Opinion ID: 2982364
Heading Depth: 3
Heading Rank: 1

Heading: Concession Agreement

Text: In an agreement dated June 5, 2000 (“Concession Agreement”), Speedway granted OS “the sole and exclusive right . . . to sell food and alcoholic and non-alcoholic beverages . . . at the Speedway at any and all events held at the Speedway.” R. 28-8, Concession Agreement § 1.1 at 1 (Page ID #583). OS would provide “the concession, catering and restaurant services for and on behalf of” Speedway. Id. at 1 (Page ID #583).1 OS was responsible for retaining, training, monitoring, evaluating, disciplining, and dismissing employees, as appropriate, and it was “solely responsible . . . for the employees and their actions.” Id. § 2.1 at 2 (Page ID #584). Nevertheless, Speedway had “the right to approve management personnel to be used by” OS at the racetrack, id. § 4.3 at 6 (Page ID #588), and retained the option to bar OS from employing anyone else, if it had “a reasonable and lawful basis,” and to “provide cross-training” at its own expense, id. § 2.1 at 2 (Page ID #584). Perhaps more significantly, although only the concessionaire had a liquor license, Speedway had a right to prevent an impaired patron from purchasing more alcohol. R. 28-11, Tr. of Second Mark Simendinger Dep. at 23 (Page ID #646). Indeed, Speedway’s right to do so was 1 Speedway and OS each acknowledged and agreed in the Concession Agreement that OS was an “independent contractor” and that Speedway and OS were “not joint venturers, partners, or otherwise related to each other in any capacity.” R. 28-8, Concession Agreement § 15.1 at 13 (Page ID #595). Nor was OS to be “deemed an agent” of Speedway. Id. § 15.2 at 14 (Page ID #596). They “specifically agreed” that OS was “not an employee” of Speedway, and that the employees performing concession services under the agreement were “solely employees of [OS] and not employees of [Speedway].” Id. § 15.1 at 13 (Page ID #595). These characterizations, and other language intended define the relationship between Speedway and the concessionaire, id., may be relevant to the resolution of any dispute between them. They do not, however, address the issue of whether Speedway was in the “business of selling alcohol,” as that term is used in the CGL Policy. 5 Nos. 12-6618/13-5015, KSPED, LLC v. Virginia Surety Company, Inc. contained in a document that it distributed to its patrons containing the racetrack’s rules. Id. at 2223 (Page ID #645-46). In addition to advising patrons that they had to be at least 21 years old and present photo identification with proof of age when purchasing alcohol, the document provided that “[w]e reserve the right to refuse alcoholic beverages to any person for any reason and will contact police if we believe you are acting in a manner that is contrary to the law or that may endanger yourself, others, or any property.” Id. at 23 (Page ID #646). Speedway also retained the right to select the food and beverages, except for alcohol, that would be served. R. 28-8, Concession Agreement § 2.3 at 3 (Page ID #585). Nevertheless, “whether alcoholic beverages w[ould] be sold at particular events” was Speedway’s decision, id. § 2.6 at 3 (Page ID #585), and alcohol was sold at all racing events, as well as other events, at the racetrack, R. 28-11, Tr. of Second Mark Simendinger Dep. at 5, 15 (Page ID #628, 638). While OS was responsible for establishing food and drink prices, including alcohol, Speedway retained the right to reasonably withhold approval of those prices. R. 28-8, Concession Agreement § 2.4 at 3 (Page ID #585). Moreover, OS and Speedway were required to cooperatively develop and institute promotional programs for food and drink items. Id. § 2.5 at 3 (Page ID #585). Both Speedway and OS were responsible for obtaining necessary permits and licenses. Id. § 12.1 at 11-12 (Page ID #593-94). Indeed, the Concession Agreement required OS to obtain, among other forms of insurance, liquor liability, including dram shop liability insurance. Id. § 13.1 at 12 (Page ID #594). Speedway was required to be named as an “additional insured” on all such insurance. Id. Moreover, OS agreed to “indemnify, defend and hold [Speedway] harmless from and against any liability incurred by [Speedway] as a result of the willful act, negligence or omission of 6 Nos. 12-6618/13-5015, KSPED, LLC v. Virginia Surety Company, Inc. [OS], its employees, agents, and contractors, and any other persons within its control.” Id. § 10.1 at 9 (Page ID #591). The Concession Agreement also required OS to provide concession services during the hours that OS and Speedway jointly established, “with the goal of maximizing concession revenue.” Id. § 2.6 at 3 (Page ID #585). Thus, regarding the sale of alcohol, Speedway’s president acknowledged that Speedway “would, like any other businessman, . . . certainly like to maximize revenue within that context.” R. 28-11, Tr. of Second Mark Simendinger Dep. at 16 (Page ID #639). Moreover, patrons were not permitted to bring alcohol from outside into the Speedway. Id. at 23 (Page ID #646). Finally, the Concession Agreement provided that OS had to pay Speedway between 30% and 35% of its gross receipts from alcohol. R. 28-8, Concession Agreement § 8.1 at 7-8 (Page ID #58990). Because the 30% to 35% came from the gross receipts, presumably before all other expenses incurred by the concessionaire were taken into account, the percentage of the net revenue was significantly higher. Speedway’s president acknowledged that Speedway benefitted from increased alcohol sales because it “gets a higher commission check.” R. 28-11, Tr. of Second Mark Simendinger Dep. at 6 (Page ID #629). The total amount paid to Speedway in commissions from the sale of alcohol in 2004 was $282,837. R. 22, Liquor Sales Stipulation ¶ 2 at 1 (Page ID #136).