Company Committed Breach of Contract When It Failed to Promote Event Via Social Media

After two companies got into dispute over fallout from jointly hosted party during Indianapolis 500, the appellate court affirmed the district court’s view that the plaintiff had no non-speculative evidence of damages, and that the plaintiff had committed a breach of contract by not promoting the event across the social media channels that it agreed to use.

The Indianapolis Motor Speedway, LLC sponsors the annual Indianapolis 500 race and associated race-weekend events, which include musical acts and other festivities. In 2015, Karma International became a licensee of Maxim, a men’s magazine. Karma has hosted Maxim-branded entertainment at large sporting events, including a party prior to the 2016 Super Bowl in San Francisco.

In early 2016 Karma began negotiations with the Speedway to host a Maxim-branded event at that year’s 100th-running of the race. The parties eventually agreed on terms in a March 2016 agreement. The agreement required each party to cross-promote the event across their social media channels. The Speedway complied with its obligations under the agreement, but Karma never ran the banner ad it promised to show on Maxim.com. It also did not use Maxim’s social-media channels to promote race-weekend events.

The Maxim party took place as scheduled on May 27, 2016. Karma spent $635,855.71 on the event but generated only $215,690.39 in revenue. While 1,787 guests attended the party, Karma sold just 92 full-price tickets. Some of the remaining guests bought reduced-price tickets but most received complimentary admission. In August 2016, Karma sued the Speedway for breach of contract, alleging that it failed to promote the Maxim party as agreed under the terms of the contract. Karma sought $817,500 in damages. The Speedway filed a counterclaim alleging that Karma failed to place the promised banner advertisement or provide marketing support on Maxim’s social-media channels.

The Speedway moved for summary judgment. While the district court found a factual dispute regarding the alleged breach of contract, the court found that Karma had no non-speculative evidence of damages. The court, therefore, entered summary judgment for the Speedway on Karma’s claim. The counterclaim proceeded to trial, and Speedway employees testified that no banner advertisement appeared on Maxim.com and that Karma failed to provide its promised marketing support. The CEO of Karma admitted that he did not know if the promised activities had occurred. The jury found Karma liable and awarded $75,000 in damages. Karma then appealed.

The appellate panel began by stating that Karma’s evidence that the Speedway guaranteed that at least 1,500 tickets to the party would be sold was quite sparse. The panel stated that it could not attribute low ticket sales to the Speedway’s alleged promotional breach merely because its employees predicted success. The panel found that Karma’s theory that the lack of success was due to the Speedway’s e-mail strategy did not rise above the level of speculation. The panel found that the district court therefore correctly decided the issue of Karma’s claim.

The panel then turned to the issue of the Speedway’s counter-claim. The panel stated that the record contained sufficient evidence of Karma’s breach. The panel then stated that the jury was able to award objectively foreseeable damages on the counter-claim based on the Speedway’s expert testimony. The panel rejected Karma’s argument that the jury needed to hear testimony on the subjective expectations of Speedway officials before awarding damages. The panel, therefore, affirmed the decision of the district court.

You can view the full decision here.

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