Herring Networks, Inc. v. AT and T Services, Inc. et al

Filing 51

MINUTES (IN CHAMBERS)- DEFENDANT AT&T SERVICES, INC.'S MOTION TO DISMISS PLAINTIFF'S COMPLAINT FOR FAILURE TO STATE A CLAIM AND DEFENDANT AT&T INC.'S MOTION TO DISMISS PLAINTIFFS COMPLAINT FOR LACK OF PERSONAL JURISDICTION by Judge Ch ristina A. Snyder. On April 25, 2016, defendant AT&T Services filed a motion to dismiss for failure to state a claim upon which relief can be granted 14 , and defendant AT&T, Inc.filed a motion to dismiss for lack of personal jurisdiction 16 . Having carefully considered the parties arguments, the Court finds and concludes as follows. In accordance with the foregoing, the Court DENIES AT&T, Inc.'s motion to dismiss for lack of personal jurisdiction and DENIES AT&T Services motion to dismiss for failure to state a claim upon which relief can be granted. (iv)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:16-cv-01636-CAS-AGR

Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

Present: The Honorable

Date

‘O’

July 25, 2016

CHRISTINA A. SNYDER

Catherine Jeang
Deputy Clerk

Not Present
Court Reporter / Recorder

N/A
Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:

(IN CHAMBERS) - DEFENDANT AT&T SERVICES, INC.’S
MOTION TO DISMISS PLAINTIFF’S COMPLAINT FOR
FAILURE TO STATE A CLAIM (Dkt. 14, filed April 25, 2016)
DEFENDANT AT&T INC.’S MOTION TO DISMISS
PLAINTIFF’S COMPLAINT FOR LACK OF PERSONAL
JURISDICTION (Dkt. 16, filed April 25, 2016)

I.

INTRODUCTION

On March 9, 2016, plaintiff Herring Networks, Inc. (“Herring”) intiated this action
against defendants AT&T Services, Inc. (“AT&T Services”) and AT&T, Inc.
(collectively, “defendants”). Dkt. 1. Plaintiff asserts claims against defendants for: (1)
fraud by concealment; (2) intentional misrepresentation; (3) negligent misrepresentation;
(4) breach of the implied covenant of good faith and fair dealing; (5) promissory
estoppel; (6) breach of oral contract; and (7) breach of implied in fact contract. Id.
On April 25, 2016, defendant AT&T Services filed a motion to dismiss for failure
to state a claim upon which relief can be granted, Dkt. 14, and defendant AT&T, Inc.
filed a motion to dismiss for lack of personal jurisdiction, Dkt. 16.1 On May 23, 2016,
plaintiff filed oppositions to both of these motions, Dkt. 32, 33, and on June 13, 2016,
defendants filed replies in support of their respective motions, Dkt. 37, 38. Having
carefully considered the parties’ arguments, the Court finds and concludes as follows.
1

To the extent the Court denies AT&T, Inc.’s motion to dismiss for lack of
personal jurisdiction, AT&T, Inc. states that it joins AT&T Services’ motion to dismiss
for failure to state a claim upon which relief can be granted. Dkt. 14, at 3 n.3.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:16-cv-01636-CAS-AGR

Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

II.

Date

‘O’

July 25, 2016

BACKGROUND

Plaintiff’s complaint alleges the following facts: Herring is an independent,
family-owned television programming company that owns and operates two television
networks––a lifestyle entertainment channel called A Wealth of Entertainment (“AWE”)
and a news channel called One America News Network (“OAN”). Compl. ¶¶ 16-19.
Herring is a California Corporation with its principal place of business in San Diego,
California. Id. ¶ 8. Defendants AT&T, Inc. and AT&T Services are Delaware
corporations with their principal places of business in Dallas, Texas. Id. ¶ 9. AT&T, Inc.
is the parent company of AT&T Services. Id. ¶ 10. Collectively, defendants are the
second largest provider of mobile telephone services and the largest provider of fixed
wireline telephone services in the United States. Id. ¶ 20. Defendants also provide
broadband internet and subscription television services. Id. In June 2006, defendants
launched AT&T U-verse (“U-verse”), a multi-channel television distribution service. Id.
¶ 21. From its launch, defendants included AWE as one of the channels on the U-verse
platform. Id. ¶ 23. Several years thereafter, defendants also began including OAN on the
U-verse platform. Id. ¶ 25.
Owners of television networks, such as Herring, generate revenue through carriage
(i.e. distribution) agreements with defendants. Id. Defendants’ customers, or
subscribers, would pay a fee to obtain access to a variety of networks available on the Uverse platform. Id. In turn, defendants would pay the network owners an agreed upon
licensing fee to distribute their content. Id. In early 2014, Herring and defendants
entered into a renewed licensing agreement (the “U-verse Agreement”). Id. ¶ 26.
Pursuant to the U-verse Agreement, defendants agreed to carry both AWE and OAN for a
customary five-year period with one-year renewals and to pay Herring a monthly
licensing fee of $0.18 per subscriber. Id.
According to Herring, when the parties negotiated the U-verse Agreement,
defendants led Herring to believe that they were committed to expanding their U-verse
platform and increasing its subscriber base. Id. ¶ 27. Nonetheless, Herring contends that
AT&T’s true intention was to wind down U-verse, acquire a competitor, DirecTV, and
move subscribers from the U-verse platform to DirecTV’s platform. Id. ¶ 29. Herring
alleges that defendants deliberately withheld this information from Herring. Id. In
particular, Herring alleges that Ryan Smith, Vice President of Content at AT&T Services,
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UNITED STATES DISTRICT COURT
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July 25, 2016

Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

made the following representations to Charles Herring, the President of Herring: (1)
defendants expected U-verse to challenge and surpass its competitor Time Warner Cable
(“TWC”)—at the time U-verse had less than half as many subscribers as TWC
(approximately 5.3 million for U-verse compared to 11.4 million for TWC); (2)
defendants were continuing U-verse’s expansion to additional markets and capturing a
larger market share in the markets where U-verse had already launched; and (3)
defendants had ambitious expansion plans. Id. ¶ 28. Herring further alleges that these
representations were consistent with defendants’ public statements regarding their
intention to grow U-verse. Id. ¶ 33. For example, in one of their Annual Reports,
defendants stated:
As part of Project Velocity IP (VIP), we [AT&T] plan to expand our
IP-broadband service to approximately 57 million customer locations,
including U-verse services to a total of 33 million customer locations.
We expect to be substantially complete in the 2015 and 2016
timeframe.
Id. Finally, Herring alleges that defendants misrepresented their plans to grow U-verse in
public filings by AT&T, Inc.’s top executives, which Herring relied on. Id. ¶¶ 90, 97.
In an early draft of the U-verse agreement, there was a clause that would have
required defendants to carry Herring’s networks on any subsequently-acquired platforms.
Id. ¶ 31. However, towards the end of the parties’ negotiations, new language was
inserted into the U-verse agreement, which stated:
For the avoidance of doubt, nothing herein shall obligate AT&T to
launch and carry the Services on any System that AT&T acquires
during the Term if such System is not already distributing or obligated
to distribute the Services.
Dkt. 17, Smith Decl, Ex. A, “U-verse Agreement” ¶ 4.B. Herring contends that this
language effectively excused AT&T from any obligation to carry Herring’s networks on
newly-acquired platforms, such as the DirecTV platform. Compl. ¶ 31.
A month after the U-verse Agreement was finalized, defendants announced their
plans to acquire DirectTV. Id. ¶ 46. In order for defendants to acquire DirecTV they
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Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

