Opinion
C22-1063JLR
04-01-2024
PROMEDEV, LLC, Plaintiff, v. ROBY WILSON, et al., Defendants.
ORDER
JAMES L. ROBART, UNITED STATES DISTRICT JUDGE
I. INTRODUCTION
Before the court are motions for summary judgment filed by (1) Defendants / Counter-Claimants Roby Wilson, MaXXiMedia Advertising Co. (“MaXXiMedia”), and Imagipix Corporation (“Imagipix”) (collectively, “Defendants”) (Def. Mot. (Dkt. # 56); Def. Reply (Dkt. # 77)); and (2) Plaintiff / Counter-Defendant Promedev, LLC (“Promedev”) (Pl. Mot. (Dkt. # 72); Pl. Reply (Dkt. # 84)). Both motions are opposed. (Pl. Resp. (Dkt. ## 62 (redacted), 67 (sealed)); Def. Resp. (Dkt. # 81).) On March 26, 2024, the court issued an order to show cause why it should not dismiss Defendants' counterclaim for copyright infringement (3/26/24 Order (Dkt. # 86)), and Defendants timely responded the following day (OSC Resp. (Dkt. # 91)). The court has considered the parties' submissions, the relevant portions of the record, and the governing law. Being fully advised,the court GRANTS in part and DENIES in part Defendants' motion for summary judgment and GRANTS in part and DENIES in part Promedev's motion for summary judgment.
Defendants request oral argument regarding their motion (Def. Mot. at 1) but not Promedev's motion (see Def. Resp. at 1). Promedev does not request oral argument. (See Pl. Mot. at 1; Pl. Resp. at 1.) The court concludes that oral argument would not be helpful to its disposition of these motions. See Local Rules W.D. Wash. LCR 7(b)(4).
II. BACKGROUND
This case arises out of a collapsed business relationship between Promedev and Defendants. Promedev is a nutrition supplement company specializing in the sale of “Relief Factor,” which it describes as “a powerful 100% drug-free botanical and fish oil research-based formula that was created to help support the body's inflammatory response.” (Am. Compl. (Dkt. # 54) ¶ 11.) Mr. Wilson works in the advertising industry and, through his companies Imagipix and MaXXiMedia, offers filming, post-production, and television ad placement services to his clients. (Def. Mot. at 6.) The parties' relationship commenced in 2018 with a “hand-shake agreement,” and MaXXiMedia began producing commercials for Promedev's supplements and placing those commercials on Fox News Channel (“Fox News”) and Newsmax shortly thereafter. (Am. Compl. ¶¶ 15-17.)
Promedev's business grew, and by the latter half of 2020, it began to reconsider its relationship with MaXXiMedia. (See id. ¶ 19.) On July 31, 2020, after several days of negotiations (see id. ¶¶ 20-26), Promedev and MaXXiMedia executed a written contract, drafted by MaXXiMedia, that would govern their relationship going forward (the “Agreement”). (See generally 1/18/24 Wilson Decl. (Dkt. # 58) ¶ 8, Ex. A (“Agreement”). See 2/5/24 Wagner Decl. (Dkt. # 65) ¶ 10.) In relevant part, the Agreement provides that:
(1) MaXXiMedia would “provide services necessary to purchase and place all media for [Promedev], specifically television” and would be “the exclusive provider for television media placement for [Promedev].” MaXXiMedia would also provide services to place advertisements in other media, as well as “[a]dditional services” including, but not limited to, “research, market planning, public relations, web, digital, design and creative services” (collectively, the “Services”) (Agreement ¶ 1);
(2) Promedev would pay MaXXiMedia a “commission or fee of 6% of the gross television media spend on a monthly basis,” with caps and/or additional payments depending on billing amounts (id. ¶ 4);
(3) MaXXiMedia would charge Promedev for “additional products and/or services . . . which [were] not part of the Services covered by the terms of th[e] Agreement” (id.);
(4) Promedev agreed to pay MaXXiMedia “all reasonable out-of-pocket miscellaneous expenses, i.e. spot distribution etc.” (id.);
(5) MaXXiMedia agreed to “invoice [Promedev] at the time of services rendered” and “[a]dditional products and services, and allowable expenses” could be “invoiced at any time” (id. ¶ 5);
(6) Promedev would make payments in a “timely fashion” (id.);
(7) if Promedev failed to pay an invoice “within thirty days or due date,” MaXXiMedia could “at its option . . . remove commercials from all media outlets” until Promedev made “payment in full” (id. ¶ 6);
(8) “[u]pon payment in full” to MaXXiMedia, Promedev would “have full rights and ownership of any ‘creative product,'” but “[m]edia buying services, work or materials (the ‘Work Product')” created by MaXXiMedia, “except as provided in th[e] Agreement,” would “remain[] the sole property of [MaXXiMedia]” (id. ¶ 8);
(9) all “Work Product,” including but not limited to “all rate and billing information,” was to be kept “strictly confidential” and not to be disclosed “to any third party” (id. ¶ 7);
(10) “[a]ll ‘Work Product' and ‘Creative Product' [was] for the exclusive use of [Promedev] and [could] not be copied, divulged, disclosed, or sold to another party” (id. ¶ 8); and
(11) either party could terminate the Agreement “on sixty (60) days written notice to the other party” and, “[i]n the event of such termination,” Promedev would “promptly pay all sums owed to [MaXXiMedia up] to and including the effective date of termination, including any future non-cancelable commitments after the termination date” (id. ¶ 13).
For the next two years, the parties appeared to have a functioning business relationship. Mr. Wilson and MaXXiMedia created advertisements and negotiated network rates for Promedev and, in return, Promedev “always timely paid” MaXXiMedia's monthly invoices. (See 2/5/24 Wagner Decl. ¶ 11.)
On July 1, 2022, however, Promedev notified MaXXiMedia of its intent to terminate the Agreement 60 days later on August 31, 2022 “pursuant to Section 13 of the Agreement.” (Id. ¶ 13; 1/18/24 Wilson Decl. ¶ 16, Ex. B, at 7-18(“Termination Letter”).) Promedev attached to its notice a proposed termination agreement with the purpose of “confirming” Promedev's right to ownership of “creative product” and its remaining payment obligations. (Termination Letter at 10-18; see also Agreement ¶ 13.) At the end of its notice, Promedev wrote that Mr. Wilson should “not hesitate to contact us if [he] ha[d] any questions.” (Termination Letter at 9.)
The court cites to the page numbers in the CM/ECF header when referring to this exhibit.
