AT&T suit hinges on unwritten agreements

Updated: May 8, 2007, 4:40 PM ET
By Angelique Chengelis | ESPN.com

AT&T Mobility's case against NASCAR regarding the branding of the No. 31 car owned by Richard Childress and driven by Jeff Burton hinges on a meeting with representatives of the sport's governing body in June 2003, during which "promises" were made by NASCAR.

Jeff Burton
Mark J. Rebilas/US PresswireThe paint scheme on Jeff Burton's car is the point of much contention between NASCAR and AT&T.

NASCAR, however, dismissed the "alleged" promises and introduced compelling testimony by a former Cingular employee designated as the "point person" for the sponsoring of the car, in a 94-page filing in U.S. District Court.

The document filing was made Monday in Atlanta.

AT&T and NASCAR have been in court since April 26 for an injunction that would allow AT&T, which merged with Cingular last December and is phasing out the Cingular brand, to put its logos on the car.

A decision is expected from Judge Marvin H. Shoob by the end of this week or early next week.

The sponsorship contract with Richard Childress Racing runs out at the end of the season, and based on court documents, RCR and AT&T are not currently negotiating a renewal.

According to AT&T Mobility's 40-page filing, the two sides met on June 26, 2003 -- a meeting in response to a letter sent by NASCAR to all team owners indicating that beginning in 2004 when Nextel became the exclusive series sponsor for an approximate $700 million investment, all Nextel competitors would be prohibited as sponsors.

During that meeting, Cingular was informed it would be grandfathered in as a sponsor but the company could not increase its brand position on the car and it could not move sponsorship to another team.

Cingular representatives were not given anything in writing from NASCAR, according to court documents. NASCAR officials simply told them, "Trust us."

NASCAR's position, however, is that no promises were made and that it made clear the limitations on Cingular to feature other telecommunication brands.

Rhonda Stell, a former Cingular employee and the point person in the sponsorship of the No. 31 car from 2003 to August 2006, indicated in her testimony that the communication from NASCAR was clear throughout.

"I can state unequivocally that NASCAR never communicated anything to Cingular that reasonably could be interpreted as allowing Cingular to use on car No. 31 the brand of AT&T or any telecommunications company [other than Cingular]," she said in court. "Indeed, the communications from NASCAR to Cingular at [that June 26, 2003] meeting and thereafter were clear that Cingular could not use the brand of any telecommunications company [other than a Cingular brand]."

Stell also testified last week she understood "NASCAR had to approve every paint scheme with every team no matter what."

The NASCAR filing also said Cingular used an "ambush" strategy, based on Stell's testimony. She said that Cingular actively looked for "loopholes" to "ambush" Nextel's exclusive sponsorship rights.

In AT&T's proposed finding of facts filed in district court, the documents reference an email from a senior Sprint Nextel official that indicates its interest in this case is based on Sprint Nextel's desire to "boot" AT&T from the sport.

In April 2005, based on rumors of an acquisition of Alltel by Verizon, Nextel amended its contract with NASCAR "prohibiting NASCAR from allowing Cingular and Alltel to activate their sponsorship under the brand of a competitor."

In March 2006, AT&T announced its merger with BellSouth and indicated Cingular might transition to AT&T. Shortly thereafter, Childress received another letter from NASCAR president Mike Helton.

"[Our] communication has been clear and consistent," Helton wrote. "Should AT&T acquire BellSouth and phase out the Cingular wireless brand, no other telecommunications brand will be allowed to replace Cingular wireless as a team sponsor in the NASCAR Nextel Cup series."

Not long after, Cingular began considering the possibility of litigation. On April 25, 2006, Cingular asked Childress if RCR would join in a lawsuit against NASCAR. Childress declined.

After AT&T and Cingular merged last December, Cingular made a request of NASCAR in January to rebrand the car -- the Cingular "jack" would remain on the hood of Burton's car and a small AT&T globe logo would appear on the rear quarter panel -- but NASCAR rejected that request.

AT&T/Cingular argue that NASCAR's determination was made in "bad faith." The filings also indicate Cingular has invested $150 million to "build goodwill among fans."

The AT&T Mobility documents also suggest that NASCAR's primary concern is that by allowing the AT&T logo, Sprint Nextel would consider suing NASCAR, a prospect NASCAR clearly wants to avoid.

Ultimately, NASCAR, which said it is not singling out Cingular, contends that since June 2003, Cingular should have known it could not use the brand of another telecommunications brand.

Angelique S. Chengelis is a contributor to ESPN's NASCAR coverage.