Talk Radio Network Enterprises, Llc et al v. Cumulus Media, Inc. et al

Motion to Dismiss for Failure to State a Claim . Oral Argument requested.

D. Or.February 15, 2017

710386.0002/6875754.1 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE i - CUMULUS DEFENDANTS’ MOTION TO DISMISS Vicki L. Smith, OSB No. 854410 smithv@lanepowell.com LANE POWELL PC 601 SW Second Avenue, Suite 2100 Portland, Oregon 97204-3158 Telephone: 503.778.2138 Facsimile: 503.778.2200 Richard A. Schirtzer, admitted pro hac vice richardschirtzer@quinnemanuel.com Christopher Tayback, admitted pro hac vice christayback@quinnemanuel.com Prashanth Chennakesavan, admitted pro hac vice prashanthchennakesavan@quinnemanuel.com QUINN EMANUEL URQUHART & SULLIVAN, LLP 865 South Figueroa Street, 10th Floor Los Angeles, California 90017-2543 Telephone: 213.443.3000 Facsimile: 213.443-3100 Attorneys for Defendants Cumulus Media, Inc.; Westwood One, Inc.; Lewis W. Dickey, Jr.; and Charles Steinhauer UNITED STATES DISTRICT COURT DISTRICT OF OREGON MEDFORD DIVISION TALK RADIO NETWORK ENTERPRISES, LLC, an Oregon limited liability company; AMERICA’S TALK NETWORK, INC., an Oregon corporation; AMERICA’S LIFESTYLE RADIO NETWORK, INC., an Oregon corporation; and TALK RADIO NETWORK ENTERTAINMENT, INC., an Oregon corporation, Plaintiffs, v. CUMULUS MEDIA, INC., a Delaware corporation; WESTWOOD ONE, INC., a Delaware corporation; WYD MEDIA MANAGEMENT, LLC, a Connecticut limited liability company; WYM MEDIA MANAGEMENT, LLC, a Connecticut limited Case No. 1:16-cv-00609-CL Defendants Cumulus Media, Inc., Westwood One, Inc., Lewis W. Dickey, Jr., and Charles Steinhauer’s MOTION TO DISMISS Pursuant to Fed. R. Civ. P. 8, 9(b), and 12(b)(6) Request for Oral Argument Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 1 of 21 710386.0002/6875754.1 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE ii - CUMULUS DEFENDANTS’ MOTION TO DISMISS liability company; LEWIS W. DICKEY, JR.; and CHARLES STEINHAUER, Defendants. LR 7-1 CERTIFICATE OF CONFERRAL Counsel for defendants Cumulus Media, Inc., Westwood One, Inc., Lewis W. Dickey, Jr., and Charles Steinhauer (collectively, “Cumulus Defendants”) certifies conferring with counsel for Plaintiffs regarding this Motion to Dismiss. Plaintiffs oppose this Motion. MOTION The Cumulus Defendants request that the Court issue an order dismissing each cause of action in Plaintiffs’ Second Amended Complaint pursuant to Rules 8, 9(b), and 12(b)(6) of the Federal Rules of Civil Procedure. This Motion is based on the accompanying Memorandum of Points and Authorities and the Cumulus Defendants’ Request for Judicial Notice, which is already in the Court’s docket (ECF 16). Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 2 of 21 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE i - CUMULUS DEFENDANTS’ MOTION TO DISMISS MEMORANDUM OF POINTS AND AUTHORITIES TABLE OF CONTENTS Page PRELIMINARY STATEMENT .....................................................................................................1 RELEVANT BACKGROUND AND FACTUAL ALLEGATIONS .............................................2 ARGUMENT ...................................................................................................................................6 I. LEGAL STANDARDS .......................................................................................................6 A. Plaintiffs Must Plead Facts Giving Rise to Facially Plausible Claims to Survive a Motion to Dismiss....................................................................................6 II. TRNE’S CONTRACT CLAIM SHOULD BE DISMISSED ..............................................6 A. TRNE Has Failed to Identify Contractual Provisions the Cumulus Defendants have Breached .......................................................................................6 B. Plaintiffs’ Related Unjust Enrichment, Implied Covenant, and Conversion Causes of Action Fail ...............................................................................................9 III. THE BREACH OF FIDUCIARY DUTY CLAIM FAILS AS A MATTER OF LAW ..................................................................................................................................11 IV. PLAINTIFFS’ TORTIOUS INTERFERENCE CLAIM FAILS .......................................12 V. PLAINTIFFS’ FRAUD CLAIM IS INSUFFICIENTLY PLEADED...............................13 CONCLUSION ..............................................................................................................................15 Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 3 of 21 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE ii - CUMULUS DEFENDANTS’ MOTION TO DISMISS TABLE OF AUTHORITIES Page Cases Ahern v. Central Pac. Freight Lines, 846 F.2d 47 (9th Cir. 1988) .......................................................................................................8 Ashcroft v. Iqbal, 556 U.S. 662 (2009) .............................................................................................................6, 13 Becker v. Pac. Forest Indus., Inc., 211 P.3d 284 (Or. App. 2009)..................................................................................................11 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) .............................................................................................................6, 13 Bennett v. Farmers Ins. Co., 26 P.3d 785 (Or. 2001) ............................................................................................................12 City Solutions, Inc. v. Clear Channel Commc'ns, Inc., 201 F. Supp. 2d 1048 (N.D. Cal. 2002) ...................................................................................12 Communications Group, Inc. v. GTE Mobilnet of Or., 871 P.2d 502 (Or. App. 1994)..................................................................................................15 Conway v. Pac. Univ., 924 P.2d 818 (Or. 1996) ..........................................................................................................12 Delameter v. Anytime