Art of Manliness, LLC v. UrbanDaddy, Inc.

478 F.Supp.3d 1191

ART OF MANLINESS, LLC, Plaintiff,

v.URBANDADDY, INC. and Lance Broumand, Defendants.

Case No. 19-CV-493-CVE-JFJ

United States District Court, N.D. Oklahoma.

Signed August 11, 2020

Amanda Michelle Lowe, Jerrick Lee Irby, Hall Estill Hardwick Gable Golden & Nelson, Tulsa, OK, for Plaintiff.

Michael S. Linscott, Richard Hugh Foster, Doerner Saunders Daniel & Anderson LLP, Tulsa, OK, for Defendants.

OPINION AND ORDER

CLAIRE V. EAGAN, UNITED STATES DISTRICT JUDGE

Now before the Court is the Opening Motion of Defendants UrbanDaddy, Inc. and Broumand to Dismiss for Lack of Personal Jurisdiction and Improper Venue, and Alternatively for Change of Venue, and Brief in Support (Dkt. # 13). Defendants UrbanDaddy, Inc. (UrbanDaddy) and Lance Broumand argue that they are not subject to personal jurisdiction in Oklahoma and they ask the Court to dismiss the case. In the alternative, they argue that the parties’ contract contains a forum selection clause, and the case should be transferred to the United States District Court for the Southern District of New York pursuant to the forum selection clause. Dkt. # 13. Plaintiff Art of Manliness, LLC (AOM) responds that UrbanDaddy and Broumand knowingly entered into a long-term business relationship with an Oklahoma entity, and they are subject to personal jurisdiction in this Court. Dkt. # 21, at 6-7. As to the forum selection clause, AOM argues that the clause was contained only in an older contract that had expired, and the new version of the contract entered by the parties in 2017 did not contain a forum selection clause. Id. at 7. Defendants filed a reply. Dkt. # 26.

I.

UrbanDaddy is a Delaware corporation with its principal place of business in New York, New York, and Broumand states that he is a citizen of New York for the purpose of diversity jurisdiction. Dkt. # 13, at 29. Broumand, the president of UrbanDaddy, states that UrbanDaddy "has had various internet websites, newsletters, and computer applications providing local and general, luxury men's lifestyle content ... targeted to relevant audiences in the largest cities across the country ...." Id. at 30. UrbanDaddy does not regularly conduct or solicit business in Oklahoma, and does not have offices or employees in Oklahoma. Id. AOM is an Oklahoma corporation operating in Tulsa, Oklahoma, and AOM states that it manages a men's interest website from Tulsa. Dkt. # 21-1, at 1. Brett McKay, the president of AOM, resides in Tulsa, and he states that AOM has always conducted business from Tulsa. Id. at 1-2.

In July 2014, UrbanDaddy's head of business development, LeBaron Meyers, contacted McKay by sending a message on Linkedin seeking to discuss a potential partnership, and McKay was originally uninterested in the services offered by UrbanDaddy. Dkt. # 21-4, at 2-4. Despite McKay's lack of interest, representatives of UrbanDaddy continued to contact him and he agreed to have a phone conference on September 17, 2014 with Meyers and Karim Farag, a freelance contractor for Urban Daddy. Dkt. # 21-1, at 3. McKay remained in contact with Meyers and Farag over the next few months and, in January 2015, Meyers and Farag expressed interest in traveling to Tulsa to discuss a business relationship between UrbanDaddy and AOM. Id. at 4. Meyers and Farag flew to Tulsa in February 2015 and met with McKay, and this meeting led to negotiations for a contractual relationship between UrbanDaddy and AOM. Id. On March 10, 2015, UrbanDaddy submitted a proposed advertising and licensing agreement to McKay. Id. UrbanDaddy claims that it conducted negotiations from its office in New York, and AOM states that the negotiations occurred in Tulsa. Dkt. # 21-1, at 4. Dkt. # 13, at 33. UrbanDaddy claims that AOM's location in Tulsa, Oklahoma was not relevant to UrbanDaddy's decision to enter a business relationship with AOM, but by the time the parties entered contractual negotiations it is undisputed that UrbanDaddy knew that AOM was based in and conducted business from Tulsa. See Dkt. # 13, at 10.

