Dish Network L.L.C. v. ABC, Inc. et al - Document 90
MEMORANDUM OPINION AND ORDER: For the foregoing reasons, Dish's request for an anti-suit injunction is denied and as further set forth in this conluscion re: 26 MOTION to Dismiss , Stay or Transfer filed by NBC Universal Media, L.L.C., CBS Corporation, 28 MOTION to Dismiss filed by The Fox Entertainment Group, Inc., Fox Cable Network Services, L.L.C., Fox Television Holdings, Inc., which are resolved. (Signed by Judge Laura Taylor Swain on 7/9/2012) (cd)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
DISH NETWORK, L.L.C.,
No. 12 Civ. 4155 (LTS)(KNF)
AMERICAN BROADCASTING COMPANIES,
INC. et al.,
MEMORANDUM OPINION AND ORDER
On May 24,2012, Dish Network, L.L.C. ("Plaintiff' or "Dish"), filed this action
against American Broadcasting Companies, Inc. ("ABC"), CBS Corp. ("CBS"), NBCUniversal
Media ("NBCU"),I Fox Entertainment Group, Inc., Fox Television Holdings, Inc., and Fox
Cable Network Services, L.L.c. (collectively "Fox" and, together with CBSINBCU,
"Defendants" or the "Networks") seeking a declaratory judgment that its "Auto Hop" technology
does not infringe the copyrights of the Networks and ABC or breach its license agreements with
those entities. Dish now seeks to enjoin litigation, filed in the United States District Court for
the Central District of California within three hours after Dish commenced its action in this
Court, by the Networks in which Fox and CBSINBCU and certain of their affiliated entities
assert that Dish's PrimeTime Anytime ("PTAT") and "Auto Hop" television programming
recording and playback services infringe the Networks' programming copyrights and in which
CBS Corporation and NBCUniversal Media are collectively referred to
throughout as "CBSINBCU."
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Fox asserts that the services violate Dish's licensing agreement with that Network. 2 On May 30,
2012, this Court granted Dish's application for a temporary restraining order prohibiting Fox
from prosecuting its California action pending the Court's determination of Dish's application
for an anti-suit injunction staying prosecution of all of the California litigation in favor ofthis
declaratory injunction action.
There are now three motions before the Court: (1) Dish's motion for an anti-suit
injunction to enjoin the Networks from prosecuting their suits in the Central District of
California; (2) Fox's motion to dismiss Dish's declaratory judgment action as an improper
anticipatory suit; and (3) CBSINBCU's motion under Federal Rules of Civil Procedure 12(b)(1)
and 12(b)(6) to dismiss, transfer, or stay Dish's action. The Court heard oral argument on the
motions on July 2,2012, and has considered thoroughly all of the parties' submissions. For the
following reasons, Dish's motion for an anti-suit injunction is denied, Fox's motion is granted in
its entirety, and CBSINBCU's motion is granted in part and denied in part.
This suit arises out of Dish's introduction of a new digital video recorder
("DVR") system called the "Hopper," which is outfitted with PT AT and Auto Hop features. In
brief, PTAT permits viewers to record simultaneously, and in high-definition ("HD") format, all
of the HD primetime TV programming on ABC, CBS, Fox and NBC. The recordings are stored
for eight days after they originally aired. (CompI.
4.) Auto Hop enables viewers, with the
ABC is the only network named in Dish's complaint that did not file suit in the
Central District of California. While ABC has filed an Answer and
Counterclaims to Dish's declaratory judgment complaint in this Court, ABC has
stated that it does not object to litigating its claims in the Central District of
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touch of a button, to skip the commercials in replaying the primetime recordings. (Id.