needed to obtain regulatory approval from the Federal Communications Commission
(“FCC”). Id. ¶ 48. According to Herring, the FCC has a Congressional mandate to foster
a diverse, robust, and competitive marketplace for video programming, which includes
ensuring fair and equal treatment for independent programmers. Id. ¶ 50. Thus, in order
to obtain the necessary governmental approvals, defendants needed support and lobbying
from independent programmers, such as Herring. Id. To this end, shortly after
announcing the planned acquisition of DirecTV, executives from Herring and defendants
met at AT&T Services’ Los Angeles offices. Id. ¶ 55. At this meeting, Aaron Slator, the
president of AT&T Services, made the following proposal: If Herring publicly supported
defendants throughout its acquisition of DirecTV, including by lobbying the FCC,
defendants would ensure that DirecTV carried Herring’s networks on its platform. Id. ¶
56. Slator said that the terms of carriage on DirecTV’s platform would be similar to the
U-verse Agreement and that this new agreement would be reduced to writing after the
acquisition of DirecTV was completed. Id. ¶ 57. He also stated that the new agreement
would be for a customary five year term, with automatic one-year renewals—i.e.,
identical to the U-verse Agreement. Id. Finally, Slator informed Herring’s executives
that while DirecTV would need to pay Herring less than the $0.18 per subscriber set forth
in the U-verse Agreement, carriage on DirecTV’s platform would still be very lucrative
for Herring. Id. ¶ 59. Slator told Herring’s executives that he had been authorized to
make this proposal by his superiors at AT&T, Inc. Id. ¶¶ 55, 58. Herring agreed to this
proposal and, thereafter, began advocating on defendants’ behalf and in favor of the
DirecTV acquisition. Id. ¶¶ 60, 66-69. On July 24, 2015, AT&T’s acquisition of
DirecTV was approved by the FCC and the AT&T/DirecTV merger was consumated. Id.
¶ 76. Nonetheless, defendants have not made either of Herring’s networks available on
the DirecTV platform. Id. ¶ 36.
In addition, Herring contends that, since acquiring DirecTV, defendants have
aggressively solicited U-verse subscribers to move to DirecTV. Id. ¶ 35. AT&T has also
publicly announced that it plans to make DirecTV its television service and wind down
U-verse. Id. ¶ 37. Defendants’ efforts to phase out U-verse have been successful. Since
the acquisition of DirecTV, U-verse has lost approximately 325,000 subscribers, while
DirecTV has gained more than 200,000 during the same time. Id. As noted above, under
the U-verse Agreement, Herring’s licensing fee is based on the number of U-verse
subscribers. Accordingly, Herring contends that, by shifting subscribers from U-verse to
DirecTV, defendants are undermining Herring’s bargained-for benefit under the U-verse
Agreement. Id. ¶ 36-39.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

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Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

III.

Date

‘O’

July 25, 2016

LEGAL STANDARD
A.

Motion to Dismiss for Lack of Personal Jurisdiction

When a defendant moves to dismiss for lack of personal jurisdiction under Federal
Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of demonstrating that the
court may properly exercise personal jurisdiction over the defendant. Pebble Beach Co.
v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). Where, as here, a court decides such a
motion without an evidentiary hearing, the plaintiff need only make a prima facie
showing of jurisdictional facts to withstand the motion to dismiss. Ballard v. Savage, 65
F.3d 1495, 1498 (9th Cir. 1995); Doe v. Unocal Corp., 27 F. Supp. 2d 1174, 1181 (C.D.
Cal. 1998), aff’d, 248 F.3d 915 (9th Cir. 2001). Plaintiff’s version of the facts is taken as
true for purposes of the motion if not directly controverted, and conflicts between the
parties’ affidavits must be resolved in plaintiff’s favor for purposes of deciding whether a
prima facie case for personal jurisdiction exists. AT & T v. Compagnie Bruxelles
Lambert, 94 F.3d 586, 588 (9th Cir. 1996); Unocal, 27 F. Supp. 2d at 1181. If the
defendant submits evidence controverting the allegations, however, the plaintiff may not
rely on its pleadings, but must “come forward with facts, by affidavit or otherwise,
supporting personal jurisdiction.” Scott v. Breeland, 792 F.2d 925, 927 (9th Cir.1986)
(quoting Amba Mktg. Servs., Inc. v. Jobar Int’l, Inc., 551 F.2d 784, 787 (9th Cir.1977)).
Generally, personal jurisdiction exists if (1) it is permitted by the forum state’s
long-arm statute and (2) the “exercise of that jurisdiction does not violate federal due
process.” Pebble Beach, 453 F.3d at 1154-55 (citing Fireman’s Fund Ins. Co. v. Nat’l
Bank of Coops., 103 F.3d 888, 893 (9th Cir. 1996). California’s long-arm jurisdictional
statute is coextensive with federal due process requirements, so that the jurisdictional
analysis under state and federal law are the same. Cal. Civ. Proc. Code § 410.10; Roth v.
Garcia Marquez, 942 F.2d 617, 620 (9th Cir. 1991). The Fourteenth Amendment’s Due
Process Clause requires that a defendant have “minimum contacts” with the forum state
so that the exercise of jurisdiction “does not offend traditional notions of fair play and
substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Depending
on the nature of the contacts between the defendant and the forum state, personal
jurisdiction is characterized as either general or specific.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

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Case No.

2:16-cv-01636-CAS-AGR

July 25, 2016

Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

A court has general jurisdiction over a nonresident defendant when that
defendant’s activities within the forum state are “substantial” or “continuous and
systematic,” even if the cause of action is “unrelated to the defendant’s forum activities.”
Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 446-47 (1952); Data Disc, Inc. v.
Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1287 (9th Cir. 1977). The standard for
establishing general jurisdiction is “fairly high” and requires that the defendant’s contacts
be substantial enough to approximate physical presence. Bancroft & Masters, Inc. v.
Augusta Nat’l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000). “Factors to be taken into
consideration are whether the defendant makes sales, solicits or engages in business in
the state, serves the state’s markets, designates an agent for service of process, holds a
license, or is incorporated there.” Id. (finding no general jurisdiction when the
corporation was not registered or licensed to do business in California, paid no taxes,
maintained no bank accounts, and targeted no advertising toward California).
A court may assert specific jurisdiction over a claim for relief that arises out of a
defendant’s forum-related activities. Rano v. Sipa Press, Inc., 987 F.2d 580, 588 (9th Cir.
1993). The test for specific personal jurisdiction has three parts:
(1) The non-resident defendant must purposefully direct his activities
or consummate some transaction with the forum or resident thereof; or
perform some act by which he purposefully avails himself of the
privilege of conducting activities in the forum, thereby invoking the
benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the
defendant's forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and
substantial justice, i.e., it must be reasonable.
Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004) (citing
Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987)); see also Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 475-76 (1985). The plaintiff bears the burden of satisfying the
first two prongs, and must do so to establish specific jurisdiction. Schwarzenegger, 374
F.3d at 802.
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UNITED STATES DISTRICT COURT
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CIVIL MINUTES - GENERAL
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Case No.

2:16-cv-01636-CAS-AGR

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Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

If the plaintiff establishes the first two prongs, then it is the defendant’s burden to
“present a compelling case” that the third prong, reasonableness, has not been satisfied.
Schwarzenegger, 374 F.3d at 802 (quoting Burger King, 471 U.S. at 477). The third
prong requires the Court to balance seven factors: (1) the “extent of the defendant’s
purposeful injection into the forum”; (2) the burdens on defendant from litigating in the
forum state; (3) the “extent of conflict with the sovereignty of the defendant’s state,” (4)
the forum state’s “interest in adjudicating the dispute”; (5) the “most efficient judicial
resolution of the controversy”; (6) the “importance of the forum to the plaintiff’s interest
in convenient and effective relief”; and (7) the existence of an alternative forum. Ziegler
v. Indian River County, 64 F.3d 470, 475 (9th Cir. 1995).
B.

Motion to Dismiss for Failure to State a Claim

A motion pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal
sufficiency of the claims asserted in a complaint. Under this Rule, a district court
properly dismisses a claim if “there is a ‘lack of a cognizable legal theory or the absence
of sufficient facts alleged under a cognizable legal theory.’ ” Conservation Force v.
Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (quoting Balisteri v. Pacifica Police Dep’t,
901 F.2d 696, 699 (9th Cir. 1988)). “While a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to
provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). “[F]actual allegations must
be enough to raise a right to relief above the speculative level.” Id.
In considering a motion pursuant to Rule 12(b)(6), a court must accept as true all
material allegations in the complaint, as well as all reasonable inferences to be drawn
from them. Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). The complaint must be
read in the light most favorable to the nonmoving party. Sprewell v. Golden State
Warriors, 266 F.3d 979, 988 (9th Cir. 2001). However, “a court considering a motion to
dismiss can choose to begin by identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth. While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations.”
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); see Moss v. United States Secret Service,
572 F.3d 962, 969 (9th Cir. 2009) (“[F]or a complaint to survive a motion to dismiss, the
non-conclusory ‘factual content,’ and reasonable inferences from that content, must be
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
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Case No.

2:16-cv-01636-CAS-AGR

July 25, 2016

Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

plausibly suggestive of a claim entitling the plaintiff to relief.”). Ultimately,
“[d]etermining whether a complaint states a plausible claim for relief will . . . be a
context-specific task that requires the reviewing court to draw on its judicial experience
and common sense.” Iqbal, 556 U.S. at 679.
Unless a court converts a Rule 12(b)(6) motion into a motion for summary
judgment, a court cannot consider material outside of the complaint (e.g., facts presented
in briefs, affidavits, or discovery materials). In re American Cont’l Corp./Lincoln Sav. &
Loan Sec. Litig., 102 F.3d 1524, 1537 (9th Cir. 1996), rev’d on other grounds sub nom
Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998). A court
may, however, consider exhibits submitted with or alleged in the complaint and matters
that may be judicially noticed pursuant to Federal Rule of Evidence 201. In re Silicon
Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999); see Lee v. City of Los
Angeles, 250 F.3d 668, 689 (9th Cir. 2001).
As a general rule, leave to amend a complaint which has been dismissed should be
freely granted. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when “the
court determines that the allegation of other facts consistent with the challenged pleading
could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture
Co., 806 F.2d 1393, 1401 (9th Cir. 1986).
IV.

