A legal dispute over ownership of a NASCAR artifacts collection has been transferred to the North Carolina Business Court.
The court, launched in 1996, handles business cases involving complex and significant issues of corporate and commercial law.
The lawsuit by tobacco manufacturer ITG Brands against the Winston Cup Museum and its owner, Will Spencer, was filed Jan. 20 in Guilford District Court, with ITG requesting a jury trial.
However, because of the complex business nature of the dispute, state Supreme Court Chief Justice Paul Newby agreed to place the lawsuit in the special court. Newby assigned the lawsuit to Judge Adam Conrad, who serves in the downtown Greensboro court location.
As of Thursday, no substantive legal action has taken place since the transfer occurred on Jan. 26.
People are also reading…
Although it is unclear which party gains an advantage from this transfer, there has been speculation in the business and legal sectors that the court tends to favor corporations over individuals or smaller businesses.
“Business courts are not so-named because they favor businesses, but because they are specifically designed to improve a state’s business environment by providing a forum to resolve complex disputes in an efficient manner,” according to the Ward and Smith law firm, based in Raleigh, which specializes in business law. “Businesses do not fear winning or losing as much as they fear not having the knowledge to help assess the inherent risks of litigation.”
The genesis for the North Carolina Business Court came in 1994 from Democratic Gov. Jim Hunt, who determined the state needed to provide corporate law with its own venue.
Until then, it was a gamble whether a state or federal judge would have the expertise to handle such a case.
The court debuted in 1996 with Judge Ben Tennille hearing cases across North Carolina as he worked out of his home near Greensboro or in a small courtroom in High Point. Since then, the court has expanded to locations in Charlotte, Raleigh and on the Wake Forest University campus in Winston-Salem.
Among the issues covered by the Business Court are disputes involving corporations, antitrust law and licensing and other intellectual property disputes.
The NASCAR championship series artifacts at the heart of the legal dispute are stored and displayed in a downtown Winston-Salem museum at 1355 Martin Luther King Jr. Drive.
Since 2005, the museum has displayed physical copies and reproductions of Winston Cup images per a storage agreement with R.J. Reynolds Tobacco Co. Racing gear, outsized winner’s checks and signage are some of the things a visitor might see.
ITG wants to use the artifacts in potential sports or entertainment marketing initiatives.
Christy Cox Spencer, the museum’s president, said that the museum was created “as a way to preserve the rich history of stock car racing and the historical ties that Winston-Salem has to the motorsports industry in North Carolina.”
ITG had wanted a judge to rule that its control over the Winston traditional cigarette brand since June 2015 also covers the Winston Cup artifacts. The company claims the museum, Spencer and a third defendant, JKS Motorsports, are denying access to the artifacts for ITG’s reproduction purposes.
Christy Spencer called the ITG lawsuit “a disappointment to everyone involved with the museum.”
“We hope that the lawsuit will not have an impact on the museum’s day-to-day operations,” she said, “and we look forward to continuing to honor the rich history the Winston Cup Museum celebrates.”
ITG controls the Winston traditional cigarette brand as part of parent company Imperial Brands’ $7.1 billion purchase of the Winston, Salem, Kool and Maverick brands from Reynolds and Lorillard in June 2015.
ITG said in the lawsuit it “desires to incorporate the Winston brand’s historical connection to motorsports, including the brand’s historic connection to the Winston Cup.”
Most of those artifacts and images — featuring Hall of Fame drivers such as Dale Earnhardt Sr., Richard Petty, Jeff Gordon and Darrell Waltrip — were developed and collected while R.J. Reynolds Tobacco Co. was the title sponsor of the Winston Cup championship series from 1971 to 2003. That 32-year period is considered the golden era of NASCAR championships.
According to the lawsuit, Will Spencer is alleged to have claimed that Reynolds “gifted them absolute title to the Winston Cup artifacts.”
ITG alleges that Spencer “attempted to extort ITG into providing him with a windfall profit for ITG’s use of the Winston Cup artifacts.”
The parties negotiated over access to the artifacts before talks broke down last year.
Among the North Carolina Business Court’s high-profile cases involving the Triad was Tennille’s 2001 ruling involving the takeover bids by First Union and SunTrust Banks for Wachovia.
Tony Plath, a retired UNC-Charlotte finance professor, said Tennille’s ruling gave Wachovia shareholders certainty that if they rejected First Union’s offer, they likely would receive one from SunTrust or another bank.
“Most of the time, the court deals with relatively obscure and wonky issues that don’t affect the lives of everyday people in North Carolina to a great degree,” Plath said.
But regarding the fight for Wachovia, “I’d at least call it the most visible and contentious issue that the court has dealt with, given the financial magnitude of the case, the amount of shareholder money involved and the number of people touched by the case.”
In December 2021, the N.C. Supreme Court upheld an April 2020 ruling by the state Business Court that Reynolds provided “fair value” to shareholders who objected to the return they received from the company’s $54.5 billion sale to British American Tobacco.
Other shareholder lawsuits handled by a Business Court judge include: Reynolds’ $29.2 billion purchase of Lorillard; the sale of Krispy Kreme Doughnuts for $1.3 billion to an affiliate of JAB Holdings; the $1.5 billion sale of Hatteras Financial Corp. to rival Annaly Capital Management; and Yadkin Financial Corp.’s $456 million purchase of NewBridge Bancorp.
In those instances, the lawsuits were either resolved by the companies providing more financial disclosures or through the Business Court, often after the deal was consummated.