IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF OREGON 

MEDFORD DIVISION 

THE ORIGINAL TALK RADIO 

NETWORK, INC., an Oregon 

corporation; TALK RADIO 

NETWORK ENTERPRISES, LLC, 

an Oregon limited liability 

Company; TALK RADIO NETWORK 

ENTERTAINMENT, INC., an 

Oregon corporation; TALK 

RADIO NETWORK-FM, INC., a 

Delaware corporation; 

AMERICA'S RADIO NEWS 

NETWORK, a N.evada Corporation,) 

Plaintiffs and 

Counterclaim 

Defendants, 

v. 

JOSEPH M. ALIOTO, 

individually and doing 

business as the ALIOTO 

FIRM, 

v. 

Defendant and 

Counterclaim 

Plaintiff, 

LAW 

MARK MASTERS, an individual 

1 - ORDER 

Counterclaim 

Defendant. 

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No. 1:13-cv-00759-PA 

ORDER 

Case 1:13-cv-00759-PA Document 137 Filed 05/27/14 Page 1 of 12
PANNER, J. 

This matter comes before the Court on Plaintiffs' Motion for 

Partial Summary Judgment (#105) and Defendant's Amended Motion 

for Summary Judgment (#118). Plaintiffs' Motion is GRANTED. 

Defendant's Motion is GRANTED in part and DENIED in part. 

Background 

Plaintiffs and counterclaim defendants in this matter are 

The Original Talk Radio Network, Inc., Talk Radio Network 

Enterprises, LLC, Talk Radio Network Entertainment, Inc., Talk 

Radio Network-FM, Inc., and America's Radio News Network 

(collectively "Plaintiffs"), all of whom are companies which 

produce syndicated news and talk radio programs. Defendant and 

counterclaim plaintiff is Joseph Alioto, an attorney specializing 

in antitrust litigation. Defendant has also named Mark Masters 

("Masters"), CEO of Plaintiffs, as an individual counterclaim 

defendant. 

In 2011, Plaintiffs became concerned about the practices of 

Dial Global ("Dial") . Plaintiffs believed Dial was violating 

antitrust laws and that Dial's conduct would shortly drive 

Plaintiffs out of business. Plaintiffs, through Masters, sought 

to retain Defendant to represent them in an antitrust action 

against Dial. 

After reviewing their case, Defendant agreed to represent 

Plaintiffs. Plaintiffs contend Defendant promised to prosecute 

their case against Dial vigorously and promptly file a complaint. 

On February 10, 2012, Defendant drew up a Fee Agreement, which he 

sent to Plaintiffs. The relevant terms of the Fee Agreement 

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Case 1:13-cv-00759-PA Document 137 Filed 05/27/14 Page 2 of 12
were: 

1) The scope of the representation was for Plaintiffs 

against Dial. 

2) Plaintiffs would pay Defendant a "$500,000 non-deductible 

non-refundable true retainer" to be paid in installments. 

The first installment of $150,000 was due immediately, with 

$100,000 installments due on March 26, 2012, May 7, 2012, 

and June 18, 2012. A final $50,000 installment was due on 

July 30, 2012. 

3) Defendant would be paid on a contingency basis. He would 

receive 25% of anything recovered before filing the 

complaint, 33.33% of anything recovered after filing t'he 

complaint, and 40% of anything recovered after the 

commencement of trial. 

4) Plaintiffs would pay $25,000 into a separate fund for 

Defendant's costs. 

5) If Plaintiffs withheld their consent to settle the case 

for an amount Defendant believed to be reasonable, Defendant 

would be permitted to withdraw. 

Masters signed the agreement and returned it to Defendant, 

along with the initial payment of $150,000 and the $25,000 cost 

fund. Plaintiffs subsequently made the March 26 payment of 

$100,000. 

Defendant and Plaintiffs engaged in settlement negotiations 

with Dial. Dial offered Plaintiffs concessions, the value of 

which is disputed by the parties. Plaintiffs repeatedly demanded 

that Defendant file the complaint, which Defendant refused to do. 

In May 2012, Plaintiffs claimed that Defendant had breached the 

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Case 1:13-cv-00759-PA Document 137 Filed 05/27/14 Page 3 of 12
contract by failing to file the complaint. Plaintiffs withheld 

payment of the May 7 and June 18 installments of the retainer and 

advised Defendant that they would immediately transfer the funds 

if Defendant filed the complaint against Dial. 

declined to file the complaint. 

