Architects vs. Big Business: A Case Commentary
Last August, famous co-counsel Johnnie Cochran of California and Willie “The Giant Killer” Gary of Florida made headlines when they prevailed in the case that pitted All Pro Sports Camps Inc. against the Walt Disney Goliath. Agreeing with the Plaintiff’s claim that the entertainment industry giant stole the idea for the Wide World of Sports complex, the jury awarded US$240 million to All Pro, a company headed by me, a Fonthill, Ontario-based architect and my partner, Nick Stracick, a Buffalo, New York-based retired baseball umpire, and other shareholders in All Pro.
The unique concept consisted of the design of a sports themed year-round permanent facility on a 250-acre secure and compact site that includes 23 sports camps for professionals and amateurs, for young and old, in the Olympic tradition, at a site called Sports Island in Orlando, Florida’s Disney World. In addition to the 23 sports programs–focused around a professional baseball winter training facility–were a number of unique non-athletic elements such as themed hotels and accommodations, a Sports Trade Mart and Retail Centre, an Education Centre, a Sports Medicine and Fitness Centre, and a Sports Conference Centre. Other entertainment facilities included the Sports Hall of Fame and the Walk of Fame, music, dance, and theatre facilities, a sports themed amusement park, and food services.
After a six week long courtroom conflict described as the largest and most complex piece of civil litigation in the Orange County jurisdiction’s history, the Defendant, Walt Disney Company (a Delaware Corporation), Walt Disney World Company (a California Corporation) and Disney Development Company (a Florida Corporation) were found guilty by a jury of three men and three women from the community. The jury ruled in favour of the Plaintiff, All Pro Sports Camps, Inc., a Florida Corporation, on the following counts: misappropriation of one or more trade secrets belonging to the Plaintiff; the misappropriation by the Defendant was willful and malicious; at least two of the Defendant companies conspired with each other to commit the misappropriation; the Defendant made a fraudulent misrepresentation to the Plaintiff; the Defendant made a negligent misrepresentation to the Plaintiff; the Defendant had a contract implied in law with the Plaintiff.
Judge Ted P. Coleman pronounced a final judgement on the jury verdict for US$240 million on November 14, 2000 and awarded $100 additional damages for the Plaintiff’s motion for award of exemplary damages. At the same time he denied the Defendant’s motions for a new trial based on newly discovered evidence for judgement in accordance with motion for directed verdict and for remittitur. Disney is required to post a bond for 120% of the judgement.
The steps to litigation were long and tortuous. All Pro first presented its concept in writing to Disney in October 1986 and held formal discussions with Disney in 1987 and 1988. Business plans, drawings, renderings and models prepared by All Pro were delivered to Disney executives and remained in their hands and on display for many months. Expressions of Interest in writing from Disney and in conversation with Disney executives continued until 1989 when, unexpectedly, All Pro received a copy of a letter addressed to a Disney manager working with All Pro stating that the Disney Development Company did not have the time, the land or the infrastructure to pursue such a large project and was therefore no longer interested in the All Pro concept. Not one of the documents–business plan, drawings or models–was ever returned to All Pro.
Disney also claimed to have previously considered this concept in-house, but offered no proof of this. However, they stated to All Pro that they would get back to them if the opportunity allowed reconsideration. The letter also included the salutation “Great minds think alike.” At about the same time the Disney manager who had been so helpful to All Pro in the beginning severed his relationship with All Pro under pressure from his bosses and received a reprimand for consorting with third parties. Disney has a long-standing directive that their employees are not to entertain third party proposals. This same manager was later promoted to the title of Owner Representative responsible for the design and for the development of the Disney Wide World of Sports Attraction based on the All Pro concept.
In March of 1993, Disney announced their concept for a major sports attraction listing almost verbatim the facilities, special events, programs, sports retail mart and sports themed accommodations proposed in the All Pro concept, claiming this to be a unique and facility. Disney opened their first sports themed low-end hotel next to the Wide World of Sports site in 1993. What follows is a brief chronology of the legal action that we pursued as a result of this announcement.
Chronology of Legal Action
August 15, 1994: All Pro hires legal counsel and prepares the background for the suit.
December 1994: Disney is served with a Notice of Action and on advice of counsel All Pro first takes Disney to Federal Court, claiming 11 counts involving fraud, copyright infringement and conversion of trade secrets.
March 1997: Over a two-year battle to get the case to court, Disney fought off every attempt to bring the matter to a close. Disney offered a number of settlements for costs, all of which were refused by All Pro. All Pro was stunned when a Federal Court judge refused to hear the case, citing lack of jurisdiction and ruling that All Pro did not have an action for Federal Copyright Count. However, the court did not rule on the other counts against Disney as they were not matters for the Federal Court. All Pro’s case looks to be dead in the water.
