Case 1:17-cv-01898-AJN Document 16 Filed 05/05/17 Page 1 of 28

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

OPTIMA MEDIA GROUP LTD;

OPTIMA SPORTS MANAGEMENT
INTERNATIONAL (UK) LTD, 17-cv-01898 (AJN)
Plaintiffs, ECF Case
against Oral Argument Requested
BLOOMBERG, L.P.,

Defendant.

DEFENDANTS MEMORANDUM OF LAW

IN SUPPORT OF MOTION TO DISMISS

PAUL, WEISS, RIFKIND, WHARTON &

GARRISON LLP
1285 Avenue of the Americas
New York, New York 10019-6064
Tel.: (212) 373-3000
Fax: (212) 757-3990

Attorneys for Defendant Bloomberg, L.P.

 Case 1:17-cv-01898-AJN Document 16 Filed 05/05/17 Page 2 of 28

TABLE OF CONTENTS

Page

PRELIMINARY STATEMENT .....................................................................................................1

BACKGROUND .............................................................................................................................3

A. The Parties ...............................................................................................................3

B. The Agreement and Its Termination ........................................................................4

C. Optimas Complaint .................................................................................................6

ARGUMENT ...................................................................................................................................7

A. Applicable Law ........................................................................................................7

B. Bloomberg Properly Terminated the Agreement Based on

Optimas Insolvency. ...............................................................................................8

C. Bloomberg Properly Terminated the Agreement Because Optimas

Representations, Warranties, and Covenants Were No Longer
True. .......................................................................................................................12
1. Optimas Representation That It Would Fulfill Its
Obligation to Administer and Manage the Channel Window
Was No Longer True in May 2015. ...........................................................12
2. Optimas Representation That It Would Obtain All
Necessary Regulatory Approvals Was No Longer True in
May 2015. ..................................................................................................13
3. The Termination Provision Should Be Enforced. ......................................14

D. Optimas Failure to Perform Under the Agreement Bars the Breach

of Contract Claim...................................................................................................16

E. Count Two Should Be Dismissed as Impermissibly Duplicative of

Count One. .............................................................................................................18

F. Optimas Request for Consequential Damages Is Barred by the

Agreement. .............................................................................................................20

CONCLUSION ..............................................................................................................................23

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TABLE OF AUTHORITIES

Page(s)
CASES

Alaska Elec. Pension Fund v. Bank of Am. Corp.,

175 F. Supp. 3d 44 (S.D.N.Y. 2016)........................................................................................19

Almazan v. Almazan,
No. 14-CV-311, 2015 WL 500176 (S.D.N.Y. Feb. 4, 2015).....................................................8

Ashcroft v. Iqbal,
556 U.S. 662 (2009) ...............................................................................................................7, 8

Bell Atl. Corp. v. Twombly,

550 U.S. 544 (2007) ...............................................................................................................7, 8

In re CCT Commcns, Inc.,

464 B.R. 97 (Bankr. S.D.N.Y. 2011) .......................................................................................21

Church & Dwight Co., Inc. v. SPD Swiss Precision Diagnostics, GMBH,
No. 14-CV-585, 2015 WL 4002468 (S.D.N.Y. Jul. 1, 2015), affd, 843 F.3d
48 (2d Cir. 2016) ......................................................................................................................20

Coastal Power Prod. Co. v. N.Y. State Pub. Serv. Commn,

153 A.D.2d 235 (N.Y. App. Div. 1990) ..................................................................................15

In re The Containership Co.,

No. 11-12622, 2016 WL 2341363 (Bankr. S.D.N.Y. Apr. 29, 2016)......................................16

Ellington Credit Fund, Ltd. v. Select Portfolio Servicing, Inc.,

837 F. Supp. 2d 162 (S.D.N.Y. 2011)......................................................................................20

Ely v. Perthuis,
No. 12-CV-1078, 2013 WL 411348 (S.D.N.Y. Jan. 29, 2013) ...............................................20

Eternity Glob. Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y.,
375 F.3d 168 (2d Cir. 2004).....................................................................................................16

In re Gordon Car & Truck Rental, Inc.,

59 B.R. 956 (Bankr. N.D.N.Y. 1985) ........................................................................................9

Harte v. Ocwen Fin. Corp.,

No. 13-CV-5410, 2016 WL 3647687 (E.D.N.Y. July 1, 2016) ...............................................18

ii
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In re Indesco Intl, Inc.,

451 B.R. 274 (Bankr. S.D.N.Y. 2011) .....................................................................................14

Jasper & Black, LLC v. Carolina Pad Co., LLC,

No. 10CV3562, 2012 WL 413869 (S.D.N.Y. Feb. 9, 2012) ...............................................17

Meighan v. Finn,
146 F.2d 594 (2d Cir. 1944).......................................................................................................9

Metro. Life Ins. Co. v. Noble Lowndes Intl, Inc.,

192 A.D.2d 83 (1993), affd, 84 N.Y.2d 430 (1994) ...............................................................22

Net2Globe Intl, Inc. v. Time Warner Telecom of N.Y.,

273 F. Supp. 2d 436 (S.D.N.Y. 2003)......................................................................................22

Phillips Puerto Rico Core, Inc. v. Tradax Petroleum Ltd.,

782 F.2d 314 (2d Cir. 1985).....................................................................................................15

Presbyterian Healthcare Servs. v. Goldman Sachs and Co.,

No. 15-CV-6579, 2017 WL 1048088 (S.D.N.Y. Mar. 17, 2017) ....................................8, 9, 19

PrinceRidge Grp. LLC v. Oppidan, Inc.,

No. 11-CV-1460, 2014 WL 11510256, at *8-9 (S.D.N.Y. Feb. 4, 2014), affd,
589 F. Appx 38 (2d Cir. 2015) ...............................................................................................20

In re Republic Airways Holdings Inc.,

No. 16-10429, 2016 WL 2616717 (Bankr. S.D.N.Y. May 4, 2016) .......................................15

