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AT&T Services, Inc. v. Max Retrans LLC

United States District Court, E.D. Missouri, Eastern Division

January 16, 2020

AT&T SERVICES, INC. and DIRECTV, LLC, Plaintiffs,
v.
MAX RETRANS LLC, Defendant.

          MEMORANDUM AND ORDER

          NOELLE C. COLLINS, UNITED STATES MAGISTRATE JUDGE

         This 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.

         I. Legal Standard

         Federal 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 unadorned, the-defendant-unlawfully-harmed-me 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).

         II. Background [1]

         Local 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).

         Defendant 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).

         By 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)

         In 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.).

         On 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). XXXXX XXXXX (Id. at ¶31).

         Shortly thereafter, in June 2019, XXXXX (Id. at ¶32). Later that same month, XXXXX (Id. at ¶33). XXXXX (Id.).

         On July 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).

         On 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).

         III. ...


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