Opinion ID: 786958
Heading Depth: 3
Heading Rank: 1

Heading: University System's Interest as a Contractual Party

Text: 103 Events and University System maintain that University System is a necessary party in this action for injunctive relief under Rule 19(a) simply because it is a signatory to a contract with Events running through 2009. 104 For this proposition, the defendants rely on Lomayaktewa v. Hathaway, 520 F.2d 1324 (9th Cir.1975), and its progeny. Lomayaktewa pronounced that [n]o procedural principle is more deeply imbedded in the common law than that, in an action to set aside a lease or a contract, all parties who may be affected by the determination of the action are indispensable. Id. at 1325. Dawavendewa reaffirm[ed] the fundamental principle [that] a party to a contract is necessary, and if not susceptible to joinder, indispensable to litigation seeking to decimate that contract. Dawavendewa, 276 F.3d at 1157; see also Clinton v. Babbitt, 180 F.3d 1081, 1088 (9th Cir.1999) ([A] district court cannot adjudicate an attack on the terms of a negotiated agreement without jurisdiction over the parties to that agreement.). 105 In none of these formulations is that principle here applicable. We note, first, that contrary to Events' representation, Events is not bound by the licensing agreement through the year 2009. Rather, the licensing agreement explicitly provides that [t]he term of this agreement is three (3) years with three (3), two-year options, beginning in 2001. By the terms of the agreement, after 2003 Events may choose to exercise its option to hold the Rodeo at the Center. The record does not indicate whether Events has exercised its option beyond 2003. As a result, the record does not establish that University System has any legal interest as a party to a binding contract beyond 2003. 106 Second and even more important, even if there is a contract binding into the future, the Lomayaktewa rule does not resolve this case. Disabled Rights' suit is not an action to set aside ... a contract, Dawavendewa, 276 F.3d at 1156 (quoting Lomayaktewa, 520 F.2d at 1325), an attack on the terms of a negotiated agreement, Clinton, 180 F.3d at 1088, or litigation seeking to decimate [a] contract. Dawavendewa, 276 F.3d at 1157. Rather, Disabled Rights seeks Events' and Cowboys' compliance with Title III of the ADA. No term of the contract requires discrimination on the basis of disability or precludes Events and Cowboys from accommodating disabled individuals to the extent Title III requires them to do so. Thus, if Disabled Rights is successful, the contract would not be invalidated or set aside, but would remain legally binding. 107 It is possible, of course, that if Events and Cowboys are ordered to comply with Title III, they may decide to hold the Rodeo elsewhere. If Events and Cowboys do so choose, then University System might have an action against Events for breach of contract for any damage suffered as a result of the private entities' refusal to abide by their agreement. University System would be free, for example, to enforce the licensing agreement, which contains a cancellation clause giving Events the right to cancel the Rodeo at the Center by paying a specified amount of liquidated damages. But the judgment itself would not mandate any change in the agreement, or any breach. Instead, like many other external events — a drop in the financial fortunes of the group sponsoring the event, or an increase in its insurance premiums due to safety concerns — the judgment could precipitate one party to refuse to perform, in which case the other party would have its legal remedies. 108 The facts of Dawavendewa illuminate the determinative distinction between a case in which the judgment will necessarily set aside the contract and a case such as this one, where it will not. As discussed above, in Dawavendewa, a lease agreement between the Navajo Nation and a lessee of Navajo property mandated compliance with a hiring policy giving preference to Navajos. The question in the case was whether that policy violated Title VII. See Dawavendewa, 276 F.3d at 1157. The plaintiff's challenge to the lessee's preferential hiring policy necessarily alleged that the contract itself was illegal. 109 In contrast, Disabled Rights does not allege that the licensing agreement is illegal, on its face or otherwise, and indeed, could not so allege, as nothing in the agreement addresses access by or discrimination against disabled individuals. 16 Moreover, in Dawavendewa, the Navajo Nation had specifically bargained for the hiring preference as the primary consideration for the lease, so the invalidation of that provision would essentially decimate the Nation's bargained-for rights. See id. Here, there is no allegation that University System had as an objective in negotiating the contract, let alone a primary objective, preservation of a physically inaccessible venue. Disabled Rights' suit thus does not threaten to destroy the contract nor University System's bargained-for rights. Rather, as explained above, University System bargained for a liquidated damages clause, so its contractual rights would remain fully protected in the event of a judgment in Disabled Rights' favor resulting in cancellation of the agreement. Nor is it a foregone conclusion that a judgment in Disabled Rights' favor would result in such cancellation. 110 Accordingly, we reject the contention that University System must be deemed necessary merely by virtue of its status as a party to a licensing agreement with Events.