Court Opinion

ID: 2786660
Source: CourtListenerOpinion
Date Created: 2015-03-17 15:00:35.062761+00
Date Added: 2024-06-11T15:18:51.328287
License: Public Domain

14-967(L)
     Spanski Enterprises, Inc. v. Telewizja Polska S.A.

                          UNITED STATES COURT OF APPEALS
                              FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER
     RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
     ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
     PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
     DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
     ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
     SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1            At a stated term of the United States Court of Appeals
 2       for the Second Circuit, held at the Thurgood Marshall United
 3       States Courthouse, 40 Foley Square, in the City of New York,
 4       on the 17th day of March, two thousand fifteen.
 5
 6       PRESENT: DENNIS JACOBS,
 7                RAYMOND J. LOHIER, JR.,
 8                              Circuit Judges,
 9                LAURA TAYLOR SWAIN,
10                              District Judge.*
11
12       - - - - - - - - - - - - - - - - - - - -X
13       Spanski Enterprises, Inc.,
14                Plaintiff-Appellant and
15                Cross-Appellee,
16
17
18                    -v.-                                               14-967 (Lead)
19                                                                       14-1115 (XAP)
20
21       Telewizja Polska, S.A.,
22                Defendant-Appellee and
23                Cross-Appellant.
24       - - - - - - - - - - - - - - - - - - - -X

                *
                  The Honorable Laura Taylor Swain, of the United
         States District Court for the Southern District of New York,
         sitting by designation.
                                                  1
 1   FOR APPELLANT:             JONATHAN ZAVIN (with Jonathan
 2                              Neil Strauss, John Piskora, and
 3                              Michael Barnett, on the brief),
 4                              Loeb & Loeb LLP, New York, New
 5                              York.
 6
 7   FOR APPELLEE:              STANLEY McDERMOTT III (with
 8                              David S. Wenger, on the brief),
 9                              DLA Piper LLP (US), New York,
10                              New York.
11
12        Appeal from a judgment of the United States District
13   Court for the Southern District of New York (Carter, J.).
14
15        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
16   AND DECREED that the judgment of the district court be
17   AFFIRMED.
18
19        Plaintiff-Appellant Spanski Enterprises, Inc. (“SEI”)
20   appeals from the judgment of the United States District
21   Court for the Southern District of New York (Carter, J.),
22   entered after a bench trial, insofar as the judgment
23   partially denied relief on one of SEI’s claims against
24   Defendant-Appellee Telewizja Polska, S.A. (“TVP”). TVP
25   cross appeals, seeking vacatur of the entire damages award.
26   We assume the parties’ familiarity with the underlying
27   facts, the procedural history, and the issues presented for
28   review.
29
30        This is the latest appeal arising from prolonged
31   disputes between TVP, a public broadcasting corporation
32   wholly owned by the Republic of Poland, and SEI, which has
33   been TVP’s exclusive distributor of television programming
34   content to the Polish diaspora in the Americas. See Spanski
35   Enters., Inc. v. Telewizja Polska, S.A., 581 F. App’x 72 (2d
36   Cir. 2014). This dispute, like the others, turns largely on
37   straightforward questions of contractual interpretation.
38
39        1. Although neither party argued the issue (until we
40   ordered briefing), we must begin by addressing a defect in
41   appellate jurisdiction. SEI’s notice of appeal reads in
42   full:
43
44            NOTICE IS GIVEN that Plaintiff Spanski
45            Enterprises, Inc. (“SEI”) hereby appeals to the
46            United States Court of Appeals for the Second
47            Circuit from that part of the March 6, 2014

