Opinion
Civil Action 20 Civ. 9032 (JHR) (SLC)
02-09-2024
RED HAWK, LLC, Plaintiff, v. COLORFORMS BRAND LLC, OUT OF THE BLUE ENTERPRISES, LLC, and OOTB PRODUCTIONS, INC., Defendants.
HONORABLE JENNIFER H. REARDEN, UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION
SARAH L. CAVE, UNITED STATES MAGISTRATE JUDGE.
I. INTRODUCTION
Readers of a certain age may fondly remember hours in their youth spent playing with Colorforms, a popular creative toy comprised of colored vinyl shapes, many in the form of popular entertainment characters, that cling to smooth surfaces. (See ECF No. 51 ¶ 2 (the “Amended Complaint”)). Time Magazine named Colorforms one of the top 100 toys of all time, and Colorforms' creator, Harry Kislevitz, has been inducted into the Toy Hall of Fame. (Id.) With over a billion Colorforms sets having been sold since their introduction in the 1950s (id.), a dispute over their legacy may have been inevitable.
See Colorforms, https://en.wikipedia.org/wiki/Colorforms (last visited February 9, 2024).
In this action, Plaintiff Red Hawk, LLC (“Red Hawk”), alleges that Defendants Colorforms Brand LLC (“Colorforms Brand”), Out of the Blue Enterprises, LLC (“Enterprises”), and OOTB Productions, Inc. (“Productions,” with Colorforms Brand and Enterprises, “Defendants”) have underpaid royalties on Colorforms-related products to which Red Hawk is entitled pursuant to a series of royalty agreements. (ECF No. 51 ¶¶ 9-37). Before the Court is Defendants' motion for partial summary judgment (ECF No. 85 (the “Motion”)), which Red Hawk opposes. (ECF No. 97; see ECF No. 120). For the reasons set forth below, the Court respectfully recommends that the Motion be DENIED.
II. BACKGROUND
A. Factual Background
The factual background of this action is set forth in the opinion and order issued by the Honorable Valerie E. Caproni dated November 1, 2022, and is incorporated by reference. See Red Hawk, LLC v. Colorforms Brand LLC, 638 F.Supp.3d 375, 378-80 (S.D.N.Y. 2022) (“Red Hawk I”) (granting in part Red Hawk's motion to exclude Defendants' expert and granting Defendants' motion to seal).The Court sets forth the additional facts necessary to decide the Motion, which are undisputed except where noted.The Court construes the facts “in the light most favorable to” Red Hawk, the non-movant. Wandering Dago, Inc. v. Destito, 879 F.3d 20, 30 (2d Cir. 2018).
Internal citations and quotation marks are omitted from case citations unless otherwise indicated.
The facts are drawn from: (1) Defendants' Rule 56.1 Statement of Material Facts (“Defendants' 56.1”) and declarations and exhibits cited therein (ECF Nos. 85-1; 86-90); (2) Red Hawk's Response to Defendants' 56.1 and Additional Statement of Material Facts (“Red Hawk's 56.1”) and declarations and exhibits cited therein (ECF Nos. 95; 96; 98); and (3) Defendants' Response to Red Hawk's 56.1 (“Defendants' Reply 56.1”) and declarations and exhibits cited therein (ECF Nos. 103-05; 107; 109; 110). For simplicity, the Court primarily cites to Defendants' Reply 56.1, which contains a compilation of Defendants' 56.1 and Red Hawk's 56.1 and thus the clearest indication of which facts are undisputed. (ECF No. 107).
1. The Royalty Agreement
Red Hawk is the successor-in-interest to No River, No View, Inc., which was formerly known as Colorforms, Inc. (“Inc.”) (ECF No. 107 at 2 ¶ 2). In 1997, Inc. sold Colorforms' assets, including the intellectual property (i.e., trademarks, patents, and copyrights) (the “Colorforms Assets”) to Toy Biz, Inc. (“Toy Biz”) (id. at 2 ¶ 3), at a reported price of $4.2 million in cash plus other guarantees. (ECF No. 90-20 at 2 (the “1997 Transaction”)). As part of the 1997 Transaction, Toy Biz agreed to pay to Inc. royalties on the Colorforms Assets. (ECF No. 90-3 at 17, 23-24).
Toy Biz's interest in Colorforms was short-lived, however, and in January 1998, Toy Biz sold the Colorforms Assets to University Games (“Unigames”). (ECF No. 107 at 3 ¶¶ 8-9 (the “1998 Transaction”)). In the 1998 Transaction, Unigames entered into a royalty agreement with Inc. and its principal shareholders, Joshua Kislevitz and David Kislevitz, and Toy Biz. (ECF No. 90-2 (the “Royalty Agreement”); see ECF No. 90-3 at 31-32). In 2014, Colorforms Brand purchased the Colorforms Assets from Unigames and took on the obligation to pay royalties pursuant to the Royalty Agreement. (ECF Nos. 86 ¶ 10; 87 ¶ 3; 95 at 6 ¶ 14; 107 ¶ 11 (the “2014 Transaction”)).
As Judge Caproni explained in Red Hawk I, pursuant to the Royalty Agreement, Red Hawk “has the right to royalty payments from” Colorforms Brand “for the use of the Colorforms name in connection with ‘Products,' as that term is defined in” the Royalty Agreement. 638 F.Supp.3d at 378-79. Paragraph 1 of the Royalty Agreement obligates Colorforms Brand to pay Red Hawk:
a royalty payment (the “Royalty”) based on the aggregate Net Sales of any of [Inc.'s] existing products listed on Schedule 1 [the “Schedule 1 Products”] or any other products sold by Unigames using the “Colorforms” brand name (the “Products”) but excluding the Unigames Products listed on Schedule 2 ....(ECF Nos. 90-2 at 2; 95-1 at 1 (the “Royalty Provision”)). The Royalty Agreement defines “Net Sales” as:
the invoice price charged to customers of Unigames, less the following Deductions (herein so called): trade discounts and allowances actually taken or given, sales, value added and similar taxes with respect to such sales, and freight and insurance charges with respect to such sales, provided, however, that the Deductions shall not exceed ten percent (10%) of the invoice price. For purposes of calculating the Royalty, Net Sales shall also include any license fees received by Unigames from and after Closing from the license of the “Colorforms” trademark to parties not affiliated with Unigames.(ECF No. 90-2 at 3 ¶ 2). The Royalty Agreement specified that it “constitute[d] the entire agreement of whatsoever kind or nature existing between or among the parties respecting the Royalty[,]” and that “no oral statements or prior written material not specifically incorporated herein shall be of any force or effect.” (Id. at 7 ¶ 10(f)). The parties dispute whether the Royalty Agreement imposes any obligations on Enterprises and Productions. (Compare ECF No. 85-1 ¶¶ 13-16 with ECF No. 98 ¶¶ 13-16).