Promedev's notice of termination triggered a flurry of correspondence from MaXXiMedia, which swiftly lawyered up and took the offensive. On July 6, 2022, counsel for Mr. Wilson, Tom Coleman, sent a “Notice of Breach of Contract” to Promedev, in which it alleged that Promedev breached the Agreement “by reason of its failure and refusal to make payments to MaXXiMedia” and asserted that Promedev was “in default by failure to make payment when due” on July 1, 2022. (2/5/24 Wagner Decl. ¶ 24, Ex. T (“7/6/22 Coleman Letter”).) Mr. Coleman acknowledged, however, that “the termination [was] not effective until August 31, 2022, pursuant to Section 13 of the Agreement.” (Id.) Two days later, Mr. Coleman sent another letter to Promedev titled “Re: Contract Breach due to proposed ‘Termination Agreement,'” asserting in relevant part that (1) MaXXiMedia owned all “creative product” (“valued” at $1,380,000) and “Work Product” (“valued” at $2,000,000); (2) Promedev owed MaXXiMedia commissions for May 2022 through December 2022 and was in “default by failure to make payment when due”; (3) MaXXiMedia could “remove” Promedev's advertisements from the air “at any time” due to its failure to pay; and (4) Promedev could purchase a “lifetime non-compete and non-disparagement agreement” for $5,000,000. (2/5/24 Rainwater Decl. (Dkt. # 66) ¶ 2, Ex. U at 1-4.) Then, on July 15, 2022, Mr. Wilson sent Promedev three invoices: one for $1,380,000 for “copyrighted ‘Creative Product'”; one for $2,000,000 for other creative “Work Product”; and one for $587,087.78, which included $127,087.78 for “[m]iscellaneous” expenses “that may be invoiced at any time,” the earliest of which dated back more than four years to May 2018. (2/5/24 Wagner Decl. ¶ 18, Ex. N (“7/15/22 Invoices”).) Ten days later, on July 25, 2022, Mr. Coleman sent Promedev's attorney an email responding to Promedev's “refus[al] to pay immediately the $527,027.78 owed for commission and $1,380,000.00 for creative product.” (Id. ¶ 19, Ex. O (“7/25/22 Email”) at PROMEDEV0016364.) In that email, MaXXiMedia threatened that if Promedev did not pay these sums, MaXXiMedia would “remove all commercials” and “assure” the “instant[] destr[uction]” of Promedev's goodwill, “devastating depositions and testimonies,” and “unwelcomed attention from various Government agencies.” (Id.) If Promedev “immediately” paid the money, however, it could “avoid[] . . . all the possible scenarios above.” (Id.)
MaXXiMedia's hostile correspondence came as a surprise to Promedev. (See 1/5/24 Wagner Decl. ¶ 13.) Promedev had not yet paid MaXXiMedia's May invoice by July 6, 2022, the date Mr. Coleman sent the “Notice of Breach of Contract” to Promedev. MaXXiMedia, however, hadn't sent that invoice to Promedev until June 28, 2022, and Promedev paid it on July 14, 2022. (2/5/24 Wagner Decl. ¶¶ 13, 20.) Promedev paid MaXXiMedia's June invoice on July 26, 2022, and sent over $400,000 dollars in additional payments in August and September 2022 to cover commissions owed for the remainder of the year and most of Mr. Wilson's miscellaneous expenses. (Id. ¶ 20; see also id. ¶ 20, Ex. P (“Checks”).) Promedev did not pay any portion of the $1,380,000 or $2,000,000 MaXXiMedia demanded for its creative product and work product, nor did Promedev pay any portion of the $5,000,000 MaXXiMedia proposed as the price for a non-compete and non-disparagement agreement. (See generally Dkt. See Pl. Resp. at 7 (noting that Promedev was “not interested in making the ‘optional purchases'”).)
Promedev began seeking new advertising agencies to partner with. While negotiating with one of those agencies, Eicoff, Promedev disclosed the rates Fox News had charged Promedev-rates MaXXiMedia had negotiated on Promedev's behalf. (See 2/5/24 Wagner Decl. ¶ 21, Ex. Q (Dkt. ## 65-17 (redacted), 68-2 (sealed)) (“Eicoff Email”) (email to Eicoff with attachments disclosing the Fox News rates).) Promedev did not, however, disclose any of MaXXiMedia's invoices to Eicoff. (See id. ¶ 21.)
Promedev filed this lawsuit on July 29, 2022. (See generally Compl. (Dkt. # 1).) Promedev brings claims for (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) civil coercion, extortion, and blackmail; and (4) declaratory judgment. (Am. Compl. at 22-26.) Defendants bring counterclaims for (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) copyright infringement; and (4) misappropriation of trade secrets under Washington's Uniform Trade Secrets Act (“UTSA”) and the federal Defend Trade Secrets Act (“DTSA”). (Counterclaims (Dkt. # 25) at 9-17.)
The court previously granted Promedev's motion to dismiss Defendants' counterclaims for violations of the Washington Consumer Protection Act, fraudulent inducement, and fraudulent representation. (See generally 3/2/23 Order (Dkt. # 40).)
Each side moves for summary judgment on the other's claims. The court provides the relevant summary judgment legal standard before considering the parties' motions.
III. LEGAL STANDARD
Summary judgment is appropriate if the evidence viewed in the light most favorable to the non-moving party shows “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact is “material” if it might affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A factual dispute is “‘genuine' only if there is sufficient evidence for a reasonable fact finder to find for the non-moving party.” Far Out Prods., Inc. v. Oskar, 247 F.3d 986, 992 (9th Cir. 2001) (citing Anderson, 477 U.S. at 248-49).
The moving party bears the initial burden of showing there is no genuine dispute of material fact and that it is entitled to prevail as a matter of law. Celotex, 477 U.S. at 323. If the moving party does not bear the ultimate burden of persuasion at trial, it can show the absence of such a dispute in two ways: (1) by producing evidence negating an essential element of the nonmoving party's case, or (2) by showing that the nonmoving party lacks evidence of an essential element of its claim or defense. Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1106 (9th Cir. 2000). If the moving party meets its burden of production, the burden then shifts to the nonmoving party to identify specific facts from which a factfinder could reasonably find in the nonmoving party's favor. Celotex, 477 U.S. at 324; Anderson, 477 U.S. at 250.
IV. THE PARTIES' MOTIONS
Each side moves for summary judgment on the other's claims for breach of contract and breach of the implied covenant of good faith and fair dealing. Additionally, Promedev seeks summary judgment on Defendants' claims for trade secret misappropriation and copyright infringement, and Defendants seek summary judgment on Promedev's claim for civil coercion, extortion, and blackmail. The court considers these claims in turn.
It is unclear whether Defendants seek summary judgment on Promedev's claim for declaratory judgment. Defendants' discussion of Promedev's declaratory judgment claim is two sentences long and describes the claim as “duplicitous and superfluous given MaXXiMedia's counterclaims.” (Def. Mot. at 18.) Defendants state that “the Court need not issue a ruling on Plaintiff's request for declaratory judgment” (id.), and Promedev “agrees that the Court should not issue a ruling on its declaratory judgment claim in response to Maxximedia's motion” (Pl. Resp. at 24). The court therefore does not consider Promedev's declaratory judgment claim in this order.
A. Breach of Contract
The parties agree the contract is governed by Washington law. (See Def. Reply. at 9-10 (applying Washington law); Pl. Resp. at 10-12 (same).) In Washington, a breach of contract is actionable “only if the contract imposes a duty, the duty is breached, and the breach proximately causes damage to the claimant.” Nw. Indep. Forest Mfrs. v. Dep't of Lab. & Indus., 899 P.2d 6, 9 (Wash.Ct.App. 1995). “Any failure to perform a contractual duty,” even if non-material, “constitutes a breach, and an injured party is generally entitled to those damages necessary to put that party in the same economic position it would have occupied had the breach not occurred.” DC Farms, LLC v. Conagra Foods Lamb Weston, Inc., 317 P.3d 543, 555 (Wash.Ct.App. 2014).