                                  2
 1            Opinion and Order of the Hon. Andrew L. Carter,
 2            Jr., as well as the March 14, 2014 Judgment
 3            resulting therefrom, which denied SEI’s third
 4            claim for relief, which was: that Defendant
 5            Telewizja Polska, S.A. breached its contract with
 6            SEI when it removed the Klan series from the TVP
 7            Polonia channel.
 8
 9   In other words, SEI declared its intent to appeal from only
10   “that part of” the district court’s order that denied relief
11   on “SEI’s third claim for relief”--what the parties refer to
12   as “the Klan claim.” SEI’s opening brief, however, also
13   seeks reversal, in part, of the district court’s damages
14   order with respect to its first claim for relief (“the
15   Polvision claim”). See Appellant’s Br. at 30-38 (“The
16   District Court Erred in Excluding From Damages Specific
17   Episodes of Klan and Plebania That Had Not Appeared on TVP
18   Polonia.”). And although the two claims might share some
19   limited factual overlap, the parties have always treated
20   them as legally distinct.1
21
22        “Our jurisdiction . . . depends on whether the intent
23   to appeal from [a] decision is clear on the face of, or can
24   be inferred from, the notice[] of appeal.” New Phone Co. v.
25   City of New York, 498 F.3d 127, 131 (2d Cir. 2007); accord
26   Bloom v. FDIC, 738 F.3d 58, 61 (2d Cir. 2013).
27
28        SEI’s notice can only be read as an intent to appeal
29   the district court’s rejection of “SEI’s third claim for
30   relief”; that is, the Klan claim. SEI cannot now enlarge
31   our appellate jurisdiction to quibble with the district
32   court’s damages calculation as to the Polvision claim.
33   Because we lack jurisdiction to consider on appeal a claim
34   that was omitted from SEI’s notice, we will not consider
35   this argument further.
36

         1
              Compare, e.g., Am. Compl. ¶ 37 (SEI describes its
     “first claim for relief” as a breach-of-contract claim
     arising from TVP’s decision “to license to SEI’s direct
     competitor, Polvision, certain TV Polonia programming”);
     with Am. Compl. ¶ 45 (SEI describes its “third claim for
     relief” as a breach-of-contract and good-faith-and-fair-
     dealing claim arising from TVP’s “removing the long-running
     and popular television series Klan from TV Polonia,” making
     no mention of Plebania, or any other series).
                                  3
 1        2. As to the Klan claim: SEI alleges breach of an
 2   implied covenant of good faith and fair dealing in
 3   connection with TVP’s removal of a television series called
 4   “Klan” from the TV Polonia channel. We affirm the district
 5   court’s dismissal of this claim.
 6
 7        Under New York law, “[i]mplicit in all contracts is a
 8   covenant of good faith and fair dealing in the course of
 9   contract performance.” Dalton v. Educ. Testing Serv., 663
10   N.E.2d 289, 291 (N.Y. 1995). “The covenant cannot be used,
11   however, to imply an obligation inconsistent with other
12   terms of a contractual relationship.” Gaia House Mezz LLC
13   v. State Street Bank & Trust Co., 720 F.3d 84, 93 (2d Cir.
14   2013) (citing Dalton, 663 N.E.2d at 289).
15
16        Pursuant to the 1994 Agreement, “TVP reserves the right
17   to introduce changes to the TV Polonia Program . . . while
18   retaining its general character.” 1994 Agreement § 9.4.2
19   Relying on this language, TVP argues that it retains
20   complete discretion over individual programming decisions--
21   like the decision to remove Klan from TV Polonia--as long as
22   TV Polonia’s “general character” is left undisturbed.
23
24        Although it was disputed in the district court, SEI now
25   concedes that, as a contractual matter, “TVP unquestionably
26   has the discretion to remove series from TV[] Polonia.”3
27   SEI’s Reply Br. at 33. SEI argues nevertheless that TVP’s
28   “discretion must be exercised in good faith, and that
29   decisions to remove series may not be made for the improper
30   purpose of circumventing the Agreements.” Id.
31

