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Impulse Marketing Group, Inc. v. National Small Business Alliance

June 12, 2007


The opinion of the court was delivered by: Kenneth M. Karas, District Judge


Plaintiff Impulse Marketing Group, Inc. ("IMG") filed this lawsuit against the National Small Business Alliance, Inc. ("NSBA") and Direct Contact Media, Inc. ("DCM") for breach of contract and various contract-related claims. DCM moves to dismiss this action as to DCM for lack of personal jurisdiction, pursuant to Fed. R. Civ. P. 12(b)(2), and for failure to state a claim upon which relief can be granted, pursuant to Fed. R. Civ. P. 12(b)(6). For the reasons set forth below, the Court denies both of DCM's Motions to Dismiss. The Motion to Dismiss for lack of personal jurisdiction is denied without prejudice to renew after jurisdictional discovery.

I. Background

The following facts are either undisputed or are assumed to be true as alleged by Plaintiff only for purposes of this Motion.

A. Factual Background

1. The Parties

IMG is a corporation organized under the laws of the State of Nevada, and its principal place of business is in Atlanta, Georgia. (First Am. Compl. ¶ 2.) IMG is an online marketing company that promotes, markets, and sells various products and services on behalf of third-party advertisers. (Id. ¶ 5.) NSBA is a District of Columbia corporation with its principal place of business in Washington, D.C. (Id. ¶ 3.) NSBA is a membership-based association of small businesses and individuals that offers discounts and services to its members. (Id. ¶ 6.) DCM is a California corporation with its principal place of business in San Diego, California. (Id. ¶ 4.) DCM delivers marketing campaigns for its clients via call centers, broadcast and print media, and direct mail. (Id. ¶ 24.)

2. Agreements Entered Into by the Parties

On April 26, 2005, IMG and NSBA entered into a written Advertiser Insertion Order and Advertiser Master Terms and Conditions Agreement ("Agreement"), whereby IMG would provide certain online marketing services to NSBA for a fee. (Id. ¶ 7.) Under the Agreement, IMG retained the right to hold NSBA's agents jointly and severally liable for all amounts due under the Agreement. (Id. ¶ 10.) In addition, the Agreement contains a choice of law and venue provision, which states:

Governing Law

This Agreement shall be governed by, construed and interpreted according to the laws of the State of New York.

The parties agree that the appropriate, convenient and exclusive venue for any action arising out of this Agreement shall be the court of appropriate jurisdiction in New York, New York. The parties hereby waive any right to a jury trial in such action.*fn1 (Decl. of Jeffrey Goldstein in Opp'n to Def. Direct Contact Media Inc.'s Mot. to Dismiss Impulse Marketing Group, Inc.'s Am. Compl. as Against DCM ("Goldstein Decl.") Ex. A3.) On July 18, 2005, IMG and NSBA entered into an Addendum to the Agreement ("Addendum"). (First Am. Compl. ¶ 8; see also Goldstein Decl. Ex. A5.) Although DCM was not a party to the Agreement or Addendum*fn2 (Decl. of Direct Contact Media, Inc. In Supp. of Its Mot. to Dismiss the Compl. ¶ 11 ("Longino Decl.")), DCM provided marketing services to NSBA (id. ¶ 13).

Under the Contract, IMG earned compensation each time an online user completed a registration application -- referred to as "Leads" -- for a particular NSBA product and/or service on websites designated by IMG. (First Am. Compl. ¶ 12.) At the request of NSBA and DCM, IMG was required to identify and compile a list of all Leads and send them to NSBA and DCM. (Id.) Additionally, IMG was paid a fee for the sale of products and/or services to any online users who responded to IMG-placed advertisements but who did not fully complete the associated registration application on the IMG-designated websites. (Id. ¶ 14.) A partially completed registration application was referred to as a "Non-Complete." (Id.) IMG transmitted substantially all Non-Completes relating to the Contract to DCM at DCM's explicit direction so that DCM could solicit the Non-Complete customers directly. (Id. ¶ 15.) During the course of performance under the Contract, IMG's main contacts were representatives of DCM, who "micro-managed each transaction" in the Contract. (Id. ¶¶ 42-43.) At various points during performance of the Contract, representatives from DCM informed IMG that DCM was "the real party in interest with respect to the Contract." (Id. ¶¶ 42-43, 79.) IMG also alleges that "DCM exercised complete domination over NSBA with respect to the transactions underlying the Contract" and that such domination was used to injure IMG. (Id. ¶¶ 62, 64.)

IMG submitted invoices for marketing services to NSBA and submitted substantially all of the invoices for Non-Completes, and some invoices for Leads, to DCM. (Id. ¶ 16.) DCM directly compensated IMG after receiving those invoices. (Id. ¶ 18.) As of August 15, 2005, NSBA and DCM, on behalf of NSBA, paid IMG a total of $565,930.50 for services rendered. (Id. ¶ 19.) Of this total, DCM paid at least $44,133 for IMG-generated Non-Completes.*fn3 (Id. ¶¶ 51-53.) Thereafter, NSBA and DCM ceased making payments on outstanding invoices from IMG. (Id. ¶ 19.) On August 19, 2005, NSBA provided IMG with notice that terminated the Contract, effective immediately. (Id. ¶ 20.)

Although DCM is not a signatory to the Contract, IMG alleges that DCM assumed the contract, inter alia, "by micro-managing each transaction underlying the Contract . . . [and by] explicitly admitting to the existence of a contractual relationship between IMG and DCM . . . ." (Id. ¶ 42.) IMG asserts that IMG's main contacts throughout performance of the Contract were two DCM principals: Raymond Longino and Michael Holleran. (Id. ¶¶ 42-43.) Plaintiff points to an email sent on June 3, 2005*fn4 to illustrate DCM's acknowledgment of a contract between DCM and IMG. The email from Longino to IMG stated that DCM was "selling memberships in NSBA" and that IMG was "doing the job" it "contracted with DCM to do." (Id. ¶¶ 44, 67.) In another email, Longino told IMG that, "[w]e [DCM] are looking forward to a long and mutually successful partnership." (Id. ¶ 48.) In addition, IMG avers that DCM assumed obligations under the Contract by demanding that IMG generate increased traffic for products ...

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