“[S]ummary judgment on an issue of contract interpretation is proper where ‘the parties' written contract, viewed in light of the parties' other objective manifestations, has only one reasonable meaning.'” Spradlin Rock Prods., Inc. v. Pub. Util. Dist. No. 1 of Grays Harbor Cnty, 266 P.3d 229, 235 (Wash.Ct.App. 2011) (quoting Hall v. Custom Craft Fixtures, Inc., 937 P.2d 1143, 1137 (Wash.Ct.App. 1997)). When interpreting contracts, Washington courts follow the “objective manifestation theory.” Hearst Commc'ns, Inc. v. Seattle Times Co., 115 P.3d 262, 267 (Wash. 2005). Under this approach, courts “attempt to determine the parties' intent by focusing on the objective manifestations of the agreement, rather than on the unexpressed subjective intent of the parties.” Id. Courts may “impute an intention corresponding to the reasonable meaning of the words used.” Id. The subjective intent of the parties is therefore “irrelevant if the intent can be determined from the actual words used.” Id. Such words are given their “ordinary, usual, and popular meaning unless the entirety of the agreement clearly demonstrates a contrary intent.” Id. “Interpretations giving lawful effect to all the provisions in a contract are favored over those that render some of the language meaningless or ineffective.” Grey v. Leach, 244 P.3d 970, 976 (Wash.Ct.App. 2010); see also Riley v. Iron Gate Self Storage, 395 P.3d 1059, 1065 (Wash.Ct.App. 2017) (“The contract is viewed as a whole, and particular language is interpreted in the context of other provisions.”).
“Clear and unambiguous contracts are enforced as written.” Radliff v. Schmidt, 532 P.3d 622, 625 (Wash.Ct.App. 2023) (quoting Grey, 244 P.3d at 975). “Courts will not revise a clear and unambiguous agreement or contract for parties or impose obligations that the parties did not assume for themselves.” Condon v. Condon, 298 P.3d 86, 92 (Wash. 2013). “Language in a contract is ambiguous if it is susceptible to two different but reasonable interpretations or where separate contractual provisions irreconcilably conflict.” Radliff, 32 P.3d at 625. “A contract provision is not ambiguous merely because the parties to the contract suggest opposing meanings.” GMAC v. Everett Chevrolet, Inc., 317 P.3d 1074, 1078 (Wash.Ct.App. 2014). Moreover, “[a]mbiguities are construed against the drafter.” Lamar Outdoor Advert. v. Harwood, 254 P.3d 208, 213 (Wash.Ct.App. 2011).
Washington courts also follow the “context rule” that “extrinsic evidence relating to the context in which a contract is made may be examined to determine the meaning of specific words and terms” used in the contract. William G. Hulbert, Jr. & Clare Mumford Hulbert Revocable Living Tr. v. Port of Everett, 245 P.3d 779, 784 (Wash.Ct.App. 2011). “Extrinsic evidence includes the subject matter and objective of the contract, all the circumstances surrounding the making of the contract, the subsequent acts and conduct of the parties, and the reasonableness of the respective interpretations urged by the parties.” Id. “Extrinsic evidence may not, however, be used to show an intention independent of the instrument or to vary, contradict or modify the written word.” Id. (internal quotations omitted) (quoting Hearst, 115 P.3d at 267).
Here, neither side moves for summary judgment on its own breach of contract claim. Instead, Defendants move for summary judgment on Promedev's claim, and Promedev moves for summary judgment on Defendants' claim. Defendants argue that summary judgment on their claim is improper because a genuine dispute of material fact exists as to whether Promedev breached the Agreement by (a) “refus[ing] to timely pay amounts that were past due for media placement services,” (b) “refus[ing] to pay amounts owed for future media placement services,” (c) “refus[ing] to pay for additional services under the contract, specifically MaXXiMedia's creative services,” (d) “refus[ing] to pay MaXXiMedia's costs incurred under the contract,” (e) making continued use of MaXXiMedia's “Creative Product” “[d]espite failing to pay monies owed,” (f) making continued use of MaXXiMedia's “Work Product” “[d]espite failing to pay monies owed,” and (g) “distribut[ing] MaXXiMedia Work Product to third parties.” (Def. Resp. at 1-2.)Promedev argues that summary judgment on its claim is improper because a genuine dispute of material fact exists as to whether MaXXiMedia breached the Agreement by “making improper demands for payment and threats if Promedev failed to pay such demands,” and “refusing to recognize [Promedev's] ownership” “of all creative product.” (Pl. Resp. at 2.) The court considers the parties' motions in turn.
Defendants do not attempt to raise a genuine dispute as to whether Promedev “violat[ed] the mutual-noncompete and exclusivity provisions by and through its actions negotiating with media networks and third parties for the purchase of ad placement.” (Counterclaims ¶ 31.) Promedev moves for summary judgment on this issue (see Pl. Mot. at 23), but Defendants do not respond (see Def. Resp. at 1-2 (listing the ways Promedev breached the Agreement, but not mentioning any violation mutual-noncompete and exclusivity provisions)). MaXXiMedia also admits that it placed the relevant ads at issue. (See Def. Resp. at 11.) The court therefore grants this portion of Promedev's motion for summary judgment.
1. Promedev's Motion
a. “Timely” Payment of Amounts Owed for Ad Placement Services
Promedev argues that there is no genuine dispute that it “timely” paid all commissions due under the Agreement. (Id. at 15.)In support of its argument, Promedev provides evidence that it paid all of MaXXiMedia's invoices for commission payments within thirty days of the invoice date. (See 2/5/24 Wagner Decl. ¶ 20; Checks.) According to MaXXiMedia, the evidence shows that Promedev “refused to timely pay amounts that were past due for media placement services” because it “had not yet paid at least $100,000 in monies owed for MaXXiMedia's services in May and June at the time Promedev elected to terminate the Agreement” on July 1, 2022, and did not satisfy the remainder of its payment obligations until “well after filing suit against MaXXiMedia.” (Def. Resp. at 1, 13-14.) The court agrees that Promedev timely paid MaXXiMedia's commissions.
The court frequently cites Promedev's opposition to Defendants' motion for summary judgment in this section because Promedev's motion refers the court back to its reasoning therein. (See, e.g., Pl. Mot. at 23 (“Maxximedia's claim . . . that Promedev failed to pay all commissions is addressed in Promedev's Opposition ....”).)
