Opinion ID: 1198944
Heading Depth: 1
Heading Rank: 2

Heading: Facts Relevant to the Creation of an Agency Relationship Between the Zoo and Fey

Text: The record demonstrates that the ticket sales occurred solely for the Zoo in the context of an agency relationship. As revealed by the testimony of witnesses, as well as the joint venture agreement itself, the Zoo intended from the outset to create an agency relationship with Fey to produce and promote its concert series. The joint venture agreement did not supplant the agency relationship but rather was meant to confirm it. Zoofest always remained a Zoo event, with Fey acting in a fiduciary relationship to the Zoo and subject to its ultimate control. In the seven years prior to 1993, the Zoofest concert series had never been subject to the seat tax. In 1993, the Zoo, desiring to continue Zoofest, but wishing to devote less time and realize more income for the Zoo, solicited bids and selected Fey to help it promote the concert series. Thomas Peterson, who served as Marketing Director of the Zoo in 1993 and had promoted Zoofest for the previous seven years, testified that Zoofest was a unique marketing tool for bringing people to the Zoo. Its purpose extended well beyond obtaining additional revenue for the Zoo. It was intended to expose nontraditional audiences to the Zoo, promote interest in the Zoo, enhance the Zoo's reputation in the community, and increase visits and admission revenues throughout the year. [1] Prior to 1993, the Zoo continued to hold Zoofest even though it lost money on the series three out of seven years. In securing Fey, a professional promoter, to execute many of the responsibilities of producing and promoting Zoofest, the Zoo was seeking to increase the overall effectiveness of the series for generating revenue, enhancing its reputation, and exposing the Zoo to new patrons who might repeat their visits. The Zoo retained critical aspects of control over Zoofest, while delegating to Fey responsibilities for implementing the success of the series. Under the parties' original understandinglater confirmed by their joint venture agreementFey had the authority to book talent for the concerts, but the talent could be selected only with the Zoo's approval. [2] Fey set the ticket prices, subject to the Zoo's approval. The dates of the concert were set by the Zoo, and the Zoo set the capacity for the concerts. The Zoo had to approve all advertising. At the hearing, Peterson engaged in the following exchange with opposing counsel: Q: Was there any provision that the zoo would have any kind of restrictive voice for the advertising or control of the concert? A: I had to approve everything. Q: Before it went out? A: Absolutely, including press releases. (Emphasis added.) Though promotion was primarily delegated to Fey, Peterson himself did some of the media interviews and promotional work for Zoofest. Any sponsors of the events required Zoo approval. The Zoo also determined how late the concerts would extend, as well as the allowable noise level. In Peterson's words, I had management of the venue, authority for approval of every area of the series. The only difference was that instead of me making the calls to creative artists, Fey was to do that. Instead of me contracting out for promotion, Fey was going to do that. (Emphasis added.) While the agreement between the Zoo and Fey was that the Zoo would retain 30% of the profits from the series, and Fey would receive 70% of the profits, Fey had to manage and maintain on behalf of Zoofest all books and records as to income and expenses. Thus, the Zoo retained authority over nearly all aspects of Zoofest, while Fey carried out most promotional and production functions and handled the books and records of income and expenses. Peterson testified at trial that: In my opinion, and in the opinion of the Denver Zoo, Fey was acting as an agent of the Denver Zoo to execute the Zoofest Concert Series ... it was not the intent of this agreement, or the very first conversation with Barry, it was never, We're turning this over to you. Fey would not have been involved in the Zoofest concert series if the zoo didn't want to have one. The Denver Zoo was not interested at that time, or my understanding, from any time from that point on, [in] allowing the zoo to act as a venue for concerts ... the zoo would hold it, and that's it. (Emphasis added.) Sometime during the planning of Zoofest, Fey raised the subject of the seat tax. Although Fey was operating under the assumption that the seat tax did not apply because of the Zoo's status with the city, Peterson and Michael McKanna (McKanna), Controller for Fey, sought confirmation from the Denver Department of Revenue (Revenue) that the tax would not apply. At that time, tickets were already on sale and had not been priced to include the seat tax. McKanna and Peterson both testified that it was always the intent of the Zoo and Fey to structure their relations in such a way as to be exempt from the seat tax. McKanna placed a phone call to Don Korte (Korte) at Revenue and inquired about the seat tax. Korte's initial response two weeks later was that Fey would be responsible for paying and collecting the seat tax. McKanna testified that Korte indicated, however, that Revenue would review Fey's contract with the Zoo, and that a joint venture deal or co-promotion would help Fey's case. Peterson also testified that a Revenue official informed him that a joint venture contract would be helpful in avoiding the seat tax. [3] According to McKanna, the Zoo and Fey then turned to formalizing their agreement in writing. By the time Fey and the Zoo received formal notification by letter on August 20, 1993, of Revenue's intent to levy the seat tax, nearly all tickets had been soldpriced without the 10% seat taxand the concert series was finished except for one concert. [4] On August 25, 1993, Fey and the Zoo signed a joint venture agreement describing the duties and responsibilities of the parties. The contract was made retroactive to May 1, 1993.