The addition of the Auto Hop feature on May 10, 2012, prompted what Dish has
charaeterized as a "barrage of negative media attacks" by the Networks. (Memo. in Support of
IRO, at 2.) At least one Network executive characterized the feature to reporters as "illegaL"
2 to Declaration of Elyse D. Echtman, docket entry no. 12.) On May 23, 2012, the
Hollywood Reporter published an article} containing un sourced statements that four major
broadcast networks - Fox Broadcasting, NBCUniversal, ABC/Disney Television Group and
"have begun consulting with major law firms with the expectation that litigation
will be filed against Dish." (Compl. 'II 34.) The article reported that the "networks are said to be
examining their Dish license agreements, looking for breaches of contract that can be alleged
along with claims for copyright infringement," and that "[one] top exec said a lawsuit should be
expected within a month." (Id.) Dish filed this action the following day, stating in its complaint
that "the Major Television Networks have threatened [Dish] with litigation." (Id. 'II 1.) Dish's
action seeks a declaratory judgment that its Auto Hop technology does not infringe the
copyrights of the Networks and ABC or breach its license agreements with those entities.
Dish's 13-page complaint does not identifY which copyrights are at issue, nor does it specify the
license agreement provisions as to which it seeks declaratory relief. The complaints filed in the
California actions, whose plaintiffs include the alleged copyright holders, are far more detailed
with respect to the copyrights and contract provisions allegedly infringed.
Dish argues that (1) under the first-filed rule, this action is entitled to priority, and
"Dish vs. TV Networks: Attorneys Readying Showdown Over Auto Hop,"
Hollywood Reporter, May 23,2012, available at:
7958 (last visited July 8, 2012).
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(2) due to the forum selection clauses in its contracts with ABC and CBS (which Dish has
indicated it will not waive), this is the only forum in which all the issues identified by the parties
may be resolved. In their motions to dismiss, transfer, and/or stay this action, the Networks
argue principally that Dish's complaint is an improper anticipatory filing, and that this Court
should not afford it the presumption of priority accorded by the first-filed rule and should decline
to exercise jurisdiction of Dish's requests for relief under the Declaratory Judgment Act.
The First-Filed Rule
The first-filed rule contemplates that "[w]here there are two competing lawsuits,
the first should have priority." Emp'rs Ins. of Wausau v. Fox Entm't Grp., Inc., 522 F.3d 271,
274-75 (2d Cir. 2008). The rule does not require that the lawsuits present exactly the same
issues, only that the cases be related, as they are here. See GT Plus, Ltd. v. Ja-Ru. Inc., 41 F.
Supp. 2d 421, 427 n.2 (S.D.N.Y. 1998). The first-filed rule "embodies considerations of judicial
administration and conservation of resources by avoiding duplicative litigation."
Bank & Trust Co. v. Simmons, 878 F .2d 76, 80 (2d Cir. 1989). Because parties "should be free
from the vexation of concurrent litigation over the same subject matter," there is a strong
presumption that a later lawsuit will be dismissed in favor of the first-filed lawsuit.
v. Jacobs, 950 F .2d 89, 93 (2d Cir. 1991); see also City of New York v. Exxon Corp., 932 F .2d
1020, 1025 (2d Cir. 1991) (,,[W]here an action is brought in one federal district court and a later
action embracing the same issue is brought in another federal court, the first court has
jurisdiction to enjoin the prosecution of the second action.").
The presumption in favor of the first-filed suit, however, "is not to be applied in a
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'rigid' or 'mechanical' way." Dornoch Ltd. v. PBM Holdings, Inc., 666 F. Supp. 2d 366, 369
(S.D.N.Y. 2009) (quoting Columbia Pictures Indus., Inc. v. Schneider, 435 F. Supp. 742, 747
(S.D.N. Y. 1977)). Indeed, "[t]he complex problems that can arise from multiple federal filings
do not lend themselves to a rigid test, but require instead that the district court consider the
equities of the situation when exercising its discretion." Curtis v. Citibank, N .A., 226 F.3d 133,
138 (2d Cir. 2006). In particular, the Second Circuit has held that the presumption of priority
accorded the first-filed suit will give way "(1) where the 'balance of convenience' favors the
second-filed action, and (2) where 'special circumstances' warrant giving priority to the second
suit." Employers Ins. of Wausau, 522 F.3d at 275. Such special circumstances include the
situation in which "the first-filed lawsuit is an improper anticipatory declaratory judgment
action." Id. at 275. "An improper anticipatory lawsuit is one made under the apparent threat of
a presumed adversary flling the mirror image of that suit in another court." Reliance Ins. Co. v.
