Panther Racing, LLC, is involved in competitive racing, including the development, maintenance, and operation of a racing team in the IndyCar series. Beginning in 2008, the National Guard annually sponsored Panther racing teams in the IndyCar series to advertise itself.

According to Panther’s CEO, John Barnes, Panther’s practice was to prepare for the next racing season before there was a written sponsorship agreement in place. In 2012, the Guard entered a sponsorship contract with Panther. In 2013, Barnes met with LTG Ingram, Director of the Army National Guard; Ingram told Barnes that the Guard’s sponsorship of Panther was authorized and fully funded for the 2014 season, thus Panther should not seek other sponsors. During a later phone conversation, Panther was advised that another member of the Guard, Sgt. Kosa, had “full authority to represent the Guard in its communications with Panther regarding the sponsorship.” However, an internal Guard memo expressly stated that Sgt. Kosa “was not authorized to award, agree to, or sign any contract modification, or in any way obligate the payment of money by the Government.”

Sgt. Kosa went on to tell Panther that the Guard authorized renewal sponsorship contract for 2014 and that Panther should prepare for the 2014 season. However, Panther’s contract was not extended. By the time it found out, it had already incurred costs while preparing for the 2014 season and did not have time to find another sponsor. Panther sued the Guard for reimbursement of its costs, arguing that Sgt. Kosa had implied authority to bind the government and that there was an implied-in-fact contract in place. Is the contract in effect even though the Guard did not authorize Sgt. Kosa to renew it? Does it matter that the defendant is the US government? How did the court rule?