City of Anaheim v. Angels Baseball, LP

In 1996, Disney Baseball Enterprises, Inc. (Disney) purchased the California Angels (Angels) baseball club, which played in Anaheim, California. In connection with this purchase, Disney entered into a revised stadium lease with the City of Anaheim (Anaheim) (plaintiff). During the lease negotiations, Anaheim sought to require Disney to name the team the Anaheim Angels, but Disney rejected Anaheim’s proposal. Instead, section 11(f) of the lease provided only that the team’s name would include “Anaheim.” The lease further provided that Disney did not have to adopt any marketing, licensing, sales, pricing, or operating policies or procedures it did not wish to adopt and contained an integration clause stating that the lease represented the parties’ entire agreement. Disney duly adopted the name Anaheim Angels. However, in 2003, Disney sold the team to Angels Baseball, LP (ABLP) (defendant). ABLP changed the team’s name to the Los Angeles Angels of Anaheim and began eliminating Anaheim from the team’s road jerseys, tickets, and other items. Anaheim sued ABLP in California state court, alleging violations of section 11(f) and the lease’s implied covenant of good faith and fair dealing. Anaheim sought, among other things, money damages. At trial, the court permitted Disney executive Larry Murphy to respond to testimony elicited by Anaheim from its witnesses that a team name with two geographic designations was absurd and was not contemplated by Anaheim or Disney during the lease negotiations. Specifically, Murphy testified that (1) he wanted Disney to have as much flexibility as possible regarding the team’s name, (2) limiting the name to Anaheim might be unwise because Anaheim was a small market, and (3) flexibility regarding the team’s name might be valuable to a future purchaser of the team. Murphy further testified that he could not recall whether he discussed a possible second geographic indicator with Anaheim. In addition, the trial court rejected several jury instructions that Anaheim proposed relating to, among other things, whether and how it should consider evidence regarding Disney’s unexpressed subjective intent about section 11(f) and any alleged prior or contemporaneous oral agreements between the parties. For example, Anaheim proposed charging the jury that it could not consider Disney’s unexpressed subjective intent regarding section 11(f) if Anaheim did not have the same understanding. The jury ruled in favor of ABLP. Anaheim appealed, arguing that the trial court erred in allowing Murphy’s testimony about his unexpressed subjective intent and in rejecting its proposed jury instructions.