Defendant again 

On June 8, 2012, Defendant sent Plaintiffs a letter stating 

that Defendant had elected to withdraw from his representation, 

citing differences of opinion on strategy and tactics and 

Plaintiffs' refusal to pay the May 7 retainer installment. 

Plaintiffs did not accept the withdrawal and advised Defendant 

that the withdrawal would be prejudicial to them. Despite 

Plaintiffs' protests, Defendant withdrew. 

Plaintiffs then filed their complaint against Dial in 

district court in California. Plaintiffs retained different 

counsel to represent them in that action. The case against Dial 

was transferred to New York and,has since settled. 

Plaintiffs demanded the return of the money they had paid to 

Defendant. Defendant refused, although he did ultimately return 

the balance of the cost fund account after Plaintiffs filed this 

action. 

Legal Standard 

Summary judgment is appropriate "if the movant shows that 

there is no genuine dispute as to any material fact and the 

movant is entitled to judgment as a matter of law." Fed. R. Civ. 

P. 56(a). Whether or not a fact is material is determined by the 

substantive law on the issue. T.W. Elec. Serv., Inc. v. Pac. 

Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). There 

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Case 1:13-cv-00759-PA Document 137 Filed 05/27/14 Page 4 of 12
is a genuine dispute if the evidence is such that a reasonable 

jury would return a verdict for the nonmoving party. Anderson v. 

Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party 

has the burden of establishing the absence of a genuine issue. of 

material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 

( 198 6) . 

Special rules of construction apply to evaluating summary 

judgment motions: (1) all reasonable doubts as to the existence 

of genuine issues of material facts should be resolved against 

the moving party; and (2) all inferences must be drawn in the 

light most favorable to the nonmoving party. T.W. Elec., 809 F.2d 

at 630-31. 

Discussion 

I. Applicable Law 

As a preliminary matter, the Court must address whether 

Oregon or California law applies. Both in his Motion for Summary 

Judgment and in his Response in Opposition to Plaintiff's Motion 

for Partial Summary Judgment, Defendant argues that California 

law should govern this case. 

When sitting in diversity, a federal court must apply the 

conflict-of-law rules of its forum state to determine which law 

c 

governs the dispute. See Mortensen v. Bresnan Communs., LLC, 722 

F.3d 1151, 1161 (9th Cir. 2013). Under Oregon conflict-of-law 

rules, the "necessary threshold determination [is] . whether 

there is a material difference between Oregon substantive law and 

the law of the other forum. Waller v. Auto-Owners Ins. Co., 174 

Or. App. 471, 475 (2001). Where no material difference exists, 

courts will apply the law of Oregon regardless of the relative 

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Case 1:13-cv-00759-PA Document 137 Filed 05/27/14 Page 5 of 12
significance of the relationship between the dispute and the 

alternative forum. See Angelini v. Delaney, 156 Or. App. 293, 

300 (1998). 

It is the burden of the party advocating for the application 

of a different forum's law to identify material differences 

between the law of Oregon and the law of the alternative forum 

and Oregon courts will apply Oregon law in the event no party 

identifies material distinctions, without regard to whether such 

distinctions actually exist. Id. "[I]t is not [the] obligation 

[of the courts] to cast around the law of California in quest of 

possible material differences." Id. 

If a material difference is found to exist, courts must then 

consider the states' relative connection to and interest in the 

litigation. Lilienthal v. Kaufman, 239 Or. 1, 14 (1964). When 

the interests of neither jurisdiction are clearly more important 

than those of the other, "the public policy of Oregon should 

prevail and the law of Oregon should be applied." Id. at 16. 

In this case, Defendant argues that a material difference 

might exist between the laws of California and Oregon with regard 

to the validity of true retainers, although he acknowledges that 

"both California and Oregon recogniz~ true retainers." 

This does not satisfy the threshold requirement of 

demonstrating a material difference between the laws of Oregon 

and California. As to all other claims and counter-claims, 

Defendant has made no showing that a material conflict exists 

between the relevant laws of California and Oregon. 

Even assuming, arguendo, that a material difference exists, 

I am not persuaded that either state has a stronger connection 

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Case 1:13-cv-00759-PA Document 137 Filed 05/27/14 Page 6 of 12
to, or interest in, this litigation. Both share a similar 

interest in the enforcement of contracts and both have a public 

policy interest in the prevention of fraud. Accordingly, I 

conclude that the public policy of Oregon should prevail and this 

case shall be governed by the substantive laws of Oregon. 

