A business plan to promote vodka sales in North Carolina, with a particular focus on Duke University sports fans, was key to a North Carolina business court ruling that Vodka Game Day had enough contact with the state to be sued here for a contract dispute. In Revel XP, LLC vs. Never Forget Brands, LLC, 2022 CNBC 39, the Court found that South Carolina-based GameDay’s contract with Revel, a North Carolina-based sports marketer, may have shown little direct connection to North Carolina. But the evolution and anticipated course of the relationship between the parties, the court found, warranted jurisdiction over GameDay (Never Forget’s d/b/a) in accordance with the principles of due process.
Under the contract, Revel was to “supervise tailgating parties at sporting events featuring GameDay merchandise.” Identifier. ¶ 25. Revel had existing relationships with UNC, NC State, and Wake Forest, but neither the contract nor subsequent SOWs “expressly provided for any hospitality services, activities, or events to be performed or held in North Carolina”. This is because no event performed as part of an executed SOW has ever occurred in the state. Identifier. ¶¶ 31, 32.
Revel did not argue that GameDay was subject to the Court’s “general jurisdiction” due to GameDay’s “continuing” or “systematic” contact with North Carolina. See Goodyear Dunlop Tires Operations, SA v. Brown, 564 United States 915, 919 (2011). Thus, Judge Robinson considered whether GameDay had sufficient “minimal contact” with North Carolina resulting from the events at issue in the action. See Tom Togs, Inc. v. Ben Elias Industries Corp., 318 NC 361366 (1986).
The Court acknowledged that GameDay’s contract with a North Carolina-based company did not “automatically establish sufficient minimum contact”. Burger King Corp. against Rudzewicz, 471 United States 462, 478 (1985). Instead, he focused on an analysis that also included “prior negotiations and contemplated future consequences” as well as “the actual conduct of the parties.” revel in¶ 54.
In what he called “a closed case” over jurisdiction over GameDay, the Court was swayed by evidence that “GameDay hoped to establish a presence in North Carolina during the term of the agreement and form a partnership with Duke University by 2023”. As the Court observed:
“GameDay was posted on its website and broadcast on social media with nationally renowned Duke University men’s basketball coach, Coach Mike Krzyzewski (“Coach K”).”
According to the complaint, GameDay’s business model included agreements with college and sports teams to package its vodka in team colors. GameDay, the court noted, also told Revel that he intended to do business in the state. ID. ¶¶ 59, 66.
Judge Robinson found that the “actual course of dealings” of the parties reflected significant contact with North Carolina. The Court noted that GameDay paid $1,175,000 in bills seeking payment from Revel in Winston-Salem. Perhaps most significant to the Court, however, was GameDay’s direct contact with one of Revel’s North Carolina-based suppliers, which resulted in GameDay paying Revel-generated invoices for “several product orders brand from this supplier. “In doing so,” the court said, “GameDay approved the prospect of continuing to source products from a North Carolina supplier as part of the agreement.” Identifier. ¶¶ 37, 64.
Take away food
- The business court, in assessing “minimum contacts” for the assertion of jurisdiction, paid particular attention to a party’s intention to use a contract to facilitate entry into North Carolina for the purpose to do business there.
- Promoting a company’s alleged partnership with a legendary North Carolina sports figure is not a good first step to downplaying how its ties to the state might be measured later.
- GameDay appealed the Court’s dismissal of its motion to dismiss for lack of personal jurisdiction.