Rbfc One, LLC v. Zeeks, Inc.

• Decision Date: 27 April 2005
• Docket Number: No. 02 Civ. 3231(DFE).,02 Civ. 3231(DFE).
• Citation: 367 F.Supp.2d 604
• Parties: RBFC ONE, LLC, Plaintiff, v. ZEEKS, INC. d/b/a *NSYNC, Justin Randall Timberlake, Christopher Alan Kirkpatrick, James Lance Bass, Joseph Anthony Fatone, Jr., Joshua Scott Chasez, Defendants.
• Court: U.S. District Court — Southern District of New York

367 F.Supp.2d 604

RBFC ONE, LLC, Plaintiff, v.ZEEKS, INC. d/b/a *NSYNC, Justin Randall Timberlake, Christopher Alan Kirkpatrick, James Lance Bass, Joseph Anthony Fatone, Jr., Joshua Scott Chasez, Defendants.

No. 02 Civ. 3231(DFE).

United States District Court, S.D. New York.

April 27, 2005.

COPYRIGHT MATERIAL OMITTED

Evans S. Zimmermann, New York City, for Defendant.

Helene M. Freeman, New York City, for Defendants.

OPINION AND ORDER

EATON, United States Magistrate Judge.

The Second Amended Complaint made claims for breach of contract and fraud.Defendants move for summary judgment dismissing all of Plaintiff's claims.Defendants previously counterclaimed for breach of contract; Plaintiff moves for summary judgment dismissing the counterclaims.

Factual and Procedural Background

Plaintiff, generally known as Really Big Film Corp., is engaged in the business of producing motion pictures, especially in giant-screen format, and also digital video disks ("DVD") and ancillary products.(Second Amen. Compl.¶ 5.)In early 2000, Really Big Film Corp. was a California corporation called RBFC Inc.; on September 6, 2000, it assigned its contract rights to a Nevada limited liability corporation called RBFC One, LLC.(Defs.' 56.1 Statement¶ 6.)

DefendantZeeks, Inc. is a Delaware corporation "that owns the *NSYNC trademark and the rights to the services of the musical group *NSYNC."(Id.¶ 2.)Defendants Timberlake, Kirkpatrick, Bass, Fatone, and Chasez comprise *NSYNC, and have often been referred to as members of "the Band."(Id.¶ 3.)

The parties negotiated a written contract dated "as of June 14, 2000," and signed it a few weeks later (the "Original Agreement").Pursuant to the Original Agreement, Plaintiff acquired the right to create a 45-minute film, in giant-screen format, entitled "*NSYNC Bigger Than Live," to consist of footage from live *NSYNC concert performances to be filmed in June and July 2000.Plaintiff agreed to bear sole responsibility for all costs and distribution of the film.The parties agreed to a percentage division of the film's gross revenues.

The Original Agreement gave Plaintiff a license only for theaters outside the United States.It gave Plaintiff the right "to distribute and exhibit the Film only in giant screen theaters for a period of two years (the `License Period') from the date of the Film's first public exhibition which will not be later than October 20, 2000[.]"(Orig. Agreement¶ 8.)

Plaintiff completed the shooting of the film and the editing of the visual portion on October 2, 2000.Its subcontractor (a company called Iwerks) completed a "first pass" editing of the sound portion on October 10, 2000.¹At that point, the parties negotiated to (a) add the United States to the license territory, and (b) extend the deadline past October 20, 2000.The result was the Amended and Restated Agreement (the "Amended Agreement"), which replaced the Original Agreement and expanded the territory to include the United States.Except for a few terms that are immaterial to this lawsuit, the terms of the Amended Agreement were typed in final form by December 16, including a date of "as of November 30, 2000."²The parties signed the Amended Agreement quite a bit later, on or about February 6, 2001; in my view, that does not affect the analysis.Under the Amended Agreement, Plaintiff still received distribution rights for a two-year period; however, that period now ran from "the later of December 1, 2000 or three weeks after the Band approves the audio mix for the Film."(Amen. Agreement¶ 8.)

The Band's sound expert, Tim Miller, prepared the audio mix on December 29 and 30, 2000 and January 9, 2001.The Band approved the audio mix by January 15, 2001.(Ritholz ReplyDecl., Ex. 8, 1/15/01 e-mail by Plaintiff's Linda Nelson, which also says: "We are planning to release the film next weekend.")The film was released and exhibited in theaters in the United States and Canada starting in the week ending February 2, 2001.(Defs.' 56.1 Statement¶ 11.)The Band attended a regional premiere of the film in Los Angeles in April 2001; that was the only public appearance made by any of the Band members in support of the film.