Rochester Gas & Elec. Corp. v. Delta Star, Inc.,

No. 06-CV-6155, 2009 WL 368508 (W.D.N.Y. Feb. 13, 2009) .............................................15

Royal Park Investments SA/NV v. Deutsche Bank National Trust Co.,

No. 14-CV-4394, 2016 WL 439020 (S.D.N.Y. Feb. 3, 2016)...................................................8

Sec. Invr Prot. Corp. v. Glob. Arena Capital Corp.,

164 F. Supp. 3d 531 (S.D.N.Y. 2016)..................................................................................9, 10

Standard Chartered Bank v. AWB (USA) Ltd.,

No. 05-CV-2013, 2010 WL 532515 (S.D.N.Y. Feb. 16, 2010)...............................................11

Tellabs, Inc. v. Makor Issues & Rights, Ltd.,

551 U.S. 308 (2007) ...................................................................................................................8

Vitol S.A., Inc. v. Koch Petroleum Grp., LP,

No. 01-CV-2184, 2005 WL 2105592 (S.D.N.Y. Aug. 31, 2005) ............................................16

In re Vivaro Corp.,
No. 12-13810, 2014 WL 486288 (Bankr. S.D.N.Y. Feb. 6, 2014) ..........................................22

iii
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W.S.A., Inc. v. ACA Corp.,

Nos. 94-CV-1868, 94-CV-1493, 1996 WL 551599 (S.D.N.Y. Sept. 27, 1996) ......................20

In re Washburn & Daudelin,

268 F.2d 279 (2d Cir. 1959).....................................................................................................10

Wells Fargo Bank, N.A. v. Palm Beach Mall, LLC,

177 So. 3d 37 (Fla. Dist. Ct. App. 2015) ...................................................................................9

World-Link, Inc. v. Citizens Telecom. Co.,

No. 99-CV-3054, 2000 WL 1877065 (S.D.N.Y. Dec. 26, 2000) ............................................22

OTHER AUTHORITIES

Fed R. Civ. P. 12(b)(6).................................................................................................................1, 7

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Defendant Bloomberg L.P. (Bloomberg) respectfully submits this memorandum

of law in support of its motion pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure

to dismiss the complaint filed on March 15, 2017 (the Complaint) by Plaintiffs Optima Media

Group Limited (Optima) and Optima Sports Management International (UK) Limited

(Optima Sports). For the reasons described below, the Complaint should be dismissed in its

entirety.

PRELIMINARY STATEMENT

In January 2012, Bloomberg entered into an agreement (the Agreement) with

Optima, pursuant to which Optima was to create television programming for markets in Africa,

to be distributed over Bloomberg television channels. To protect the integrity of Bloombergs

market-leading brand, the Agreement provided Bloomberg with remedies in the event Optima

failed to remain a viable business partner, including the right to terminate the Agreement

immediately if Optima became insolvent or otherwise breached its representations, warranties,

and covenants. Bloomberg exercised that termination right in May 2015, after Optima admitted

its inability to pay employees and to honor the express representations, warranties, and covenants

contained in the Agreement.

Now, two years later, Optima and its guarantor, Optima Sports, bring this action

claiming that Bloomberg improperly terminated the Agreement. Conspicuously absent from the

Complaint is any allegation that Optima was able to pay its employees or otherwise adhere to its

representations, warranties, and covenants, including that it would fulfill its contractual

obligations and obtain and maintain all approvals necessary to perform its duties under the

Agreement. To the contrary, the Complaint concedes Optimas deficiencies in that regard.

Optima nonetheless argues that Bloomberg should have permitted Optima to work through the
 Case 1:17-cv-01898-AJN Document 16 Filed 05/05/17 Page 7 of 28

various financial and regulatory difficulties that caused it to violate core provisions of the

Agreement. But Optima points to no provision of the Agreement (because there is none) that

required Bloomberg to excuse Optimas breach while Optima endeavored to return to solvency

and comply with its representations, warranties, and covenants. Bloombergs express contractual

right of termination provides a complete response to Optimas claims and requires dismissal of

the Complaint.

The Complaint also suffers from other fatal deficiencies. To bring a breach of

contract claim, a plaintiff must plead facts showing that it performed its obligations under the

contract. The Complaint contains no such well-pleaded facts, only conclusory assertions of

Optimas performance that are contradicted by allegations contained elsewhere in the Complaint.

Optimas admitted failure to perform its contractual obligations forecloses its breach of contract

claim. Nor can Optima sue for breach of the implied covenant of good faith and fair dealing

where that claim is based on the same facts offered in support of its breach of contract claim.

New York law prohibits such claims as duplicative, and that clear precedent bars the

Complaints alternative ground for relief. Finally, the consequential damages Optima seeks are

barred by the express limitations of liability in the Agreement. Optima seeks lost profits and

other benefits that it hoped to obtain from the Agreement, even though the parties expressly

agreed to forego such damages.

In an unsupported effort to raise a suggestion of impropriety where none exists,

Optima contends that Bloombergs decision to terminate the Agreement was pretextual, and not

premised on Optimas insolvency or its failure to honor its representations, warranties, and

covenants. Optima claims that the real reason for termination was Bloombergs fear of

negative publicity arising from news reports about Optimas failure to pay its employees. That

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argument is completely irrelevant and in no way undermines the legitimacy and appropriateness

of Bloombergs decision to terminate. But even assuming the existence of negative news

accounts relating to Bloombergs contract with Optima, they would provide only further support

for Bloombergs exercise of its contractual right to terminate. The Agreement provided

Bloomberg with a clear remedy in the event Optima was no longer a viable business partner.

Bloomberg was not required, under the Agreement or as a matter of law, to endure negative

publicity arising from a contract counterpartys inability to pay its employees or otherwise

adhere to its contractual representations. The Complaint itself establishes that Bloombergs

termination of the Agreement was proper, and the Complaint should therefore be dismissed.

