Hong et al v. KBS America, Inc. et al

Filing 151

MEMORANDUM AND ORDER granting in part and denying in part defendants' 125 Motion for Summary Judgment. So Ordered by Judge Eric N. Vitaliano on 9/19/2013. (Lee, Tiffeny)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

---------------------------------------------------------------------x
YONG KI HONG and HWAN MEDIA, INC.,
Plain tiffs,
-against-

MEMORANDUM AND ORDER

KBS AMERICA, INC., CHANG JOON LEE,
JOSEPH KONG, SPRING VIDEO & GIFT, INC.,
and YANG JOONG KIM, d/b/a HAN KOOK
VIDEO,

05-CV-1177 (ENV) (VMS)

Defendants.

---------------------------------------------------------------------x
VITALIANO, D.J.
Plaintiffs Yong Ki Hong and Hwan Media, Inc. commenced this action
against defendants KBS America, Inc. ("KBSA"), Chang Joon Lee ("C.J. Lee"),
Joseph Kong, Spring Video & Gift, Inc. ("Spring Video"), and Yang Joong Kim,
d/b/a Han Kook Video, alleging federal antitrust violations under sections 1 and 2 of
the Sherman Act, 15 U.S.C. §§ 1 and 2. Plaintiffs, owners of a Queens-based store
that rents Korean videotapes, claim that defendants engaged in an unlawful
horizontal price-fixing scheme and group boycott in order to monopolize the market
for Korean videotapes and prevent plaintiffs' store from competing in that market.
Plaintiffs also assert New York state law causes of action under the Donnelly Act,
N.Y.G.B.L. §§ 340 et seq., the Deceptive Practices Act, N.Y.G.B.L § 349(h), and
common law theories of tortious interference with business relationships, unjust
enrichment, intentional infliction of emotional distress, and promissory estoppel.
1

KBSA and C.J. Lee (together, "the KBSA litigants") advance several
counterclaims against plaintiffs and against now-counterclaim defendant Jung
Hoon Lee ("J.H. Lee"), Hong's business partner, including breach of contract, libel,
slander, copyright infringement, violations of the Lanham Act, 15 U.S.C. § 1125(a),
false advertising in violation of N.Y.G.B.L. § 350, unfair competition under New
York common law, use of name with intent to deceive in violation ofN.Y.G.B.L.

§ 133, a N.Y.G.B.L. § 349(h) deceptive practices claim, tortious interference with
business relationships, and three related civil conspiracy claims. All defendants now
move for summary judgment against all of plaintiffs' claims. The KBSA litigants
also move for summary judgment on their counterclaims for copyright violations,
libel per se, and slander per se.
For the reasons set forth below, the Court grants defendants' motions for
summary judgment dismissing all of plaintiffs' claims except three against Kong,
Spring Video, and Kim for tortious interference with business relationships.
Summary judgment is denied as to those three claims. The Court also denies the
KBSA litigants' motion for summary judgment on their counterclaims for copyright
infringement, libel per se, and slander per se, and, upon searching the record, grants
summary judgment to the counterclaim defendants on the libel per se and slander
per se claims.

2

Background
The following facts are drawn from the pleadings and the parties'
submissions, including statements of undisputed material facts submitted pursuant
1

to Local Civil Rule 56.1. The facts are construed, as they must be at summary
judgment, in the light most favorable to the nonmoving party. See Allstate Ins. Co. v.

Hamilton Beach/Proctor Silex, Inc., 473 F.3d 450, 456 (2d Cir. 2007). Any relevant
factual disputes are noted.
Korean-American video stores in the New York metropolitan area purchase
television programs, dramas, and movies that air in the Republic of Korea (i.e.,
South Korea) from various distributors, copy them with the distributors'
permission, and rent them to their retail customers. (Compl. (Dkt. No. 1) ~ 13).
There are three distributors that supply Korean videos to stores in New York:
Moon Hwa Broadcasting Company ("MBC"), Seoul Broadcasting Service ("SBS")
and defendant KBSA. (Id.

~

14). KBSA is a wholly-owned subsidiary of KBS Korea

Broadcasting System, a large public broadcaster in South Korea. (Pis.' Rule 56.1
In order to extricate and classify the facts relevant to its summary judgment
inquiry, the Court applies the following principles: (1) any fact alleged in a
moving party's Rule 56.1 statement, supported by the record, and not
specifically and expressly contradicted by properly supported allegations in the
nonmoving party's Rule 56.1 statement, is deemed admitted by the nonmoving
party; (2) any fact alleged in a moving party's Rule 56.1 statement, supported by
the record, which is specifically and expressly controverted by allegations in the
nonmoving party's Rule 56.1 statement that are properly supported by the
record, is not deemed admitted by the nonmoving party; (3) any fact alleged in a
moving party's Rule 56.1 statement that is not supported by citations to
admissible evidence in the record is not deemed admitted by the nonmoving
party. See Taylor v. Ridley, 904 F. Supp. 2d 222, 229 (E.D.N.Y. 2012) (citing
Giannullo v. City of New York, 322 F.3d 139, 140 (2d Cir. 2003)).
3

Statement ("Pis.' 56.l") (Dkt. No. 139), 1). KBSA's mission in the United States is
twofold: to promote cultural ties between Korea and the United States by
distributing Korean television programming to the broadest possible market; and, a
market-driven one, to earn royalties on the distribution of copyright-protected KBS
programs. (Id., 2).
KBS provides access to its programming in the U.S. primarily through
weekly "master tapes" containing KBS content, which KBSA licenses and
distributes, at a weekly fee, to individual video store owners for copying and retail
distribution to their walk-in customers. (KBSA Litigants' Rule 56.1 Statement
("KBSA's 56.1") (Dkt. No. 126) , , 3-4). According to KBSA, these licenses are sitespecific, and do not automatically transfer if a store owner decides to move his store
to another location. (Id., 5). Although the licenses were, as of the relevant dates of
this litigation, entirely oral, KBSA alleges that the terms were well known in the
Korean video market. (Id., 13; (C.J. Lee Deel. (Dkt. No. 34), Exh. C)). Plaintiffs
dispute the use of the term "license," arguing that it was not used by KBSA or the
video store owners prior to this litigation, and deny that the licenses were storespecific, generally non-transferable, and authorized distribution to walk-in
customers only. (Pis.' 56.1, 5).
In or around February 2004, Hong and J.H. Lee decided to open a Korean
video store, and began researching the market by speaking to others in the industry.
(Compl.

~

17; KBSA's 56.1

~~

14, 17). On October 5, 2004, the two partners had a
4

dinner meeting with Jong Seung Choi, a manager at MBC, and Hahn Gyoung Jo, a
KBSA employee, at which the group discussed how Hong and J.H. Lee might go
about opening a video store in Queens. (Pis.' 56.1 ~ 5). Exactly what was said during
this meeting is in dispute. According to Choi, Jo suggested that, rather than open a
new store, Hong and J.H. Lee should buy an existing, inexpensive video store in
Brooklyn ("the Shilla store"), and then move it to Queens. (Asher Deel. (Dkt. No.
137), Exh. A, at 51:10-56:18). Choi further claims that Jo told the two partners that

KBSA would continue to provide the Queens store with tapes following the
relocation. Id. However, Jo contradicts this account, claiming (1) that it was Choi,
not him, who suggested that Hong and J.H. Lee buy an existing store and relocate;
(2) that he does not recall having discussed the Shilla store with Hong and J.H. Lee;
(3) that he never said "this [relocation] strategy would work with KBS America;"
and (4) that he "did not in any way state, imply or indicate that KBS America would
approve a license for [plaintiffs'] store at either location." (Jo Deel. (Dkt. No. 35) at
~~

23-33).

In October 2004, Hong formed a corporation, Hwan Media Inc., in order to
purchase the Shilla store. (KBSA's 56.1

~

22). Hong was the sole owner of Hwan

Media. (Id.). J.H. Lee entered into a verbal agreement with Hong that he would
receive 50°/o of the profits from the store, but was never an employee, shareholder,
or officer of Hwan Media, nor was he paid for the services he performed for the
business. (Id.

~

23). The partners purchased the Shilla store in Brooklyn for around
5

$30,000 and assumed ownership of the store's existing KBSA license. (Id. ~ 19; Jo
Deel. at ~ 35). According to KBSA, a store in Queens would have cost between
$100,000 and $500,000. (KBSA's

56.1~19).

The rates store owners had to pay to the

distributors for weekly master tapes were also higher in Queens than in Brooklyn.
(Id.~

20).
After a few weeks in Brooklyn, Hong and J.H. Lee closed the Shilla store and

relocated their operations to a storefront in Fresh Meadows, Queens (now called
"the Samsung store"). (Id.

~

26). J.H. Lee subsequently asked Jo, who had been

delivering KBS master tapes to the Shilla store, to make future deliveries to the
Queens location. (Id. ~ 27). Jo made one tape delivery to a street corner in Queens
and another two to the Samsung store. (Id.). Defendants attest that, each time Jo
made a delivery to the Queens location, he informed the store owners that the tapes
were for use in the Shilla store in Brooklyn, not for the Samsung store in Queens.
~

(Id.

28). Hong and J.H. Lee distributed KBS content from these tapes at the

Samsung store for three to four weeks, as well as KBS sports programming for
which they did not have a license. (Id.
56.1

~

~

32; Asher Deel., Exh. J, 71:8-23; KBSA's

33). During this time, defendants claim that the Samsung store owners

continued to pay the lower Brooklyn rate for the master tape deliveries. 2 (KBSA's
56.1~31).

2

The KBSA litigants' record citations indicate that Queens rates were generally
higher than Brooklyn rates, and that plaintiffs had paid $200 per week at the
Shilla store, but no one has offered record citations that clearly establish what
rate plaintiffs paid after the move to Queens.
6

In December 2004, KBSA stopped providing the Samsung store with KBS
master tapes. The circumstances surrounding this supply cut-off, and the reasons
for it, are in dispute. C.J. Lee, General Manager of KBSA's Eastern regional office,
claims that, sometime during the week of November 29, 2004, he learned that the
partners had moved their store from Brooklyn to Queens, which led him to
"investigate whether KBS programs were being illegally rented" from the Queens
location. (C.J. Lee

Deel.~~

69-70.) C.J. Lee states that he visited the Samsung store

on December 3, 2004, enabling him to confirm firsthand that plaintiffs were
distributing KBS content.

(Id.~~

71-74; KBSA's

56.1~35).

Soon thereafter, KBSA

terminated the supply of KBS master tapes to plaintiffs. (KBSA's 56.1

~

35)

Defendants contend that KBS cut off Hong and J.H. Lee's supply of videos
because the partners had violated the terms of the Shilla store license by neglecting
to inform KBSA management about the move to Queens and failing to request a
new license for the Samsung store. (Id.). Because of this, defendants claim, KBSA
was unable to investigate the viability of the new store's location and its potential
impact on KBSA's distribution stream. (Id.). C.J. Lee states that he subsequently
told Hong and J.H. Lee that they would have to apply for a license through the
"normal approval process," which involved review by KBSA's Los Angeles office.
(Id.~

36).
Plaintiffs vehemently dispute defendants' account of these events. (Pis.' 56.1

7

~ 35(b)). They contend that Hong and J.H. Lee did, in fact, inform KBSA

management of the move during their October 5, 2004 dinner meeting with Jo and
Choi, at which Jo allegedly "encouraged, authorized and approved" the purchase of
the Shilla store and its subsequent relocation to Queens. (Id. ~ 35(a)). They further
assert that it was never agreed that the license to copy and distribute KBS
programming was site-specific and would not automatically transfer from the Shilla
store to the Samsung store.

(Id.~

13). As discussed above, Choi-a non-party

witness-largely corroborated plaintiffs' version of the dinner meeting, while Jo
and C.J. Lee deny that any such authorization and approval was granted.
Plaintiffs further claim that KBSA's termination of supply had nothing to do
with either the relocation of the store or the license issue. Instead, they point to
evidence of anticompetitive behavior on the part of other video store owners in
conjunction with KBSA. Kim, owner of Han Kook Video, was at the time the
president of the New York Korean Video Store Owners Association (the
"Association"), whose members own and operate Korean video stores in the New
York area.

(Id.~

35(b)). Kong, owner of Spring Video, was the vice-president of the

Association at the time. Plaintiffs claim that Kim, Kong, and other Association
members entered into an agreement to charge a uniform $1.50 price for video
rentals, and pressured KBSA to cut off supply to plaintiffs' store because it was
charging only $1.00 per rental.
As evidence of this alleged price-fixing scheme, plaintiffs cite the following:
8

•

Choi's deposition testimony that he heard that Kim visited all
the other Korean video store owners and got them to agree on a
$1.50 rental price. (Pis.' 56.1~35(b); Asher Deel., Exh. A, at
101:3-25).

•

Hong's deposition testimony that Kim told him he had been
suggesting to all the video stores that they should charge $1.50,
which had been widely accepted. (Geercken Deel. (Dkt. 127),
Exh. Hat 101:16-102:24)).

•

A February 25, 2005 telephone conversation between Kim and
Hong regarding the apparent hostility from other store owners
regarding the pricing practices and location of the Samsung
store. Plaintiffs and defendants have offered competing
transcriptions of this conversation. (See Pis.' 56.1 ~ 35(b); Asher
Deel., Exh. B ("Hong Deel.), Exh. 1 (plaintiffs' transcription);
C.J. Lee Deel., Exh. E (defendants' transcription)).