Plaintiff distributed the film throughout the world for more than a year.On April 22, 2002, Adam Ritholz(Secretary and General Counsel of Zeeks) learned that the WB television network was announcing that it would broadcast the film on April 25, 2002.He promptly contacted the owner of the WB network and learned that it had signed a contract with Plaintiff in which Plaintiff asserted that Plaintiff had received television rights from Defendants.On April 23, 2002, Mr. Ritholz sent a cease-and-desist letter to Plaintiff and stated that Plaintiff had violated the terms of the Amended Agreement.The Amended Agreement said (at ¶ 9(c)(iii)) that "[Plaintiff] may not exhibit, or grant any third-party the right to exhibit, the Film other than in large format theaters and in accordance with the terms and conditions contained herein."On April 24, 2002, the WB Network decided not to broadcast the film.³

Two days later, Plaintiff filed this lawsuit in our Court.Among other things, Plaintiff alleged that Defendants had breached the Amended Agreement some 17 months earlier, by unreasonably delaying approval of the sound mix.

Plaintiff filed an Amended Complaint on June 24, 2002.The Amended Complaint asserted five causes of action: (1) breach of contract; (2) breach of fiduciary duty; (3) negligence; (4) tortious interference with prospective business advantage; and (5) fraud.Defendants filed answers attaching copies of the Original Agreement and the Amended Agreement.On September 19, 2002, Defendants moved for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c).

On March 15, 2004, Judge Kimba M. Wood granted Defendants' motion in part and denied it in part.She dismissed two claims with prejudice — the claims for negligence and breach of fiduciary duty.(3/15/04Orderat 11-12.)She dismissed two other claims without prejudice — the claims for fraud and tortious interference.(Id. at 13-16.)She dismissed portions of the claim for breach of contract:

Plaintiff's claims brought under the [Original] Agreement fail because the Amended Agreement is a substituted contract that supercedes the [Original] Agreement.A substituted contract renders unactionable any breaches that pre-date the substitution; any breaches that post-date the substitution may be brought only under the substituted contract.

(Id. at 8.)Judge Wood then turned to the claims for breach of the Amended Agreement that "took effect on November 30, 2000."(Id.)She wrote: "Plaintiff's allegation that [D]efendants exercised their discretion unreasonably and in bad faith is sufficient to state a claim of breach of contract.Plaintiff's allegations regarding [D]efendants' unreasonable behavior at the promotional event are likewise sufficient."(Id. at 10.)

On April 12, 2004, Plaintiff filed a Second Amended Complaint, restating its claims for: (1) breach of contract, (2) tortious interference, and (3) fraud.On April 26, 2004, Defendants filed an answer; they also asserted counterclaims, as they had in 2002, attacking Plaintiff's attempts to license the film for television and DVD.On November 16, 2004, during discovery, the case was reassigned to me.On December 27, 2004, I set a firm trial date of May 9, 2005.

On February 28, 2005, Defendants served a memorandum of law in support of summary judgment along with the declarations of Adam Ritholz, Helene Freeman, and Melinda Bell.The same day, Plaintiff served a memorandum of law in support of summary judgment on all of the counterclaims, along with the declarations of Farhad Novian, Linda Nelson, and Eddy Aslanian.On March 17, 2005, Defendants served their opposition to Plaintiff's motion, as well as additional declarations from Mr. Ritholz and Ms. Freeman.On March 17, Plaintiff served its opposition to Defendants' motion, as well as additional declarations from Mr. Novian and Ms. Nelson.On March 25, 2005, both sides served reply memoranda of law; Defendants also served a reply declaration from Mr. Ritholz.

On April 1, 2005, Plaintiff served a 15-page surreply letter, an additional declaration from Ms. Nelson, and 43 pages of exhibits.Later that day, Defendants served a 5-page letter.On April 4, 2005, Defendants served a 1-page letter and a 4-page exhibit.Later that day, Plaintiff served a 2-page letter and 14 pages of exhibits.On April 7, 2005, I heard oral argument.Post-argument letters were submitted by Plaintiff on April 14, by Defendants on April 15 and April 20, by Plaintiff on April 22(including a fourth declaration by Ms. Nelson), and by Defendants on April 25.

The Legal Standards for Summary Judgment

"[T]he plain language of Rule 56 mandates the entry of summary judgment ... against a party who fails to make a showing sufficient to establish the evidence of an element essential to that party's case, and on which that party will bear the burden of proof at trial."Celotex Corp. v. Catrett,477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265(1986)."Factual disputes that are irrelevant or unnecessary will not be counted."Anderson v. Liberty Lobby, Inc.,477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202(1986)."[A] dispute about a material fact is `genuine' ... if the evidence is such that a reasonable jury could return a verdict for the nonmoving party."Id.The judge "construes the evidence in the light most favorable to the non-moving party and drawing all reasonable inferences in its favor."Niagara Mohawk Power Corp. v. Jones Chem., Inc.,315 F.3d 171, 175(2d Cir.2003).However, "the non-moving party may not rely on conclusory allegations or unsubstantiated speculation."Fujitsu Ltd. v. Federal Express Corp.,247 F.3d 423, 428(2d Cir.2001).At the summary judgment stage, the parties must submit evidence; "[t]he time has...