Fitness, Inc., 722 F. Supp. 2d 1168 (E.D. Cal. 2010)......................................................................................8 Edward D. Jones & Co. v. Mishler, 161 Or. App. 544 (1999) ..........................................................................................................10 Int'l Audiotext Network, Inc. v. Am. Tel. and Tel. Co., 62 F.3d 69 (2d Cir.1995)............................................................................................................3 Maier v. Pac. Heritage Homes, Inc., 72 F. Supp. 2d 1184 (D. Or. 1999) ..........................................................................................15 MCC Dev. Corp. v. Perla, 81 A.D. 3d 474 (N.Y. App. 2011) .............................................................................................8 McGanty v. Staudernaus, 901 P.2d 841 (Or. 1995) ..........................................................................................................13 Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 4 of 21 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE iii - CUMULUS DEFENDANTS’ MOTION TO DISMISS Morrow v. Red Shield Ins. Co., 159 P.3d 384 (Or. App. 2007)..................................................................................................10 Murphy v. American Home Products Corp., 58 N.Y.2d 293 (N.Y. 1983) .....................................................................................................10 National Union Fire Ins. Co. of Pittsburgh, PA v. Xerox Corp., 25 A.D. 3d 309 (N.Y. App. Div. 1st Dept. 2006) ....................................................................10 Parrino v. FHP, Inc., 146 F.3d 699 (9th Cir. 1998) .....................................................................................................3 Rapacki v. Chase Home Finance LLC, 797 F. Supp. 2d 1085 (D. Or. 2011) ........................................................................................11 Semegen v. Weidner, 780 F.2d 727 (9th Cir. 1985) ...................................................................................................13 Spada Properties, Inc. v. Unified Grocers, Inc., 121 F. Supp. 3d 1070 (D. Or. 2015) ........................................................................................11 Stone & Webster, Inc. v. Ga. Power Co., 968 F. Supp. 2d 1 (D.D.C. 2013) ...............................................................................................8 Valencia v. Sharp Elecs. Corp., 561 F. App’x. 591 (9th Cir. 2014) .....................................................................................14, 15 Webb v. Clark, 546 P.2d 1078 (Or. 1976) ........................................................................................................13 Wood Indust. Corp. v. Neil Rose, 530 P.2d 1245 (Or. 1975) ........................................................................................................11 Ziya v. Global Linguistic Solution, 3:11-C 2012 WL 1357678 (D. Or. Apr. 19, 2012) ....................................................................7 Statutes Fed. R. Civ. P. 8, 12(b)(6)........................................................................................................1, 2, 6 Fed. R. Civ. P. 9 .............................................................................................................................15 Fed. R. Civ. P. 9(b) ..........................................................................................................1, 2, 13, 14 Miscellaneous Black's Law Dictionary 268 (9th ed. 2009) ...................................................................................11 Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 5 of 21 710386.0002/6875754.1 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 1 - CUMULUS DEFENDANTS’ MOTION TO DISMISS PRELIMINARY STATEMENT Despite having months to amend its original Complaint to address the deficiencies this Court found in its order granting the Cumulus Defendants’1 motion to dismiss in its entirety (ECF 38; see also ECF 42) (hereinafter, “Order”), Plaintiffs filed an Amended Complaint that was nearly identical to the original Complaint and contained no new factual allegations.2 (ECF 48.) After the Cumulus Defendants met and conferred (including providing Plaintiffs with a draft of their motion to dismiss), Plaintiffs filed a Second Amended Complaint (“SAC”), their third attempt at pleading plausible claims. (ECF 53.) Plaintiffs’ latest attempt fares no better. Instead of addressing the deficiencies in their pleading which have now been pointed out several times in this Court’s prior dismissal Order and through two subsequent amendments, Plaintiffs have merely added a handful of conclusory statements. Because the alleged facts remain the same as in the initial Complaint, the result should as well, and Plaintiffs’ SAC should be dismissed pursuant to Rules 8, 9(b), and 12(b)(6).3 Plaintiffs continue to assert a breach of contract claim based on nothing more than a vague allegation that Defendants perpetrated an “Allocation Fraud” scheme by engaging in conduct explicitly permitted by the parties’ written contract-bundling plaintiff Talk Radio Network’s programming with that produced by numerous other entities and allocating resulting revenues in their “sole discretion.” Tellingly, Plaintiffs again refused to attach a copy of the 1 “Cumulus Defendants” refers to defendants Cumulus Media, Inc. (“Cumulus”), Westwood One, Inc. (“Westwood”) (previously known as Dial Global, Inc.), Lewis W. Dickey, Jr., and Charles Steinhauer. 2 The Cumulus Defendants also filed a motion to transfer venue to the Southern District of New York (S.D.N.Y). (ECF 33.) The Court reserved ruling on that Motion. (Order at 1.) The Cumulus Defendants respectfully request that-should this Court deny this motion to dismiss in whole or in part-this action be transferred to S.D.N.Y. for the reasons stated in the Cumulus Defendants’ motion to transfer. 3 For the Court’s benefit, the Cumulus Defendants attach to this motion as Appendix A a comparison showing changes between Plaintiffs’ Complaint and SAC. Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 6 of 21 710386.0002/6875754.1 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 2 - CUMULUS DEFENDANTS’ MOTION TO DISMISS actual contract, the language of which undermines Plaintiffs’ claims.4 Indeed, the Court previously ruled that Plaintiffs’ mere conclusory allegations of how Defendants could have engaged in misconduct in allocating advertising revenue is insufficient as a matter of law to survive a motion to dismiss; Plaintiffs must allege what Westwood actually did that breached the agreement. Plaintiffs have not done so. For example, Plaintiffs amended their breach of contract cause of action to add an allegation that “Westwood is required to act in good faith and in a commercially reasonable manner under the Rep Agreement [and] has not complied with the terms of the Rep Agreement in good faith or in a commercially reasonable manner.” (SAC ¶ 60.) But the SAC relies on the same vague conclusory allegations the Court previously found wonting. Plaintiffs’ failure to provide the kind of factually plausible theory of liability to survive Rule 8 scrutiny (or, for the fraud claim, Rule 9(b)) warrants dismissal. Plaintiffs’ remaining causes of action for breach of the implied covenant, conversion, unjust enrichment, tortious interference, and fraud likewise fail to cure the deficiencies this Court previously identified. Plaintiffs have not articulated a single actionable claim-or even attempted to plead the additional facts required. The SAC should thus be dismissed with prejudice. RELEVANT BACKGROUND AND FACTUAL ALLEGATIONS5 The Plaintiffs. The “Syndication Plaintiffs”6 “produce and syndicate, and/or have produced or syndicated, long-form spoken word news and/or talk radio programming.” (SAC ¶ 16.) The Syndication Plaintiffs provide content they produce to radio stations in exchange for the right to sell advertising spots during the radio station’s broadcasts.7 (SAC ¶ 22.) Talk Radio 4 The Court previously took judicial notice of various facts, including the Sales Representation Agreement (“Rep Agreement”) between TRNE and Westwood. (Order at 2; see also ECF 16, 32.) The Cumulus Defendants request that the Court take judicial notice of the same facts in connection with this motion in accordance with the Request for Judicial Notice (ECF 16). 5 For purposes of this motion to dismiss only, the Cumulus Defendants accept as true the non- conclusory allegations of the Complaint except as noted otherwise herein. 6 Plaintiffs define the “Syndication Plaintiffs” as Talk Radio Network Entertainment, Inc. (“TRN-ENT”), America’s Talk Network, Inc. (“ATN”), and America’s Lifestyle Radio Network, Inc. (“ALRN”). (SAC ¶16.) 7 Plaintiffs define the right to sell advertising spots as “Commercial Inventory.” (SAC ¶ 22.) Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 7 of 21 710386.0002/6875754.1 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 3 - CUMULUS DEFENDANTS’ MOTION TO DISMISS Network Enterprises, LLC (“TRNE”) represents the Syndicated Plaintiffs “in affiliate relations and advertising sales.” (SAC ¶ 16.) The Syndication Plaintiffs’ Radio Advertising and “Ad Reps”. Plaintiffs sell advertising spots-or “Commercial Inventory”-in two ways: “(i) ‘direct response advertising,’” which encourages the listener to contact the advertiser (e.g., by using a toll-free number or website); and “(ii) ‘institutional’ advertising,” which involves marketing brand images or announcements for products, services, or stores (e.g., general advertising for Ford vehicles). (SAC ¶¶ 23-25.) Advertisers purchase spots for direct response during specific shows; they purchase institutional advertising spots directly or through an agency by paying to reach a certain number of listeners or a specific demographic (e.g., persons in the 25-54 age bracket) through a bundle of spots across multiple programs, as opposed to spots in any specific program. (SAC ¶¶ 24-26.) To generate revenue from institutional advertisers, Plaintiffs contract with “Contracted Ad Rep[s],” who bundle programs from multiple syndicators, including Plaintiffs, and sell advertising spots in those bundles to agencies representing advertisers. (SAC ¶¶ 27-29.) Advertising agencies and Contracted Ad Reps earn commissions from the gross revenues generated from the sales of advertising spots in programming bundles. (SAC ¶¶ 30-32.) Contracted Ad Reps then allocate the remaining revenue among syndicators whose programming was included in the bundle based on an analysis of each program’s contribution to the bundle’s ability to reach the targeted audience size and demographic. (Id.; SAC ¶¶ 33-35.) Plaintiffs’ Contract With Westwood. Plaintiffs allege they (through TRNE) entered into a “written Sales Representation Agreement”-the “Rep Agreement”8-with Westwood on or about February 28, 2014, that requires Westwood to “provide sales representation services” for 8 The Rep Agreement is not attached to Plaintiffs’ SAC. “[W]hen a plaintiff chooses not to attach to the complaint or incorporate by reference a document upon which it solely relies and which is integral to the complaint,” such as the contract upon which Plaintiffs sue here, “the court may nevertheless take the document into consideration in deciding the defendant’s motion to dismiss.” Int’l Audiotext Network, Inc. v. Am. Tel. and Tel. Co., 62 F.3d 69, 72 (2d Cir.1995) (internal citations omitted); see also Parrino v. FHP, Inc., 146 F.3d 699, 705 (9th Cir. 1998) (superseded by statute on other grounds). Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 8 of 21 710386.0002/6875754.1 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 4 - CUMULUS DEFENDANTS’ MOTION TO DISMISS Plaintiffs’ programming. (SAC ¶ 38.) As the Cumulus Defendants previously explained in their motion to dismiss Plaintiffs’ original Complaint, the Rep Agreement was part of a litigation settlement agreement that resolved three lawsuits between the parties in 2014. The Rep Agreement, which was for a two-year term between March 5, 2014 and March 4, 2016, required Westwood to use “commercially reasonable efforts to sell” advertising spots in TRNE’s programs, but permitted Westwood to make determinations about, inter alia, “buys, sales, packages, offers, program vehicles and the bundling thereof” at its “sole discretion.” (Rep Agreement at §§ 1.1, 3.1.) The Rep Agreement also allowed Westwood to make decisions for the “benefit [of] other producers of content, including [Westwood]” and gave it “sole discretion” to allocate revenue between syndicators based on its consideration of various factors, including “the reported audience [], type of [a]dvertisements, [a]dvertisors’ criteria [], and [] demand for the programs . . . .” (Id. at §§ 3.1, 4.1.) TRNE retained the right to examine certain Westwood “books and records” related to the sale of advertising for TRNE’s programs and dispute Westwood’s calculations “within six months” of receiving a final statement for each year, and pursue any “rights or remedies” if the parties could not resolve their dispute within 60 days. (Id. at § 5.) TRNE also “disclaim[ed] any right to contest [allocation decisions] made by” Westwood. (Id. at § 4.1.) The Cumulus Defendants’ Alleged Breach of the Rep Agreement. Plaintiffs’ allegations related to the Cumulus Defendants’ alleged breach of the Rep Agreement are identical to the allegations in the original Complaint. As they did in the original Complaint, Plaintiffs continue to allege that “Defendants” (without specifying which Defendants) have “continued”-since the Settlement Agreement that released the Defendants-”to engage in unlawful, wrongful, improper and/or tortious actions, in order to enrich themselves at the expense of Plaintiffs and other Independent Radio Syndicators.” (Compare SAC ¶ 42 with Compl. ¶ 60.) As in the original Complaint, Plaintiffs allege that “Defendants have not been transparent in their allocations,” and have engaged in an “Allocation Fraud” by reducing “the disclosed allocation of ad revenue” Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 9 of 21 710386.0002/6875754.1 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 5 - CUMULUS DEFENDANTS’ MOTION TO DISMISS owed to Plaintiffs and claiming “an outsized share of the total ad revenue from a bundle for” themselves. (Compare SAC ¶¶ 42-50 with Compl. ¶¶ 60-67.) In addition, Plaintiffs claim Defendants have “failed to perform its [sic] ad rep services reasonably” because they transferred an employee to an affiliate in order to “underperform in sales activity under the Rep Agreement,” and have “commencing in October of 2015, [] failed to pay over even those amounts actually due to Plaintiffs, based upon” acknowledged sales. (Compare SAC ¶ 50 with Compl. ¶ 68.) Defendants’ Alleged Fraudulent Conduct. Plaintiffs continue to allege only that Defendants induced TRNE “to enter into the Rep Agreement by making multiple representations to Plaintiffs that Cumulus, as the new owner of Westwood, would ensure that prior wrongful conduct and other improprieties by Westwood would not be repeated, and, that, in particular, Cumulus would ensure that allocations of revenues” would be made in a “fair, proper and correct manner.” (Compare SAC ¶ 39 with Compl. ¶ 57.) While Plaintiffs have added an allegation that Defendants “made representations at the time the parties entered into the Rep Agreement that Defendants would not engage in any of the wrongful or disputed conduct against Plaintiffs,” they fail to identify any specific representation, the person who made the representation, the date when the representation was made, or to whom the representation was made. (SAC ¶ 84.) In addition, Plaintiffs allege they “relied on this representation to their detriment,” but do not identify any action they took in such reliance. (Id.) The Cumulus Defendants’ Relationships With Other Defendants. Plaintiffs allege that WYD Media Management LLC (“WYD”) “produces and syndicates spoken word radio programming” and is somehow related to the Cumulus Defendants because it launched a new “sales arm” with a former employee of Westwood. (SAC ¶ 36.) WYM Media Management LLC (“WYM”) supposedly “serves as a Contracted Ad Rep” for WYD. (SAC ¶ 37.) Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 10 of 21 710386.0002/6875754.1 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 6 - CUMULUS DEFENDANTS’ MOTION TO DISMISS ARGUMENT I. LEGAL STANDARDS A. Plaintiffs Must Plead Facts Giving Rise to Facially Plausible Claims to Survive a Motion to Dismiss To survive a motion to dismiss pursuant to Rules 8 and 12(b)(6) of the Federal Rules of Civil Procedure, Plaintiffs must plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). This obligation requires more than the “sheer possibility” that a defendant has acted unlawfully. Id.; see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “[A] formulaic recitation of the elements of a cause of action” will not shield a complaint from dismissal. Twombly, 550 U.S. at 555. Moreover, a court need not credit legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678-79 (“Rule 8 . . . does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.”). II. TRNE’S CONTRACT CLAIM SHOULD BE DISMISSED A. TRNE Has Failed to Identify Contractual Provisions the Cumulus Defendants have Breached The first cause of action for breach of contract alleges that Westwood breached the Rep Agreement by: (1) underpaying and failing to pay advertising revenues; (2) failing to include Plaintiffs’ programs in “appropriate advertising bundles”; (3) failing to pay “other amounts clearly due for advertising revenues of Plaintiffs collected by Westwood”; (4) failing to provide accounting reports; (5) failing to use “commercially reasonable efforts in performing Westwood’s duties”; and (6) refusing to permit Plaintiffs to access “Westwood’s books and accounting records.” (SAC ¶ 60; compare with Compl. ¶ 120.)9 TRNE has not cured the deficiencies the Court previously identified because it fails to “assert any specific facts regarding payments that were or were not made in breach of this agreement,” “specific facts pertaining to 9 The Court previously found that only TRNE is a party to the Rep Agreement. (Order at 12; Rep Agreement at 1.) Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 11 of 21 710386.0002/6875754.1 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 7 - CUMULUS DEFENDANTS’ MOTION TO DISMISS record inspection,” or explain how Westwood failed to use “commercially reasonable” efforts to sell TRNE programming. (Order at 12.) Ignoring all of this, TRNE has amended its contract claim to only state that Westwood has not acted “in good faith or in a commercially reasonable manner” without attempting to allege what would be commercially reasonable. (SAC ¶ 60.) First, despite multiple opportunities to re-plead, TRNE still fails to allege any facts in support of its claim that Westwood under-allocated advertising revenues, or even how revenues should be allocated pursuant to the parties’ agreement. TRNE continues to only allege how allocations “should” be made under some general practice that is not alleged to be a contractual provision. (Compare SAC ¶¶ 31-32 with Compl. ¶¶ 33-34.) Because TRNE fails to cite any specific contractual provision, it is not clear whether it contends Westwood breached this “practice” or an actual contractual agreement. See, e.g., Ziya v. Global Linguistic Solution, 3:11- CV-01398-MO, 2012 WL 1357678, *2 (D. Or. Apr. 19, 2012) (dismissing breach of contract claim where plaintiff failed to allege “the specific term of the contract that [defendants] breached and the specific damages she suffered”). Moreover, the Rep Agreement makes clear that Westwood’s failure to collect 100% of advertising revenues would not constitute a breach of the parties’ agreement. (E.g., Rep Agreement at § 4.2.) Indeed, the contract provides that allocations are made by Westwood “in its sole discretion, and [TRNE] disclaims any right to contest such allocations . . . .” (Id.) Thus, TRNE’s regurgitated allegations do not establish that mere “underpayment” is even an actionable breach. Second, TRNE has not (and cannot) plead that Westwood was contractually obligated to secure placement of their spots in the advertising bundles sold. To the contrary, the Rep Agreement permits Westwood to bundle TRNE’s programs at its “sole discretion.” Id. at § 3.1. Absent such an obligation, TRNE does not plead a breach. Third, TRNE does not identify any “clearly due” amount owed. Fourth, while the Rep Agreement allows TRNE to examine “the appropriate portions of [] books and records related solely to” TRNE’s programs once a year (Rep Agreement at § 5 Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 12 of 21 710386.0002/6875754.1 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 8 - CUMULUS DEFENDANTS’ MOTION TO DISMISS (emphasis added)), TRNE’s allegations do not describe the circumstances of its demand. In a failed attempt to cure the deficiency the Court previously identified, TRNE now generally alleges that it “demanded the right to inspect relevant portions of the books and records of Westwood,” that its initial complaint “constitutes further notice of Plaintiffs’ demands.” (SAC ¶¶ 61-62.) TRNE also alleges its “request was within the time frame outlined in the Rep Agreement.” (SAC ¶ 61.) That is wholly insufficient because TRNE does not allege when it made these demands or what it demanded. The Rep Agreement requires any request for examination to be made within six months of TRNE receiving each year’s final statement, and the parties to use “best efforts” to resolve any dispute for 60 days. (Rep Agreement at § 5.) As the party making the demand, TRNE certainly has knowledge of the dates of any attempted pre- suit dispute resolution. That factual allegation would allow the Court to determine if its complaint is “plausible” in light of the contractual provision. A party’s failure to comply with contractually required pre-suit dispute resolution is of course grounds for dismissal. See, e.g., MCC Dev. Corp. v. Perla, 81 A.D. 3d 474, 474 (N.Y. App. 2011) (failure to satisfy condition precedent to filing suit grounds for dismissal); Delameter v. Anytime Fitness, Inc., 722 F. Supp. 2d 1168, 1180-81 (E.D. Cal. 2010) (“[t]here is no dispute that the parties have not engaged in mediation. . . . . Delameter failed to satisfy the condition precedent necessary to trigger the right to initiate litigation”); Stone & Webster, Inc. v. Ga. Power Co., 968 F. Supp. 2d 1, 9-10 (D.D.C. 2013) (dismissing the suit “where a contractual condition precedent to filing suit [was] satisfied after the [p]laintiffs file[d] suit”). Merely alleging that it has complied-without any specificity-precludes any meaningful review of the plausibility of TRNE’s allegation. Fifth, TRNE pleads no facts in support of its conclusory allegation that Westwood failed to “use commercially reasonable efforts.” (SAC ¶¶ 59-64.) The Court found “only that an agreement was made that Westwood would attempt sales.” (Order at 13.) That is hardly surprising given that the very purpose of the parties’ Settlement Agreement (and concurrent Rep Agreement) was to resolve the parties’ disputes and “quiet[] litigation.” Ahern v. Central Pac. Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 13 of 21 710386.0002/6875754.1 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 9 - CUMULUS DEFENDANTS’ MOTION TO DISMISS Freight Lines, 846 F.2d 47, 48 (9th Cir. 1988). The Rep Agreement was clearly structured to achieve that purpose by giving Westwood discretion in deciding how to bundle programs and allocate revenue in its “sole discretion,” requiring that Plaintiffs raise any dispute in a timely manner, and requiring pre-suit dispute resolution efforts. TRNE has failed to cure-or even attempt to cure-the deficiencies the Court identified with its breach of contract claim. Nor could it. The claim must thus be dismissed with prejudice. B. Plaintiffs’ Related Unjust Enrichment, Implied Covenant, and Conversion Causes of Action Fail Even though Plaintiffs now acknowledge that only TRNE and Westwood were parties to the Rep Agreement (SAC ¶¶ 59-64), they continue to allege conversion (SAC ¶¶ 