The Agreement requires payment in a “timely fashion” and provides that “[a]ll invoices not paid within thirty days or due date are considered overdue.” (Agreement ¶¶ 5-6.) MaXXiMedia does not dispute that Promedev paid all invoices within thirty days. (See generally Def. Resp.) Rather, MaXXiMedia argues that Promedev failed to make timely payments because it did not pay all invoices before providing its notice of intent to terminate the Agreement or filing this lawsuit. (See id. at 13-14.) Defendants' interpretation of the Agreement is unreasonable. Nothing in the Agreement requires Promedev to pay all outstanding invoices before providing notice of intent to terminate. To the contrary, paragraph 13, “Termination,” contemplates payment after providing such notice. (See Agreement ¶ 13 (“In the event of such termination, the Client shall promptly pay all sums owed to the Agency [up] to and including the effective date of termination ....”).) Likewise, although the Agreement contemplates “legal action . . .taken to enforce the terms of this Agreement” (id. ¶ 14), no provision requires Promedev to pay all outstanding or future invoices before suing to enforce its rights (see generally id.). Instead, the Agreement unambiguously provides Promedev a “thirty day[]” window to make payments before they become “overdue.” (Agreement ¶ 6.) Defendants' attempts to shorten that window are not rooted in the contract language and contradict the Agreement's express terms. The court therefore concludes as a matter of law that Promedev timely paid all of MaXXiMedia's commission invoices and grants this portion of Promedev's motion.
b. Payment for Future Media Placement Services
Promedev argues that there is no genuine dispute that it timely paid all commissions owed for future media placement services because it made “early” payments of all post-Agreement invoices. (Pl. Reply at 3 (listing payment dates).) The evidence establishes that Promedev paid MaXXiMedia's commissions for August through December 2022 on August 29, 2022, before the effective date of termination. (See 2/5/24 Wagner Decl. ¶ 20; Checks; Agreement ¶ 13.) Defendants do not argue that Promedev failed to make “prompt” payments after providing notice of termination. (See generally Counterclaims; Def. Resp. See Agreement ¶ 13 (requiring Promedev to “promptly pay all sums owed” in the event of termination).) Instead, Defendants argue that the evidence establishes that Promedev “refused to pay amounts owed” until “after this filing.” (Def. Resp. at 1.) The court again agrees with Promedev, concluding that Promedev timely paid MaXXiMedia's commissions for future media placement services.
There is no language in the Agreement that required Promedev to pay sums not yet owed before filing suit to enforce its rights. See supra IV.A.1.a. Promedev paid MaXXiMedia's commissions for August through December 2022 in full before the month of August ended. (See 2/5/24 Wagner Decl. ¶ 20.) Because Promedev's July 1, 2022 notice contemplated an August 31, 2022 termination date consistent with paragraph 13 of the Agreement (see Termination Letter at 9), Promedev made its payments both within 30 days of each invoice's date and prior to the Agreement's effective termination date. Defendants make no allegation that Promedev violated paragraph 13 by failing to “promptly pay all sums owed.” (See Agreement ¶ 13. See generally Def. Resp.) Accordingly, Defendants raise no genuine dispute of material fact as to Promedev's timely compliance with its payment obligations concerning MaXXiMedia's future commissions. The court therefore concludes as a matter of law that Promedev did not breach the Agreement by paying MaXXiMedia's future commissions on August 29, 2022 and grants this portion of Promedev's motion.
c. Payment for “Creative Services”
Promedev argues that there is no genuine dispute that it did not breach the Agreement by refusing to give in to MaXXiMedia's demand for $1,380,000 for “creative services.” (Pl. Resp. at 10-15.) Defendants counter that Promedev breached the Agreement by “refus[ing] to pay for” such services. (Def. Resp. at 1-2.) The court agrees with Promedev.
The Agreement unambiguously provides that “creative services” are part of the “Services” MaXXiMedia performed in exchange for commission payments. (See Agreement ¶¶ 1, 4.) Paragraph 4 provides that MaXXiMedia would charge Promedev “for additional products and/or services as ordered by [Promedev] which are not part of the Services covered by the terms of this Agreement.” (id. ¶ 4 (emphasis added).) Paragraph 1, “Services,” provides that MaXXiMedia's “services may include, but are not limited to, research, market planning, public relations, web, digital, design and creative services.” (id. ¶ 1 (emphasis added).) The fact that MaXXiMedia chose to bill Promedev for these creative services only after Promedev gave its notice of intent to terminate further confirms the parties' understanding that such services were baked into MaXXiMedia's commission payments. (See id. ¶ 5 (“The Agency will invoice the Client at the time of services rendered.” (emphasis added)).) The court therefore concludes as a matter of law that Promedev did not breach the Agreement by refusing to pay MaXXiMedia $1,380,000 for “creative services” and grants this portion of Promedev's motion.
d. Payment for “Costs Incurred Under the Contract”
Promedev argues that there is no genuine dispute that it paid “all expenses due under the Agreement” and indeed “overpaid the legitimate amount[]” owed. (Pl. Resp. at 16.) To support this argument, Promedev provides evidence that it paid over $100,000 to MaXXiMedia to cover Mr. Wilson's miscellaneous expenses dating back more than four years, even though he did not invoice Promedev for those expenses until two weeks after Promedev provided its notice of intent to terminate. (See 2/5/24 Wagner Decl. ¶ 20; Checks; 7/15/22 Invoices at ¶ 009429.) Defendants do not dispute Promedev's contention that it overpaid the legitimate amounts owed to cover Mr. Wilson's expenses. (See generally Def. Mot.; Def. Resp.; Def. Reply.) Nor do Defendants argue or allege that Promedev failed to “timely” pay Mr. Wilson's expenses. (See generally Counterclaims; Def. Mot.; Def. Resp.; Def. Reply.) Instead, Defendants simply assert that “Promedev refused to pay MaXXiMedia's costs incurred under the contract, which Promedev agreed to pay after this lawsuit was filed.” (Def. Resp. at 2.) The court agrees with Promedev that it did not breach the Agreement by failing to timely pay expenses.
The parties use the terms “costs” and “expenses” interchangeably to refer to those sums owed in addition to MaXXiMedia's “Services” under the Agreement. (See Agreement ¶ 4.)
The court already concluded that Promedev did not breach the Agreement by failing to pay any sums owed before filing this lawsuit. See supra §§ IV.A.1.a-b. No provision in the Agreement required Promedev to pay these sums before filing suit, and Defendants do not argue that Promedev's September 1, 2022 payment toward Mr. Wilson's expenses was untimely. (See generally Agreement; Def. Resp.) It is ironic, however, that Defendants allege Promedev breached the Agreement by refusing to pay “costs incurred under the contract” (Def. Resp. at 2 (emphasis added)), when tens of thousands of dollars of Mr. Wilson's expenses evidently pre-dated the Agreement-some by more than two years (see 2/5/24 Rainwater Decl. ¶ 13, Ex. FF (expense spreadsheet including a $1,628.00 May 2018 expense for “Creative Planning” and a $37,800.00 expense dated “5/18/2018 to date” for “Traffic”).) The court therefore concludes as a matter of law that Promedev did not breach the Agreement by “refusing” to pay any costs owed to MaXXiMedia and grants this portion of Promedev's motion.
e. Continued Use of “Creative Product” Despite Failure to Pay Monies Owed
Promedev argues that there is no genuine dispute that its use of all “creative product” was authorized because it “timely paid all amounts due under the Agreement” and therefore possesses “full rights and ownership of any ‘creative product.'” (Pl. Resp. at 15, 17 (quoting Agreement ¶ 8).) According to Defendants, however, the evidence establishes that Promedev “chose to continue using MaXXimedia's creative work . . . without paying what was owed up to and well after filing suit.” (Def. Resp. at 13-14.) Once again, the court agrees with Promedev.
