Opinion ID: 5499
Heading Depth: 2
Heading Rank: 1

Heading: interpreting the dynamic duo-hbo contract

Text: In paragraph 3 of the Dynamic Duo-HBO contract, Dynamic Duo reserved the right to authorize live exhibition of the fight by means of closed-circuit television. The parties' primary dispute, at trial and on appeal, concerns the definition of closed circuit as that term is used in the Dynamic Duo-HBO contract.
PPV asserts that the phrase by means of closed-circuit television refers to a particular means of transmitting a television or radio signal to specific viewers. That is, the term closed circuit merely describes a technology, whereby the telecast goes to a finite number of locations, rather than to the public at large.1 Based on this definition of closed circuit, PPV's proposed telecast to homes equipped with satellite dishes and the necessary decoder would have been by means of closed-circuit television. PPV claims that the right it acquired from J & J—to telecast the fight on a pay-per-view basis to homes equipped with satellite dishes—falls within the closed-circuit right retained by Dynamic Duo in paragraph 3 of the Dynamic Duo-HBO contract. Thus, PPV contends that HBO had no right to object to PPV's proposed telecast because the telecast would not have infringed HBO's contractual rights. To support its definition of closed circuit at trial, PPV presented the testimony of Dawson, PPV's owner and an active participant in the satellite industry, and Albert P. Kelly, whom PPV identifies as an expert in satellite communications technology. Both witnesses testified that closed circuit is merely a means of distributing a television signal to authorized points of reception. Kelly's 1 Under this definition, telecast to the general public by ABC, CBS, NBC, and FOX are not closed-circuit telecasts, but telecast by cable programmers such as ESPN, HBO, and Showtime are closed-circuit telecasts. A cable television system utilizes closed-circuit technology. background is in selling, installing, and maintaining satellite systems. He has helped conduct telecasts of boxing matches (and similar events), but has not been involved in negotiating telecast contracts with boxing promoters. Kelly testified that closed circuit has no special meaning in the boxing business. At trial, PPV also introduced several dictionaries and encyclopedias that also broadly defined closed circuit in the technological sense. See, e.g., WEBSTER'S NINTH NEW COLLEGIATE DICTIONARY 250 (1985) (a television installation in which the signal is transmitted by wire to a limited number of receivers); MCGRAW-HILL ENCYCLOPEDIA OF SCIENCE & TECHNOLOGY 45 (6th ed. 1987) (A video communication system in which the signal is transmitted from the point of origin only to those specific receivers that have access to it by previous arrangement.); LONGMAN DICTIONARY OF MASS MEDIA AND COMMUNICATION 53 (Tracy Daniel Connors ed. 1982) (transmission of television signals over a communications line or system (rather than broadcasting them) for reception by only certain receivers; often used for major sports events, industrial, and educational applications).
HBO asserts that the closed-circuit right retained by Dynamic Duo only encompasses the right to telecast the fight to paying audiences in commercial establishments, such as theaters, arenas, and bars. Under the Dynamic Duo-HBO contract, HBO claims the exclusive right to telecast the fight to home viewers. Thus, HBO contends that it justifiably interfered with PPV's proposed telecast. In support of HBO's position, two HBO representatives who negotiated the Dynamic DuoHBO contract testified that the term closed circuit, as used in the boxing industry, refers to exhibitions in public locations where people pay an admission fee. The two HBO representatives indicated that they have negotiated several similar telecast contracts with boxing promoters. One of Dynamic Duo's attorneys involved in negotiating the Dynamic Duo-HBO contract agreed with HBO's definition and HBO's position that the Dynamic Duo-HBO contract granted HBO the exclusive right to telecast to home viewers. The Dynamic Duo attorney testified that throughout his career he has represented boxers, boxing promoters, and closed-circuit exhibitors. Additionally, HBO introduced the testimony of two closed-circuit exhibitors, Louis A. Falcigno, owner and president of Momentum Enterprises, and Joseph Hand, Jr., president of Joe Hand Promotions. Both Falcigno and Hand testified that they have obtained closed-circuit rights to every major boxing event since the 1970s, and that they have done business with both Don King and Butch Lewis. Both Falcigno and Hand testified that, in the boxing industry, closed-circuit rights do