Madison Square Garden Boxing, Inc. v. Shavers Court Opinion

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Hew York. N. Y. 10013 
L I B R A R Y  ' " '

m  2 6  19??UNITED STATES COURT OF APPEALS 

F or th e  S econd C ircuit

Nos. 1538, 1556, 1557, 1559—September Term, 1976. 

(Argued August 15, 1977 Decided August 19, 1977.) 

Docket Nos. 77-7348, 7353, 7400, 7401

M adison S quare Garden B oxing , I n c .,

Plaintiff-Appellee,
Y.

E arnie S havers,
Defendant,

T op R a n k , I n c .,

Proposed Intervenor-Appellant.

B e f o r e  :
V an  G raafeiland , W ebster,* Circuit Judges, 

and D ooling,** U.S. District Judge

Appeal from an order of the United States District 
Court for the Southern District of New York, Owen, J., 
denying application of Top Rank, Inc. to intervene in 
pending action; also from orders of the United States 
District Court for the Southern District of New York, 
Owen, «/. and Haight, J., enjoining Top Rank, Inc. from

* Of the U.S. Court of Appeals (8th Cir.). sitting by designation.

* Of the Eastern District o f New York, sitting bv designation.

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securing injunctive relief in the New York State Supreme 
Court.

Appeal from order denying intervention dismissed as 
moot. Appeal from orders enjoining State Court proceed­
ings reversed.

------------ -----------------
T heodore H. F riedm an , New York, N.Y. (Arum, 

Friedman & Katz, New York, N .Y.; David 
G. Miller, Klari Neuwelt, Daniel A. Ruzow, 
of Counsel), for Appellant Top Rank, Inc.

J ohn  A. G tjzzetta, New York, N.Y. (Simpson 
Thacher & Bartlett, New York, N.Y.; Barry 
R. Ostrager, Dennis G. Jacobs, of Counsel), 
for Plaintiff-Appellee.

V an  Graafeiland , Circuit Judge:

Muhammad Ali and Earnie Shavers, two well-known 
pugilists, are scheduled to fight for the heavyweight cham­
pionship of the world on September 29, 1977. A prelim­
inary bout between the would-be promoters of this event is 
presently taking place. Madison Square Garden Boxing, 
Inc. (MSG) and Top Rank, Inc., each of whom claims to 
have an exclusive promotional contract with Shavers, are 
now in the sixth round of an imbroglio which bids fair to 
outdo the main event. For those who missed the earlier 
rounds, a brief review of what has transpired to date will 
he helpful.

In the Spring of 1977, MSG, which had an option contract 
with Ali for a heavyweight title fight, undertook to secure 
Shavers as All’s opponent. On May 16, Shavers’ manager 
sent MSG a telegram indicating his conditional acceptance 
of MSG’s suggested terms. A proposed letter agreement 
was then sent hy MSG to Shavers, the terms of which dif-

5356



fered from those of the telegram in several respects. Oral 
discussions followed; and Shavers, apparently concluding 
that an agreement would not be reached with MSG, signed 
a contract to fight for Top Rank. MSG felt, on the other 
hand, that an agreement had been consummated between 
it and Shavers prior to the execution of the Top Rank 
contract. With these conflicting views, the parties entered 
the legal arena.

The first action was by Top Rank, which commenced an 
Article 78 proceeding in New York State Supreme Court 
on June 10 seeking to restrain the New York State Athletic 
Commission from making a determination as to the validity 
of the purported agreement between MSG and Shavers. 
By order dated June 30, 1977, Judge Sullivan of the State 
Supreme Court held that there was no binding contract 
between MSG and Shavers and vacated a decision by the 
Athletic Commission which held to the contrary.

In the meantime, on June 16, MSG commenced an action 
against Shavers in the United States District Court for 
the Southern District of New York seeking to enjoin him 
from participating in any boxing match until he fulfilled 
his alleged contractual obligations with MSG. An order 
was issued directing Shavers to show cause on June 22 why 
a preliminary injunction for this relief should not be 
granted. A hearing was held on June 23, and on June 24 
the District Judge made an order preliminarily enjoining 
Shavers from fighting for any promoter other than MSG 
before October 11, 1977.1 On the same day, Top Rank sub­
mitted an application to intervene in the action as an in­
dispensable party which was denied by the District Court.2

1 A more detailed opinion and order followed on June 28.

2 The granting of Top Rank’s motion to intervene as an indispensable 
party would have deprived the District Court of jurisdiction because of 
lack of diversity between MSG and Top Rank. Johnson v. Middleton, 
175 F.2d 535, 537 (7th Cir. 1949).

