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Reklam v. Bellator Sport Worldwide LLC

United States District Court, D. Delaware

November 8, 2017

KOLONI REKLAM, SANAYI, TICARET LTD/STI, Plaintiff,
v.
BELLATOR SPORT WORLDWIDE LLC Defendant.

          REPORT AND RECOMMENDATION

          SHERRY R. FALLON, UNITED UNITED STATES MAGISTRATE JUDGE

         I. INTRODUCTION

         Presently before the court in this breach of contract case is a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6) filed by defendant Bellator Sport Worldwide LLC ("Bellator" or "Defendant"). (D.I. 19) For the following reasons, I recommend granting Defendant's motion.

         II. BACKGROUND

         A. The Parties

         Defendant Bellator is a mixed martial arts promotion company that was founded in 2008. (D.I. 17 at ¶ 1) Bellator currently has two members: (1) MTV Networks[1] ("MTVN"), which holds approximately 99% of Bellator through MMA HoldCo, Inc. ("MMA HoldCo"), and (2) Plaintiff Koloni Reklam, Sanayi, Ticaret, LTD/STI ("KRST" or "Plaintiff'), which holds a 1% interest. (Id. at ¶14)

         KRST is a company based in Turkey. (Id. at ¶ 5) Bellator is a limited liability company organized under the laws of the State of Delaware, with its principal place of business in Santa Monica, California. (Id. at ¶ 6) This court has jurisdiction pursuant to 28 U.S.C. § 1332(a).

         B. The Operating Agreement

         Bellator is governed by its Third Amended and Restated Operating Agreement (the "Operating Agreement"). (D.I. 20, Ex. A) The Operating Agreement itself is governed by Delaware law. (Id. at § 11.11) The parties to the Operating Agreement are Bellator and its members. (Id. at 1; App'x A)

         Since October 2014, Bellator has been managed by a three-member committee (the "Management Committee"). (D.I. 20 at 5) Pursuant to the Operating Agreement, "all powers to control and manage the Business and affairs of [Bellator] shall be exclusively vested in the Management Committee, " except as provided otherwise. (D.I. 20, Ex. A at § 4.3) MTVN has the right to designate the members of the Management Committee so long as MTVN and/or its affiliates collectively hold at least a 15% interest. (Id. at § 4.1(b))

         In accordance with 6 Del. C. § 18-1101 (c), [2] the Operating Agreement eliminates all fiduciary duties for members. Specifically, Section 4.11 provides that "[a] member shall not have any duties, fiduciary or otherwise, to [Bellator] or to the other Members, other than the contractual obligations of such Members set forth herein." (Id. at § 4.11)

         Section 7.2(b) provides that each member has the right to reasonable access and to inspect the books and records listed in Sections 7.1(a) and 7.2(a) "for any purpose reasonably related to such Member's interest as a member of [Bellator]." (Id. at § 7.2(b)) Section 7.2(c) requires Bellator, at the end of each fiscal quarter, to deliver to members the company's unaudited balance sheets, income statements, cash flow statements, and changes in members' equity in the company. (Id. at § 7.2(c)) Section 7.2(c) also requires Bellator, at the end of each fiscal year, to deliver to members the company's audited balance sheets, income statements, cash flow statements, and changes in members' equity in the company. (Id.)

         C. Procedural History

         On July 13, 2015, KRST filed a complaint in a California state court naming Viacom and Does 1-20 as defendants. (D.I. 8 at 5) The California complaint asserted claims for breach of the Operating Agreement, breach of the implied covenant of good faith and fair dealing, breach of common law fiduciary duties, an accounting, and unjust enrichment. (Id.) Viacom filed a motion to stay or dismiss the case, which KRST opposed. (Id.) On October 30, 2015, the California court dismissed the action, recognizing that it was barred by the Delaware forum selection clause in the Operating Agreement. (Id.)

         On January 22, 2016, KRST re-filed the same complaint in Delaware Superior Court, this time adding Kevin Kay ("Kay"), a Bellator manager, as a defendant. (Id.) On March 9, 2016, Viacom and Kay filed a motion to dismiss. (Id.) Subsequently, KRST dismissed its action, recognizing belatedly that the Delaware Superior Court lacked subject matter jurisdiction to adjudicate the equitable claims asserted. (Id.)

         On April 21, 2016, KRST filed the same complaint in the United States District Court for the District of Delaware. (D.I. 1) On July 8, 2016, Viacom and Kay filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). (D.I. 6) On February 23, 2017, the court granted Viacom and Kay's motion, and the complaint was dismissed without prejudice.[3] (D.I. 16) On March 23, 2017, KRST filed its First Amended Complaint ("Amended Complaint"). (D.I. 17) The Amended Complaint, the operative complaint for purposes of the instant motion, asserts claims against Bellator for breach of contract and breach of the implied covenant of good faith and fair dealing for Bellator's "failure to provide Plaintiff with accurate and complete financials under the [Operating Agreement]." (D.I. 17 at ¶ 4) On May 17, 2017, Bellator filed the current motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). (D.I. 19) The court heard oral argument on October 18, 2017.

         III. ...


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