GMI, LLC v. Asociacion Del Futbol Argentino et al

Filing 122

ORDER granting 98 Motion to Dismiss. This case is dismissed and the Clerk is instructed to mark it closed. Signed by Judge Cecilia M. Altonaga on 6/23/2014. (ps1)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 13-21494-CIV-ALTONAGA
GMI, LLC,
Plaintiff,
vs.
ASOCIACIÓN DEL FÚTBOL
ARGENTINO, et al.,
Defendants.
___________________________/
ORDER
THIS CAUSE came before the Court on Defendants, Asociación del Fútbol Argentino
(“AFA”), IMG Worldwide, Inc. (“IMG”); Fox Sports Net, Inc. (“Fox Sports”); Fox Sports Latin
America Ltd. (“Fox Latin”); GOL TV, Inc. (“GOL”); and Republic of Argentina’s
(“Argentina[’s]”) (collectively, “Defendants[’]”) Omnibus Motion to Dismiss the Amended
Complaint . . . (“Motion”) [ECF No. 98], filed January 31, 2014. On March 4, 2014, Plaintiff,
GMI, LLC (“GMI”) filed its Response in Opposition . . . (“Response”) [ECF No. 108].
Defendants filed their Omnibus Reply . . . (“Reply”) [ECF No. 115] on March 28, 2014. The
Court has carefully reviewed the parties’ written submissions and applicable law.
I. BACKGROUND
This case involves claims brought by GMI against Defendants in connection with GMI’s
allegations that “Defendants have unlawfully deprived GMI of its right to collect commissions”
it expected to receive as compensation for brokering deals for the purchase of television rights to
broadcast AFA soccer matches. (Amended Complaint ¶ 2 [ECF No. 66]). GMI is a limitedliability company composed of two members, Alejandro and Gustavo Mascardi, who are

CASE NO. 13-21494-CIV-ALTONAGA
“foreign citizens.” (Id. ¶ 7) AFA, the Argentine Football Association, is the “governing body”
of soccer in Argentina. (Id. ¶ 8). IMG is an Ohio corporation with offices in Coral Gables,
Florida. (See id. ¶ 9). Fox Sports is a Delaware corporation with offices in Fort Lauderdale,
Florida. (See id. ¶ 10). Fox Latin is a foreign corporation with offices in Coral Gables, Florida.
(See id. ¶ 11). GOL is a Florida corporation. (See id. ¶ 12). Argentina is a foreign sovereign.
(See id. ¶ 13).
GMI was approached by AFA in August 2006 to assist AFA with brokering a new deal
for AFA’s television and media rights. (See id. ¶ 15). GMI agreed to assist, and, to that end,
GMI and AFA executed an agreement (“GMI-AFA Agreement”) granting GMI the exclusive
right to market and negotiate a deal regarding AFA’s media rights. (See id. ¶ 16; Ex. A –
Exclusive Authorization (“GMI-AFA Agreement”) [ECF No. 66-1]). The GMI-AFA Agreement
states “AFA will reach an agreement with the buyer on the financial compensation due GMI for
organizing the transaction, as well as the way in which this will be implemented (i.e., cash,
shareholding, etc.).” (GMI-AFA Agreement; see also Am. Compl. ¶ 17). GMI claims “the
industry standard for brokering television and media rights is fifteen (15) percent of the purchase
price.” (Am. Compl. ¶ 17).
GMI “initiated a campaign” to broker the AFA deal, formed a team of employees,
marketing experts, and other professionals, and met with various “international power brokers”
in furtherance of the campaign. (Id. ¶¶ 18–19). GMI also met with representatives from Fox
Sports/Fox Latin1 and IMG about the potential deal in 2007 and 2008. (See id. ¶¶ 19–20). GMI
alleges neither Fox Sports/Fox Latin nor IMG knew of the opportunity before it was presented
by GMI. (See id. ¶ 20).
1

In the Amended Complaint, GMI notes Fox Sports has asserted Fox Latin was actually the entity
involved in the transactions. Because “it is impossible for GMI to verify” Fox Sports’s assertion at this
stage, the Amended Complaint treats Fox Sports and Fox Latin together. (Id. 1 n.1).

