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FAHERTY v. SPICE ENTERTAINMENT

August 18, 2005.

J. ROGER FAHERTY, Plaintiff,
v.
SPICE ENTERTAINMENT, INC.; PLAYBOY ENTERPRISES, INC.; PLAYBOY ENTERPRISES INTERNATIONAL INC.; D. KEITH HOWINGTON, ANNE HOWINGTON, and LOGIX DEVELOPMENT CORPORATION, Defendants.



The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge

OPINION

Defendants Logix Development Corporation (hereinafter, "Logix") and D. Keith Howington and Anne Howington (hereinafter, the "Howingtons") (collectively, the "Defendants") have moved for dismissal of the complaint filed by plaintiff J. Roger Faherty (hereinafter, "Faherty) based on: (1) lack of personal jurisdiction pursuant to Rule 12(b) (2), Fed.R.Civ.P.; (2) improper venue pursuant to Rule 12(b) (3), Fed.R.Civ.P.; and (3) failure to state a claim upon which relief can be granted pursuant to Rule 12(b) (6), Fed.R.Civ.P.

For the reasons set forth below, the motion to dismiss is granted for lack of personal jurisdiction under Rule 12(b) (2), Fed.R.Civ.P. Lacking the requisite jurisdiction, this Court refrains from reaching the merits of the remaining issues presented.

  Prior Proceedings

  Plaintiff filed his complaint on April 14, 2004, commencing this action against Defendants Playboy Enterprises Inc., Playboy International Inc., Spice Entertainment Inc., Logix, and the Howingtons. The initial complaint alleged four causes of action: breach of contract, statutory indemnification, tortious interference with a contract, and common law conspiracy. On January 14, 2005, Defendants Logix and the Howingtons moved to dismiss the complaint on grounds of lack of jurisdiction, improper venue, and failure to state a claim. Faherty filed opposition to the motion to dismiss and cross-moved to stay the instant proceedings pending resolution of an ongoing and related suit currently scheduled for trial in the Superior Court of California, County of Los Angeles. The motion was marked fully submitted on March 9, 2005.

  Defendants Playboy Enterprises Inc., Playboy International Inc. (hereinafter, collectively "Playboy") and Spice Entertainment Inc., (hereinafter, "Spice") have stipulated with Faherty to staying the instant action pending the resolution of the California suit. This Court so ordered the parties' stipulation on February 11, 2005. As such, the instant motion to dismiss does not encompass any arguments set forth by Defendants Playboy or Spice.

  The Facts

  The facts are set forth in the statements of the parties and are not in dispute except as noted below. All well-pleaded allegations are accepted as true for the purpose of this motion. See Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002). The following statements do not constitute findings of the Court. Faherty, a citizen and resident of New Jersey, filed a complaint on April 14, 2004, against Defendants Spice and Playboy, Defendant Logix, and Defendants D. Keith Howington and Anne Howington.

  Defendant Spice Entertainment, Inc., formerly known as Spice Entertainment Companies, Inc., (collectively, "Spice"), is a corporation organized and existing under the laws of the State of Delaware, with a principal place of business in Chicago, Illinois. Defendant Spice is a wholly owned subsidiary of defendant Playboy.

  Defendant Playboy is a corporation organized and existing under the laws of the State of Delaware, having its principal place of business in Chicago, Illinois.

  Defendant Logix is a corporation organized and existing under the laws of the State of California, with its principal place of business in Camarillo, California.

  Defendants D. Keith Howington and Anne Howington are citizens and residents of the State of California, residing in Ventura County, California, and are the principal shareholders, officers, and directors of Logix.

  Faherty was the Chief Executive Officer of Spice until Playboy acquired Spice on March 15, 1999. In connection with this acquisition, Spice effected a spin-off of a wholly-owned subsidiary, Directrix, Inc., (hereinafter, "Directrix"), to Spice's shareholders. At that point, Faherty ended his employment with Spice and assumed the position of Chief Executive Officer at Directrix.

  The instant action arises from and relates to an alleged breach by Defendants Spice and Playboy of the indemnification provisions applicable to corporate officers and directors, as set forth in the June 13, 1997 Amended and Restated By-Laws (hereinafter, the "By-Laws") of Defendant Spice, presently a wholly-owned subsidiary of Defendant Playboy.

  The California Action

  On May 17, 2001, Logix and the Howingtons, as plaintiffs, commenced suit against Faherty, Spice, Playboy, and other defendants in the Superior Court of California, (hereinafter, the "California Action"). The California Action focused upon an alleged breach of an Agreement dated January 18, 1997, (hereinafter, the "Main Agreement"), between Logix and Emerald Media, Inc. (hereinafter, "EMI").

  In the California Action, Logix and the Howingtons sought to hold Spice, Playboy, Faherty and others liable for EMI's alleged breach of the Main Agreement under an alter ego theory of liability. Plaintiffs further alleged that they had been defrauded by Spice, Playboy, Faherty, and others.

  Trial in the California Action is scheduled to proceed in late August 2005.

  Defendants Playboy and Spice Settle with Logix and the Howingtons

  In February 2004, Logix and the Howingtons entered into a confidential settlement agreement (hereinafter, the "Settlement Agreement") with Defendants Playboy and Spice, in which they settled their claims against Playboy and Spice for $8.5 million. Faherty was not included as a ...


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