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Clarity Sports International LLC v. Redland Sports

United States District Court, M.D. Pennsylvania

September 4, 2019

CLARITY SPORTS INTERNATIONAL LLC and JASON BERNSTEIN, Plaintiffs
v.
REDLAND SPORTS, et al., Defendants

          MEMORANDUM

          Kane, Judge.

         Before the Court are Defendants' motions to dismiss Plaintiffs' amended complaint (Doc. Nos. 10, 11), and motion to bifurcate discovery (Doc. No. 29). For the reasons that follow, the Court will grant the motions to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) and dismiss the amended complaint without prejudice to Plaintiffs' ability to file a second amended complaint consistent with the Court's discussion infra. The Court will deny the Boone Defendants' motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), deny Defendants' request to stay this case, and deny Defendants' motion to bifurcate discovery.

         I.BACKGROUND[1]

         Plaintiff Clarity Sports International LLC (“Plaintiff Clarity Sports”) is a Maryland limited liability company with a principal place of business in Potomac, Maryland (Doc. No. 7 ¶ 1), and Plaintiff Jason Bernstein (“Plaintiff Bernstein”) - a Maryland resident - is its majority owner (id. ¶ 2). Defendant Redland Sports (“Defendant Redland”) conducts business in Pennsylvania, has a principal place of business in York, Pennsylvania, and is owned by Defendant Gerry Ochs (“Defendant Ochs”), who is a resident of Pennsylvania. (Id. ¶¶ 3-4.)[2]Defendant MVP Authentics, LLC (“Defendant MVP Authentics”) also conducts business in the Commonwealth of Pennsylvania, with a principal place of business in Dauphin County, Pennsylvania, and is owned by Defendant Daryl Eisenhour (“Defendant Eisenhour”), a Pennsylvania resident, and Defendant Jason Smith (“Defendant Smith”), a New Jersey resident. (Id. ¶¶ 5-7.) Defendant Boone Enterprises, Inc., d/b/a Boone Enterprises Authentic Autographs (“Defendant Boone Enterprises”) has a principal place of business in Pompton Plains, New Jersey and, according to the complaint, regularly conducts business in Pennsylvania. (Id. ¶¶ 8-9.)[3] Defendant Craig Boone (“Defendant Boone”), a New Jersey resident, is the owner and/or manager of Defendant Boone Enterprises. (Id. ¶ 10.)[4]

         Plaintiff Bernstein is “a National Football League Players' Association (‘NFLPA') certified contract advisor” who “represents several players in the National Football League (‘NFL') as their agent.” (Id. ¶ 16.) Plaintiff Bernstein is the owner of Plaintiff Clarity Sports, “a full-service sports management company with a focus on providing management and advisory services to professional athletes.” (Id. ¶ 17.) Plaintiff Clarity Sports “represents NFL players in their contractual negotiations and dealings with the NFL, and in other matters to which the parties agree, including the representation of players in those players' marketing and endorsement contract negotiations.” (Id. ¶ 18.) In this capacity, Plaintiff Bernstein previously represented Kenny Golladay (“Golladay”), an NFL player who is currently under contract with the Detroit Lions. (Id. ¶ 19.)

         Defendants Redland Sports, MVP Authentics, and Boone Enterprises are sports memorabilia companies, and, as such, “are each in the business of procuring and selling autographed sports memorabilia.” (Id. ¶¶ 20-21.) In connection with its line of business, Defendant Redland Sports “arranges and . . . presents autograph signings with NFL players and then markets and sells the items signed[, ]” and in so doing, advertises the signed memorabilia on its Facebook page. (Id. ¶ 22.) Defendants MVP Authentics and Boone Enterprises also arrange autograph signings with NFL players and market the signed memorabilia on various social media platforms. (Id. ¶¶ 23-24.) In connection with these autograph signings, “Defendants contract with NFL players to pay those players for their appearance and autographs, typically on a per-autograph or per-appearance basis[, ]” and “typically negotiate the contracts for NFL players' autograph signings with those NFL players' agents.” (Id. ¶¶ 25-26.) In addition, “Defendants are and were aware that in the NFL, NFLPA registered agents are often in exclusive marketing arrangements with their player-clients.” (Id. ¶ 27.)

