponsorship price, of the agreement. 9. By early September 2008, the parties reached an agreement regarding the price and terms of a five-year contract. 10. On September 5, 2008, Colin Clark ( Clark ), Brand Manager for Under Armour, sent the Chicago Cubs written correspondence memorializing the essential terms of the five-year agreement extending the Under Armour sponsorship of the Chicago Cubs. A true and correct copy of the September 5, 2008 correspondence is attached hereto as Exhibit Under this agreement, Under Armour agreed to pay the Chicago Cubs $10,800,000 to be the Official Performance Brand of the Chicago Cubs from the 2009 baseball season through the 2013 baseball season

3 12. In exchange, the Chicago Cubs agreed, among other terms, to display the historic Under Armour signage on the Wrigley Field outfield doors, display additional Under Armour signage behind home plate, display a half inning of Under Armour signage on three LED boards in the stadium during each game, designate Under Armour as the official outfitter of the Chicago Cubs Minor League teams, provide Under Armour four season tickets and a $5000 ticket credit per season, make a pre-game announcement for Under Armour, grant Under Armour the title sponsorship of the charity event Race to Wrigley, designate Under Armour Day at Wrigley Field, grant Under Armour the right to sell Under Armour product at retail, and host the All-American High School baseball game at Wrigley Field. 13. In addition, Under Armour received the right to use the Chicago Cubs logo and the right to film a commercial in Wrigley Field. Those rights were valuable to Under Armour because the Chicago Cubs are one of the premier and most recognizable professional baseball teams of all time. 14. In multiple conversations with the Chicago Cubs marketing department, Clark stated the agreement was done. Both parties understood the essential terms of the contract were agreed upon and Under Armour would remain the Official Performance Brand of the Chicago Cubs through the 2013 baseball season. 15. In reliance on this agreement, the Chicago Cubs immediately stopped pursuing other potential sponsorship partners to occupy the advertising signage on the outfield doors. 16. After reaching the agreement with Under Armour, potential sponsors contacted the Chicago Cubs and expressed interest in being the title sponsor of the annual charity event, Race to Wrigley. In reliance on its agreement with Under Armour, the Chicago Cubs rejected these overtures

4 17. In furtherance of the agreement on September 22, 2008, Clark sent correspondence to the Chicago Cubs detailing the products Under Armour would supply to the Chicago Cubs minor league players and teams. The stated, in part, here is the product we [Under Armour] would give you for the outfitting part of the contract. The contained specific quantity detail of various products to be provided to the Chicago Cubs, such as, 200 units of Under Armour Heat Gear Loose Tee, 200 units of Under Armour Micro Shorts, etc. 18. In collaboration with Under Armour and in furtherance of the agreement, the Chicago Cubs scheduled the 2009 All-American High School baseball game at Wrigley Field. The All-American game is hosted and sponsored by Under Armour. By reserving these dates for the Under Armour All-American High School baseball game, the Chicago Cubs were unable to offer the use of Wrigley Field on those dates to other potential sponsors of the Chicago Cubs. 19. In collaboration with Under Armour and in furtherance of the agreement, the Chicago Cubs scheduled the 2009 Under Armour Day at Wrigley Field. During the 2009 Under Armour Day, Under Armour was entitled, among others, to partake in a pre-game Bat-at-Wrigley clinic and throw the ceremonial first pitch to begin the Chicago Cubs baseball game. By reserving this date for Under Armour Day, the Chicago Cubs were unable to offer this sponsorship opportunity to other potential sponsors of the Chicago Cubs. 20. To celebrate that the parties were able to reach an agreement before the conclusion of the 2008 baseball season, the Chicago Cubs invited Steve Battista ( Battista ), Senior Vice President of Under Armour, to throw out a ceremonial opening pitch for one of the final regular season baseball games of the 2008 season at Wrigley Field on September 16, Battista was unable to attend the game on September 16, 2008, but Under Armour sent Clark to attend the Chicago Cubs playoff game on or about October 1, Clark sat in the Chicago Cubs sponsorship box at Wrigley Field during the game