BACKGROUND

A. The Parties

Plaintiff Optima purports to be a Nigerian media company with its principal place

of business in Lagos, Nigeria. Compl. 13. Optima was the licensee under the Agreement from

January 2012 to 2015. Compl. 26, 128; Anderson Decl. Ex. A (Agrmt.) at 1.

Plaintiff Optima Sports is an English corporation with its principal place of

business in London, England. Compl. 14. Optima Sports was a party to the Agreement as

guarantor to Optima. Agrmt. at 1.

Defendant Bloomberg is a limited partnership registered in Delaware with its

principal place of business in New York, New York. Compl. 18. Bloomberg, a business and

financial information company that delivers data, news, and analytics, was the licensor under the

Agreement.

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B. The Agreement and Its Termination

In January 2012, Bloomberg, Optima, and Optima Sports agreed to create

original live programming with the editorial, technical and substantive style of [Bloomberg

Television] and to [brand it] . . . Bloomberg West Africa for distribution in certain African

markets. Agrmt. at 1. Optima was selected for this endeavor because of its experience

acquiring and distributing television channels and programmes by satellite to customers on pay

and free-to-air platforms in Nigeria. Id. Bloomberg brought to the table its market-leading

experience in providing television programming and content distribution . . . emphasizing

business and financial news. Id. Under the Agreement, Optima was obligated, among other

things, to produce three to four hours per day of region-specific content (the so-called Channel

Window), to handle all production, administration, and management necessary to do so, and to

pay a license fee to Bloomberg. Compl. 2839; Agrmt. at 14, 8-10, 15, 1(a)(i)(ii), 4,

10(a). The Agreement provided Optima with the right to market and sell a substantial portion of

the commercial slots available within the Channel Window. Agrmt. at 11, 5(c)(i). 1

As is customary in such licensing agreements, Bloomberg took care to ensure that

Optimas status as a licensee would not damage or diminish the Bloomberg brand. For example,

the Agreement required that content bearing the Bloomberg name be consistent with brand

standards and that programming meet certain technical, content, and stylistic criteria. Compl.

34, 38; Agrmt. at 48, 1(a)(iii)(iv), 23. Optima also agreed to administer the Channel

Window in compliance with local rules and regulations and to secure any necessary approvals or

licenses. Compl. 38(D); Agrmt. at 3, 1718, 1(a)(ii)(b)(xi), 12(b). To the extent Optima

1
Bloomberg reserves the right to file a counterclaim against Optima for disclosing the terms of the
Agreement and other information in its publicly-filed, non-redacted Complaint in violation of the Agreements
confidentiality provision. Agrmt. at 1617, 11.

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needed to upgrade its equipment to comply with Bloombergs technical standards, Optima

agreed to do so and bear the corresponding costs. Compl. 38(B)(C), Agrmt. at 6,

1(a)(iv)(d).

The parties also agreed that certain events would permit the immediate

termination of the agreement, without liability or the need to provide a cure period. For

example, both Optima and Bloomberg had the right to terminate the Agreement immediately if

the other . . . becomes insolvent. Compl. 44; Agrmt. at 13, 8(b)(i)(b). The parties also

agreed that Bloomberg could terminate the Agreement at any time without notice and without

incurring liability if . . . the representations, warranties, or covenants made by [Optima] . . . are

no longer true. Agrmt. at 13, 8(b)(ii). Among other things, Optimas representations,

warranties, and covenants included its pledge to: (i) fulfill its obligations to Bloomberg under

the Agreement; (ii) obtain . . . and . . . maintain, at its own expense, any and all . . . rights,

licenses, approvals, clearances, releases, local, and international authorizations necessary to

perform its obligations under the Agreement, and (iii) comply with all applicable laws, rules,

and regulations with respect to its rights and obligations under th[e] Agreement. Agrmt. at 17

18, 12(b).

In the years after the Agreement was executed, Optima struggled to perform. It

failed to produce the programming mandated by the Agreement on the established schedule.

While the Agreement required Optima to provide content by June 2012, Agrmt. at 12, 1(a)(i),

Optima was unable to do so until November 2013. Compl. 77.

Optimas deficiencies became untenable in the spring of 2015. In late April,

Optima acknowledged delays in remitting salary payments to our staff and some suppliers,

cash flow issues over the last 6 month[s]. . . affect[ing] timely payments, and a backlog for

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staff and suppliers that was still outstanding. Anderson Decl. Ex. B (Email from Richard

Harrison, April 29, 2015); Compl. 118 (referencing same). Although Optima suggested that its

financial difficulties might be resolved with new financial backing from third parties, it

acknowledged that this backing was contingent upon the signing of an amendment to the

Agreement. Id. Optima does not allege that any such amendment was ever signed. Optima

concedes in its Complaint that it could not make timely payments to [its] employees and

contractors, and contends that a new regulation severely limited, and in some cases completely

restricted, its access to foreign currency. Compl. 68, 97.

In light of these facts, on May 7, 2015, Bloomberg terminated the Agreement,

invoking two contract provisions. First, Bloomberg relied on Optimas insolvency, evidenced by

its inability to pay debts as they came due. Second, Bloomberg pointed to representations,

warranties, and covenants Optima had made in the Agreement that were no longer truenamely

those related to Optimas obtaining necessary authorizations, complying with local regulations,

and fulfilling its obligations under the Agreement. Compl. 128; Anderson Decl. Ex. C (notice

of termination); Agrmt. at 1314, 1718, 8(b), 12(b).

C. Optimas Complaint

Nearly two years later, Optima filed the Complaint on March 15, 2017. Despite

having never adequately performed under the Agreement, Optima alleges that Bloomberg

improperly breached the Agreement by exercising its right of termination. Compl. 16067.

Relying on the same set of allegations, Optima also claims that Bloomberg breached the implied

covenant of good faith and fair dealing by terminating the Agreement. Compl. 16872. For

damages, Optima seeks to recover its costs and its lost profits, including potential advertising

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revenue and sponsorship deals that it believes would have materialized absent termination of the

Agreement. Compl. 149, 165.

