SyndiGate Media Inc. v. Comtex News Network, Inc.
| Docket Number | Index 654818/2018 |
| Decision Date | 23 January 2022 |
| Citation | 2022 NY Slip Op 30249 (U) |
| Parties | SYNDIGATE MEDIA, INC., AL-BAWABA MIDDLE EAST, LTD. Plaintiff, v. COMTEX NEWS NETWORK, INC., Defendant. Motion Seq. Nos. 002, 004 |
| Court | New York Supreme Court |
MOTION DATE 05/07/2021
DECISION + ORDER ON MOTION
The following e-filed documents, listed by NYSCEF document number (Motion 002) 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82 83, 84, 85, 86, 87, 95, 96, 97, 98, 99, 100, 101, 102, 103 104, 105, 159, 160, 161, 162, 163, 164, 165, 166, 167, 168 169, 170, 171, 172, 173, 174, 175, 186, 187, 188, 189, 190, 191, 192, 193, 194, 195, 196, 197, 198, 199, 200, 240, 241, 242, 243, 244, 245, 246, 247, 248, 249, 250, 251, 252, 253, 254, 255, 256, 278, 279, 280, 281, 282, 283, 284, 285, 286, 287, 288, 289, 290, 291, 322, 323, 324, 325, 326, 327, 328, 329, 330, 331, 332, 333 were read on this motion to/for SUMMARY JUDGMENT(AFTER JOINDER.
The following e-filed documents, listed by NYSCEF document number (Motion 004) 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 106, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117, 118, 119, 120, 121, 122, 123, 124, 125, 126, 127, 128, 129, 130, 131, 132, 133, 134, 135, 136, 137, 138, 139, 140, 141, 142, 143, 144, 145, 146, 147, 148, 149, 150, 151, 152, 153, 154, 155, 156, 157, 158, 176, 177, 178, 179, 180, 181, 182, 183, 184, 185, 201, 257, 258, 259, 260, 261, 262, 263, 264, 265, 266, 267, 268, 269, 270, 271, 272, 273, 274, 275, 276, 277, 292, 293, 294, 295, 296, 297, 298, 299, 300, 301, 302, 303, 304, 305, 306, 307, 308, 309, 310, 311, 312, 313, 314, 315, 316, 317, 318, 319, 320, 321, 334, 335, 336, 337, 338, 339, 340, 341, 342 were read on this motion to/for SUMMARY JUDGMENT(AFTER JOINDER .
On motion sequence 002, plaintiffs Syndigate Media, Inc. and Al-Bawaba Middle East, Ltd. move for summary judgment on their breach of contract claims against defendant Comtex News Network, Inc. Plaintiffs further move for summary judgment against defendant's counterclaim for breach of contract. On motion sequence 004, defendant Comtex News Network, Inc. moves for summary judgment dismissing plaintiffs' claims against defendant. For the following reasons, plaintiff's motion is granted and defendant's motion is denied.
The following facts are from the parties' statements of material facts (Pl. Fact Statement [NYSCEF Doc. No. 87]; Def. Fact Statement [NYSCEF Doc. No. 96] [together, "Party Fact Statements"]). Plaintiff Syndigate Media, Inc. ("Syndigate") is a content aggregator (Party Fact Statements ¶¶ 1-3). Defendant Comtex News Network Inc. ("Comtex") is a news aggregator that receives content from sources like Syndigate and Al-Bawaba (Party Fact Statements ¶ 4). Comtex redistributes content it receives to its customers who pay it fees and, in turn, Comtex pays royalties to its content providers (Party Fact Statements ¶¶ 5-6). Effective July 30, 2014, Syndigate and Comtex entered into an Information Provider Agreement (the "Agreement"), pursuant to which Syndigate granted Comtex "a worldwide, non-exclusive license and right to use, market, distribute, sell and transmit the Information to Users." The Agreement defines "Users" as "all parties to whom Comtex directly or indirectly licenses, sells, transfers, makes available or otherwise distributes the Content" (Party Fact Statements ¶ 7; Saunt Aff., Ex. 1 §§ 1-2 [the "Syndigate Agreement"] [NYSCEF Doc. No. 83]). Section 5(b) of the Syndigate Agreement established that "Royalties will be paid to Provider according to the terms in Exhibit B" (Party Fact Statements ¶ 8; Agreement § 5(b)). Exhibit B to the Syndigate Agreement provided a Royalty calculation that determines what Comtex will pay to Syndigate monthly for providing customers with content from Syndigate sources (Syndigate Agreement, Exhibit B). Comtex provided this content to its customers through "CustomWires," a selection of content at Comtex's sole discretion from various news sources, at times including Syndigate (id.). Section 5(a) of the Syndigate Agreement provided that Comtex would provide Syndigate with a report "listing the Comtex customers who receive the Content" monthly (id. § 5(a)).
