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UPDATE ON IWTV VS. GCW LAWSUIT, GCW FILES MOTION TO DISMISS

By Mike Johnson on 2021-09-14 14:22:00

An update on the breach of contract lawsuit Pennsylvania-based independent wrestling streaming service IndependentWrestling.TV  (IWTV) filed beore the United States District Court

Middle District of Pennsylvania (Scranton) last June against Game Changer Wrestling, alleging that GCW broke an agreement for IWTV to carry their events as part of IWTV's streaming service.  

On 8/30, GCW filed a motion to dismiss, claiming that IWTV has failed “to state a claim upon which relief can be granted.”

The Times-Leader in Pennsylvania reported back in June that the lawsuit alleges the two sides entered into an agreement in March of 2020 but by December, GCW informed IWTV they would be "breaching" the deal and have since held 36 PPV events, a "violation of the signed agreement" of the two sides.  The lawsuit alleges GCW has damaged IWTV "in excess of $500,000."

In a 100-page filing on 9/13 before the law, GCW argued their side of the argument, pushing for a dismissal, stating:

Plaintiff Independent Wrestling.TV (“IWTV”) alleges that Defendant Game Changer Wrestling, LLC (“Game Changer”) breached the terms of a distribution agreement. IWTV brought this suit to recover the profits it claims to have lost as a result of this alleged breach. 

Assuming for purposes of this motion that the contract on which IWTV relies was not procured under highly problematic circumstances evidencing fraud and duress (and it was), the very distribution agreement upon which Plaintiff relies—one which was drafted by IWTV without any input from Defendant Game Changer—includes a limitation of damage provision that expressly prohibits recovery of lost profits. Because IWTV has failed to allege any other viable theory of damages, its claim for breach of contract must be dismissed. IWTV’s claim for “detrimental reliance” is similarly deficient. 

IWTV’s claim fails because it has not adequately alleged any of the elements—a promise, reliance, injustice, or substantial damages stemming therefrom. In any case, a party cannot evade the application of a clear contractual limitation on damages—especially here where that was drafted without the input of the defendant counterparty—simply by restyling its breach of contract claim. 

The promise on which Plaintiff relies is one purportedly made in the contract itself, and subject to all of the same restrictions. What’s more, IWTV failed to plead (as it must) that it actually relied to its detriment on any purported promise. For these reasons, the claim for detrimental reliance must also be dismissed. 

Game Changer Wrestling claims their agreement with IWTV was to provide one live stream per month.  They also argued that their contract with IWTV states that the contractual agreement between the two sides prevents each from being liable for the other’s lost profits, stating:

But Game Changer is not liable for IWTV’s alleged lost profits. The Distribution Agreement, drafted exclusively by Plaintiff IWTV, could scarcely be more explicit about this: “Neither party shall be liable to the other for any indirect, special, consequential or punitive damages, including loss of profits, revenue, data or use incurred by any party, even if such party has been advised of the possibility of such damages.” Dist. Agreement § 11(c) (emphasis added). So IWTV cannot recover damages based on its lost profits. And because the Complaint does not allege any other form of injury suffered by IWTV, that leaves it without the crucial element of damages.

GCW also argued that the allegation that they breached the confidentiality of their contract with IWTV, arguing:

Apparently recognizing that the limitation on damages would prevent recovery for lost profits, IWTV has conclusorily asserted that Game Changer “breached section 8 of the Distribution Agreement by revealing and publicizing the terms of the Distribution Agreement to other promoters.” Compl. ¶ 21. As noted above, the bar on recovery of lost profits does not apply to a claim that either party has breached its contractual confidentiality obligations. But this transparent attempt to perform an end-run around the damages’ limitation clause fails for three separate reasons. First, “[c]onclusory allegations” with no factual support to show their plausibility “are insufficient to survive a motion to dismiss.”

 Plaintiff claims that Game Changer breached the “Distribution Agreement by revealing and publicizing the terms of the Distribution Agreement to other promoters.” See Compl. ¶ 21. That is the entirety of Plaintiff’s allegation of this breach. Plaintiff does not include a single fact to support this naked assertion. Where, as here, Plaintiff pleads no facts “to move these claims ‘across the line from conceivable to plausible,’” the allegations are not sufficient to survive a motion to dismiss. Golod v. Bank of America Corp., 403 F. App’x 699, 703 (3rd Cir. 2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009)).

Secondly, even if Game Changer had breached its confidentiality obligations, IWTV has still failed to plead damages flowing from that breach. Again, the Complaint only claims damages in the form of lost profits, but nowhere does the Complaint even attempt to allege how Game Changer’s disclosure of certain contractual terms had somehow caused IWTV to lose profits. And without such a causal connection between breach and damages, IWTV’s claim fails.

Finally, IWTV’s allegation that Game Changer breached its confidentiality obligations is contradicted by the plain language of the contract. “Confidential Information” is defined by the contract to include only “information that is disclosed by or on behalf of one Party to the other Party.” Dist. Agreement claims that this provision was violated because Game Changer revealed the terms of the contract itself. This is obviously incorrect for a few independent reasons. The terms of the Distribution Agreement cannot constitute confidential information because those terms were not “disclosed by or on behalf of” IWTV to Game Changer.

Plainly, IWTV could not have “disclosed” to Game Changer terms which Game Changer supposedly participated in negotiating. In fact, “‘Confidential Information’ does not include information that . . . is rightfully known by the receiving Party at the time of disclosure without an obligation of confidentiality.”

Of course, even if this allegation that Game Changer violated the confidentiality provision of the agreement were true (and it is not), Game Changer had every right to utilize the Distribution Agreement, which by its terms is not confidential. Further, the confidentiality provision requires each party to “keep the other Party’s Confidential Information” safe. Id. § 8(b) (emphasis added). But the terms of a contract do not belong to one party or the other.

This confidentiality provision is clearly intended to protect information belonging to a single party that is disclosed to the other party for purposes of negotiation. It does not apply to a mutually executed agreement. The confidentiality provision therefore simply does not bar disclosure of the terms of the Distribution Agreement itself. Any contrary interpretation, in addition  to contradicting the plain language of the agreement, would lead to absurd results. For example, the contract provides that “[t]he receiving Party shall return or delete all Confidential Information of the disclosing Party promptly upon request of the disclosing Party.” Id. § 8(b). Under IWTV’s interpretation, the terms of a contract to which Game Changer is a party somehow constitute “confidential information” owned by IWTV, which would mean that IWTV could require that Game Changer “return or delete” the contract itself.

Obviously, this cannot be right, because the contract does not treat its own terms as “confidential information” belonging to one party or the other. This alone is enough to doom IWTV’s attempt—recognizing the limitation on damages contained in the Distribution Agreement—to backdoor lost profits in through the confidentiality provision.

In the filing, GCW states that they informed IWTV in December 2020 they were seeking alternative platforms (they moved exclusively to FITE.TV) and that IWTV filed their lawsuit in June 2021.  They also argued that many of the allegations against them were simply duplicates of other allegations and even alleged their original agreement was signed under duress.

IWTV, obviously, has yet to respond and the Court will not rule on the Motion until IWTV gets to have their argument filed before the court.

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