ARGUMENT

Bloombergs termination of the Agreement was entirely appropriate based on the

facts alleged in the Complaint. It is uncontested that Bloomberg had the right to terminate if

Optima became insolvent or breached its representations, warranties, and covenants. Optima

acknowledges that it could not pay its employees in a timely manner. Optima also has admitted

that it failed to obtain regulatory approvals necessary to carry out its obligations under the

Agreement. Either concession is a fully sufficient justification for terminating the Agreement

without notice and without any liability. Even in the absence of these binding contract

provisions, however, the Complaint should be dismissed because the two claims suffer

independent defects: the first claim fails to adequately plead that Optima performed its

obligations under the Agreement, and the second claim is impermissibly duplicative of the first.

As a result of these basic defects, the Complaint should be dismissed.

A. Applicable Law

When considering a motion to dismiss under Rule 12(b)(6), this Court must

accept as true the well-pleaded factual allegations in a complaint, but it is under no obligation to

accept as true legal conclusions, bald assertions, conclusions unsupported by the facts, or

unwarranted inferences. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 55556 (2007) (citing

cases). A mere conclusory statement[] that a plaintiff has satisfied an element of a cause of

action do[es] not suffice, Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted), and to

survive a motion to dismiss, a plaintiff must plead enough facts to state a claim for relief that is

plausible on its face and not merely conceivable, Twombly, 550 U.S. at 570. This standard

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asks for more than a sheer possibility that a defendant has acted unlawfully. Iqbal, 556 U.S. at

678. Where a complaint pleads facts that are merely consistent with a defendants liability, it

stops short of the line between possibility and plausibility of entitlement to relief. Id. (citing

Twombly, 550 U.S. at 557).

In ruling on a motion to dismiss, the court may consider documents incorporated

by reference in the complaint. Presbyterian Healthcare Servs. v. Goldman Sachs and Co., No.

15-CV-6579, 2017 WL 1048088, at *5 (S.D.N.Y. Mar. 17, 2017) (citation omitted); see also

Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). Where a document is

not incorporated by reference, the court may nevertheless consider it where the complaint relies

heavily upon its terms and effect, thereby rendering the document integral to the complaint.

Almazan v. Almazan, No. 14-CV-311, 2015 WL 500176, at *4 (S.D.N.Y. Feb. 4, 2015) (citations

omitted). If a document so considered contradict[s] allegations in the complaint, the document,

not the allegations, control, and the court need not accept the allegations in the complaint as

true. Royal Park Investments SA/NV v. Deutsche Bank National Trust Co., No. 14-CV-4394,

2016 WL 439020, at *1 (S.D.N.Y. Feb. 3, 2016) (citation omitted).

B. Bloomberg Properly Terminated the Agreement Based on Optimas Insolvency.

Optima asserts a claim for breach of contract arising out of Bloombergs decision

to terminate the Agreement. But that decision was based on Optimas insolvency, and the

Agreement provided Bloomberg the right to terminate if Optima became insolvent.

Under the Agreement, Bloomberg was entitled to terminate th[e] Agreement

prior to the normal expiration of the Termwithout liability or obligationif Optima

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becomes insolvent. Agrmt. at 1314, 8(b)(i)(b), 8(b)(iv). 2 For these purposes, to be

considered insolvent, a company need not be formally bankrupt or meet the balance-sheet

standard of insolvency; rather, a company is insolvent where it is in temporary financial

difficulty or where it experiences a lack of liquid funds. Sec. Invr Prot. Corp. v. Glob.

Arena Capital Corp., 164 F. Supp. 3d 531, 53738 (S.D.N.Y. 2016) (quoting In re Poseidon

Pool & Spa Recreational, Inc., 443 B.R. 271, 280 (E.D.N.Y. 2010)). That is the time-honored

meaning of insolvency, establishing a default common-law rule that an inability to meet

obligations as they mature in [the] ordinary course of business constitutes insolvency. Meighan

v. Finn, 146 F.2d 594, 595 (2d Cir. 1944); see also In re Gordon Car & Truck Rental, Inc., 59

B.R. 956, 961 (Bankr. N.D.N.Y. 1985) (applying the common-law insolvency test where a

contract was silent with respect to the definition of insolvency); Wells Fargo Bank, N.A. v. Palm

Beach Mall, LLC, 177 So. 3d 37, 48 (Fla. Dist. Ct. App. 2015) (applying New York law and

discussing cases). Where, as here, an entity is [un]ab[le] to pay [its] debts in the ordinary

course of business as the debts mature, it qualifies as insolvent under the common law. Sec.

Invr Prot. Corp., 164 F. Supp. 3d at 537 (quoting In re Poseidon Pool & Spa Recreational, Inc.,

443 B.R. at 280).

Optima has conceded in the Complaint and in contemporaneous communications

that, by the spring of 2015, it was unable to pay its debts as they came due. In the Complaint,

Optima acknowledges that it could not make timely payments to [its] employees and that it

was delay[ed] in . . . paying certain staff members, consultants, and other third-party contractors

who were guaranteed payments in foreign currency. Compl. 68, 100. That concession is

2
The Agreement is either incorporated by reference or integral to the Complaint, see Compl. 2 et seq.,
and the Court may therefore consider it on a motion to dismiss. Presbyterian Healthcare Servs., 2017 WL 1048088,
at *5 (considering underlying agreement integral to the complaint).

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consistent with the contemporaneous admissions Optima made to Bloomberg about its inability

to make timely payments. In an April 2015 email referenced in the Complaint, Optima

acknowledged delays in remitting salary payments to our staff and some suppliers, remittance

difficulties, cash flow issues . . . affect[ing] timely payments to a number of staff and

suppliers, and a backlog for staff and suppliers that was still outstanding as of the date of

the email. Anderson Decl. Ex. B (Harrison email). 3

Optimas acknowledged inability to pay its debts as they came due plainly

satisfies the applicable standard for measuring insolvency. See, e.g., Sec. Invr Prot. Corp., 164

F. Supp. 3d at 53738. Bloomberg was well within its rights under the Agreement and the

common law to rely on Optimas admission of insolvency when terminating the Agreement.