•

A recorded February 25, 2005 conversation (the "bakery
conversation") between Hong, J.H. Lee, and C.J. Lee at which,
plaintiffs claim, C.J. Lee admitted that KBSA terminated the
Samsung store's supply of videos because the two partners
would not abide by the terms of the price-fixing agreement.
(Hong. Deel. ~ 27). Defendants claim that the recording of this
conversation is garbled and unintelligible, (see KBSA's 56.1
~~ 39-40). The Court ordered that a transcription be made of an
audio-enhanced version of the recording, and both parties have
again offered their own competing transcriptions. (See Pis.' 56.1
~ 35(b); Asher Deel. Exh. C (court-ordered transcription), Exh.
E (plaintiffs' transcription), Exh. D (defendants' transcription)).
All three transcriptions are, indeed, extremely difficult to
decipher.

•

Statements Kong and Kim allegedly made in May 2004 to
members of the Korean-American media regarding their
intention to enforce the price-fixing arrangement and shut out
non-cooperators, as well as articles in the Korea Central Daily
News and Korea Times reporting the alleged statements. (Pis.'
56.1~35(b); Compl., Exh. A).

•

An affidavit from a customer stating that she started renting
from the Samsung store because its rental price was $1, as
9

opposed to the $1.50 charged by other stores in the area. (Pis.'
Asher Deel., Exh. K).

56.1~35(b);

•

A "suspicious flurry of phone calls" between Kong and Han,
another KBSA employee, around the time the Samsung store's
video supply was terminated, including seven calls on the day
C.J. Lee and Han visited the store. (Pis.' 56.1~35(b); Asher
Deel., Exh. 0).

•

A complaint submitted to the Federal Trade Commission by
Assa Video, another Korean video store, accusing KBSA of
operating an unlawful monopoly in the Korean video rental
market along with video stores and other distributors. (Pis.' 56.1
~ 35(b); Asher Deel., Exh. L).

•

A petition circulated by the National Association of Video
Owners urging KBSA to remedy the problems of overpricing
and oversaturation. (Pis.' 56.1~35(b)).

On or around December 8, 2004, Hong and J.H. Lee contacted and spoke
with with reporters from the Korean-American media, alleging that KBSA had
wrongfully terminated the supply of videos to the Samsung store. (KBSA's 56.1
~~

64, 37; Geercken Deck., Exh. M, 266:18-275:2). That same month, Hong also

delivered a bottle of whiskey to C.J. Lee at KBSA's Eastern regional office,
apparently in hopes of receiving a favorable resolution to the conflict. (C.J. Lee
Deel.~~

118, 121; Pis.' 56.1

~~

66-67). C.J. Lee considered this an act of bribery,

which he claims to "abhor," and returned the bottle unopened. (C.J. Lee Deel.
~~

120-21; KBSA's

56.1~67).

On or around February 2, 2005, Hong and J.H. Lee sent a letter to KBSA's
CEO, Kevin Kwon, imploring him to resume the Samsung store's supply of KBS
master tapes. (KBSA's

56.1~~37,

65; Kwon Aff.. (Dkt. No. 36), Exh. 1)). The letter
10

also indicated that C.J. Lee had terminated the supply in response to threats he
believed the Samsung store owners had made to KBSA, and suggested that "a third
person"-implicitly, other store owners-had spread lies about Hong and J.H. Lee
in order to damage their relationship with KBSA. (Kwon A., Exh. 1). Also in
February 2005, Hong filed two complaints via the Internet with South Korea's
Citizen's Complaint Resolution Committee, an agency within the Blue House (the
Korean equivalent of the White House). (KBSA's

56.1~66;

C.J. Lee

Deel.~~

117-

124., Exhs. M-N). These complaints charged KBSA of wrongfully terminating the
Samsung store's video supply and accused C.J. Lee of soliciting and accepting
bribes from store owners, and of threatening to "make things very difficult" for
Hong. (KBSA's

56.1~66;

C.J. Lee Deel.~~ 117-124, Exhs. M-N).

On March 2, 2005, Hong and Hwan Media filed this lawsuit against
defendants under the Sherman Act and a host of state law causes of action. (See
Compl.) In response, the KBSA litigants asserted a raft of counterclaims. (See Am.
Ans. (Dkt. No. 56)). Now before the Court are defendants' motions for summary
judgment against all of plaintiffs' claims, as well as the KBSA litigants' motion for
summary judgment on its counterclaims for copyright infringement, libel per se,
and slander per se.
Standard of Review
A motion for summary judgment shall be granted when "the pleadings, the
discovery and disclosure materials on file, and any affidavits show 'that there is no
11

genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law."' Brown v. Eli Lilly and Co., 654 F.3d 347, 358 (2d Cir. 2011) (quoting
Fed. R. Civ. P. 56(a)); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
"In deciding a motion for summary judgment, the court cannot try issues of fact but
can only determine whether there are issues of fact to be tried." Sutera v. Schering

Corp., 73 F.3d 13, 16 (2d Cir. 1995) (internal quotations omitted) (emphasis in
original). The burden rests with the moving party to demonstrate that there is no
genuine issue as to any material fact. See, e.g., Jeffreys v. City of New York, 426 F.3d
549, 554 (2d Cir. 2005). "[A] court is required to resolve all ambiguities and draw all
permissible factual inferences in favor of the party against whom summary
judgment is sought." Allstate Ins. Co. v. Hamilton Beach/Proctor Silex, Inc., 473 F.3d
450, 456 (2d Cir. 207) (internal quotations and citations omitted).
If the moving party meets its initial burden of demonstrating no dispute of

material fact, the burden then shifts to the nonmoving party. PepsiCo, Inc. v. Coca-

Cola Co., 315 F.3d 101, 105 (2d Cir. 2002). However, the nonmoving party "may not
rest upon the mere allegations or denials of his pleading, but ... must set forth
specific facts showing that there is a genuine issue for trial." Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986); see also Celotex, 477 U.S. at 324. Moreover,
"the mere existence of some alleged factual dispute between the parties will not
defeat an otherwise properly supported motion for summary judgment; the
requirement is that there be no genuine issue of material fact." Anderson, 447 U.S. at
12

247-48 (emphasis in original). A genuine issue of material fact exists when "there is
sufficient evidence favoring the nonmoving party for a jury to return a verdict for
that party. If the evidence is merely colorable, or is not significantly probative,
summary judgment may be granted." Id. at 249-50 (internal citations omitted).
Finally, the Second Circuit has instructed that, "[i]n the context antitrust
cases ... summary judgment is particularly favored because of the concern that
protracted litigation will chill pro-competitive market forces." PepsiCo, 315 F.3d at
104. Therefore, "[a]lthough all reasonable inferences will be drawn in favor of the
non-movant, those inferences 'must be reasonable in light of competing inferences of
acceptable conduct."' Id. at 105 (quoting Tops Mkts., Inc. v. Quality Mkts., Inc., 142
F.3d 90, 95 (2d Cir.1998)).
Discussion
I. Plaintiffs' Claims

a. The Sherman Act
To succeed on a Sherman Act claim, a plaintiff must not only satisfy the
substantive elements of the statute, but must also establish antitrust standing, which
is distinct from standing under Article III of the Constitution. See Shaywitz v. Am.

Bd. of Psychiatry and Neurology, 675 F. Supp. 2d 376, 385 (S.D.N.Y. 2009) (citing
Associated Gen. Contractors of Calif., Inc. v. Calif. State Council of Carpenters, 459
U.S. 519, 535 n. 31 (1983)). The Supreme Court has described several factors
relevant to antitrust standing: whether the alleged injury '"is of the type that the
13

antitrust statute was intended to forestall,' 'the directness or indirectness of [that]
injury,' the extent to which the plaintiff's asserted damages are speculative, 'the
potential for duplicative recovery or complex apportionment of damages,' and 'the
existence of more direct victims of the alleged conspiracy."' Gatt Commc'ns, Inc. v.

PMC Associates, L.L.C., 711 F.3d 68 (2d Cir. 2013) (quoting Associated Gen.
Contractors, 459 U.S. at 540-45). The Second Circuit has "distilled these factors into
two imperatives." Gatt Commc'ns, 711 F.3d at 76. First, an antitrust plaintiff must
plausibly allege "that it suffered a special kind of antitrust injury." Id. at 76
(internal quotations omitted). Second, the grievant must show that "it is a suitable
plaintiff to pursue the alleged antitrust violations and, thus, is an 'efficient enforcer'
of the antitrust laws." Id. (internal quotations omitted).
To that end, case law has embraced a three-step process for determining
whether a plaintiff has sufficiently alleged antitrust injury:
First, the [plaintiff] ... must identify the practice complained of and
the reasons such a practice is or might be anticompetitive. Next, [the
court must] identify the actual injury the plaintiff alleges. This requires
[the court] to look to the ways in which the plaintiff claims it is in a
"worse position" as a consequence of the defendant's conduct. Finally,
the court must compare the anticompetitive effect of the specific
practice at issue to the actual injury the plaintiff alleges.

Id. (internal citations and quotations omitted). Significantly, "[i]t is not enough for
the actual injury to be 'causally linked' to the asserted violation." Id. (quoting

Brunswick Corp. v. Pueblo Bowl-0-Mat, Inc., 429 U.S. 477, 487 (1977)). "Rather, in
order to establish antitrust injury, the plaintiff must demonstrate that its injury is
14

'of the type the antitrust laws were intended to prevent and that flows from that
which makes or might make defendants' acts unlawful."' Gatt Commc'ns, 711 F.3d
at 76 (quoting Daniel v. Am. Bd. of Emergency Med., 428 F.3d 408, 438 (2d Cir.
2005)). Put differently, "[p]laintiffs must allege harm to the general market that has,
in turn, harmed their own interests." E & L Consulting, Ltd. v. Doman Indus., Ltd.,
360 F. Supp. 2d 465, 474 (E.D.N.Y. 2005).
Not surprisingly, the parties in this case spar over whether plaintiffs have
established antitrust standing. Plaintiffs' chief contention is that KBSA cut off their
supply of KBS videos in retaliation for their failure to adhere to the alleged pricefixing agreement, and to prevent the Samsung store from freely competing with
other Korean video stores. (Pis.' Mem. (Dkt. No. 138) at 12). "As a result," plaintiffs
assert, "[the Samsung] store had significant losses that it would otherwise have not
suffered had KBS[A] continued its supply of content." (Id.) "The type of injury
Plaintiffs suffered," they continue, "was therefore distinctly an antitrust type of
injury and resulted directly from the defendant store owners' desire to limit
competition and maintain a price floor and from defendant KBS[A]'s complicity in
maintaining the store owners' price floor." (Id. (emphasis in original)). They further
contend that defendants' actions were "intended not only to injure [plaintiffs], but
also video customers, who would as a result need to pay artificially higher prices for
their videos. Once supply of KBS content to Plaintiffs' store was terminated,
customers had to travel to Flushing." (Id. at 13).
15

The KBSA litigants counter that "any injury to Plaintiffs' business once
KBSA terminated supply (inasmuch as Plaintiffs continued to rent videos from
other, allegedly less popular suppliers) would be purely private in nature and,
therefore, insufficient to give rise to antitrust standing." (KBSA's Mem. (Dkt. No.
128) at 10). Citing Union Cosmetic Castle, Inc. v. Amorepaci.fic Cosmetics USA, Inc.,
454 F. Supp. 2d 62 (E.D.N.Y. 2006), the KBSA litigants argue that a distributor does
not achieve antitrust standing merely because it suffers a loss in profits, or goes out
of business, after a supplier cuts off its supply of a popular product, even if the
supplier's actions unreasonably hamper competition and result in uniformally
higher prices. (KBSA's Mem. at 11). Furthermore, the KBSA litigants contend that
the market for Korean video rentals does not, in fact, reveal uniform pricing, and
that no anticompetitive effects have resulted from any of their actions. (Id.).
The controlling precedent, however, is not Union Cosmetic, but is, instead,

Gatt Communications, in which the Second Circuit considered and rejected a
plaintiff's claim of antitrust standing on essentially identical facts. See 711 F.3d at
76-80. In its light, plaintiffs' argument for antitrust standing must fail. Because the
facts in Gatt Communications are so analogous to the case at bar, they are worth
recalling here. In that case, Gatt (a retailer of commercial radios) and Vertex (a
radio manufacturer/distributor) entered into a contract, pursuant to which Gatt
became a licensed dealer of Vertex radios and equip'ment. Id. at 71-72. According to
the agreement, Gatt's dealings with Vertex would be coordinated through PMC,
16

also a dealer /retailer of Gatt radios and Gatt's sales representative in New York. Id.
at 72. Vertex instructed Gatt that failure to cooperate with PMC could result in
termination of the contract. Id.
Between 2002 and 2007, various governmental agencies in New York
purchased Vertex radios by soliciting bids from dealers. Id. at 72. Unbeknownst to
these agencies, the dealers (at PMC's direction, and with Vertex's support and
encouragement) operated a bid-rigging scheme between 2005 and 2007, whereby
one dealer would submit a "real" bid for a particular solicitation (never to fall below
a specified price floor) and other dealers would submit inflated phony bids,
resulting in a loss of opportunity to win the bid for any but the "real" bidder. Id.
Each dealer would then get a turn as the "real" bidder on subsequent solicitations,
creating artificially higher prices paid by the agencies for Vertex radios. Id.
After a year and a half of participating in the bid-rigging scheme, Gatt
decided to break ranks with the cartel, and submitted its own rogue bid for a
contract with the New York City Transit Authority ("NY CT A") in excess of $1
million. Id. at 73. NY CTA indicated that Gatt would likely win the contract, and
PMC complained to Vertex, which promptly terminated its contract with Gatt. Id.
NYCT A then re-bid the solicitation after discovering technical errors in the original
solicitation, and Gatt, now unable to sell Vertex products, was unable to participate
in the bidding. Id. at 74.