ANALYSIS

A.
AT&T Inc.’s Motion to Dismiss for Lack of Personal Jurisdiction
Plaintiff has named two defendants in this action—AT&T Services and its parent
company, AT&T, Inc. AT&T, Inc. moves to dismiss for lack of personal jurisdiction. In
brief, AT&T, Inc. contends that it has not engaged in any of the conduct underlying the
claims raised in plaintiff’s complaint. Rather, AT&T, Inc. contends that those activities
were performed by its subsidiary AT&T Services. Accordingly, AT&T, Inc. argues that
it lacks the requisite “minimum contacts” to subject it to this Court’s jurisdiction.
As noted above, there are two types of personal jurisdiction—general and specific.
However, as an initial matter, plaintiff concedes that general personal jurisdiction is not
appropriate over AT&T, Inc. in California. See Opp’n., at 9 n.3 (“Herring has never
asserted general jurisdiction as a basis for jurisdiction”). Accordingly, the Court only
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
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Case No.

2:16-cv-01636-CAS-AGR

July 25, 2016

Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

addresses whether specific personal jurisdiction is appropriate over AT&T, Inc. in
California.
1.

Specific Jurisdiction

A court may assert specific jurisdiction over a claim for relief that arises out of a
defendant’s forum-related activities. Rano, 987 F.2d at 588. As noted above, the Ninth
Circuit uses the following three-part test to determine whether specific jurisdiction may
be exercised over a particular defendant:
(1) The non-resident defendant must purposefully direct his activities
or consummate some transaction with the forum or resident thereof; or
perform some act by which he purposefully avails himself of the
privilege of conducting activities in the forum, thereby invoking the
benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the
defendant's forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and
substantial justice, i.e. it must be reasonable.
Schwarzenegger v. Fred Martin Motor Co., 374 F.3d at 802.
The first prong of this test is, in turn, separated into two distinct concepts:
“purposeful direction” and “purposeful availment.” The “purposeful availment analysis
is most often used in suits sounding in contract,” where as the “purposeful direction
analysis . . . is most often used in suits sounding in tort.” Id. Here, plaintiff’s claims
against AT&T, Inc. sound in both contract and tort (i.e., fraud). Accordingly, both the
purposeful direction and purposeful availment tests are applicable and the Court
addresses each in turn.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:16-cv-01636-CAS-AGR

Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.
a.

Date

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July 25, 2016

Whether AT&T Purposefully Directed its Activities
Towards California

In a purposeful direction analysis, courts apply the “effects” test first set forth by
the Supreme Court in Calder v. Jones, 465 U.S. 783 (1984). See Mavrix Photo, 647 F.3d
at 1228 (9th Cir. 2011) (“In tort cases, we typically inquire whether a defendant
‘purposefully direct[s] his activities’ at the forum state, applying an ‘effects’ test”). This
test requires that “the defendant allegedly must have (1) committed an intentional act, (2)
expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to
be suffered in the forum state.” Brayton Purcell, 606 F.3d at 1128.
Here, the Court finds that plaintiff has identified at least one intentional act
committed by AT&T, Inc. Specifically, plaintiff alleges that AT&T, Inc.’s CEO and
Chairman, Randall Stephenson (“Stephenson”), expressly authorized the President of
AT&T Services, Aaron Slator (“Slator”), to promise plaintiff that if it publicly supported
AT&T, Inc.’s acquisition of DirecTV, plaintiff’s networks would be carried on
DirecTV’s platform. Plaintiff also alleges that this promise was reitterated several
months later by another AT&T Services executive, James Cicconi (“Cicconi”) and that
Cicconi stated that his superiors at AT&T, Inc. authorized him to make this promise.2
And plaintiff alleges Cicconi reported directly to Stephenson and was responsible for
leading AT&T, Inc.’s efforts to gain government approval for the DirecTV acquisition.
Compl. ¶ 71. In this capacity, Cicconi allegedly directed Herring’s activities to promote
the DirecTV acquisition, which included, among other things, lobbying the FCC, the
Department of Justice, and members of Congress, filing briefs with the FCC, and

2

AT&T, Inc. argues that Cicconi’s statements do not support jurisdiction in
California because he met with plaintiff in Washington, D.C., not California. This
argument misses the mark. For jurisdictional purposes, physical presence in the forum is
not required. See Burger King, 471 U.S. at 476 (“So long as a commercial actor’s efforts
are ‘purposefully directed’ toward residents of another State, we have consistently
rejected the notion that an absence of physical contacts can defeat personal jurisdiction
there.”)
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Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

soliciting other independent programmers to support AT&T, Inc.’s acquisition of
DirecTV. Compl. ¶¶ 66, 68, 74.3
These allegations are uncontroverted by the affidavits submitted by AT&T, Inc.
Instead, AT&T, Inc. contends that these intentional acts cannot support personal
jurisdiction over AT&T, Inc. because they were committed by employees of AT&T
Services. AT&T, Inc. also cites several cases in which courts have held that, as a general
matter, parent companies, such as AT&T, Inc., may not be subject to personal jurisdiction
based on the contacts of their subsidiaries. See, e.g., Sonora Diamond Corp. v. Superior
Court, 83 Cal. App. 4th 523, 540 (Cal. Ct. App. 2000) (“We start with the firm
proposition that neither ownership nor control of a subsidiary corporation by a foreign

3

Plaintiff identifies a number of other purported intentional acts committed by
AT&T, Inc. Specifically, plaintiff alleges: (1) AT&T, Inc. “set company-wide corporate
policies and practices” for its subsidiaries, including AT&T Services; (2) AT&T, Inc.’s
CEO and Chairman of the Board, Randall Stephenson, made false statements to the
public regarding AT&T’s intent to expand U-verse; (3) AT&T, Inc. “planned,
orchestrated and ultimately consummated” the acquisition of DirecTV; and (4) AT&T,
Inc. expressed an interest in acquiring a stake in plaintiff. Nonetheless, the Court finds
that these acts do not support the exercise of specific personal jurisdiction over AT&T,
Inc. With respect to the allegations that AT&T, Inc. set corporate policies for its
subsidiaries, that its CEO and Chairman made false statements to the public, and that
AT&T, Inc. planned the acquisition of DirecTV, plaintiff cannot establish that these acts
were “expressly aimed” at California, let alone plaintiff. Indeed, it does not appear that
these acts were directed at any state in particular. See also James M. Wagstaffe, Federal
Civil Procedure Before Trial Ch. 3, Personal Jurisdiction (The Rutter Group 2016) ¶
3:172.5 (“[T]he ‘expressly aimed’ requirement distinguishes cases where plaintiff
fortuitously lives in the forum state with the conduct directed, e.g., to the nation as a
whole, from those in which the intentional conduct is directed uniquely to the forum
itself.”) (citing Clemens v. McNamee, 615 F.3d 374, 380 (5th Cir. 2010) (defamatory
statements made in New York to national publication about a Texas resident
insufficient)). And, as for AT&T, Inc.’s purported interest in acquiring a stake in
plaintiff, while arguably directed towards California, this act is unrelated to plaintiff’s
claims in this action—i.e., plaintiff’s claims do not “arise out of” this alleged contact with
California.
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2:16-cv-01636-CAS-AGR

July 25, 2016

Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

parent corporation, without more, subjects the parent to the jurisdiction of the state where
the subsidiary does business.”). Nonetheless, a parent company may still be subject to
jurisdiction based on its own contacts with a forum state. And, to the extent AT&T, Inc.
directed and/or authorized AT&T Services to engage in conduct in California, those
actions may be attributed to AT&T, Inc. for purposes of evaluating personal jurisdiction.
See also Weaver v. Johnson & Johnson, Ethicon, Inc., 2016 WL 1668749, at *5 (S.D.
Cal. Apr. 27, 2016) (Curiel, J.) (“A parent corporation may be amenable to specific
jurisdiction in a forum state, through an agency relationship, if it itself targeted the forum
or it ‘purposefully availed itself of a forum by directing its agents or distributors to take
action there.’ ”) (quoting Daimler AG v. Bauman, 134 S. Ct. 746, 759 n.13 (2014));
HealthMarkets, Inc. v. Superior Court, 171 Cal. App. th 1160, 1170 (Cal. Ct. App. 2009)
(Croskey, J.) (noting that jurisdiction may be appropriate over a defendant-parent
company where a “defendant has purposefully directed its activities at the forum state by
causing a separate person or entity to engage in forum contacts.”). Here, plaintiff alleges
that executives at AT&T, Inc., including the Chairman and CEO of AT&T, Inc.,
authorized and instructed both Slator and Cicconi to promise plaintiff that its networks
would be carried on DirecTV’s platform. Moreover, plaintiff alleges that it supported the
acquisition of DirecTV on AT&T, Inc.’s behalf and at the direction of Cicconi, who
reported directly to Stephenson. Accordingly, the Court finds that these intentional acts
may fairly be attributed to AT&T, Inc.4

