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SpeedConnect LLC v. Idaho Falls Wireless P'ship

United States District Court, D. Idaho

July 1, 2013

SPEEDCONNECT LLC, a Michigan limited liability company, Plaintiff,
v.
IDAHO FALLS WIRELESS PARTNERSHIP, a District of Columbia general partnership, Defendant

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For SpeedConnect, LLC, a Michigan limited liability company, Plaintiff: Alex Gerard Cavanaugh, PRO HAC VICE, Michael J Sheehan, PRO HAC VICE, Howard & Howard Attorneys PLLC, Royal Oak, MI; Gary Lee Cooper, COOPER and LARSEN, Pocatello, ID.

For Idaho Falls Wireless Partnership, a District of Columbia limited partnership, Defendant: Howard D Burnett, LEAD ATTORNEY, HAWLEY TROXELL ENNIS & HAWLEY, Pocatello, ID; Robert F Condon, PRO HAC VICE, Mitchell & Dunn, Alexandria, VA.

OPINION

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B. Lynn Winmill, Chief United States District Judge.

MEMORANDUM DECISION AND ORDER

INTRODUCTION

The Court has before it Defendant's Motion to Dismiss (Dkt. 20). Plaintiff, SpeedConnect LLC, a Michigan limited liability company, brought this action against Idaho Falls Wireless Partnership (" IFWP" ), a District of Columbia general partnership, seeking declaratory judgment that plaintiff has not violated any right held by defendant or committed any tortious interference with defendant's contractual rights. Plaintiff also requests declaratory judgment that the contractual restrictions on assignment in IFWP's lease agreement are unenforceable.

Defendant argues that the Court lacks personal jurisdiction and venue, and moves to dismiss the case on additional grounds. Defendant also asks the Court to grant Rule 11 sanctions against SpeedConnect. As explained below, the Court finds personal jurisdiction and venue over the Defendant. Additionally, the Court finds no alternative grounds for dismissal warranted in this case. Finally, because IFWP's request for sanctions was not made separately from its other motions, the Court will not impose Rule 11 sanctions against Plaintiff.

BACKGROUND

IFWP is a District of Columbia general partnership with its principal place of business in the Washington, DC area. IFWP holds a Broadband Radio Service (" BRS" ) license from the Federal Communications Commission (" FCC" ) authorizing it to operate BRS channels in and around Idaho Falls, Idaho. IFWP does not operate any radio transmitters or wireless internet systems. Instead, IFWP leases the right to operate radio frequencies under its BRS license to other parties.

In 1996, IFWP entered into a sublease with Teton Wireless Television, Inc. to operate its BRS channels in Idaho. In 2006, IFWP's lease to Teton Wireless Television, Inc. was assigned to DigitalBridge Communications Corp., a Delaware Corporation,

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and the prior lease was amended. DigitalBridge was granted de facto control of the operation of the BRS channels and IFWP retained the license and de jure control of the license.

DigitalBridge also leased other parts of the available spectrum from other license-holders for purposes of providing services to the Idaho Falls market. Under the lease with IFWP, DigitalBridge was required to " tie" the IFWP spectrum with all other spectrum leased by DigitalBridge. The lease provided that " Sublessee may not sell, assign, or otherwise cause or assist in the transfer to any third party of any IFGS, MDS, or LPTV lease or license interests except as a whole including this Agreement to a new wireless cable operator . . . ." Exhibit A, section 10(a) , Dkt. 12. Under this provision, DigitalBridge could not transfer any of its spectrum unless it transferred IFWP's spectrum as part of the package and obtained IFWP's consent.

In 2011, the lease was set to expire, and DigitalBridge sought to extend the term of the lease. The lease was amended and extended for an additional 15 years. The 2011 amendment also included language prohibiting DigitalBridge from assigning any of its spectrum to a third party unless DigitalBridge assigned all of its spectrum to the same third party. See Exihibit B, section 8(c) , Dkt. 12-1.

On June 29, 2012, DigitalBridge sold a portion--but not all--of its broadband radio service to SpeedConnect LLC, a Michigan limited liability company. DigitalBridge did not include the IFWP lease as part of the bundle of spectrum leases and licenses sold to SpeedConnect. Prior to the sale, on June 25, SpeedConnect contacted IFWP in an attempt to negotiate a new lease and price for the IFWP spectrum. When negotiations failed, SpeedConnect proceeded to acquire DigitalBridge's other spectrum without the IFWP lease.