         On December 23, 2016, Plaintiff Bernstein and Golladay “executed an NFLPA Standard Representation Agreement” (“SRA”), under which Plaintiff Bernstein “agreed to represent, advise, counsel, and assist Golladay in the negotiation and execution of Golladay's playing contracts in the NFL.” (Id. ¶ 28) (internal quotation marks omitted).[5] Pursuant to the SRA, Plaintiff Bernstein “was the exclusive representative of Golladay for the purpose of negotiating playing contracts for Golladay[, ]” and “[i]n return, Golladay agreed to pay [Plaintiff] Bernstein three percent of the compensation Golladay earned under the playing contracts [Plaintiff] Bernstein negotiated for him.” (Id. ¶¶ 29-30) (internal quotation marks omitted).[6] The SRA provides, in pertinent part, that as Golladay's agent, Plaintiff Bernstein was to receive 3% of “the compensation received by [Golladay] for each playing season covered by the [SRA].” (Doc. No. 29-1 at 13.)

         Plaintiff Clarity Sports and Golladay also entered into an “Endorsement and Marketing Agreement” (“EMA”) on the same date, which Plaintiff Bernstein signed on behalf of Plaintiff Clarity Sports, and under which Plaintiff Clarity Sports “agreed to ‘procure, negotiate, and manage Endorsement Opportunities' for Golladay.” (Id. ¶¶ 32-34) (second set of internal quotation marks omitted). Such endorsement opportunities consisted of “contracts for the endorsement of commercial products and services, paid personal services, and other opportunities related to the commercial exploitation of Golladay's status as an NFL player, including but not limited to autograph-signing appearances.” (Id. ¶ 35.) As consideration, “Golladay agreed to pay [Plaintiff Clarity Sports] fifteen percent of the endorsement monies he earned” in connection with the EMA, which established “an exclusive agreement” between the parties as to “opportunities such as autograph signings and other paid appearances available to Golladay.” (Id. ¶ 37.) As stated in the amended complaint, “[i]n other words, as under the SRA, ” Plaintiffs “were Golladay's exclusive representatives in the endorsement and marketing arena.” (Id. ¶ 38.) Accordingly, pursuant to the EMA, Plaintiff Clarity Sports “contracted for, arranged, and helped execute multiple autograph signings and similar appearances for Golladay.” (Id. ¶ 39.)

         On January 2, 2019, Defendant Redland Sports “announced on its Facebook page . . . that it would host, ‘in conjunction with Boone Enterprises and MVP Authentics,' a private autograph signing with Golladay on January 21, 2019.” (Id. ¶ 40.) Plaintiffs neither “arrange[d] for Golladay's appearance at this event, ” nor were they “aware of the then-upcoming signing until [Defendant] Redland Sports announced it on its Facebook page[, ]” and “[i]n fact, Plaintiffs at that time were in the process of negotiating for Golladay a contract for a different signing, pursuant to the terms of their exclusive [EMA].” (Id. ¶¶ 41-42.) After becoming aware of the Facebook post and autograph signing, Plaintiff Bernstein emailed Defendant Ochs on January 7, 2019 “to inform him that [Plaintiff Clarity Sports] had an exclusive marketing agreement in place with Golladay[, ]” specifying that the agreement “includes handling all signings” and also sending Defendant Ochs a text message to that effect. (Id. ¶¶ 43-45.) Through both the email and text message, Plaintiff Bernstein “asked [Defendant] Ochs to remove the Facebook post advertising the January 21, 2019 signing” and “asked that [Defendant] Ochs contact him by telephone” (id. ¶ 46) (internal quotation marks omitted), but Defendant Ochs did not respond to either the email or text message (id. ¶ 47).

         As stated by Plaintiffs, “Defendants ignored Plaintiffs' exclusive arrangement with Golladay and did not negotiate the contract for Golladay's appearance with Plaintiffs[, ]” but rather, worked “with Todd France (‘France'), a different NFLPA registered agent, on the contract for Golladay to appear at the January 21, 2019 signing.” (Id. ¶¶ 48-49.) Defendants also “worked with other representatives from and employees of France's employer, CAA Sports LLC (‘CAA Sports')[, ]” which is affiliated with Creative Artists' Agency (“CAA”), a California- based talent agency. (Id. ¶ 49.) Per this arrangement, which Plaintiffs allege “Defendants negotiated with France and CAA Sports, Golladay was paid to appear and was paid for a number of his autographs signed at the January 21, 2019 appearance.” (Id. ¶ 50.)

