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Centurylink, Inc v. Dish Network

July 31, 2012

CENTURYLINK, INC., PLAINTIFF,
v.
DISH NETWORK, L.L.C., DEFENDANT.



The opinion of the court was delivered by: Hon. Harold Baer, Jr., District Judge:

OPINION & ORDER

Plaintiff CenturyLink, Inc., ("CenturyLink") moves pursuant to Rule 12(c) of the Federal Rules of Civil Procedure for judgment on the pleadings as to the liability of defendant DISH Network, L.L.C., ("DISH") under the contract between them and based on the denials in the DISH answer. For the reasons set forth below, the present motion is GRANTED.

Background

CenturyLink provides telephone and internet services and DISH satellite TV service. The parties entered into a contract that was to run from April 2007 until August 2010 (the "Contract") and allowed CenturyLink to sell DISH's TV service along with CenturyLink's phone and internet service in what is referred to as a bundled service or package.*fn1 An important component of the Contract is the means by which CenturyLink and DISH continue to provide uninterrupted service to existing customers after the providers' contractual relationship formally ends. Such existing customers are referred to as "legacy customers" and this period of time as the "wind-down period." See Contract § 1, 12.4(b). CenturyLink properly terminated the Contract in 2010, without renewing, and the only issue before the Court is whether certain monthly incentive payments are owed to CenturyLink during the wind-down period.

Discussion

A motion for judgment on the pleadings enables the moving party to have the court rule in its favor based on the merits of the pleadings. Sellers v. M.C. Floor Crafters, Inc., 842 F.2d 639, 642 (2d Cir. 1988). The court applies the same standard in a Rule 12(c) motion as it does in a Rule 12(b)(6) motion, and the court must accept as true the allegations contained in the pleading and draw all reasonable inferences in favor of the non-moving party. L-7 Designs, Inc. v. Old Navy, LLC, 647 F.3d 419, 429 (2d Cir. 2011). "A party is entitled to judgment on the pleadings only if it is clear that no material issues of fact remain to be resolved and that it is entitled to judgment as a matter of law." Citibank, N.A. v. Morgan Stanley & Co. Int'l., PLC, 724 F. Supp. 2d 407, 414 (S.D.N.Y. 2010).

DISH questions the propriety of a Rule 12(c) motion and argues that its denials in the answer are sufficient to create issues of material fact. See Def.'s Opp'n 9--11 (citing Virgin Group Holdings v. Energy Parametrics & Comm'ns, No. 10 CV 08752(BSJ)(THK), 2011 WL 4448943 (S.D.N.Y. Sept. 26, 2011)). In order to prevail on its contract claim, CenturyLink must prove (1) the existence of an agreement, (2) adequate performance of the contract by CenturyLink, (3) breach of contract by DISH, and (4) damages. Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168, 177 (2d Cir. 2004). CenturyLink does not presently seek a determination as to damages, and there is no dispute that a contract existed and was adequately performed by CenturyLink. The interpretation of the Contract here raises an issue that is capable of resolution as a matter of law, and DISH's conclusory denial of a breach is insufficient to create a material issue of fact. See Kondaur Capital Corp. v. Cajuste, 82 Fed. R. Serv. 3d 195 (E.D.N.Y. 2012) ("The Court is not bound to accept as true legal conclusions couched as factual allegations. Bald contentions, unsupported characterizations, and legal conclusions are not well-pleaded allegations and will not defeat the motion." (internal citations and quotation marks omitted)); cf. Virgin Group Holdings, 2011 WL 4448943, at *1 ("Plaintiff alleges in its complaint that it was indeed ready, willing, and able to [perform]. In their Answer, Defendants respond that they lack sufficient information to either admit or deny Plaintiff's contention." (internal citation omitted)).

I.Contract Interpretation under New York Law

The parties agree and the Contract requires that New York law governs. "Under New York law, '[t]he fundamental, neutral precept of contract interpretation is that agreements are construed in accord with the parties' intent.' Typically, the best evidence of intent is the contract itself; if an agreement is 'complete, clear and unambiguous on its face[, it] must be enforced according to the plain meaning of its terms.'" Eternity Global Master Fund Ltd., 375 F.3d at 177 (quoting Greenfield v. Philles Records, Inc., 780 N.E.2d 166, 170 (N.Y. 2002)). "Contract language is ambiguous if it is capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business." Sayers v. Rochester Tel. Corp. Supplemental Mgmt. Pension Plan, 7 F.3d 1091, 1095 (2d Cir.1993) (internal quotation marks omitted).

II.CenturyLink's Textual Interpretation

CenturyLink provides a reasonable interpretation of the Contract. In short, the monthly incentive ("MI") and wind-down provisions anticipate the continued payment of the MI for as long as there are a sufficient number of legacy customers. The Contract requires CenturyLink and DISH to "each continue to provide services" to legacy customers, who are those subscribers "existing at the date of [the Contract's expiration.]" Contract§ 12.4(b). Should CenturyLink cease to actively market and promote the bundled services during the term (that is, before the expiration of the Contract), DISH may proactively terminate the agreement and thereby cutoff MI payments that would otherwise have continued beyond the term.

a.Incentive Payments in the Regular Course Section 9.1 reads: "Activation Incentives and Monthly Incentives are payable by [DISH] to [CenturyLink] as provided in Schedules 9.1 and 9.8.1 for sales to Qualified Subscribers . . . ." Section 1 defines "activation incentive" as a "one-time payment for the sale and subsequent activation by [CenturyLink] of a Qualified Subscriber . . . as further described in Schedule 9.1" and MI as "a monthly recurring payment for each month that a Qualified Subscriber acquired by [CenturyLink] remains a Qualified Subscriber as further described in Schedules 9.1 and 9.8.1." These provisions work together to provide for two forms of remuneration to CenturyLink for its obligation to market and promote the bundled packages. The MI, as distinct from the one-time activation incentive, is a recurring payment for each month that an acquired customer remains a Qualified Subscriber. CenturyLink is paid immediately upon the acquisition of a new customer (activation incentive) and each month thereafter for as long as the customer subscribes to the bundled services (MI). Schedule 9.1 sets the dollar amounts:

1.Activation Incentive: For each activation of a new Qualified Subscriber . . . by [CenturyLink], [DISH] will pay a one-time Activation Incentive of $200 . . . .

2.Monthly Incentive: For each month that a new Qualified Subscriber acquired by [CenturyLink] remains a Qualified Subscriber . . . , [DISH] will pay [CenturyLink] a Monthly Incentive of $1.75 per such Qualified Subscriber . . . .

Schedule 9.8.1, titled "Payment Standards", governs the manner in which the incentives are to be paid (such as when and how they are effected). Much of this text is irrelevant to the issue before the Court. While critical to DISH's textual argument, Schedule 9.8.1 under CenturyLink's view ...


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