2. Payment, or Non-Payment, of Royalties to Red Hawk
a. Pre-2017
Between 1998 and 2014, Toy Biz and Unigames paid royalties based on the invoice price of Schedule 1 Products bearing the Colorforms name, regardless of the manufacturer or seller. (ECF No. 95 at 5 ¶ 13). Initially following the 2014 Transaction, Colorforms Brand “operated as a stand-alone business directly engaged in the manufacture and sale of Colorforms products” (the “Manufacturing Model”). (ECF No. 87 ¶ 4; see ECF No. 107 at 6 ¶ 19). “Colorforms Brand had its own employees, including dedicated management and sales staff, engaged manufacturers to produce products, entered into agreements with retailers and third-party licensors, and was responsible for delivery of products to retailers and for invoicing and receipt of payments from retailers.” (ECF No. 87 ¶ 4; see ECF No. 107 at 6 ¶ 20). Under the Manufacturing Model, Colorforms Brand sold both traditional Colorforms products that did not incorporate any third-party intellectual property (the “Classic Colorforms Products”), as well as Colorforms Products that incorporated intellectual property licensed from popular children's entertainment companies (the “Third-Party Licensed Products”). (ECF Nos. 89 ¶¶ 4-5; 107 at 6 ¶¶ 21-22). For the Third-Party Licensed Products, Colorforms Brand obtained licenses from third parties such as Disney, Marvel, and Nickelodeon to use their intellectual property rights in exchange for royalty payments (the “Licenses In”). (ECF Nos. 89 ¶ 6; 107 at 6 ¶¶ 23-24, 26; see ECF No. 86 ¶ 12). During this period, Colorforms Brand continued to pay royalties to Red Hawk based on the invoice prices of the Schedule 1 Products, regardless of who manufactured and sold those products. (ECF No. 95 at 6 ¶ 15; see ECF No. 86 ¶ 12). Royalty statements from 2015 through 2017 reflect that Colorforms Brand paid Red Hawk a percentage royalty based on invoice prices for both Classic Colorforms Products as well as Third-Party Licensed Products. (ECF No. 95-3 at 1-8).
b. 2017
In 2017, Colorforms Brand decided to discontinue the Manufacturing Model and instead license to third parties the right to use Colorforms' Brand's intellectual property to make and sell Colorforms products in exchange for royalty payments (the “Licensing Model”). (ECF Nos. 87 ¶¶ 5-6; 107 at 7 ¶¶ 27, 29). In the Licensing Model, Colorforms Brand granted licenses to third parties to engage manufacturers, sell to retail partners, and ensure delivery to and receipt of revenue from retailers (the “Licenses Out”). (ECF Nos. 89 ¶ 8; 107 at 8 ¶ 31). Colorforms' Brand granted the first License Out to Kahootz Toys (now known as Playmonster (“Playmonster”)), to produce and sell Classic Colorforms Products in exchange for a royalty payment to Colorforms Brand calculated as a percentage of net sales. (ECF Nos. 89 ¶ 9; 107 at 8 ¶¶ 32-33). Because Colorforms Brand had Licenses In that continued past January 1, 2017, Third-Party Licensed Products were handled through a services agreement between Playmonster and Colorforms Brand dated November 18, 2016 (the “2016 License Agreement”), pursuant to which Playmonster was responsible for sales to retail stores, order processing, warehousing and fulfillment, coordination with manufacturers and shippers, and invoicing and collection, in exchange for making royalty payments to Colorforms Brand. (ECF Nos. 89 ¶¶ 9-10, 13; 96-1 at 1-2; 107 at 8-9, 11 ¶¶ 34-35, 43).
On January 1, 2018, Colorforms Brand and Playmonster entered into another agreement with essentially the same terms as the 2016 License Agreement (the “2018 License Agreement”). (ECF No. 96-2). Both the 2016 License Agreement and the 2018 License Agreement have a term of January 1, 2017 to December 31, 2020. (ECF Nos. 96-1 at 2; 96-2 at 2). Notwithstanding the 2016 and 2018 License Agreements with Playmonster, Colorforms Brand continued to pay royalties to Red Hawk based on the invoice prices of Schedule 1 Products. (ECF No. 95 at 8 ¶¶ 2122). The parties dispute which Colorforms products were subject to the 2016 and 2018 License Agreements. (Compare ECF No. 85-1 ¶¶ 34-42 with ECF No. 98 ¶¶ 34-42).
In addition to Playmonster, Colorforms Brand has granted Licenses Out to other third-party companies to use the Colorforms Assets in connection with those companies' products and services, in exchange for royalty payments. (ECF Nos. 89 at 4 ¶ 14; 107 at 11 ¶ 47). When Colorforms Brand receives royalty payments for Licenses Out, it reports and pays royalties to Red Hawk, although the parties dispute the method by which those royalties have been calculated. (ECF No. 89 at 4 ¶ 15; compare ECF No. 85-1 ¶¶ 51-52 with ECF No. 98 ¶¶ 51-52). Colorforms Brand is the only entity authorized to grant Licenses Out with respect to the Colorforms Assets. (ECF Nos. 89 ¶ 17; 107 at 11 ¶¶ 48-49). In 2018, Colorforms Brand sold the Colorforms Assets to 9 Story Media Group Inc. (“9 Story”). (ECF No. 95 at 6-7 ¶¶ 15-16).
