Ford vs. Kahne
From the Detroit Insider:
Sunday, May 29, 2005
Racer, Ford collide off track
Automaker claims precocious stock car driver secretly defected to Dodge.
By David Shepardson / The Detroit News
DEARBORN -- Kasey Kahne was a quick study and adept driver on the racetrack -- shifting from the dirt courses of his native Washington state to stock car racing's minor league in just several years.
Ford Motor Co., anxious to discover and groom future racing talent, took a chance and backed the young driver, and soon Kahne went on to win his first Busch Series race in 2003.
But he was hungry for a chance to race in NASCAR's top league event -- the Nextel Cup.
Frustrated that Ford wouldn't allow him to race in the premier circuit full time, Kahne secretly struck a deal, the automaker says, to drive Dodge-powered cars in fall 2003. After numerous runner-up finishes, he won his first NASCAR Nextel Cup race on May 14 driving a No. 9 Dodge Charger.
Ford is now suing Kahne, 25, for breach of contract, and the two sides are headed to trial in September.
According to court records, the case has become a bitter standoff between one of NASCAR's biggest financial backers and its rising star. It also offers a rare glimpse at how much automakers spend to use America's most popular auto racing circuit and its drivers as marketing tools.
U.S. District Judge Robert H. Cleland summed up the case at a hearing Thursday: The company "lost a diamond in the rough," who jumped at the chance to make more money before his contract was up and agreed to "roll the dice" and gamble that Ford might sue him.
"Before he started winning, Kasey Kahne was nobody," Cleland said. "He was essentially a nonentity."
Kahne's lawyers have blasted Ford repeatedly, noting that Kahne won rookie of the year honors in the 2004 Nextel Cup season with a Dodge team. He earned $4.8 million racing in 2004 and has pocketed $1.7 million this year.
"Ford filed this (lawsuit) in a transparent attempt to deflect the public embarrassment of its squandered opportunity, and widely reported failures of its racing program, which currently fields a fraction of the cars fielded by its competitors," Kahne lawyer Dan Baum wrote in a recent court filing.
Noting Ford has won the last two NASCAR championships and is in a good position to win this year, Ford Racing spokesman Kevin Kennedy said: "Ford has never bad-mouthed Kasey Kahne and never denied he was a talented driver."
But in a May 6 court filing, Ford said Kahne "embarked on a surreptitious course of duplicitous conduct with non-Ford race teams" and calls his conduct "malodorous."
The automaker hasn't disclosed how much it is seeking in damages, though federal suits require a minimum of $75,000.
Kahne has already lost several battles in the case. On Thursday, Cleland refused to order Ford to turn over data detailing the marketing value of NASCAR drivers -- specifically Kahne -- to Kahne's lawyers.
John Szymanski, director of sponsor development for Ford Racing, said in a sworn deposition last month that racing is important to car buyers "because they identify people and drivers as people that drive Fords; and therefore, they help establish an emotional connection to the Ford brand, to the fans through their support or affection for certain drivers."
Ford's attorneys -- eager not to disclose the information -- agreed in advance to drop any claims that Kahne's departure cost the company any vehicle sales. They refused to turn over "marketing-related information on the incremental sales impact of Ford's participation in competitive racing series," Ford's attorneys said. The research was conducted in 2003 or 2004, the company said.
Baum said that the court should dismiss Ford's suit if it no longer suggests it lost any money as a result of Kahne's departure.
Cleland has also denied a request by Kahne's lawyers to question Edsel Ford II, a member of Ford's board of directors and then-honorary chairman of the Team Ford Racing Fan Club. Last week, the judge ordered Kahne to produce tax and financial records for 2004 and 2005 -- but Ford must keep the records confidential.
Ford disclosed in court filings that it spent well over $1 million on Kahne's development. Ford also agreed to pay Kahne $200,000 a year -- plus a $30,000 signing bonus and a Lincoln "loaner" car for personal use.
After signing a contract with Ford in 2002, Kahne raced Ford vehicles for two teams in the NASCAR Busch Series during the 2002 and 2003 seasons.
He initially drove for Robert Yates Racing in 2002, and then moved to Akins Motorsports with the agreement of Robert Yates.
In 2003, Kahne approached Ford and requested a full-time slot in the more prestigious Nextel Cup for the 2004 season. But Ford told Kahne it wanted him to wait another season.
"There is a danger, however, in moving up too soon," Dan Davis, Ford Racing's director, said in a Sept. 24, 2003, letter to Kahne. "We strongly believe that a premature, full-time entry into the Cup series could have negative impact on performance and future marketability of your skills."
But Kahne had already been looking for another team that would allow him to race in the Nextel Cup.
In August 2003, Kahne told Yates he had an opportunity to race full time in both the Busch Series and Nextel Cup series for Evernham Motorsports, a Dodge team. Yates acknowledged in his deposition that he told Kahne that Evernham was probably "the best seat in the house" and added: "if you were my son, I'd have a hard time telling you not to take (the) opportunity."
Fewer than 10 days after receiving Davis' letter, Kahne signed an agreement to race in the Nextel Cup for Evernham on Oct. 2. He signed another deal on Oct. 3, 2003, with Akins Motorsports to race in the Busch series, which later moved its team to Dodge vehicles.
But Kahne, Ford noted, didn't inform them until Oct. 7, 2003.
The case rests on the meaning of certain terms and provisions in the three-year contract.
Lawyers for Kahne note the deal says the driver agreed to participate in a "mutually acceptable racing series." When Ford refused to let him race in Nextel, his lawyers argue he had a right to void the contract.
The contract also says that if "in the opinion of Ford," the relationship becomes unsatisfactory, then Ford could place Kahne with another team. The automaker claims Kahne abandoned a legal obligation to race for Ford in order to secure more money with a rival.
Ford has tried to settle the case on several occasions.
On April 27, Ford's lawyers sent Kahne's lawyer a letter marked "Confidential: Attorney-to Attorney Settlement Communication."
Ford attorney Maurice Jenkins described Kahne's conduct as "malodorous" -- but then asked Baum to enter arbitration and settle the case "in a private forum that would not expose either party to adverse media scrutiny."
Instead, the letter was filed publicly.
At trial, set for Sept. 19, nearly all of Ford's senior racing executives are expected to testify, as is Kahne. Cleland will hold a hearing July 20 to consider Kahne's request that the case be thrown out without a trial.