4

Additionally, under principles of California agency law, Slator and Cicconi’s
conduct can be attributed to AT&T, Inc. under the theory that they acted with actual––or
at least apparent—authority from AT&T, Inc. Plaintiff alleges that Slator and Cicconi
had express instructions from AT&T, Inc. to promise plaintiff that its networks would be
carried on DirecTV’s platform. Moreover, plaintiff alleges that Slator and Cicconi
categorically represented to plaintiff that they were acting on behalf of their superiors at
AT&T, Inc. Under California law, when an agent acts under actual or ostensible (i.e.,
apparent) authority, the principal is bound by the agent’s actions. Cal. Civ. Code. §§
2330, 2334. Moreover, an agency relationship may be created by either “precedent
authorization or a subsequent ratification.” Cal. Civ. Code § 2307. Here, accepting
plaintiff’s uncontroverted allegations as true, AT&T, Inc. conferred actual authority upon
Slator and Cicconi to promise plaintiff that its networks would be carried on DirecTV’s
platform. See also Penthouse Int'l, Ltd. v. Barnes, 792 F.2d 943, 947-48 (9th Cir. 1986)
(photographer acted within actual implied authority per Penthouse magazine’s
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July 25, 2016

Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

Next, the Court finds that AT&T, Inc.’s conduct was expressly aimed at California.
Plaintiff alleges that AT&T, Inc. authorized and instructed Slator and Cicconi to make
promises to plaintiff—a California corporation. AT&T, Inc. argues that, under recent
Supreme Court and Ninth Circuit precedent, the mere fact that a resident of a forum has
been injured is insufficient to invoke personal jurisdiction. See, e.g., Walden v. Fiore,
134 S.Ct. 1115, 1125 (2014) (“mere injury to a forum resident is not a sufficient
connection to the forum”). However, in those cases the defendant had only attenuated
contacts with the forum state, and the courts held that the fact that the plaintiff happened
to be from the forum state was insufficient to support the assertion of personal
jurisdiction. For example, in Walden v. Fiore, two Nevada residents sued a DEA agent in
a Nevada court based on a search the agent had conducted in Georgia. 134 S.Ct. at 1119.
The Supreme Court held that the Nevada court lacked jurisdiction over the agent
reasoning that “the plaintiff cannot be the only link between the defendant and the
forum.” Id. at 1122. Similarly, in Picot v. Weston, 780 F.3d 1206, 1214 (9th Cir. 2015),
a California resident brought suit against a Michigan resident for making various threats
to stop a business transaction. The Michigan resident had engaged in no conduct in
California and the underlying business transaction had been negotiated in Michigan and
was expected to be performed in Michigan. Id. at 1212. Accordingly, relying on

instructions to present contracts to models); In re Nelson, 761 F.2d 1320, 1322 (9th Cir.
1985) (husband had actual implied authority to encumber wife’s interest in property
where wife knew he signed her name to loan documents and husband reasonably believed
he had authority to do so). Furthermore, it is appropriate for the Court to consider
California agency law in evaluating personal jurisdiction. See James M. Wagstaffe,
Federal Civil Procedure Before Trial Ch. 3, Personal Jurisdiction (The Rutter Group
2016) ¶ 3:83.3 (“Whether the person whose forum-related acts give rise to jurisdiction
was acting as an agent of the nonresident defendant, or as an independent contractor, is
determined in accordance with applicable state law.”) (citing Ochoa v. J.B. Martin and
Sons Farms, Inc., 287 F.3d 1182, 1189 (9th Cir. 2002) (looking to Arizona law to
determine whether personal jurisdiction existed based on contacts of purported agent);
Vázquez-Robles v. CommoLoCo, Inc.,757 F.3d. 1, 3 (1st Cir. 2014) (same applying
Puerto Rican law)); Cf. Daimler, 134 S.Ct. 746, 759 n.13 (2014) (“Agency relationships,
we have recognized, may be relevant to the existence of specific jurisdiction . . . As such,
a corporation can purposefully avail itself of a forum by directing its agents or
distributors to take action there.”).
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July 25, 2016

Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

Walden, the Ninth Circuit held that the defendant’s out-of-state actions “did not connect
him with California in a way sufficient to support the assertion of personal jurisdiction
over him.” Id. at 1215.
By contrast, in this case, plaintiff has not merely alleged that jurisdiction is
appropriate because it is a resident of California who suffered harm. Rather, plaintiff
alleges that AT&T, Inc. authorized Slator and Cicconi to make promises to plaintiff
which envisioned an ongoing business relationship whereby plaintiff’s networks would
be carried on DirecTV’s platform for a term of five years. See also Walden, 134 S.Ct. at
1125 (“[W]e have upheld the assertion of jurisdiction over defendants who have
purposefully ‘reach[ed] out beyond’ their State and into another by, for example, entering
a contractual relationship that ‘envisioned continuing and wide-reaching contacts’ in the
forum State.”) (citing Burger King, 471 U.S. at 479–480). And plaintiff alleges that
Slator made this promise in the Los Angeles offices of AT&T Services—i.e., in
California. Accordingly, the Court finds that Walden and Picot are distinguishable and
that AT&T, Inc.’s conduct was expressly aimed at California.
Finally, the Court finds that plaintiff has adequately alleged that AT&T, Inc. knew
plaintiff would suffer harm in California. AT&T, Inc. contends that plaintiff has failed to
adequately allege that AT&T, Inc. knew its intentional acts would cause harm in
California. But, at all times relevant to this action, plaintiff has been a California
corporation doing business in San Diego, California. Moreover, AT&T, Inc.’s
subsidiary, AT&T Services, had a contractual relationship with plaintiff spanning nearly
ten years, and throughout that relationship plaintiff was a California corporation. Lastly,
AT&T, Inc. authorized Slator to make promises to plaintiff, and Slator made those
promises in California. See also Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1114 (9th
Cir. 2002) (finding effects test satisfied where “[t]he principal place of business of
[plaintiff was] California, and [plaintiff’s] managers in California were induced to
approve the injurious transactions.”). In light of these allegations, the Court finds that
plaintiff has adequately established that AT&T, Inc. was aware that any harm resulting
from its conduct would be felt in California.
Accordingly, all three elements of the “effects” test are satisfied and the Court
finds that AT&T, Inc. purposefully directed its conduct towards California.

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Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.
b.

Date

‘O’

July 25, 2016

Whether AT&T Purposefully Availed Itself of California

The Court also finds that AT&T, Inc. has purposefully availed itself of California.
. “ ‘Purposeful availment’ requires that the defendant ‘have performed some type of
affirmative conduct which allows or promotes the transaction of business within the
forum state.’ ” Sher v. Johnson, 911 F.2d 1357, 1362 (9th Cir. 1990) (quoting Sinatra v.
Nat'l Enquirer, Inc., 854 F.2d 1191, 1195 (9th Cir. 1988)). Here, AT&T, Inc. instructed
Slator and Cicconi to solicit a California corporation to engage in lobbying efforts on its
behalf. In exchange for those lobbying efforts, AT&T, Inc. authorized Slator and Cicconi
to promise plaintiff an ongoing contractual relationship whereby plaintiff’s television
networks would be carried on DirecTV’s platform. By this conduct, AT&T, Inc.
purposefully availed itself of the privilege of conducting business in California. See also
Burger King, 471 U.S. at 475-76 (“where the defendant ‘deliberately’ has engaged in
significant activities within a State or has created ‘continuing obligations’ between
himself and residents of the forum he manifestly has availed himself of the privilege of
conducting business there . . .”) (emphasis added) (citations omitted); Peterson v.
Highland Music, Inc., 140 F.3d 1313, 1320 (9th Cir. 1998) (negotiating a contract in
California with a California resident satisfies “purposeful availment”).
Again, AT&T, Inc.’s affidavits do not controvert these allegations. Instead,
AT&T, Inc. contends that neither Slator nor Cicconi is an employee of AT&T, Inc.
However, as already stated, because AT&T, Inc. purportedly instructed and authorized
Slator and Cicconi to make promises to plaintiff, their conduct can be imputed to AT&T,
Inc.
c.

Whether Plaintiff’s Claims “Arise Out of or Relate” to
AT&T, Inc.’s Forum-Related Contacts

Under the second prong of the specific personal jurisdiction analysis, the Court
must assess whether plaintiff’s claims arise out of or relate to AT&T, Inc.’s forum-related
contacts. “[A] lawsuit arises out of a defendant’s contacts with the forum state if a direct
nexus exists between those contacts and the cause of action.” In re Western States
Wholesale Nat. Gas Antitrust Litig., 715 F.3d 716, 742 (9th Cir. 2013) (citations
omitted).

