## Facts

- James C. Bain officiated a March 6, 1982 men’s basketball game between the University of Iowa and Purdue University.
- Near the end of the game, Bain called a foul on an Iowa player; Purdue converted a free throw that proved decisive.
- John and Karen Gillispie operated a privately owned Iowa City novelty shop selling University of Iowa sports memorabilia, without affiliation with the university or its athletic department.
- After the game, the Gillispies sold T-shirts referencing Bain that depicted a man with a rope around his neck and the caption “Jim Bain Fan Club.”
- Bain sued the Gillispies for injunctive relief and for actual and punitive damages.
- The Gillispies filed a counterclaim alleging Bain’s officiating fell below professional standards and caused them economic losses (including lost profits and loss of business advantage) tied to Iowa’s failure to win the Big Ten championship, and also alleged emotional distress and lost goodwill.
- The counterclaim asserted (1) negligence (“referee malpractice”) based on foreseeability of their economic harm and (2) a contract claim that they were intended third-party beneficiaries of Bain’s employment contract with the Big Ten Conference.

## Issues

1. Whether a basketball referee owes a tort duty to remote commercial actors to prevent purely economic losses allegedly resulting from an on-court call.
2. Whether sports-memorabilia retailers may enforce a referee’s employment contract with a sports conference as intended third-party beneficiaries.

## Decision

- The Iowa Court of Appeals affirmed summary judgment dismissing the Gillispies’ counterclaim.
- The court held the negligence claim failed because the law did not recognize a duty from a sports official to remote economic actors for these alleged losses.
- The court held the third-party beneficiary claim failed because the Gillispies were not intended beneficiaries of Bain’s contract with the Big Ten Conference.
- Because both theories failed as a matter of law even if the alleged facts were assumed true, no genuine issue of material fact precluded summary judgment.

## Legal Principles

- Foreseeability alone does not establish a tort duty; courts limit duty based on policy considerations, including avoiding indeterminate liability for remote and speculative economic expectations.
- Purely economic losses claimed by downstream actors based on the outcome of a sporting event are too remote and speculative to be recovered from a referee under negligence.
- A nonparty may sue on a contract only if the contracting parties intended to confer an enforceable benefit on that nonparty (as a gift or to satisfy a duty owed to the nonparty); incidental beneficiaries lack standing.
- A contract for competent performance (such as officiating services) does not create enforceable rights in third parties who may profit indirectly from that performance absent evidence of intent to benefit them.

## Conclusion

The court rejected attempts to impose tort liability on a referee for remote, outcome-dependent business losses and rejected contract enforcement by memorabilia sellers as third-party beneficiaries, affirming summary judgment because the counterclaim stated no legally cognizable right to relief.


Bain v. Gillispie, 357 N.W.2d 47 (Iowa Ct. App. 1984)