Six Star, Inc., 155 F. Supp. 2d 49,55 (S.D.N.Y. 2001). Defendants contend that Dish's action is
just such an improper anticipatory lawsuit and should be denied the presumption of priority.
The Declaratory Judgment Act
Under the Declaratory Judgment Act, 28 U.S.c. § 220 I (a), a court "may declare
the rights and other legal relations of any interested party seeking such a declaration" in "a case
of actual controversy." An "actual controversy" exists if there is a "substantial controversy,
between parties having adverse legal interests, of sufficient immediacy and reality to warrant the
issuance of a declaratory judgment." Duane Reade, Inc. v. St. Paul Fire & Marine Ins. Co., 411
F.3d 384,388 (2d Cir. 2005) (quoting Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273
(1941 ». The disagreement must "have taken on a fixed and final shape so that a court can see
what legal issues it is deciding." Jenkins v. United States, 386 F.3d 415,418 (2d Cir. 2004)
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(quoting Public Servo Comm'n of Utah v. Wycoff Co., 344 U.S. 237,244 (1952)).
It is left to the discretion of the district court to decide whether to hear declaratory
relief claims. Wilton v. Seven Falls Co., 515 U.S. 277, 289-90 (1995). "The Second Circuit has
provided two factors to help district courts properly exercise the broad discretion conferred by
the Declaratory Judgment Act: '(1) when the judgment will serve a useful purpose in clarifying
and settling the legal relations in issue; and (2) when it will terminate and afford relief from the
uncertainty, insecurity, and controversy giving rise to the proceeding.'" Bentley v. The
Wellpoint Companies, Inc., No. 11 Civ. 8963(CM), 2012 WL 546991, at *4 (S.D.N.Y. Feb. 17,
2012) (quoting Continental Cas. Co. v. Coastal Sav. Bank, 977 F.2d 734, 737 (2d Cir. 1992)). In
deciding whether to exercise its permissive jurisdiction, the district court may consider
"equitable, prudential, and policy arguments." MedImmune, Inc. v. Genentech, Inc., 549 U.S.
118, 136 (2007). One of the primary purposes of declaratory relief is to promote efficiency
i.e., to allow "one action to define the legal relationships and adjust the attendant rights and
obligations at issue between the parties." Dow Jones & Co., Inc. v. Harrods, Ltd., 237 F. Supp.
2d 394, 405 (S.D.N.V. 2002); UBS Sec. LLC v. Finish Line, Inc., 07 Civ. 10382 (LAP), 2008
WL 536616, at *3 (S.D.N.V. Feb. 22, 2008) (the Declaratory Judgment act is designed to "avoid
multiplicity of actions").
However, "[i]f a court finds that a declaratory judgment action was brought in
anticipation of the coercive suit for the purpose of gaining 'home field advantage,' the coercive
suit is given precedence." Reliance Ins. Co. v. Bend'N Stretch, Inc., 935 F. Supp. 476, 478
Nat'l Union Fire Ins. Co. v. Int'l Wire Group, Inc., No. 02 Civ.
10338,2003 WL 21277114, at *6 (S.D.N.V. June 2,2003) ("Courts in the Second Circuit have
repeatedly refused to exercise jurisdiction over declaratory actions motivated by a desire to wrest
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the choice of forum from the real plaintiff."); Great Am. Ins. Co. v. Houston Gen. Ins. Co., 735
F. Supp. 581, 586 (S.D.N.Y. 1990) ("[T]he misuse of the Declaratory Judgment Act to gain a
procedural advantage and preempt the forum choice of the plaintiff in the coercive action
militates in favor of dismissing the declaratory judgment action."); Dow Jones & Co.. Inc. v.
