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Pennsylvania-based independent wrestling streaming service IndependentWrestling.TV (IWTV) filed a motion on 10/27, asking the the United States District Court Middle District of Pennsylvania (Scranton) to deny Game Changer Wrestling's Motion to dismiss the lawsuit IWTV has brought against the company.
IWTV filed a lawsuit this past June against Game Changer Wrestling, alleging they 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 had 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 court, GCW pushed 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 claimed 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.
On 10/27, IWTV filed the following response to the court:
The Plaintiff operates a subscription-model live streaming service focused on independent wrestling that allows subscribers to view live-streamed events as well as archived programs over an internet connection. The Defendant is an independent wrestling production company that arranges and puts on live independent wrestling events. The Plaintiff and Defendant entered into a Distribution Agreement dated March 19, 2020 (the “Distribution Agreement), for the purpose of Plaintiff producing and videoing the Defendant’s wrestling events so that they may be live streamed on either the Plaintiff’s online platform or another online platform, or distributed via the Plaintiff’s subscription service. A true and correct copy of the Distribution Agreement executed by the Parties can be found at Doc. 1 Exhibit A, pg. 13.
Paragraph 2 of the Distribution Agreement grants to the Plaintiff an exclusive license during the term of the contract to produce and distribute the Defendant’s PayPer-View events and the Defendant’s Programs throughout the world. Id. The Distribution Agreement defines Pay-Per-View events as specific programs, either live streamed or archived which a viewer can purchase to view either once or a specified number of times via private stream or broadcast, and not included in Plaintiff’s subscription service.
The Distribution Agreement defines Programs as audiovisual content (including any related metadata, identifying information or Case 3:21-cv-01139-JFS Document 13 Filed 10/27/21 Page 2 of 11 3 2521005.2 other supplemental information) that Provider (Defendant) makes available to Distributor (Plaintiff) pursuant to the Agreement. Id. Programs include Archived Content as well as Live Streamed Events. Id. Plaintiff operates a subscription model to provide Programs to its subscribers. The subscription service does not include Pay per View Events.
On December 1, 2020, Defendant notified Plaintiff of Defendant’s intent to breach the Distribution Agreement by producing and live streaming Defendant’s Pay-Per-View events through an alternate platform. (Doc. 1 Exhibit A pg. 27). Defendant proceeded to have Pay-Per-View events on December 5, 2020, December 31, 2020 and January 1, 2021 in violation of the Distribution Agreement with Plaintiff. Since the filing of the current lawsuit the Defendant has continued to produce and live stream Pay-Per-View events in violation of the Distribution Agreement with Plaintiff.
On December 7, 2020, counsel for the Plaintiff notified Defendant that its actions of utilizing a different production company and distribution system for the events on December 5, 2020, December 31, 2020 and January 1, 2021 were a violation of the signed Distribution Agreement between the parties. (Doc. 1 Exhibit A pg. 29).
Nevertheless, Defendant continued to conduct live stream Pay-Per-View events utilizing a different production company and distribution system in violation of the Distribution Agreement on the dates detailed above as well as January 29-30, 2021; February 13, 2021; February 20, 2021; March 6, 2021; April 8-10, 2021; May 1, 2021 and May 15, 2021 for a total of approximately thirty-six (36) events up to the date of the filing of the Complaint.
Further, Defendant breached Paragraph 4C of the Distribution Agreement by failing to provide to Plaintiff the requisite number of live stream events per month. Paragraph 4C of the Distribution Agreement states that Defendant “agrees to provide an average of one (1) live stream program per month to (Plaintiff), with the allowance that if there are no streams in any given month then (Plaintiff) shall receive two (2) live stream programs the following month.” (Doc. 1 Exhibit A pg. 15).
Since the signing of the Distribution Agreement, Defendant has provided to Plaintiff four (4) live stream events, which is less than the number required under the terms of the Distribution Agreement.
Finally, Defendant breached the Distribution Agreement by disclosing the terms of the Agreement to third parties.
IWTV is also asked that they be allowed to amend their lawsuit to amend the Breach of Contract claim.
From this point, here are how things may go:
*The Court sides with GCW and dismisses the complaint, either without prejudice which would allow IWTV to re-file a reconfigured lawsuit or with prejudice, which would mean the entire case is done and cannot be brought back to life.
*The Court sides with IWTV and decides the lawsuit at least has some merit that deserves to argued before the court. At that point, they would move into discovery and prepare for a trial that could be a few years down the line, unless they settle.
*The sides decide to figure out a settlement and end the legal process.
PWInsider.com will update as the story continues to progress.
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