         2
              Neither the subsequent amendments to the 1994
     Agreement, nor the 2009 Settlement Agreement made any
     changes to this provision.
         3
              Notwithstanding this clear concession, SEI
     struggled mightily to salvage its faulty notice of appeal,
     in part, by suggesting in its supplemental letter brief that
     it still claims that TVP breached the parties’ contracts by
     removing Klan from TV Polonia. To the extent SEI is
     actually attempting to resurrect this breach-of-contract
     claim (rather than grasping for a post-hoc explanation for
     its partially defective notice), the argument remains
     waived.
                                  4
 1        But as to good faith, the district court made explicit
 2   factual findings: SEI failed to sustain its burden to show
 3   that SEI’s decision to remove the Klan series was made in
 4   bad faith. The district court credited TVP’s “evidence that
 5   the decision to remove Klan was part of a regular quarterly
 6   programming review,” and that TVP’s decision was not “a
 7   violation of what SEI could have reasonably expected” under
 8   the terms of the parties’ contractual relationship. Those
 9   findings were not clearly erroneous.
10
11        3. TVP’s cross-appeal is focused primarily on the
12   district court’s damages order, which granted partial relief
13   on SEI’s claim that TVP breached the parties’ contracts by
14   licensing TV Polonia programming content to a (non-party)
15   competitor, Polvision. TVP challenges (a) the liability
16   ruling, (b) the propriety of a damages award for lost
17   profits, and (c) the actual calculation of the lost-profits
18   award. We affirm the district court on all three issues.
19
20        a. TVP argues that SEI’s exclusivity rights are
21   limited to “one time use” of TV Polonia programming, meaning
22   TVP is free to license “rerun” (i.e., previously aired)
23   episodes of TV Polonia shows to whomever it wishes. This
24   argument fails for two reasons.
25
26        This is a new argument raised for the first time on
27   appeal. Moreover, TVP made representations in the district
28   court that are inconsistent with this argument. See, e.g.,
29   TVP’s Post Trial Mem. at 5 (“Clause II.E [of the 2009
30   Settlement Agreement] adds to SEI’s distribution rights the
31   exclusive right to repeat broadcasts of the TVP Polonia
32   channel (beyond SEI’s previous one-off use rights)--it
33   prevents TVP from distributing ‘other channels’ containing
34   the TV[] Polonia broadcast, even after the first broadcast
35   of the TV[] Polonia channel . . . by SEI.”). So the
36   argument is waived. See Paulsen v. Remington Lodging &
37   Hospitality, LLC, 773 F.3d 462, 468 (2d Cir. 2014).
38
39        Even if the argument had been properly preserved, it
40   would be meritless. In the parties’ 2009 Settlement
41   Agreement, TVP promised not to
42
43            distribute or offer to distribute, or permit the
44            distribution of any other channels in North and
45            South America that contain any of the same
46            programming that is contained, has been contained,

                                  5
 1            or will be contained in either TV Polonia or TVP
 2            Info.
 3
 4   2009 Settlement Agreement § II.E. A rerun of a TV Polonia
 5   show is unquestionably “programming” that “has been
 6   contained” on TV Polonia. Licensing that content to a
 7   competing channel violates TVP’s promise not to “permit the
 8   distribution of any other channels” that contain TV Polonia
 9   programming content. We therefore affirm the district
10   court’s ruling that TVP is liable for breach of contract on
11   the Polvision claim.
12
13        TVP suggests that the agreement cannot mean what it
14   says, because “SEI cannot restrain competition.” If TVP is
15   arguing that all vertical exclusive distribution agreements
16   violate the antitrust laws, that argument is also meritless,
17   see, e.g., E & L Consulting, Ltd. v. Doman Indus. Ltd., 472
18   F.3d 23, 29 (2d Cir. 2006), and forfeited, see Paulsen, 773
19   F.3d at 468. Since every exclusive distribution agreement--
20   indeed, every contract--“restrain[s] competition” in a
21   sense,3 that alone is no justification for TVP’s clear
22   violations of its contractual promises.
23
24        b. TVP contends that the district court erred in
25   adopting a lost-profits measure of damages. “[W]e review
26   the legal question of the applicable damages measurement de
27   novo.” Bessemer Trust Co., N.A. v. Branin, 618 F.3d 76, 85
28   (2d Cir. 2010). Even so, any predicate factual findings
29   relevant to that determination are reviewed for clear error.
30   See id. at 91.
31
32        Under New York law, “to recover damages for lost
33   profits, it must be shown that: (1) the damages were caused
34   by the breach; (2) the alleged loss [is] capable of proof
35   with reasonable certainty, and (3) the particular damages
36   were within the contemplation of the parties to the contract
37   at the time it was made.” Ashland Mgmt. Inc. v. Janien, 624
38   N.E.2d 1007, 1011 (N.Y. 1993).
39