The parties entered a written agreement under which UrbanDaddy had the exclusive right to "represent, manage and sell all of the Display Advertising and Sponsorships available" on AOM's websites through December 31, 2016. Dkt. # 13, at 47. The agreement required AOM to maintain a minimum monthly average of unique visitors to its website, and AOM also agreed to a minimum number of "impressions," or views of advertisements, on a monthly and quarterly basis. Id. at 44. UrbanDaddy agreed to pay AOM 50 percent of the net advertising revenue from the placement of advertisements on AOM's websites., and the parties agreed to minimum quarterly payments to AOM through the end of 2016. Id. at 45. The payments to AOM could be increased or decreased depending on various factors, including the number of visitors to AOM's websites, the number of impressions, and the click through rate (CTR). Id. at 45. The agreement gave AOM the right to request an audit of UrbanDaddy's books and records by an independent certified accounting firm if a dispute arose over the amount of UrbanDaddy's payments to AOM. Id. If either party wanted to terminate the agreement before December 31, 2016, the party seeking to terminate the agreement was required to provide notice in writing and give the other party 30 days to cure any alleged breach of the agreement. Id. at 47. The agreement also provided that it could be terminated for the bankruptcy of either party or if the CTR fell below a minimum standard for a three month time period, but either party would be in breach of contract if they attempted terminate the agreement for a reason not specified in Section 8 of the agreement. Id. The parties agreed that the "Agreement may be modified only by writing executed by a duly authorized company officer" and no course of dealing by the parties could waive this right. Id. at 48. The agreement also contains a choice of law provision selecting New York law, and the parties "irrevocably agree that any action at law or in equity arising out of or relating to these terms shall be filed only in state or federal courts located in New York County, New York and the parties hereby consent and submit to the personal jurisdiction of such courts for the purposes of litigating any such action." Id. at 49.

The agreement was executed by UrbanDaddy and AOM in March 2015, but it quickly became apparent to AOM that it would not be able to meet the minimum website traffic requirements of the agreement. Dkt. # 21-1, at 5. In August 2015, Urban Daddy agreed to make a one time exception to contractual requirements for the number of "impressions" and the CTR, but UrbanDaddy advised AOM that it could be penalized in 2016 if these numbers failed to improve. Dkt. # 26, at 32. In September 2015, McKay proposed eliminating the minimum quarterly payment and amending the CTR, and UrbanDaddy agreed to the proposed changes to the parties’ agreement. Id. at 35-36. On November 22, 2015, UrbanDaddy sent an e-mail to McKay stating that UrbanDaddy's attorneys were reviewing a new draft of the parties’ agreement and a subsequent e-mail sent by UrbanDaddy on December 28, 2015 shows that UrbanDaddy was open to renegotiating certain aspects of the parties’ agreement. Dkt. # 21-6. McKay states that he believed that the Agreement had been so materially altered that the parties mutually understood that the original agreement was no longer in effect. Dkt. # 21-1, at 6. However, there is no evidence that either party invoked the termination procedure required by the agreement to terminate the contract, and the e-mails from UrbanDaddy do not show that there was a mutual understanding that the original agreement had been terminated. UrbanDaddy prepared amendments to the contract and sent the amendments to McKay, and the amendments left all portions of the original contract in effect that were not changed by the amendments. Dkt. # 26, at 39. The copy of the amendments attached to UrbanDaddy's reply is unsigned and it does not appear that the parties formally executed the amendments to the contract.

McKay states that AOM was contemplating terminating its business relationship with UrbanDaddy and, on October 6, 2016, Broumand and Meyers traveled to Tulsa to make a sales pitch for continuation of the business relationship. Dkt. # 21-1, at 6-7. In an October 14, 2016 e-mail, Broumand wrote to McKay that he was not "looking to lock [AOM] into a contract" and he wanted to "figure out what the right thing to do is ...." Dkt. # 21-7, at 2. UrbanDaddy presented a 40 page powerpoint presentation to AOM in November 2016, and UrbanDaddy proposed a business relationship that essentially tracked the parties’ existing contractual arrangement with some amendments. Dkt. # 26, at 57-96. Broumand followed up with McKay in a November 29, 2016 e-mail and stated that he was "not asking [AOM] to commit to us for any contract term," but Broumand noted that AOM would be receiving a third-quarter statement and payment pursuant to the existing contract within a few days. Dkt. # 21-8, at 2. McKay responded that AOM intended to reduce the amount of original content on its websites from one or two pieces per day to three pieces per week, and McKay wanted to know if Broumand would view AOM as a "valuable long-term partner" with this reduced amount of original content on its websites. Dkt. # 13, at 76. In a subsequent e-mail, McKay stated he still felt like AOM and UrbanDaddy had a "good partnership" and that the "only change with this shift of ours to the original plan (besides planning on less traffic) is that we wouldn't [be] up for doing underwritten sponsored content anymore ...." Id. at 78.

The parties do not dispute that the original contract expired on December 31, 2016, but there is a significant dispute concerning the contractual arrangement underlying the parties’ business dealings after December 31, 2016. McKay claims that the parties had a "2017 Agreement"...