17

Gatt subsequently sued PMC under the Sherman Act, seeking to recover lost
profits from the NYCTA contract and subsequent bid solicitations from which it
was now shut out. Id. Affirming the district court's dismissal for lack of antitrust
standing, the Second Circuit observed that, while "the illegal 'practice' Gatt alleges
is the carrying out of an illegal bid-rigging scheme, and Gatt's alleged injury is the
harm it suffered as a consequence of its inability to continue selling Vertex products
... [t]his harm only supports antitrust injury ... if it flows from that which makes
the bid-rigging scheme unlawful." Id. at 77. Considering this question, the court
reasoned that,
even assuming that the alleged bid-rigging scheme is unlawful, it is so only
because of the harm it may cause-increased prices-to purchasers of Vertex
products. See Balak/aw v. Lovell, 14 F.3d 793, 797 (2d Cir.1994). Gatt's lost
revenue resulting from the Vertex termination, however, is not an injury that
flows from that which makes bid-rigging unlawful. Gatt has not been forced
to pay higher prices for a product, as customers who are victimized by pricefixing schemes might.... Even if the antitrust laws seek to prevent Vertex
and PM C's alleged activities because of resulting harms to competition, these
laws are not concerned with injuries to competitors such as Gatt resulting
from their participation in or exile from such schemes. See At/. Richfield Co.
v. USA Petroleum Co., 495 U.S. 328, 338 (1990).
Gatt Commc'ns, 711 F.3d at 77 (emphasis in original). In line with its analysis, the
court held that "Gatt's allegations fail to demonstrate injury 'of the type the
antitrust laws were intended to prevent and that flows from that which makes [the]
defendants' acts unlawful [under the antitrust laws].' Brunswick, 429 U.S. at 489.
Therefore, Gatt does not have antitrust standing to pursue these claims." Gatt
Commc'ns, 711 F.3d at 77.
18

The alleged wrongful conduct now before the Court is functionally
indistinguishable from that presented in Gatt Communications. 3 Here, the only
injury that plaintiffs claim to have suffered as a result of defendants' allegedly
unlawful activities is lost revenue due to the termination of plaintiffs' access to their
KBS video supply. But, as Gatt Communications makes crystal clear, a competitor's
lost profits is not an injury "of the type the antitrust laws were intended to prevent."
711 F.3d at 77. Rather, horizontal price-fixing schemes are illegal under the
antitrust laws "only because of the harm [they] may cause-increased prices-to

purchasers" of the product for which prices have been fixed. Id. (emphasis added).
Plaintiffs never paid higher prices for KBS videos as a result of the alleged pricefixing arrangement. They claim, instead, and more grievously to them, that their
supply of KBS videos was simply cut off when they refused to participate, just as
Gatt's supply of Vertex radios was terminated after it abandoned the bid-rigging
scheme that fixed prices there.
Plaintiffs, of course, try to divert attention to their rental customers. In their
brief, they refer to the "artificially higher prices" that the price-fixing scheme would
create for customers, and also point out that "[o]nce supply of KBS content to
Plaintiffs' store was terminated, customers had to travel to Flushing" to rent their
videos. (Pis.' Mem. at 13). Certainly, these are the kinds of injuries that the
3

It should be noted that, unlike in Gatt Communications, there is no claim that

plaintiffs in this case ever participated in the alleged price-fixing scheme that
they now attack under the Sherman Act. However, that fact did not affect the
Gatt Communications court's reasoning on the issue of antitrust standing. See
generally Gatt Commc'ns, 11 F.3d at 77-80.
19

Sherman Act was intended to prevent, and if video customers brought suit on those
facts, they might well achieve antitrust standing. It is unmistakable from the record,
though, that if such injuries were inflicted, they were not suffered by plaintiffs
themselves; their injury was profit, not price. In Gatt Communications, the court
held that lost profits, though an economic injury, is simply not the type of injury
that confers antitrust standing on a claimant. That is the case here.
Plaintiffs fare no better with regard to their Sherman Act § 2 claim. In the
complaint, they advance this claim against all defendants, but only brief KBSA's
alleged monopoly power. (See Pis.' Br. at 17-21). Even if KBSA did, in fact, operate
such a monopoly, G.K.A. Beverage Corp. v. Honickman, 55 F.3d 762 (2d Cir. 1995)
forecloses any possibility that plaintiffs might have antitrust standing to bring a § 2
claim. In G.K.A. Beverage, a group of truck drivers/distributors of soda products
sued a soda bottling company for allegedly monopolizing the local bottling market
(that is, the market one level up in the distribution chain from the drivers). Id. at
764-66. The drivers claimed to have suffered losses after the bottler allegedly used
its monopoly power to drive a competing bottler, with whom the drivers had a
contract, into bankruptcy. Id. at 766. The court held that the drivers' injuries were
merely derivative, and that "a party in a business relationship with an entity that
failed as a result of an antitrust violation has not suffered the antitrust injury
necessary for antitrust standing." Id.; see also A.G.S. Electronics, Ltd. v. B.S.R.

(U.S.A.), Ltd., 460 F. Supp. 707, 710-11 (S.D.N.Y.), aff'd, 591 F.2d 1329 (2d Cir.
20

1978) (plaintiff distributor lacked antitrust standing where its sole injury was lost
profits due to defendant manufacturer's acquisition of a competitor and termination
of plaintiff's exclusive distribution contract with that entity).
In this case, plaintiffs baldly assert (without any supporting evidence) that
KBSA controls 60°/c, of the market for broadcasters and/or suppliers of Korean
videos. (Pis.'

56.1~35).

Even if true, this fact would not, without more, prove that

KBSA had monopoly power over its competitors. See, e.g., PepsiCo, 315 F.3d at 109
(64°/o of market share insufficient to show monopoly power). But, even accepting,
for argument's sake, plaintiffs' claim that KBSA possesses monopoly power over the
market for Korean videos, they would still lack antitrust standing. G.K.A. Beverage
leaves no doubt that a product distributor may not sue a supplier under § 2 of the
Sherman act when its injuries are merely derivative of the supplier's monopoly
power against its competitors. Plaintiffs never competed with KBSA; rather, they
were one of its customers. Therefore, the injury they suffered as a result of KBSA's
alleged monopoly-termination of their video supply- was, at best, derivative.
There can be no antitrust standing based on this injury.
Despite the intimations in the complaint, plaintiffs do not marshal any record
evidence showing, nor do they even allege in their brief, a monopoly of the video
rental market held by the non-KBSA litigants. As such, the Court must consider any
such claims as abandoned. See, e.g., Singleton v. City of Newburgh, 1 F. Supp. 2d
306, 312 (S.D.N.Y. 1998) (claims raised in complaint but nowhere else in the record
21

were deemed "abandoned" at the summary judgment stage). But even if plaintiffs
had not abandoned these claims, they would still lack antitrust standing to pursue
them. Once again, the only injury plaintiffs have suffered is loss of profits due to
KBSA's termination of their KBS video supply. Assuming as true plaintiffs' claim
that KBSA had cut off this supply in retaliation for their refusal to join the video
stores' alleged monopolistic cartel, this injury is, at best, a derivative one. 4 G.K.A.

Beverage makes clear that an injury of this nature cannot support antitrust
standing. In short, plaintiffs have not suffered the kind of injury needed to support
antitrust standing. Consequently, they cannot pursue their causes of action under
the Sherman Act, and defendants are granted summary judgment on all such
claims.

b. The Donnelly Act
The Donnelly Act claims stumble on the same ground: antitrust standing. The
Donnelly Act prohibits "[e]very contract, agreement, arrangement or combination
whereby ... [a] monopoly ... is or may be established or maintained, or whereby
... competition ... is or may be restrained." N.Y.G.B.L § 340(1). The New York
Court of Appeals has held that "the Donnelly Act, having been modelled on the

4

Notably, plaintiffs offer neither pleadings nor proof that KBSA played any direct
role in fixing the retail price for Korean videos, either alone or in conjunction
with the Association, or that it played even an indirect role apart from allegedly
terminating the Samsung store's video supply. Even if plaintiffs had antitrust
standing, their factual allegations against KBSA fall far short of the mark to
support a Sherman Act claim.
22

Federal Sherman Act ... should generally be construed in light of Federal
precedent and given a different interpretation only where State policy, differences in
the statutory language or the legislative history justify such a result." XL.O.

Concrete Corp. v. Rivergate Corp., 83 N.Y.2d 513, 518, 611 N.Y.S.2d 786, 634 N.E.2d
158 (1994) (internal quotations omitted). Plaintiffs have offered no reasons for
interpreting their Donnelly Act claims differently from their Sherman Act claims,
and the Court detects none independently. Indeed, the courts in both Gatt

Communications, 711 F.3d at 81-82, and G.K.A. Beverage, 55 F.3d at 766-67,
dismissed plaintiffs' parallel Donnelly Act charges along with their Sherman Act
claims for lack of antitrust standing. The Court now follows suit. Summary
judgment for defendants on all Donnelly Act claims is granted.

c. Deceptive Practices Act
New York's Deceptive Practices Act ("DPA"), N.Y.G.B.L. § 349(h), prohibits
"[d]eceptive acts or practices in the conduct of any business, trade or commerce." In
this lawsuit, plaintiffs allege that they "had a reasonable expectation that the price
of [Korean rental) videos and their distribution would not already be established
and controlled by Defendants and their fellow co-conspirators," but that "that
expectation was thwarted by Defendants' activities"-presumably, since the motion
papers are otherwise silent, the alleged price-fixing scheme- "and by their
concealment of those activities." (Compl.

~

85). Furthermore, plaintiffs allege that,

"[b]y fixing the price at which Korean videos were sold, and by monopolizing the
23

Korean video market, Defendants wrongfully deprived Plaintiffs of the opportunity
to compete in a free and open marketplace." (Id. ~ 86).
To prevail on a DPA claim, a plaintiff must show that the defendant has
engaged in "(1) consumer-oriented conduct that is (2) materially misleading and
that (3) plaintiff suffered injury as a result of the allegedly deceptive act or
practice." City of New York v. Smokes-Spirits.Com, Inc., 12 N.Y.3d 616, 621, 911
N.E.2d 834, 883 N.Y.S.2d 772 (2009). To qualify as "consumer-oriented conduct," a
defendant's acts or practices "need not be repetitive or recurring," but "must have a
broad impact on consumers at large; private contract disputes unique to the parties
... would not fall within the ambit of the statute." New York Univ. v. Continental

Ins. Co., 87 N.Y.2d 308, 320, 662 N.E.2d 763, 639 N.Y.S.2d 283 (1995) (internal
quotations omitted). "Materially misleading conduct" is that which is "likely to
mislead a reasonable consumer acting reasonably under the circumstances." Oswego

Laborers' Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20, 25,
647 N.E.2d 741, 623 N.Y.S.2d 529 (1995).
Notably, "[a]lthough the [DPA] is based upon section 5 of the Federal Trade
Commission Act ... , New York has chosen not to include 'unfair competition' or
'unfair' practices in its consumer protection statute, language that bespeaks a
significantly broader reach." In re Digital Music Antitrust Litigation, 812 F. Supp. 2d
390, 410 (S.D.N.Y. 2011) (internal quotations omitted). "Accordingly,
'anticompetitive conduct that is not premised on consumer deception is not within
24

the ambit of the statute,' Leider v. Ralfe, 387 F. Supp. 2d 283, 295 {S.D.N. Y.2005),
because '[t]he statute seeks to secure an honest market place where trust, and not
deception, prevails."' Music Antitrust Litigation, 812 F. Supp. 2d at 410 (quoting

Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 324, 774 N.E.2d 1190, 1195,
746 N.Y.S.2d 858, 863 (2002)); see also In re New Motor Vehicles Canadian Export

Antitrust Litigation, 350 F. Supp. 2d 160, 197 (D. Me. 2004) ("An antitrust violation
may violate section 349, but only if it is deceptive.") (emphasis added).
In this case, plaintiffs have failed to adduce evidence that the allegedly
unlawful conduct-the price-fixing scheme-was in any way materially misleading
to consumers. While horizontal price floors may be illegal under antitrust laws due
to their anticompetitive effects, arrangements of this nature do not necessarily
mislead customers, or dupe them into making purchases they otherwise would not
have made. These schemes may result in artificially inflated costs, but without
additional evidence of materially misleading conduct, they cannot in and of
themselves undergird a successful DPA claim. Mere failure by the scheme's
participants to disclose the nature of the arrangement is not enough-direct
evidence of misleading or deceitful activity is required. See, e.g., In re Digital Music

Antitrust Litigation, 812 F. Supp. 2d 390, 409 (S.D.N.Y. 2011) ("[l]f failure to disclose
participation in a purported antitrust conspiracy were sufficient to state a
consumer-protection claim, then any [Sherman Act] Section 1 antitrust case would
automatically become a consumer-protection case. That is not the law.") (emphasis
25

in original). See also id. at 410 (dismissing DPA claim based on price-fixing scheme
in the absence of facts indicating deceptiveness); Leider v. Ralfe, 387 F. Supp. 2d
283, 295 (S.D.N. Y. 2005) (rejecting DPA claim because defendants' monopolistic
practices, "while certainly reprehensible, [were] not secretive").
Despite their conclusory assertions regarding the "deceptive" nature of
defendants' conduct, (see Compl. ~ 85), plaintiffs point to no record evidence
suggesting that defendants ever took steps to ensure that customers were unaware of
the alleged price-fixing scheme, or engaged in any other deceptive activity. On the
contrary, plaintiffs themselves claim that Kong and Kim publicly announced, in a
May 2004 press conference (at least five months before plaintiffs purchased the
Shilla store), the intention of Association-affiliated stores to tamp down on increased
price competition and ensure that uncooperative stores would be unable to operate.
(Pis.' 56.1

~

7). Plaintiffs include as exhibits to the complaint articles from two

Korean language newspapers describing the press conference and reporting the key
quotes from Kim and Kong. (Compl., Exhs. A and B). 5 They cannot now credibly
assert that there is a triable issue of fact as to whether defendants were deceitful in
operating the alleged price-fixing scheme.
5

The Court emphasizes that it refers to these articles not as evidence of the truth
of the statements they report, but as evidence of the fact that the alleged pricefixing scheme was public knowledge. Therefore, they do not constitute hearsay.
See Anderson v. United States, 417 U.S. 211, 220 (1974) ("Out-of-court statements
constitute hearsay only when offered in evidence to prove the truth of the matter
asserted."). In any event, plaintiffs have offered these statements into evidence,
and cannot now object to their admissibility. See Capobianco v. City of New York,
422 F.3d 47, 55 (2d Cir. 2005).
26

Simply put, the defendants' alleged scheme may have been, in the words of

Leider, "reprehensible," but it was not "secretive." Plaintiffs therefore cannot
survive summary judgment on their DPA claim. It is of no import that "the practice
of which Plaintiffs complain is not merely the charging of high prices but rather
inducing Plaintiff Hong to open and relocate a video store with the expectation that
he could freely set the rental price of his videos, conspiring to charge a high price,
using market power to enforce the conspiracy, and terminating supply that
Defendants had promised." (Pis.' Mem. at 22). The fact remains that all of these
allegations are part and parcel of the general claim that defendants operated an
illegal price-fixing cartel and retaliated against plaintiffs for their refusal to
participate. As explained above, plaintiffs have not provided any facts indicating
that this scheme was one that might materially mislead reasonable consumers.
Accordingly, plaintiffs' DPA claim fails, and summary judgment is awarded to
defendants. 6

d. Tortious Interference Claims
Next, plaintiffs advance a claim against all defendants for "tortious
interference with customer base," (Compl.