Compl. 128-29; Anderson Decl. Ex. C (notice of termination (citing insolvency clause,

Agrmt. at 13, 8(b)(i)(b), in terminating the Agreement)). 4

Insofar as Optima might argue that payments to employees do not constitute debts

for purposes of measuring insolvency, that argument is foreclosed. The Second Circuit in In re

Washburn & Daudelin considered payments due to employees and contractors as debts when

measuring insolvency. 268 F.2d 279, 280 (2d Cir. 1959). Optimas failure to pay its employees

requires the same conclusion here.

It is equally unpersuasive for Optima to shift responsibility for non-payment to

entities it created to assist in carrying out its obligations under the Agreement. According to the

Complaint, Optima itself was not late in making any payments to any employees because two

3
This email exchange is either incorporated by reference or integral to the Complaint, see, e.g., Compl.
118, and the Court may therefore consider it on a motion to dismiss.
4
The notice of termination is either incorporated by reference or integral to the Complaint, see, e.g.,
Compl. 128-29, and the Court may therefore consider it on a motion to dismiss.

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other entities, BTVA UK and BTVA Nigeria, . . . were the companies that were invoiced and

responsible for paying the . . . employees and contractors. Compl. 60, 66, 140. Neither

BTVA UK nor BTVA Nigeria was a party to the Agreement, however, and both were

incorporated after the Agreement had been executed. Compl. 1516. While those entities

were allegedly created to assist Optima in complying with its obligations under the Agreement,

Compl. 60, 66, those entities could not and did not assume Optimas obligations under the

Agreement. The obligation to pay employees remained Optimas, even if it allegedly delegated

that responsibility to entities it created. Optima cannot shield itself from its contractual

undertakings by allegedly shifting them to affiliated entities.

Were it otherwise, a party could evade its contractual obligations by simply

delegating responsibility to a separate legal entity and disclaiming further responsibility. That is

not the law. See, e.g., Standard Chartered Bank v. AWB (USA) Ltd., No. 05-CV-2013, 2010 WL

532515, at *13 (S.D.N.Y. Feb. 16, 2010) (As the Second Circuit stated the rule, It is true, of

course, as a general rule, that when rights are assigned, the assignors interest in the rights

assigned come to an end. When duties are delegated, however, the delegants obligations do not

come to an end . . . . The act of delegation . . . does not relieve the delegant of the ultimate

responsibility to see that the obligation is performed.) (quoting Contemporary Mission, Inc. v.

Famous Music Corp., 557 F.2d 918, 924 (2d Cir. 1977)). Optima retained the obligation to pay

employees and its failure to do sowhether directly or through corporate subsidiaries or

affiliatesis proof of its insolvency.

Likewise, any argument that Bloomberg acquiesced in or waived objection to

Optimas failure to pay employees would fail. Under the express terms of the Agreement, [n]o

failure of either Party to exercise or enforce any of its rights under th[e] Agreement shall act as a

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waiver of such rights. Agrmt. at 20, 14(d). Bloombergs earlier patience with Optima was

thus in no way a waiver of any of its rights under the Agreement. Bloomberg was entirely within

its rights to terminate the Agreement in May 2015, even though Optimas insolvency would also

have provided a valid basis for an earlier termination.

C. Bloomberg Properly Terminated the Agreement Because Optimas Representations,

Warranties, and Covenants Were No Longer True.

Optimas failure to honor to its representations, warranties, and covenants

provided Bloomberg with a separate and independent basis to terminate. Under the Agreement,

Bloomberg was authorized to terminate the Agreement at any time without notice and without

incurring liability if any of Optimas representations, warranties, and covenants were no

longer true. Agrmt. at 13, 8(b)(ii)(b). That condition came to pass no later than May 2015,

when Optimas representations about its ability to manage the Channel Window and obtain

necessary regulatory approvals were established to be no longer true.

1. Optimas Representation That It Would Fulfill Its Obligation to

Administer and Manage the Channel Window Was No Longer True
in May 2015.

Optima made a series of representations, warranties, and covenants in the

Agreement. Among other things, it represented that it ha[d] the power . . . to perform fully its

obligations under the Agreement, and that it would fulfill its obligations to Bloomberg in

accordance with the terms set forth in th[e] Agreement. Agrmt. at 1718, 12. The terms of

the Agreement, in turn, required Optima to be responsible for . . . all production and

administration of the Channel Window, for the management of all day-to-day operations

thereof, for the payment of all set-up and maintenance costs related thereto, and for such

other administrative functions as are customary for the operation of a channel or programming

similar to the Channel Window. Agrmt. at 23, 1(a)(ii)(a), (b)(i)(ii), (b)(xii).

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In May 2015, Optimas representations about its ability to produce, administer,

and manage the Channel Window were no longer true. Administering and managing the

Channel Window imposed a basic responsibility on Optima to pay its staff. See, e.g., Agrmt. at

23, 1(a)(ii)(a), (b)(i)(ii), (b)(xii). Optimas failure to pay employee salaries over a period of

months breached its commitment to manage and pay the costs of operations and jeopardized the

success of the enterprise by creating the risk that personnel responsible for developing and

maintaining the Channel Window would stop working. The fundamental nature of maintaining a

payroll is not just a matter of common sense; it was also a matter of contract. Under the

Agreement, Optima was required to manage the operations and pay all set-up and

maintenance costs of the Channel Window. Agrmt. at 2, 1(a)(ii)(a)(b)(ii). As described

above, however, Optima has acknowledged that, by no later than May 2015, it was unable to pay

the employees and contractors necessary to operate the Channel Window. Compl. 68, 100,

118; Anderson Decl. Ex. B (Harrison email). At that point (at the latest), Optimas

representations about its ability to administer and manage the Channel Window were no longer

true.