         In addition, on January 24, 2019, Defendant Redland Sports advertised through its Facebook page various autographed items for sale from the signing involving Golladay, which it described as its “#Massive #PrivateSigning.” (Id. ¶ 52.) Also on this date, Defendant Boone Enterprises posted an announcement on its Facebook page that advertised autographed items and noted that they were “from [its] private signing” with Golladay. (Id. ¶ 53.) According to Plaintiffs, “Defendants worked and negotiated with France and/or others at CAA Sports to arrange the signing, despite Defendants' full knowledge and awareness that France was not Golladay's NFLPA certified contract advisor or marketing agent.” (Id. ¶ 54.) Further, while “Defendants have negotiated numerous autograph signing and appearance deals for NFL player-clients of France and CAA Sports in the past . . . [i]n this instance, however, Defendants were aware that Golladay was not in fact represented by France and CAA Sports, either under [an SRA] or marketing agreement.” (Id. ¶¶ 55-56.) Plaintiffs further allege that “Defendants were also aware that France desired to represent Golladay, and that through negotiating a contract for Golladay's appearance, France hoped to persuade Golladay to terminate his relationship with Plaintiffs and become France's client.” (Id. ¶ 57.) Moreover, Plaintiffs assert that despite being “aware that Golladay in fact had an exclusive marketing agreement with Plaintiffs[, ]” and regardless of their knowledge of the EMA, “Defendants negotiated the contract for Golladay's January 21, 2019 appearance with France and CAA Sports.” (Id. ¶¶ 58-59.) Additionally, Plaintiffs allege that despite being aware of Plaintiffs' SRA with Golladay, Defendants were both “aware that France desired to represent and enter into [an SRA] with Golladay” and “through their negotiations with France about the January 21, 2019 signing, and knowledge of his desire to represent Golladay, purposefully interfered with the SRA.” (Id. ¶¶ 60-62.) Following the January 21, 2019 appearance and signing, “Golladay terminated the SRA with Plaintiffs on January 24, 2019.” (Id. ¶ 63.)

         Plaintiffs subsequently commenced the above-captioned action by filing a complaint against Defendants in this Court on February 22, 2019. (Doc. No. 1.) On March 15, 2019, Plaintiffs filed an amended complaint (Doc. No. 7), alleging tortious interference with existing contractual relationships with respect to the EMA (Count I), and tortious interference with existing contractual relationships pertaining to the SRA (Count II). Plaintiffs aver that “[a]s a result of Defendants' interference, Plaintiffs sustained and will sustain in the future pecuniary losses in excess of $75, 000, representing their lost fees” under the SRA and EMA. (Id. at 13-14.) The Redland Defendants moved to dismiss the amended complaint on April 14, 2019 (Doc. No. 10), and on April 15, 2019, the Boone Defendants also moved for dismissal of the amended complaint (Doc. No. 11).[7] The Court heard oral argument on the motions on July 23, 2019 (Doc. No. 26), and having been fully briefed (Doc. Nos. 18, 19, 21, 23, 24), the motions are ripe for disposition.

         II. STANDARD OF REVIEW

         A. Motion to Dismiss for Lack of Subject Matter Jurisdiction Pursuant to Federal Rule of Civil Procedure 12(b)(1)

         Federal Rule of Civil Procedure 12(b)(1) permits a party to move for dismissal of a claim on the basis that subject matter jurisdiction is lacking. See Fed.R.Civ.P. 12(b)(1). “A 12(b)(1) motion may challenge jurisdiction based on the face of the complaint or in its existence in fact.” Henderson v. Nationwide Mut. Ins. Co., 169 F.Supp.2d 365, 367 (E.D. Pa. 2001) (citing Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000)). “When the challenge is facial, the [C]ourt must accept as true all well-pleaded allegations in the complaint and draw reasonable inferences in favor of the plaintiff[, ]” but when a party raises a factual challenge, “the [C]ourt is not bound by the allegations in the pleadings” and “[t]herefore, ‘no presumptive truthfulness attaches to [the] plaintiff's allegations' for factual challenges.” See id. (citation omitted) (quoting Mortensen v. First Fed. Savs. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)). “Regardless of whether the challenge is facial or factual, the plaintiff bears the burden of persuasion.” Id. (citing Mortensen, 549 F.2d at 890); see also Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, at *1409 (3d Cir. 1991) (“When subject matter jurisdiction is challenged under Rule 12(b)(1), the plaintiff must bear the burden of persuasion.” (citing Mortensen, 549 F.2d at 891)).