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In 2009, GMI reached out to government officials in Argentina about the potential for
Argentina to purchase the media rights to AFA matches. (See id. ¶ 21). At AFA’s behest, GMI
arranged meetings with various Argentinian officials, including then-Minister of Justice Anibal
Domingo Fernandez and then-Minister of Economy Amado Boudou. (See id. ¶¶ 21–22). GMI
alleges Argentina was not aware of the opportunity to purchase the broadcast rights before it was
presented by GMI. (See id. ¶ 21). In August 2009, AFA and Argentina executed a 10-year
partnership agreement (“AFA-Argentina Agreement”) for AFA’s television rights — without
representatives from GMI. (See id. ¶ 23). The AFA-Argentina Agreement was memorialized in
an Argentinian administrative decision, which makes no mention of GMI’s involvement. (See
id. ¶ 24).
GMI alleges AFA and Argentina then “flipped” AFA’s international transmission rights
to IMG and Fox Sports/Fox Latin, and AFA and Argentina are sharing the monies being paid for
the international transmission rights. (Id. ¶ 25). GMI believes AFA and Argentina “benefit[ted]
from the interest already created through GMI’s negotiations with IMG and [Fox Sports/Fox
Latin].” (Id. (alterations added)). GMI further alleges GOL acquired transmission rights for
which GOL is making payments to Argentina and AFA. (See id. ¶ 27). Defendants have failed
to give GMI any commission payments. (See id. ¶¶ 27–28).
In its Amended Complaint, GMI asserts claims against AFA for breach of contract
(Count I), breach of fiduciary duty (Count II), breach of the duties of good faith and fair dealing
(Count III), unjust enrichment (Count IV); and against Argentina for tortious interference (Count
XI) and unjust enrichment (Count XII). (See generally id.). GMI seeks a declaratory judgment

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CASE NO. 13-21494-CIV-ALTONAGA
that it is entitled to compensation for its services from AFA (Count V), IMG (Count VII), Fox
Sports/Fox Latin (Count IX), GOL (Count X), and Argentina (Count XIII).2 (See generally id.).
In its initial Complaint [ECF No. 1], GMI alleged the Court had subject matter
jurisdiction pursuant to 28 U.S.C. section 1332 because of the diversity of citizenship of the
parties, and pursuant to 28 U.S.C. section 1330, as Argentina is a foreign state. (See id. ¶ 5).
Following the filing of several motions to dismiss (see [ECF Nos. 32, 35, 36, 37, and 39]), the
parties appeared for a status conference on December 6, 2013 to address the Court’s concern
over the timing of jurisdictional discovery and a schedule for briefing on the motions to dismiss.
At that conference, the Court pointed out the Complaint failed to identify the citizenship of the
members of GMI, a limited liability company, and hence it was not clear diversity of citizenship
provided a basis for federal subject matter jurisdiction. GMI indicated its intention to amend the
Complaint and inquire into the citizenship of GMI’s members.

GMI thereafter filed the

Amended Complaint, which has as its sole basis of federal subject matter jurisdiction section
1330, with supplemental jurisdiction alleged to exist over the remaining Defendants pursuant to
28 U.S.C. section 1367. (See Am. Compl. ¶ 5).3
Defendants move to dismiss all counts on jurisdictional grounds and for failure to state a
claim, as well as for the lack of personal jurisdiction over AFA and Argentina, and forum non
conveniens as to AFA. (See generally Mot.). Because Article III jurisdiction must be reached as
a threshold matter, and the Court cannot “resolve contested questions of law when its jurisdiction
GMI’s Amended Complaint asserted claims for tortious interference against IMG (Count VI), tortious
interference against Fox Sports/Fox Latin (Count VIII), and civil conspiracy against AFA, IMG, and Fox
Sports/Fox Latin (Count XIV). GMI voluntarily dismissed those counts on March 4, 2014. (See
Plaintiff’s Notice of Dropping Counts VI, VIII, and XIV of the Amended Complaint Without Prejudice
(“Notice of Dropping Counts”) [ECF No. 107]).

