North American Catholic Educational Programming Foundation, Inc., et al. v. Clearwire Spectrum Holdings II LLC, et al. (Lawyers Weekly No. 09-023-18)
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
No. 15-3118 BLS 2
NORTH AMERICAN CATHOLIC EDUCATIONAL
PROGRAMMING FOUNDATION, INC. et al.[1]
Plaintiffs
vs.
CLEARWIRE SPECTRUM HOLDINGS II LLC,
CLEARWIRE LEGACY LLC and SPRINT SPECTRUM, L.P.,
Defendants
MEMORANDUM OF DECISION AND ORDER
ON DEFENDANTS’ MOTION TO STAY ACTION
Plaintiffs are non-profit entities that hold licenses from the Federal Communications Commission (FCC) to operate Educational Broadband Services (EBS) channels in certain geographic markets. In 2006, plaintiffs granted access to a portion of their wireless communication spectrum to defendants Clearwire Spectrum Holdings LLC and Clearwire, Legacy, LLC (Clearwire) pursuant to various written Agreements, including Master Royalty and Use Agreements (MRUAs). The defendant Sprint Spectrum L.P. (Sprint) subsequently acquired all the stock in Clearwire’s parent, and a dispute arose between Sprint and the plaintiffs as to what services Sprint was obligated to provide plaintiffs’ customers. Plaintiffs took the position that Clearwire had effectively sublicensed its use of the broadband spectrum to Sprint, and that, pursuant to the Agreements, this required plaintiffs’ consent – consent which they were entitled to withhold unless Sprint agreed to provide broadband access to plaintiff’s customers that was equivalent to what Clearwire itself would have provided had there been no sublicense.
Plaintiffs filed this lawsuit in October 2015 seeking equitable relief and specific performance. In November 2015, this Court allowed plaintiffs’ Motion for a Preliminary Injunction, concluding that plaintiffs had demonstrated a substantial likelihood of prevailing on the merits. The injunction among other things required defendants to maintain Cost Free Educational Accounts (CFEAs) that entitle plaintiffs’ customers to access the Clearwire broadband network free of charge. On June 24, 2016, this Court allowed plaintiffs’ Motion for Partial Summary Judgment as to Count One of the Complaint, which focused on the single issue of consent. After some period of negotiation seeking a global resolution, two of the six plaintiffs in the instant action filed arbitration claims seeking damages, the MRUAs requiring them to pursue any monetary remedy in that forum. Defendants now move to stay this action until the arbitration is concluded. This Court concludes that this Motion must be DENIED.
In support of the motion, defendants cite the broad arbitration provision in the MRUAs and argue that under the Federal Arbitration Act, it would be an abuse of discretion not to stay the instant action because the claims its raises substantially overlap with those issues being presented to a three member arbitration panel. A stay is appropriate, they argue, in order to avoid duplicative discovery and the risk of inconsistent results. In response, the plaintiffs contend that there is no overlap between the claims that they assert in this Court and the claims brought in arbitration. They also note that the MRUAs’ dispute resolution provision has a broad carve-out that entitle plaintiffs to pursue their equitable claims in court. This Court is persuaded by plaintiffs’ position.
Although the MRUAs do indeed set forth detailed dispute resolution procedures that require arbitration, they also state that “notwithstanding” that provision, a party has “no obligation to arbitrate claims for injunctive relief, specific performance, or other equitable relief” and that such claims can be pursued in state or federal courts in Boston. §11.12(c) (viii). Indeed, a party has a right to “obtain specific performance of the terms of” the MRUA “in addition to other remedies which may be available, including money damages…” §11.11. The MRUAs further provide that “no remedy…is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder…” Id. Finally, a party’s “election of any one or more remedies …shall not constitute a waiver of the right to pursue other available remedies at any time. “ Id. These various provisions read together clearly permit the parties to seek resolution of their differences in two different arenas, depending on the kind of relief they seek.
As to the defendants’ assertion of overlap, there does not appear to any substantial overlap when plaintiffs’ claims in this Court are compared to the single claim for damages that two of the six named plaintiffs are pursuing in arbitration. [2] Any overlap that does exist was due to the defendants’ decision first to assert counterclaims in the instant matter and then to assert essentially the same counterclaims in the arbitration proceeding. In other words, the overlap is of the defendants’ own making. Plaintiffs unsuccessfully sought to dismiss the counterclaims in the arbitration matter precisely to avoid this overlap but defendants successfully opposed that effort by arguing that the MRUAs specifically contemplate potential parallel proceedings “no matter how close the relationship is” between their own counterclaims in court and their counterclaims in arbitration. This Court sees no reason why that is not equally true for plaintiffs, who seek to pursue their claims for equitable relief in court at the same time that they seek monetary damages in arbitration. As to duplication in discovery that can be easily avoided if the parties work cooperatively together.
SO ORDERED.
_____________________________
Janet L. Sanders
Justice of the Superior Court
Dated: February 8, 2018
[1] Chicago Instructional Technology Foundation, Inc., Denver Area Educational
Telecommunications Consortium, Inc., Instructional Telecommunications Foundation, Inc., Portland Regional
Educational Telecommunications Corporation, and Twin Cities Schools’ Telecommunications Group, Inc.
[2] Those portions of the pleadings which described the arbitration claims have been impounded so this Court does not include a detailed description here.