~~

106-111), a cause of action that does

not exist under New York law. Plaintiffs reformulate this claim in their brief as one
for tortious interference with an existing contract and prospective business
relations-two separate causes of action-and the parties both brief the issue
6

Having rejected plaintiffs' claims under the Sherman Act, Donnelly Act, and the
DPA, the Court also dismisses plaintiffs' eighth and ninth claims, which request
declaratory and injunctive relief under those statutes. (Compl. ~~ 68-83).
27

accordingly. (Pis.' Mem. at 23-26; KBSA Mem. at 29-31; KBSA's Reply (Dkt. No.
141) at 15-16). The Court, therefore, construes plaintiffs' fourteenth claim as two
distinct claims: one for tortious interference with an existing contract, and one for
tortious interference with prospective business relations.
Under New York law, "[t]o succeed on a cause of action alleging tortious
interference with an existing contract, the plaintiff must establish: (1) the existence
of a valid contract between it and a third party, (2) the defendants' knowledge of
that contract, (3) the defendants' intentional procurement of the third party's
breach of that contract without justification, and (4) damages." Barns & Farms

Realty, LLC v. Novelli, 82 A.D.3d 689, 690, 917 N.Y.S.2d 691, 693 (2d Dep't 2011)
(internal quotations omitted). With regard to the first element, the contract at issue
must be specific, as "conclusory allegations of interference with an unspecified
contract are insufficient." Lesesne v. Brimecome, 918 F. Supp. 2d 221, 227 (S.D.N. Y.
2013). As to the second element, "although a defendant need not be aware of all the
details of a contract, it must have actual knowledge of the specific contract" that is
the subject of the claim. Medtech Products Inc. v. Ranir, LLC, 596 F.Supp.2d 778,
796 (S.D.N.Y. 2008) (internal quotations omitted). Finally, a plaintiff cannot prevail
on a claim of this nature unless he demonstrates an actual breach of the specified
contract. See NBT Bancorp Inc. v. Fleet/Norstar Financial Group, Inc., 87 N.Y.2d
614, 620-21, 664 N.E.2d 492, 496, 641 N.Y.S.2d 581, 584 (1996) ("Indeed, breach of

28

contract has repeatedly been listed among the elements of a claim for tortious
interference with contractual relations.").
To support their claims that defendants interfered with existing contracts,
plaintiffs point to "three affidavits of existing customers of Plaintiffs who have all
claimed under oath that in the event the Defendants ceased supply of KBS content,
they would have no choice but go to another store that supplies KBS content." (Pis.'
Mem. at 24; Asher Deel., Exh. K (Affidavits of So Mi Yoon, Yun Sook Park, and
Han Suh Hahn)). But, at no point do any of the affiants indicate that they had a
contract of any kind-written or oral, express or implied-to rent videos from the
Samsung store: they merely attest that they rent or have rented KBS videos from
Samsung, but will have to begin renting them from a different store if Samsung's
KBS supply is terminated. (Asher Deel., Exh. Kat PDF pp. 2, 4-5). There is no
evidence whatsoever of a binding contractual relationship between any of these
customers and plaintiffs. Pointedly, the evidence points in exactly the opposite
direction-to traditional, ad hoc retail transactions. The claim of tortious
interference with an existing contract, as a result, fails on that ground alone.
Even if such contractual relationships did exist, there is, moreover, no
evidence of a breach: the affiants merely state that they "may" or "will have to
return to [their] prior rental place[s]" if Samsung remains unable to obtain KBS
videos. (Id.). Mere anticipation of breach, however, will not suffice: a plaintiff must
show an actual breach to prevail. See, e.g., Am. Bldg. Maintenance Co. of N. Y. v.
29

Acme Property Servs., Inc., 515 F. Supp. 2d 298, 315 (N.D.N.Y. 2007) (rejecting claim
of tortious interference with contractual relations because plaintiffs "failed to allege
actual breach" by the third party). Similarly, even if there were actual contracts
between plaintiffs and the three named customers, there is no record evidence
whatsoever that any of the defendants had actual knowledge of these contracts. For
these additional reasons, summary judgment must be awarded to defendants.
The claim of tortious interference with prospective business relations meets
the same fate. A claim of this nature requires proof of "(1) the defendant's
knowledge of a business relationship between the plaintiff and a third party; (2) the
defendant's intentional interference with the relationship; (3) that the defendant
acted by the use of wrongful means or with the sole purpose of malice; and (4)
resulting injury to the business relationship." 534 East 11th Street Housing Dev.

Fund Corp. v. Hendrick, 90 A.D.3d 541, 542, 935 N.Y.S.2d 23, 24 (1st Dep't 2011).
"[l]t is not necessary that the prospective relation be expected to be reduced to a
formal, binding contract." Hannex Corp. v. GM/, Inc., 140 F.3d 194, 205 (2d Cir.
1998) (citing Restatement (Second) of Torts§ 766B cmt. c.). "Accordingly, the tort
encompasses ... interferences with ... the opportunity of selling or buying ...
chattels or services, and any other relations leading to potentially profitable
contracts." Hannex, 140 F.3d at 205 (internal quotations omitted).
Once again, plaintiffs falter because they have offered no evidence indicating
that any of the defendants had actual awareness of plaintiffs' business relationships
30

with affiants Yoon, Park, and Hahn, or that they intentionally sought to interfere
with those relationships. Plaintiffs assert that "Defendants knew or should have
known the Plaintiffs had customers who enjoyed KBS content and employed
wrongful means to interfere with that relationship." (Pis.' Mem. at 25). A
generalized allegation of this nature will not pass muster; plaintiffs must show that
defendants had actual knowledge of the specific business relationships with which
they allegedly interfered. Courts have repeatedly rejected general claims of this
nature because the party claiming interference could not make such a showing. See,

e.g., Boehner v. Heise, 734 F. Supp. 2d 389, 406-07 (S.D.N.Y. 2010) (granting
summary judgment to defendant, a ginseng trade organization, in part because
plaintiff, a ginseng wholesaler, could not show that the defendant knew that a
particular supplier had sold ginseng to plaintiff in the past or intended to do so in
the future); Sedona Corp. v. Ladenburg Thalmann & Co., Inc., No. 03-Civ. 3120,
2009 WL 1492196, at *9 (S.D.N.Y. May 27, 2009) (dismissing claim because, while
plaintiff "refers to Defendants' knowledge of [plaintiff's] business model generally,
at no point does [it] actually allege that Defendants knew about the specific business
relationships [at issue]") (emphasis added); 800America, Inc. v. Control Commerce,

Inc., 202 F. Supp. 2d 288, 289-90 (S.D.N.Y. 2002) (holding similarly). Because the
record is bereft of evidence indicating that defendants had knowledge of plaintiffs'
business relationships with Yoon, Park, or Hahn (or, indeed, with any other specific

31

customer), the Court grants summary judgment to defendants on plaintiffs' claim
for tortious interference with prospective business relations.
Relatedly, plaintiffs also advance three tortious interference claims against
Kong, Spring Video, and Kim on the grounds that these defendants intentionally
interfered with plaintiffs' contractual, economic, and prospective business
relationship with KBSA. (Compl. ~~ 88-105). Although these defendants move to
dismiss "any and all claims asserted against [them]" in their motions, (see Def. Kong
and Spring Video's Mem. (Dkt. No. 135) at 4; Def. Kim's Mem. (Dkt. No. 132) at 4),
neither defendants nor plaintiffs analyze or even mention these particular claims in
their briefs. Accordingly, the Court denies defendants' motion for summary
judgment at this time on these causes of action. Gavigan v. Comm'r. of LR.S., No.
3:06-CV-942, 2007 WL 1238651, at *7 (D. Conn. Apr. 27, 2007) (denying
defendant's motion to dismiss a specific claim because it "did not brief the issue and
makes only passing references to dismissing all of Plaintiffs' claims under Rule
12(b)(6)"); Goshorn v. Bonamie, No. 95-CV-188, 1998 WL 166832, at *8 (N.D.N.Y.
Apr. 08, 1998). At the same time, given the parallel tortious interference claims that
are dismissed by this Order, leave is granted to Kong, Spring Video, and Kim to file
a supplemental summary judgment motion on those claims.

e. Unjust Enrichment
As part of their state law assaults, plaintiffs bring a cause of action against all
defendants for unjust enrichment. (See Compl.
32

~~

112-15). It is, though, derivative

of their antitrust claims. Plaintiffs concede that a litigant "cannot recover for unjust
enrichment if the underlying basis for the claim is a failed antitrust claim pursuant
to the holding set forth in Kramer v. Pollock-Krasner, 890 F. Supp. 250, 257
(S.D.N.Y. 1995)." (Pis.' Mem. at 26); see also Sands v. Ticketmaster-New York, Inc.,
207 A.D.2d 687, 688, 616 N.Y.S.2d 362, 364 (1st Dep't 1994). Plaintiffs, however, go
on to assert that their antitrust claims "are cognizable and certainly not barred as a
matter of law," and, therefore, "the claim for unjust enrichment should be
sustained." (Pis.' Mem. at 26).
As discussed above, plaintiffs lack antitrust standing to pursue their Sherman
Act and Donnelly Act claims. However, in both Kramer and Sands, the courts
rejected plaintiffs' antitrust claims on the merits, rather than disposing of them on
the threshold issue of antitrust standing, as the Court has done here. See Kramer,
890 F. Supp. at 254-57; Sands, 207 A.D.2d at 688. These holdings could plausibly be
interpreted to extend only to cases in which the court fully considers the underlying
antitrust claims on the merits. However, courts have held that indirect purchaserswho, under Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), lack antitrust standing
to bring claims under the Sherman Act and other federal antitrust statutes-may
not circumvent the Court's holding in Illinois Brick by characterizing their causes of
action as unjust enrichment claims. See, e.g., In re Digital Music Antitrust Litigation,
812 F. Supp. 2d 390, 412 (S.D.N.Y. 2011) ("[l]t is beyond peradventure that indirect
purchasers may not employ unjust enrichment to skirt the limitation on recovery
33

imposed by [Illinois Brick]."); In re New Motor Vehicles Canadian Export Antitrust

Litigation ("In re NMV''), 350 F. Supp. 2d 160, 211 (D. Me. 2004) (holding similarly).
Other courts have applied this doctrine to state-level antitrust statutes as well. See,

e.g., In re DDA VP Indirect Purchaser Antitrust Litigation, 903 F. Supp. 2d 198, 23233 (S.D.N.Y. 2012); In re Microsoft Corp. Antitrust Litigation, 241 F. Supp. 2d 563,
565 (D. Md. 2003); In re NMV, 350 F. Supp. 2d at 211.
The Court is persuaded that the logic of these holdings should extend
generally and bar all litigants who lack antitrust standing from bringing identical
claims under a common law theory of unjust enrichment. Certainly, if such
plaintiffs were permitted to repackage their antitrust claims as unjust enrichment
actions, the entire thrust and purpose of the antitrust standing doctrine would
disintegrate. Practically, if economic harm caused by market manipulation was
cognizable on a theory of unjust enrichment, the antitrust laws themselves would be
superfluous. Therefore, because they lack antitrust standing on their Sherman and
Donnelly Act claims, plaintiffs cannot advance identical claims under a theory of
unjust enrichment. Summary judgment must be, and is, awarded to defendants on
those claims.

f. Intentional Infliction ofEmotional Distress
Seeming far out of place in a commercial setting, plaintiffs sue for intentional
infliction of emotional distress 7 on the grounds that defendants "knew or should
7