Royalty statements from 2017 through June 2018 appear to reflect that Colorforms Brand paid Red Hawk a percentage royalty based on invoice prices for both Classic Colorforms Products as well as Third-Party Licensed Products. (ECF No. 95-3 at 7-10; see ECF No. 95 at 6 ¶ 15). The royalty statement that Colorforms Brand provided to Red Hawk for the third quarter of 2018, however, “reflected much[]lower royalties than those generated in the prior decades.” (ECF No. 95 at 6-7 ¶ 16; see ECF No. 95-4). When Red Hawk requested “an explanation for the change in how royalties are being calculated[,]” Maryann Comuniello, 9 Story's Production Controller, responded that “[t]here has been no change in the way royalties are being calculated.” (ECF No. 95-6 at 1 (the “Email”)). As Colorforms Brands has admitted in support of the Motion, however, “Colorforms Brand's payments to Red Hawk are lower than they were when Colorforms Brand was manufacturing and selling products itself . . . because instead of paying a royalty based on direct sales of toys to customers, Colorforms [Brand] pays a royalty based on royalties it receives from its licensees based on the licensees' sales to their customers.” (ECF No. 89 at 4 ¶ 16 (emphasis added); see ECF No. 109 at 3-5 ¶¶ 12-15 (explaining that Colorforms Brand decided to pay Red Hawk royalty on royalty)). The parties dispute the timing of and reason for Colorforms Brand's change to its method for calculating royalties paid to Red Hawk, and whether royalties are recoverable from Enterprises and Productions. (Compare ECF No. 85-1 ¶¶ 54-57 with ECF No. 98 ¶¶ 54-57; see ECF No. 109 at 5-6 ¶¶ 16-19 (offering different interpretation of the Email)).
Red Hawk's co-owner, Joshua Kislevitz, testified that Red Hawk is entitled to be paid “a royalty based on the invoice” price of a Schedule 1 Product, whether Colorforms Brand manufactured the product or licensed a third party to do so. (ECF No. 90-3 at 28; see ECF No. 95 at 4 ¶ 9).
3. The Netflix Series
Enterprises developed and shopped the concept for a Colorforms show, and Netflix ultimately “agreed to go forward with a television series.” (ECF No. 107 at 14 ¶¶ 58-60; see ECF No. 88 at 2 ¶ 4). The parties dispute the reason Netflix agreed to go forward with a Colorforms series. (Compare ECF No. 85-1 ¶¶ 61-62 with ECF No. 98 ¶¶ 61-62). For purposes of the production, Colorforms Brand and Enterprises entered into an agreement dated March 1, 2017 (the “2017 Agreement”), pursuant to which Colorforms Brand granted Enterprises the rights to develop, produce, own, and distribute the show, “Charlie's Colorforms City” (the “Series”) using Colorforms Assets. (ECF No. 107 at 14-15 ¶ 63; see ECF No. 88 at 2 ¶ 5). Colorforms Brand retained all ancillary rights relating to the Series, including publishing, merchandising, sound recording, and videogames. (ECF No. 107 at 15 ¶ 64). The 2017 Agreement did not require Enterprises to pay Colorforms Brand, and provided that all production rights reverted to Colorforms Brand if Enterprises did not produce audiovisual content using the Colorforms Assets. (ECF No. 107 at 15 ¶¶ 65-66; see ECF No. 88 at 2 ¶ 6).
As producer of the Series, Enterprises entered an agreement with Netflix dated March 31, 2017 (the “Netflix License”), pursuant to which Netflix was to pay Enterprises a license fee representing a portion of the budgeted cost to develop and produce the series, in exchange for the rights to exploit the Series on the Netflix platform for a limited term. (ECF Nos. 88 at 3 ¶ 7;107 at 18 ¶¶ 74-75). The Netflix License did not grant Netflix ownership of the copyright in the Series, nor were its rights perpetual or unlimited. (ECF Nos. 88 at 3 ¶ 7; 107 at 18 ¶ 76). The Netflix License did not limit the use of the Colorforms Assets outside the Series, grant Netflix an “uptick” in the performance of Colorforms Brand, grant Netflix participation in reserved distribution rights, or vest in Netflix any ownership rights in the Colorforms Assets. (ECF Nos. 88 at 4 ¶ 11; 107 at 19 ¶ 81). Netflix also received, for no additional fee, ancillary rights to use all elements contained within the Series, including excerpts, stills, voices, music, and the Colorforms trademark, to enable Netflix to exploit its rights in and promote the Series. (ECF Nos. 88 at 5 ¶ 22; 107 at 21-22 ¶ 100).
Netflix commissioned Enterprises to produce the initial season of the Series, consisting of 26 eleven-minute episodes (“Season 1”), for which Enterprises was responsible for developing characters, worlds, and storylines; writing; acting; animating; post-production; and delivery of finished episodes. (ECF Nos. 88 at 3 ¶ 8; 107 at 18 ¶¶ 77-78). Netflix agreed to pay Enterprises a license fee for: (i) the production and delivery of Season 1 according to Netflix's specifications; (ii) the exclusive right to exploit certain rights in Season 1 on the Netflix platform worldwide for a 20-year term; and (iii) ancillary rights such as the option to acquire further seasons and spin-offs and the right to receive financial participation from Colorforms products based on the Series. (ECF Nos. 88 at 3 ¶ 9; 107 at 18-19 ¶ 79). Enterprises reserved ancillary rights in the Series such as merchandising, sound recording, and videogame rights (subject to Netflix's financial participation), and the exclusive right to distribute and license the Series in other media. (ECF Nos. 88 at 3 ¶ 10; 107 at 19 ¶ 80). Since the Series launched, Colorforms Brand licensed or is developing new Colorforms toy products that incorporate intellectual property from the Series, but the parties dispute whether Colorforms Brand has paid any royalties to Red Hawk with respect to these products. (ECF Nos. 89 at 5; 95 at 13-14 ¶¶ 39-42; 109 at 6-7 ¶¶ 20-23; compare ECF No. 85-1 ¶ 145 with ECF No. 98 ¶ 145).
The cost of producing Season 1 of the Series was greater than the Netflix license fee, and Enterprises contributed a substantial portion of the Season 1 production costs by obtaining a distribution advance against future downstream revenue, contributing a producer investment, and undertaking to secure tax credits on Canadian services. (ECF Nos. 88 at 4 ¶ 12; 107 at 19 ¶¶ 82, 84). Following production by Enterprises, Season 1 became available on the Netflix platform. (ECF Nos. 88 at 4 ¶ 13; 107 at 20 ¶ 86).
