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U.S. v. AEGIS CONSULTING GROUP

November 22, 2005.

ASSOCIATION OF THE UNITED STATES ARMY, Plaintiff,
v.
AEGIS CONSULTING GROUP, INC., and THE ABERJONA PRESS, Defendants.



The opinion of the court was delivered by: KIM GIBSON, District Judge

MEMORANDUM OPINION AND ORDER

This case comes before the Court on Association of the United States Army's (hereinafter "Plaintiff") Motion to Compel Defendants' Production of Documents (Document No. 16), Aegis Consulting Group, Inc., and The Aberjona Press' (hereinafter "Defendants") Cross Motion to Compel (Document No. 18), and Plaintiff's Brief in Opposition to Defendants' Cross Motion to Compel (Document No. 22). Upon consideration of the record in the case sub judice, a telephonic conference on the above-listed motions, and pursuant to Federal Rules of Civil Procedure 26 and 37, the Court shall grant in part and deny in part Plaintiff's Motion to Compel Defendants' Production of Documents, and the Court shall grant in part and deny in part Defendants' Cross Motion to Compel for the following reasons.

JURISDICTION AND VENUE

  Jurisdiction is proper in the United States District Court for the Western District of Pennsylvania under 15 U.S.C. § 1121 and 28 U.S.C. §§ 1331, 1338(a) and 1338(b). This Court also has jurisdiction pursuant to 28 U.S.C.A. § 1332 as there is complete diversity between the Plaintiff, a citizen of the District of Columbia, and Defendants, who are citizens of Pennsylvania. Additionally, the amount in controversy exceeds $75,000.00, exclusive of interest and costs.

  Venue is proper in this Court pursuant to 28 U.S.C. § 1391, and the Defendants are subject to personal jurisdiction within this judicial district. The Defendants' principal places of business are located within the Western District of Pennsylvania, and a substantial part of the events giving rise to Plaintiff's claim occurred in the Western District of Pennsylvania.

  FACTUAL AND PROCEDURAL BACKGROUND

  Plaintiff is a private educational organization that supports active Army members, retirees, and family members. (Document No. 1). One of the Plaintiff's distinguishing markers is that since approximately 1950, it has used a logo that incorporates the phrase "Association of the United States Army" ("AUSA") in a circular pattern around a depiction of an eagle holding a shield and olive branch. Id. Throughout the years, the Plaintiff has provided "professional education and information programs" in an effort to foster support for the Army. Id. One of the informational products and services provided by the Plaintiff is the distribution of the Army magazine. Id. Another product is the AUSA News publication provided by the Plaintiff. Id.

  Defendant, Aegis Consulting Group, Inc. (hereinafter "Aegis") is a publishing house, with its principal place of business located in Bedford, Pennsylvania. (Document No. 1). The Defendant, The Aberjona Press (hereinafter "Aberjona") is a division of Aegis. Id. Collectively, Aegis and Aberjona (hereinafter "Defendants") publish historical and military professional literature. Id.

  On or about May 1, 2002, the above parties outlined a marketing agreement and publishing agreement (hereinafter "Outline"). (Document No. 1). Under the terms of this agreement, the Plaintiff and the Defendants "addressed the parties' joint marketing efforts and publishing efforts." Id.*fn1 For example, Plaintiff agreed to permit the use of its name as a sponsor of AUSA books published by Defendants. Id. The Plaintiff also agreed to provide a "hotlink" from its website to Defendants' website. Id. Additionally, the Plaintiff agreed to provide space in its publications for book reviews and to list Aegis book discounts as part of its member benefits. Id. Finally, the Plaintiff was to provide manuscripts from its holdings for publication with Defendants. Id.

  The Defendants, on the other hand, agreed to publish, distribute and provide fulfillment for "AUSA books."*fn2 (Document No. 1). Defendants also agreed to pay the Plaintiff a 3% royalty on each AUSA book that was sold. Id. Moreover, the Defendants' website was to likewise provide a "hotlink" and artwork for the Plaintiff's website. Id. The Defendants further agreed to offer a 20% discount for all AUSA members. Id.

  On or about May 24, 2002, the parties entered into a signed Memorandum of Understanding ("MOU") regarding the above-mentioned publishing agreement. (Document No. 1). Under the terms of this signed agreement, the Plaintiff agreed to advance funds in the amount of $50,000.00 to Defendants for the publication of books "if specific conditions are met". Id. This advance was to be made in increments, with each increment to be in two installments after each of four books was published by the Defendants.*fn3 Id.

  The MOU also provided that the Plaintiff would review each book, advertise books on its website, provide a "hotlink" to Defendants for ordering, and the Plaintiff would publicize its relationship with Defendants. (Document No. 1). Additionally, the MOU provided that the Defendants would have temporary use of the advancement made by the Plaintiff. Id. In return, the Defendants were to publish four AUSA owned books during a twelve-month period following the advancement. Id. Defendants were also to repay the advancement, as well as pay the Plaintiff a 15% royalty on all AUSA-owned books that the parties agreed would be published by the Defendants. Id.

  The Defendants further contend that a third document creates the entire contract between the parties. (Document No. 25). Specifically, the Defendants argue that the three documents which comprise the contract are the Outline, the MOU, and the May 8, 2001 letter from General Stroup to the Defendants. Id. at p. 9. In this letter, the Defendants claim that General Stroup expressed that "he had procured over 100 never before seen manuscripts written either in combat or shortly thereafter by historical research teams," and the Defendants contend that these manuscripts are central to the contested issues between the parties in the case sub judice. Id.

  Plaintiff alleges that Defendants have failed to publish any AUSA books as per the MOU. (Document No. 1). Additionally, the Plaintiff asserts that the Defendants have not repaid the $50,000.00 advancement, nor have Defendants paid royalties owed to the Plaintiff. Id. Moreover, the Plaintiff states that ...


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