In their complaint, plaintiffs sue merely for "emotional distress," not specifying
whether their claim is for negligent or intentional infliction of emotional
34

have known that emotional distress was the likely result of their collusion to deprive
Plaintiffs and others from being able to compete in a free and open competitive
marketplace," and that their "extreme and outrageous" conduct in fact caused
emotional distress to plaintiff Hong. (Com pl.~~ 116-21). A tort of this nature
obligates a plaintiff to show "extreme and outrageous conduct; (ii) intent to cause,
or disregard of a substantial probability of causing, severe emotional distress; (iii) a
causal connection between the conduct and injury; and (iv) severe emotional
distress." Howell v New York Post Co., 81 N.Y.2d 115, 121, 596 N.Y.S.2d 350 (1993).
"In practice, courts have tended to focus on the outrageousness element, the one
most susceptible to determination as a matter of law." Id. This standard is
"rigorous, and difficult to satisfy.... Indeed, of the intentional infliction of
emotional distress claims considered by the [New York Court of Appeals], every one
has failed because the alleged conduct was not sufficiently outrageous." Id. at 122
(internal quotations omitted). For a plaintiff to succeed, the defendant's conduct
must have been "so outrageous in character, and so extreme in degree, as to go
beyond all possible bounds of decency, and to be regarded as atrocious, and utterly
intolerable in a civilized community." Id. (internal quotations omitted).
Plaintiffs allege two distinct categories of conduct that they believe qualify as
"extreme and outrageous": defendants' alleged operation of the price-fixing scheme
itself, and defendants' statements and actions pressuring Hong to join in that
distress-two distinct causes of action under New York law. (Compl. ~~ 116-21).
However, plaintiffs clarify in their brief that their claim is one for intentional
infliction. (Pis.' Mem. at 26-27).
35

scheme. (See Compl. ~~ 117-18; Pis.' Mem. at 26-27). As to the latter category,
plaintiffs specifically allege that Kim told Hong that he "should raise his price or be
put out of business," and that C.J. Lee "also threatened [Hong] that he would make
it 'very difficult' for him to continue his business operation" after Hong filed one of
the Blue House [i.e., the South Korean government] complaints. (Pis.' Mem. at 2627).
Accepting these allegations as true for argument's sake, plaintiffs cannot
ascend Howell's steep stairs to the necessary threshold showing. Despite its potential
illegality, the mere existence of the price-fixing scheme cannot satisfy the first

Howell element: it simply is not "so outrageous in character, and so extreme in
degree, as to go beyond all possible bounds of decency." 81 N.Y.2d at 122. "A wide
range of conduct-though offensive or even otherwise illegal-is not considered
'utterly intolerable in a civilized society' to support a cause of action for intentional
infliction of emotional distress." Neufeld v. Neufeld, 910 F. Supp. 977, 984 (S.D.N.Y.
1996) (collecting cases in which conduct that was unlawful, including racial
discrimination and sexual harassment, was nonetheless found not to satisfy the first

Howell element). Furthermore, the price-fixing scheme was not directed at
plaintiffs, and there is no evidence that defendants intended, nor had any reason to
foresee, that plaintiff would be emotionally harmed merely by the existence of the
arrangement.

36

Nor do plaintiffs' other allegations demonstrate "extreme and outrageous"
conduct. Kim's putative statement that Hong "should raise his price or be put out of
business," and Lee's alleged threat to make it "very difficult" for Hong's business to
survive, may have been offensive, but they do not rise to the level of patent
outrageousness. See, e.g., Novak v. Rubin, 129 A.D.2d 780, 781, 514 N.Y.S.2d 523 (2d
Dep't 1987) (defendant's threat to ruin plaintiff's wife's career if plaintiff pursued a
lawsuit against him was, "as a matter of law, simply not 'outrageous' enough to
support ... a claim [for intentional infliction of emotional distress]"); Huzar v. State,
156 Misc.2d 370, 374-75, 590 N.Y.S.2d 1000, 1004 (N.Y. Ct. Cl. 1992) (dismissing
similar claim premised on allegation that the defendant threatened to have plaintiff
fired if she did not drop her worker's compensation claim).
Succinctly, the record evidence does not come close to demonstrating conduct
that would support a claim for intentional infliction of emotional distress.
Consequently, the Court grants summary judgment to defendants.

g. Promissory Estoppel
Finally, plaintiffs move against KBSA on a theory of promissory estoppel.

(See Compl. ~~ 122-27). Under New York law, a party may recover damages in the
absence of a written contract if it can show "(1) a promise that is sufficiently clear
and unambiguous; (2) reasonable reliance on the promise by [that] party; and (3)
injury caused by the reliance." MatlinPatterson ATA Holdings LLC v. Fed. Express

Corp., 87 A.D.3d 836, 841-42, 929 N.Y.S.2d 571, 577 (1st Dep't 2011). Wielding the
37

sabre of promissory estoppel, plaintiffs thrust with the following allegations: that
KBS "made a clear and unambiguous oral promise that, if plaintiff Hong would buy
an existing store and obtain the accompanying license, it would supply the store
with its product;" that KBS[A] failed to disclose that "it would honor the foregoing
commitment only if Hong would enter into an illegal conspiracy and agreement in
restraint of trade;" that Hong "[r]easonably reli[ed] on KBS[A]'s promise" and
"purchased a store and obtained the accompanying license;" and that "KBS[A] now
refuses to deal with Plaintiffs and supply their store with its product," on account of
which "Plaintiffs have suffered and continue to suffer damages." (Compl.

~~

123-

27).
KBSA, in turn, raises the shield of the Statute of Frauds, which "requires a
written contract for an agreement that is not to be performed within one year of its
making." Sheehy v. Clifford Chance Rogers & Wells LLP, 3 N.Y.3d 554, 560, 822
N.E.2d 763, 766, 789 N.Y.S.2d 456, 459 (2004) (citing G.O.L. § 5-701(a)(l)). As
KBSA correctly observes, a plaintiff may "avoid the application of the Statute of
Frauds by relying on the doctrine of promissory estoppel ... only where the
aggrieved party can demonstrate it would be unconscionable" to apply the Statute
of Frauds. Steele v. Delverde S.R.L., 242 A.D.2d 414, 415, 662 N.Y.S.2d 30, 31 (1st
Dep't 1997). Plaintiffs riposte that the Statute of Frauds does not apply to the
alleged oral agreement between Hong and KBSA because Hong could-and, in fact,

38

did-perform his contractual obligation within a year's time: purchasing the Shilla
store and moving the business to a Queens location. (Pis.' Mem. at 29).
Plaintiffs' argument misses the mark. "In order to remove an agreement
from the application of the statute of frauds, both parties must be able to complete
their performance of the contract within one year." Sheehy, 3 N. Y.3d at 560
(emphasis added). As plaintiffs describe it, KBSA's end of the bargain was to
provide them with a continuous supply of KBS videos once they opened their new
store, regardless of its location. There is no evidence that the parties agreed to (or
even discussed) an end date for KBSA's performance, and plaintiffs do not assert
that such an end date existed. Hence, either the contract was terminable at will by
either party-in which case there was no "unambiguous promise" that KBSA would
continue to supply videos indefinitely, granting KBSA a contractual right to
terminate supply at any time and vitiating any promissory estoppel claim-or, on
the other hand, the contract was one of indefinite duration, in which case the Statute
of Frauds applies. See, e.g., D & N Boening, Inc. v. Kirsch Beverages, Inc., 63 N.Y.2d
449, 467, 472 N.E.2d 992, 995, 483 N.Y.S.2d 164, 167 (1984) ("[T[he oral agreement
between the parties called for performance of an indefinite duration .... As such,
the agreement fell within the Statute of Frauds and was void."); Rosen v. Hyundai

Group (Korea), 829 F. Supp. 41, 48-49 (E.D.N.Y. 1993) (Statute of Fraud applied to
oral supply contract of indefinite duration).

39

Therefore, promissory estoppel here is barred by the Statute of Frauds unless
there is evidence that the grievant would otherwise suffer "unconscionable injury."

Dunn v. B & H Associates, 295 A.D.2d 396, 397, 743 N.Y.S.2d 546, 548 (2d Dep't
2002). Plaintiffs fail to meet this demanding standard. In an effort to do so, they
assert that they invested some $200,000 in their business on the basis of KBSA's
alleged representations, and that enforcement of the agreement is necessary to
prevent defendants from "continu[ing] to violate antitrust laws and continu[ing] to
engage in unlawful restraint of trade." (Defs.' Mem. at 29-30). Plaintiffs cite no
authority for the proposition that injury of this nature, which the Court has found
they lack standing to assert, is unconscionable. In fact, the case law indicates the
opposite. See, e.g., United Magazine Co. v. Murdoch Magazines Distribution, Inc., 146
F. Supp. 2d 385, 406 (S.D.N.Y. 2001) ("[T]he loss of money invested in the business
... is precisely the injury that flows naturally from the non-performance of an oral
agreement," and is therefore not an unconscionable injury); Eber-NDC, LLC v. Star

Indus., Inc., 42 A.D.3d 873, 874-75, 839 N.Y.S.2d 650, 651-53 (4th Dep't 2007) (no
unconscionable injury despite plaintiff's "substantial investment ... by expanding
its warehouse and its staff'' in response to oral promise); Blinds and Carpet Gallery,

Inc. v. EEM Realty, Inc., 34 Misc.3d 1228(A), 951 N.Y.S.2d 85, at *4-5 (Sup. Ct.,
Kings Cnty., 2012) (plaintiffs who invested $700,000 in anticipation of lease renewal
did not suffer unconscionable injury). Whether or not antitrust violations were
involved is immaterial. Whatever the motivation for KBSA's alleged breach of an
40

agreement to supply its product, there is no evidence of unconscionable injury. As a
consequence, Plaintiffs' promissory estoppel claim is barred by the Statute of
Frauds.
Though not relied upon by the Court for its disposition, it appears that
plaintiffs' promissory estoppel claim would fail on another ground-their failure to
show that KBSA unambiguously promised to provide a constant supply of KBS
videos to them after their relocation to Queens. See, e.g., Reprosystem, B. V. v. SCM

Corp., 727 F.2d 257, 264 (2d Cir. 1984) (promissory estoppel claim was properly
dismissed due to lack of a "clear and unambiguous promise" by the defendant).
Even assuming that KBSA employee Jo represented at the dinner meeting that
KBSA would continue to honor the Shilla store's license after plaintiffs' move to
Queens, it is highly uncertain whether Jo had, as plaintiffs argue, actual or apparent
authority to make a binding promise on behalf of his employer, or that he sought to
do so. (See Pis.' Mem. at 28). The KBSA litigants characterize Jo as a mere
"deliveryman," and vigorously deny that he had (or even suggested he had) any
such authority. (KBSA's

56.1~~58-59).

Indeed, J.H. Lee admitted in his deposition

that neither Jo nor anyone else represented that Jo had independent authority to
negotiate a supply agreement with plaintiffs on behalf of KBSA. (Geercken Deel.,
Exh. M, 222:8-223:22). The representations made at the February 2004 dinner
meeting, and the nature of Jo's actual or apparent authority to enter into an
agreement on behalf of KBSA, could hardly be more ambiguous on the undisputed
41

facts. Summary judgment, notwithstanding formal and final determination on this
aspect, is, at bottom, warranted and awarded to KBSA on this claim. 8
II. KBSA's Counterclaims

a. Copyright Act
9

KBSA seeks damages at law from Hong, Hwan Media, and J.H. Lee
("the Samsung owners") for violations of our national Copyright Act, 17 U.S.C. §
101 et seq. Specifically, it is alleged that the Samsung owners copied and distributed,
without a license or other approval, programming for which KBSA possessed a sole
and exclusive North American license. (See Am. Ans., Counterclaims, ~~ 68-76). The
Samsung owners respond that KBSA has failed to establish that it owned any such
copyrights, and, in any case, that the actions of the counterclaim defendants were
permitted under the terms of their oral license with KBSA. (Pis.' Mem. at 32-33).
To prevail on a copyright infringement claim, a claimant must show "(i)
ownership of a valid copyright; and (ii) unauthorized copying of the copyrighted
work." Jorgensen v. Epic/Sony Records, 351 F.3d 46, 51 (2d Cir. 2003). As to the first
element, the Second Circuit has determined that "[t]he Copyright Act authorizes
only two types of claimants to sue for copyright infringement: (1) owners of
8

Plaintiffs' requests for punitive damages for claims 14 through 17 are dismissed
along with those claims. However, because the Court denies summary judgment
as to claims 11 through 13 at this time, it similarly declines to dismiss plaintiffs'
request for punitive damages on those claims.

9

C.J. Lee also joins KBSA on these copyright (and other) counterclaims. For the
sake of simplicity, the Court refers to the KBSA and C.J. Lee claims together as
"KBSA's claims."
42

copyrights, and (2) persons who have been granted exclusive licenses by owners of
copyrights." Eden Toys, Inc. v. Florelee Undergarment Co., Inc., 697 F.2d 27, 32 (2d
Cir. 1982), superseded by rule and statute on other grounds. The court in Eden Toys
expressly rejected the argument that a person other than a copyright owner or
exclusive licensee may sue for copyright infringement, even if explicitly authorized
to do so by the copyright owner. Id. at 32 n. 3 (citing 17 U.S.C. § 501(b)); see also
ABKCO Music, Inc. v. Harrisongs Music, Ltd., 944 F.2d 971, 980 (2d Cir. 1991)

("[T[he Copyright Act does not permit copyright holders to choose third parties to
bring suits on their behalf.").
KBSA contends that it satisfies the first Jorgenson element because it is "the
assignee of the copyrights of KBS content distributed throughout the United
States." (KBS Defs.' Mem. at 36; see also Am. Ans. at 69 ("Since approximately July
or August 2004, Counterclaim Plaintiff KBS America was the sole and exclusive
licensee of Content in North America, including, without limitation, the United
States."); KBSA's

56.1~61).