2

3

GMI now states the citizenship of GMI’s members “is irrelevant for jurisdictional purposes as the
Plaintiff is no longer asserting diversity jurisdiction as a basis for pursuing this matter before the Court[].”
(Id. ¶ 7).

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CASE NO. 13-21494-CIV-ALTONAGA
is in doubt,” the Court first addresses Defendants’ arguments regarding subject matter
jurisdiction. Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 101 (1998). And because the
Court finds it lacks subject matter jurisdiction over this case, it does not reach the remaining
arguments for dismissal.
II. LEGAL STANDARD
“Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of
Am., 511 U.S. 375, 377 (1994). It is presumed that a federal court lacks jurisdiction in a
particular case until the plaintiff demonstrates the court has jurisdiction over the subject matter.
See id. (citing Turner v. Bank of N. Am., 4 U.S. 8, 11 (1799); McNutt v. Gen. Motors Acceptance
Corp. of Ind., 298 U.S. 178, 182 (1936) (“It is incumbent upon the plaintiff properly to allege the
jurisdictional facts . . . .”)). “If the court determines at any time that it lacks subject–matter
jurisdiction, the court must dismiss the action.” FED. R. CIV. P. 12(h)(3).
Attacks on subject matter jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil
Procedure may be either facial or factual. See Lawrence v. Dunbar, 919 F.2d 1525, 1528–29
(11th Cir. 1990). Like a Rule 12(b)(6) motion, “[a] ‘facial attack’ on the complaint requires the
court merely to look and see if [the] plaintiff has sufficiently alleged a basis of subject matter
jurisdiction, and the allegations in [the] complaint are taken as true . . . .” Menchaca v. Chrysler
Credit Corp., 613 F.2d 507, 511 (5th Cir. 1980) (alterations added) (citing Mortensen v. First
Fed. Sav. & Loan Ass’n, 549 F.2d 884, 891 (3d Cir. 1977)). Factual attacks differ because they
“challenge[] the existence of subject matter jurisdiction in fact . . . and matters outside of the
pleadings, such as testimony and affidavits, are considered.” Id. (alterations added). Factual
attacks also differ from facial attacks because “no presumptive truthfulness attaches to plaintiff’s
allegations, and the existence of disputed material facts will not preclude the trial court from

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evaluating for itself the merits of jurisdictional claims.”

Mortensen, 549 F.2d at 891.

Defendants’ Motion presents a facial attack. (See generally Mot.).
III. ANALYSIS
GMI asserts various claims against the foreign Defendants, AFA and Argentina, and
seeks only declaratory judgments against the remaining Defendants, IMG, GOL, and Fox
Sports/Fox Latin. (See generally Am. Compl.; Notice of Dropping Counts). As stated, GMI
alleges the Court has jurisdiction over this action pursuant to 28 U.S.C. section 1330, which
confers subject matter jurisdiction onto federal courts in cases involving a foreign state under the
Foreign Sovereign Immunities Act of 1976 (“FSIA”), 28 U.S.C. section 1620 et seq., and section
1367, which authorizes federal courts to exercise supplemental jurisdiction over related claims
— here, those asserted against Defendants AFA, IMG, GOL, and Fox Sports/Fox Latin. (See
Am. Compl. ¶ 5).

Defendants argue the Court lacks subject matter jurisdiction because

Argentina is immune from suit under the FSIA, and GMI has not established an exception to the
FSIA applies. (See Mot. 23–33).
“To establish subject matter jurisdiction under the FSIA, a plaintiff must overcome the
presumption that the foreign state is immune from suit in the United States’[s] courts.” S &
Davis Int’l, Inc. v. Republic of Yemen, 218 F.3d 1292, 1300 (11th Cir. 2000) (alteration added;
citations omitted). “In order to overcome the presumption of immunity, a plaintiff must prove
that the conduct which forms the basis of its complaint falls within one of the statutorily defined
exceptions.” Id. (citing Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 610–11 (1992);
28 U.S.C. § 1604).
Under the FSIA, foreign states are immune from suit in the United States unless their
alleged activity falls within the exceptions enumerated in 28 U.S.C. sections 1605 to 1607. See

