United States District Court, D. Delaware
William M. Lafferty, John P. DiTomo, Zi-Xiang Shen, MORRIS,
NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware;
Stephen M. Juris, Alexandra Verdi, FRIED, FRANK, HARRIS,
SHRIVER & JACOBSON LLP, New York, New York Counsel for
Patricia A. Winston, MORRIS JAMES LLP, Wilmington, Delaware;
John Du Wors, Nathan Durrance, NEWMAN DU WORS DURRANCE LLP,
Seattle, Washington Counsel for Defendant.
F. CONNOLLY UNITED STATES DISTRICT JUDGE.
1 B.V. (MarkDutchCo) has sued Zeta Interactive Corp. (Zeta)
for Specific Performance (Count I), Breach of Contract (Count
II), and Declaratory Judgment and Injunctive Relief (Count
III). All three claims arise from Zeta's refusal to pay
MarkDutchCo $3, 450, 000 MarkDutchCo alleges it is owed. Zeta
has moved for dismissal of the complaint pursuant to Federal
Rule of Civil Procedure 12(b)(1) for lack of jurisdiction or,
alternatively, for a stay of the case until a related case in
this Court and a purported arbitration in England are
resolved. D.I. 5.
case arises out of an Interest Purchase Agreement that Zeta
and nonparty Markmidco S.ar.l (Markmidco) entered into as of
August 28, 2015. D.I. 1, Ex. A. Pursuant to the Purchase
Agreement, Zeta acquired Markmidco's interest in a
customer relationship management business (the CRM business),
which consisted of several companies that provided to
retailers email and text message marketing, database
management, and related services. Zeta agreed to pay, among
other things, $23, 000, 000 in cash for the CRM Business. But
the Purchase Agreement permitted Zeta to hold back at the
closing of the transaction and to retain for up to 18 months
and three business days $3, 450, 000 of the cash payment (the
"Holdback Amount") as insurance against losses
covered by the Agreement's indemnification provisions.
Pursuant to § 6(b)(v) of the Agreement and a subsequent
assignment of Markmidco's rights under the Agreement to
MarkDutchCo, when the 18-month-and-three-business-day period
expired on May 5, 2017, Zeta was obligated to pay MarkDutchCo
"an amount equal to the Holdback Amount less
the Retained Holdback Amounts." D.I. 1, Ex. A §
6(b)(v). The Agreement defined "Retained Holdback
Amounts" as the amount of indemnified losses "that
are finally determined." D.I. 1, Ex. A § 6(b)(v).
the Purchase Agreement, there were three ways for Zeta to
obtain a final determination of its indemnified losses:
(i) by "reach[ing] an agreement in writing" with
the other parties to the dispute that created the losses;
(ii) by getting "a final and non-appealable order"
from "a court of competent jurisdiction[;]" or
(iii) by getting "a final non-appealable
determination" from "an arbitration or like
D.I. 1, Ex. A at § 6(b)(v).
time before May 5, 2017 did Zeta obtain or seek to obtain an
agreement in writing with Markmidco or MarkDutchCo; nor did
it obtain or seek to obtain an order with respect to any
losses from a court or arbitration-like panel. On May 1,
2017, Zeta informed MarkDutchCo that it planned on
withholding the entirety of the Holdback Amount because of
various losses it alleged it had incurred. Zeta has refused
to this date to make any payment to MarkDutchCo. That refusal
led MarkDutchCo to file this lawsuit, by which it seeks to
recover the entirety of the Holdback Amount.
argues that this case is not ripe for adjudication, because
there has been no final determination of the amount of losses
Zeta alleges it incurred and is ...