2015-07-02 / Around Town

Court Proceedings Present a Different Kind of Marathon

By Barry Bridges

By the time athletes cross the Newport Marathon’s Easton’s Beach finish line this fall, the event organizer may feel that it has already weathered its own marathon in court.

Since securing the necessary license earlier this year from the Newport City Council to produce the Oct. 11 race, Gray Matter Marketing and the previous producer, Eident Sports Marketing, have been locked in a battle over alleged difficulties in the transition. Gray Matter objected that Eident was continuing to advertise a “Newport Rhode Race” for the same day and signing up participants, notwithstanding its lack of a permit. Eident maintained that it would host a competing race in the area for those already registered.

Gray Matter and its attorney, Thomas Connolly, took the matter to a judge, filing an action in Superior Court on April 9 claiming that Eident’s activities were creating confusion and amounted to unfair competition, tortious interference with prospective business relations, and unjust enrichment. The suit asked for a temporary restraining order and preliminary injunction, asserting that “it appears that Eident’s conduct is designed … to ruin Gray Matter’s event and to punish the Newport City Council for doing its job.”

Judge Walter R. Stone heard arguments from Connolly and Eident attorney, Kurt Kalberer, on April 24. Stone issued an order May 7 requiring Eident to take specified actions within seven days. The company was instructed to contact its Oct. 11 registrants to fully explain the licensing issues, while also outlining how to effect potential refunds or registration/fee transfers to Gray Matter. Additionally, Eident was to place prominent disclaimers about the situation on advertisements, social media, web pages, and solicitations.

By May 18, Gray Matter felt that sufficient progress in complying with those directives was not being made and filed a complaint for contempt.

“On May 7, the court clearly and unambiguously imposed, among other things, the obligation upon Eident to notify registrants that its application to organize the 2015 Newport Marathon had been rejected by the city and to notify prospective registrants of the same,” Gray Matter averred. “The failure to do so constitutes contempt.”

The filing kicked off a litany of hearings where Stone entertained arguments on whether the letter and the spirit of his mandates had been met. Gray Matter argued that Eident was meeting neither the prior registrant nor disclaimer requirements. Many sessions saw Connolly and Kalberer retreating to the judge’s chambers, with conversations off the public record. They convened on May 26, May 28, and June 1, and even though several additional orders were issued, little seemed to get resolved.

On June 22, Gray Matter filed a second motion for contempt along with supporting documents, writing that “After months of intransigence and multiple opportunities to comply with this court’s several orders, Eident continues to operate in clear violation of each of those orders.”

At the subsequent hearing on June 25, Stone’s patience with the attorneys arguing back and forth was wearing thin, and he threatened to appoint a special master to audit compliance with his decrees, while moving registration fees into receivership so that the court would have closer oversight of the funds.

But the judge further delayed taking action until Tuesday, June 30, when Eident President John Mathews made an appearance and answered questions under oath as to his company’s efforts in responding to the original order. Although Mathews could not recite an exact chain of dates and events during his lengthy testimony, he said that his company had made good faith efforts to comply with the registrant and disclaimer requirements.

Although at one point Stone intimated that he was still inclined to name a receiver, he was somewhat concerned that settling on a measure of damages prior to the race could prove to be “like shadowboxing.” He sent counsel into the hallway to work out a middle-ground settlement that would hammer home the remaining issues on registrants and disclaimers while also making provisions for the payment of Gray Matter’s attorney’s fees.

By the next day, the attorneys were continuing to work toward a new agreement, which is expected to be incorporated into yet another order on Thursday, July 2. In the near term, Gray Matter wants Eident to respond more fully to refund requests and is also seeking a list of all runners that want to transfer their registrations to the Newport race, along with any associated fees that have already been paid.

The parties may be back in court after the holiday weekend for a status conference.

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