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CASE NO. 13-21494-CIV-ALTONAGA
28 U.S.C. § 1604. “The most significant of the FSIA’s exceptions . . . is the ‘commercial’
exception of [section] 1605(a)(2) . . . .” Weltover, 504 U.S. at 611 (alterations added). Section
1605(a)(2) provides a foreign state shall not be immune in any case:
in which the action is based upon a commercial activity carried on in the United
States by the foreign state; or upon an act performed in the United States in
connection with a commercial activity of the foreign state elsewhere; or upon an
act outside the territory of the United States in connection with a commercial
activity of the foreign state elsewhere and that act causes a direct effect in the
United States.
28 U.S.C. § 1605(a)(2).
GMI relies on the third clause of section 1605(a)(2) to assert Argentina is subject to the
Court’s jurisdiction under the “commercial activity” exception. (See Resp. 5–6). To fall under
this exception, GMI must establish the case is “(1) based upon an act outside the territory of the
Untied States; (2) that was taken in connection with a commercial activity of Argentina outside
this country; and (3) that caused a direct effect in the United States.” Weltover, 504 U.S. at 611
(internal quotation marks, alterations, and footnote call number omitted). Defendants argue GMI
has not established the third element — that Argentina’s alleged activity caused a direct effect in
the United States. (See Mot. 29–33). But according to GMI, this case falls within the FSIA’s
commercial activity exception because GMI would have ultimately requested its commission
payment be made in the United States, thereby constituting a direct effect in the United States.4
(See Resp. 6 (citing Am. Compl. ¶ 126); see also Am. Compl. ¶ 6).

GMI also seems to argue Argentina’s alleged contacts with IMG, GOL, and Fox Sports/Fox Latin
provide an additional basis for finding the commercial activity exception to the FSIA is satisfied. (See
Resp. 8–9). That argument, however, ultimately depends on the commercial activity having an effect in
the United States, which GMI predicates exclusively on “[t]he loss of millions of dollars by GMI — due
and payable in the United States.” (Resp. 9 (alteration added)). GMI’s arguments, then, can be distilled
into one claim: GMI believes Argentina’s conduct had a direct effect in the United States because GMI
would have directed its commission be paid in the United States. (See id. 8–9).
4

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In support of its position, GMI cites to Hanil Bank v. PT. Bank Negara Indonesia,
(Persero), 148 F.3d 127, 132 (2d Cir. 1998). There, the Second Circuit found the direct effect
exception to the FSIA satisfied where the plaintiff designated the United States as the place for
payment. (See Resp. 9 (citing Hanil Bank, 148 F.3d at 132)). Even though the foreign sovereign
in Hanil Bank protested the exercise of jurisdiction over it on the ground it “never expressly
agreed to New York as the place of payment,” the court found the contract at issue:
authorized the negotiating bank to designate the place of payment. In so doing,
BNI [the foreign sovereign] consented to pay the relevant amount at a location
chosen by plaintiff Hanil, wherever that might be. Accordingly, when Hanil
specified New York in its correspondence, BNI had already impliedly agreed to
New York as the place of payment.
Hanil Bank, 148 F.3d at 132 (alteration added). The court concluded the foreign sovereign’s
conduct caused a direct effect in the United States, since “‘[m]oney that was supposed to have
been delivered to a New York bank for deposit was not forthcoming.’” Id. (alteration in original)
(quoting Weltover, 504 U.S. at 619).
This case is distinguishable from Hanil Bank on two grounds. First, GMI has not alleged
it ever actually designated the United States as the place of payment — only that it had intended
to do so. (See Am. Compl. ¶ 6). Second, GMI has failed to demonstrate such a unilateral
designation, even if articulated, would have bound the purchaser of AFA’s media rights, such
that “[m]oney that was supposed to have been delivered to a [U.S.] bank for deposit was not
forthcoming.” Weltover, 504 U.S. at 619 (alterations added).
To elaborate, GMI claims it would have directed its commission payment to be made in
the United States, alleging “payment was due (and/or would have been dictated to be due by the
Plaintiff) in Miami-Dade County, Florida.” (Am. Compl. ¶ 6). GMI does not, however, allege it
ever articulated a request to be paid in the United States. (See generally id.). Nothing in the text

