Rst (2005) Inc. v. Research in Motion Ltd.

• Decision Date: 04 February 2009
• Docket Number: No. 07 Civ. 3737(VM).,07 Civ. 3737(VM).
• Citation: 597 F.Supp.2d 362
• Parties: RST (2005) INC., Plaintiff, v. RESEARCH IN MOTION LIMITED, Defendant.
• Court: U.S. District Court — Southern District of New York

Page 362

597 F.Supp.2d 362

RST (2005) INC., Plaintiff, v. RESEARCH IN MOTION LIMITED, Defendant.

No. 07 Civ. 3737(VM).

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

February 4, 2009.

COPYRIGHT MATERIAL OMITTED

David Jay Stone, Ronald Daniel Lefton, Greenberg Traurig, LLP, New York, NY, Timothy John MacFall, Bernstein Liebhard, LLP, Vincent Henry Chieffo, Greenberg Traurig, L.L.P., Santa Monica, CA, for Plaintiff.

Scott D. Musoff, Skadden, Arps, Slate, Meagher & Flom LLP, New York, NY, for Defendant.

DECISION AND ORDER

VICTOR MARRERO, District Judge.

I. BACKGROUND

By Decision and Order dated December 16, 2008 (the "Order")¹ the Court granted in part and denied in part the motion of plaintiff RST (2005) Inc. ("RST") for summary judgment pursuant to Federal Rule of Civil Procedure 56 ("Rule 56"), and denied the motion of defendant Research in Motion Limited ("RIM") for summary judgment pursuant to Rule 56. In the underlying action, RST sued for breach of contract, alleging that RIM breached an agreement with RST (the "RST-RIM Agreement") when it failed to either spend $5 million on the development of a limitededition Blackberry featuring the musical group The Rolling Stones, or pay RST the difference between the amount RIM actually spent and $5 million. RIM counterclaimed, asserting breach of contract and breach of the implied covenant of good faith and fair dealing.

In the Order, the Court determined that RST was entitled to judgment as a matter of law on certain aspects of its breach of contract claim against RIM, but not as to the affirmative defense that RST materially breached the RST-RIM Agreement's warranty of ownership or control of the licensed properties ("Licensed Properties"). The Court awarded RST summary judgment on the other affirmative defenses asserted by RIM.

With respect to RIM's motion for summary judgment on its counterclaims, the Court stated that it would consider only those grounds for breach of contract contained in RIM's Counterclaim and Answer, dated July 13, 2007 ("Counterclaim and Answer"). RIM alleged in its Counterclaim and Answer that RST breached the RST-RIM Agreement when Palm, Inc. ("Palm") released an advertisement featuring some of the Licensed Properties and promoting the give-away of a flash drive containing an album by The Rolling Stones with the purchase of a Palm device (the "Palm Advertisement"). The Court denied RIM's motion for summary judgment as to this claim, and dismissed RIM's claim for breach of the implied covenant of good faith and fair dealing as duplicative of the breach of contract claim. RST and RIM now move for an order pursuant to Local Civil Rule 6.3 ("Rule 6.3") granting reconsideration.²

II. STANDARD OF REVIEW

Reconsideration of a previous order by the court is an "extraordinary remedy to be employed sparingly in the interests of finality and conservation of scarce judicial resources." In re Health Mgmt. Sys. Inc. Secs. Litig., 113 F.Supp.2d 613, 614 (S.D.N.Y.2000) (citations and quotation marks omitted). "A motion for reconsideration may not be used to advance new facts, issues or arguments not previously presented to the Court, nor may it be used as a vehicle for relitigating issues already decided by the Court." Davidson v. Scully, 172 F.Supp.2d 458, 461 (S.D.N.Y.2001). "The major grounds justifying reconsideration are `an intervening change in controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice.'" Virgin Atl. Airways, Ltd. v. National Mediation Bd., 956 F.2d 1245, 1255 (2d Cir.1992) (quoting 18 C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure § 4478 at 790). To these ends, a request for reconsideration under Rule 6.3 must demonstrate controlling law or factual matters put before the court in its decision on the underlying matter that the movant believes the court overlooked and that might reasonably be expected to alter the conclusion reached by the court. See Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir.1995).

Rule 6.3 is intended to "`ensure the finality of decisions and to prevent the practice of a losing party ... plugging the gaps of a lost motion with additional matters.'" S.E.C. v. Ashbury Capital Partners, L.P., No. 00 Civ. 7898, 2001 WL 604044, at *1 (S.D.N.Y. May 31, 2001) (quoting Carolco Pictures, Inc. v. Sirota, 700 F.Supp. 169, 170 (S.D.N.Y.1988)). A court must narrowly construe and strictly apply Rule 6.3 so as to avoid duplicative rulings on previously considered issues and to prevent Rule 6.3 from being used to advance different theories not previously argued, or as a substitute for appealing a final judgment. See Montanile v. National Broad. Co., 216 F.Supp.2d 341, 342 (S.D.N.Y.2002); Shamis v. Ambassador Factors Corp., 187 F.R.D. 148, 151 (S.D.N.Y.1999).