5 22. In celebration of the five-year agreement with Under Armour, the Chicago Cubs invited Clark to appear in the Chicago Cubs 2009 marketing video. On or about October 1, 2008, in Wrigley Field, Clark provided video commentary on Under Armour s relationship with the Chicago Cubs, the benefits Under Armour receives due to its marketing partnership with the Chicago Cubs and Under Armour s continuing sponsorship of the Chicago Cubs in upcoming baseball seasons. Clark stated, and it is recorded on the videotape that, The last two seasons that we ve [Under Armour] been out here [Wrigley Field], the Cubs have made the playoffs both years, and, you know, so that s really exciting for us to kind of follow that tradition, you know, into the next generation. 23. Clark specifically remarked upon Under Armour s five-year sponsorship agreement with the Chicago Cubs during the filming of his video commentary. Clark stated, and it is recorded on the videotape that, It [Under Armour s sponsorship of the Cubs] took our All- America game to that next level where it s the premier high school baseball game in the nation now, and we ll have that here for the next five years at Wrigley Field. We re excited to go forward. 24. On or about October 8, 2008, the Chicago Cubs sent Under Armour a formalized contract incorporating the terms of the agreement. The formalized contract included the essential terms of the agreement as stated in the Under Armour correspondence dated September 5, 2008 as well as the details of the agreement, for example, the quantities of product Under Armour would provide to the Chicago Cubs minor league teams as stated in the Under Armour correspondence dated September 22, The contract contained an acceptance provision that stated, By signing below and/or undertaking any advertising or promotional event, Sponsor agrees to all terms above and to the terms and conditions on the back of this page. A true and - 5 -

6 correct copy of the formalized contract sent to Under Armour on October 8, 2009 is attached hereto as Exhibit After receiving the formalized contract from the Chicago Cubs and after the conclusion of the 2008 baseball season, Under Armour sought permission from the Chicago Cubs to access Wrigley Field to film a commercial involving Chicago Cubs pitcher Jeff Samardzija. 26. Pursuant to the terms of the agreement extending Under Armour s sponsorship through the 2009 baseball season, the Chicago Cubs permitted Under Armour to film the commercial in Wrigley Field. Under Armour filmed commercial footage featuring Chicago Cubs pitcher Jeff Samardzija in Wrigley Field on or about October 27, The Chicago Cubs would not have granted Under Armour access to Wrigley Field unless an agreement was in place through the 2009 baseball season. 27. On December 9, 2008, Under Armour issued a press release unveiling Under Armour s new Athletes Run advertising campaign. The press release states that the campaign s television commercials will premier on January 1, 2009 and will feature Chicago Cubs pitcher Jeff Samardzija, among other athletes. This press release is posted on Under Armour s website ( and featured to this day, January 22, After receiving the formalized contract from the Chicago Cubs and after the conclusion of the 2008 baseball season, Under Armour displayed advertising on its website featuring Wrigley Field and Chicago Cubs player Alfonso Soriano. That advertising is displayed on Under Armour s website to this day, January 22, Under Armour s year-end earnings were lower than expected and did not meet industry expectations. Its stock price plummeted 15% on the day this news was reported. Under Armour also said it expects its 2008 income from operations to be approximately $10 million - 6 -