After 9 Story acquired Enterprises, Netflix ordered a second season of the Series (“Season 2”), which was memorialized in an amendment to the Netflix License. (ECF Nos. 88 at 4 ¶ 14; 107 at 20 ¶¶ 87-88). Consistent with “standard practice” at 9 Story to use separate production companies for each season of a show and license the production company to produce without payment of a monetary license fee, Productions produced Season 2 of the Series. (ECF Nos. 88 at 4 ¶ 15; 107 at 20 ¶¶ 89-91). Productions does not hold any other assets or do any other business. (ECF Nos. 88 at 4 ¶ 15; 107 at 20 ¶ 92). In agreements effective January 3, 2020, Netflix consented to Enterprises' assignment of its rights and obligations to produce Season 2 to Productions. (ECF Nos. 88 at 5 ¶¶ 16-17; 107 at 21 ¶¶ 93-94; id. at 35 ¶ 162). Netflix agreed to pay Productions a flat license fee for the production and delivery of Season 2 and the right to exploit it on the Netflix platform for a 20-year term. (ECF Nos. 88 at 5 ¶ 19; 107 at 21 ¶ 96). Productions produced Season 2, which was made available on the Netflix platform. (ECF Nos. 88 at 5 ¶ 18; 107 at 21 ¶ 95).
As with Season 1, the cost to produce Season 2 was greater than the Netflix license fee, and Productions contributed a substantial portion of the production costs by contributing its own resources, obtaining a distribution advance against future downstream revenue, investments, and tax credits. (ECF Nos. 88 at 5 ¶ 20; 107 at 21 ¶¶ 97-98). Enterprises and Productions did not recoup their investments in the Series from Netflix's license fees, and do not expect to recoup their investments from downstream licensing of the Series for some time, if ever. (ECF Nos. 88 at 5 ¶ 21; 107 at 21 ¶ 99). The parties dispute whether Defendants received from Netflix for the Series compensation subject to the Royalty Agreement. (Compare ECF Nos. 85-1 ¶¶ 102-04 with ECF No. 98 ¶¶ 102-04; see ECF No. 107 at 36 ¶ 174). See also Red Hawk I, 638 F.Supp.3d at 383 (noting that “the ultimate question for the jury[ is] whether the Royalty Agreement is limited to royalties for consumer products”).
4. Defendants' Corporate Structure
Enterprises is a New York limited liability company founded in 2005 by Samantha Freeman (“Freeman”) and Angela Santomero. (ECF Nos. 86 at 1-2 ¶ 4; 107 at 23 ¶¶ 105-06). Productions is a New York corporation with its own by-laws that is a second-tier subsidiary of Enterprises. (ECF Nos. 86 at 2 ¶ 5; 107 at 23 ¶¶ 110-12). Colorforms Brand is also a New York limited liability company that was formed in 2014 as a subsidiary of Enterprises for the purpose of acquiring the Colorforms business. (ECF Nos. 86 at 2 ¶ 6; 107 at 23-24 ¶¶ 113-15). Enterprises is the sole member of Colorforms Brand, and Freeman is CEO of both Enterprises and Colorforms Brand. (ECF Nos. 86 at 2 ¶ 6; 95-15 at 1; 107 at 24 ¶ 116; id. at 35 ¶ 166). Colorforms Brand and Enterprises have the same business address in New York City. (ECF Nos. 95-14; 95-16). In December 2017, 9 Story Media US, Corp. acquired Enterprises, which currently does business under the name 9 Story USA. (ECF Nos. 86 at 2 ¶¶ 4, 7; 107 at 23-24 ¶¶ 109-17).
Colorforms Brand, Enterprises, and Productions each have their own by-laws and maintain separate bank accounts, books and records, financial reporting, and balance sheets. (ECF No. 86 at 3 ¶ 8; 107 at 24 ¶¶ 119-23). Colorforms Brand and Productions are both subsidiaries of Enterprises, but each entity enters into written agreements and invoices in its name when licensing rights or providing services to third parties. (ECF Nos. 86 at 3 ¶¶ 8-9; 107 at 25 ¶¶ 124-25).
Red Hawk served separate discovery demands on each of Colorforms Brand, Enterprises, and Production seeking documents and testimony concerning Defendants' corporate relationships. (ECF No. 107 at 26 ¶¶ 128-35). The parties subsequently stipulated that Enterprises “shall be liable for any judgment which may be entered in this action against” Colorforms Brand, Enterprises, and Productions. (ECF No. 90-18 at 2; see ECF No. 107 at 37 ¶ 177).
The parties dispute whether, given these facts, Colorforms Brand, Enterprises, and Productions are a single economic entity. (Compare ECF No. 85-1 ¶ 118 with ECF No. 98 ¶ 118).
B. Procedural History
On October 28, 2020, Red Hawk filed a complaint, naming only Colorforms Brand as a defendant. (ECF No. 1 (the “Complaint”)). After Colorforms Brand failed to appear, the Clerk of the Court entered a certificate of default and Red Hawk sought a default judgment against Colorforms Brand. (ECF Nos. 10; 13; 17-19). After Colorforms Brand appeared and sought an extension of time to respond to the Complaint, Judge Caproni vacated the certificate of default, set a deadline for Colorforms Brand to respond, and scheduled an initial pretrial conference. (ECF Nos. 16; 20). On January 28, 2021, Colorforms Brand filed an answer to the Complaint. (ECF No. 26).
On September 1, 2021, Judge Caproni granted Red Hawk's motion for leave to amend the Complaint, and on September 3, 2021, Red Hawk filed the Amended Complaint, which added Enterprises, Productions, and 9 Story as Defendants and asserts two claims. (ECF Nos. 50-51).In the first claim, Red Hawk alleges that Colorforms Brand breached the Royalty Agreement by failing to account for and pay royalties from “‘Net Sales' of ‘Inventory' using the Colorforms brand name.” (ECF No. 51 ¶¶ 9-16 (the “First Claim”)). In the second claim, Red Hawk alleges that the amounts Defendants received from Netflix with respect to the Series constituted “Net Sales” under the Royalty Agreement, which Defendants breached by failing to account for and pay to Red Hawk royalties from those “Net Sales” of the Series, “including but not limited to any additional sales or licensing of the Series itself or of anything based on or derived from the Series.” (Id. ¶¶ 17-37 (the “Second Claim”)). On December 3, 2021, 9 Story was voluntarily dismissed without prejudice pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i). (ECF Nos. 72-74).
The incorrect naming in the Amended Complaint of Enterprises as “Out of the Blue Enterprises, LLC” (rather than Out of the Blue Enterprises LLC) and of Productions as “Out of the Blue Productions, Inc.” (instead of OOTB Productions, Inc.), was subsequently corrected by Stipulation and Order dated October 19, 2021. (ECF No. 66).