The court already determined that Promedev paid all commissions and costs owed under the Agreement. See supra §§ IV.A.1.a-d. And the court has concluded that Promedev did not breach the Agreement by failing to pay any sums owed before filing this lawsuit. See supra §§ IV.A.1.a-b. The Agreement unambiguously provides that, “[u]pon payment in full to [MaXXiMedia], [Promedev] shall have full rights and ownership of any ‘creative product.'” (Agreement ¶ 8.) The court concludes that Promedev made “payment in full” under the Agreement no later than September 1, 2022, the day Promedev made its final payment toward Mr. Wilson's miscellaneous expenses and the first day after the effective date of the Agreement's termination. Thus, Promedev did not, as a matter of law, breach the Agreement by making unauthorized continued use of creative product from July 1, 2022 onward. The court therefore grants this portion of Promedev's motion.
f. Continued Use of “Work Product” Despite Failure to Pay Monies Owed
Defendants' last two breach of contract allegations concern Promedev's use of MaXXiMedia “work product”-specifically, the billing rates it negotiated on Promedev's behalf with Fox News-through the remainder of 2022. (See Def. Resp. at 2.)Promedev argues that there is no genuine dispute of material fact that its use of the Fox News rates through 2022 was authorized because “Maxximedia agreed Promedev could do so.” (Pl. Mot. at 25.) Defendants fail to respond to Promedev's argument, instead asserting that “MaXXiMedia's negotiated rates saved Promedev millions.”. (Def. Resp. at 9 (capitalization altered).) The court agrees with Promedev that MaXXiMedia authorized it to continue using the rates through 2022.
The parties “agree that MaXXiMedia did not claim Promedev was contractually obligated, under the 2020 Agreement, to pay $2,000,000 for Work Product.” (Def. Reply at 8.)
Promedev provides evidence that the parties “reached a deal” “to allow the continued use of [the] Fox rates through the end of 2022.” (Pl. Mot. at 25 (citing 2/8/24 Rainwater Decl. (Dkt. # 73) ¶ 14, Ex. M (“8/31/23 Emails”)).) In particular, Promedev provides an email from Defendants' attorney “[c]onfirming call has been made” to Fox News to “make clear that we are using [MaXXiMedia's] rates through the end of the year.” (8/31/23 Emails at 1, 9.) Defendants do not respond to this argument in any of their briefing or direct the court toward any evidence to the contrary. (See generally Def. Resp.; Dkt.) Accordingly, the court concludes that there is no genuine dispute that MaXXiMedia agreed to allow Promedev to continue using the Fox News rates through the remainder of 2022; Promedev paid MaXXiMedia's commissions through that term (2/5/24 Wagner Decl. ¶ 20), and MaXXiMedia agreed to let Promedev continue using the rates (8/31/23 Emails at 1). The court therefore grants this portion of Promedev's motion.
f. Distribution of “Work Product” in Violation of Confidentiality Provision
Finally, Promedev argues that there is no genuine dispute of material fact that it did not breach the Agreement by disclosing the Fox News rates to non-party Eicoff because “the Agreement's confidentiality clause was for Promedev's benefit.” (Pl. Reply at 12.) Defendants argue that the Agreement “clearly required . . . strict confidentiality surrounding MaXXiMedia's Work Product,” and that Promedev disregarded this obligation. (Def. Resp. at 13.) The court agrees with Defendants that Promedev has not demonstrated that it is entitled to summary judgment on this portion of their breach of contract claim.
Paragraph 7 of the Agreement recognizes that “the Agency and Client will have access to confidential information about the Agency's and Client's business” and provides that “[t]he Agency and client agree to keep all such information strictly confidential and not . . . disclose or divulge such information to any third party. This includes all ‘work product' in section 8 of this agreement which includes . . . all rate and billing information.” (Agreement ¶ 7.) Promedev argues that these provisions “were for Promedev's benefit, not Maxximedia['s].” (Pl. Reply at 12.) In support of its argument, Promedev cites paragraph 10 of the Agreement, “Remedies,” which contemplates “the Client's remedy at law for a breach . . . of Section[] 7.” (id. at 12-13 (quoting Agreement ¶ 10).) Section 10 does not, however, state that MaXXiMedia has no remedy for Promedev's violation of paragraph 7. (See Agreement ¶ 10.) Promedev's argument is also dubious in light of paragraph 7's requirement that “[t]he Agency and client agree to keep all such information strictly confidential.” (id. ¶ 7 (emphasis added).) Promedev's interpretation would seemingly eliminate the requirement that it keep all “work product” strictly confidential. (id.); see also Grey, 244 P.3d at 976. There is no dispute that Promedev disclosed the Fox News rates to Eicoff. (See Pl. Resp. at 18 (“[T]he only rates that Promedev shared with third parties were the rates that Fox charged to Promedev ....”).) A jury must determine whether Promedev's disclosure of those rates to Eicoff (and potentially other third parties) constituted a breach of contract. The court therefore denies this portion of Promedev's motion.
2. Defendants' Motion
Defendants argue that there is no genuine dispute of material fact that MaXXiMedia did not breach the Agreement because MaXXiMedia “was entitled to payment for expenses and creative services.” (Def. Mot. at 11.) Promedev argues that the evidence “unequivocally” establishes that MaXXiMedia breached the Agreement by “making improper demands for payments and threats if Promedev failed to pay such demands” and “refusing to recognize” Promedev's ownership of creative product. (Pl. Resp. at 2.) The court disagrees with Defendants for the reasons stated above, see supra § IV.A.1.a-f (concluding that Promedev timely paid all sums due), but the court is also skeptical of Promedev's claim.
Promedev fails to identify which provision(s) of the Agreement MaXXiMedia allegedly breached. (See generally Pl. Resp.) A party does not breach a contract simply by acting as a browbeater, and the uncontroverted evidence establishes that MaXXiMedia did not remove Promedev's commercials from media outlets despite threatening to do so. (See Agreement ¶ 6 (allowing MaXXiMedia to remove commercials in the event of an overdue invoice); 1/18/24 Wilson Decl. ¶ 18 (“Although MaXXiMedia had authority to pull the creative off air for nonpayment, I allowed it to continue to air on Promedev's request ....”).)
Federal Rule of Civil Procedure 56(f) provides that the court may, “[a]fter giving notice and a reasonable time to respond,” “grant the motion [for summary judgment] on grounds not raised by a party.” Fed.R.Civ.P. 56(f). The court exercises its discretion under Rule 56(f) and orders Promedev to show cause why the court should not grant summary judgment in Defendants' favor on its breach of contract claim for failure to provide evidence sufficient for a reasonable factfinder to conclude that (1) Defendants breached a duty under the Agreement, and (2) that breach proximately harmed to Promedev. Failure to do so by 8:00 a.m. PDT on Monday, April 8, 2024 will result in dismissal of Promedev's breach of contract claim with prejudice. Promedev's brief shall not exceed 1,250 words.
