John Barnes IndyCar case dismissed for lack of jurisdiction

John Barnes

The 7th Circuit Court of Appeals found a lack of subject matter jurisdiction in a breach-of-contract case where one IndyCar team accused another of conspiring to steal its sponsor. The court found an amended complaint took the case out of federal court and remanded for dismissal.

Panther Brands LLC signed a contract with IndyCar to provide various marketing benefits to its team sponsor, the Army National Guard. The benefits included access to coveted space in the “Fan Village" at IndyCar racing events. Panther learned another team, Rahal Letterman Lanigan Racing, intended to provide the Guard with Fan Village space as a sponsorship benefit.

Panther believed RLL Racing conspired with IndyCar and a bid management agency called Docupak to persuade the Guard to sponsor RLL Racing instead of Panther and filed suit in state court against RLL Racing, Docupak, IndyCar and active-duty Guard member John Metzler, who acted as the liaison between the Guard and Panther. The defendants moved the case to federal court where the United States was substituted as a party for Metzler. Panther filed an amended complaint that did not name Metzler or the United States.

The district court dismissed the suit under Federal Rule of Civil Procedure 12(b)(6), but the 7th Circuit remanded the case for dismissal for a different reason, lack of subject matter jurisdiction. When Panther amended its complaint, the basis for federal jurisdiction disappeared, Chief Judge Diane Wood wrote.

Panther offered several reasons why the case should remain in federal court, but the 7th Circuit dismissed all of them. Panther claimed that RLL and Metzler formed an agreement violating multiple federal statutes and regulations, but Wood wrote that alone is not enough to justify federal jurisdictions. The heart of Panther’s suit alleges state law theories.

Panther also claimed that Docupak was a person acting for a governmental agency under federal authority according to 28. U.S.C. 1442 (a)(1). Wood wrote that while Docupak was a person, the company was not acting under federal authority. “Docupak’s activities on behalf of the Guard fell far short of the closely monitored and highly regulated relationships involved in the distillery, federal benefits, Agent Orange, or oceanic preserves cases on which it relies," Wood wrote. “Neither did the Guard delegate any rulemaking authority to Docupak, which we have suggested might make a difference."

Finally, Panther argued the Westfall Act gives the court jurisdiction. That act immunizes federal employees acting within the scope of their employment from an action for damages through the devices of substituting the United States as party defendant as long as the suit is not for a constitutional violation. Wood wrote that after the United States was removed from the suit, the Westfall Act did not apply.

The case is Panther Brands LLC et al v. Indy Racing League LLC, doing business as IndyCar et al., 15-1818. TheIndianaLawyer.com