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Big Hunt Media, Inc. v. Smith & Wesson Corp.

United States District Court, W.D. Oklahoma

July 30, 2018

BIG HUNT MEDIA, INC., an Oklahoma Corporation, Plaintiff,
v.
SMITH & WESSON CORP., a Delaware Corporation, Defendant.

          ORDER

          DAVID L. RUSSELL UNITED STATES DISTRICT JUDGE.

         Before the Court is Defendant's Motion to Dismiss, Doc. 6. Plaintiff Big Hunt entered into a contract for the 2016 hunting season with Defendant Smith & Wesson (“S&W”), a “well-known firearms manufacturer, ” to produce television shows, commercials, and other content featuring S&W products. Doc. 1-1, at 2. That contract expired on January 31, 2017, and Defendant notified Plaintiff on February 13, 2017 that it did not intend to renew. However, by then Plaintiff had already “completed the bulk of its filming for the [2017] season.” Doc. 1-1, at 3. Plaintiff sued Defendant to recover for these services under two alternate theories: 1) breach of contract-alleging that the parties incorporated into their contract an auto-renewal provision of their Copyright License and Release, and 2) quantum meruit-alleging that Plaintiff rendered valuable services outside the contract's scope with a reasonable expectation of compensation. The Court hereby dismisses the breach of contract claim based on the expired contract and finds that Plaintiff alleges a plausible quantum meruit claim to recover for its 2017 production services.

         I. Background

         There are three documents to consider in this case-(1) the “Television Advertising and Sponsorship Agreement, ” which provides that S&W pays Big Hunt $67, 500 for content promoting S&W on various media during the term of January 1, 2016 through January 31, 2017, Doc. 6-1, at 1-4; (2) the Agreement's expressly incorporated “Terms and Conditions, ”[1] id. at 5-6; and (3) the “Copyright License and Release, ” also referred to as “EXHIBIT A to Television Advertising and Sponsorship Agreement, ” which grants S&W intellectual property rights in the content produced under the Television Advertising and Sponsorship Agreement; the License also provides that “the Term will automatically renew” for another year “unless a party provides the other parties with written notice of non-renewal at least thirty (30) days prior to expiration” of the term. Id. at 7-9.

         Plaintiff includes the Television Advertising and Sponsorship Agreement and Copyright License and Release in its complaint, but omits the Terms and Conditions. Doc. 1-1, at 7-13. Nonetheless, the Court considers all three documents to determine whether the Agreement automatically renewed for a year and whether it was reasonable for Plaintiff to expect compensation for the production of 2017 content without a new contract.[2]

         II. Discussion

         Before turning to the merits of Plaintiff's two claims, the Court must first address jurisdiction and the governing law. Defendant removed this suit from the District Court of Cleveland County, Oklahoma, on the basis of diversity jurisdiction. Doc. 1. The removal application and petition offer a conclusory statement that the amount in controversy exceeds $75, 000, even though the underlying contract at issue is for $67, 500 and Plaintiff only alleges that it provided a fraction of these services for the 2017 season. Doc. 1, at 3; Doc. 1-1, at 3-5. However, Oklahoma allows for the recovery of attorney's fees in civil actions “for labor or services rendered, ” 12 O.S. § 936, and “statutorily allowed attorney fees may be considered in determining the amount in controversy.” Humphreys v. Fuselier, 124 F.3d 216 (10th Cir. 1997) (unpublished) (citing Missouri State Life Ins. Co. v. Jones, 290 U.S. 199, 202 n.3 (1933)); see also Francis v. Allstate Ins. Co., 709 F.3d 362, 368 (4th Cir. 2013). Thus, the Court finds that Defendant has made “a plausible allegation that the amount in controversy exceeds the jurisdictional threshold.” Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.Ct. 547, 554 (2014); see also McPhail v. Deere & Co., 529 F.3d 947, 953 (10th Cir. 2008).

         Oklahoma choice-of-law principles treat Plaintiff's two claims differently. Massachusetts law governs Plaintiff's breach of contract claim because the Agreement and License both contain Massachusetts “Governing Law” provisions. Doc. 6-1, at 6, 8. Harvell v. Goodyear Tire & Rubber Co., 164 P.3d 1028, 1033-34 (Okla. 2006).[3]

         The quantum meruit action, by contrast, is governed by Oklahoma law because it does not arise expressly from these contracts, but from an implied contract based on the parties' conduct. See Klebe v. United States, 263 U.S. 188, 192 (1923). “Oklahoma conflict-of-law principles apply . . . [f]or [Plaintiff's] implied contract claim[]” and “dictate that lex loci contractus controls-i.e., ‘the nature, validity, and interpretation of a contract are governed by the law where the contract was made.'” Yavuz v. 61 MM, Ltd., 576 F.3d 1166, 1178 (10th Cir. 2009) (quoting Harvell, 164 P.3d at 1034). For an implied contract like this, Oklahoma law considers the contract to have been made “where the services were rendered.” Harvell, 164 P.3d at 1036.[4] Plaintiff rendered the services at issue, production for the 2017 season, in Oklahoma. Doc. 1-1, at 1. At the Court's July 26, 2018 hearing, neither party suggested that Massachusetts or Oklahoma law would dictate a different result in this case.

