ESPN, Inc. v. Office of the Commissioner of Baseball

76 F.Supp2d 383 (S.D. N.Y. 1999)

FACTS In 1996 ESPN and Major League Baseball entered into an agreement whereby ESPN would telecast baseball games on Wednesday and Sunday nights. The contract included two provisions which would become the focus of litigation. First, it contained a clause that stated ESPN would not enter into any other agreements that would conflict with or prevent full performance of the contract with MLB. Second was a clause that stated ESPN could preempt up to 10 games per year, with Baseball's written approval, for an event of significant viewer interest.

On Jan. 13, 1998 ESPN entered into a contract with the NFL to broadcast football games on Sunday nights. ESPN then requested Baseball's permission to preempt baseball games and broadcast them on ESPN 2 instead. Baseball denied ESPN's request. ESPN preempted the games anyway so Baseball in turn refused to allow the games to be broadcasted on ESPN 2.

The exact sequence of events repeated itself in Jan. 1999. After the this incident Baseball terminated the agreement in April1999. ESPN then filed suit alleging Baseball materially breached the contract by (1) unreasonably withholding its permission of ESPN's preemption request, (2) refusing to allow ESPN to broadcast the games on ESPN 2, and (3) improper termination of the agreement. Baseball counterclaimed alleging ESPN materially breached by (1) entering into a conflicting agreement with the NFL, (2) preempting games without Baseball's permission, and (3) utilizing highlight footage in excess of the amount provided for by the agreement.

ISSUE Can Baseball terminate the agreement with ESPN after continuing to perform after the alleged material breaches of 1998 and 1999?

HOLDING If the 1999 preemptions constitute a material breach, Baseball has a right to terminate the 1996 agreement.

RULE The election of remedies requires that a party choose a single course of action. In the instant case Baseball can choose to terminate and sue for total breach or Baseball can elect to continue and sue for partial breach.

RATIONALE Because Baseball elected to continue after ESPN's alleged 1998 material breaches Baseball can no longer terminate based on those breaches. However, Baseball can terminate based on the 1999 breaches if those breaches are found to be material. Baseball's decision to terminate after the 1999 season ended was reasonable due to the fact that games and programming were already scheduled and relied upon by third parties and as such immediate termination would have harmed ESPN and Baseball as well as those third parties.