Harrods, Ltd., 237 F. Supp. 2d 394,440 (S.D.N.Y. 2002) ("A rush to file first in anticipation of
litigation in another tribunal, thereby enabling a potential defendant to choose the forum and
governing law by which to adjudicate the dispute, and otherwise to interfere with or frustrate the
other party's pursuit of claims elsewhere, is one ofthe equitable considerations a court may
weigh in ruling on a request for declaratory relief."); Perez v. Ledesma, 401 U.S. 82, 119 n. 12
(1971) (Brennan, 1. dissenting) ("The federal declaratory judgment is not a prize to the winner of
a race to the courthouses. ").
Moreover, courts have found no "useful purpose" and declined to exercise
jurisdiction over a declaratory judgment complaint where a coercive suit exists that will settle
the legal issues for which declaratory judgment was sought. ="-"-""-= Amusement Indus. v.
Stern, 693 F. Supp. 2d 301,311 (S.D.N.Y. 2010) (citing cases).
The Court thus considers whether dismissal of Dish's declaratory judgment
claims is appropriate to the extent that mirror coercive claims have been raised by the "natural"
the Defendants who claim that their copyright and contractual rights are being
violated) in California.
Whether Dish's Complaint is an Improper Anticipatory Filing
The Second Circuit has stated that, for a declaratory judgment action to be
properly treated as anticipatory and denied priority under the first-filed rule, the action must have
been "filed in response to a direct threat of litigation that gives specific warnings as to deadlines
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and subsequent legal action." Emp'rs Ins. of Wausau, 522 FJd at 276. Whether a threat is
sufficiently direct and specific is a delicate, highly fact-dependent inquiry that requires courts to
examine the "totality of the events rather than employ any bright line rule." BuddyUSA v.
Recording Indus. Ass'n of Am., Inc., 21 F. App'x 52, 55 (2d Cir. 2001); Schnabel v. Ramsey
Quantitative Sys., 322 F. Supp. 2d 505,512 (S.D.N.Y. 2004). This inquiry is complicated by the
fact that actions for declaratory relief are always, to a degree, anticipatory: the main purpose of
the Declaratory Judgment Act is to "avoid accrual of avoidable damages to one not certain of his
rights and to afford him an early adjudication without waiting until his adversary should see fit
to begin suit, after damage has accrued." Nafl Union Fire Ins. Co. of Pittsburgh, Pa. v. Int'l Wire
Gm., Inc., No. 02 Civ. 10338,2003 WL 21277114, at *4 (S.D.N.Y. June 2, 2003) (quoting
Luckenbach Steamship Co. v. United States, 312 F.2d 545, 548 (2d Cir. 1963)); see also Dow
Jones & Co., Inc. v. Harrods, Ltd., 237 F. Supp. 2d 394, 405 (S.D.N.Y. 2002) (the Declaratory
Judgment Act is designed to "settle legal rights and remove uncertainty and insecurity from legal
relationships without awaiting a violation of the rights or a disturbance of the relationships")
(quoting Beacon Const. Co. Inc. v. Matco Elec. Co., Inc., 521 F.2d 392, 397 (2d Cir. ] 975).
Here, several facts persuade the Court that Dish's filing was motivated by a fear
of imminent legal action by the Networks and was, thus, improperly anticipatory within the
meaning of the special circumstances exception to the first-filed rule. First, the Hollywood
Reporter article conveyed the unmistakable impression that a legal showdown was inevitable;
while it did not quote named sources, it identified each of the networks preparing for legal
action, provided a time frame for filing suit ("within a month"), and identified the types of
claims that were expected to be brought. See, e.g., CGI Solutions, LLC v. Sailtime Licensing
Grp., LLC, No. 05 Civ. 4120(DAB), 2005 WL 3097533, at *3-4 (S.D.N.Y. Nov. 17,2005)
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(finding anticipatory filing where notice letter detailed claims that "may" be brought even
though it "did not outright announce that it would be filing suit by a particular date"). Dish's
complaint leaves no doubt as to how Dish understood the import of this article: Dish's opening
paragraph states that "the Major Television Networks have threatened [Dish Network] with
litigation," and a later subheading reads, "The Major Television Networks Threaten DISH with
Imminent Litigation." (Compi.