not include the right to telecast to homes. Furthermore, the vice president of J & J, the company that contracted with PPV, conceded that, in boxing telecast contracts, closed circuit refers to a telecast via satellite or telephone lines into an arena or into a bar, something with substantial seating capacity. In further support of its definition, HBO introduced several newspaper articles that used the term closed circuit to refer to telecasts of boxing events in public locations. See, e.g., Larry Stewart, Fight on Pay-Per-View TV Only, or at a Closed-Circuit Location, L.A. TIMES, Dec. 7, 1989, at C12; Norman Chad, Pay-Per-View Can Drive Closed-Circuit off Screen, WASH. POST, July 2, 1988, at D2; Noel Gunther, Closed-Circuit Heavyweight: Louis Falcigno, Beaming Bouts to America's Fight Fans, N.Y. TIMES, June 19, 1988, at § 3, at 4.2 Moreover, at least one of the encyclopedias on which PPV relies contains a definition consistent with HBO's position. See MCGRAW-HILL ENCYCLOPEDIA OF SCIENCE & TECHNOLOGY 46 (Closed-circuit television can describe situations where the original television signal is transmitted and distributed to theaters which are equipped with large-screen television projection systems for displaying the received image to the paying audience.).
In construing a specific contractual term, we must give consideration to the meaning attributed to that term in the industry. See Seiden, 959 F.2d at 428 (noting that a contract is ambiguous if it is capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular 2 These articles distinguish between pay-per-view television and closed-circuit television, the latter being a telecast to commercial establishments, not to homes. This distinction is inconsistent with PPV's position. Under PPV's definition of closed-circuit, pay-per-view television is a type of closed-circuit telecast because the signals are transmitted to specific users. trade or business) (emphasis added). We must also consider the contract in its entirety in an effort to harmonize and give effect to all provisions of the contract so that none will be rendered meaningless. Goodheart Clothing Co. v. Laura Goodman Enter., Inc., 962 F.2d 268, 272-73 (2d Cir.1992) (applying New York law). The jury should have played no role in interpreting the Dynamic Duo-HBO contract. Based on the parties' objective intent as evidenced by the contract language as a whole and the industry meaning of the term closed circuit, we conclude that this contract is susceptible to only one reasonable interpretation. To the extent that the industry meaning of the term closed circuit might be considered a question of fact under New York law, we note that the overwhelming evidence demonstrates as a matter of law that, in the boxing industry, closed circuit refers to a type of venue, not the method of transmitting the television signal. Our examination of the Dynamic Duo-HBO contract as a whole accords with HBO's position that it had the exclusive right to telecast the fight to home viewers. The term closed circuit as used in paragraph 3 of the contract must be construed with reference to other provisions in the contract, particularly paragraph 2 of the contract. The first sentence o f paragraph 2 states that HBO shall have the exclusive ... right to exhibit the Event in any and all media on the HBO programming services throughout the United States.... (emphasis added). The word exclusive is used again in the fourth sentence of paragraph 2: In addition to HBO's exclusive right to exhibit the Event live, HBO shall have the right to exhibit the Event on a delayed basis.... Paragraph 3 limits HBO's exclusive right by providing that Dynamic Duo may authorize live exhibition by means of closed-circuit television. PPV asserts that paragraph 2 only grants HBO the right to exhibit the fight on HBO programming services, and that Dynamic Duo, in paragraph 3, retained the right to permit anyone to telecast the fight anywhere, so long as the telecast utilized closed-circuit technology. Under PPV's interpretation, Dynamic Duo retained the right to permit other cable programming companies, such as Showtime or ESPN, to telecast the fight to home viewers.3 PPV's interpretation would render the 3 Cable programmers utilize close-circuit technology. language exclusive and in any and all media meaningless. Moreover, it ignores that HBO's own telecast of the fight utilized closed-circuit technology. Given the contract language as a whole and the prevailing industry meaning of the term closed circuit, we interpret the Dynamic Duo-HBO contract as conveying to HBO the exclusive right to telecast the fight live to home viewers.4 Under paragraph 3, Dynamic Duo retained the right to telecast the fight to public venues.5