United States District Court, E.D. Missouri, Eastern Division
AT&T SERVICES, INC. and DIRECTV, LLC, Plaintiffs,
MAX RETRANS LLC, Defendant.
MEMORANDUM AND ORDER
C. COLLINS, UNITED STATES MAGISTRATE JUDGE
matter is before the Court on Defendant Max Retrans LLC's
(“Max Retrans”) Motion to Dismiss (Doc. 22).
Plaintiffs AT&T and DIRECTV, LLC (collectively,
“AT&T” or “Plaintiffs”) filed a
response (Doc. 27) and Max Retrans filed a reply (Doc. 30).
AT&T also filed a Notice of Supplemental Authority (Doc.
36) and, at the request of the Court, Max Retrans filed a
Response to the Notice (Doc. 38). The parties have consented
to the jurisdiction of the undersigned United States
Magistrate Judge pursuant to Title 28 U.S.C. § 636(c)
(Doc. 31). For the following reasons, Max Retrans' Motion
will be GRANTED.
Rule of Civil Procedure 8(a)(2) requires “a short and
plain statement of the claim showing that the pleader is
entitled to relief.” Federal Rule of Civil Procedure
12(b)(6) provides for a motion to dismiss based on the
“failure to state a claim upon which relief can be
granted.” To survive a motion to dismiss a complaint
must show “‘that the pleader is entitled to
relief,' in order to ‘give the defendant fair
notice of what the . . . claim is and the grounds upon which
it rests.'” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v.
Gibson, 355 U.S. 41, 47 (1957)). “Threadbare
recitals of the elements of a cause of action, supported by
mere conclusory statements, do not suffice” to defeat a
motion to dismiss. Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (citing Twombly, 550 U.S. at 555).
“[O]nly a complaint that states a plausible claim for
relief survives a motion to dismiss.” Id. at
679 (citing Twombly, 550 U.S. at 556). “The
plausibility standard is not akin to a ‘probability
requirement,' but it asks for more than a sheer
possibility that a defendant has acted unlawfully.”
Id. at 678. (citation omitted). The pleading
standard of Rule 8 “does not require ‘detailed
factual allegations,' but it demands more than an
accusation.” Id. (quoting Twombly,
550 U.S. at 555). “When ruling on a defendant's
motion to dismiss, a judge must accept as true all of the
factual allegations contained in the complaint.”
Erickson v. Pardus, 551 U.S. 89, 94 (2007). All
reasonable inferences from the complaint must be drawn in
favor of the nonmoving party. Young v. City of St.
Charles, Mo., 244 F.3d 623, 627 (8th Cir. 2001).
broadcast channels are licensed by the Federal Communications
Commission to broadcast their television signals over the air
for free (Doc. 6 at ¶¶1, 15). Under the
Communications Act of 1934, as amended, multichannel video
programming distributors (“MVPDs”) such as
Plaintiffs must get the consent of the local stations to
transmit the local broadcast channels alongside their pay-TV
channels (Id. at ¶¶1, 16). Consent is
obtained through retransmission consent agreements
(“RCAs”) (Id. at ¶1).
Max Retrans represents station groups in their negotiations
with MVPDs (Id. at ¶3). Duane Lammers
(“Lammers”) is the principal of Max Retrans
(Id. at ¶5). In 2016, Lammers negotiated RCAs
on behalf of a group of eleven different broadcast station
groups (Id. at ¶21). On September 13, 2016, in
connection with AT&T's agreement to negotiate with
Max Retrans, Max Retrans signed a confidentiality agreement
(the “NDA”) (Id. at ¶22). The NDA
indicates that Max Retrans “is representing certain
station groups” subsequently called the
“Represented Station Groups” “for the
continued carriage or carriage launch, as applicable, of the
broadcast television stations owned and operated by such
Represented Station Groups (the
“Negotiations”)” (Doc. 22-1 at 2) (emphasis
excluded). Under the terms of the NDA, Max Retrans agreed
“to not disclose to any third party (including any
client of MAX RETRANS other than the applicable Represented
Station Group engaged in such Negotiations) . . .