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Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

Here, as explained above, AT&T, Inc.’s contacts with California consist of
authorizing and instructing Slator and Cicconi to promise plaintiff that, if plaintiff
publicly supported AT&T, Inc.’s acquisition of DirecTV, defendants would carry
plaintiff’s networks on DirecTV’s platform. In the complaint, plaintiff has asserted
several claims against AT&T, Inc. directly predicated on this promise. See also Dole,
303 F.3d at 1114 (claims arose out of forum-related contacts where contacts were an
“integral and essential part[]” of the allegations underlying plaintiff’s claims).
Accordingly, plaintiff’s claims against AT&T, Inc. “arise out of or relate to” AT&T,
Inc.’s forum-related contacts.
d.

Whether it Would be Unreasonable to Subject AT&T, Inc.
to Personal Jurisdiction in California

Finally, the Court must assess whether it would be reasonable to subject AT&T,
Inc. to personal jurisdiction in California. The burden is on defendant to present a
“compelling case that the exercise of jurisdiction would not be reasonable.” Menken v.
Emm, 503 F.3d. 1050, 1057 (9th Cir. 2007). In evaluating whether the exercise of
personal jurisdiction is reasonable, courts consider the following factors: “(1) the extent
of the defendant’s purposeful interjection into the forum state, (2) the burden on the
defendant in defending in the forum, (3) the extent of the conflict with the sovereignty of
the defendant’s state, (4) the forum state’s interest in adjudicating the dispute, (5) the
most efficient judicial resolution of the controversy, (6) the importance of the forum to
the plaintiff’s interest in convenient and effective relief, and (7) the existence of an
alternative forum.” In re Western States, 715 F.3d at 745 (citing Bancroft & Masters,
Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1088 (9th Cir.2000)) . Here, the Court finds
that the majority of these factors weigh in favor of exercising personal jurisdiction over
AT&T, Inc.
First, as discussed above, plaintiff has alleged that Slator and Cicconi promised
plaintiff that, if it publicly supported AT&T, Inc.’s acquisition of DirecTV, defendant
would carry plaintiff’s networks on DirecTV’s platform. Moreover, plaintiff alleges that
at least one of these promises was made in California. AT&T, Inc. argues that “it is not
reasonable to hale AT&T, Inc. into a California court based on the contacts of individuals
employed by other AT&T entities”—i.e., Slator and Cicconi. Mot., at 13. But, plaintiff
has alleged that AT&T, Inc.’s officers and directors instructed and ratified Slator and
Cicconi’s promises to plaintiff that form the basis for this lawsuit. In light of these
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Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

contacts, the Court finds that the “purposeful interjection” factor weighs in favor of
exercising jurisdiction. See Panavision Intern., L.P. v. Toeppen, 141 F.3d 1316, 1323
(9th Cir. 1998) (finding “purposeful interjection” factor weighed “strongly in favor of the
district court’s exercise of personal jurisdiction” where the defendant knew its conduct
would harm plaintiff in California and sent a letter to plaintiff in California.).
Regarding the next two factors, AT&T, Inc. does not explain how it will be
burdened by litigating this case in California, nor does it identify any relevant conflict
between the laws of California and Delaware and Texas, where AT&T, Inc. is
incorporated and headquartered, respectively. Accordingly, these factors weigh in favor
of exercising jurisdiction.
California also has an interest in adjudicating this action, which concerns a
California corporation and where at least some of the relevant conduct occurred in
California. See also Burger King, 471 U.S. at 474 (“A State generally has a ‘manifest
interest’ in providing its residents with a convenient forum for redressing injuries
inflicted by out-of-state actors.”). In addition, given that plaintiff is headquartered in
California and particularly given that defendants concede that jurisdiction is appropriate
in California over AT&T Services, it is arguably most efficient to resolve plaintiff’s
claims against AT&T, Inc. in this forum as well. Thus, these two factors also weigh in
favor of exercising jurisdiction.
Finally, AT&T, Inc. correctly notes that plaintiff could conceivably pursue its
claims against AT&T, Inc. in either Delaware or Texas—the jurisdictions where AT&T,
Inc. is incorporated and headquartered. Accordingly, this factor weighs against the
exercise of jurisdiction. Nonetheless, given that all of the other factors courts consider
weigh in favor of exercising jurisdiction, the Court finds that it is not unreasonable to
subject AT&T, Inc. to personal jurisdiction in California.
Thus, plaintiff has satisfied all three prongs of the Ninth Circuit’s personal
jurisdiction test. The Court, therefore, DENIES AT&T, Inc.’s motion to dismiss for lack
of personal jurisdiction.

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UNITED STATES DISTRICT COURT
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Case No.

2:16-cv-01636-CAS-AGR

Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.
B.

Date

‘O’

July 25, 2016

AT&T Service’s Motion to Dismiss for Failure to State a Claim

In the complaint, plaintiff asserts seven claims for relief against defendants: (1)
fraud by concealment; (2) intentional misrepresentation; (3) negligent misrepresentation;
(4) breach of the implied covenant of good faith and fair dealing; (5) promissory
estoppel; (6) breach of oral contract; and (7) breach of implied in fact contract. These
claims roughly divide into three legal theories. First, plaintiff contends that defendants
fraudulently represented that they intended to grow their U-verse platform when, in
reality, they intended to wind-down the platform. Second, plaintiff contends that AT&T
Services breached the covenant of good faith and fair dealing implicit in the U-verse
Agreement by deliberately shifting customers away from the U-verse platform. And
third, plaintiff alleges that defendants entered into an oral agreement—which they
subsequently breached—to place plaintiff’s network on DirecTV in exchange for
plaintiff’s assistance lobbying the government to approve AT&T’s acquisition of
DirecTV. Defendants contend that none of these theories states a viable basis for relief.
For the following reasons the Court disagrees.
1.

Plaintiff’s Fraud Claims

Plaintiff asserts claims for fraud by concealment (claim one), intentional
misrepresentation (claim two), and negligent misrepresentation (claim three). In each of
these claims, plaintiff alleges that defendants intentionally or negligently misrepresented
that they were committed to and intended to grow their U-verse platform. Nonetheless,
plaintiff alleges that defendants true intention was to acquire DirecTV, wind down the Uverse platform, and transition customers to DirecTV’s platform. Plaintiff alleges that, in
reliance on defendants’ allegedly false representation that it intended to grow the U-verse
platform, it entered into the U-verse Agreement. Defendants now move to dismiss each
of plaintiff’s fraud claims. Because these claims raise similar issues the Court addresses
them together.
Defendants’ first argue that plaintiff has failed to allege actionable
misrepresentations of fact. “It is hornbook law that an actionable misrepresentation must
be made about past or existing facts.” Samica Enters., LLC v. Mail Boxes Etc., USA,
Inc., 637 F. Supp. 2d 712, 726 (C.D. Cal. 2008) (emphasis added). As such, statements
and predictions about future events are generally considered to be mere opinions that are
not actionable. See In re West Seal, Inc. Sec. Litig., 518 F. Supp. 2d 1148, 1168 (C.D.
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Cal. 2007) (“Predictions and forecasts which are not of the type subject to objective
verification are rarely actionable.”). Nonetheless, misrepresentations about future events
are actionable “if they were intended and accepted as a representations of fact and
involved matters peculiarly within the speaker’s knowledge.” Eade v. Reich, 120 Cal.
App. 32, 35 (1932).
Here, plaintiff alleges that defendants represented, among other things: (1) that
they intended to expand U-verse to additional markets and capture a larger market share
in existing markets; (2) that they intended to exceed the market share of their competitor,
TWC; and (3) that they had “ambitious expansion plans” for U-verse. Defendants argue
that these statements constitute mere opinions or puffery about U-verse’s potential for
future growth. Defendants also cite several cases finding that similar statements
constituted mere statements of opinion that were not actionable. See, e.g., In re Energy
Recovery Inc. Sec. Litig., 2016 WL 324150, at *19 (N.D. Cal. Jan. 27, 2016) (statement
such as “projecting excellent results,” “blowout winner product,” and “significant sales
gains” are not actionable); In re Wet Seal, 518 F. Supp. 2d at 1168 (statements such as
“growth that positions us beautifully,” “measurable progress,” “continuing
improvements,” “a sizable lead over our competition,” and “resilience in the face of
mounting debt” are not actionable). However, plaintiff does not merely contend that it
relied on defendants predictions about U-verse’s potential growth. Rather, implicit in
each of these statements was a representation that defendants were, at a minimum,
committed to their U-verse platform and intended to take steps to grow U-verse’s market
share. Indeed it is unclear how defendants could have expected to exceed their
competitor TWC’s market share, a feat that would have apparently required more than
doubling U-verse’s subscriber base, if they did not have at least some intention of
growing the U-verse platform. In short, while defendants predictions regarding the
potential growth of U-verse may not be actionable, to the extent those statements
indicated a commitment to growing the U-verse platform and taking steps to expand Uverse’s market share, they may form the basis of an actionable fraud claim. See also
Jolley v. Chase Home Fin., LLC, 213 Cal. App. 4th 872, 892 (Cal. Ct. App. 2013) (“well
recognized is that there may be liability for an opinion where it is expressed in a manner
implying a factual basis which does not exist.”) (citations omitted); Brakke v. Economic
Concepts, Inc., 213 Cal. App. th 761, 769 (Cal. Ct. App. 2013) (statements of opinion
may be actionable “where a party states his opinion as an existing fact or as implying
facts which justify a belief in the truth of the opinion.”).
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HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