III. DISCUSSION

A. RST'S MOTION FOR RECONSIERATION

RST argues that the Court's grant of summary judgment as to several of RIM's affirmative defenses rendered the issue of whether RST breached the warranty of ownership or control moot. RST contends that because RIM did not identify any injuries suffered by this alleged breach, RIM cannot prevail on this affirmative defense.

The Court notes that RST did not raise this argument in its summary judgment papers, and that a motion under Rule 6.3 should not be used to advance theories not previously argued. See Montanile, 216 F.Supp.2d at 342. For this reason alone, RST's motion for reconsideration should be denied.

However, even if the Court were to consider RST's arguments in favor of reconsideration, the Court would find those arguments to be without merit. RST contends that the Court found "there was no evidence that another entity licensed the Licensed Properties for a conflicting use" (RST Opening Mem. 9), and argues that this conclusion necessarily means that RIM failed to show that it suffered any damages as a result of a breach of the warranty of ownership or control. This argument misconstrues the Court's earlier conclusions. The Court determined that neither the Palm Advertisement nor the agreement in which Virgin Records America ("Virgin Records") licensed some of the Licensed Properties to SanDisk, Inc. ("SanDisk") (the "Virgin-SanDisk Agreement") constituted licensing activity by RST. The Court made no finding with respect to whether a third party engaged in licensing activity that would have demonstrated a breach of the warranty of ownership or control. RIM alleged damages "to be determined at trial" in its Counterclaim and Answer (see Counterclaim and Answer ¶¶ 17-18), and RIM estimated that damages would amount to at least the $1 million it paid as a licensing fee. RIM argued in its summary judgment papers and argues here in opposition to RST's motion for reconsideration that it would not have paid the licensing fee or incurred the planning and development costs associated with the limitededition Blackberry if RST had not represented that it had full ownership or control of the Licensed Properties. RST has not shown that there are no genuine issues of material fact regarding the damages suffered by RIM as a result of the alleged breach of the warranty of ownership or control.

RST also contends that RIM's breach of warranty claim affirmative defense was "inextricably tied to its allegations that the Virgin/SanDisk License and Palm Advertisement constitutes [sic] the breach," and that the breach of warranty affirmative defense must fail because the Court rejected those allegations. (RST Opening Mem. 10.) Again, the Court notes that this argument was not presented at the summary judgment stage and the Court is not required to consider it here.

In addition, this argument is unavailing, as RIM's breach of warranty claim does not necessarily depend on whether the Virgin-SanDisk Agreement or the Palm Advertisement constitutes licensing activity by RST. As the Court noted in its Order, there are still genuine issues of material fact regarding the ownership or control of the Licensed Properties.³ RIM has presented evidence that could support a finding that Virgin Records licensed at least some of the Licensed Properties to San-Disk, in the form of the Virgin-SanDisk Agreement. There is no basis for the Court to find, as a matter of law, that RST did not breach the warranty of ownership or control, because as the Court observed in its Order, the precise relationship between Virgin Records and RST has not yet been established. RIM might yet be able to show at trial that RST did not own or control all rights in or to the Licensed Properties, and thus breached the warranty. RST has cited no controlling law or factual matters overlooked by the Court, and its motion for reconsideration is therefore denied.

B. RIM'S MOTION FOR RECONSIERATION

1. Implied Covenant of Good Faith and Fair Dealing

In its motion for reconsideration, RIM first argues that the Court erred when it dismissed RIM's claim for breach of the implied covenant of good faith and fair dealing as duplicative of RIM's breach of contract claim. RIM contends that once the Court granted judgment as a matter of law to RST on certain aspects of RIM's breach of contract claim, the implied covenant claim was no longer duplicative.

The Court finds this argument to be without merit. RIM points to a single case in which a court in this district allowed a breach of covenant claim to proceed after dismissing a breach of contract claim, finding that the Federal Rules of Civil Procedure permit "alternative pleading of contradictory claims." DiFolco v. MSNBC Cable LLC, No. 06 Civ. 4728, 2007 WL 959085, at *4 (S.D.N.Y. Mar. 30, 2007). However, the weight of authority in this district strongly supports the dismissal of an implied covenant claim based on the same underlying facts as a breach of contract claim. See, e.g., Goldblatt v. Englander Commc'ns. LLC, No. 06 Civ. 3208, 2007 WL 148699, at *5 (S.D.N.Y. Jan. 22, 2007) (collecting cases). This proposition holds even if the...