## Facts

- VICI Racing, LLC operated a professional racing team in the American Le Mans Series.
- T-Mobile USA, Inc. agreed to sponsor VICI for the 2009–2011 seasons in exchange for branding on VICI’s race cars and related promotional benefits.
- The agreement included a telematics exclusivity term granting T-Mobile exclusive wireless-carrier rights for Porsche, Audi, and VW telematics programs; VICI’s ability to grant such rights was disputed.
- The agreement contained a force majeure clause excusing performance for events beyond a party’s control and a severability clause preserving the remainder of the contract if a term was invalid.
- The agreement included a “Limitation of Liabilities” clause capping each party’s maximum aggregate liability at the higher of $50,000 or the aggregate amount payable under the agreement and stating it was the sole and exclusive remedy.
- In July 2009, a sponsored race car was severely damaged and was unavailable for approximately 45–60 days; VICI missed certain racing-related obligations during the repair period.
- T-Mobile failed to make a $7 million payment due January 1, 2010; VICI issued a notice of default on January 5, 2010.
- On January 7, 2010, T-Mobile terminated the agreement, asserting VICI misrepresented its authority regarding telematics rights and failed to race at a key event.
- VICI sued for unpaid sponsorship payments; the district court found T-Mobile breached and awarded VICI $7 million for the unpaid 2010 payment, while rejecting VICI’s claim that the liability-cap clause guaranteed $14 million.

## Issues

1. Whether federal diversity jurisdiction existed based on the parties’ citizenship and the amount in controversy.
2. Whether the telematics exclusivity provision was ambiguous and, if so, whether it could be severed while enforcing the remaining sponsorship and payment terms.
3. Whether the force majeure clause excused VICI’s nonperformance arising from the 2009 accident and whether T-Mobile preserved a foreseeability-based challenge.
4. Whether the “Limitation of Liabilities” clause functioned as liquidated damages entitling VICI to the aggregate amount payable under the agreement.
5. Whether the district court’s treatment of damages relating to the 2011 payment (and related attorney’s fees consequences) required modification on appeal.

## Decision

- The Third Circuit held diversity jurisdiction existed because VICI (an LLC) was a citizen of its members’ states, T-Mobile (a corporation) was a citizen of its incorporation and principal place of business, and the pleaded amount in controversy exceeded $75,000.
- The court affirmed that the telematics provision was ambiguous and that the district court properly severed it under the contract’s severability clause while enforcing the remainder.
- The court affirmed that the force majeure clause excused VICI’s nonperformance tied to the accident and held T-Mobile waived its foreseeability argument by failing to preserve it.
- The court affirmed that T-Mobile breached by failing to pay the 2010 amount and affirmed the $7 million award for that unpaid payment.
- The court held the liability-cap clause was not a liquidated-damages provision and did not automatically entitle VICI to $14 million.
- The court vacated in part and remanded for further proceedings concerning 2011-related damages issues and reconsideration of attorney’s fees consistent with the appellate rulings.

## Legal Principles

- For diversity jurisdiction, an LLC has the citizenship of each of its members, while a corporation is a citizen of its state of incorporation and principal place of business; the amount in controversy is evaluated from the plaintiff’s good-faith claim.
- Under Delaware contract law, an ambiguous or unenforceable provision may be severed when the parties expressed an intent to sever and the remaining terms are sufficiently definite to be enforced.
- A force majeure clause may excuse contractual nonperformance when performance is prevented by events beyond a party’s reasonable control; arguments not properly raised below may be deemed waived on appeal.
- A clause labeled and structured as a limitation of liability that caps aggregate exposure is not treated as liquidated damages absent clear contractual intent to predetermine damages upon breach.
- After a bench trial, appellate review is deferential to factual findings (including credibility determinations) and independent as to legal conclusions.

## Conclusion

The Third Circuit upheld liability and the 2010 damages award for T-Mobile’s nonpayment, enforced the sponsorship agreement after severing an ambiguous telematics exclusivity term, applied force majeure to excuse VICI’s accident-related nonperformance, rejected characterization of the liability cap as liquidated damages, and remanded for limited reconsideration of 2011-related damages and attorney’s fees.


VICI Racing, LLC v. T-Mobile USA, Inc., 763 F.3d 273 (3d Cir. 2014)