Second, defendants argue that plaintiff’s have failed to plausibly plead reliance.
Specifically, they contend that the U-verse Agreement contained several provisions
expressly stating that defendants might acquire a new television distribution platform
upon which plaintiff would have no right to air its programming. Defendants point to the
Acquired Systems Clause, paragraph 4.B. of the U-verse Agreement, which states that
defendants might acquire a new platform and that defendants would have no obligation to
carry plaintiff’s networks on such a platform:
For the avoidance of doubt, nothing herein shall obligate AT&T to
launch and carry the Services on any System that AT&T acquires
during the Term if such System is not already distributing or obligated
to distribute the Services.
Smith Decl, Ex. A, “U-verse Agreement” ¶ 4.B. And defendants point to paragraph 3.C.
of the U-verse Agreement in which defendants reserved the right to shut down U-verse in
whole or in part at any point in the future:
Upon sixty (60)-days advance written notice to Network, AT&T may
terminate this Agreement in full if AT&T ceases operation of the
System(s) as a whole, or if AT&T discontinues its delivery of video
programming in any geographic area(s) being served by the
System(s), then AT&T can terminate this Agreement as to such
geographic area(s)
Id. ¶ 3.C. However, regardless of what the U-verse Agreement states regarding
defendants obligations to carry plaintiff’s network on later-acquired platforms or their
ability to terminate the U-verse Agreement, plaintiff still could have relied upon
defendants’ representation that they were committed to and intended to grow the U-verse
platform. Indeed, plaintiff contends that it agreed to sign an agreement containing
disclaimers regarding later-acquired platforms because of defendants representation that
they intended to grow the U-verse platform. See, e.g., Compl. ¶ 91 (AT&T made these
fraudulent statements with the intent to induce Herring to sign the [U-verse] Agreement
with language that excused AT&T from any obligation to carry Herring’s networks on [a
platform] that AT&T acquires, such as DirecTV.”). Moreover, given that under the Uverse Agreement plaintiff’s licensing fees were directly tied to U-verse’s subscriber base,
it is at least plausible that plaintiff would have relied on defendants’ statements that they
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Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

intended to grow U-verse’s market share (i.e., the number of U-verse subscribers).
Lastly, the Court notes that reliance is generally considered to be a question of fact rarely
amenable to resolution at the pleadings stage. See Alliance Mortg. Co. v. Rothwell, 10
Cal. th 1226, 1239 (1995) (“Except in the rare case where the undisputed facts leave no
room for a reasonable difference of opinion, the question of whether a plaintiff’s reliance
is reasonable is a question of fact.”) (citations omitted).
Third, defendants contend that plaintiff has failed to plead with requisite
particularity that defendants alleged statements were false when made. To plead a claim
for fraud, a plaintiff “must allege facts sufficient to plausibly establish that the statement
was false when made.” Muse Brands, LLC v. Gentil, 2015 U.S. Dist. LEXIS 99143, *13
(N.D. Cal. July 28, 2015). Here, defendants argue that plaintiff has failed to plausibly
allege that when defendants made their purportedly false statements regarding the future
of U-verse in 2014, they knew or should have known that they intended to wind down Uverse’s business and transition U-verse subscribers to DirecTV’s platform. Defendants
note that the acquisition of DirecTV was uncertain and required government approval—a
process that ultimately lasted more than one year. And defendants contend that there is
an obvious alternative explanation for defendants’ alleged misrepresentation; namely,
that defendants “intended to do precisely what [they] said with respect to U-verse in early
2014, but changed [their] minds over a year later once the DirecTV acquisition became a
reality.” Mot., at 14.
Nonetheless, the Court finds that plaintiff has adequately alleged falsity. Plaintiff
alleges that in early 2014 and up and until plaintiff signed the U-verse Agreement with
AT&T Services, defendants continued to represent that they intended to grow the U-verse
platform. Nonetheless, in May 2014, only a month after plaintiff signed the U-verse
Agreement, defendants announced their plan to acquire DirecTV for $65 billion. As both
parties acknowledge, this was a massive undertaking, involving extensive lobbying
efforts by defendants as well as numerous third parties. It is simply implausible that this
planned acquisition first arose in the weeks after the U-verse Agreement was finalized.
Rather, based on the allegations in the complaint, it seems far more plausible that,
throughout the period in which the parties were negotiating the U-verse Agreement,
during which time defendants continued to represent that they planned to grow the Uverse platform, defendants were preparing for and planning to acquire DirecTV.
Moreover, given the magnitude of the DirecTV acquisition and the considerable efforts
purportedly required to make the acquisition a reality, it also seems plausible that
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defendants could have formulated a plan to wind down their U-verse platform in order to
take advantage of DirecTV’s existing platform in advance of announcing the planned
acquisition of DirecTV.
With respect to defendants’ “obvious alternative explanation,” defendants contend
that plaintiff has failed to plead facts tending to exclude this explanation. However,
plaintiff has alleged that defendants engaged in conduct that was arguably inconsistent
with their “alternative explanation.” Specifically, plaintiff’s allegation that defendants
took steps to acquire an alternative television distribution platform (DirecTV) is arguably
inconsistent with defendants’ contemporaneous statements that they intended to grow
their existing platform (U-verse). Indeed, even defendants concede that acquisition of an
alternative platform could detrimentally affect their U-verse platform. Reply, at 10 (“It
goes without saying that, if AT&T acquired an alternative platform, the acquisition could
impede U-verse.”). Thus, by alleging facts that are arguably inconsistent with defendants
“alternative explanation,” the Court finds that plaintiff’s have adequately addressed this
claimed alternative explanation for purposes of a motion to dismiss. See also Muse
Brands, LLC v. Gentil, 2015 WL 4572975, at *4 (N.D. Cal. Jul 29, 2015) (“[T]o plead
falseness, the plaintiff must provide an explanation as to why the disputed statement was
untrue or misleading when made[,] which may be done by pointing to inconsistent
contemporaneous statements or information . . .”) (citation omitted). Lastly, as with
reliance, the Court finds that falsity is an issue better decided either on a motion for
summary judgment or by the trier of fact at trial. See also Starr v. Baca, 652 F.3d 1202,
1216 (9th Cir. 2011) (where there are “two alternative explanations, one advanced by
defendant and the other advanced by plaintiff, both of which are plausible, plaintiff’s
complaint survives a motion to dismiss under rule 12(b)(6).”).
Fourth, defendants allege that plaintiff has failed to adequately allege that it
suffered any harm as a result of defendants’ purportedly false statements. Defendants
argue that, at most, plaintiff has alleged that, had it known defendant’s’ true intentions
regarding the U-verse platform, it would not have entered into the U-verse Agreement in
the first place or, at a minimum, would have insisted on an agreement with better terms,
such as an obligation to place plaintiff’s networks on later-acquired platforms.
Defendants’ argue that, had plaintiff not entered into the U-verse agreement at all, it
would have been in a worse position than it is purportedly in now—having lost out on the
subscriber fees that were generated by the U-verse Agreement. And defendants argue
that the potential that plaintiff would have been able to negotiate a different agreement
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Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