B. Trade Secret Misappropriation
The court next considers Defendants' claim for trade secret misappropriation. Promedev argues that the court must grant it summary judgment on Defendants' misappropriation claim because the rates MaXXiMedia negotiated on Promedev's behalf with Fox News do not qualify as trade secrets. (Pl. Mot. at 17-20.) Defendants argue that MaXXiMedia's rates “are built out of decades-long industry relationships” and hold “competitive value.” (Def. Resp. at 22 (capitalization altered).) Defendants further assert that “MaXXiMedia required its clients,” including Promedev, “to keep its work product strictly confidential.” (id. at 23 (capitalization altered).) Defendants do not, however, present any evidence suggesting that Fox News had an obligation to keep the rates confidential. (See generally id.) Summary judgment in Promedev's favor is therefore warranted.
To have a valid claim for trade secret misappropriation under the DTSA or UTSA, the complainant must first establish “the existence of a protectable trade secret.” Traverse Therapy Servs., PLLC v. Sadler-Bridges Wellness Grp., PLLC, No. C23-1239MJP, 2024 WL 381180, at *3 (W.D. Wash. Feb. 1, 2024). Trade secrets may consist of “all forms and types of financial, business, scientific, technical, economic, or engineering information.” 18 U.S.C. § 1839(3); see also RCW 19.108.010(4) (providing a similar definition). The owner must, however, take “reasonable measures to keep such information secret.” id. § 1839(3)(A); see also Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1002 (1984) (“[T]he extent of the property right . . . is defined by the extent to which the owner of the secret protects his interest from disclosure to others.”). Accordingly, “[i]f an individual discloses his trade secret to others who are under no obligation to protect the confidentiality of the information, . . . his property right is extinguished.” Ruckelshaus, 467 U.S. at 1002; see also Woo v. Fireman's Fund Ins. Co., 154 P.3d 236, 241 (Wash.Ct.App. 2007) (“A[] requirement for trade secrets is that the holder must make reasonable efforts to maintain the secrecy of the material.”).
Here, the undisputed facts establish that the rates Fox News charged Promedev are not a trade secret because Fox News was under “no obligation” to maintain their confidentiality. Ruckelshaus, 467 U.S. at 1002. (See generally 2/5/24 Wagner Decl. ¶ 23, Ex. S (Dkt. ## 65-19 (redacted), 68-3 (sealed)) (“Fox Agreement”).) The Fox Agreement contains no confidentiality provisions and in no way obligates Fox News to maintain the rates as confidential or to disclose them solely on a “need to know” basis. (See generally id.) Mr. Wilson even confirmed at deposition that he “d[oesn't] have an agreement with Fox News that precludes them from disclosing [the] rates to anyone.” (2/5/24 Rainwater Decl. ¶ 7, Ex. Z at 194:24-25; see also id. at 194:11-15 (“Q. So if Fox News were to disclose to a third party the rates that it was charging MaXXiMedia, Fox News would be misappropriating MaXXiMedia's trade secrets; is that your contention? A. I don't have an agreement like that with Fox.”).) There is no evidence Defendants took even the simplest measures to ensure that Fox News would keep the rates confidential. The court concludes as a matter of law that Defendants did not take reasonable efforts to protect the billing rates Fox News charged Promedev. As a result, the rates are not a trade secret, and summary judgment in Promedev's favor is warranted.
C. Copyright Infringement
The court next considers Defendants' claim for copyright infringement. A copyright infringement claim comprises two elements: “(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.” Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991). The court's March 26, 2024 show cause order was directed toward the first element, which requires the claimant to possess a valid copyright registration before filing its lawsuit. (See 3/26/24 Order (citing 17 U.S.C. § 411(a)).) In response to the court's order, Defendants identified eight copyrights they allege Promedev infringed (see OSC Rep. at 1-2). Defendants maintain that Promedev infringed these copyrights solely by airing advertisements on Fox News between July 1, 2022 and August 28, 2022. (See generally OSC Resp.)
Promedev argues that it is entitled to summary judgment on this claim for two key reasons: (1) “Promedev paid Maxximedia all amounts due under the parties' July 31, 2020 Agreement”; and (2) “Maxximedia cannot claim infringement for the ads that aired on Fox News from July 1, 2022 through August 31, 2022 because Maxximedia was solely responsible for airing those ads.” (Pl. Mot. at 1.) Defendants do not dispute that MaXXiMedia placed the ads at issue. (See generally Def. Resp.) Instead, Defendants assert that “[w]hether or not MaXXiMedia ‘placed' the at-issue ads on Fox is a red herring.” Defendants' argument is fishy, and summary judgment is warranted in Promedev's favor.
As Promedev recognizes, Defendants' argument rests on the idea that Promedev terminated the Agreement on July 1, 2022. (Pl. Mot. at 8.) Promedev, however, only gave notice of termination on July 1, 2022, and that notice unequivocally provided for an August 31, 2022 termination date, consistent with Section 13 of the Agreement. (Termination Letter at 9 (“Pursuant to our phone call earlier today, this notice of termination letter . . . is to confirm our election to terminate the Agreement on August 31, 2022 pursuant to Section 13 of the Agreement.”); Agreement ¶ 13 (providing that the Agreement “may be terminated by either party on sixty (60) days written notice”).) MaXXiMedia knew this; Mr. Coleman's July 6, 2022 correspondence confirmed that “the termination is not effective until August 31, 2022.” (7/6/22 Coleman Letter.) Between July 1 and August 31, 2022, Defendants continued sending invoices, and Promedev continued paying them until making its final payment the day after the Agreement terminated. (See 2/5/24 Wagner Decl. ¶ 20; Checks.) Defendants' argument therefore fails because it rests on a fallacy that Promedev could have infringed MaXXiMedia's copyrights while the Agreement allowing it to air MaXXiMedia's advertisements was still in effect.
Worse for Defendants, however, is Mr. Wilson's own declaration that MaXXiMedia purchased the “television ad ‘spots' for Relief Factor on Fox News” and “allowed” those ads to “continue to air” after Promedev provided its notice of intent to terminate. (1/18/24 Wilson Decl. ¶¶ 6, 18.) These facts render Defendants' copyright infringement claim absurd. As Promedev argues, Defendants are effectively arguing that Promedev “is vicariously liable to Maxximedia for Maxximedia's infringement of Maxximedia's copyrights.” (Pl. Mot. at 8.)