After the close of fact and expert discovery, Red Hawk sought to exclude the report and testimony of Defendants' experts Susan E. Miller (“Miller”) to the extent that she opined on the meaning of the term “Products” as used in the Royalty Agreement, and Ezra J. Doner (“Doner”) to the extent that he opined on what would have been a reasonable frontend license fee for the use of the Colorforms Brand name for the Series. (ECF No. 76 (the “Daubert Motion”)). On November 1, 2022, Judge Caproni granted the Daubert Motion in part. Red Hawk I, 638 F.Supp.3d at 378. As to Miller's opinions, Judge Caproni noted that “[t]he threshold question is whether the Royalty Agreement is ambiguous[]” as to the definition of “Products.” Id. at 381. Judge Caproni found that the “Royalty Agreement defines ‘Products' as all products carrying the Colorforms brand, whether the product was in existence at the time of contracting[,]” and that “[t]he products on Schedule 2”-which are excluded from Net Sales and thus the calculation of royalty payments-“represent a greater variety of children's entertainment than those on Schedule 1.” Id. at 381-82. Judge Caproni found that, because the Royalty Agreement contained “dueling indicia of the meaning of ‘Products' that support both” parties' interpretations, “the term ‘Products' is ambiguous because more than one interpretation of the term is reasonable.” Id. at 382-83. Judge Caproni found that by opining that the term “‘Products' was intended to cover items similar to the consumer products listed” in Schedule 1, “Miller overstep[ped] her role by opining on the ultimate question for the jury: whether the Royalty Agreement is limited to royalties for consumer products.” Id. at 383. Accordingly, Judge Caproni held that “Miller may not opine on what the parties to the Royalty Agreement intended by the term Net Sales or Products, but she can testify generally about how the terms ‘product' and ‘net sales' are used in the industry.” Id. Judge Caproni also excluded Doner's opinion regarding a hypothetical frontend license fee for the series because “[t]he value of the allegedly due but unpaid royalty payments can be readily discerned through Net Sales, calculated according to the formula in the Royalty Agreement, which includes license fees in the definition of Net Sales.” Id. at 384.
On January 26, 2023, Defendants filed the Motion. (ECF No. 85). On February 7, 2023, the action was reassigned to the Honorable Jennifer H. Rearden. (ECF min. entry Feb. 7, 2023; ECF No. 92). On March 9, 2023, Red Hawk opposed the Motion. (ECF Nos. 95-98). On May 30, 2023, Judge Rearden heard oral argument on the Motion. (ECF min. entry May 30, 2023; ECF No. 117). On September 23, 2023, Judge Rearden referred the Motion to the undersigned for this Report and Recommendation. (ECF No. 120).
By separate Opinion and Order, the Court addresses the parties' requests that several of the exhibits in support of and in opposition to the Motion be sealed. (ECF Nos. 94; 99; 100; 101; 108).
III.DISCUSSION
A. Legal Standards
1. Summary Judgment
“Summary judgment is appropriate where the admissible evidence and pleadings demonstrate ‘no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'” N.Y.C. Transit Auth. v. Express Scripts, Inc., 588 F.Supp.3d 424, 433 (S.D.N.Y. 2022) (quoting Fed.R.Civ.P. 56(a)); see Johnson v. Killian, 680 F.3d 234, 236 (2d Cir. 2012) (per curiam). To qualify as a genuine dispute of material fact, the evidence must be “such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact.” Express Scripts, 588 F.Supp.3d at 433-34 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). “In moving for summary judgment against a party who will bear the ultimate burden of proof at trial, the movant's burden will be satisfied if [it] can point to an absence of evidence to support an essential element of the nonmoving party's claim.” Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1985) (citing Celotex, 477 U.S. at 322-23); see PepsiCo, Inc. v. Coca-Cola Co., 315 F.3d 101, 105 (2d Cir. 2002) (per curiam).
In analyzing a motion for summary judgment, a court must view all evidence “in the light most favorable to the non-moving party[,]” Overton v. N.Y. State Div. of Mil. & Naval Affs., 373 F.3d 83, 89 (2d Cir. 2004), and must “resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought[.]” Sec. Ins. Co. of Hartford v. Old Dominion Freight Line Inc., 391 F.3d 77, 83 (2d Cir. 2004). To overcome a motion for summary judgment, the non-moving party must put forth more than a “scintilla of evidence[,]” Anderson, 477 U.S. at 252, and must demonstrate more than “some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The non-moving party “cannot defeat the motion by relying on the allegations in [its] pleading, or on conclusory statements, or on mere assertions that affidavits supporting the motion are not credible[.]” Gottlieb v. Cnty. of Orange, 84 F.3d 511, 518 (2d Cir. 1996).
2. Breach of Contract
To establish a breach of contract claim under New York law, a plaintiff must show “(1) an agreement, (2) adequate performance by the plaintiff, (3) breach by the defendant, and (4) damages.” Fischer & Mandell, LLP v. Citibank, N.A., 632 F.3d 793, 799 (2d Cir. 2011). The plaintiff must also “identify what provisions of the contract were breached as a result of the acts at issue.” Chefs Diet Acquisition Corp. v. Lean Chefs, LLC, No. 14 Civ. 8467 (JMF), 2016 WL 5416498, at *8 (S.D.N.Y. Sept. 28, 2016).
A court may grant summary judgment on a breach of contract claim “only when the contractual language on which the moving party's case rests is found to be wholly unambiguous and to convey a definite meaning.” Topps Co. v. Cadbury Stani S.A.I.C., 526 F.3d 63, 68 (2d Cir. 2008); see Postlewaite v. McGraw Hill, Inc., 411 F.3d 63, 67 (2d Cir. 2005) (explaining that “‘when the meaning of the contract is ambiguous and the intent of the parties becomes a matter of inquiry, a question of fact is presented which cannot be resolved on a motion for summary judgment'”) (quoting Ruttenberg v. Davidge Data Sys. Corp., 215 A.D.2d 191, 192-93 (1st Dep't 1995)). “A contract is ambiguous if its language is ‘capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement.'” Express Scripts, 588 F.Supp.3d at 434 (quoting Sayers v. Rochester Tel. Corp. Suppl. Mgmt. Pension Plan, 7 F.3d 1091, 1095 (2d Cir. 1993)); accord Red Hawk I, 638 F.Supp.3d at 381.