On November 30, 2012, IFWP's attorney sent a letter to SpeedConnect seeking information regarding the assets SpeedConnect obtained from DigitalBridge. In the letter, IFWP stated that if SpeedConnect took assignment of any of DigitalBridge's BRS licenses without also taking assignment of the IFWP lease, SpeedConnect intentionally violated IFWP's lease with DigitalBridge. IFWP asserted that if there was a violation of the lease, IFWP was " ready to pursue all available lawful remedies to rectify this wrongdoing." Exhibit C at 3, Dkt. 12-2.

SpeedConnect disputes that it has violated any rights held by IFWP. It asserts that if the sale of DigitalBridge's assets to SpeedConnect violated the terms of IFWP's lease, IFWP's remedy lies solely with DigitalBridge. SpeedConnect claims it had legitimate reasons not to acquire the IFWP lease from DigitalBridge and that the purchase of other spectrum leases from DigitalBridge does not constitute tortious conduct. SpeedConnect asks the Court to issue a declaratory judgment that SpeedConnect's purchase of some of DigitalBridge's spectrum licenses and leases without the purchase of the IFWP's spectrum does not violate any of IFWP's rights. Additionally, SpeedConnect requests that the Court declare that the contractual restriction on assignment of certain spectrum licenses and leases of DigitalBridge is not legally enforceable.

IFWP moves the Court to dismiss the case for (1) lack of personal jurisdiction and (2) improper venue. If the court finds jurisdiction and venue, IFWP asks the Court to dismiss the case because (3) the doctrine of forum non conveniens warrants dismissal, (4) there is no controversy sufficient to invoke federal court jurisdiction, and (5) the Court should abstain from issuing a ruling under the Declaratory Judgment Act. IFWP also asks that Rule 11

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sanctions be imposed against SpeedConnect for failing to name the correct party in the original complaint.

ANALYSIS

1. Personal Jurisdiction

On the defendant's motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2), SpeedConnect bears the burden of showing that the Court has jurisdiction over the defendant. Schwarzenegger v. Fred Martin Motor Co. , 374 F.3d 797, 800 (9th Cir. 2004). Because there has not been an evidentiary hearing on the matter, SpeedConnect satisfies its burden by making a prima facie showing that the Court has jurisdiction over the defendant. Id. Although SpeedConnect cannot " simply rest on the bare allegations" in its complaint, the Court accepts as true the uncontroverted allegations in SpeedConnect's complaint. Id. (internal quotation mark omitted). Furthermore, conflicting statements in the parties' affidavits will be resolved in the plaintiff's favor. Id.

Because there is no federal statute which controls the Court's personal jurisdiction in this matter, the Court applies the law of Idaho. See Fed. R. Civ. Pro. 4(k)(1)(A); Schwarzenegger , 374 F.3d at 800. Idaho's long arm statute is coextensive with the limits of due process. Lake v. Lake , 817 F.2d 1416, 1420 (9th Cir. 1987). Thus, the only question is whether the constitutional standard is met in this case. Schwarzenegger , 374 F.3d at 800.

The Due Process Clause of the Fourteenth Amendment allows state courts, and therefore this Court, to exercise personal jurisdiction over an out-of-state defendant if the defendant has " certain minimum contacts with [the state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (internal quotation marks omitted). " Endeavoring to give specific content to [ International Shoe 's] 'fair play and substantial justice'" standard, the Supreme Court has recognized two categories of cases in which personal jurisdiction exists over a foreign defendant. Goodyear Dunlop Tires Operations, S.A., v. Brown , 131 S.Ct. 2846, 2853, 180 L.Ed.2d 796 (2011). First, a court has specific jurisdiction over a defendant when the defendant's actions within the forum state give rise to the cause of action. Id. Second, where a defendant's contacts with the forum are " continuous and systematic," courts may exercise general jurisdiction over the defendant " on causes of action arising from dealings entirely distinct from [the defendant's in-state] activities." Id. (internal quotation mark omitted).

A. General Jurisdiction

SpeedConnect argues that IFWP is subject either to this Court's general or specific jurisdiction. To show general jurisdiction, SpeedConnect must show that IFWP's activities within Idaho are " substantial" or " continuous and systematic." Id. If SpeedConnect meets its burden, the burden is IFWP's to " 'present a compelling case' that the exercise of jurisdiction would, in fact, be unreasonable." Amoco Egypt Oil Co. v. Leonis Nav. Co., Inc. , 1 F.3d 848, 851-52 (9th Cir. 1993); accord Burger King Corp. v. Rudzewicz , 471 U.S. 462, 477, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985).

The standard for establishing general jurisdiction is " fairly high," and requires that the defendant's contacts be of the sort that approximate physical presence. See Bancroft & Masters, Inc. v. Augusta Nat. Inc. , 223 F.3d 1082, 1086 (9th Cir.2000) (citing Brand v. Menlove Dodge , 796 F.2d 1070, 1073 (9th Cir.1986). Factors ...


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