2. Optimas Representation That It Would Obtain All Necessary

Regulatory Approvals Was No Longer True in May 2015.

Optima also represented that it would obtain and . . . maintain, at its own

expense, any and all rights, licenses, approvals, clearances, releases, local, and international

authorizations necessary to perform its obligations under the Agreement. Agrmt. at 17, 12(b).

See also id. at 3, 1(a)(ii)(b)(xi) (requiring that Optima obtain and maintain all necessary

licenses, approvals, and consents from government authorities). With these representations,

Optima assured Bloomberg that it was able to navigate the regulatory environment in the

relevant African markets. Optimas representations on these topics were important because, as

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set forth in the Agreement, it was Optimas experience in these markets that made it an attractive

contract partner. Agrmt. at 1. Bloomberg relied on Optimas expertise to comply with local

regulations and ensure that operations ran smoothly.

Optimas representation about its ability to obtain the necessary regulatory

approvals was no longer true by at least May 2015. In the Complaint, Optima acknowledges its

inability to obtain regulatory approvals necessary to convert currency. It alleges that the

Nigerian Central Bank had to approve each proposed exchange for foreign currency payments

exceeding certain threshold amounts. Compl. 68. Optima concedes that it was unable to

comply with this approval process, which resulted (at best) in delayed or late payments to its

staff. Compl. 6869, 118. In other words, Optima has conceded that it was not able to obtain

the approvals necessary to exchange sufficient currency to pay its staff. This failure to obtain

approvals and to comply with the Nigerian regulatory process was a failure to honor the

representations Optima had made in the Agreement. Agrmt. at 1718, 12(b)(iv)(v).

3. The Termination Provision Should Be Enforced.

Where, as here, a contract contains an unambiguous termination provision based

on a breach of representations, warranties, or covenants (see Agrmt. at 13, 8(b)(ii)(b)), courts

give effect to that termination clause. In In re Indesco Intl, Inc., for example, the court

considered a contract permitting termination in the event of a breach of any covenant,

representation, or warranty contained in th[e] Agreement. 451 B.R. 274, 28384 (Bankr.

S.D.N.Y. 2011). Because the plain language . . . of the contract [was] unambiguous, that

court permitted the non-breaching party to terminate the . . . Agreement in accordance with the

provision. Id. at 284. The same reasoning applies to the termination provision at issue here.

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It is no answer for Optima to suggest that its difficulties complying with the

Agreement were attributable to a difficult regulatory environment. Compl. 69. The

Agreement assigned Optima the obligation of complying with a regulatory environment less

familiar to Bloomberg. Navigating any difficulties in that environment was within the

responsibilities undertaken by Optima, and any risk in that regard was borne by Optima.

Likewise, insofar as Optima suggests that the breach of its representations,

warranties, and covenants is excusable under the Agreements force majeure clause, Compl.

46, that argument suffers from two fatal defects.

First, the parties expressly allocated to Optima the duties to comply with

governmental regulations and secure government approvals, Agrmt. at 3, 1(a)(ii)(b)(xi), and the

currency regulations and approvals at issue here are not of the type courts would recognize as

falling under a force majeure clause. See Rochester Gas & Elec. Corp. v. Delta Star, Inc., No.

06-CV-6155, 2009 WL 368508, at *67 (W.D.N.Y. Feb. 13, 2009) (collecting treatises and cases

noting that [m]ere . . . unanticipated difficulty is not enough to excuse performance under a

force majeure clause) (citation omitted); Phillips Puerto Rico Core, Inc. v. Tradax Petroleum

Ltd., 782 F.2d 314, 31920 & n.4 (2d Cir. 1985) (holding force majeure clause inapplicable to

Coast Guards detention of cargo ship where contract negotiation demonstrated clear allocation

of risk and that applying force majeure clause would be to wholly overturn the allocation of

duties provided by contract); Coastal Power Prod. Co. v. N.Y. State Pub. Serv. Commn, 153

A.D.2d 235, 240 (N.Y. App. Div. 1990) (noting that [t]he fact that a contract becomes

increasingly difficult and expensive to perform because of a law enacted after its execution does

not excuse performance) (citation omitted); In re Republic Airways Holdings Inc., No. 16-

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10429, 2016 WL 2616717, at *7 (Bankr. S.D.N.Y. May 4, 2016) (noting that financial

considerations brought about by regulations do not excuse performance).

Second, Optima failed to follow the procedure for invoking the force majeure

clause. Under the Agreement, a party seeking to invoke the force majeure clause was required to

provide notice and to estimate the anticipated duration of the disruption, such that both parties

would be excused from performance for that period of time. Agrmt. at 21, 14(g). Optima has

not alleged (nor could it) that it provided the notice and estimated time period required by the

Agreement. Where, as here, a contract requires one party to give the other notice of the

existence of force majeure conditions and the party does not provide notice of the type specified

by the contract, courts will not excuse[] [the party] from its contractual obligations. In re The

Containership Co., No. 11-12622, 2016 WL 2341363, at *9 (Bankr. S.D.N.Y. Apr. 29, 2016);

see also Vitol S.A., Inc. v. Koch Petroleum Grp., LP, No. 01-CV-2184, 2005 WL 2105592, at

*11 (S.D.N.Y. Aug. 31, 2005) (holding that force majeure did not excuse performance, and

more importantly, [that] the force majeure defense fails because [one party] did not provide [the

other] with notification of the force majeure event as [it] was required to do under the parties

contract).

D. Optimas Failure to Perform Under the Agreement Bars the Breach of Contract
Claim.

Optimas breach of contract claim should also be dismissed for the independent

reason that Optima has failed to plead properly that it performed its obligations under the

Agreement. To survive a motion to dismiss, a plaintiff in a breach of contract case must allege

(1) the existence of an agreement, (2) adequate performance of the contract by the plaintiff, (3)

breach of contract by the defendant, and (4) damages. Eternity Glob. Master Fund Ltd. v.