On the other hand, “a contract is unambiguous if the language it uses has a definite and precise meaning, as to which there is no reasonable basis for a difference of opinion.” Lockheed Martin Corp. v. Retail Holdings, N.V., 639 F.3d 63, 69 (2d Cir. 2011). “Under New York law, a court must give full effect to unambiguous contract terms.” HOP Energy, L.L.C. v. Loc. 553 Pension Fund, 678 F.3d 158, 162 (2d Cir. 2012). “[N]either extrinsic evidence nor the parties' subjective intent operates to vary the terms of an unambiguous contract.” AAR Allen Servs. Inc. v. Feil 747 Zeckendorf Blvd LLC, No. 13 Civ. 3241 (JMF), 2014 WL 1807098, at *4 (S.D.N.Y. May 6, 2014), aff'd, 599 Fed.Appx. 23 (2d Cir. 2015) (summary order) (citing HOP Energy, 678 F.3d at 162). “In interpreting a contract under New York law, words and phrases . . . should be given their plain meaning, and the contract should be construed so as to give full meaning and effect to all of its provisions.” LaSalle Bank Nat'l Ass'n v. Nomura Asset Cap. Corp., 424 F.3d 195, 206 (2d Cir. 2005). “‘[A]n interpretation of a contract that has the effect of rendering at least one clause superfluous or meaningless . . . is not preferred and will be avoided if possible.'” Id. (quoting Shaw Grp., Inc. v. Triplefine Int'l Corp., 322 F.3d 115, 124 (2d Cir. 2003)). The Court must afford the “ordinary meaning” to a word that “is not defined in the writing[.]” Johnson v. Levy, 812 F.Supp.2d 167, 184 (S.D.N.Y. 2011). New York courts commonly “refer to the dictionary to determine the plain and ordinary meaning of words to a contract.” 2619 Realty, LLC v. Fid. & Guar. Ins. Co., 303 A.D.2d 299, 301 (1st Dep't 2003). “Under the rule of ejusdem generis, the meaning of a word in a series of words is determined ‘by the company it keeps.'” Lead Lease (U.S.) Const. LMB Inc. v. Zurich Amer. Ins. Co., 136 A.D.3d 52, 57 (1st Dep't 2015) (quoting People v. Illardo, 48 N.Y.2d 408, 416 (1979)).
“Moreover, it is a well-established principle of New York contract law that ‘[a] contract should not be interpreted to produce a result that is absurd, commercially unreasonable, or contrary to the reasonable expectations of the parties.'” Zeckendorf, 2014 WL 1807098, at *4 (quoting In re Lipper Holdings, LLC, 1 A.D.3d 170, 171 (1st Dep't 2003)); see Osprey Partners, LLC v. Bank of N.Y. Mellon Corp., 115 A.D.3d 561, 561-62 (1st Dep't 2014) (“Under well-established principles of contract interpretation, agreements are generally construed in accord with the parties' intent[.]”). Thus, the Court must examine the language of the contract “as a whole,” Postlewaite, 411 F.3d at 67, and “‘in light of the business purposes sought to be achieved by the parties and the plain meaning of the words chosen by them to effect those purposes.'” Newmont Mines Ltd. v. Hanover Ins. Co., 784 F.2d 127, 135 (2d Cir. 1986) (quoting Champion Int'l Corp v. Cont'l Cas. Co., 546 F.2d 502, 505 (2d Cir. 1976)).
“Whether contract language is ambiguous is a question of law that is resolved ‘by reference to the contract alone.'” O'Neil v. Ret. Plan for Salaried Emps. Of RKO Gen., Inc., 37 F.3d 55, 58-59 (2d Cir. 1994) (quoting Burger King Corp. v. Horn & Hardart Co., 893 F.2d 525, 527 (2d Cir. 1990)); see Gap Inc. v. Ponte Gadea N.Y. LLC, 524 F.Supp.3d 224, 231 (S.D.N.Y. 2021) (“Under New York law, ‘if a contract is straightforward and unambiguous, its interpretation presents a question of law for the court to be made without resort to extrinsic evidence.'”) (quoting Spinelli v. Nat'l Football League, 903 F.3d 185, 200 (2d Cir. 2000)). The Second Circuit has cautioned that a “‘court should not find the language ambiguous on the basis of the interpretation urged by one party, where that interpretation would strain the contract language beyond its reasonable and ordinary meaning.'” Fed. Ins. Co. v. Am. Home Assur. Co., 639 F.3d 557, 568 (2d Cir. 2011) (quoting Metro. Life Ins. Co. v. RJR Nabisco, Inc., 906 F.2d 884, 889 (2d Cir. 1990)); see L. Debenture Tr. Co. of N.Y. v. Maverick Tube Corp., 595 F.3d 458, 467 (2d Cir. 2010) (“Language whose meaning is otherwise plain does not become ambiguous merely because the parties urge different interpretations in the litigation, unless each is a reasonable interpretation[.]”).
B. Application
1. Disputed Issues of Fact Preclude Summary Judgment as to the First Claim.
Colorforms Brand argues that the Royalty Agreement does not require payment of royalties to Red Hawk based on the invoice prices licensees charge their customers and, therefore, that it is entitled to summary judgment as to Red Hawk's First Claim. (ECF No. 91 at 14-15). Red Hawk responds that the Royalty Agreement does require Colorforms Brands to pay royalties to Red Hawk based on invoice prices of Schedule 1 Products, regardless of who sells them, Colorforms Brand or its licensees. (ECF No. 97 at 11-12). Because the Court finds that Colorforms Brand has failed to show that unambiguous language in the Royalty Agreement obviates any obligation to pay royalties based on invoice prices charged by Colorforms Brand's licensees, Colorforms Brand is not entitled to summary judgment on the First Claim.
