Yong Ki Hong v. KBS Am., Inc., 05-CV-1177 (ENV) (VMS)
| Decision Date | 19 September 2013 |
| Docket Number | 05-CV-1177 (ENV) (VMS) |
| Parties | YONG KI HONG and HWAN MEDIA, INC., Plaintiffs, v. KBS AMERICA, INC., CHANG JOON LEE, JOSEPH KONG, SPRING VIDEO & GIFT, INC and YANG JOONG KIM, d/b/a HAN KOOK VIDEO, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
VITALIANO, D.J.
Plaintiffs Yong Ki Hong and Hwan Media, Inc. commenced this action against defendants KBS America, Inc. ("KBSA"), Chang Joon Lee ("C.J. Lee"), Joseph Kong, Spring Video & Gift, Inc. ("Spring Video"), and Yang Joong Kim, d/b/a Han Kook Video, alleging federal antitrust violations under sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2. Plaintiffs, owners of a Queens-based store that rents Korean videotapes, claim that defendants engaged in an unlawful horizontal price-fixing scheme and group boycott in order to monopolize the market for Korean videotapes and prevent plaintiffs' store from competing in that market. Plaintiffs also assert New York state law causes of action under the Donnelly Act, N.Y.G.B.L. §§ 340 et seq., the Deceptive Practices Act, N.Y.G.B.L § 349(h), and common law theories of tortious interference with business relationships, unjust enrichment, intentional infliction of emotional distress, and promissory estoppel.
KBSA and C.J. Lee (together, "the KBSA litigants") advance several counterclaims against plaintiffs and against now-counterclaim defendant Jung Hoon Lee ("J.H. Lee"), Hong's business partner, including breach of contract, libel, slander, copyright infringement, violations of the Lanham Act, 15 U.S.C. § 1125(a), false advertising in violation of N.Y.G.B.L. § 350, unfair competition under New York common law, use of name with intent to deceive in violation of N.Y.G.B.L. § 133, a N.Y.G.B.L. § 349(h) deceptive practices claim, tortious interference with business relationships, and three related civil conspiracy claims. All defendants now move for summary judgment against all of plaintiffs' claims. The KBSA litigants also move for summary judgment on their counterclaims for copyright violations, libel per se, and slander per se.
For the reasons set forth below, the Court grants defendants' motions for summary judgment dismissing all of plaintiffs' claims except three against Kong, Spring Video, and Kim for tortious interference with business relationships. Summary judgment is denied as to those three claims. The Court also denies the KBSA litigants' motion for summary judgment on their counterclaims for copyright infringement, libel per se, and slander per se, and, upon searching the record, grants summary judgment to the counterclaim defendants on the libel per se and slander per se claims.
The following facts are drawn from the pleadings and the parties' submissions, including statements of undisputed material facts submitted pursuant to Local Civil Rule 56.1.1 The facts are construed, as they must be at summary judgment, in the light most favorable to the nonmoving party. See Allstate Ins. Co. v. Hamilton Beach/Proctor Silex, Inc., 473 F.3d 450, 456 (2d Cir. 2007). Any relevant factual disputes are noted.
Korean-American video stores in the New York metropolitan area purchase television programs, dramas, and movies that air in the Republic of Korea (i.e., South Korea) from various distributors, copy them with the distributors' permission, and rent them to their retail customers. (Compl. (Dkt. No. 1) ¶ 13). There are three distributors that supply Korean videos to stores in New York: Moon Hwa Broadcasting Company ("MBC"), Seoul Broadcasting Service ("SBS") and defendant KBSA. (Id. ¶ 14). KBSA is a wholly-owned subsidiary of KBS Korea Broadcasting System, a large public broadcaster in South Korea. (Pls.' Rule 56.1Statement ( ) (Dkt. No. 139) ¶ 1). KBSA's mission in the United States is twofold: to promote cultural ties between Korea and the United States by distributing Korean television programming to the broadest possible market; and, a market-driven one, to earn royalties on the distribution of copyright-protected KBS programs. (Id. ¶ 2).
KBS provides access to its programming in the U.S. primarily through weekly "master tapes" containing KBS content, which KBSA licenses and distributes, at a weekly fee, to individual video store owners for copying and retail distribution to their walk-in customers. (KBSA Litigants' Rule 56.1 Statement ("KBSA's 56.1") (Dkt. No. 126) ¶¶ 3-4). According to KBSA, these licenses are site-specific, and do not automatically transfer if a store owner decides to move his store to another location. (Id. ¶ 5). Although the licenses were, as of the relevant dates of this litigation, entirely oral, KBSA alleges that the terms were well known in the Korean video market. (Id. ¶ 13; (C.J. Lee Decl. (Dkt. No. 34), Exh. C)). Plaintiffs dispute the use of the term "license," arguing that it was not used by KBSA or the video store owners prior to this litigation, and deny that the licenses were store-specific, generally non-transferable, and authorized distribution to walk-in customers only. (Pls.' 56.1 ¶ 5).