II. Plaintiffs' Motion for Partial Summary Judgment 

Plaintiffs move for partial summary judgment on Defendant's 

counterclaim for breach of contract. Defendant's counterclaim 

seeks to hold both Plaintiffs and Masters liable for $250,000 

which Defendant contends is still owing on the contract. 

Plaintiffs argue that the contract is between Plaintiffs and 

Defendant and that Masters signed the contract in his capacity as 

an officer and agent of Plaintiffs. 

The dispute comes down to two lines in the Fee Agreement. 

The first relevant line is the signature line, which reads "Mark 

Masters, CEb Talk Radio Network" and bears the signature "Mark 

Masters, CEO." Plaintiffs contend that this clearly demonstrates 

that Masters signed the contract in his capacity as CEO of 

Plaintiffs, rather than in his individual capacity. 

The Oregon Supreme Court has considered this issue: 

It may often happen in the haste incident to the prompt 

execution of business, or through in~dvertence, being 

more intent on the substance than the form, that 

merchants or others engaged in business transactions 

express themselves in their writings informally, and 

without precision of language, and hence the liberal 

policy of allowing the intent of the parties to govern~ 

as discoverable from the whole instrument. But we do 

not think it is usual for persons engaged in business 

transactions, when acting for themselves and not in a 

representative capacity, to attaqh to their signatures 

such designations of office and to attest the same with 

the seal of the corporation bearing an impression of 

its corporate name. On the contrary, we believe when 

such things are done, and the instrument is consistent 

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Case 1:13-cv-00759-PA Document 137 Filed 05/27/14 Page 7 of 12
and operative with such indicia, they are more properly 

referable to the company than the persons as 

individuals who signed the instrument . 

. Guthrie v. Imbrie,- 12 Or. 182, 192 (1885). 

The record indicates that the Fee Agreement was prepared and 

signed in some haste. A close reading makes it clear that the 

agreement was to be between Plaintiffs and Defendant, with 

Masters acting as an agent of Plaintiffs. Such an arrangement is 

consistent with the signature line, as well as with the address 

line, which similarly reads "Mark Masters, CEO Talk Radio 

Network." 

The second relevant line follows a description of the sums 

to be paid and the dates of payment and reads: "These retainer 

installments are guaranteed to be paid on the dates indicated by 

Mr. Masters- and TRN." Defendant argues that this unambiguously 

shows that Masters was to be held personally liable. I conclude, 

however, that ·the guarantee line is not as unambiguous as 

Defendant contends. It could be a guarantee of payment, that 

payment was to be made on a specific date, or both. Nor does it 

explicitly state that Masters is personally liable for the 

amount. Consider{ng the document as a whole, I am satisfied that 

Masters was signing as an officer of TRN. 

In the alternative, Defendant contends that Masters should 

be held personally liable because Plaintiffs are his alter ego. 

In order to impose liability on a shareholder under the alter ego 

theory, the moving party must show that 1) the shareholder 

acttially .controlled or shared in the actu~l control of the 

corporation; 2) the shareholder engaged in improper conduct in 

the exercise of control over the corporation; and 3) the 

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Case 1:13-cv-00759-PA Document 137 Filed 05/27/14 Page 8 of 12
shareholder's improper conduct in the exercise of control over 

the corporation prevented the plaintiff from obtaining an 

adequate remedy from the corporation. Salem Tent & Awning Co. v. 

Schmidt, 79 Or. App. 475, 481 (1986). 

In this case, Defendant has shown only that Masters 

controlled Plaintiffs or shared in the control of Plaintiffs. 

There is no evidence of improper conduct or that Masters's 

improper conduct has prevented Defendant from obtaining a remedy 

from Plaintiffs. Accordingly, Defendant cannot establish 

Masters's personal liability under the alter ego theory. 

Plaintiffs' Motion for Partial Summary Judgment is GRANTED. 

III. Defendant's Motion for Summary Judgment 

Def~ndant has moved for summary judgment on Plaintiffs' 

claims as well as his own counterclaims. Plaintiffs have 

conceded and withdrawn their claim for legal malpractice. I 

accept that concession and that claim is DISMISSED. 

A. Fraud Claims 

Both parties have asserted claims for fraud. To establish 

actionable fraud under Oregon law, a plaintiff must plead and 

prove the following elements: 1) a representation; 2) its 

falsity; 3) its materiality; 4) the speakers knowledge of its 

falsity or ignorance of its truth; 5) his intent that it should 

be acted upon by the person and in the manner reasonably 

contemplated; 6) the hearer's ignorance of its falsity; 7) his 

reliance on its truth; 8) his right to rely thereon; and 9) his 

consequent and proximate injury. Webb v. Clark, 274 Or. 387, 391 

( 197 6) . 