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Morgan Guar. Trust Co. of N.Y., 375 F.3d 168, 177 (2d Cir. 2004). Optima has not, because it

cannot, allege that it adequately performed under the Agreement.

Under the Agreement, Optima was required to produce a live weekday

programming window or windows of not more than four (4) hours per day, beginning on or

before June 30, 2012. Agrmt. at 12, 1(a)(i). In addition, Optima was responsible for . . . all

production and administration of the Channel Window, management of all day-to-day

operations, payment of all set-up and maintenance costs, and obtaining and maintaining

necessary . . . approvals from the government. Agrmt. at 23, 1(a)(ii)(b)(i), (ii), (xi), (xii).

The Complaint contains several admissions demonstrating that Optima did not

perform its obligations under the Agreement. First, Optima admits that it did not begin

producing even minimal content until November 2013, more than a year after the contractual

production deadline, Compl. 6277; Agrmt. at 12, 1(a)(i), and Optima does not allege that

the deadline was extended in accordance with the Agreement. Second, Optima admits that it did

not make timely payments to its staff and contractors, despite the Agreements requirement that

Optima pay costs necessary to administer and manage the Channel Window. Compl. 68, 100;

Anderson Decl. Ex. B (Harrison email). Third, Optima admits that it failed to obtain the

government approvals and regulatory clearances necessary to secure currency sufficient to pay

its staff, despite a requirement in the Agreement that it do so. Compl. 38(D), 68, 118. These

admissions amount to a concession of nonperformance of contractual obligations.

Where, as here, a plaintiff has failed to allege that it performed all of its

contractual obligations, a claim for breach of contract cannot be maintained. Faced with just

such a situation in Jasper & Black, LLC v. Carolina Pad Co., LLC, Judge Swain dismissed a

breach of contract claim as deficiently pleaded. No. 10CV3562, 2012 WL 413869 (S.D.N.Y.

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Feb. 9, 2012). In that case, a distributor sued its supplier for breach of contract, alleging in the

complaint that it had performed only some of its contractual duties. Id. at *9. Ruling that the

claim was improperly pleaded, Judge Swain held that to adequately plead due performance,

Plaintiff must allege that it duly performed all thirteen duties set forth in the relevant agreement.

Id. The absence of such an allegation was fatal to the claim.

Optima has not only failed to plead that it performed all of its obligations under

the Agreement; it has admitted that it failed to perform contractual duties. Those concessions

foreclose any attempt to plead adequate performance. In Harte v. Ocwen Fin. Corp., for

example, a plaintiff claimed that she and other class members had performed adequately under a

contract because they had made contractually-required payments until they were directed . . .

that they should withhold [the] payments. No. 13-CV-5410, 2016 WL 3647687, at *5

(E.D.N.Y. July 1, 2016). That allegation was refute[d] by a document incorporated by

reference into the complaint stating that [the plaintiff] stopped payments before she had

received any direction to do so. Id. In light of that contradiction, which established that the

plaintiff had not performed her obligations under the contract, the court held that the plaintiff had

failed to properly allege that she performed, and granted defendants motion to dismiss. Id.

The same result is appropriate here. Optima has conceded that it did not perform all of its

obligations under the Agreement. Based on that concession, Optima cannot plead adequate

performance, and its breach of contract claim must therefore be dismissed.

E. Count Two Should Be Dismissed as Impermissibly Duplicative of Count One.

In Count Two of the Complaint, Optima alleges that Bloomberg breached the

implied covenant of good faith and fair dealing by terminating the Agreement. But the facts

alleged in support of that claim are identical to the facts Optima offers in support of Count One.

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Compl. 168. Such redundant pleading is impermissible under New York law, which does not

recognize a separate cause of action for breach of the implied covenant of good faith and fair

dealing when a breach of contract claim, based upon the same facts, is also pled. Presbyterian

Healthcare Servs., 2017 WL 1048088, at *12 (quoting Harris v. Provident Life and Accident Ins.

Co., 310 F.3d 73, 81 (2d Cir. 2002)). Because Optima has pleaded a breach of contract claim, its

claim for a breach of the implied covenant of good faith and fair dealing based on identical facts

should be dismissed.

For Optima to avoid that result, it would have to base its implied covenant claim

on allegations different than those underlying the . . . breach of contract claim. Alaska Elec.

Pension Fund v. Bank of Am. Corp., 175 F. Supp. 3d 44, 63 (S.D.N.Y. 2016). It must also seek

relief [that] is not intrinsically tied to the damages allegedly resulting from the breach of

contract. Id. Optima has failed to satisfy either requirement, let alone both. It has alleged no

facts unique to its second count, and has instead incorporated by reference all of the facts used to

support its first count. Compl. 168. No additional facts are pleaded in support of Count Two.

In addition, Optimas first and second counts turn on the same theories of harm and damages,

namely that the alleged breach deprived Optima of income it would have received had the

Agreement not been terminated. Optima alleges, in Count One, that it lost revenue [it] would

have earned after the Project launched, Compl. 165, and in Count Two alleges that it was

deprive[d] . . . of the benefits of the Agreement, the very same revenue. Compl. 169. There

is no daylight between the two counts.

That Count Two must be dismissed under New York law is unsurprising. Judge

Haight once observed that every court confronted with such a complaint brought under New

York law has dismissed the claim for breach of the covenant of fair dealing as redundant of

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the breach of contract claim. W.S.A., Inc. v. ACA Corp., Nos. 94-CV-1868, 94-CV-1493, 1996

WL 551599, at *9 (S.D.N.Y. Sept. 27, 1996). More recent decisions in this district support the

continued accuracy of Judge Haights assessment. See, e.g., Ellington Credit Fund, Ltd. v. Select

Portfolio Servicing, Inc., 837 F. Supp. 2d 162, 20506 (S.D.N.Y. 2011).