In or around February 2004, Hong and J.H. Lee decided to open a Korean video store, and began researching the market by speaking to others in the industry. (Compl. ¶ 17; KBSA's 56.1 ¶¶ 14, 17). On October 5, 2004, the two partners had adinner meeting with Jong Seung Choi, a manager at MBC, and Hahn Gyoung Jo, a KBSA employee, at which the group discussed how Hong and J.H. Lee might go about opening a video store in Queens. (Pls.' 56.1 ¶ 5). Exactly what was said during this meeting is in dispute. According to Choi, Jo suggested that, rather than open a new store, Hong and J.H. Lee should buy an existing, inexpensive video store in Brooklyn ("the Shilla store"), and then move it to Queens. . Choi further claims that Jo told the two partners that KBSA would continue to provide the Queens store with tapes following the relocation. Id. However, Jo contradicts this account, claiming (1) that it was Choi, not him, who suggested that Hong and J.H. Lee buy an existing store and relocate; (2) that he does not recall having discussed the Shilla store with Hong and J.H. Lee; (3) that he never said "this [relocation] strategy would work with KBS America;" and (4) that he "did not in any way state, imply or indicate that KBS America would approve a license for [plaintiffs'] store at either location." (Jo Decl. (Dkt. No. 35) at ¶¶ 23-33).
In October 2004, Hong formed a corporation, Hwan Media Inc., in order to purchase the Shilla store. (KBSA's 56.1 ¶ 22). Hong was the sole owner of Hwan Media. (Id.). J.H. Lee entered into a verbal agreement with Hong that he would receive 50% of the profits from the store, but was never an employee, shareholder, or officer of Hwan Media, nor was he paid for the services he performed for the business. (Id. ¶ 23). The partners purchased the Shilla store in Brooklyn for around$30,000 and assumed ownership of the store's existing KBSA license. (Id. ¶ 19; Jo Decl. at ¶ 35). According to KBSA, a store in Queens would have cost between $100,000 and $500,000. (KBSA's 56.1 ¶ 19). The rates store owners had to pay to the distributors for weekly master tapes were also higher in Queens than in Brooklyn. (Id. ¶ 20).
After a few weeks in Brooklyn, Hong and J.H. Lee closed the Shilla store and relocated their operations to a storefront in Fresh Meadows, Queens (now called "the Samsung store"). (Id. ¶ 26). J.H. Lee subsequently asked Jo, who had been delivering KBS master tapes to the Shilla store, to make future deliveries to the Queens location. (Id. ¶ 27). Jo made one tape delivery to a street corner in Queens and another two to the Samsung store. (Id.). Defendants attest that, each time Jo made a delivery to the Queens location, he informed the store owners that the tapes were for use in the Shilla store in Brooklyn, not for the Samsung store in Queens. (Id. ¶ 28). Hong and J.H. Lee distributed KBS content from these tapes at the Samsung store for three to four weeks, as well as KBS sports programming for which they did not have a license. (Id. ¶ 32; Asher Decl., Exh. J, 71:8-23; KBSA's 56.1 ¶ 33). During this time, defendants claim that the Samsung store owners continued to pay the lower Brooklyn rate for the master tape deliveries.2 (KBSA's 56.1 ¶ 31).
In December 2004, KBSA stopped providing the Samsung store with KBS master tapes. The circumstances surrounding this supply cut-off, and the reasons for it, are in dispute. C.J. Lee, General Manager of KBSA's Eastern regional office, claims that, sometime during the week of November 29, 2004, he learned that the partners had moved their store from Brooklyn to Queens, which led him to "investigate whether KBS programs were being illegally rented" from the Queens location. (C.J. Lee Decl. ¶¶ 69-70.) C.J. Lee states that he visited the Samsung store on December 3, 2004, enabling him to confirm firsthand that plaintiffs were distributing KBS content. (Id. ¶¶ 71-74; KBSA's 56.1 ¶ 35). Soon thereafter, KBSA terminated the supply of KBS master tapes to plaintiffs. (KBSA's 56.1 ¶ 35)
Defendants contend that KBS cut off Hong and J.H. Lee's supply of videos because the partners had violated the terms of the Shilla store license by neglecting to inform KBSA management about the move to Queens and failing to request a new license for the Samsung store. (Id.). Because of this, defendants claim, KBSA was unable to investigate the viability of the new store's location and its potential impact on KBSA's distribution stream. (Id.). C.J. Lee states that he subsequently told Hong and J.H. Lee that they would have to apply for a license through the "normal approval process," which involved review by KBSA's Los Angeles office. (Id. ¶ 36).
Plaintiffs vehemently dispute defendants' account of these events. (Pls.' 56.1¶ 35(b)). They contend that Hong and J.H. Lee did, in fact, inform KBSA management of the move during their October...
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