65-69), unjust enrichment (SAC ¶¶ 90-94), and implied covenant (SAC ¶¶ 95-100) causes of action on behalf of all Plaintiffs, and against multiple defendants. Plaintiffs allege conversion against Cumulus, Westwood, and Steinhauer; unjust enrichment against Westwood and Cumulus; and implied covenant against Westwood. Each cause of action is, however, based entirely on an alleged breach of contract. See, e.g., SAC ¶ 66 (alleging conversion based on an alleged refusal of Defendants to “pay [] revenues” collected on Plaintiffs’ behalf); ¶ 91 (“Plaintiffs . . . permitt[ed] Westwood to sell Commercial Inventory”-presumably pursuant to the Rep Agreement-and Westwood and Cumulus have been unjustly enriched); ¶¶ 96-97 (“there is an implied covenant of good faith and fair dealing inherent in every contract,” which Westwood has breached (emphasis added)). Because only TRNE and Westwood were parties to the Rep Agreement, the second, sixth, and seventh causes of action fail to the extent any other entity is named as a plaintiff or defendant. Moreover, TRNE’s claims fail on the merits. TRNE continues to allege unjust enrichment as its sixth cause of action under Oregon law. The elements of this claim “are a benefit conferred, awareness by the recipient that a benefit has been received and, under the circumstances, [that] it would be unjust to allow retention of the benefit without requiring the Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 14 of 21 710386.0002/6875754.1 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 10 - CUMULUS DEFENDANTS’ MOTION TO DISMISS recipient to pay for it.” Edward D. Jones & Co. v. Mishler, 161 Or. App. 544, 569 (1999) (internal citations and quotations omitted). TRNE’s allegations with respect to this claim are so generalized, however, that they fail for all of the same reasons as its breach of contract claim. (SAC ¶¶ 90-94.) Specifically, TRNE fails to allege exactly how Westwood “unjustly” failed to return benefits comparable to any benefits they received from TRNE. In their original Complaint, Plaintiffs “fail[ed] to specify an identifiable benefit conferred that is germane to Plaintiffs.” (Order at 15.) Their allegations were limited to explaining “by way of example” how programming content should be bundled, and an assertion that it would be unjust to allow Defendants to receive the benefits of Plaintiff’s programming without compensation. The Court found that allegation insufficient because “a complaint must state more than a ‘suspicion’ to proceed” and the Court cannot “presume a bad act from an opportunity to perform a bad act.” (Order at 15.) TRNE has not alleged any additional facts that would support a finding that Westwood somehow “receive[d the] benefits” of Plaintiffs’ programming without paying in full. (SAC ¶¶ 90-94.) Instead, TRNE has merely added a conclusory allegation that “Defendants were actually enriched” and that “Westwood and Cumulus have not conferred any corresponding benefit.” (SAC ¶ 92.) The unjust enrichment claim fails as a matter of law, and must be dismissed with prejudice. TRNE also conclusorily alleges a breach of the implied covenant of good faith and fair dealing. (SAC ¶¶ 95-100.) Under New York law, which governs this contract, “‘[n]o obligation can be implied . . . which would be inconsistent with other terms of the contractual relationship.” Murphy v. American Home Products Corp., 58 N.Y.2d 293, 304 (N.Y. 1983). “The covenant of good faith and fair dealing cannot be construed so broadly as to effectively nullify other express terms of the contract, or to create independent contractual rights.” National Union Fire Ins. Co. of Pittsburgh, PA v. Xerox Corp., 25 A.D. 3d 309, 310 (N.Y. App. Div. 1st Dept. 2006). The implied covenant “does not vary the substantive terms of the contract or impose obligations inconsistent with the terms of the contract.” Morrow v. Red Shield Ins. Co., 159 P.3d 384, 388- Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 15 of 21 710386.0002/6875754.1 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 11 - CUMULUS DEFENDANTS’ MOTION TO DISMISS 39 (Or. App. 2007) (citation omitted). TRNE has failed to plead how Westwood’s conduct violated the implied covenant other than by allegedly breaching the Rep Agreement. As explained above, TRNE’s breach of contract claim fails as a matter of law, and the implied covenant claim cannot survive and should be dismissed with prejudice. The related cause of action for conversion likewise fails to state a claim. (SAC ¶¶ 65- 69.) Conversion is the “intentional exercise of dominion or control over a chattel which [] seriously interferes with the right of another to control it.” Becker v. Pac. Forest Indus., Inc., 211 P.3d 284, 287 (Or. App. 2009) (citation and quotation omitted). TRNE has not identified any “revenues” to which it is entitled. Moreover, “[t]he tort of conversion requires chattel” (Order at 17-18), which is “‘[m]ovable or transferable property; personal property; esp. a physical object capable of manual delivery.’” Rapacki v. Chase Home Finance LLC, 797 F. Supp. 2d 1085, 1092 (D. Or. 2011) (quoting Black’s Law Dictionary 268 (9th ed. 2009)). While money may be chattel, “there can be no conversion of money, unless it was wrongfully received by the party charged with conversion or unless such party was under obligation to return the specific money to the party claiming it.” Wood Indust. Corp. v. Neil Rose, 530 P.2d 1245, 1248 (Or. 1975) (internal citations omitted). As in their original Complaint, TRNE has failed to “identify sums, approximation of sums, or account holdings to which [it] claims right of possession” (Order at 17-18) and instead alleges it will “determine[] at trial” the sums converted. The conversion claim should thus be dismissed with prejudice. III. THE BREACH OF FIDUCIARY DUTY CLAIM FAILS AS A MATTER OF LAW Plaintiffs’ third purported cause of action for breach of fiduciary duty fails as a matter of law and should be dismissed. “[T]o recover for breach of fiduciary duty, the plaintiff must prove: (1) the existence of a fiduciary relationship