First, the Royalty Agreement requires Colorforms Brand to pay Red Hawk a royalty “based on the aggregate Net Sales” of two categories of Products: (1) “any of” the Schedule 1 Products; and (2) “any other products sold by Unigames [now, Colorforms Brand] using the ‘Colorforms' brand name[.]” (ECF Nos. 90-2 at 2; 95-1 at 1). See Red Hawk I, 638 F.Supp.3d at 379. While the second category is limited to other products “sold by” Colorforms Brand, (ECF Nos. 90-2 at 2; 95-1 at 1), the first category does not limit the identity of the seller, “justifying the inference that items not mentioned were excluded by deliberate choice, not inadvertence.” Barnhart v. Peabody Coal Co., 537 U.S. 149, 168 (2003). The deliberate absence of a limitation on the identity of the seller of Schedule 1 products suggests that the parties contemplated that Red Hawk was entitled to receive a royalty on all such products, whether sold by Colorforms Brand or its licensee. For both categories of products, the Royalty Provision specifies the same method of calculating the royalty due to Red Hawk-“aggregate Net Sales”-which represents “the invoice price charged to customers,” less certain deductions. (ECF No. 90-2 at 2-3 ¶¶ 1-2). The Royalty Provision makes no distinction between invoice prices charged by Colorforms Brand to customers and invoice prices its licensees charge to customers. Thus, Colorforms Brand is simply incorrect when it asserts that the Royalty Agreement unambiguously provides that “neither sentence of the definition of Net Sales calls for payment of a Royalty to Red Hawk based on the invoice price that Colorforms Brand's licensees charge to their customers.” (ECF No. 91 at 15).
As a result of the 2014 Transaction, Colorforms Brand stands in the shoes of Unigames. (See ECF Nos. 86 ¶ 10; 87 ¶ 3; 95 ¶ 14; 107 ¶ 11).
Second, the Royalty Provision contemplates that, for sales by Colorforms Brand's licensees, the “Net Sales” used to calculate the royalty “shall also include any license fees[.]” (ECF No. 90-2 at 3 ¶ 2 (emphasis added)). The pertinent dictionary definition of “also” is “in addition to.” Also, MERRIAM-WEBSTER DICTIONARY, https://www.merriam-webster.com/dictionary/also (last visited Feb. 9, 2024). See Summit Health, Inc. v. APS Healthcare Bethesda, Inc., 993 F.Supp.2d 379, 390 (S.D.N.Y. 2014) (noting that “New York courts will commonly refer to dictionary definitions in order to determine” the “plain and ordinary meaning” of a contract term). Thus, the Royalty Provision could mean that, for sales by licensees, the parties expected that the royalty would be calculated using both the invoice price and any license fee. Again, the Royalty Provision contradicts Colorforms Brand's argument that the “plain language of the Royalty Agreement makes clear that Red Hawk is not entitled to royalties based on invoice prices for sales made by Colorforms Brand's licensees.” (ECF No. 91 at 16 (emphasis added)).
Third, “the parties' course of dealing throughout the life of [the Royalty Agreement] is highly relevant to determining the meaning of the terms of the agreement.” Faulkner v. Nat'l Geographic Soc., 452 F.Supp.2d 369, 381 (S.D.N.Y. 2006); see Old Colony Trust Co. v. Omaha, 230 U.S. 100, 118 (1913) (“Generally speaking, the practical interpretation of a contract by the parties to it for any considerable period of time before it comes to be the subject of controversy is deemed of great, if not controlling, influence.”). Here, Colorforms Brand has now admitted that, since 2017, “Colorforms Brand's payments to Red Hawk are lower than they were when Colorforms Brand was manufacturing and selling products itself . . . because instead of paying a royalty based on direct sales of toys to customers, Colorforms [Brand] pays a royalty based on royalties it receives from its licensees based on the licensees' sales to their customers.” (ECF No. 89 at 4 ¶ 16; see ECF No. 109 at 3-5 ¶¶ 12-15). While the exact timing of Colorforms Brand's implementation of this change to its calculation of royalties due to Red Hawk is in dispute (compare ECF No. 85-1 ¶¶ 54-57 with ECF No. 98 ¶¶ 54-57; see also ECF No. 109 at 5-6 ¶¶ 1619), Colorforms Brand does not dispute that the way it now pays royalties to Red Hawk-a royalty on a royalty-is different than the prior 20 years-a royalty based on invoice prices-under the Royalty Agreement. (ECF Nos. 86 ¶ 12; 95 at 6 ¶ 15; 95-3 at 1-8; see ECF No. 107 at 31 ¶ 153 (“Colorforms Brand admits that there was a change in royalty computation in 2017[.]”)). Even after Colorforms Brand entered into the 2016 Agreement with Playmonster, at least through the fourth quarter of 2017, Colorforms Brand continued to pay royalties to Red Hawk based on invoice prices, not royalty payments Colorforms Brand received from Playmonster. (See ECF No. 103 ¶¶ 4-7 (explaining that until the fourth quarter of 2017, Colorforms Brand paid Red Hawk royalties based on invoice prices)). This undisputed evidence of the parties' course of dealing under the Royalty Agreement-up until Colorforms Brand claims to have changed from a Manufacturing Model to a Licensing Model in 2017-reinforces the conclusion that the parties appeared to understand the Royalty Provision to require royalties to Red Hawk to be calculated based on invoice prices to Schedule 1 Products regardless of who sold them. See Faulkner, 452 F.Supp.2d at 381-82 (finding that parties' course of dealing demonstrated that plaintiffs were entitled to be paid consistent with past practice). This, too, contradicts Colorforms Brand's argument regarding the Royalty Agreement's lack of ambiguity concerning Red Hawk's entitlement to royalties based on invoice prices for sales made by Colorforms Brand's licensees. (ECF No. 91 at 16).
Accordingly, I respectfully recommend that the Motion be DENIED as to the First Claim.
2. Disputed Issues of Fact Preclude Summary Judgment as to the Second Claim.
As noted above, Red Hawk's Second Claim is that it is entitled to royalty payments for all “Net Sales” of the Series. (ECF No. 51 ¶¶ 17-37). In the Motion, Colorforms Brand contends that, because “the Series was licensed to Netflix and not sold,” and Colorforms Brand did not receive any license fee for the Series, summary judgment dismissing the Second Claim is warranted. (ECF No. 91 at 16-18). Enterprises and Productions also contend that, because they are not parties to the Royalty Agreement and they do not operate as a single entity with Colorforms Brand, they cannot be liable to Red Hawk. (ECF No. 91 at 20-26). Red Hawk responds that Judge Caproni has already recognized that the meaning of “Products” as used in the Royalty Agreement is ambiguous, and that all Defendants are liable on the Second Claim. (ECF No. 97 at 15-23). The Court finds that genuine issues of material fact preclude summary judgment for Defendants as to the Second Claim.
