Wall Street Network, Ltd. v. New York Times Co.
2008 Cal. App. LEXIS 1058, 80 Cal. Rptr. 3d 6, 164 Cal.App.4th 1171 (2008)
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Rule of Law:
A plaintiff asserting breach of contract must present timely and admissible evidence of its performance under the agreement, which is classified as either a contract for services or goods based on its predominant purpose, and failure to do so can result in summary judgment and forfeiture of claims.
Facts:
- Wall Street Network Ltd. (WSN) became the assignee of Click2Boost, Inc. (C2B).
- On May 10, 2002, C2B entered into an Internet marketing agreement with The New York Times Company (NYT).
- Under the agreement, C2B was tasked with soliciting subscribers for home delivery of The New York Times newspaper through "pop up ads" placed on Internet websites with which C2B had marketing alliances.
- C2B's system was designed so that a person clicking an ad would submit their ZIP code, then additional information for a subscription if the ZIP code was suitable, culminating in a confirmation of the subscription.
- NYT agreed to pay C2B a fee or commission for each home delivery subscription C2B submitted.
- From May 2002 to September 2003, NYT paid C2B over $1.5 million in subscription submission fees.
- NYT terminated the agreement on September 16, 2003.
- By December 2, 2003, NYT determined that almost 90 percent of C2B’s purported subscription submissions were cancelled, stopped, or discontinued, often because purported subscribers contended they had never ordered the newspaper, with only 187 resulting in any payment.
Procedural Posture:
- In October 2003, Wall Street Network Ltd. (WSN), as C2B’s assignee, initiated a lawsuit in the trial court (the court of first instance).
- On November 7, 2003, WSN filed its first amended complaint (FAC) asserting claims for breach of contract and misrepresentation against The New York Times Company (NYT), NETexponent, Chris Kramer, Jason Lerman, and Michael Keenan.
- On March 16, 2004, NYT filed a cross-complaint for breach of contract against C2B, seeking restitution of the fees it had paid.
- C2B sought summary judgment on NYT’s cross-complaint, and respondents (NYT et al.) filed a motion for summary judgment or adjudication on WSN’s FAC.
- Following an April 5, 2005 hearing, the trial court denied C2B’s motion and granted respondents’ motion for summary judgment on WSN's FAC.
- On April 14, 2005, WSN filed a motion for reconsideration of the ruling on respondents’ motion, which the trial court granted in part, denying summary judgment but granting summary adjudication on each claim in the FAC except the breach of contract claim.
- NYT sought relief from this ruling by petition for writ of mandate to the intermediate appellate court, the Court of Appeal, which concluded reconsideration was improper in New York Times Co. v. Superior Court (2005) 135 Cal.App.4th 206, and directed the trial court to vacate its reconsideration order and reinstate its summary judgment order.
- On May 23, 2006, the trial court filed an order granting respondents’ motion for summary judgment and entered judgment in respondents’ favor on the FAC.
- WSN filed a motion for a new trial, which the trial court denied.
- On October 4, 2006, the trial court issued respondents an award of $1,430,754.50 in attorney fees against WSN and C2B.
- WSN appealed the summary judgment, the denial of its new trial motion, and the attorney fee award to the California Court of Appeal.
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Issue:
Does a trial court properly grant summary judgment for a defendant in a breach of contract action where the plaintiff fails to present admissible evidence of its performance under an internet marketing agreement classified as a contract for services, and belatedly attempts to introduce such evidence after the summary judgment opposition deadline?
Opinions:
Majority - Manella, J.
Yes, the trial court properly granted summary judgment in favor of NYT because WSN failed to raise a triable issue of material fact regarding C2B's performance under the Internet marketing agreement. The court found that WSN could not establish that C2B had performed its contractual obligations to derive subscription information through its POPS system from customers of C2B’s affiliated Internet marketing partners, as the agreement's plain language required. WSN offered no admissible evidence to show C2B had done so, as the trial court's evidentiary rulings sustaining objections to Alon Nachom’s testimony and Sohn’s declaration were unchallenged on appeal and thus excluded from review. The court also rejected WSN’s argument that the agreement was for the sale of "goods" under the Uniform Commercial Code (UCC), determining that it was fundamentally a contract for the provision of services, and therefore UCC acceptance rules did not apply. Finally, the appellate court upheld the trial court's discretion to exclude belatedly identified deposition testimony from Kobi Nachom, Cerullo, and Nelson, noting that WSN failed to properly incorporate this evidence into its opposition or seek a continuance, and that a new trial motion based on "minutes of the court" does not circumvent the strict requirements for "newly discovered evidence."
Analysis:
This case significantly clarifies the stringent evidentiary requirements for defeating summary judgment in California, emphasizing that the non-moving party must present timely and admissible evidence to raise a triable issue of fact. It also provides a crucial precedent for distinguishing between contracts for "goods" (governed by the UCC) and "services" in the context of internet marketing and data transmission agreements, guiding future interpretations in the digital commerce landscape. The ruling reinforces the principle that procedural rules, especially those governing evidence submission and deadlines, are not mere technicalities; their strict adherence is essential to due process and efficient litigation. This approach incentivizes thorough and timely preparation, discouraging attempts to introduce evidence belatedly, which could impact strategic considerations in discovery and motion practice.