between the parties; (2) a breach of one or more of the fiduciary duties arising out of that relationship; and (3) damage to the plaintiff resulting from a breach of one or more of those duties.” Spada Properties, Inc. v. Unified Grocers, Inc., 121 F. Supp. 3d 1070, 1090 (D. Or. 2015). A fiduciary duty exists only where the Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 16 of 21 710386.0002/6875754.1 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 12 - CUMULUS DEFENDANTS’ MOTION TO DISMISS parties are in a “special relationship” that obliges one party to pursue the other’s best interests. Conway v. Pac. Univ., 924 P.2d 818, 821 (Or. 1996). The focus is on whether the “nature of the parties’ relationship itself allowed one party to exercise control in the first party’s best interests.” Bennett v. Farmers Ins. Co., 26 P.3d 785, 799 (Or. 2001) (emphasis in original). Where the parties have a contractual relationship, there is no fiduciary relationship unless the agreement suggests one party would “relinquish control over his business” and the other would “exercise independent judgment” on the first’s behalf. Id. at 800. Plaintiffs allege that the Rep Agreement alone gave rise to a fiduciary relationship. (See SAC ¶¶ 70-74-fiduciary duty exists because “Westwood acts as a Contracted Ad Rep on Plaintiff[s’] behalf”.) First, as noted above, only TRNE was a party to the agreement. (See supra at 6, n.9; Rep. Agreement at 1.) Claims by the other plaintiffs thus fail. Moreover, TRNE expressly disclaimed such an agency relationship in the Rep Agreement. (See, e.g., Rep Agreement at § 2.2 (Westwood “shall have the right, but not the obligation, to act as the principal network radio sales representative”); §§ 1.1-1.2 (TRNE may sell advertising time through other means, and Westwood’s services “shall be non-exclusive”).) Nothing in the agreement suggests that there was a “special relationship” whereby TRNE “relinquish[ed] control over their business.” Bennett, 26 P.3d at 800. “The mere fact that in the course of their business relationships the parties reposed trust and confidence in each other does not impose any corresponding fiduciary duty . . .” City Solutions, Inc. v. Clear Channel Commc’ns, Inc., 201 F. Supp. 2d 1048, 1050 (N.D. Cal. 2002). In addition, as the Court previously found, TRNE has failed to allege any breach by Westwood. (Order at 16-17.) TRNE cannot convert Westwood’s arms-length contractual duties into fiduciary obligations. The third cause of action should be dismissed with prejudice. IV. PLAINTIFFS’ TORTIOUS INTERFERENCE CLAIM FAILS Plaintiffs’ fourth cause of action for tortious interference with contractual relations requires Plaintiffs to allege: “(1) the existence of a professional or business relationship . . ., (2) Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 17 of 21 710386.0002/6875754.1 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 13 - CUMULUS DEFENDANTS’ MOTION TO DISMISS intentional interference with that relationship, (3) by a third party, (4) accomplished through improper means or for an improper purpose, (5) a causal effect between the interference and damage to the economic relationship, and (6) damages.” McGanty v. Staudernaus, 901 P.2d 841, 844 (Or. 1995) (citations omitted). The Court previously dismissed Plaintiffs’ tortious interference claim because in their “forty-three page Complaint [Plaintiffs made] no clear statement of the relationship, contractual or otherwise, that Plaintiffs have with any identifiable talk radio host.” (Order at 20.) Despite two rounds of amendments, Plaintiffs’ 34-page SAC still does not identify any “host” relationship with which these Defendants interfered, and further fails to plead: (1) that these Defendants did anything independently “improper” to interfere with Plaintiffs’ relationships; (2) there was any disruption in Plaintiffs’ relationships; or (3) Plaintiffs have suffered any economic harm as a result. (SAC ¶¶ 75-81.) Plaintiffs’ allegations do not satisfy the standards of Iqbal and Twombly and must be dismissed with prejudice. V. PLAINTIFFS’ FRAUD CLAIM IS INSUFFICIENTLY PLEADED The Federal Rules of Civil Procedure require a party alleging “fraud or mistake” to “state with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). The rule requires plaintiffs to “give defendants notice of the particular misconduct which is alleged to constitute fraud . . . so that they can defend against the charge and not just deny that they have done anything wrong.” Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985) (emphasis added). To plead a fraud claim under Oregon law, Plaintiffs are required to plead with particularity: (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker’s knowledge of its falsity or ignorance of its truth; (5) his intent that it should be acted on by the person and in the manner reasonably contemplated; (6) the hearer’s ignorance of its falsity; (7) his reliance on its truth; (8) his right to rely thereon; and (9) his consequent and proximate injury. Webb v. Clark, 546 P.2d 1078, 1080 (Or. 1976). Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 18 of 21 710386.0002/6875754.1 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 14 - CUMULUS DEFENDANTS’ MOTION TO DISMISS Plaintiffs’ allegations in the SAC are nearly identical to those in the original Complaint. (Compare SAC ¶¶ 82-89 with Compl. ¶¶ 140-147.) They continue to allege that TRNE “entered into the Rep Agreement for the benefit of all Plaintiffs” based on some “fraudulent misrepresentation.” (SAC ¶ 87.) In other words, Plaintiffs claim that the parties’ 2014 Settlement Agreement, and attached Rep Agreement, were fraudulently induced. As an initial matter, Plaintiffs’ fraud claim fails because Plaintiffs do not dispute the validity of the Settlement Agreement or Rep Agreement; the first cause of action alleges the validity and breaches of the very same agreement. (SAC ¶¶ 59-64.)10 Further, Plaintiffs only allege a vague representation that Cumulus and Westwood had a “desire to start a new leaf [in their] dealings with