Maxim party host that sued IMS, then lost $75K in countersuit, loses appeal

A federal appeals court has upheld a jury’s award of $75,000 to Indianapolis Motor Speedway in a breach of contract lawsuit brought by an event-planning company that had sued IMS due to poor ticket sales at a party marking the 100th running of the Indy 500.

The 7th Circuit Court of Appeals on Wednesday ruled against Karma International LLC, which in 2016 hosted a Maxim men’s magazine-themed party for the 2016 IndyCar race that lost more than $420,000, according to the court.

Karma filed a breach-of-contract suit seeking $817,500 in damages, alleging Speedway officials had speculated it would raise at least $1 million in ticket and table sales. After Karma sued the Speedway, IMS countersued, claiming that Karma failed to place promised banner ads and marketing support on Maxim’s website and social media channels.

Southern District Senior Judge William T. Lawrence awarded the Speedway summary judgment against Karma’s claim, but IMS’s counterclaim proceeded to a jury trial. Jurors in Indianapolis found Karma liable and issued a $75,000 damages verdict in favor of the Speedway.

That ruling was affirmed Wednesday by the 7th Circuit.

“The Indianapolis 500 race has been a fixture of American life since 1911, interrupted only by world war. So when its 100th running arrived in 2016, organizers wanted to shift the race-weekend entertainment into high gear,” with the Karma-sponsored Maxim party, Circuit Judge Diane Sykes wrote for the appellate panel.

“Unlike the Indianapolis 500 itself—which sold out for the first time in history—the Karma party was a disappointment,” Sykes wrote in affirming the jury’s verdict. Nevertheless, the panel agreed with the district court that IMS was not to blame for the party’s poor results in terms of revenue.

“Karma’s evidence of damages is indeed speculative, so its claim fails under Indiana law. And we see no reason to second-guess the jury’s determination that Karma breached the parties’ contract by failing to fulfill its promises to advertise the event online.”

The panel also rejected Karma’s request for a new trial or other potential relief.

“Finally, we see no abuse of discretion in the judge’s ruling on Karma’s motion for a new trial. The jury had plenty of evidence that the Speedway complied with its promise to send a ‘dedicated email’ to its database,” the panel concluded.