Jack
Dempsey the boxer was hired to promote boxing in Chicago and fight Harry
Wills.Dempsey was to receive
$300k on Aug 5th, $500k 10 days before the fight in September,
and 50% of the profits above $2M (plus a % of concessions and merch).
Dempsey
also had to get a physical for insurance purposes and not fight anyone
else before the Wills fight.
Chicago
Coliseum had already entered into a contract with Wills to fight Dempsey
for $50k.However, they never
paid Wills the money.They
also entered a contract with Weisberg to help promote the fight, for
expenses and a % of profits.
In
July, Chicago Coliseum wrote to Dempsey to schedule the physical Dempsey
replied that he was, "far to busy training for his fight with Tunney
and there was no contract between himself and Chicago Coliseum."
On
Aug 3rd, Chicago Coliseum sued and filed in Indiana asking to
have Demsey "restrained" from his fight with Tunney.They claimed to have a reliance
interest.
They
sued in Indiana not Illinois because of civil procedure issues. (Dempsey
was in Indiana and needed service of process)
Indiana
Trial Court found that the contract was valid.They issued a decree that Dempsey be perpetually
restrained from participating in any contracts in furtherance of a
professional boxing match.Dempsey appealed.
The
Indiana Appellate Court reversed the decision.
Indiana
Appellate Court found that damages should consist of four categories:
Loss
of Profits
Chicago
Coliseum argued that they would have made $1.6M on the fight.Court found that any number
would be purely speculative.In fact, there was a reasonable chance that the Chicago Coliseum
would have lost money.
Expenses
prior to the contract
Chicago
Coliseum argued that the contract with Wills was recoverable, even
though the general rule is that you can only recover for damages that
result from the contract, not precede it.Court found that anything Chicago Coliseum did prior
to the Dempsey contract was not Dempsey's fault (plus they never paid
Wills anyway)
Expenses
incurred attempting to restrain the defendant
Court
found that this was effectively "attorney's fees", which are
not recoverable.
Expenses
after the contract signing but before the breach
Chicago
Coliseum argued that the work of Weisberg in promoting the fight
amounted to an expense.The
Court found that since Weisberg was only working for a % of the profits,
and hadn't been paid yet, there were no expenses to be recovered.
Indiana
Appellate Court did find that there were some incidental damages, such as
secretaries' salaries and consultation with an architect to build the
ring.Regular salaries paid
to employees of Chicago Coliseum are not recoverable as they count as overhead.
Courts
will never order specific performance
to force a person like Dempsey to fight (no specific performance in personal services contracts).But notice that in this case they
ordered an injunction to
stop him from working for anybody else.