1, pg. 9 (emphasis added». Second, Dish filed its complaint
less than 24 hours after the article was published, bolstering the inference that Dish took the
article's claims of impending coercive litigation seriously. See Chicago Ins. Co. v. Holzer, No.
00 Civ. 1062,2000 WL 777907(SAS), at *3 (S.D.N.Y. June 16,2000) (fact that plaintiff filed
for declaratory relief within 24 hours of receiving notice letter "demonstrate [ed] that [plaintiff]
interpreted defendant's threat oflegal action as a firm intention"). Third, the length and content
of Dish's complaint are indicative of hasty preparation: it is a mere 13 pages long, fails to name
the parties who hold the copyrights, lists neither the relevant copyrights nor the contractual
provisions at issue, and contains only the most cursory description of the allegedly offending
services. See Laxman v. Shapiro, 06 Civ. 11408(DLC), 2006 WL 3423807, at *2 (S.D.N.Y.
Nov. 29,2006) (finding that brevity of complaint and "numerous technical deficiencies and
factual omissions" support inference of anticipatory filing);
John Wiley & Sons, Inc. v.
Visuals Unlimited, Inc., 11 Civ. 5453(CM), 2011 WL 5245192, at *4 (S.D.N.Y. Nov. 2, 2011)
(declining to exercise jurisdiction over declaratory jUdgment complaint that contained nothing
more than "vague allegations"). These deficiencies support Defendants' contention that Dish's
complaint was a "place-holder" suit, filed in anticipation of coercive litigation and designed
principally to secure Dish's preferred forum over any other forum selected by the natural
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Plaintiff nonetheless argues that it is properly entitled to first-filed priority,
asserting that the standard enunciated by the Second Circuit in Emp'rs Ins. of Wausau requires a
threatening communication that is "direct" in the sense that it is specifically communicated by
the party claiming injury to the alleged offendcr by means of a letter or some other party-to-party
mode of communication. Plaintiff thus defines "direct" as "[w]ithout intervening persons,
conditions or agencies." (Dish Opp. at 3, docket entry no. 51 (quoting American Heritage
Dictionary).) In Plaintiffs view, only a formal party-to-party communication - as opposed to,
say, a statement conveyed through a media outlet - can constitute a "direct threat." IIowever,
the American Heritage Dictionary also defines "direct" as "[s]traightforward and candid; not
devious or ambiguous." This definition is more consistent with the policies animating the policy
disfavoring anticipatory filings. If Plaintiffs interpretation governed the analysis, a party that
learned of an imminent suit through subterfuge, an unauthorized leak, or even - to take
Plaintiff s argument to its logical conclusion
a televised announcement by corporate counsel
describing in detail the claims her company was set to file the following day, and then raced into
court with a preemptive declaratory judgment action would be rewarded with presumptive
priority for its choice of forum.
While it is true that, in each of the opinions that Defendants cite, party-to-party
communications (usually in the form of "notice-of-suit" letters) preceded the anticipatory filing,
that fact only reflects the reality that parties often engage in dispute-specific communications
before commencing litigation. Here, however, it appears that none of the Networks raised the
prospect of litigation in their ongoing business-related communications with Dish.
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VERSION 7 i9!12
The Court is not aware of any judicial decisions that specifically require that the
coercive litigation threat be expressed in a party-to-party communication. Dish offers 800
Flowers, Inc. v. Intercontinental Florist, Inc., 860 F. Supp. 128 (S.D.N.Y. 1994) as support for
such a proposition. But, in 800 Flowers, the only evidence supporting the plaintiffs argument
that the earlier-filed action was anticipatory was a proffer that the plaintiff had told the
defendant's customers that the defendant's employees were "thieves and crooks" and had falsely
told them that the parties were in litigation. Id. at 131-32. The 800 Flowers court's rejection of
the anticipatory filing argument was not based on the absence of a direct party-to-party
communication but, rather, on the absence of any unambiguous threat oflitigation: it found that
the cited comments were only "disparaging remarks to potential customers, presumably in order
to divert competition away from [plaintiffJ." Id. at 133.
