Vikings defense beats Wells Fargo offense in contract dispute over signage.

Osborne, Barbara

A case recently decided by the U.S. District Court in Minnesota illustrates the complex interactions between stadium development and lease agreements and the expanding scope of protections provided for intellectual property interests including brand and image. In 2012, the Minnesota state legislature passed a statute (Minn. Stat. [section][section] 473J.01-473J.27) creating the Minnesota Sports Facilities Authority (MSFA) and providing for construction and financing of a new stadium for the Minnesota Vikings football team. The MSFA then entered into a contract with the Minnesota Vikings Football Stadium, LLC (Vikings). The stadium use agreement provided the Vikings the right to control the "branding and image of the stadium" including the area around the stadium (Minnesota Vikings Football Stadium v. Wells Fargo Bank, 2016, p. 2). These contract provisions become central to the Vikings efforts to protect their official sponsors.

Background

Knowing of the plans for the Vikings stadium, Wells Fargo Bank entered into an agreement with others to redevelop Downtown East, the section of the city where the stadium was to be built. The crowning landmark of the redevelopment project was the Wells Fargo Towers, a 17 story skyscraper office complex for more than 5,000 employees. Given the Vikings authority to control the image of the area surrounding the stadium provided by the MSFA stadium use agreement, the Vikings contacted Wells Fargo about the Downtown East project.

In February 2014, Wells Fargo and the Vikings entered into a contract that limited the type of signage Wells Fargo could use for Wells Fargo Towers (the signage agreement). Mounted or raised rooftop signage was prohibited, allowing only a 56' x 56' flat sign to be painted on the roof of the buildings. Also included in the contract was a provision the Vikings would not interfere with Wells Fargo's efforts to get the City of Minneapolis to change their signage ordinances. The liquidated damages clause stipulated a breach by either party would cause irreparable harm, that monetary damages would not be an adequate remedy for such breach, and that the prevailing party in a breach of contract lawsuit would be entitled to court costs and attorney fees (Minnesota Vikings Football Stadium v. Wells Fargo Bank, 2016).

Later that year, Wells Fargo convinced the City of Minneapolis to change the signage ordinance to allow for mounted and illuminated rooftop signage. In August 2014, Wells Fargo communicated their intent to change the rooftop signage by sending an updated signage plan to the Vikings. Within five days the Vikings responded back to Wells Fargo clearly indicating the new signage proposal violated the signage agreement. Ignoring the Vikings warning, Wells Fargo proceeded to obtain permits from the city to construct raised and illuminated signage on the Wells Fargo Towers rooftops. Construction began in April 2015.

In December 2015, the Vikings filed a lawsuit against Wells Fargo for breach of the signage agreement (Minnesota Vikings Football Stadium v. Wells Fargo Bank, 2016). The Vikings sought an injunction to stop installation of the rooftop signs on the Wells Fargo Towers, for Wells Fargo to remove the existing signage, and for reimbursement of court costs and attorneys' fees (Minnesota Vikings Football Stadium v. Wells Fargo Bank, 2016). Both parties filed motions for summary judgment requesting the court to enter judgment in their favor. To resolve these motions, the court first had to interpret the signage agreement.

The Signage Agreement Interpretation and Enforcement

While both parties agreed that the signage agreement was a valid contract, they disagreed about the meaning of specific terms in the contract. The Vikings asserted the descriptions of types of signage that were and were not allowed was clear, and Wells Fargo Bank claimed the language was ambiguous. Typically, the court will try to determine the intent of the parties based on the language in the contract as a whole. If contract terms only have one meaning (are unambiguous), then it is appropriate for the court to determine the intent of the contract as a matter of law. In this case, the district court judge determined that the plain meaning of the language in the contract clearly prohibited roof-mounted signs. The only rooftop signage allowed was a flat, painted sign. The signage agreement also incorporated the master signage plan--in that plan, the only illuminated signs were on the sides of the building at street level, a location not visible in views from or of the stadium. Based on the plain meaning of the language in the contract, and the information included in the document as a whole, the district court judge ruled that Wells Fargo breached the contract and granted summary judgment to the Vikings on the breach of contract claim (Minnesota Vikings Football Stadium v. Wells Fargo Bank, 2016).

After finding that Wells Fargo Bank did breach the contract, the district court judge then turned to the Vikings request for permanent injunctive relief. "As the Supreme Court has explained, a plaintiff must satisfy a four-factor test before a court may grant permanent injunctive relief: (1) the plaintiff has suffered irreparable injury; (2) legal remedies, such as money damages, are inadequate; (3) an equitable remedy is warranted in light of the balance of hardships between the parties; and (4) a permanent injunction would not disserve the public interest" (Minnesota Vikings Football Stadium v. Wells Fargo Bank, 2016, p. 9). The district court addressed each item separately.

Irreparable harm is a type of injury that cannot be fixed by a typical legal remedy. The harm does not have to be very large or even beyond compare (Gifis, 1991). Based on the facts provided in discovery, it was clear that the raised and illuminated signage Wells Fargo mounted on the rooftops tainted the image of the football stadium. For example, witnesses for the Vikings explained how the mounted and illuminated Wells Fargo signage damaged the image of the stadium because the signs would clearly be visible from the stadium and in television broadcasts or pictures of and from the stadium. Wells Fargo witnesses corroborated those statements, adding that the value of the mounted and illuminated signage is visibility, particularly because of the nearby stadium (Minnesota Vikings Football Stadium v. Wells Fargo Bank, 2016).