Optima gains no traction by alleging that Bloomberg acted in bad faith when it

terminated the Agreement. Compl. 170. While that unsupportable, conclusory allegation

might not be necessary to support the breach of contract claim, it does not alter the overlapping

core of the claims. Courts have consistently dismissed implied covenant claims where the facts

supporting the claims substantially overla[p], Church & Dwight Co., Inc. v. SPD Swiss

Precision Diagnostics, GMBH, No. 14-CV-585, 2015 WL 4002468, at *33 (S.D.N.Y. Jul. 1,

2015), affd, 843 F.3d 48 (2d Cir. 2016), and where the claims relat[e] to the same events, Ely

v. Perthuis, No. 12-CV-1078, 2013 WL 411348, at *5 (S.D.N.Y. Jan. 29, 2013). Moreover, this

Court has rejected efforts to distinguish an implied covenant claim from a breach of contract

claim based on bad faith. In PrinceRidge Grp. LLC v. Oppidan, Inc., this Court rejected the

plaintiffs attempt to distinguish an implied covenant claim from a breach of contract claim by

suggesting that the defendant employed manipulative tactics or deceit[]. No. 11-CV-1460,

2014 WL 11510256, at *89 (S.D.N.Y. Feb. 4, 2014), aff'd, 589 F. Appx 38 (2d Cir. 2015).

Because the defendants alleged efforts to avoid compensating the plaintiff were the

predicate for both claims, the allegations of bad faith did not save the implied covenant claim

from dismissal. Id. Optimas claim should fare no better.

F. Optimas Request for Consequential Damages Is Barred by the Agreement.

Even if the Complaint is not dismissed for any of the independently fatal defects

described above, it should be narrowed to eliminate the consequential damages Optima seeks as

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a remedy. Under the Agreement, Bloomberg is not liable for any incidental, speculative,

special, punitive, or consequential damages, business interruption, or lost profits . . . occasioned

by any failure to perform, or the breach of any obligation under this agreement for any cause

whatsoever . . . . Agrmt. at 18, 13(c)(i). Optima openly seeks consequential damages and lost

profits as a remedy for its claims against Bloomberg. Optimas request for damages prohibited

by the Agreement should be rejected.

In the Complaint, Optima unambiguously seeks consequential damages and lost

profits as a remedy for the injury allegedly caused by Bloomberg. Describing the nature of its

damages, Optima asks for compensation that would allow it to realize [the] benefit from its

considerable investment in the project and to make payments to investors who expected to be

repaid through the revenue generated by the Project. Compl. 146, 148. The specific

alleged damages for which it seeks recovery include:

certain advertising and sponsorship deals from which Optima expected to

profit, Compl. 149;

lost revenue [Optima] would have earned after the Project launched,

Compl. 165; and

interest that has accrued on loans expected to be repaid with proceeds from

the Channel Window, Compl. 148.

These damages are appropriately classified as the benefits that performance would have

produced, which is the textbook definition of consequential damages. In re CCT Commcns,

Inc., 464 B.R. 97, 11617 (Bankr. S.D.N.Y. 2011) (defining general damages as the losses in

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the very thing to which the plaintiff is entitled, and consequential damages as measur[ing] the

income it can produce or the losses it can avoid). 5

The consequential damages Optima seeks to recover in this action cannot be

awarded under the Agreement. Where, as here, a contract expressly precludes recovery for

consequential damages, courts uphold the parties agreement to limit liability. Prohibitions of

consequential damages are common and enforceable under New York law. World-Link, Inc. v.

Citizens Telecom. Co., No. 99-CV-3054, 2000 WL 1877065, at *5 (S.D.N.Y. Dec. 26, 2000). It

is well settled that the damages recoverable are . . . limited to those specified in the contract.

Metro. Life Ins. Co. v. Noble Lowndes Intl, Inc., 192 A.D.2d 83, 88 (1993), affd, 84 N.Y.2d

430 (1994). And where, as here, parties to a contract allocat[e the] risk of economic loss,

courts should honor the parties allocation of risks. In re Vivaro Corp., 2014 WL 486288, at

*4. It may be that a party later regret[s] [its] assumption of the risks of non-performance in this

manner; but the courts let them lie on the bed they made. Net2Globe Intl, Inc. v. Time Warner

Telecom of N.Y., 273 F. Supp. 2d 436, 450 (S.D.N.Y. 2003) (quoting Metro. Life Ins. Co., 192

A.D.2d at 88 and collecting cases); see also id. at 449 (holding, in a case involving a limitation

on liability nearly identical to that in the Agreement, that the plain language of this contractual

provision precludes recovery by [the plaintiff] of lost profits).

Optima has presented no valid reason to bypass the limitation of liability clause

set forth in the Agreement. Accordingly, Optima should not be permitted to claim consequential

damages or lost profits in this action.

5
The Agreement separately bars recovery for lost profits, Agrmt. at 18, 13(c)(i), but even if it did not,
lost profits would be separately barred here by the limitation on consequential damages. In re Vivaro Corp., No. 12-
13810, 2014 WL 486288, at *4 (Bankr. S.D.N.Y. Feb. 6, 2014) (holding that a partys claim for lost profits was
barred by a limitation on consequential damages). See also id. at *3 (noting that under New York law, lost profits
only constitute general damages where the non-breaching party seeks to recover money owed directly by the
breaching party under the parties contract.) (citation omitted).

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CONCLUSION

For the reasons set forth above, Bloomberg respectfully requests that the Court

dismiss the Complaint in its entirety.

Dated: New York, New York

May 5, 2017
Respectfully submitted,

PAUL, WEISS, RIFKIND, WHARTON &

GARRISON LLP

By: /s/ Lorin L. Reisner

Brad S. Karp ([email protected])
Lorin L. Reisner ([email protected])
Justin Anderson ([email protected])

1285 Avenue of the Americas

New York, New York 10019-6064
(212) 373-3000 (telephone)

Attorneys for Defendant Bloomberg, L.P.

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