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Lativafter Liquidating Trust v. Clear Channel Communications

July 1, 2008

LATIVAFTER LIQUIDATING TRUST, PLAINTIFF,
v.
CLEAR CHANNEL COMMUNICATIONS, INC., DEFENDANT.



The opinion of the court was delivered by: Judge Phillips

MEMORANDUM AND ORDER

Plaintiff Eon Streams, Inc.,*fn1 brought this action against defendant Clear Channel Communications, Inc., for breach of contract, promissory estoppel and negligent misrepresentation. Clear Channel brought a counterclaim against Eon alleging breach of contract and intentional interference with existing or prospective business relationships. The case was tried to a jury over a seven-day period and resulted in a jury verdict in favor of plaintiff on the breach of contract claim and $40 million in damages to plaintiff. The jury rejected defendant's counterclaim. Clear Channel now moves the court for judgment as a matter of law, pursuant to Rule 50(b), Federal Rules of Civil Procedure, or, in the alternative, for a new trial, pursuant to Rule 59(a), Federal Rules of Civil Procedure.

As grounds for the motion, Clear Channel states that: (1) the record fails to support the jury's finding that the parties entered into a new contract or a contract to amend the Services Agreement; and (2) the record fails to support the jury's finding of $40 million damages for the "depressed value" of Eon Streams.

Motion for Judgment as a Matter of Law

Clear Channel moves the court for judgment as a matter of law pursuant to the provisions of Rule 50, Federal Rules of Civil Procedure. In diversity cases, a state-law standard of review is applied when a Rule 50(b) motion for judgment as a matter of law is based on a challenge to the sufficiency of evidence necessary to support the jury's verdict. Morales v. American Honda Motor Co., 151 F.3d 500, 506 (6th Cir. 1998). In Tennessee, a motion for judgment notwithstanding the verdict is the state-law equivalent of a federal motion for judgment as a matter of law. Tenn.R.Civ.P. 50.02; Mairose v. Federal Exp. Corp., 86 S.W.3d 502, 510-11 (Tenn.App. 2001).

In considering a motion for judgment notwithstanding the verdict, a Tennessee court is required to "take the strongest legitimate view of the evidence in favor of the non-moving party, and allow all reasonable inferences in his favor." Id. Judgment notwithstanding the verdict is proper if, after assessing the evidence, the court determines that "reasonable minds could not differ as to the conclusion to be drawn from the evidence." Id.

Motion for New Trial

Clear Channel also moves for a new trial pursuant to Rule 59 of the Federal Rules of Civil Procedure. In diversity cases, federal law provides the standard of review used in deciding a motion for new trial under Rule 59. Conte v. Gener Housewares Corp., 215 F.3d 628, 637 (6th Cir. 2000). The authority to grant a new trial under rule 59 rests within the discretion of the trial court. A new trial is warranted when a jury has reached a "seriously erroneous result," which may occur when (1) the verdict is against the weight of the evidence; (2) the damages awarded are excessive; or (3) the trial was unfair to the moving party in some fashion (i.e., the proceedings were influenced by prejudice or bias). See Holmes v. City of Massillon, 78 F.3d 1041, 1045-46 (6th Cir. 1996). The burden of demonstrating the necessity of a new trial is on the moving party, Clarksville-Montgomery Co. Sch. Sys. v. U.S. Gypsum Co., 925 F.2d 993, 1002 (6th Cir. 1991), and the ultimate decision whether to grant such relief is a matter vested within the sound discretion of the district court. See Anchor v. O'Toole, 94 F.3d 1014, 1021 (6th Cir. 1996); Davis v. Jellico Community Hosp., Inc., 912 F.2d 129, 133 (6th Cir. 1990) (limiting a court's responsibility to preventing an injustice); Browne v. Signal Mountain Nursery, 286 F.Supp.2d 904, 908 (E.D.Tenn. 2003).