The Vikings were given the right to control the stadium's image through the state statute. Wells Fargo Bank's signage is at minimum a "distraction from the 'image' of the Stadium in Downtown East" causing an "intangible harm related to public perception of a building and the brand associated with that building" (Minnesota Vikings Football Stadium v. Wells Fargo Bank, 2016, p. 12). Citing to other Eighth Circuit cases, the district court confirmed harm related to "intangible assets such as reputation and goodwill can constitute irreparable injury" (Minnesota Vikings Football Stadium v. Wells Fargo Bank, 2016, p. 12). The plain language in the signage agreement also stated breach of contract would constitute irreparable injury, solidifying the district court judge's conclusion that there is an irreparable injury.

The second element is proof that monetary damages are inadequate. In discovery, both sides made statements that it would be difficult to quantify the harm to the stadium's image in monetary terms. Furthermore, paragraph 5 of the Signage Agreement expressly specifies money damages would not be an adequate remedy for a breach of contract. The district court judge confirmed that monetary damages are inadequate (Minnesota Vikings Football Stadium v. Wells Fargo Bank, 2016).

The third factor is to balance the harms relative to both parties to determine whether equitable remedy is warranted. While the harm to the stadium image is intangible, it was previously determined that harm is significant. The harm to Wells Fargo is also significant; the bank spent $490,000 to construct the rooftop signs, and will incur additional costs to tear them down, store them, and install the allowed flat, painted signs. However, the district court judge acknowledged that Wells Fargo's harm was self-inflicted--the bank was aware the Vikings believed it was a breach of contract and constructed the signs anyway. The balance of harms clearly favored the Vikings (Minnesota Vikings Football Stadium v. Wells Fargo Bank, 2016).

Finally, the court must determine whether a permanent injunction serves the public interest. Here, the district court judge acknowledged that both parties were good corporate citizens who were vested in the community and the development of Downtown East. However, the public has a significant interest in upholding valid contracts, so the district court judge finds that a permanent injunction serves the public interest concluding "If commerce is to function in our capitalistic system, entrepreneurs must play by the rules" (Minnesota Vikings Football Stadium v. Wells Fargo Bank, 2016, p. 13).

With all four factors favoring the Vikings, the court granted the permanent injunction ordering Wells Fargo to remove the rooftop signs within 30 days. Additionally, the signage agreement also addressed the issue of attorney fees and court costs in the event of a breach, so Wells Fargo was also ordered to pay those. In conclusion, the district court judge criticized the parties for wasting public resources litigating this claim instead of settling and recommended that they settle instead of appealing any further (Minnesota Vikings Football Stadium v. Wells Fargo Bank, 2016).

Discussion and Implications

Although it was not addressed directly by the district court, one possible reason the parties were unable to settle this dispute was because Wells Fargo was trying to capitalize on the view from the stadium and undermine the facility naming rights sponsor, U.S. Bank. While U.S. Bank likely paid millions of dollars (the sum is confidential), the visibility of Wells Fargo signs in televised and photographic images of the stadium seriously discounts the value of U.S. Bank's naming rights and competes with U.S. Bank's stadium signage. In essence, Wells Fargo may have intentionally gambled that the increased visibility by essentially photo-bombing their signage in pictures and broadcasts of the stadium was worth the cost of a potential breach of contract. This case could also be viewed through the lens of ambush marketing. Ambush marketing is any intentional attempt by an organization to associate itself with an event although it did not pay for the rights of that association (Epstein, 2014). Typically, ambush marketing is associated with advertising or promotions related to major sporting events such as the Olympic Games, World Cup Soccer, or the Super Bowl; however, large new stadium development projects also present a fertile landscape for both creative and ambush marketing efforts of non-official sponsors. This case illustrates that a well-motivated product competitor can also attempt to undermine the value of the naming rights holder of a venue via permanent signage in and around the vicinity. However, in this case the potential for competitor sabotage was likely contemplated by the Vikings as they negotiated the rights to control the branding and image of the stadium and the surrounding area in the Stadium Use agreement with MFSA.

It is important for sport managers and sport marketers to anticipate these potential issues when they are drafting signage, stadium use, and lease agreements. It is clear that a well-drafted contract using clear and unambiguous language that expressly identifies the value and materiality of brand, image, and signage visibility can provide critical protections. It is also advisable to include both liquidated damages clauses and injunctive rights to provide additional defenses against an attack by a brand competitor looking to capitalize on the venue's visibility.

References

Epstein, A. (2014). The Olympics, ambush marketing and Sochi media.

Arizona State University Sports and Entertainment Law Journal, 3, 110-131.

Gifis, S. H. (1991). Barron's Law Dictionary (3rd ed.). New York, NY: Barron's Educational Series, Inc.

Minnesota Football Stadium Authority Statute, Minn. Stat. [section][section] 473J.01-473J.27, 2012.

Minnesota Vikings Football Stadium, LLC v. Wells Fargo Bank, 2016 U.S. Dist. LEXIS 82430 (D. Minn. 2016).

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Barbara Osborne, JD, is a licensed attorney and associate professor in the Department of Exercise and Sport Science, with a joint appointment in the School of Law, at the University of North Carolina at Chapel Hill.