Dish also argues that this Court should entertain its suit because this is the only
forum in which it can resolve all of its PTAT and Auto Hop-related disputes with the Networks
and ABC in a single lawsuit: neither CBS nor NBCU has brought contract claims in California,
and the ABC and CBS contracts include forum selection clauses that provide for adjudication of
contract disputes in New York. The Court notes that, although ABC has indicated that it would
waive the New York forum selection clause were the remainder of the litigation transferred to
California, Dish stated at oral argument that it will not waive its rights under the forum selection
Dish also argues that this is the appropriate venue because the Networks have ties
to the Southern District of New York. Dish's arguments show only that the
Networks have ties to the Southern District in addition to their ties to the Central
District of California: they do not persuade the Court that the Southern District is
a plainly superior venue.
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However, entertaining the declaratory judgment complaint for the purpose of
consolidating all of the litigation against the four networks and their affiliates in New York
would be particularly inappropriate in this case, precisely because three of the sets of parties
claiming injury have chosen another forum for their claims, and none of those natural plaintiffs
has asserted an affirnlative claim under a contract requiring litigation in New York. Fox (which
is not a party to a forum selection clause) has filed coercive contract and copyright claims in
California, CBS and NBCU have also filed copyright claims there, and CBS takes the position
that the contract on which Dish appears to premise its New Yark forum selection argument is
inapplicable to its copyright claims.
In light of the Court's determination that Dish's complaint constitutes an
improper anticipatory filing, and the existence of coercive litigation as to most of the issues in
California, the Court finds that there is no useful or appropriate purpose in entertaining Dish's
declaratory judgment action to the extent that it overlaps with the litigation pending in the
Central District of California. Accordingly, insofar as Dish's complaint pertains to Fox's
copyright and contract claims and CBS/NBCU's copyright claims, this action will be dismissed
without prejudice to litigation of Dish's assertions in the pending Central District of California
actions. Because CBS and NBCU have not asserted contract claims in California, and because
ABC has not filed suit against Dish, this action will continue as to Dish's contract claims against
CBS/NBCU, and as to all of the claims and counterclaims asserted with respect to ABC.
There are numerous ways to mitigate whatever inefficiencies might result from
allowing these claims to proceed in separate venues. CBS and NBCU are represented by the
sanle national law firm (indeed, with the exception of ABC, each of the parties is represented by
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at least one firm that has offices on both coasts of the United States), which will facilitate
coordination; the California actions may be consolidated; and, if the parties are unable to reach
an agreement to consolidate the claims that remain in this district with those in California, the
courts can, with the cooperation of the parties, coordinate the proceedings so as to minimize any
For the foregoing reasons, Dish's request for an anti-suit injunction is denied.
The Court declines to exercise jurisdiction of Dish's declaratory judgment claims against Fox.
Fox's motion to dismiss the complaint is therefore granted without prejudice to litigation of
Dish's assertions in the pending Central District of California action. The Court al so declines to
exercise jurisdiction of Dish's copyright declaratory judgment claims against CBSINBCU.
CBSINBCU's motion to dismiss the complaint is granted without prejudice with respect to the
copyright claims, and is denied in all other respects. The aspect of the CBSINBCU motion that
seeks dismissal of Dish's contract claims pursuant to Federal Rule of Civil Procedure 12(b)(6)
for failure to state a claim is denied without prejudice to renewal upon briefing that addresses the
relevant pleading standards. Because ABC has not brought claims in California and has
counterclaimed here, the ABC-related aspect of this action will proceed as well.
The expedited discovery orders made orally on the record at the June 22, 2012,
conference remain in place except to the extent they are superseded by orders of the California
court. The parties are directed to use their best efforts to coordinate the taking and use of
discovery in the remaining aspects of this action and the California litigation so a'> to avoid
duplication and inefficiency.
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This Memorandum Opinion and Order resolves docket entries 26 and 28.
Dated: New York, New York
July 9, 20]2
United States District Judge
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