United States District Court, W.D. Louisiana
DISH NETWORK L.L.C.
ORDER AND REASONS
J. BARBIER UNITED STATES DISTRICT JUDGE.
the Court is a Motion to Dismiss or, in the Alternative,
Motion for Summary Judgment (Rec. Doc.
27) filed by Defendant, WLAJ-TV. At the direction of
the Court, Defendant clarified in a pocket brief (Rec. Doc.
30) that it believed that this matter could be disposed of
via 12(b)(6), because cited to exhibits were referenced
implicitly in the Complaint. Plaintiff filed an opposition
(Rec. Doc. 32), to which Defendant replied (Rec. Doc. 34).
Having considered the Motion and legal memoranda, the record,
and the applicable law, the Court finds that Defendant's
Motion should be DENIED.
AND PROCEDURAL BACKGROUND
DISH Network L.LC., is a major subscription-television
provider in the United States, which delivers its services to
its customers via satellite transmissions. In order to
provide content to its subscribers, DISH contracts with local
television stations. On August 31, 2012, DISH executed a
re-transmission consent agreement (the “Sinclair
Agreement”) with the Sinclair Broadcast Group for
re-transmission of content produced by 82 of Sinclair's
TV stations. (Rec. Doc. 27-6). Among the stations was
WLAJ-TV, a station assigned to the Lansing, Michigan market
area. WLAJ is currently owned by Defendant, WLAJ-TV, LLC.
(Rec. Doc. 15 at 1-2).
Sinclair Agreement was deemed to be effective on August 16,
2012. (Rec. Doc. 27-6 at 1). Per its terms, DISH agreed to
pay Sinclair a fee for each of the stations that it would
rebroadcast. The fee was on a per subscriber basis and would
depend on the affiliated network. Also, among the Sinclair
Agreement's terms was a “More Favorable Fee”
provision, which acted as a “most favored nation”
(“MFN”) clause. (Rec. Doc. 15 at 2). In section
22 of the Sinclair Agreement, Sinclair promised that if it
granted a re-transmission fee more favorable to certain
re-transmitter-competitors of DISH, by more than half a cent
per subscriber than that paid by DISH, Sinclair would offer
DISH the benefit of the more favorable fee. The Sinclair
Agreement was set to expire on August 15, 2015. However,
section 23 provides:
Audit Right. During the term and
for one (1) year thereafter, each party will have the right,
upon reasonable, prior notice, to conduct an audit of the
other party's books and records that are reasonably
necessary to verify the accuracy of the Re-transmission Fees
paid by DISH and/or verify Operator's compliance with its
obligations under Section 22.
(Rec. Doc. 27-6 at 14). Additionally, section 24 states:
Survival. Any provision of this
Agreement which logically would be expected to survive
termination or expiration of the Agreement shall survive
termination or expiration.
(Rec. Doc. 27-6 at 14). On November 13, 2012, Sinclair sent a
notice to DISH indicating that Sinclair intended to sell
WLAJ-TV to Defendant, with an assurance that Defendant would
“assume all of Sinclair's obligations under the
Agreement as they relate to WLAJ-TV.” (Rec. Doc. 39-4
at 2). The Sinclair Agreement states that subject to such
notice, “DISH hereby consents . . . in the case of
assignment or transfer of control of one or more, but less
than all of the Stations then operated by [Sinclair], to the
assignment of such portion of this Agreement as may then be
applicable to such Station.” In April of 2013,
Defendant's parent company notified DISH that it had
acquired substantially all of the assets to WLAJ and that
Defendant had “assumed certain Station contracts,
including the [Sinclair] Agreement.” (Rec. Doc. 39-5 at
Defendant claims that when it gave notice it was assuming the
Sinclair Agreement, Sinclair had presented Defendant only
with a redacted version of the Sinclair Agreement (the
“Redacted Sinclair Agreement”), which lists a
section 22 among its numbered items, but omits its content.
(Rec. Doc. 27-4 at 13). While the substance of section 22 has
been whited out, the Redacted Sinclair Agreement does not in
any way obscure the audit right described in section 23.
(Rec. Doc. 27-6 at 12-13). Rather, the Redacted Sinclair
Agreement clearly states that DISH may employ an audit to
“verify Operator's compliance with its obligations
in section 22 hereof.”
October 29, 2015-after the expiration of the Sinclair
Agreement, but during the 1-year grace period-DISH notified
Defendant that it intended to conduct an audit to ensure
compliance with the MFN clause. Defendant refused to comply
with the audit. On December 7, 2015, DISH gave notice of
breach of contract and on June 22, 2016, DISH filed suit
against Defendant, alleging breach of the Sinclair Agreement.
8, 2016, DISH and Defendant entered into a new
re-transmission broadcast agreement (the “WLAJ
Agreement”) (Rec. Doc. 27-7). The agreement was made
retroactively effective as of August 16, 2015. Notably, the
WLAJ Agreement includes the following passage:
Integration. This Agreement,
together with any documents and exhibits specifically
referred to in this Agreement, constitutes the entire
agreement between the Parties to this Agreement. . . . Upon
execution of this Agreement, all prior agreements and
understandings between the Parties related to the Stations
will be null and void. Each of the Parties specifically
acknowledges that there are no unwritten side agreements or
oral agreements between the Parties that alter, amend, modify
or supplement this Agreement.
(Rec. Doc. 27-7 at 20). In April of 2018, Defendant filed its
Motion. On July 26, 2018, this matter was transferred to the
undersigned judge. The Court heard oral argument on the
matter on October 24, 2018 and took the matter under
argues it is entitled to dismissal or summary judgment on
three grounds: “ The assigned re-transmission
agreement on which DISH bases its case is now null and void;
 The more favorable fee provisions of the null and void
retransmission agreement were never assigned to WLAJ anyway;
and,  Even if the agreement were not null and void, and
even if the ‘more favorable' fee provision had been
part of the assigned agreement, it would not be applicable
here, where DISH seeks to apply it to WLAJ on a
station-by-station basis in conflict with the averaging
language of the Sinclair agreement.” (Rec. Doc. 27-1 at
counters that the WLAJ agreement did not extinguish
Plaintiff's right to enforce the Sinclair Agreement.
(Rec. Doc 32-1 at 16-19). Plaintiff argues that the
“null and void” language is nothing more than a
merger provision, which seeks to make clear that there are no
other oral or written agreements binding the Parties. In
other words, the language is intended to require a court to
enforce the parol evidence rule. Plaintiff argues that the
words “null and void” at most terminated
the Sinclair Agreement, but did not rescind it. The
distinction being that plaintiffs can seek to enforce prior
breaches of a terminated contract, but not a rescinded
contract. Further, Plaintiff argues that the audit provision
survived termination pursuant to the to the survival
provision of the Sinclair Agreement. Thus, Plaintiff had a
right to audit Defendant in order to determine whether
Defendant had complied with the MFN provision prior to
contract termination. To the extent that “null and
void” is ambiguous, Plaintiff offers evidence that
Parties had considered but ultimately did not agree to a
“clean slate” provision.
Plaintiff argues that Defendant explicitly agreed to assume
the Sinclair Agreement and did so without reservation. (Rec.
Doc. 32-1 at 4). Plaintiff argues that Sinclair's alleged
redaction of a provision had no effect on Defendant's
assumption of the entire agreement, and that Defendant failed
to do due diligence before assuming the Sinclair Agreement.
Finally, Plaintiff argues that summary judgment is ...