         A. Breach of Contract

         Plaintiff fails to allege a plausible breach of contract claim because-to state the obvious-[t]o prevail on a claim for breach of contract, a plaintiff must demonstrate that there was an agreement between the parties.” Bulwer v. Mount Auburn Hosp., 473 Mass., 46 N.E. 3d 24, 39 (Mass. 2016). The parties agreed to a Television Advertising and Sponsorship Agreement for the 2016 “Broadcast Season/Term, ” with terms running from January 1, 2016 through January 31, 2017. Doc. 6-1, at 1. Plaintiff does not allege that Defendant failed to meet its obligations during this term; it instead claims that Defendant failed to make payments for the 2017 season, in which the parties lacked a formal contract. Doc. 1-1, at 3- 4. Thus, by suing on an expired contract for services outside the contract's scope, Plaintiff cannot meet an essential element of breach of contract.[5]

         Plaintiff attempts to resurrect this claim by arguing that the Television Advertising and Sponsorship Agreement incorporated by reference the auto-renewal provision in their Copyright License and Release, and that the License “has no ascertainable purpose” if unincorporated. Doc. 7, at 11-12; see Doc. 1-1, at 4; Doc. 6-1, at 7 (“[T]he Term will automatically renew for additional successive twelve (12) month periods, unless a party provides the other parties with written notice of non-renewal at least thirty (30) days prior to expiration of the then-current twelve (12) month Term.”). To incorporate by reference, “the document to be incorporated [must] be referred to and described in the contract so that the referenced document may be identified beyond doubt.” Lowney v. Genrad, Inc., 925 F.Supp. 40, 47 (D. Mass. 1995)). The language used “to incorporate extrinsic material by reference . . . must clearly communicate that the purpose of the reference is to incorporate the referenced material into the contract (rather than merely to acknowledge that the referenced material is relevant to the contract, e.g., as background law or negotiating history).” NSTAR Elec. Co. v. Dep't of Pub. Utilities, 968 N.E.2d 895, 905-06 (Mass. 2012) (quoting Northrop Grumman Info. Tech., Inc. v. United States, 535 F.3d 1339, 1345 (Fed. Cir. 2008)). When “language [is] ambiguous, ” the Court “consider[s] it in light of the ‘contract as a whole, in a reasonable and practical way.'” Id. (quoting MCI WorldCom Communications, Inc. v. Dep't of Telecomm & Energy, 810 N.W.2d 802 (Mass. 2004)).

         The Television Advertising and Sponsorship Agreement only incorporates the Terms and Conditions, not the Copyright License and Release. There are at least five textual reasons: (1) the Agreement expressly “incorporate[s] herein by reference” the “Terms and Conditions, ” whereas the Agreement merely refers to the Copyright License and Release by stating “See Exhibit ‘A'” and “Producer shall . . . obtain and provide to S&W executed copy(ies) of the Copyright License and Release, in the form attached hereto as Exhibit A . . . .” Doc. 6-1, at 2-3; (2) the bottom of each page of the Terms and Conditions states “Smith & Wesson Terms and Conditions Television Advertising and Sponsorship Agreement, ” whereas the License pages only read “Copyright License and Release, ” id. at 5-9; (3) the Terms and Conditions and Copyright License and Release each repeat entire sections, meaning that the parties did not intend to automatically apply the Terms and Conditions' sections to the License, id.; (4) the License's auto-renewal section refers to “a party provid[ing] the other parties with written notice, ” meaning there are at least three parties to that contract, whereas the Television Advertising and Sponsorship Agreement clearly has only two parties, id. at 4, 7, 9 (emphasis added); (5) the phrase “This Agreement” in the License's auto-renewal section refers to “This Copyright License and Release (the ‘Agreement').” Id. at 7.

         Plaintiff's purpose-driven argument fairs no better. Doc. 7, at 11-12. The Copyright License and Release maintained an “ascertainable purpose” when it automatically renewed in spite of the Agreement's expiration-it provided Defendant continued intellectual property rights in the content that Plaintiff already produced, meaning that S&W could reproduce 2016 content even if Big Hunt stopped making new shows and commercials. See Doc. 6-1, at 7-9. It is actually the Television Advertising and Sponsorship Agreement that would have no purpose if it out-lasted the Copyright License and Release because then ...


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