with better terms is pure speculation that cannot support a claim for damages. However,
the issue of what profits plaintiff may have foregone or what losses it may have avoided
by not agreeing to the U-verse Agreement is again a question of fact to be decided at a
later stage in this litigation. See also Qwest Commc’n v. Herakles, LLC, 2008 WL
3864826, at*6 (E.D. Cal. Aug. 19, 2008) (finding allegations of harm and damages to be
proven at trial were sufficient to survive a motion to dismiss pursuant to Federal Rule of
Civil Procedure 12(b)(6)). And the Court cannot find that it is implausible that had
plaintiff known about defendants’ intentions regarding U-verse it would not have been
able to negotiate an agreement with different or more favorable terms. Indeed it seems
unlikely that, had plaintiff known that defendants intended to wind down their U-verse
platform, it would have agreed to an agreement that excused defendants from any
obligation to carry plaintiff’s networks on later-acquired platforms. Moreover,
defendants fail to acknowledge all of the purported harms identified in the complaint.
For example, plaintiff alleges that, in reliance on defendants’ representations, it expended
substantial resources strengthening its program offerings on OAN and AWE. Thus, the
Court finds that plaintiff has adequately alleged harm.
Finally, defendants argue that plaintiff’s fraud claims are barred by the economic
loss rule. Specifically, defendants argue that plaintiff’s fraud claims are based on the
same conduct underlying their claim for breach of the implied covenant of good faith and
fair dealing and thus impermissibly conflate a claim for fraud with a claim for breach of
contract. In short, the economic loss rule states “that no tort cause of action will lie
where the breach of duty is nothing more than a violation of a promise which undermines
the expectations of the parties to an agreement.” Oracle USA, Inc. v. XL Global
Services, Inc., 2009 WL 2084154, at *4 (N.D. Cal. July 13, 2009); see also JMP
Securities LLP v. Altair Nanotechnologies, Inc., 880 F. Supp. 2d 1029, 1042 (N.D. Cal.
Jul. 23, 2012) (“This rule serves to prevent every breach of a contract from giving rise to
tort liability and the threat of punitive damages”).
However, the economic loss rule does not apply where, as here, the defendants’
tortious conduct is separate and apart from the alleged breach of contract. Here, plaintiff
has asserted distinct claims for fraud and for breach of the implied covenant of good faith
and fair dealing. In the fraud claims, plaintiff alleges that defendants falsely represented
that they intended to grow the U-verse platform. In reliance on these representations,
plaintiff contends that it agreed to enter into the U-verse Agreement and took efforts to
expand its existing networks. By contrast, in plaintiff’s implied covenant claim, it alleges
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July 25, 2016

Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

that, after agreeing to the U-verse Agreement, defendants breached that agreement by
failing to make a good faith effort to grow their U-verse platform and, in fact, taking
steps to shrink the platform. Thus plaintiff’s fraud claims are based on separate and
distinct conduct from their breach of contract claims and the economic loss rule does not
apply. See also Silver v. Goldman Sachs Grp., Inc., 2011 WL 1979241, at *5 (C.D. Cal.
May 19, 2011) (“a plaintiff can separately allege a claim for negligent misrepresentation
stemming from a contract, as courts have held that the claim for negligent
misrepresentation is a traditional common law tort claim, and that by alleging this tort, a
plaintiff allege[s][a] violation [ ] of duties independent of the contract.”) (citations
omitted); Rejects Skate Magazine, Inc. v. Acutrack, Inc., 2006 WL 2458759, at*5 (N.D.
Cal. Aug. 22, 2006) (finding that claims for neligent and intentional misrepresentation
alleged “violations of duties independent of the contract” and therefore the economic loss
rule did not apply).
Accordingly, the Court finds that plaintiff’s fraud claims are sufficiently alleged in
the complaint and, therefore, DENIES defendants’ motion to dismiss these claims.
2.

Plaintiff’s Claim for Breach of the Implied Covenant of Good
Faith and Fair Dealing

Plaintiff asserts a claim, solely against AT&T Services, for breach of the implied
covenant of good faith and fair dealing. In this claim, plaintiff alleges that AT&T
Services breached the covenant of good faith and fair dealing implied in the U-verse
Agreement by engaging in conduct to deliberately shift customers away from the U-verse
platform thereby undermining its own U-verse platform.
“Every contract imposes upon each party a duty of good faith and fair dealing in its
performance and its enforcement.” Carma Developers (Cal.), Inc. v. Marathon Dev. Cal.,
Inc., 2 Cal. 4th 342, 371-72 (1992). The implied covenant imposes on contracting parties
the duty to refrain from unfair dealing, whether or not it also constitutes breach of a
consensual contract term, . . . that unfairly frustrates the agreed common purposes and
disappoints the reasonable expectations of the other party.” Celador Intern. Ltd. v. Walt
Disney Co., 347 F. Supp. 2d 846, 852 (C.D. Cal. 2004) (citations omitted).
Here, AT&T Services argues that plaintiff’s implied covenant claim improperly
attempts to expand plaintiff’s contractual rights and preclude AT&T Services from
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HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

exercising rights it expressly reserved under the U-verse Agreement. In particular,
AT&T Services notes that the U-verse Agreement places no obligations on it to maintain
a certain number of subscribers or to take efforts to expand U-verse’s subscriber base.
AT&T Services also notes that, under the U-verse agreement, AT&T Services reserves
the right to shut down the U-verse platform, in whole or in part, at any time. See also
Guz v. Bechtel Nat’l, Inc., 24 Cal. 4th 317, 349–50 (2000) (the implied covenant “cannot
impose substantive duties or limits on the contracting parties beyond those incorporated
in the specific terms of their agreement.”).
However, plaintiff does not merely allege that AT&T Services failed to take
adequate steps to expand U-verse’s subscriber base or maintain existing subscribers;
rather, plaintiff alleges that AT&T Services is deliberately taking steps to reduce the
number of U-verse subscribers. See Compl. ¶ 35 (“AT&T is now aggressively soliciting
U-verse subscribers to move to DirecTV.”). For example, plaintiff contends that “using
AT&T’s logo, DirecTV sent U-verse TV customers a solicitation offering money to
move to DirecTV.” Id. And plaintiff asserts that “AT&T has told U-verse subscribers
that the networks or channels they have on U-verse will be available on
DirecTV”—despite the fact that plaintiff’s networks are not on DirecTV. Id. While this
conduct may not be expressly forbidden by the terms of the U-verse Agreement, the
implied covenant exists to “supplement[ ] the express contractual terms ‘to prevent a
contracting party from engaging in conduct which (while not technically transgressing
the express covenants) frustrates the other party’s rights to the benefits of the contract.’ ”
Americanwest Bank v. Banc of California, 2014 WL 1347166, at *6 (C.D. Cal. Apr. 4,
2014) (citing Racine & Laramie, Ltd. v. Dep't of Parks & Recreation, 11 Cal. App. 4th
1026, 1031–32 (Cal. Ct. App. 1992)). Per the U-verse Agreement, plaintiff’s right to
compensation is based entirely on the number of U-verse subscribers. See Compl. ¶¶ 26,
108. Thus, by taking steps to reduce the total number of U-verse subscribers—including
by actively soliciting existing subscribers to move to a different platform—AT&T
Services is frustrating plaintiff’s rights to its per-subscriber license fees. Accordingly, the
Court finds that plaintiff has adequately stated a claim for breach of the implied covenant
of good faith and fair dealing. See also Fortaleza v. PNC Fin. Servs. Grp., Inc., 642 F.
Supp. 2d 1012, 1021–22 (N.D. Cal. 2009) (in order to plead breach of the implied
covenant, “a plaintiff must establish the existence of a contractual obligation, along with

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July 25, 2016

Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

conduct that frustrates the other party’s rights to benefit from the contract.”). The Court,
therefore, DENIES AT&T Services’ motion to dismiss this claim.5
3.

Plaintiff’s Lobbying Claims

Plaintiff asserts three claims against defendants predicated on defendants’ alleged
promise that, if plaintiff publicly supported AT&T, Inc.’s acquisition of DirecTV,
defendants would carry plaintiff’s networks on DirecTV’s platform (“the DirecTV
Promise”). In particular, plaintiff asserts claims against defendants for: (1) promissory
estoppel (claim five); (2) breach of oral contract (claim six); and (3) breach of implied in

5

AT&T Services also contends that plaintiff’s implied covenant claim violates the
parol evidence rule. The parol evidence rule bars a plaintiff from using extrinsic
evidence “to alter or add to the terms of [a fully integrated] writing.” Riverisland Cold
Storage, Inc. v. Fresno-Madera Prod. Credit Ass’n, 55 Cal. 4th 1169, 1174 (2013) (citing
Cal. Code Civ. Proc. § 1856; Cal. Civ. Code § 1625); see also Masterson v. Sine, 68 Cal.
2d 222, 225 (1968) (“When the parties to a written contract have agreed to it as an
‘integration’—a complete and final embodiment of the terms of an agreement—parol
evidence cannot be used to add to or vary its terms.”) (citations omitted). However, the
parol evidence rule is inapplicable here. Plaintiff does not seek to add additional terms or
alter the existing terms of the U-verse Agreement through its implied covenant claim;
rather, the implied covenant is already implied into the U-verse Agreement as a matter of
California law. See also Amloc Companies, Inc. v. Cypress Abbey Co., 2006 WL
1462908, at *7 (Cal. Ct. App. 2006) (unpublished) (parol evidence rule inapplicable
where evidence was “not used to supplement or vary the terms of the [agreements].”).
Moreover, the fact that the implied covenant may impose obligations on parties that are
not expressly stated in their agreement does not change this analysis. Courts recognize
that that implied covenant imposes on contracting parties an obligation to refrain from
conduct which, while not expressly prohibited by the terms of a contract, nonetheless
frustrates the other parties’ bargained for expectations. See, e.g., Americanwest Bank,
2014 WL 1347166, at *6. This argument is, therefore, unavailing.
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Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