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of the GMI-AFA Agreement provided by GMI indicates the United States was designated as the
place of payment (see GMI-AFA Agreement), and GMI does not point to any language in the
GMI-AFA Agreement stating GMI was to be paid in the United States (see generally id.).
Even though the Amended Complaint contains no factual allegation indicating GMI ever
designated the United States as the place of payment (see generally Am. Compl.), GMI
maintains it has established an exception to the FSIA applies because its commissions “would
have been due and payable in the United States” (Resp. 8). Taking all of GMI’s allegations as
true establishes only that GMI intended to designate the United States as the place of payment —
not that it ever actually did.
In Agrocomplect AD v. Republic of Iraq, 304 F. App’x 872 (D.C. Cir. 2008), the District
of Columbia Circuit dismissed a Bulgarian corporation’s suit against the Republic of Iraq where
the plaintiff failed to show “payments under its contract with Iraq were supposed to pass through
an American bank, as Weltover requires.” Id. at 873. The Agrocomplect AD court relied in part
on its prior holding in Goodman Holdings v. Rafidain Bank, 26 F.3d 1143, 1146–47 (D.C. Cir.
1994), where the court declined to find subject matter jurisdiction existed since “[n]either New
York nor any other United States location was designated as the ‘place of performance’ where
money was ‘supposed’ to have been paid by Rafidain or to Goodman.” Goodman Holdings, 26
F.3d at 1146 (alteration added).
The opinions in Hanil Bank, Agrocomplect AD, and Goodman Holdings all recognize a
direct effect in the United States is established where the United States is designated as the place
of payment. That is not the case here, where GMI never identified its place of payment as the
United States. GMI has failed to provide any support for its assertion a direct effect in the

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United States is established where the plaintiff never specified payment be made the United
States, but now alleges it “would have” done so. (Id. ¶ 6 (emphasis added)).
Even if GMI had, at some point, indicated its desire to be paid in the United States, such
allegation alone would fail to establish a contractual obligation on the purchaser’s part to make
payment in the United States.

In Hanil Bank, the plaintiff benefitted from the ability to

unilaterally designate a place of payment per the contract at issue and create a contractual
obligation via its designation. Hanil Bank, 148 F.3d at 132. No similar agreement exists here.
Under the terms of the GMI-AFA Agreement, GMI expected to broker a deal for AFA’s media
rights, following which AFA — not GMI — would arrange for the amount and form of payment
due to GMI. (See GMI-AFA Agreement (“The AFA will reach an agreement with the buyer on
the financial compensation due GMI for organizing the transaction, as well as the way in which
this will be implemented (i.e., cash, shareholding, etc.).”)). GMI fails to allege the GMI-AFA
Agreement authorized GMI to unilaterally select a place for payment, nor does the GMI-AMA
Agreement indicate GMI had such an entitlement. (See generally Am. Compl.; GMI-AFA
Agreement).
Ultimately, GMI fails to allege any facts to support a conclusion it was due to be paid in
the United States. The only allegation GMI makes to support subject matter jurisdiction over
Argentina is that GMI would have asked for its commission to be paid in the United States. (See
Am. Compl. ¶ 6). Because GMI’s allegations fail to establish the purchaser of AFA’s media
rights would have been under any obligation to direct a payment into the United States, GMI has
failed to demonstrate its payment was due here and that Argentina’s alleged interference caused
a direct effect in the United States. (See generally Am. Compl.).