The Syndigate Agreement also granted Syndigate the right to inspect and audit Comtex's "relevant" books and records to ascertain whether Syndigate had received the correct amount of royalties. The audit was generally at Syndigate's expense (Part Fact Statements ¶ 12; Agreement, Section § 5(c)). However, the audit provision also contained a provision to shift fees onto Comtex if the audit revealed an error of 10% or more (Syndigate Agreement, § 5(c)). Plaintiffs allege that Comtex provided Syndigate news stories to Boeing Intelligence and Analytics and affiliated companies Kestrel and Skarven (collectively, "Boeing") between August 2014 and June 2017 without reporting or paying royalties to Syndigate. It is undisputed that Comtex' monthly reports identifying customers who received Syndigate or Al-Bawaba content did not name Boeing (id. ¶ 25).
In 2017 and 2018, Syndigate attempted to audit defendant's books and records through its accounting firm, Cohn Reznick, to determine whether Syndigate received proper royalties (id. ¶ 26). Plaintiffs allege that defendant hid that Boeing was receiving Syndigate content during these audits (id. ¶ 27).
Prior to the Syndigate Agreement, plaintiff Al-Bawaba, an affiliate of Syndigate, provided content to Comtex via an Information Provider Agreement (id. ¶¶ 29, 31; Saunt Aff., Ex. 2 [the "Al-Bawaba Agreement"] [Doc. No. 84]). Like the Syndigate Agreement, the Al-Bawaba Agreement contained terms establishing royalty rates that defendant committed to pay Al-Bawaba in exchange for using its content (Party Fact Statements ¶ 32). The Al-Bawaba Agreement provided that, on a quarterly basis, defendant was required to provided Al-Bawaba with a report listing third parties to whom defendant has distributed Al-Bawaba content (id. ¶ 38; Al-Bawaba Agreement § 5(a)).
Plaintiffs allege, as with the Syndigate Agreement, Comtex did not report to Al-Bawaba that Boeing was accessing its content. Nor did Comtex pay Al-Bawaba royalty fees that Boeing paid to defendant (id. ¶¶ 34-36, 39). Plaintiffs claim that Comtex's documents show that Boeing paid Comtex $373, 381.00 during the September 2012 through July 2014 time period.
Plaintiffs seek summary judgment against defendant as to the two breach of contract claims in the amended complaint: (i) breach of the Syndigate Agreement, sections 5(a), (b), and (c), and (ii) breach of the Al-Bawaba Agreement, sections 5(a) and (b) (Amended Compl. ¶¶ 26-35 [Doc. No. 5]). Plaintiffs further seek summary judgment to dismiss defendant's counterclaim for breach of contract against plaintiffs (Amended Answer, Counterclaim ¶¶ 1-9 [Doc. No. 7]). At oral argument, the court rejected Comtex's assertion that plaintiffs' claims are barred by the statute of limitations. Consequently, this order addresses only the substance of the motion for summary judgment on breach of contract.
Plaintiffs argue that defendant breached the Syndigate Agreement by failing to: (i) pay royalties due to Syndigate (Syndigate Agreement, § 5(b); id., Exhibit B), (ii) provide Syndigate with the required lists of Comtex customers receiving Syndigate content (id., § 5(a)), and (iii) permit Syndigate's audit of Comtex's books and records (id. § 5(c); Pl. Br. at 11 [NYSCEF Doc. No. 86]). Defendant opposes, arguing that: (i) plaintiffs rely on "unauthenticated" and "inadmissible" evidence, (ii) no royalties are due as Boeing was merely "trialing" plaintiffs' content for nearly five years, (iii) it is impossible to prove that plaintiffs' content was shown to particular customers, and (iv) plaintiff has not provided proof that requires cost-shifting under the audit provision.
Section 5(a) of the Syndigate Agreement states that, "on a monthly basis, Comtex will provide [Syndigate] a report, in a format to be mutually agreed upon by the parties, listing the Comtex customers who receive the Content which includes the Information" (Syndigate Agreement § 5(a)). Section 5(b) states that "[r]oyalties will be paid to [Syndigate] according to the terms in Exhibit B" (Syndigate Agreement § 5(b)). Exhibit B to the Syndigate Agreement outlines a Royalty Calculation that defendant is obligated to pay plaintiff Syndigate monthly for "CustomWires" sold containing Syndigate content (id., Exhibit B).
Plaintiffs have produced evidence showing that Comtex provided Syndigate content to non-party Boeing. This evidence includes: (i) spreadsheets showing that Boeing accessed Syndigate content was accessed (Gordon Aff., Exs. B & C [Doc. Nos. 74-75]), (ii) emails between defendant's employees indicating that Boeing received Al-Bawaba/Syndigate content in both May 2016 and July 2017 (Gordon Aff., Exs. E, F [Doc. Nos. 77-78]), and (iii) an email between defendant's Controller and Boeing from 2013 indicating that Boeing received plaintiff's content (id., Ex. F). In response, defendant argues in its opposition that the spreadsheets are not admissible because the "reliability of the 'evidence' has not been established." However, the spreadsheets derive from Contex's own production (Def. Opp. At 6-7 [Doc. No. 97]). Comtex's opposition does not appear to refute, or even address, the emails establishing Comtex was aware that Boeing was receiving plaintiffs' content.
At oral argument, defendant's counsel conceded that Boeing received plaintiffs' content, but argues that because Comtex never charged Boeing for this content, it is impossible to calculate royalty...
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