Court sides with Nike against Oakley in McIlroy rift
Tuesday, December 31, 2013
Nike received an early Christmas present in its legal dispute with Oakley.
On Dec. 18, Judge James Selna of the U.S. District Court for the Central District of California ruled in favor of the Beaverton, Ore.-based company. The 11-page decision effectively ended the case against Nike.
Oakley had filed a five-count complaint against Nike and Rory McIlroy on Dec. 10, 2012, after the two-time major champion from Northern Ireland left Oakley and signed an endorsement contract with Nike. Oakley had maintained that it had the first right of refusal in re-signing McIlroy and that McIlroy and Nike violated that right.
On Nov. 24, McIlroy and Oakley settled their dispute. The terms were not disclosed.
"We are very pleased the proceedings against Rory have been resolved," Pat McIlvain, Oakley's vice president of global sports marketing, said in a statement. "We enjoyed an excellent relationship with Rory as an Oakley brand ambassador. He conducted all his engagements on our behalf with energy and professionalism. We recognize that, in his business dealings with us that were the subject matter of this dispute, Rory was represented by his agent."
The settlement removed the breach-of-contract count from the list of allegations, and the court dealt with the other claims – international interference with contractual relations; violation of a California code on unfair competition; breach of implied covenant of good faith and fair dealings; and declaratory relief – in its ruling.
"We are pleased with the court's decision as it reflects the professional approach with which we undertook the negotiations," Nike said in a statement released to Golfweek.
Phone messages left with Oakley officials and company attorneys were not immediately returned.
According to the court's findings, Nike first approached McIlroy in 2012. In a phone conversation Sept. 12, 2012, between Nike representatives and Oliver Hunt, McIlroy’s attorney, a deal was seriously discussed and Hunt represented to Nike that McIlroy was free to discuss such a deal.
Thirteen days later, Nike extended to McIlroy’s representatives – Conor Ridge, then McIlroy’s agent, and Hunt – a substantial offer for five years to start in January 2013, to which McIlroy’s representatives agreed in principle.
On Sept. 28 and 29, the parties met in Chicago to complete negotiations. That's when McIlroy’s representatives first raised the Oakley issue of first right of refusal to Nike.
McIlroy had signed a two-year endorsement deal for 2011-12 that required McIlroy to provide Oakley a right of first refusal regarding any offer received for an endorsement agreement covering the period after the McIlroy-Oakley agreement.
According to the court, Nike steadfastly told McIlroy’s representatives it was not interested in signing a contract until McIlroy was legally able to do so. At that meeting, Ridge told Nike that Oakley was not going to match the Nike offer and signed the contract on behalf of McIlroy and also signed an additional covenant that McIlroy had no obligations that would prevent him from entering into an agreement with Nike.
The court on procedural grounds disposed of the remaining allegations.
Ridge and Horizon Sports Management represented McIlroy at the time of the signing of the contract and during most of the period the lawsuit was being adjudicated.
Horizon and Ridge were released from representing McIlroy in 2013 and subsequently sued by McIlroy to breach his representation contract. That case is pending in Commercial Court in Dublin.