When ruling on a new trial motion claiming the verdict was against the weight of the evidence, the district court should "compare the opposing proofs and weigh the evidence." Conte v. Gen. Housewares Corp., 215 F.3d 628, 637 (6th Cir. 2000); Toth v. Yoder Co., 749 F.2d 1190, 1197 (6th Cir. 1984); see also J.C. Wyckoff & Assoc. v. Standard Fire Ins. Co., 936 F.2d 1474, 1487 (6th Cir. 1991). The court should deny the motion and leave the jury's verdict undisturbed so long as it "could reasonably have been reached." See Conte, 215 F.3d at 637-38. Thus, a motion for a new trial should be denied "if the verdict is one that reasonably could be reached, regardless of whether the trial judge might have reached a different conclusion were he the trier of fact." Mosley v. Kelly, 65 F.Supp.2d 725, 739 (E.D. Tenn. 1999), quoting Powers v. Bayliner Marine Corp., 83 F.3d 789, 796 (6th Cir. 1996). A jury's verdict "should not be considered unreasonable simply because different inferences and conclusions could have been drawn or because other results are more reasonable." J.C. Wyckoff, 936 F.2d at 1487. Rather, the court must compare the offered evidence and set aside the jury's verdict only if it is against the clear weight of the evidence as a whole. Webster v. Edward D. Jones & Co., 197 F.3d 815, 818 (6th Cir. 1999).

The Jury's Verdict is Supported by Material Evidence

To prevail on a claim for breach of contract, Eon must show (1) the existence of an enforceable contract, (2) a breach of the contract due to nonperformance, and (3) damages caused by the breach. See Life Care Centers of America, Inc. v. Charles Town Assocs. Ltd. Partnership, LPIMC, Inc., 79 F.3d 496, 514 (6th Cir. 1996).

As to the existence of an enforceable contract, Steve Newman, President and CEO of Eon, testified that he had conversations with Brian Parsons, Vice President of Technology for Clear Channel, about entering into an agreement to provide streaming to Clear Channel. He received an email from Parsons stating that he was the main contact person for Clear Channel and had authority to execute any agreements between the two companies.

Newman testified that in October 2004, he and Parsons discussed the development of ad insertion technology for Clear Channel. Eon prepared the Letter of Agreement (LOA) which set out that Clear Channel agreed to move all its streaming radio stations to Eon by December 31st. Eon was to develop and deliver a network ad insertion program by January 1, 2005, and Eon was to receive a 15 per cent commission on any network advertising sales. The term of the LOA was three years. On October 19, 2004, Parsons sent an email to Eon setting out the deal points. When asked why he sent the email, Parsons responded "because that was the understanding that we reached with Eon." The parties culminated their discussions in a LOA sent to Newman by Parsons via email on October 22, 2004.

Thereafter, Newman met with Jeff Littlejohn, Clear Channel Senior Vice President, who told Newman that they had a deal. Littlejohn testified, via deposition, that Parsons had authority to enter into agreements for streaming, and the agreements did not have to be in writing. Newman further testified that based on the agreement reached with Clear Channel, Eon began developing the ad insertion product based on Parson's and Littlejohn's assurances that the parties had a deal. New employees were hired to work on the project. Eon began developing custom media players, web-based access to real time streaming audience statistics, and data collection. Parsons testified he had weekly or tri-weekly meetings with Eon during development. Eon hired Don Williams to start making calls for advertising sales. Newman, Williams and Kim Johnson from Clear Channel met with prospective advertising customers such as Mars Candy, Toyota, Lexus, Verizon, American Express, Sprint, Kraft, and Pepsi.

Newman testified that everyone at Clear Channel was moving ahead with the project even though the LOA had not yet been signed by Clear Channel. Parsons repeatedly reassured Newman that Clear Channel was going to sign the LOA. On November 2, 2004, Newman inquired, via email, of Parsons, whether the LOA had been signed by Clear Channel. In January 2005, Newman met with Evan Harrison, the newly hired executive vice president for Clear Channel. Newman explained what Eon had ...


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