Realizing that there was a need to retain more energetic and powerful counsel to battle the Goliath of the entertainment industry, All Pro decides to pursue the best in the US legal business. Johnnie Cochran is called, and after a short period of consideration says that he will take the case. He arranges a meeting with colleague Willie “The Giant Killer” Gary in Florida. After a presentation of the documentation by All Pro, Gary pronounces that this is a simple case: “You invented it, they stole it, now Disney has to pay for it.”
March 19, 1997: The Willie Gary and Johnnie Cochran team take the case to State Court and move for an immediate trial by judge and jury. Disney files a motion to dismiss, and is again successful in having the case dismissed with prejudice meaning that the case could not be reargued before this court and the presiding Judge washes his hands of the case.
May 1997: The appeals firm of Curusso, Burlington, Bohn and Compiani is hired and an appeal is launched in the Florida Appeals court. After a two-year struggle All Pro received a favourable opinion from the three judges of the appeal court. All Pro is back in business and returns to the State Court for a jury trial.
March 2000: Disney continues to file motions for dismissal but this time the court finds in favour of All Pro and sets a trial date for March 11, 2000. The date is delayed several times again by Disney.
July 2000: Finally, a trial begins on July 12, 2000 in Orange County Court, Judge Ted P. Coleman presiding. Jury selection takes two days of cross and recross examination and eight jurors, including two alternates, are selected from the pool of 60 potential jurors.
August 11, 2000: Case Results: The jury finds for the Plaintiff, All Pro Sports Camps, Inc. in the amount of US$240 million dollars after six weeks of testimony. Superficially, one might conclude that the jury’s verdict was a vindication of high order, unbelievable, newsworthy on a national level and more. Shocking, unbelievable, media-grabbing, unsettling: the size of this award was all of that. However, a second and longer look at this verdict suggests a more fundamental and historic importance to this case, outweighing by far the enormous award itself. This case was brought by two small businessmen
who, in a business relationship with Disney of several years duration, presented a refined, formulated, and polished concept, an imaginative idea for a unique sports complex as a major new attraction to Disney World. The evidence presented to the jury disclosed that at the time Disney announced its decision to terminate this joint endeavour after allegedly deciding that it was not viable, Disney secretly commenced this project without All Pro’s involvement or consent. These men were unaware for some time of this deceit that sought to deprive them of financial regard and involvement in this ultimately highly profitable undertaking. The case focused upon issues of law in an important area of business, for which, surprisingly, there was a lack of recognized legal precedent and in which the only law thought to apply was the law of the jungle.
This case established a major legal precedent. It affirmed that principles of equity and contract law apply to the conduct and undertaking of business generally and not just some areas of the market place. They apply not merely to corporate relationships in contracts respecting goods, services, properties and rights, but to the crucial exchanges of business ideas and concepts between corporations, particularly between corporations of unequal size. Such relationships create enforceable legal rights and duties in equity and contract law, when they are undertaken with a joint intent, express or implied, that if the project proves to be viable, its fruits will be shared. Disney’s position was that it could appropriate the ideas of another corporation with impunity. They did not see their actions as theft; there was no legal wrong. Ideas are not property, therefore their actions could not constitute theft. From Disney’s point of view, no wrong was done.
This case was a stinging rebuke to that view. It affirmed that where this exchange takes place in a confidential relationship of shared corporate purposes, the law will apply principles of equity and contract law and recognize an implied contract, trust obligations and duties of fairness and equity. It recognizes that intentional deceit and malice must give rise to legal rights of recourse and remedy.
When its implications are seen, this case should compel a change in the practices and ethics of business. The changes in the law it signals, and the size of award given, deliver a powerful message, a message that unethical practices are generally illegal and clearly wrong and that practitioners must expect that such conduct will incur a growing risk of heavy censure. The success of this case will encourage, as well, an accelerated interest on the part of Plaintiffs in similar lawsuits, present and future. If the case proves, in the long run, to be as significant as now seems likely, it may persuade big business to look beyond the letter of the law to recognize that ethical business conduct is in the best interest of business.
Civil suits are usually directed against companies with deep pockets who can afford heavy damages rather than the individuals concerned. Companies do not make decisions, people do. The liability is met by the company and has the advantage of compensating victims, but its drawback is that it is only a weak deterrent to similar acts by others. If small entrepreneurs are not to become victims of unscrupulous employees of large corporations they must be ever vigilant of the access given to ideas and concepts if their rights are to be preserved. No confidentiality agreement will guarantee that secrets will not be misappropriated. Architects are by nature promoters of their ideas and are often willing to describe in detail their concepts to others. If you value your copyright or trade secrets, create a clear business relationship with those listening before spilling the beans.
Edward Russell is principal of Russell Associates Architecture and Planning in Fonthill, Ontario and of All Pro Sports Camps Inc.