Confidential Information” (Id.).
“Confidential Information” includes “any
term or provision of any underlying and/or ancillary
agreement between the Company(ies) and the Represented
Station Group(s) for carriage of station(s) of such
Represented Station Group(s)” (Id.).
“MAX RETRANS may disclose Confidential Information to
(i) the Represented Station Group and such other persons that
are specifically authorized under the confidentiality
provisions of an Agreement” including “such of
MAX RETRANS's [sic] employees who have a need to know
such information to enable MAX RETRANS to represent
Represented Station Group(s) in connection with the
Negotiations” (Id.). The NDA also indicates
that the agreement “shall be governed by and construed
in accordance with the laws of the State of California
applicable to contracts made and fully performed
therein” (Doc. 22-1 at 3).
their terms, the RCAs negotiated in 2016 expired in late
March 2019 (Doc. 6 at ¶24). In January 2019, AT&T
initiated negotiations to renew these agreements
(Id. at ¶25). AT&T was advised that Max
Retrans would represent 10 of the station groups from the
2016 negotiations in the renegotiations (Id. at
¶¶5, 25). All 10 station groups are managed and
controlled by Sinclair Broadcast Group
(“Sinclair”) (Id. at ¶3). According
to Lammers, XXXXX (Id. at
¶29). Lammers acknowledged and represented that the 2016
NDA remains in effect and applies to the renegotiations
(Id. at ¶¶5, 25). Lammers XXXXX (Id. at ¶25)
early March 2019, AT&T sent Max Retrans separate
individualized proposals for each of the 10 stations groups
(Id. at ¶26). Later that month, XXXXX (Id.). XXXXX (Id.).AT&T subsequently
accepted further extensions of the existing agreements until
late-May/early-June 2019 (Id.).
April 1, 2019, Lammers responded on behalf of the
“Joint Parties” and provided AT&T with a
marked-up version of AT&T's proposal for the
XXXXX of the 10 station groups
(Id. at ¶27). AT&T attempted to negotiate
each RCA separately, sending new proposals for each group
XXXXX (Id. at ¶28).
XXXXX (Id. at
¶¶28, 29). In response to Lammers' indications,
AT&T and its outside counsel sent Max Retrans letters
with information that this conduct and negotiation strategy
would violate the NDA (Id. at ¶30).
(Id. at ¶31).
thereafter, in June 2019, XXXXX
(Id. at ¶32). Later that same month,
XXXXX (Id. at ¶33).
11, 2019, Plaintiffs filed this action against Max Retrans
for Breach of Contract (Count I) and for violation of the
Defend Trade Secrets Act (“DTSA”), 18 U.S.C.
§ 1836(b) (Count II) (Doc. 6). Plaintiffs generally
assert that Max Retrans has breached and will continue to
breach the 2016 NDA (Id. at ¶6). Specifically,
Plaintiffs assert that XXXXX
(Id.). Plaintiffs additionally argue that
XXXXX (Id.). As of the
filing of the lawsuit, the RCAs from nine of the ten stations
groups have expired without extension (Id. at
¶7). Without an RCA or an extension in place, the
channels have “gone dark” meaning AT&T
subscribers see only a black screen when they select an
affected local channel (Id.). AT&T seeks
damages, including lost subscriber revenue and retransmission
consent fees which exceed what those stations would have paid
absent the breach, punitive damages, attorneys' fees, and
declaratory and injunctive relief to “prevent further
unlawful disclosure of AT&T's confidential
information” (Id. at ¶8).
August 5, 2019, Max Retrans filed a Motion to Dismiss
Plaintiffs' Complaint for Failure to State a Claim
pursuant to Federal Rule of Civil Procedure 12(b)(6). In its
Motion to Dismiss, Max Retrans asserts that Max Retrans did
not breach the NDA because the station groups were jointly
negotiating and thus were not “third parties”
with respect to the negotiations at issue here (Doc. 22).