Video Elephant Ltd. v. Blake Broadcasting LLC

Background

Video Elephant Ltd. sued Blake Broadcasting LLC for allegedly failing to pay licensing fees under three sublicensing agreements involving content from FCCE BV, Bloomberg L.P., and Greenlight International. Blake denied those claims and asserted four counterclaims against Video Elephant, along with two third-party causes of action against John Jordan. This order addressed Video Elephant’s motion under Federal Rule of Civil Procedure 12(b)(6), which asks whether the opposing pleading states a legally sufficient claim. The motion addressed Blake’s First, Third, Fourth, and Sixth Counterclaims.

Blake alleged that Video Elephant acted as its exclusive content-management company and that Video Elephant and Jordan had duties concerning Blake’s business and content. Blake also alleged that Video Elephant breached the FCCE Agreement by warranting that FCCE owned the relevant copyrights, failing to provide “fresh weekly” content, and violating confidentiality provisions. Blake alleged that Video Elephant breached the Bloomberg Agreement by providing content with technical problems and breached the Greenlight Agreement by providing content that was not “new” as required by that agreement. Blake sought at least $52 million in damages on the four counterclaims.

Choice of Law

For purposes of this motion, the court applied New York law to the fiduciary-duty claim and to the FCCE and Greenlight contract claims. It applied Delaware law to the Bloomberg contract claim, based on the Bloomberg Agreement’s choice-of-law provision. The court treated this as a preliminary determination because the record did not clearly establish all facts relevant to the choice-of-law issue and the parties had not fully briefed it.

Fiduciary-Duty Counterclaim

The court dismissed Blake’s First Counterclaim, which alleged that Video Elephant breached fiduciary duties arising from an agency relationship. The court found that Blake had not plausibly alleged that it retained the necessary control over Video Elephant or that Video Elephant had authority to act on Blake’s behalf. Blake also did not adequately identify duties separate from those in the three agreements that Video Elephant allegedly breached. The court dismissed this counterclaim without prejudice to Blake’s seeking permission to replead it.

FCCE Agreement

Blake asserted three theories under the FCCE Agreement. The court denied the motion to dismiss the warranty theory. Blake alleged that FCCE was not actually the sole copyright owner of all content covered by the warranty, and its allegations about efforts to investigate ownership made that claim plausible at the pleading stage. Blake also adequately alleged reliance on the warranty and damages.

The court likewise denied the motion to dismiss the theory that Video Elephant failed to provide “weekly fresh episodes.” The court found that “fresh” was ambiguous because it could reasonably mean material newly created from content that did not previously exist, or nonduplicative content presented in a new edited form. Blake’s interpretation was reasonable enough for the claim to proceed.

The court dismissed the FCCE confidentiality theory. Blake’s allegations that Video Elephant disclosed confidential information “upon information and belief” lacked supporting facts, such as how Blake learned of the disclosure, what was disclosed, when it occurred, and to whom. The court also concluded that the contract did not clearly impose the alleged duty on Video Elephant to prevent FCCE from disclosing Blake’s information to third parties. The court denied the motion as to the other two FCCE theories but dismissed the confidentiality theory without prejudice to a motion for permission to replead it.

Bloomberg Agreement

The court dismissed Blake’s Fourth Counterclaim concerning the Bloomberg Agreement. Blake alleged that technical problems made the content difficult or impossible to use, but it did not identify a specific contract provision requiring the technical features or delivery conditions that Video Elephant allegedly breached. Under Delaware law, Blake had to identify a contractual obligation that Video Elephant violated. The court dismissed the counterclaim without prejudice to a motion for permission to replead it with details about the provision allegedly breached and the nature of the breach.

Greenlight Agreement

The court denied the motion to dismiss Blake’s Sixth Counterclaim concerning the Greenlight Agreement. The agreement required “new” content to be delivered weekly, but the court found that “new” could reasonably have more than one meaning. Because Blake’s interpretation was reasonable, its claim that Video Elephant breached the agreement by providing content that was not new could proceed.

Damages

The court also denied Video Elephant’s argument that Blake’s contract counterclaims should be dismissed because the claimed damages were improper or too speculative. The court found Blake’s allegations of damages sufficient at this stage and concluded that the issue could be evaluated more fully after further briefing and development of the record.

Disposition

The court granted in part and denied in part Video Elephant’s motion to dismiss. The First and Fourth Counterclaims were dismissed in their entirety. The Third Counterclaim was dismissed only as to the alleged breach of the FCCE confidentiality provision; its warranty and content-delivery theories survived. The Sixth Counterclaim survived. Blake was granted permission to move for leave to replead the dismissed claims within 30 days, with proposed amended counterclaims and a redline. If Blake did not timely seek amendment, or if amendment was denied as futile, the First and Fourth Counterclaims and the confidentiality portion of the Third Counterclaim would be dismissed with prejudice. Judge Laura Taylor Swain ordered that the motion was resolved.