         B. Motion to Dismiss for Lack of Personal Jurisdiction Pursuant to Federal Rule of Civil Procedure 12(b)(2)

         Federal Rule of Civil Procedure 12(b)(2) permits a defendant to bring a motion challenging the court's right to exercise personal jurisdiction over it. See Fed.R.Civ.P. 12(b)(2). Once “the defendant raises the question of personal jurisdiction, the plaintiff bears the burden to prove, by a preponderance of the evidence, facts sufficient to establish personal jurisdiction.” See Carteret Sav. Bank, FA v. Shushan, 954 F.2d 141, 146 (3d Cir. 1992). To avoid dismissal pursuant to Rule 12(b)(2), the plaintiff must “establish[] jurisdictional facts through sworn affidavits or other competent evidence.” See Time Share Vacation Club v. Atl. Resorts, 735 F.2d 61, 66 n.9 (3d Cir. 1984). “[A]t no point may a plaintiff rely on the bare pleadings alone in order to withstand a defendant's Rule 12(b)(2) motion to dismiss for lack of in personam jurisdiction.” Id.

         “A federal court may assert personal jurisdiction over a nonresident of the state in which the court sits to the extent authorized by the law of the state.” Carteret Sav. Bank, 954 F.2d at 144-45 (quoting Provident Nat'l Bank v. Cal. Fed. Sav. & Loan Ass'n, 819 F.2d 434, 436 (3d Cir. 1987)). Pennsylvania's long-arm statute permits the Court to exercise personal jurisdiction “to the fullest extent allowed under the Constitution of the United States.” 42 Pa. Cons. Stat. § 5322(b). Therefore, in its exercise of personal jurisdiction, this Court is constrained only by the Due Process Clause of the United States Constitution, which requires that a defendant has “certain minimum contacts with [the forum state] such that maintenance of the suit does not offend traditional notions of fair play and substantial justice.” See O'Connor v. Sandy Lane Hotel Co., Ltd., 496 F.3d 312, 316 (3d Cir. 2007) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). Requiring “minimum contacts” between the defendant and the forum state gives “fair warning” to a defendant that he or she may be called to defend a lawsuit in that state. See Marten v. Godwin, 499 F.3d 290, 296 (3d Cir. 2007) (quotation omitted).

         Two types of personal jurisdiction comport with these notions of due process: specific and general jurisdiction. See Daimler AG v. Bauman, 134 S.Ct. 746 (2014). Specific jurisdiction encompasses cases “in which the suit ‘aris[es] out of or relate[s] to the defendant's contacts with the forum.'” Id. at 754 (citations omitted). General jurisdiction, however, may be exercised by a court when foreign corporations' “affiliations with the [s]tate are so ‘continuous and systematic' as to render them essentially at home in the forum [s]tate.” Id. (citations omitted).

         C. Motion to Dismiss for Failure to State a Claim upon Which Relief May Be Granted Pursuant to Federal Rule of Civil Procedure 12(b)(6)

         Federal notice and pleading rules require the complaint to provide the defendant notice of the claim and the grounds upon which it rests. See Phillips v. Cty. of Allegheny, 515 F.3d 224, 232 (3d Cir. 2008). The plaintiff must present facts that, accepted as true, demonstrate a plausible right to relief. Fed.R.Civ.P. 8(a). Although the Federal Rule of Civil Procedure 8(a)(2) requires “only a short and plain statement of the claim showing that the pleader is entitled to relief, ” a complaint may nevertheless be dismissed under Federal Rule of Civil Procedure 12(b)(6) for its “failure to state a claim upon which relief can be granted.” See Fed.R.Civ.P. 12(b)(6).