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Tiie District Judge found no basis for intervention as of 
right. He also held that the application was untimely and 
that Top Rank’s interests were being adequately protected 
by Shavers. Shavers promptly appealed from the order 
granting a preliminary injunction, and Top Rank appealed 
from the order denying intervention.

On July 7, Top Rank commenced a new action against 
Shavers and MSG in New York State Supreme Court seek­
ing a declaratory judgment as to the rights of all the 
parties and secured a temporary restraining order pro­
hibiting MSG and Shavers from consummating their pro­
posed agreement. On July 15, the District Court, in a 
proceeding brought by MSG against Judge Sullivan and 
Top Rank, enjoined the latter from enforcing the State 
Court’s temporary restraining order on the ground that 
it would nullify the District Court’s preliminary injunc­
tion. Top Rank has appealed from this order of the Dis­
trict Court.

Thereafter, MSG sweetened the terms of its proposed 
contract with Shavers, and Shavers stipulated with MSG 
that a final judgment containing a permanent injunction 
might be entered against him and that his appeal was dis­
continued on the merits. Pursuant to this stipulation, a 
final judgment was entered in the District Court on July 
20. MSG then moved to dismiss Top Rank’s appeal from 
the order denying intervention on the ground of mootness.

MSG also moved in District Court to extend the scope 
of the July 15 injunction order, and on July 27, a second 
order issued from the District Court enjoining Top Rank 
from taking any steps to obtain injunctive relief in any 
court which would interfere with the contractual rights of 
MSG or would nullify the final judgment and permanent 
injunction granted on July 20. Once again, Top Rank ap­
pealed. By order of this Court, the three appeals were 
argued together, along with MSG’s motion to dismiss.

5358



The parties have briefed and argued at length the law 
covering the rights of a would-be intervenor. Because of 
the peculiar posture of this case, we see no reason to par­
ticipate in this vigorous discussion. Whether rightly or 
wrongly, MSG contended that Top Rank had no right to 
intervene and prevailed in this position in the District 
Court. It then proceeded to settle its differences with 
Shavers, with the result that a final judgment containing 
a permanent injunction was entered by stipulation. Under 
the circumstances, this judgment had no binding effect 
whatever on Top Rank.

A  judgment entered by consent and stipulation is bind­
ing upon the consenting parties only. Raylite Electric 
Corp. v. Noma Electric Corp., 170 F.2d 914, 915 (2d Gir. 
1948). Moreover, it is the general rule that no one can be 
bound by an in personam judgment in litigation in which 
he or his privy was not a party. Hansberry v. Lee, 311 
U.S. 32, 41 (1940); Williamson v. Bethlehem Steel Corp., 
468 F.2d 1201, 1203-04 (2d Cir. 1972), cert, denied, 411 U.S. 
931 (1973). Whatever may have been the relationship 
between Shavers and Top Rank when the District Court 
denied the latter’s application to intervene, they were ob­
viously not in privity when Shavers stipulated with MSG 
for entry of judgment.

With the entry of the final judgment, the life of the pre­
liminary injunction came to an end, and it no longer had a 
binding effect on any one. The preliminary injunction was 
by its very nature interlocutory, tentative and imperma­
nent. Hamilton Watch Co. v. Benrus Watch Co., 206 F.2d 
738, 742 (2d Cir. 1953). The findings of fact made therein 
were not controlling on the ultimate issues, and the parties 
would have been free to retry these issues during the hear­
ing on the merits leading to a final judgment. Imperial 
Chemical Industries, Ltd. v. National Distillers & Chemical 
Corp., 354 F.2d 459, 463 (2d Cir. 1965). There is therefore

5359



no basis for enjoining Top Rank from seeking injunctive 
relief in the State Courts on the ground that such relief 
would nullify the terms of either the preliminary injunc­
tion or the final judgment. Southwest Airlines Co. v. Texas 
International Airlines, Inc., 546 F.2d 84, 94 (5th Cir. 1977).

A determination by the State Court that the contract 
between Shavers and Top Rank is binding and enforce­
able may possibly result in an injunction prohibiting 
Shavers from fighting for MSG, in which case the federal 
and state injunctions will offset each other and there will be 
no fight. That is, however, a determination to be made by 
the courts of New York, not by this Court. We hold simply 
that, under the posture of this case, the District Court 
erred in enjoining Top Rank from attempting to secure 
full relief in our sister court.

The appeal from the order denying Top Rank’s applica­
tion to intervene is dismissed as moot. The orders enjoin­
ing Top Rank from securing injunctive relief in the state 
courts are reversed. Costs are awarded to neither party.

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480-8-22-77 USCA— 4221
MEILEN PRESS INC., 445 GREENWICH ST., NEW  YORK, N. Y. 10013, (212) 966-4177

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