7 lower than So, Under Armour reneged on its $10.8 million agreement with the Chicago Cubs. 30. On December 12, 2008, Battista sent correspondence to the Chicago Cubs stating that Under Armour would not sponsor the Chicago Cubs during the 2009 baseball season and Under Armour would not meet any of its obligations under the agreement. 31. Though Under Armour has stated its intention to breach its sponsorship agreement with the Cubs, Under Armour continues to feature Chicago Cubs players and Wrigley Field in its advertising. COUNT I BREACH OF CONTRACT 32. The Chicago Cubs reallege each and every allegation set forth in Paragraphs 1 through 31, inclusive, and incorporate them by reference herein. 33. The Chicago Cubs and Under Armour entered into an agreement whereby Under Armour would be the Official Performance Brand of the Chicago Cubs for the 2009 baseball season through the 2013 baseball season. The Chicago Cubs agreed to grant this designation and agreed sponsorship opportunities, including but not limited to advertising on the outfield doors of Wrigley Field, in exchange for payment from Under Armour. 34. The Chicago Cubs have been performing their obligations to Under Armour by, among others, granting Under Armour access to Wrigley Field to film a commercial, reserving dates for 2009 Under Armour publicity events at Wrigley Field, turning down competing sponsorship offers for the Chicago Cubs charity event, and not pursuing alternative sponsors to advertise on the outfield doors. agreement. 35. Under Armour has stated that it will not honor its obligations under the - 7 -

8 36. By refusing to honor its agreement to be a sponsor of the Chicago Cubs for the 2009 season, Under Armour breached its agreement with the Chicago Cubs. $10,800, Accordingly, the Chicago Cubs have been damaged in an amount in excess of WHEREFORE Plaintiff Chicago Cubs respectfully request that this Court enter judgment in its favor and against Defendant Under Armour in excess of $10,800,000 in an amount to be determined at trial, and for such other and further relief as may be appropriate. COUNT II PROMISSORY ESTOPPEL 38. The Chicago Cubs reallege each and every allegation set forth in Paragraphs 1 through 37, inclusive, and incorporate them by reference herein. 39. Many corporations set their advertising budgets and, accordingly, make sponsorship decisions, in the fourth quarter of each year. Detrimentally acting in reliance on its agreement with Under Armour, the Chicago Cubs did not pursue negotiations with other potential sponsors to place signage on the outfield doors of Wrigley Field. Due to Under Armour s breach of the sponsorship agreement in mid-december 2008, after most corporations already have committed themselves to sponsorship agreements for 2009, the Chicago Cubs have not been able to replace Under Armour sponsorship revenues. 40. Further detrimentally acting in reliance on the agreement with Under Armour, the Chicago Cubs also: a) permitted Under Armour to access Wrigley Field to film a commercial involving Chicago Cubs pitcher Jeff Samardzija; b) featured Under Armour Brand Manager Colin Clark in the Chicago Cubs 2009 marketing video; c) scheduled and reserved Wrigley Field for the 2009 Under Armour All-American High School baseball game; d) scheduled and reserved the 2009 Under Armour Day at Wrigley Field; e) turned down alternative sponsors of - 8 -

9 the annual Race to Wrigley; and f) gave up pursuit of other potential sponsors to advertise on Wrigley Field signage. 41. The Chicago Cubs reliance on Under Armour s promises and agreements were expected and foreseeable. Under Armour s Clark even appeared in the Chicago Cubs 2009 marketing video, knowing that the Chicago Cubs would rely on his statements to secure other sponsors and marketing opportunities. 42. By virtue of the Chicago Cubs detrimental reliance on Under Armour s promises and agreement that it would be the Official Performance Brand of the Chicago Cubs for the 2009 baseball season, Under Armour is estopped from denying the existence of an enforceable sponsorship agreement between it and the Chicago Cubs for the 2009 baseball season. WHEREFORE Plaintiff Chicago Cubs respectfully request that this Court enter an order barring defendant Under Armour from denying the existence of an agreement to sponsor the Chicago Cubs for the 2009 baseball season, and awarding the Chicago Cubs a judgment against Under Armour in an amount to be determined at trial, and for such other and further relief as may be appropriate. RULE 38 JURY TRIAL DEMAND Plaintiff, Chicago Cubs, hereby demands a trial by jury. Dated: January 22, 2009 Respectfully Submitted, SONNENSCHEIN NATH & ROSENTHAL LLP James A. Klenk (ARDC ) Tiffany L. Wohlefeil (ARDC ) 7800 Sears Tower, 233 S. Wacker Dr. Chicago, Illinois (312) By: s/ James A. Klenk One of the Attorneys for Plaintiff /