Cisco Systems, Inc. v. Synamedia LTD.

Background

Cisco brought claims against Synamedia for breach of contract, anticipatory breach of contract, and declaratory judgment. The dispute principally concerned an April 30, 2018 Purchase Agreement under which Cisco sold Synamedia certain assets and Synamedia assumed certain liabilities. One asset was a lease for property known as Chandlers Ford 2. The lease required the landlord’s consent before it could be formally assigned to Synamedia, and the opinion states that the landlord had not consented to an assignment or other formal transfer.

The Purchase Agreement treated contracts requiring third-party consent as “Restricted Assets.” Section 1.5(d) required the parties to use commercially reasonable efforts to arrange for Synamedia to perform and be responsible for the related liabilities until the required consent was obtained or the contract expired, terminated, lapsed, or was not renewed. Section 1.5(e) stated that Synamedia would perform and discharge, be responsible for, and promptly reimburse Cisco’s reasonable costs and expenses related to specified work involving Restricted Assets.

The parties also entered into a Transition Services Agreement. Among other things, Cisco was to provide Synamedia access to and services at Chandlers Ford 2 during specified transition periods. After closing, Synamedia used the premises and paid Cisco rent and related expenses. The parties attempted to secure a surrender and grant or assignment of the lease, but Cisco alleged that Synamedia rejected every proposed assignment. In the summer of 2020, Synamedia moved to a nearby property, stopped paying Cisco’s lease-related amounts, and took the position that it was no longer responsible for lease obligations after vacating Chandlers Ford 2.

Motion to Dismiss

Synamedia moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. Synamedia argued that its obligations under the Purchase Agreement were implemented only through the Transition Services Agreement and ended when that agreement expired in or around August 2020.

The court concluded that Cisco plausibly alleged that the Purchase Agreement continued to make Synamedia responsible for performing and reimbursing Cisco’s lease liabilities after the Transition Services Agreement expired. The court reasoned that Section 1.5(d) did not impose a time limit tied to the Transition Services Agreement and instead described obligations lasting until landlord consent or the lease’s expiration, termination, lapse, or nonrenewal. The court also found that Section 1.5(e) supported Cisco’s reading and that the Transition Services Agreement did not make Cisco’s breach-of-contract claim implausible. Because contractual language could not be resolved against Cisco at the motion-to-dismiss stage, the court denied Synamedia’s motion as to Count I.

The court likewise denied Synamedia’s motion to dismiss Count II, the anticipatory-breach claim, because Synamedia relied on the same arguments and the court had found that Cisco plausibly stated a breach-of-contract claim.

As to Count III, the court agreed with Synamedia that a request for a declaratory judgment is a form of relief rather than an independent cause of action. The court therefore dismissed Count III to the extent it was pleaded as a standalone cause of action, while construing it as a request for declaratory relief connected to Counts I and II.

Sealing Requests

Synamedia and Cisco each asked to seal materials filed in connection with the motion to dismiss. The court explained that documents filed with a motion to dismiss are judicial documents subject to a strong presumption of public access.

The court denied Cisco’s request to seal portions of its opposition memorandum in its entirety. It denied in part Synamedia’s request to seal its opening memorandum because the parties’ confidentiality agreement, general claims of competitive harm, and references to pre-suit negotiations did not overcome the public-access presumption.

The court granted in part and denied in part Synamedia’s request concerning the Transition Services Agreement. Portions not referenced in the parties’ briefing or the Memorandum Order could remain sealed, but Synamedia had to file a redacted version revealing the portions referenced in those materials. The court also ordered Cisco to file an unredacted opposition memorandum and a version of the Complaint with specified paragraphs unredacted. Synamedia had to file an unredacted principal memorandum and a version of the Transition Services Agreement with only the permitted portions redacted.

Disposition

Judge Laura Taylor Swain denied Synamedia’s motion to dismiss as to Count I and Count II and granted it as to Count III. She granted in part and denied in part Synamedia’s letter-motion to seal and denied Cisco’s letter-motion to seal in its entirety. The case remained referred to Magistrate Judge Netburn for general pretrial management.