A claim for fraud cannot be predicated upon a promise to do 

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Case 1:13-cv-00759-PA Document 137 Filed 05/27/14 Page 9 of 12
something in the future "unless it is alleged and proven that, at 

the time of making the promise, there was no present intention of 

performance or, alternatively, that the promise was made with 

reckless disregard as to whether the promissor could or could not 

perform." Jones v. Northside Ford Truck Sales, Inc., 276 Or. 

685, 690 (1976) (internal quotation marks omitted). Proof of a 

defendant's eventual failure to perform is not a sufficient basis 

for an inference that the defendant never intended to perform. 

Id. at 691. "Other circumstances of a substantial character must 

be shown ln addition to nonperformance before such inference of 

wrongful ~ntent may be drawn." Conzelmann v. Northwest Poultry & 

Dairy Prod. Co., 190 Or. 332, 352 (1950). 

1. Plaintiffs' Claim for Fraud 

In this case, Plaintiffs allege that Defendant fraudulently 

represented to them that he would "diligently finalize and file 

the complaint in the federal court in the State of Oregon and 

vigorously prosecute Plaintiffs' claims against [Dial]." 

Plaintiffs contend that, once Defendant had induced them to sign 

the Fee Agree~ent, his "attitude changed so dramatically" that it 

was apparent he had never intended to perform as promised. 

Plaintiffs contend this constitutes "circumstances of a 

substantial character" to support an inference of wrongful 

intent .. 

I cannot agree. The only evidence that Defendant never 

intended to file the complaint and vigorously prosecute 

Plaintiffs' claims is his subsequent non-performance. This is 

not sufficient create a genuine question of fact with regard to 

Plaintiffs' fraud claim. Accordingly, Defendant's Motion for 

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Case 1:13-cv-00759-PA Document 137 Filed 05/27/14 Page 10 of 12
Summary Judgment on this claim is GRANTED. 

2. Defendant's Counterclaim for Fraud 

Defendant's counterclaim for fraud alleges that Plaintiffs 

and Masters represented that they would pay him $500,000 to 

induce him to enter into the Fee Agreement with them. Defendant 

l 

-alleges that neither Plaintiffs dr Masters had any intention of 

actually paying that money. 

Although Plaintiffs have not moved for summary judgment on 

this issue, this Court may sua sponte grant summary judgment to 

one party if "it is made to appear from all the records, files, 

affidavits and documents presented that there is no genuine 

dispute respecting a material fact essential to the proof of 

movant's case and that the case cannot be proved if a trial 

should be held." Cool Fuel, Inc. v. Connett, 685 F.2d 309, 311 

(9th Cir. 1982). 

Defendant's counterclaim for fraud shares the deficiencies 

of-Plaintiffs' fraud claim. Other than the fact of subsequent 

non-performance, Defendant has produced no evidence that either 

Plaintiffs or Masters intended not to honor the Fee Agreement at 

the time they entered into it. Nor has Defendant produced 

evidence of "circumstances of a substantial character" to support 

an inference of fraud. I conclude that there is no genuine 

dispute of material fact as to this issue. Accordingly, I GRANT 

summary judgment in favor of Plaintiffs. 

B. Other claims and counterclaims 

As to all other claims and counterclaims, I conclude that 

genuine issues of material fact remain. Accordingly, I find that 

summary judgment is not appropriate on those claims and 

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Case 1:13-cv-00759-PA Document 137 Filed 05/27/14 Page 11 of 12
Defendant's Motion for Summary Judgment is DENIED. 

Conclusion 

Plaintiffs' Motion for Partial Summary Judgment (#105) is 

GRANTED. Plaintiffs have withdrawn their claim for legal 

malpractice and that claim is DISMISSED. Defendant's Amended 

Motion for Summary Judgment (#118) is GRANTED in part and DENIED 

in part. Summary judgment is GRANTED in favor of Defendant on 

Plaintiffs' claim for fraud and GRANTED in favor of Plaintiffs on 

Defendant's counterclaim for fraud. Summary judgment is DENIED 

as to all other claims and counterclaims. 

IT IS SO ORDERED. 

DATED this ~J' day of May, 2014. 

Owen M. Fanner 

United States District Judge 

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Case 1:13-cv-00759-PA Document 137 Filed 05/27/14 Page 12 of 12