         3
              See Bd. of Trade of City of Chi. v. United States,
     246 U.S. 231, 238 (1918) (“Every agreement concerning trade,
     every regulation of trade, restrains. To bind, to restrain,
     is of their very essence.”); see also NCAA v. Bd. of Regents
     of Univ. of Okla., 468 U.S. 85, 98 (1984) (“[E]very contract
     is a restraint of trade.”).
                                  6
 1        The district court applied the correct legal standard,
 2   and the evidence supports its conclusion that the first two
 3   elements of New York’s lost-profits test are established.
 4   So the question is whether the district court correctly
 5   concluded that the parties contemplated lost profits damages
 6   at the time they entered into the 2009 Settlement Agreement.
 7
 8        This facet of the parties’ dispute turned on whether,
 9   at the time the Settlement Agreement was signed, SEI had
10   ever contracted with other channels to distribute or
11   syndicate TV Polonia programming content (and whether TVP
12   knew about these contracts). Resolving that factual
13   dispute, the district court credited SEI’s “evidence of
14   agreements it had made to license TVP Polonia content to
15   other channels”; and SEI’s evidence that “when other
16   channels . . . approached TVP about distributing TVP Polonia
17   content, it informed them SEI was the exclusive distributor
18   and directed them to contact SEI if they wanted to pursue an
19   agreement.” These factual findings are not clearly
20   erroneous, and they are sufficient to support the district
21   court’s conclusion that SEI was entitled to lost profits.
22
23        c. TVP contends that the district court’s lost-profit
24   calculations were excessive. Assuming the district court
25   selected an appropriate measure of damages, “[t]he question
26   of the amount of recoverable damages is a question of fact,”
27   reviewed only for clear error. See Bessemer Trust, 618 F.3d
28   at 85 (emphasis added).
29
30        Here, the district court found that $600-per-episode
31   was the market value of the syndication rights that TVP
32   improperly licensed to Polvision. That price came from
33   TVP’s own contracts with Polvision. Relying on TVP’s own
34   bargained-for price was not clearly erroneous and used an
35   appropriate measure of damages. So we affirm the damages
36   award in full.
37
38        4. TVP also cross-appeals from the dismissal of its
39   counterclaim, which alleged that SEI failed to expend
40   “reasonable efforts” to market and distribute TVP’s content
41   in a way that would maximize total subscribers. The
42   district court found a “complete void of evidence in the
43   record to support this claim.” That finding was not clearly
44   erroneous: the only evidence presented by TVP concerning a
45   shortfall in subscribers established that SEI’s results fell
46   short of TVP’s expectations. But as the district court
47   correctly explained, “the test is whether SEI used

                                  7
 1   reasonable efforts to distribute TVP’s programs”--“not
 2   whether SEI achieved measurable success in distribution as
 3   contemplated by the number of subscribers.”
 4
 5                             *    *   *
 6
 7        For the foregoing reasons, and finding no merit in the
 8   parties’ other arguments, we hereby AFFIRM the judgment of
 9   the district court.
10
11                                 FOR THE COURT:
12                                 CATHERINE O’HAGAN WOLFE, CLERK
13

                                    8