         When ruling on a motion to dismiss under Rule 12(b)(6), the Court must accept as true all factual allegations in the complaint and all reasonable inferences that can be drawn from them, viewed in the light most favorable to the plaintiff. See In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 314 (3d Cir. 2010). The Court's inquiry is guided by the standard of Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009). Under Twombly and Iqbal, pleading requirements have shifted to a “more heightened form of pleading.” See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). To avoid dismissal, all civil complaints must set out “sufficient factual matter” to show that the claim is facially plausible. See id. The plausibility standard requires more than a mere possibility that the defendant is liable for the alleged misconduct. As the Supreme Court instructed in Iqbal, “where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.'” Iqbal, 556 U.S. at 679 (quoting Fed.R.Civ.P. 8(a)(2)).

         Accordingly, to determine the sufficiency of a complaint under Twombly and Iqbal, the United States Court of Appeals for the Third Circuit has identified the following steps a district court must take when determining the sufficiency of a complaint under Rule 12(b)(6): (1) identify the elements a plaintiff must plead to state a claim; (2) identify any conclusory allegations contained in the complaint “not entitled” to the assumption of truth; and (3) determine whether any “well-pleaded factual allegations” contained in the complaint “plausibly give rise to an entitlement for relief.” See Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010) (internal quotation marks omitted) (quoting Iqbal, 556 U.S. at 675, 679). In ruling on a Rule 12(b)(6) motion to dismiss for failure to state a claim, “a court must consider only the complaint, exhibits attached to the complaint, matters of public record, as well as undisputedly authentic documents if the complainant's claims are based upon these documents.” See Mayer v. Belichick, 605 F.3d 223, 230 (citing Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993)). A court may also consider “any ‘matters incorporated by reference or integral to the claim, items subject to judicial notice, matters of public record, orders, [and] items appearing in the record of the case.'” Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006) (quoting 5B Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 1357 (3d ed. 2004)).

         III. DISCUSSION

         The Court observes that all Defendants move for dismissal of the amended complaint pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure and to stay the case pending the outcome of an NFLPA grievance asserted by Plaintiffs against France on July 1, 2019, and that the Boone Defendants also move for dismissal for lack of personal jurisdiction under Rule 12(b)(2). Additionally, Defendants have also moved for bifurcation and sequencing of discovery so as to limit discovery to jurisdictional issues pending the disposition of the instant motions to dismiss. The Court addresses each asserted basis for dismissal in turn, beginning with Defendants' motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1).[8]

         A. Defendants' Motions to Dismiss for Lack of Subject Matter Jurisdiction Pursuant to Federal Rule of Civil Procedure 12(b)(1)

         1. Applicable Legal Standard

         “Federal courts, being courts of limited jurisdiction, have a continuing duty to satisfy themselves of jurisdiction before addressing the merits of a case.” Tasker v. Farmer's New Century Ins., No. 3:04-cv-2620, 2005 WL 8168231, at *1 (M.D. Pa. Mar. 10, 2005) (citing Packard v. Provident Nat'l Bank, 994 F.2d 1039, 1049 (3d Cir. 1993)); see also id. (noting the proposition that federal courts have “been too cautious in addressing the large number of cases” that “do not belong in federal courts” (citing Nelson v. Keefer, 451 F.2d 289, 293-85 (3d Cir. 1971))). 28 U.S.C. § 1332 provides, inter alia, that in order for federal diversity jurisdiction to exist, the amount in controversy must “exceed[] the sum or value of $75, 000.” See 28 U.S.C. § 1332(a). “It is well-settled that ‘[w]hen deciding a motion to dismiss pursuant to [Rule] 12(b)(1) on an allegation that the amount in controversy does not meet the jurisdictional minimum, the sum claimed by the plaintiff controls if the claim is apparently made in good faith.'” Chrestman v. NHB, LLC, No. 07-cv-492, 2007 WL 1575202, at *1 (E.D. Pa. May 31, 2007) (first alteration in original) (second set of internal quotation marks omitted) (quoting Krauss v. Steelmaster Bldgs., LLC, 2006 WL 3097767, No. 06-cv-796, at *1 (E.D.Pa. Oct. 27, 2006)). To determine whether the purported amount in controversy is sufficient to establish diversity jurisdiction, courts employ the “legal certainty” standard, which provides that:

[I]f, from the face of the pleadings, it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed or if, from the proofs, the [C]ourt is satisfied to a like certainty that the plaintiff never was entitled to recover that amount . . . the suit will be dismissed.

Valhal Corp. v. Sullivan Assocs., Inc., 48 F.3d 760, 761 (3d Cir. 1995) (quoting St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938)).

         2.Arguments ...


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