In support, KBSA offers five items of evidence: the

declaration of C.J. Lee (Geercken Deel., Exh. N ~ 15); the affidavit of Kevin Kwon
("Kwon Aff." (Dkt No. 36)); excerpts from Kwon's deposition (Geercken Reply
Deel. (Dkt. No. 140), Exh. C); a letter to Kwon from Mun-Ki Eun, Head of Global
Strategy for KBS (Geercken Deel., Exh. N, sub-Exh. A); and copies of the licensing
agreement between KBS World 10 and KBSA (titled "KBS World Channel and
10

"KBSA World" appears to be the name for KBS's Korean headquarters. (See
Geercken Reply Deel., Exh. C, 271:21-22).
43

Content Business Agreement") in both the original Korean and an English
translation. (Geercken Reply Deel., Exhs. A-B). The Samsung owners object that
this evidence does not sufficiently demonstrate the existence of an exclusive license
agreement between KBS and KBSA.
Upon reviewing KBSA's proffered evidence, the Court determines that there
is a genuine dispute of material fact as to whether or not KBSA's license was
exclusive. On the one hand, Kwon states in his affidavit that, "[i]n July 2004, KBS
entered into an exclusive license agreement with KBS America, pursuant to which
KBS America became the sole and exclusive licensee of KBS programming in North
America." (Kwon Aff.
(C.J. Lee Deel.

~

~

3). C.J. Lee makes a similar statement in his declaration.

15).

On the other hand, nowhere in the excerpted deposition testimony does Kwon
confirm that KBSA's licensing agreement with KBS was intended to be exclusive.

(See Geercken Reply Deel., Exh. C, 271:4-276:2). More importantly, the actual
terms of KBSA's licensing contract with KBS neither state nor suggest that KBSA
would be the sole and exclusive distributor of KBS programming in North America.

(See generally Geercken Reply. Deel., Exh. B). 11 Quite to the contrary, the language
of the contract is explicit that KBS retains the right to distribute its own

11

The licensing contract is properly offered as evidence of its legal effect on the
contracting parties. See United States v. Dupree, 706 F.3d 131, 137 (2d Cir. 2013)
("[S]tatements affecting the legal rights of parties ... are excluded from the
definition of hearsay.").
44

programming content in North America. (See id.,§ 1(3) ("[KBS] may directly
distribute content to North America as deemed necessary for [its] business.")). By
their very nature, exclusive licenses grant the licensee rights to utilize copyrighted
material to the exclusion of all others-including the licensor. See Davis v. Blige, 505
F.3d 90, 101 (2d Cir. 2007) ("[A]n exclusive licensee may sue others for
infringement, including the licensor if the licensor infringes on the exclusive right he
granted the licensee.") (emphasis added). See also Black's Law Dictionary 1003 (9th
Ed. 2009) (defining an "exclusive license" as one that "gives the licensee the sole
right to perform the licensed act, often in a defined territory, and that prohibits the

licensor from performing the licensed act and from granting the right to anyone else;
esp., such a license of a copyright, patent, or trademark right") (emphasis added);

Corbello v. DeVito, 832 F. Supp. 2d 1231, 1244 (D. Nev. 2011) ("[T]he difference
between 'exclusive' and 'nonexclusive' licenses concerns the continuing ability of the
grantor to use or further license to others the licensed property during the period
the license is in effect.").
The contract does, admittedly, require KBSA to "secure at [its] own expense
the copyright and copyright acknowledgements which [KBS] has not secured," and
provides that "[KBS] may represent [KBSA] in negotiations involving [KBSA's]
copyright agreement." (Geercken Reply. Deel., Exh. B § 5). Yet, there is no evidence
that KBS failed to secure any copyrights for its programming, that KBSA in fact
acquired those copyrights, or that those particular materials ever appeared in the
45

Samsung store. Furthermore, although the contract purports to delegate to KBSA
the authority and/or duty to protect KBS's copyrights from infringement (see id. §
6), Eden Toys makes clear that a copyright owner cannot, by contract or otherwise,
grant a non-exclusive licensee the right to sue for copyright infringement. 697 F.2d
at 32 n. 3; see also ABKCO Music, 944 F.2d at 980.
As for the June 2005 letter that KBS official Mun-Ki Eun sent to Kwon,
which purportedly confirms the exclusive nature of KBSA's license, it is an out-ofcourt statement offered to prove the truth of the statements made in it, and is
therefore inadmissible hearsay. Fed. R. Evid. 801(c); U.S. v. Pedroza, 750 F.2d 187,
199-200 (2d Cir. 1984). As such, the Court may not consider it on a motion for
summary judgment. Feingold v. New York, 366 F.3d 138, 155 n. 17 (2d Cir.2004). 12
Considering it nonetheless would change nothing. While the letter and Kwon's
testimony might suggest that KBSA had an exclusive licensing agreement with KBS,
the language of the contract itself appears to directly contradict that assertion. As
such, there remains a question of material fact as to whether KBSA held either a
copyright or an exclusive license over any of the KBS programming that plaintiffs

12

It could be argued that this letter is admissible non-hearsay because KBSA has

offered it as evidence of its legal effect: a post hoc confirmation of an exclusive
license agreement, in satisfaction of 17 U.S.C. § 204(a)'s requirement that such
arrangements be made in writing. See Dupree, 706 F.3d at 137; Eden Toys, 697
F.2d at 32. Yet KBS and KBSA do not claim that they ever had an oral
agreement that required post hoc confirmation under§ 204(a); rather, their
licensing contract from July 2004 was already made in writing and is included as
evidence, as discussed above. (See Geercken Reply. Deel., Exhs. A and B).
Accordingly, the June 2005 letter appears to have no legal effect.
46

allegedly rented at the Samsung location. Summary judgment is, therefore,
inappropriate. 13
Moreover, and critically on this motion, there is also a dispute of material fact
as to whether the Samsung owners actually "violat[ed] ... the Shilla license."
(KBSA's Mem. at 36). KBSA claims that its licenses with video store owners are
site-specific, and permit stores to rent to walk-in customers only. (KBSA's 56.1 ~~ 46; C.J. Lee Deel. ~~ 35-37). In support, KBSA has offered affidavits from various
Korean video store owners in the New York area affirming that their licenses with
KBSA included those limitations and that they had always understood them. (See
C.J. Lee Deel, Exh. C). According to KBSA, by moving the Shilla store to Queens
without authorization, and by renting to non-walk-in customers, the Samsung
owners violated the terms of the license they acquired upon purchasing the Shilla
store. (Am. Ans.,

Counterclaims~

71; C.J. Lee Deel.~~ 35-37, 62-69, 80). KBSA

claims that the Samsung owners were instructed not to rent KBS content at a
location other than the Shilla location, but that they nonetheless rented those videos
at the Samsung location after the move, and that Hong expressed remorse when C.J.
Lee discovered this practice. (KBSA's 56.1
13

~~

28, 30; C.J. Lee

Deel~~

71-74). KBSA

Citing Eden Toys, 697 F.2d at 36-37, KBSA argues that "an infringer may not
question the sufficiency of a writing between a copyright owner (here KBS) and
its licensee (here, KBSA), as a defense to the claim of infringement." (KBSA
Defs.' Reply at 19). Yet, Hong and J.H. Lee have not attacked the legal
sufficiency of KBS's license with KBSA under § 204(a); they have simply denied
that there is record evidence attesting to the exclusive nature of that license. (See
Pis.' Mem. at 32). Because the Court holds that a material dispute of fact exists
as to that question, it denies summary judgment.
47

further claims that these alleged license violations were the reasons that it cut off the
Samsung store's supply of KBS videos. (KBSA's 56.1~~35-36).
The Samsung owners vigorously parry that they did not violate the terms of
their oral agreement with KBSA. 14 In particular, they attest that the license they
acquired from KBSA was not limited to the Shilla location only, or to walk-in
customers only, but would automatically transfer to the Queens location, and
permitted rental to home delivery customers in addition to walk-in customers. (Pis.'
56.1~~3-5,

13, 63; Hong Deel.~~ 10-12). They further attest that Jo approved of

and ratified their plan to move their store to the Queens location, and that he
assured them that the Shilla license would transfer to the new store. (Pis.' 56.1
~~

26, 28, 31-32, 35, 58-59; Hong Deel.~~ 10-14). As a result, the Samsung owners

dispute that they violated in any manner the terms of their agreement with KBSA as
negotiated through Jo.
In serendipity with these claims, the Samsung owners also contend that
KBSA cut off their supply of KBS video programming not because of an alleged
14

As KBSA points out, Hong admitted at his deposition that he. rented to customers
videos of Korean sporting events, originally broadcast in Korea on KBS, without
authorization or a license. (KBSA's Mem. at 37; Geercken Deel., Exh. J, 30:936:21; KBSA 56.1~33). The Samsung owners counter that "[t]here is no
evidentiary proof ... that KBS owned a valid copyright to the sports
programming except the letter from Mun-Ki Eun [to Kwon] ... that purportedly
claimed that KBS entered into an exclusive license agreement with [KBSA]."
(Pis.' 56.1~62). The Court assumes they meant there is no evidence that KBSA
held a valid copyright to the sports programming. In any event, as discussed
previously, there is a material dispute of fact as to the nature of KBSA's license,
and summary judgment is therefore denied with regard the Samsung owners'
allegedly unauthorized rental of KBS sports programming as well.
48

license breach, but because they refused to abide by the terms of the alleged pricefixing scheme that other Korean video stores were operating. (Pis.' 56.1 ~ 34). Hong
specifically testified at his deposition that C.J. Lee "admitted that the reason that
[KBSA] could not resume supplying [his] store was the complaints launched by
defendants Kong and Kim based upon my violation of the price-fixing agreement
between the local Korean video rental storeowners, and for that reason alone
[KBSA] would no longer be able to supply me with their videos." (Hong Deel.~ 27).
It is clear from these highly divergent narratives that there is a genuine

dispute of material fact as to the terms of the Samsung owners' agreement with
KBSA. Both parties have presented competent evidence supporting their
interpretation of the agreement. For instance, KBSA has provided affidavits from
other store owners indicating the general nature of KBSA licenses, as well as
testimony that the Samsung owners were warned not to rent videos under the Shilla
license after they had moved their retail operations to the Queens location. (KBSA's
56.1

~~

28, 30; C.J. Lee Deel.~~ 71-74, Exh. C). The Samsung owners, for their

part, have offered testimony from multiple witnesses that Jo affirmatively
represented that KBSA would continue supplying videos to them after they moved
their store from Brooklyn to Queens. (Asher Deel., Exh.

A~~

39:3-40:7, 51:10-

57:19; Hong Deel.~~ 10-14). Whether or not Jo had actual or apparent authority to
negotiate a contract on behalf of KBSA, his statements to the Samsung owners are
surely of evidentiary value as to the nature of their agreement with KBSA, as is C.J.
49

Lee's alleged statement that KBSA was terminating Samsung owners' video supply
solely on account of their failure to join the price-fixing scheme. (Hong Deel. ~ 27).
Quite simply, "[e]vidence presented at trial is the only means by which the terms of
this [alleged] oral contract" to license plaintiffs to offer KBS videos for rental can be
identified, "and summary judgment [on a copyright claim essentially intertwined
with that contract] is therefore inappropriate in this instance." May Ship Repair

Contracting Corp. v. Barge Columbia N.Y., 160 F. Supp. 2d 594, 598 (S.D.N.Y.
2001). 15

b. Defamation Claims
Finally, KBSA sues the Samsung owners for libel per se and slander per se
based on written and oral statements that Hong and/or Lee allegedly made about
KBSA and/or C.J. Lee. (See Am. Ans.

~~

49-67). To prevail on a defamation claim, a

plaintiff must show that the defendant made a "false statement, published without
privilege or authorization to a third party, constituting fault as judged by, at a
15

KBSA denies that counterclaim defendants had any valid license at all to copy
KBS videos because their agreement was not in writing, and thus legally void
under New York's Statute of Frauds, G.O.L. § 5-701(a)(l). (KBSA's Mem. at 3637). Although this statute bars plaintiffs' promissory estoppel claim, KBSA fails
to cite a single case permitting a plaintiff to wield a state-level statute of frauds as
a sword in a Copyright Act case. Furthermore, at least one court has held that
non-exclusive oral licenses are permitted under the Copyright Act's own Statute
ofFrauds-17 U.S.C. § 204(a)-regardless of G.O.L. § 5-701(a)(l). See
Holtzbrinck Pub. Holdings, L.P. v. Vyne Communications, Inc., No. 97 CIV. 1082,
2000 WL 50286, at **6-7 (S.D.N.Y. Apr. 26, 2000); see also Robinson v. Buy-Rite
Costume Jewelry, Inc., No. 03 Civ. 3619, 2004 WL 1878781, at *4 (S.D.N.Y. Aug.
23, 2004) (under the Copyright Act, "a non-exclusive license may be written or
oral"). Hence, the Court holds that§ 5-701(a)(l) does not bar a defense under the
Copyright Act that the alleged infringer held a non-exclusive oral license from
the copyright owner to use the copyrighted material.
50

minimum, a negligence standard, and it must either cause special harm or constitute
defamation per se." Epifani v. Johnson, 65 A.D.3d 224, 233, 882 N. Y.S.2d 234, 242
(2d Dep't 2009). In the absence of special damages-that is, pecuniary or economic
losses, G.L. v. Markowitz, 101 A.D.3d 821, 826, 955 N.Y.S.2d 643, 648 (2d Dep't
2012)-a plaintiff must show that the statement, if written, "tended to expose him to
public contempt, ridicule, aversion or disgrace, or induce an evil opinion of him in
the minds of right-thinking persons, and to deprive him of their friendly intercourse
in society." Frank v. Nat'/ Broadcasting Co., Inc., 119 A.D.2d 252, 255, 506 N.Y.S.2d
869, 871 (2d Dep't 1986) (internal quotations omitted). If the statement is oral, it
must also fall into one of four specified categories, which include statements that
"tend to injure another in his or her trade, business or profession." Zherka v.

