Sportvision, Inc v. MLB Advanced Media L.P.

Background

Sportvision developed PITCHf/x, a camera-based system that tracked the trajectory of baseball pitches. Sportvision and MLB Advanced Media, L.P. entered into a joint venture agreement in 2006, later amended several times. The fourth amendment stated that the agreement would remain in force until December 31, 2019, while also addressing negotiations about renewal and the parties’ obligations concerning PITCHf/x after 2016.

SportsMEDIA Technology Corporation acquired Sportvision in 2016. According to the plaintiffs, MLB Advanced Media failed to perform several operational obligations during the 2017 season, including funding equipment, hiring operators, providing stadium access, maintaining databases, paying operating expenses, and working to develop business opportunities for PITCHf/x data. These allegations appeared in Count IV of the plaintiffs’ Second Amended Complaint.

Sanctions Motion

MLB Advanced Media moved for sanctions under Federal Rule of Civil Procedure 11. Rule 11 allows sanctions for filings that lack a reasonable factual or legal basis or that were submitted for an improper purpose. MLB Advanced Media argued that discovery showed the plaintiffs understood before filing the lawsuit that MLB Advanced Media’s operational obligations ended in 2016, not 2019.

MLB Advanced Media relied on January 2018 letters exchanged between Sportvision and SportsMEDIA during an indemnity dispute, as well as deposition testimony from Mike Jakob, Sportvision’s former President and Chief Executive Officer, and Gerald Hall, SportsMEDIA’s Chief Executive Officer. MLB Advanced Media also argued that the plaintiffs lacked a good-faith basis for asserting that MLB Advanced Media had abandoned the agreement and that the arbitration provision therefore did not apply to their contract claims.

Report and Recommendation

Magistrate Judge Valerie Figueredo recommended that the sanctions motion be denied without prejudice. She concluded that the parties’ letters could be understood in more than one way and did not conclusively establish that the plaintiffs knew their contract claims lacked a good-faith basis. Statements that future revenues or continued performance were uncertain did not necessarily mean that MLB Advanced Media had no operational obligations after 2016.

Judge Figueredo also found that Mr. Hall’s testimony was equivocal and did not irrefutably show that the plaintiffs’ allegations were false. Mr. Jakob’s testimony about his understanding of the fourth amendment was extrinsic evidence—evidence outside the contract’s text—and, standing alone, did not show that the plaintiffs’ interpretation of the agreement was objectively unreasonable.

Judge Figueredo further recommended denying the plaintiffs’ request for their costs and attorney fees related to the sanctions motion because the plaintiffs had not shown that MLB Advanced Media’s motion was frivolous.

District Court’s Ruling

No party objected to the Report and Recommendation. Judge Gardephe therefore reviewed the record for clear error and found none. He adopted the Report and Recommendation in its entirety.

The court denied MLB Advanced Media’s motion for sanctions without prejudice. This means the ruling did not bar the motion from being renewed, although the opinion did not decide whether a renewed motion would succeed. The court also denied the plaintiffs’ request for costs and attorney fees. The order did not decide the underlying contract claims.