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The “direct effect” question asks: “‘was the effect sufficiently ‘direct’ and sufficiently ‘in
the United States’ that Congress would have wanted an American court to hear the case?’”
Guevara v. Republic of Peru, 608 F.3d 1297, 1309 (11th Cir. 2010) (alteration added; citations
omitted). Based on GMI’s allegations, the Court finds the answer is a clear “no.” GMI, itself
comprised of foreign citizens, has sued a foreign sovereign and a foreign association based on a
foreign contract. The only nexus this action has to the United States is GMI’s allegation it would
have arranged to be paid its commission in the United States. GMI cannot now claim it would
have requested payment be made here in order to haul a foreign sovereign into a U.S. court under
the commercial activity exception to the FSIA.
Indeed, if such an attenuated connection could serve to establish an exception to the
FSIA, plaintiffs would be able to plead around foreign sovereign immunity simply by claiming
they intended to request payment be made in the United States. Cf. Arbaugh v. Y&H Corp., 546
U.S. 500, 513 n.10 (2006) (“A claim invoking federal-question jurisdiction . . . may be dismissed
for want of subject-matter jurisdiction if it is . . . made solely for the purpose of obtaining
jurisdiction . . . .” (alterations added; internal quotation marks and citations omitted)). Such a
conclusion would implicate serious due process concerns, enabling plaintiffs to haul foreign
sovereigns into federal court where those sovereigns could not “reasonably anticipate being
haled into court” here. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).
GMI’s allegations, taken as true, do not establish an exception to the FSIA.
GMI’s only basis for asserting federal subject matter jurisdiction over the entire action is
the FSIA, and the Court has determined the commercial activity exception to the FSIA does not
apply. There are two independent reasons to dismiss the remaining Defendants.

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First, the remaining Defendants must be dismissed pursuant to Republic of the
Philippines v. Pimentel, 553 U.S. 851 (2008). Under Pimentel, “where sovereign immunity is
asserted, and the claims of the sovereign are not frivolous, dismissal of the action must be
ordered where there is a potential for injury to the interests of the absent sovereign.” Id. at 867.
Pimentel mandates dismissal of the entire action where a party to a suit possesses sovereign
immunity and is a required party under Federal Rule of Civil Procedure 19. Id. at 862–67; see
also TJGEM LLC v. Republic of Ghana, -- F. Supp. 2d --, No. 13-382 (BAH), 2013 WL
6857988, at *8 (D.D.C. Dec. 31, 2013) (applying Pimentel). Rule 19 requires joinder of a party
who “claims an interest relating to the subject of the action and is so situated that disposing of
the action in the person’s absence may . . . as a practical matter impair or impede the person’s
ability to protect the interest.” FED. R. CIV. P. 19(a)(1)(B)(i) (alteration added). Argentina’s
absence would impair its ability to protect its interests in this suit, and allowing the action to
proceed in its absence would fail to “give full effect to sovereign immunity.” Pimentel, 553 U.S.
at 865. Therefore, dismissal of this action in its entirety is required under Pimentel.
Second, GMI alleges jurisdiction over the remaining Defendants based on 28 U.S.C.
section 1367. That statute authorizes courts to “decline to exercise supplemental jurisdiction
over a claim” where “the district court has dismissed all claims over which it has original
jurisdiction.” Id. § 1367(c)(3). The Court is dismissing the claims over which it has original
jurisdiction — those against Argentina, a foreign sovereign — and declines to exercise
supplemental jurisdiction over the remaining claims, most of which are asserted against AFA, a
foreign defendant, and the rest of which seek only declaratory judgments.

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“[W]hen a federal court concludes that it lacks subject-matter jurisdiction, the court must
dismiss the complaint in its entirety.” Arbaugh, 546 U.S. at 514 (alteration added; citation
omitted).
IV. CONCLUSION
For the foregoing reasons, it is
ORDERED AND ADJUDGED that Defendants’ Motion [ECF No. 98] is GRANTED.
This case is DISMISSED. The Clerk is directed to mark this case as CLOSED.
DONE AND ORDERED in Chambers at Miami, Florida, this 23rd day of June, 2014.

_________________________________
CECILIA M. ALTONAGA
UNITED STATES DISTRICT JUDGE
cc:

counsel of record

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