fact contract (claim seven).6 Defendants contend that all three of these claims fail to state
a claim upon which relief can be granted.
First, defendants argue that the Lobbying Claims are barred by a provision in the
U-verse Agreement which states that the agreement “may only be amended or modified
by a written agreement of both Parties.” Dkt. 17, Smith Decl, Ex. A, “U-verse
Agreement”, at 36 ¶ P. Defendants contend that the Lobbying Claims attempt to modify
the U-verse Agreement, which expressly states that defendants have no obligation to
carry plaintiff’s networks on later acquired platforms, such as DirecTV. Defendants’
further contend that, because the DirecTV Promise was, if anything, an oral agreement, it
violates the provision of the U-verse Agreement requiring that all amendments or
modification be in writing. This argument mischaracterizes plaintiff’s allegations.
Plaintiff does not contend that, in making the DirecTV Promise, defendants were
proposing a modification of plaintiff’s existing agreement. Rather, plaintiff is alleging
that defendants were proposing a new agreement, distinct from the U-verse Agreement.
See also Performance Plastering v. Richmond Am. Homes of Cal., Inc., 153 Cal. App. 4th
659, 671 (Cal. Ct. App. 2007) (contractual provision requiring that modifications be in
writing was inapplicable where oral agreement was not a modification, but rather a
separate contract); Bing Ting Ren v. Wells Fargo Bank, N.A., 2013 WL 2468368, at *4
(N.D. Cal. Jun. 7, 2013) (oral promise separate from any contractual provision was not a
modification to written contract). As such, the provision of the U-verse Agreement
defendants rely upon is inapplicable.7

6

For simplicity and because these claims raise similar issues, the Court refers to
these claims collectively as plaintiff’s “Lobbying Claims.”
7

Defendants argue that plaintiff’s are improperly characterizing the DirecTV
Promise as a “new” contract when in reality it is nothing more than an attempted oral
modification of the U-verse Agreement. However, plaintiffs have alleged that their new
DirecTV contract contained materially distinct terms from the U-verse Agreement. For
example, while as plaintiff received $0.18 per subscriber under the U-verse Agreement, it
allegedly would have received $0.12 per subscriber under a DirecTV contract. See
Compl. ¶ 118. Moreover, given that the U-verse Agreement expressly excused
defendants from any obligation to carry plaintiff’s networks on later acquired platforms,
such as DirecTV, it arguably makes sense that the parties would need to form a new
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Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

Second, defendants argue that, to the extent any agreement was formed by the
DirecTV Promise, it is barred by California’s statute of frauds. California Civil Code
section 1624(a)(1) provides that “[a]n agreement that by its terms is not to be performed
within a year from the making thereof” is invalid unless made in writing. Cal. Civ. Code
§ 1624(a)(1). Here, plaintiff alleges that, pursuant to the DirecTV Promise, defendants
agreed that “DirecTV would carry both of Herring’s networks, OAN and AWE . . . [for] a
customary five-year term.” Compl. ¶ 81. Thus, the statute of frauds applies to this
agreement because, by its terms, it would require five years to complete. Nonetheless,
Courts have recognized several exceptions to the statute of frauds. And, as relevant here,
one of those exceptions applies when a party has rendered full performance under an oral
agreement. See, e.g., Corvello v. Wells Fargo Bank, NA, 728 F.3d 878, 885 (9th Cir.
2013) (“Wells Fargo separately contends that the Lucias’ breach of contract claim cannot
survive the statute of frauds because it is an oral agreement to modify a mortgage. The
Lucias, however, have alleged full performance of their obligations under the contract.
They therefore may enforce the remaining promises.”); Griffin v. Green Tree Servicing,
LLC, 2015 WL 10059081, at *8 (C.D. Cal. Oct. 1, 2015) (“Under California law, full
performance by the party seeking enforcement of an oral contract removes the contract
from the statute of frauds.”) (Morrow, J.). Here, plaintiff alleges that it fully performed it
obligations under its agreement with defendants. Specifically, plaintiff alleges that it
lobbied the FCC, the DOJ, and members of Congress, that it solicited other independent
programmers to support the acquisition of DirecTV, and that it filed briefs in support of
the acquisition, amongst many other activities. Plaintiff further alleges that it reported to
one of AT&T Services’ executives, James Cicconi, who gave plaintiff instructions on
how it should support the acquisition, and plaintiff alleges that, ultimately, AT&T, Inc.’s
acquisition of DirecTV was approved by the requisite regulatory bodies. Accordingly,
under the terms of the parties’ agreement, as alleged in the complaint, plaintiff has
fulfilled its side of the bargain and thus the statute of fraud does not prevent plaintiff from
enforcing the DirecTV Promise.8 Finally, defendants allege that plaintiff has failed to

agreement providing carriage on DirecTV’s platform. Accordingly, the Court finds that
plaintiff has plausibly alleged that the parties intended the DirecTV Promise as a distinct
contract from the U-verse Agreement.
8

Defendants contend that plaintiff has not fully performed under the parties
purported agreement. Specifically, defendants contend that, in order to fully perform,
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Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

adequately allege a clear and enforceable promise. Under each of the Lobbying Claims,
plaintiff must allege the existence of a promise that is clear and unambiguous in its terms.
See, e.g., US Ecology, Inc. v. State, 129 Cal. App. 4th 887, 901 (Cal. Ct. App. 2005)
(elements of a promissory estoppel claim include “a promise clear and unambiguous in its
terms”); Weddington Prods., Inc. v. Flick, 60 Cal. App. 4th 793, 811(1998) (“In order for
acceptance of a proposal to result in the formation of a contract, the proposal must be
sufficiently definite, or must call for such definite terms in the acceptance, that the
performance promised is reasonably certain.”). Defendants contend that plaintiff has
failed to allege the existence of a promise with the requisite specificity. The Court
disagrees. In the complaint, plaintiff alleges that defendants “made a clear and
unambiguous promise to Herring” that:
if Herring used its status as an owner of two independent cable
television networks to lobby in support of AT&T’s acquisition of
DirecTV, AT&T would provide Herring’s networks with carriage on
DirecTV post-Acquisition. AT&T promised that Herring would
receive $20 to $25 million per year, i.e., $0.12 per subscriber for 85%
of DirecTV’s subscribers, in licensing fees from DirecTV, including a
five year term, as with Herring’s existing [U-verse] Agreement with
AT&T.

plaintiff was required to tender its channels to defendants for carriage on DirecTV.
However, as alleged in the complaint, the parties’ agreement did not require plaintiff to
tender its channels to defendants in order for defendants to become obligated to carry
those channels on DirecTV. Rather, plaintiff alleges that, pursuant to the DirecTV
Promise, plaintiff agreed that in exchange for lobbying on defendants’ behalf defendants
would carry plaintiff’s channels on DirecTV. Here, plaintiff alleges that it fully
performed its lobbying obligations under the DirecTV Promise. Moreover, even
assuming that plaintiff was required to tender its channels to defendants, there is no
indication that plaintiff did not attempt to tender those channels—indeed, plaintiff alleges
that it desired to place its channels on DirecTV and only engaged in the lobbying efforts
alleged in the complaint so that it could place those channels on DirecTV. And, in any
event, defendants arguably frustrated plaintiff’s ability to tender its channels by allegedly
reneging on the DirecTV Promise and refusing to carry plaintiff’s networks.
Accordingly, this argument is unavailing.
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UNITED STATES DISTRICT COURT
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Title

HERRING NETWORKS, INC. V. AT&T SERVICES, INC., ET AL.

Compl. 112. Thus, plaintiff has alleged the existence of a promise that clearly sets forth
plaintiff’s own obligations (to support AT&T’s acquisition of DirecTV), the obligations
of defendants (to provide plaintiff’s networks with carriage on DirecTV), the time for
defendants’ performance (post-acquisition of DirecTV), the method by which plaintiff
would be compensated ($0.12 per subscriber for 85% of DirecTV’s subscribers), and the
length of the agreement (five years). This is more than sufficient at the pleading stage.
See Alvarado v. Aurora Loan Servs, LLC, 2012 WL 4475330, at *3 (C.D. Cal. Sep. 20,
2012) (“[A] plaintiff can successfully plead a breach of contract claim by alleging the
substance of its relevant terms.”); see also 1 Witkin, Summary of Cal. Law, Contracts, §
137 (2005 10th ed.) (“The terms of a contract are reasonably certain if they provide a
basis for determining the existence of a breach and for giving an appropriate remedy.”)
(quoting Rest. 2d Contracts, § 33).
Accordingly, the Court finds that plaintiff has adequately pleaded its Lobbying
Claims and DENIES defendants motion to dismiss these claims.
V.

CONCLUSION

In accordance with the foregoing, the Court DENIES AT&T, Inc.’s motion to
dismiss for lack of personal jurisdiction and DENIES AT&T Services motion to dismiss
for failure to state a claim upon which relief can be granted.
IT IS SO ORDERED
00
Initials of Preparer

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