This is bad faith litigation. Eight months ago, the court ordered Defendants “to identify the creative product it claims are subject to copyright and/or contractual protection.” (7/10/23 Minute Entry (Dkt. # 50).) In response, Defendants supplemented an interrogatory response and listed 132 different advertisements, identifying “[t]he specific instances of infringement” as “[a]nytime the above-listed media aired between July 1, 2022 and August 31, 2022.” (2/8/24 Rainwater Decl. ¶ 2, Ex. A (Defendants' response to Interrogatory 22).)Defendants continued to argue that Promedev infringed all of these advertisements despite the fact that they lacked registrations for 124 of them. (See Def. Resp. at 8 (criticizing Promedev for “attempt[ing] to refute MaXXiMedia's infringement claim . . . while ignoring well over a hundred advertisements created in total”).) Because Defendants' counterclaims list only eight registration numbers (see Counterclaims ¶ 52), Defendants' continued assertion of so many alleged copyrights raised the court's eyebrow, and the court subsequently ordered MaXXiMedia to identify the relevant copyright registrations it actually owned and the platforms on which Promedev aired the allegedly infringing ads (see 3/26/24 Order at 2-3). See also 17 U.S.C. § 411(a) (requiring a valid copyright registration before filing suit). Defendants, however, were only able to identify the same eight copyright registrations and only listed ads that MaXXiMedia, not Promedev, placed on Fox News. (See generally OSC Resp.) Promedev admits that it aired four ads on Facebook and YouTube without MaXXiMedia's assistance (see Pl. Mot. at 10), but MaXXiMedia never registered copyrights for those advertisements (see OSC Resp.). Nevertheless, Defendants continued to litigate over them and hundreds more as if they held the valid copyright registrations. (See Def. Resp. at 19.) The court finds that Defendants' sweeping copyright infringement claim is improper, frivolous, and without evidentiary support.
At least four of these advertisements were filmed before Promedev even hired MaXXiMedia in 2018. (See 2/8/24 Wagner Decl. (Dkt. # 72) at 4.)
The court is considering imposing sanctions against Defendants and their attorneys for bringing and continuing to pursue this copyright infringement claim. Pursuant to Federal Rule of Civil Procedure 11(c)(3), the court orders Defendants and their attorneys to show cause why sanctions should not issue for violations of Rule 11(b). Defendants and their attorneys must explain (1) the proper purpose behind their sweeping copyright infringement claim, (2) why that claim was warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law, and (3) the evidentiary support behind their factual contentions surrounding the breadth of their copyright portfolio. Should Defendants and their attorneys fail to show cause, the court will impose sanctions “limited to what suffices to deter repetition of the conduct or comparable conduct by others similar situated.” Fed.R.Civ.P. 11(c)(4). Such sanctions may include nonmonetary directives, including requiring Defendants' attorneys to attend continuing legal education classes, and an order to pay a penalty into the court. Defendants and their attorneys must submit a brief responding to this order by no later than 8:00 a.m. on Monday, April 8, 2024, and their brief may not exceed 2,500 words.
D. Good Faith and Fair Dealing
Next, the court considers the parties' motions as they pertain to alleged breaches of the implied covenant of good faith and fair dealing. Promedev alleges that, “[t]o the extent the breaches” described in its breach of contract claim “do not constitute breaches of the express terms of the Agreement, they are breaches of the implied covenant of good faith and fair dealing.” (Am. Compl. ¶ 71.) Defendants allege that Promedev breached the covenant of good faith and fair dealing by operating “under the guise of a partnership . . . to obtain trade secrets and convince MaXXiMedia to provide its credit and reputational support to be placed on national TV” and “strategically executed the discretionary termination clause with the intent to utilize the work product of MaXXiMedia and secure continuous benefit from MaXXiMedia's exclusively negotiated pricing and plans for ad placement with television networks.” (Counterclaims ¶ 35.) Each side moves for summary judgment on the other's fair dealing claims.
In Washington, there is no “free-floating” duty of good faith and fair dealing. Barrett v. Weyerhaeuser Co. Severance Pay Plan, 700 P.2d 338, 342 n.6 (Wash.Ct.App. 1985); Keystone Land & Dev. Co. v. Xerox Corp., 94 P.3d 945, 949 (Wash. 2004). Instead, the implied duty of good faith and fair dealing “arises out of the obligations created by a contract and only exists in relation to the performance of specific contract terms.” Keystone, 94 P.3d at 949; Badgett v. Sec. State Bank, 807 P.2d 356, 360 (Wash. 1991). A claim for breach of the implied duty exists “where the contract gives a party discretion or leeway in determining how to act and that party exercises its discretion in a manner inconsistent with the reasonable expectations of the parties or in some other objectionable manner.” Microsoft Corp. v. Motorola, Inc., 963 F.Supp.2d 1176, 1190 (W.D. Wash. 2013) (first citing Craig v. Pillsbury Non-Qualified Pension Plan, 458 F.3d 748, 752 (8th Cir. 2006); and then citing Aventa Learning, Inc. v. K12, Inc., 830 F.Supp.2d 1083, 1101 (W.D. Wash. 2011)). Thus, to avoid summary judgment on a claim for breach of the implied duty of good faith and fair dealing, a party must show a genuine issue of material fact as to each of the following elements: (1) the existence of a binding contract; (2) a duty to act in good faith arose in relation to the performance of a specific contract term; (3) the other side breached that duty; and (4) the breach caused the party to suffer cognizable damages. See, e.g., Microsoft Corp., 963 F.Supp.2d at 1184-86 (discussing the elements of a claim for breach of the implied duty of good faith and fair dealing).
Here, there is no dispute that both parties satisfy the first element of a claim for breach of the duty of good faith and fair dealing because the Agreement is a binding contract. The court considers the remaining elements as they pertain to Promedev's and Defendants' claims.
1. Promedev's Claim
Promedev has provided evidence sufficient to establish a genuine dispute of material fact as to the second element by identifying specific contract terms giving rise to MaXXiMedia's duty to act in good faith. Paragraph 1 requires MaXXiMedia to provide services, including those “necessary to purchase and place all media for [Promedev].” (Pl. Resp. at 17 (quoting Agreement ¶ 1).) Paragraph 6 provides that MaXXiMedia “may remove commercials” if an invoice is “not paid within thirty days or due date.” (Id. (quoting Agreement ¶ 6).) And paragraph 8 provides that Promedev “shall have full rights and ownership of any ‘creative product'” upon “payment in full.” (id. (quoting Agreement ¶ 8).) Promedev argues that these terms obligated MaXXiMedia to allow Promedev's existing inventory of advertisements to air on Fox News and other media outlets through the term of the non-cancellable Fox ad buy-the remainder of 2022- because Promedev never “failed to pay amounts legitimately due under the Agreement” and eventually “paid all amounts due under the Agreement.” (id.) Given this evidence, a reasonable jury could find that MaXXiMedia had a duty to act in good faith under the Agreement by allowing Promedev's advertisements to air through 2022 without the threat of repercussion.
Promedev has likewise provided sufficient evidence to establish a genuine dispute of material fact as to the third element. As a result of MaXXiMedia's conduct from July 2022 onward, including the threats it made, Promedev asserts that it was “forced to hire a new production company on an expedited basis so that it would have new ads to air on the non-cancellable Fox ad buy, which ran through 2022.” (id.) Promedev argues that MaXXiMedia breached its duty to act in good faith to provide services necessary to purchase and place Promedev's advertisements by threatening to remove Promedev's advertisements even though none of MaXXiMedia's invoices were overdue. (See id.; see also, e.g., 2/5/24 Rainwater Decl. ¶ 12, Ex. EE at PROMEDEV 0016228 (“In order to prevent Fox and Newsmaxx having no creative to air, wire your agreed upon obligation . . . today.”); 7/25/20 Email at PROMEDEV0016364 (threatening to “introduc[e] superior competitors in the space coupled [with] negative social campaigns targeting Relief Factor”).) Based on the evidence Promedev cites in its brief, a reasonable jury could conclude that MaXXiMedia breached its duty to act in good faith.