Gribler, 101 A.D.3d 864, 864, 954 N.Y.S.2d 893, 893 (2d Dep't 2012) (internal
quotations omitted).
"Truth is an absolute defense to an action based on defamation." Goldberg v.

Levine, 97 A.D.3d 725, 726, 949 N.Y.S.2d 692, 693 (2d Dep't 2012) (internal
quotations omitted). Where the parties are private entities and the statements
concern matters of only private concern, the defendant bears the burden of proving
the statement's truth as an affirmative defense. See Grieco v. Galasso, 297 A.D.2d
659, 660, 747 N.Y.S.2d 120, 122 (2d Dep't 2002). By the same token, "only
statements alleging facts can properly be the subject of a defamation action;"
statements of opinion are not actionable. Russell v. Davies, 97 A.D.3d 649, 650, 948
51

N.Y.S.2d 394, 396 (2d Dep't 2012) (internal quotations omitted). In distinguishing
fact from opinion, a court must consider "(1) whether the specific language has a
precise meaning that is readily understood, (2) whether the statements are capable
of being proven true or false, and (3) whether the context in which the statement
appears signals to readers that the statement is likely to be opinion, not fact." Id.
"The dispositive inquiry is whether a reasonable reader could have concluded that
the statements were conveying facts about the plaintiff." Id. (internal quotations
omitted).
Lastly, courts have recognized several privileges that shield declarants from
liability even if their statements are defamatory. "A qualified privilege arises when a
person makes a bona fide communication upon a subject in which he or she has an
interest, or a legal, moral, or social duty to speak, and the communication is made to
a person having a corresponding interest or duty." Silverman v. Clark, 35 A.D.3d 1,
10, 822 N.Y.S.2d 9, 16 (1st Dep't 2006) (internal quotations omitted). A party
claiming defamation can only overcome this privilege by showing that the defendant
made the statement with "actual malice"-that is, with awareness that the statement
was false or with reckless disregard as to its truth or falsity. See Diaz v. Espada, 8
A.D.3d 49, 50, 778 N.Y.S.2d 38, 40 (1st Dep't 2004). Furthermore, "[s]tatements
made by parties, attorneys, and witnesses in the course of a judicial or quasi-judicial
proceeding are absolutely privileged, notwithstanding the motive with which they
are made, so long as they are material and pertinent to the issue to be resolved in the
52

proceeding." Wilson v. Erra, 94 A.D.3d 756, 756-57, 942 N.Y.S.2d 127, 129 (2d Dep't
2012) (internal quotations omitted).
KBSA attributes three distinct categories of defamatory statements to the
Samsung owners. First, KBSA claims that they made false oral statements to several
reporters that "KBSA had wrongfully terminated supply" of KBSA videos.
(KBSA's 65.1,,37, 64; C.J. Lee Deel.,, 90-94). Second, KBSA charges that the
partners sent a letter to KBSA president and CEO Kwon ("the Kwon letter")
making "false ... accusations ... [of] wrongdoing and/or improper behavior by C.J.
Lee." (KBSA's 56.1, 65; Kwon Aff., Exh. 1). Third, KBSA contends that Hong filed
the two Blue House complaints falsely accusing KBSA of "oppressing small
businesses ... and in some cases destroying their livelihood," and claiming that C.J.
Lee threatened Hong and solicited and/or accepted bribes from video store owners.
(KBSA's 56.1,,66-67; C.J. Lee Deel.,, 117-124, Exhs. M-N). The Samsung
owners respond that KBSA has failed to demonstrate that the statements attributed
to them were either false or defamatory. (See Pis.' Mem. at 34-39). They further
claim that their statements in the Kwon letter are entitled to a qualified privilege,
and that KBSA has failed to produce evidence sufficient to overcome that privilege.
(See id. at 367).

In its Amended Answer, KBSA claims that these allegedly defamatory
statements "damaged the business reputations of [KBSA] and the business and
personal reputation of ... C.J. Lee ... [causing him] severe emotional distress."
53

(Am. Ans. ~~ 55-56). However, it offers no actual evidence that these statements
caused either KBSA or C.J. Lee pecuniary or economic harm. Accordingly, KBSA
can only prevail by establishing, that the alleged statements constitute defamation

per se. See McCart v. Morris, 58 A.D.2d 700, 700, 396 N.Y.S.2d 107, 108 (3d Dep't
1977) ("Absent allegations or proof of special damages, the question is whether the
statements complained of are libel or slander per se.").
i.

Oral Statements to Reporters

KBSA claims to have learned through "inquiries from reporters" that, after
their supply of videos was cut off, the Samsung owners organized a press conference
with reporters from the Korean-American media at which the counterclaim
defendants "accused KBSA of wrongful behavior in terminating the Shilla license."
(KBSA's

56.1~~37,

64). Although Jo and C.J. Lee purport to elaborate on the

nature of these statements in their declarations, they rely solely on the accounts of
others who either heard or heard about the statements. (See C.J. Lee Deel.

~~

85-93,

Exh. Q ~~ 51-52). Accordingly, their testimony is hearsay, and may not be
considered by the Court as evidence of the contents of any such statements. See, e.g.,

Arnheim v. Prozeralik, 266 A.D.2d 855, 855, 697 N.Y.S.2d 431, 431 (4th Dep't 1999)
(rejecting as hearsay testimony by plaintiff's attorney regarding defamatory
statements that were reported to him but not made to him directly).
The only admissible evidence in the record bearing on these statements is the
deposition of J.H. Lee, at which he testified that he and/or Hong contacted Neoyul
54

Kim, Jin Se Kim, and Jong Hoon Kim-reporters from the Korean-American
press-to discuss their conflict with KBSA. (Geercken Deck., Exh. M, 266: 18-275:2).
J.H. Lee testified as follows:
I explained to Neoyul Kim that we were receiving the tapes supplies
through normal business relationship and suddenly the tapes supply
stopped, and because of this, it affected Mr. Hong's business really
terribly and Mr. Hong had just opened a business with the help of his
father's loan. This was just to feed his wife and his kid and now he
couldn't even support himself, and I said that-I complained this was
not a proper disposition.
(Id. 267:6-15). He further testified that, in response to this press conference, "there

was an article [written] that mentioned that there would be a possibility of a lawsuit
between KBS arising out of-arising between KBS and Samsung." (Id. 268:10-13).
He also stated that Hong contacted Jin Se Kim and Jong Hoon Kim, and while he
did not relay the contents of that conversation, he asserted that Hong told him he
was "very upset. He said all this is very unfair, pushing him to close his store ....
[t]hat this situation should be known to the world and that ... he was entitled to
conduct-continue his business fairly or he was entitled to be treated fairly." (Id.
269:10-12, 16-23). Finally, he testified that he and Hong arranged a dinner with the
three reporters in order to "let them know exactly what we had explained to Neoyul
Kim before, the fact that we were treated unfairly by stopping-by not having the
tapes supplies all of a sudden." (Id. 271:12-14). J.H. Lee specifically denied
mentioning C.J. Lee or Jo at this meeting, asserting instead that he and Hong
attributed these actions solely to KBSA. (Id. 273:4-10).
55

These statements to the reporters, as relayed by J.H. Lee, do not constitute
defamatory speech. In sum and substance, the Samsung owners asserted that KBSA
suddenly cut off supply of KBS videotapes to the Samsung store-an undisputed
fact-and that this action was unfair and "not a proper disposition." Under the
three factors described in Russell v. Davies, 97 A.D.3d at 650, the latter contention
(the unfairness of the KBSA cut-off) is quite clearly a non-actionable statement of
opinion than an assertion of fact. To remark that a particular business decision
directed at the speaker's interest is "unfair" or "not a proper disposition" does not
convey a definite meaning that is precisely understood, and cannot be proven
objectively true or false. Taken in context, there is little doubt that these statements
reflected the Samsung owners' emotionally-charged opinions in response to the
sudden cessation of KBS videos, rather than false assertions of fact.
It is true that statements of opinion may be defamatory if they "imply the

existence of undisclosed underlying facts that would support defendant's opinion
and would be detrimental to plaintiffs." Giffuni v. Feingold, 299 A.D.2d 265, 266,
749 N.Y.S.2d 716, 716 (1st Dep't 2002) (internal quotations omitted). The statements
at issue here do not entail any such implications. Based on the evidence presented,
there is no indication that either Hong or J.H. Lee even hinted at KBSA's reasons
(illegal or otherwise) for terminating their video supply, nor did either of them make
any reference to the alleged price-fixing scheme they charge in the lawsuit. They

56

merely explained what happened to their business and expressed their outrage as a
result of it.
At most, the two partners implied that KBSA had breached a contract with
them by cutting off their supply of KBS videos. But, without more, such an assertion
is not defamatory. Courts have repeatedly held that an accusation that a party has
breached a contract or other legal agreement is not defamatory per se unless the
declarant has made or implied additional defamatory assertions of fact. See, e.g.,

Phillips v. Carter, 58 A.D.3d 528, 872 N.Y.S.2d 22, 23 (1st Dep't 2009) ("While the
complaint alleges defendant falsely told the third party that plaintiff had breached
his contract and 'could not be trusted as a contract partner,' it fails to state a claim
for defamation ... [because] [the] statements were either true or unactionable

opinion.") (emphasis added); Belly Basics, Inc. v. Mothers Work, Inc., 95 F. Supp. 2d
146-48 (S.D.N. Y. 2000) (statement that plaintiff "seems not to care in the least about
its legal agreements," implying it had breached a particular settlement agreement,
was a subjective opinion, and therefore not defamatory); In re Andrew Velez Const.,

Inc., Bankruptcy No. 06-12765 (MG), 2008 WL 68746, at *4 (Bankr. S.D.N.Y. Jan.
04, 2008) (statement that plaintiff breached a contract "[is] not itself sufficient to
state a claim for defamation per se," but requires further reference to, or
implication of, specific wrongful conduct by the plaintiff in relation to the breach);

Cummins v. Suntrust Capital Markets, Inc., 649 F. Supp. 2d 224, 256 (S.D.N.Y. 2009)
(statement indicating that corporate officer may have breached his fiduciary duty
57

was an expression of subjective opinion, and not actionable). In sum, the Samsung
owners' oral statements to reporters, as described in the testimony of J.H. Lee, are
not defamatory. There being no admissible evidence to the contrary that would
create a genuine issue of material fact, and KBSA's motion for summary judgment
is denied as to those remarks; and, searching the record sua sponte, the Court grants
summary judgment to counterclaim defendants.
ii.

The Kwon Letter

Next, KBSA contends that the two partners defamed C.J. Lee in the Kwon
letter. (See Kwon Aff., Exh. 1; see also KBSA's

56.1~65;

KBSA's Mem. at 37-38).

This letter concerns the dispute between the store owners, on the one hand, and
KBSA's Eastern regional office, on the other hand, over the termination of KBS
videos to the Samsung store. More generally, the letter deals with a conflict that
threatened to disrupt or destroy an otherwise mutually beneficial business
relationship between the two parties. As such, the letter is a "communication[]
between parties on matters in which they share a common interest," Gonda/ v.
N. Y.C. Dept. of Educ., 19 A.D.3d 141, 142, 796 N.Y.S.2d 594, 595 (1st Dep't 2005),
and statements made in this sort of correspondence are immune from a defamation
claim unless KBSA can allege and show malice. Id.
KBSA argues that the qualified privilege should not apply to the Kwon letter
because "[c)ourts have generally limited this privilege to members of the same
organization or entity, such as 'employees of an organization' or 'constituent
58

physicians of a health insurance plan.'" (KBSA's Reply at 23-24 (citing Liberman v.

Ge/stein, 80 N.Y.2d 429, 437, 605 N.E.2d 344, 590 N.Y.S.2d 857 (1992)). KBSA
awkwardly fashions out of whole cloth this new requirement in an attempt to
circumvent the qualified privilege. Neither Liberman nor any other case has
indicated that the privilege applies only to communications between members of the
same organization, and the decisional law thoroughly debunks any such
interpretation. See, e.g., In re Hoge, 96 A.D.3d 1398, 1400, 946 N.Y.S.2d 350, 353
(4th Dep't 2012) (statements between two different companies regarding credit card
use by one of the company's shareholders were qualifiedly privileged); East Point

Collision Works, Inc. v. Liberty Mut. Ins. Co., 271A.D.2d471, 471-72, 706 N.Y.S.2d
700, 701-02 (2d Dep't 2000) (qualified privilege applied to communications between
insurance representative and owner of a car that was damaged by the insured
automobile); Liere v. Scully, 79 A.D.3d 821, 912 N.Y.S.2d 690 (2d Dep't 2010) (a
public official's comments to a reporter about suspected environmental violations
by plaintiff were privileged, since "[the] reporter ... and the public in general, had
corresponding interests in the statements' subject matter"). The fact that the
Samsung owners and Kwon were not members of the same organization is
immaterial to a determination as to the propriety of invoking the qualified privilege.
KBSA takes another swipe at the privilege, built on the fact that the Samsung
owners' interests were "diametrically opposed to those then espoused by KBSA ...
Indeed, the very goal of the Kwon letter is to address the conflict (not the unity of
59

interest) between [the store owners] and KBSA." (KBSA's Reply at 24). KBSA's
rhetorical jiu-jitsu is impressively dexterous, but equally unpersuasive. The
qualified privilege requires that the communicants share a common, mutual, or

corresponding interest, not an identical interest. That is to say, they must both have
some vested interest in the subject matter of the communications, but their
respective interests need not be aligned. See, e.g., Vinson v. Bryant and Stratton

Business Institute, Inc., No. 92-CV-0762E (F), 1995 WL 307594, at *10 (W.D.N.Y.
May 15, 1995) (finding that plaintiff's argument "confuses the law by attempting to
require not a merely corresponding interest, but an identical one").
The New York Court of Appeals has specifically instructed that the purpose
of the qualified privilege is to "foster ... debate," and "to permit an interested
participant to defend his position vigorously without fear of being penalized for his
statements should some of them actually turn out to be erroneous." Stillman v. Ford,
22 N.Y.2d 48, 54, 238 N.E.2d 304, 307, 290 N.Y.S.2d 893, 898 (1968). It would not
serve the policy goals that justify the privilege to require that the speakers' interests
in the subject matter be identical, congruent, or even parallel. On the contrary, if
the privilege exists to foster debate, and to permit parties to defend their positions,
the privilege must a fortiori be all the more applicable when the communicating
parties' interests are opposed. Other jurisdictions have recognized this principle.