First, as Judge Caproni has already observed, while “[t]he Royalty Agreement defines ‘Products' as all products carrying the Colorforms brand, whether the product was in existence at the time of contracting[,]” there are nevertheless “within the four-corners of the contract . . . dueling indicia of the meaning of ‘Products' that support” the parties' competing interpretations whether the Series is a “Product.” Red Hawk I, 638 F.Supp.3d at 381-82. Judge Caproni clarified that, because of this ambiguity, “whether the Royalty Agreement is limited to royalties for consumer products” is “the ultimate question for the jury[.]” Id. at 383. In support and in opposition to the Motion, the parties continue to offer competing evidence on this question. For example, Colorforms Brand points to the Netflix License and the absence of a monetary payment as proof that the Series was not sold to Netflix and therefore cannot fall within the meaning of “Net Sales” under the Royalty Agreement. (ECF No. 91 at 16-18). Red Hawk counters by pointing to (i) the testimony of Joshua Kislevitz, who signed the Royalty Agreement on Red Hawk's behalf, that he understood “that royalties would be owed on income generated from anything bearing the Colorforms[] brand name” (ECF No. 95 ¶ 24), and (ii) the absence of any limitation on the term “Product” in the Royalty Agreement, to support its view that the Series is a “Product” for which Red Hawk is entitled to royalties. (Id. ¶ 26; see ECF No. 95-1 at 1 ¶ 1). Because, as Judge Caproni already found, the term “Products” in the Royalty Agreement is ambiguous, “summary judgment is inappropriate.” Kemelhor v. Penthouse Int'l, Ltd., No. 85 Civ. 0002 (CBM), 1986 WL 15698, at *3-4 (S.D.N.Y. Feb. 24, 1986) (denying summary judgment where “the relevant terms of the contract are open to at least two reasonable interpretations”); see U.S. Naval Inst. v. Charter Commc'ns, Inc., 875 F.2d 1044, 1048 (2d Cir. 1989) (“The meaning of a contract term that is susceptible to at least two reasonable interpretations is generally an issue of fact, requiring the trier of fact to determine the parties' intent.”); Sugerman v. MCY Music World, Inc., 158 F.Supp.2d 316, 323 (S.D.N.Y. 2001) (denying motion for summary judgment because contract was “reasonably susceptible of both Plaintiff's and Defendants' interpretations[,]” and therefore, “[a] jury should make the call”).
Second, while it is undisputed that Enterprises and Productions are not signatories to the Royalty Agreement, disputed issues of fact as to Defendants' corporate structure render summary judgment on the Second Claim inappropriate. Under New York law, “‘piercing the corporate veil requires a showing that: (1) the owners exercised complete domination of the corporation in respect to the transaction attacked; and (2) that such domination was used to commit a fraud or wrong against the plaintiff which resulted in the plaintiff's injury.'” JSC Foreign Econ. Ass'n Technostroyexport v. Int'l Dev. & Trade Servs., Inc., 386 F.Supp.2d 461, 465 (S.D.N.Y. 2005) (quoting Morris v. N.Y. State Dep't of Tax. and Fin., 82 N.Y.2d 135, 141 (1993)); accord MAG Portfolio Consult, GmbH v. Merlin Biomed Grp., LLC, 268 F.3d 58, 63 (2d Cir. 2001). Determining that veil-piercing is appropriate is a fact specific inquiry that requires consideration of many factors, including:
(1) disregard of corporate formalities; (2) inadequate capitalization; (3) intermingling of funds; (4) overlap in ownership, officers, directors, and personnel; (5) common office space, address and telephone numbers of corporate entities; (6) the degree of discretion shown by the allegedly dominated corporation; (7) whether the dealings between the entities are at arm[']s length; (8) whether the corporations are treated as independent profit centers; (9) payment or guarantee of the corporation's debts by the dominating entity[;] and (10) intermingling of property between the entities.Freeman v. Complex Computing Co., 119 F.3d 1044, 1053 (2d Cir. 1997). Viewing the facts in the light most favorable to Red Hawk, the non-movant, summary judgment on the issue of piercing the corporate veil is inappropriate. While Defendants observed some corporate formalities, such as having separate by-laws, they ignored others, sharing officers, personnel, and office space. (ECF Nos. 86 at 3 ¶ 8; 95-14; 95-15 at 1; 95-16; 107 at 24 ¶¶ 116, 119-22; id. at 35 ¶ 166). Although Defendants have asserted legitimate reasons for Colorforms Brands to grant Enterprises the rights to develop the Series-and for Enterprises to assign those rights to Productions for Season 2 (ECF No. 88 at 2 ¶ 5; id. at 4 ¶ 15; 107 at 21 ¶¶ 93-94; id. at 35 ¶ 162)- a jury could also reasonably find that the timing of these arrangements-in 2017, the same time Colorforms Brand was changing the royalty calculations-evidences an ulterior motive that resulted in depriving Red Hawk of royalties to which it was entitled under the Royalty Agreement. David v. Glemby Co., 717 F.Supp. 162, 167-68 (S.D.N.Y. 1989) (denying motion for summary judgment where jury could find that related party was a “mere instrumentality” of defendant and that corporate structure “resulted in an unjust loss to the plaintiff”). Because the evidence on the Motion is not conclusive and a jury could reasonably find that the corporate veil should be pierced to hold Enterprises and Productions liable to Red Hawk for royalties on the Series, summary judgment is inappropriate. See Network Enter. Inc. v. APBA Offshore Prods., Inc., No. 01 Civ. 11765 (CSH), 2004 WL 1837349, at *6 (S.D.N.Y. Aug. 16, 2004) (denying summary judgment on veil-piercing claim where “numerous disputes of fact” existed as to whether parties were alter egos).
Accordingly, I respectfully recommend that the Motion be DENIED as to the Second Claim.
IV.CONCLUSION
For the reasons set forth above, I respectfully recommend that the Motion be DENIED. * * *
NOTICE OF PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed.R.Civ.P. 6(a), (d) (adding three additional days when service is made under Fed.R.Civ.P. 5(b)(2)(C), (D) or (F)). A party may respond to another party's objections within fourteen (14) days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Such objections, and any response to objections, shall be filed with the Clerk of the Court. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), (d), 72(b). Any request for an extension of time for filing objections shall be addressed to Judge Rearden.
FAILURE TO OBJECT WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), (d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).