Finally, Promedev satisfies the fourth element because a genuine dispute of material fact exists concerning the measure of damages owed to Promedev for MaXXiMedia's alleged breach. As Promedev argues (and Defendants do not dispute), it was “forced to hire a new production company on an expedited basis so that it would have ads to air.” (Pl. Resp. at 17; see Def. Reply at 11 (“Promedev admits that it incurred expenses because it was forced to secure creative services elsewhere during its dispute with MaXXiMedia ....”). See generally Eicoff Email.)
Accordingly, a reasonable jury could conclude that MaXXiMedia had a duty to act in good faith under the Agreement, breached that duty, and owes Promedev damages for that breach. The court therefore denies Defendants' motion for summary judgment on Promedev's claim for breach of the implied covenant of good faith and fair dealing.
2. Defendants' Claim
Defendants' claim for breach of the implied covenant of good faith and fair dealing arises from the same conduct underlying the surviving portion of their breach of contract claim-Promedev's disclosure of the Fox News rates. (See Def. Resp. at 11 (“Promedev breached its duty of good faith and fair dealing by knowingly distributing MaXXiMedia's confidential rate information to third parties without permission ....”); id. (“Promedev repeatedly disclosed MaXXiMedia's confidential rates to third parties without permission and in violation of its contract with MaXXiMedia ....”).) If disclosure of the rates was a breach of the Agreement's confidentiality provision, however, then Promedev had no “discretion or leeway in determining how to act.” Microsoft, 963 F.Supp.2d at 1190. Accordingly, Promedev's disclosure of the rates cannot be both a breach of contract and breach of the implied covenant of good faith and fair dealing. Accord Ricketti v. Barry, No. 13-6804, 2015 WL 1013547, at *7-8 (D.N.J. Mar. 9, 2015) (“[T]he conduct alleged to be a breach of the implied covenant of good faith and fair dealing must be distinct from the conduct alleged to constitute a breach of contract.”). Because Promedev could not have exercised discretion it never possessed, the court grants Promedev's motion for summary judgment on Defendants' claim for breach of the implied covenant of good faith and fair dealing.
E. Civil Coercion, Extortion, and Blackmail
Finally, the court considers Defendants' motion for summary judgment on Promedev's claim for civil coercion, extortion, and blackmail. Promedev alleges that Defendants threatened that they would interfere with Promedev's business relationships, disparage it in the marketplace, release unauthorized recordings, and “draw ‘scrutiny and unwelcomed attention from various Government agencies'” if Promedev did not pay Defendants' demands for $1,380,000 for creative product, $2,000,000 for work product, and $5,000,000 for a non-compete and non-disparagement agreement. (Am. Compl. ¶ 75.) Defendants argue that this claim must be dismissed because no private cause of action exists under Washington law for coercion, extortion, or blackmail and, even if there were, Promedev was not financially harmed as a result of Defendants' payment demands. (Def. Mot. at 14-17; Def. Reply at 7.) The court concludes that Promedev does not have a cause of action for attempted extortion.
The Washington Supreme Court may have recognized a limited private right of action for extortion over a century ago in Bertschinger v. Campbell, 168 P. 977, 981-82 (Wash. 1917). Noting that extortion is prohibited pursuant to “a general criminal statute,” the Washington Supreme Court in Bertschinger nevertheless held that, because extortion “is a crime against the person and works to his personal injury[,] . . . the commission of it would create a cause of action in favor of the person so injured.” id. at 981. The Court therefore appears to have recognized a “right to recover money so extorted,” id. at 982 (emphasis added), but it was silent with respect to a right to sue for attempted extortion where no money was paid to the defendant.
Attempted extortion is, however, criminally punishable. See RCW 9A.56.110.
Bertschinger sat dormant for nearly a century, during which time the Washington Court of Appeals, in an unpublished (and therefore nonprecedential) opinion that failed to cite Bertschinger, wrote that “there is no indication that there is a private right of action” for extortion. Walker v. City of Kennewick, No. 19610-1-III, 2001 WL 1434692, at *7 (Wash.Ct.App. Nov. 15, 2001). In 2017, however, the Honorable Beth M. Andrus, then serving on the King County Superior Court, held (again, in an unpublished decision) that “Bertschinger remains good law” and “stands for the proposition that a person may sue another to recover money extorted from him.” N. Pac. Corp. v. Maliarov, No. 16-2-11144-1SEA, 2017 Wash. Super. LEXIS 16211, at *2 (July 11, 2017) (emphasis added). The court concludes that, to the extent Washington recognizes a private right of action for extortion, such right is limited to the recovery of funds that actually changed hands. In other words, there is no private right of action for attempted extortion in Washington.
This court's interpretation of Bertschinger dooms Promedev's claim. Promedev alleges that Defendants attempted to extort it for millions of dollars (see Am. Compl. ¶ 75), but there is no evidence Promedev paid any fraction of the $1,380,000 Defendants demanded for creative product, $2,000,000 for the use of work product, or $5,000,000 for a non-compete and non-disparagement agreement (see generally Pl. Resp.). Because there is no money for Promedev to recover, the court GRANTS Defendants' motion for summary judgment on Promedev's claim for civil coercion, extortion, and blackmail.
V. CONCLUSION
For the foregoing reasons, the court GRANTS in part and DENIES in part Promedev's motion for summary judgment (Dkt. # 72) and GRANTS in part and DENIES in part Defendants' motion for summary judgment (Dkt. # 56). In particular, the court rules as follows:
1. Promedev's motion for summary judgment on Defendants' breach of contract claim is GRANTED in part and DENIED in part. Trial will proceed on whether Promedev breached the Agreement by disclosing the Fox News billing rates that MaXXiMedia negotiated on its behalf to third parties.
2. Promedev's motion for summary judgment on Defendants' claims for breach of the implied covenant of good faith and fair dealing, trade secret misappropriation, and copyright infringement is GRANTED. These claims are DISMISSED with prejudice.
3. Defendants' motion for summary judgment on Promedev's claims for breach of contract and breach of the implied covenant of good faith and fair dealing is DENIED at this time. The court ORDERS Promedev to show cause why the court should not grant Defendants summary judgment on its breach of contract claim by 8:00 a.m. PDT on Monday, April 8, 2024.
4. Defendants' motion for summary judgment on Promedev's claim for civil coercion, extortion, or blackmail is GRANTED. This claim is DISMISSED with prejudice.
5. Defendants and their attorneys are ORDERED to show cause why the court should not impose Rule 11 sanctions for bringing and maintaining a frivolous copyright infringement claim by 8:00 a.m. PDT on Monday, April 8, 2024.