See, e.g., Brown v. Collins, 402 F.2d 209, 212 (D.C. Cir. 1968) (stating in dicta that
"[p]ersons whose ultimate interests are diametrically opposed may nonetheless
60

share a mutual interest in minimizing their conflict and therefore may be
conditionally privileged when they make defamatory statements inter sese to that
end.").
In this case, Kwon, as the president and CEO of KBSA, and the Samsung
owners, as KBSA's licensed customers, had a common interest in the business
relationship between the two entities. Courts have recognized that a mutual interest
of this nature is sufficient to trigger the qualified privilege. See, e.g., Rupert v.

Sellers, 65 A.D.2d 473, 485, 411 N.Y.S.2d 75, 82 (4th Dep't 1978) (holding that the
privilege applies to communications between parties "who share a common interest
in the same property, business or business relationship") (emphasis added). More
precisely, the parties had a common interest in avoiding further escalation of the
dispute, negotiating an agreement, and avoiding litigation (unfortunately, a failed
endeavor). The Kwon letter was clearly written in furtherance of settling the
conflict. It may have failed in that regard, but because it concerned a topic on which
both parties shared a common interest-their business relationship-it is shielded
by the qualified privilege.
With no white flag in sight, KBSA counters that, even if the privilege applies,
the Samsung owners "evince[d] actual malice in sending the Kwon Letter," because
they "misrepresented ... the timing and circumstances of their move from Brooklyn
to Queens, and ... what they were told as to why supply was stopped. In this regard,
they attempt to shift the blame from their shoulders onto Mr. C.J. Lee, painting him
61

as a short-tempered autocrat who was causing KBSA not to live up to its
obligations." (KBSA's Reply at 24-25 (internal citations omitted)). These facts, even
if accurate, fail, as a matter of law, to establish that the store owners acted

maliciously in sending the Kwon letter. First, even if they did misrepresent "the
timing and circumstances of their move from Brooklyn to Queens," that statement
refers to their own actions, not those of C.J. Lee-it cannot possibly be defamatory,
nor does it manifest any showing of malice.
Nor is there fertile soil in KBSA's simple and conclusory assessment that the
counterclaim defendants misrepresented "what they were told as to why supply was
stopped." On that score, the Samsung owners stated in the Kwon letter that, several
days after their supply of KBS videos was terminated,
the employee of KBS America's East Coast Office whom we contacted
initially for the relocation and other issues earlier explained to us that
the main reason for the cessation was "because we made a threat to
KBS by saying something to the effect that in the event KBS ceases the
supply, we will create havoc for KBS by resorting to media reports and
lawsuits, and General Manager Chang Joon Lee became enraged by
this and ordered the abrupt cessation."
(Kwon Letter at 2). KBSA has not shown that a reasonable jury could not find that
C.J. Lee terminated Samsung's video supply, at least in part, for the reasons stated
in the letter. Nor have they shown that the unnamed KBSA employee did not make
the alleged statements to the Samsung owners regarding C.J. Lee's reason for
terminating the supply. Thus, they have neither shown that the statements
concerning C.J. Lee were false, nor that the Samsung owners were aware of, or were
62

recklessly indifferent to, the alleged falsehood of those statements. But, most
importantly of all, and it is on this ground that the Court acts, there is absolutely no
showing of actual malice in connection with the Kwon letter. As with the alleged
defamatory statements to the reporters, here, too, summary judgment for KBSA
must be denied, based on a review of the undisputed facts in the record, granted to
the counterclaim defendants. 16
iii.

The Blue House Complaints

In its third and last defamation claim, KBSA focuses on Hong's allegedly
"false and defamatory statements concerning KBSA and Mr. C.J. Lee" in the two
complaints he submitted to the Blue House. (KBSA's 56.1

~

66; C.J. Lee Deel.

~~

117-124). KBSA charges that these statements included libelous allegations that

16

Regardless of the qualified privilege, the Court would still reject KBSA's claim
because the statements in the Kwon letter are not defamatory. The letter, in
essence, alleges that C.J. Lee cut off the Samsung owners' video supply in
response to threats that they had reportedly made to sue KBSA, to tarnish its
good name in the press, and to wreak general havoc if KBSA did not follow their
preferred course of action. If anything, this statement places the Samsung owners
in a more negative light. C.J. Lee, in this account, comes across as no wilting
flower, but his alleged response to the Samsung owner's reported threats is at
least understandable-it is a natural human response to "bec[o]me enraged" in
the face of such threats, and for an assertive manager to protect his employer
against erratic clients. These allegations just do not tend to subject C.J. Lee to
the kind of scorn, hatred, and ridicule that characterize defamatory statements,
nor do they damage or disparage him in his profession. None of the other
statements concerning C.J. Lee in the Kwon letter even approach libel.

63

KBSA was "oppressing small business ... and in some cases destroying their
livelihood," that Hong had attempted to bribe C.J. Lee after hearing that he would
be receptive to such a thing, and that C.J. Lee had threatened to "make things very
difficult for [the Samsung owners]" after learning of the first Blue House complaint.
(KBSA's 56.1

~~

66-67). Hong admits that he submitted these complaints, but does

not concede that his assertions were libelous. (Geercken Deel., Exh. J, 121:14123:10).
KBSA offers two pieces of evidence to support its claim. First, it submits
(both in English and in Korean) a printout from the Citizens' Complaint Resolution
Committee, a "[South] Korean government agency," describing Hong's first
complaint, and including processing information, such as the date, name of
complainant, web registration number, and the names of the relevant government
agencies to which the complaint would be triaged: the Korean Broadcasting System
(i.e., KBS) and the Fair Trade Committee. (C.J. Lee Deel., Exh. M). Second, KBSA
submits (also in both English and Korean) a form received by KBSA's headquarters
from KBS's audit team investigating the issues raised in the second Blue House
complaint. (Id., Exh. N). This document is titled "Audit 110-72" and concerns a
"[r]equest for an investigation and resolution of the attached complaint and report
of the outcome." (Id.). It further explains that "[the] Citizen's Complaint Resolution
Committee received the attached complaint concerning your company. Please
review the content and reply to the complainant, and submit the outcome of the
64

investigation and resolution to the Audit Team." (Id.) Each page of the document is
titled "Detailed Description of a Civil Complaint," and includes a statement
explaining the background to the filing, a description of the complainant, and a list
of issues requiring verification. (Id.). The document also includes the official seal of
the Auditor of KBS. (Id.)
From the record evidence, there can be no genuine dispute of material fact
that Hong, by submitting the Blue House complaints, initiated a quasi-judicial
administrative proceeding in hope of vindicating what he believed were his legal
rights without the need to file a formal lawsuit-a resort to a form of alternative
dispute resolution. The Citizens' Complaint Resolution Committee appears beyond
doubt to be a Korean governmental body that investigates, and attempts to resolve,
civil disputes between Korean nationals at home and abroad, and/or directs such
complaints to the appropriate government agency for resolution. Since the
counterclaimants offer not a scintilla of evidence to the contrary, it is equally
apparent that Hong submitted the two complaints with the intent of resolving his
conflict with KBSA through a formal administrative process involving fact-finding,
an opportunity for both sides to be heard, consideration before a neutral arbiter,
and standardized forms and procedures. As such, the Blue House complaints were
communications made by a party in a "quasi-judicial proceeding," and were
"material and pertinent to the issue to be resolved in the proceeding." See Wilson, 94
A.D.3d at 756-57 (internal quotations omitted). Pointedly, Hong's two complaint
65

letters apprised the Korean dispute resolvers of many of the same facts alleged by
plaintiffs about defendants in this lawsuit. Accordingly, any statements included in
the Blue House complaints are, as Wilson makes clear, absolutely privileged from
claims of defamation. Id.
The fact that the place where the formal dispute resolution occurs is not
called a courtroom provides no safe harbor for defamation claims. New York courts
have not limited the absolute privilege to statements made during actual judicial
proceedings, but have extended it to those made during administrative proceedings
as well. See, e.g., Rosenberg v. MetLife, Inc., 8 N.Y.3d 359, 365-68, 866 N.E.2d 439,
834 N.Y.S.2d 494 (2007) (statements regarding a brokerage firm employee's
termination made to a quasi-governmental regulatory body were absolute
privileged); Kilkenny v. Law Office of Cushner & Garvey, LLP, 76 A.D.3d 512, 513,
905 N.Y.S.2d 661, 662 (2d Dep't 2010) (statements made in letter to state bar's
Grievance Committee were absolutely privileged); Henfeld & Stern, Inc. v. Beck,
175 A.D.2d 689, 572 N.Y.S.2d 683 (1st Dep't 1991) (statements made to New York
Stock Exchange's Department of Enforcement granted absolute immunity); Gonda/

Asset Management v. N.Y. Stock Exchange, 22 Misc.3d 1108(A), 880 N.Y.S.2d 223, at
*25 (N.Y. Sup. Ct., N.Y. Cnty., 2004), aff'd 27 A.D.3d 271, 809 N.Y.S.2d 912 (1st
Dep't 2006) (letter submitted to state Attorney General's Office opposing plaintiff's
application to register as an investment advisor granted absolute immunity); Cincu

v. Asadorian, 20 Misc.3d 1107(A), 866 N.Y.S.2d 90, at *3 (N.Y. Sup. Ct., N.Y. Cnty.,
66

2008) (statements made in the context of a Labor Department adjudication for
unemployment insurance were absolutely privileged).
Nor have courts limited this privilege to domestic actions only. Although
there is relatively scant case law on this question, courts that have confronted
statements made before non-domestic agencies or adjudicators have extended the
privilege to foreign proceedings. See, e.g., Sorge v. City of New York, 56 Misc.2d 414,
288 N.Y.S.2d 787, 790-91 (Sup. Ct., N.Y. Cnty., 1968) (statements made to Italian
magistrate absolutely privileged); Beroiz v. Wahl, 84 Cal.App.4th 485, 493, 100
Cal.Rptr.2d 905, 910 (Ct. App. 2000) ("[A]pplying the absolute privilege to fair
judicial proceedings in foreign countries encourages American citizens in these
countries to resolve disputes in the courtroom, rather than by self-help, promotes
the finality of judgment, and limits derivative tort litigation ... .");see also

Vanderkam v. Clarke, 993 F. Supp. 1031, 1032 (S.D. Tex. 1998) (statements made
before High Court of Ireland were absolutely privileged); cf. Bakhshandeh v.

American Cyanamid Co., 211 F. Supp. 803, 808 (S.D.N.Y. 1962) (statements made to
Iranian Minister of Health granted same privilege that would apply to statements
made in New York).
Adopting the logic of these cases, the Court holds that New York's absolute
privilege applies to statements made in the course of a dispute resolution in foreign
judicial or quasi-judicial proceedings. Here, there is no genuine dispute of material
fact that Hong initiated, and was a party to, quasi-judicial proceedings before the
67

Citizen's Complaint Resolution Committee and other agencies of the government of
South Korea when he submitted the Blue House complaints. The statements
included in those complaints were, of course, relevant and material on their face to
the administrative proceedings they instigated. Therefore, all of the statements
included in the Blue House complaints are absolutely privileged. KBSA's motion for
summary judgment on this libel claim is denied, 17 and, as with the other defamation
claims against the Samsung owners, the Court searches the record and grants
summary judgment for the counterclaim defendants.
Conclusion
For the reasons discussed above, defendants' motion for summary judgment
is granted as to all of plaintiffs' claims, except their three claims against Kong,
Spring Video, and Kim for tortious interference with contractual, economic, and
prospective business relations. Summary judgment is denied as to those three
charges, but renewal of the motion and additional summary judgment briefing as to
those claims is granted. Within 30 days of the entry on the docket of this

17

In the alternative, the statements in the Blue House complaints are qualifiedly
privileged, since they concern the treatment of the Samsung owners by KBSA, a
subject of common interest to both Hong and the Citizen's Complaint Resolution
Committee, which exists precisely to investigate such claims. KBSA has offered
no evidence of malicious intent on Hong's part in submitting the complaints, and
summary judgment is therefore appropriate on the ground of qualified privilege
as well. See Park Knoll Associates v. Schmidt, 59 N.Y.2d 205, 210-11, 451 N.E.2d
182, 187, 464 N.Y.S.2d 424, 427 (1983) (applying qualified privilege to statements
made by president of a tenants' association to State Division of Housing and
Community Renewal, where defendant was not a party to the proceeding but
had helped tenants prepare and submit complaints to the agency).
68

Memorandum and Order, the parties shall submit a joint briefing schedule with
regard to the renewed motion.
The motion of the KBSA litigants for summary judgment as to their
counterclaims for copyright infringement is denied. As to the counterclaims for libel
per se and slander per se, summary judgment is denied to the KBSA litigants on the
motion, and upon the Court's searching of the record, is awarded to the
counterclaim defendants.
So Ordered.

Dated: Brooklyn, New York
September 19, 2013

s/Eric N. Vitaliano
United States District Judge

69