Independent Radio Syndicators . . . [and] rectify[] the past unlawful actions of Westwood.” (SAC ¶ 84.) Plaintiffs do not plead what “unlawful actions” they assumed Westwood would rectify, or what material fact they were relying on based on the supposed statement of a “desire to start a new leaf.” Plaintiffs also repeat that Defendants made representations that they “would not engage in any of the wrongful or disputed conduct against Plaintiffs which was the basis for the first lawsuit between these parties.” (Id.) It remains unclear from the SAC what specific false representations are at issue, how they were false, why they were material, how Plaintiffs relied on the representations, whether Plaintiffs had the right to rely on the statements, and whether Plaintiffs entered into the Settlement and Rep agreements because of the representations. Indeed, the actual text of the Rep Agreement belies such reliance: it sets forth an integration clause that disclaims “any and all former agreements and understandings, whether oral or written . . . .” (Rep Agreement at § 8.5). The specificity requirement of Rule 9(b) includes, of course, “the who, what, when, where, and how of the misconduct charged.” Valencia v. Sharp Elecs. Corp., 561 F. App’x. 591, 593 (9th Cir. 2014). In addition, where, as here, plaintiffs plead fraud 10 Of course, the parties’ settlement agreement expressly released Cumulus and Westwood “from any and all claims, causes of action, demands, damages, liabilities, and losses of any nature that were or could have been brought,” including the “past unlawful acts” that supposedly give rise to their fraud claim. (Settlement Agreement at § 3(a).) (SAC ¶¶ 39-42.) Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 19 of 21 710386.0002/6875754.1 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 15 - CUMULUS DEFENDANTS’ MOTION TO DISMISS based on alleged statements of future intention, they must plead an “inten[tion] not to perform when []the promises [were made, or allege that] the promise[s were made] with reckless disregard for whether they could perform.” Communications Group, Inc. v. GTE Mobilnet of Or., 871 P.2d 502, 504-05 (Or. App. 1994); see also Maier v. Pac. Heritage Homes, Inc., 72 F. Supp. 2d 1184, 1197 (D. Or. 1999) (mere “nonperformance of a promise made, or the failure to carry out an intention expressed, in the course of negotiations, is neither fraud nor evidence of fraud”) (citations and quotations omitted); Valencia, 561 F. App’x. at 593-94 (where a party alleges intent not to perform, the intent allegations “should be clear, specific and unequivocal” and “usually must at least [include] the date and method by which the promise was delivered”) (citations and quotations omitted). Other than a statement that representations were “knowingly and intentionally false, misleading and fraudulent,” Plaintiffs do not plead any facts that would support a claim of any intentional misrepresentation. The fraud allegation is vague to the point of being incomprehensible, and certainly does not meet the heightened pleading standard of Rule 9. It must be dismissed with prejudice. CONCLUSION For all of the foregoing reasons, the Second Amended Complaint should be dismissed with prejudice. DATED: February 15, 2017 LANE POWELL PC By /s/ Vicki L. Smith Vicki L. Smith, OSB No. 854410 Telephone: (503)778.2138 QUINN, EMANUEL URQUHART & SULLIVAN, LLP Richard A. Schirtzer, admitted pro hac vice richardschirtzer@quinnemanuel.com Christopher Tayback, admitted pro hac vice christayback@quinnemanuel.com Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 20 of 21 710386.0002/6875754.1 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 16 - CUMULUS DEFENDANTS’ MOTION TO DISMISS Prashanth Chennakesavan, admitted pro hac vice prashanthchennakesavan@quinnemanuel.com Telephone: (213) 443-3000 Attorneys for Defendants Cumulus Media, Inc.; Westwood One, Inc.; Lewis W. Dickey, Jr.; and Charles Steinhauer Case 1:16-cv-00609-CL Document 54 Filed 02/15/17 Page 21 of 21 Appendix Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 1 of 48 ALIOTO LAW FIRM Joseph M. Alioto, SBNCSBN #42680,Admitted Pro hac vice pending jmaioto@aliotolaw.comjosephalioto@mac.com ALIOTO LAW FIRM One Sansome Street San Francisco, CA 94104 Telephone: (415) -434-8900Facsimile: ( Phone/415) -434-9200 Fax CAUBLE, CAUBLE & SELVIG, LLP Christopher L. Cauble, OSB No. 962374 ccauble@thecaublefirm.com Rachele R. Selvig, OSB No. 095016 rselvig@thecaublefirm.com CAUBLE, CAUBLE & SELVIG, LLP Max C. Whittington, OSB No. 154474 mwhittington@thecaublefirm.com 111 SE Sixth Street Grants Pass, OR 97526 Telephone: (541) -476-8825Facsimile: ( Phone/541) -471-1704 Fax SEVERAID & GLAHN, PC Ronald H. Severaid, CSBN #78923, Pro hac vice pending Rhseveraid@sbcglobal.net Carter Glahn, CSBN #242378, Pro hac vice pending cglahn@sbcglobal.net 1787 Tribute Road, Suite D Sacramento, CA 95815 916-929-8383 Phone/916-925-4763 Fax Attorneys for Plaintiffs IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON, MEDFORD DIVISION TALK RADIO NETWORK ENTERPRISES, LLC. an Oregon limited liability company; AMERICA'’S TALK NETWORK, INC., an Oregon corporation; AMERICA'’S LIFESTYLE RADIO NETWORK, INC., an Oregon corporation; and TALK RADIO NETWORK ENTERTAINMENT, INC., an Oregon corporation;. Plaintiffs, v. Case No.: 1:16-cv-00609-CL SECOND AMENDED COMPLAINT FOR ANTITRUST VIOLATIONS, UNFAIR COMPETITION, BREACH OF CONTRACT, CONVERSION, BREACH OF FIDUCIARY DUTY, TORTIOUS INTERFERENCE WITH CONTRACT Page 1 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 1 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 2 of 48 CUMULUS MEDIA, InINC., a Delaware corporation; WESTWOOD ONE, INC., a Delaware corporation; COMPASS MEDIA NETWORKS, LLC, a Delaware limited liability company; COMPASS MEDIA MARKETING, LLC, a Delaware limited liability company; WYD MEDIA MANAGEMENT, LLC, a Connecticut limited liability company; WYM MEDIA MANAGEMENT, LLC, a Connecticut limited liability company; LEWIS W. DICKEY, JR.; and CHARLES STEINHAUER;. Defendants., AND PROSPECTIVE ADVANTAGE, FRAUD AND OTHER STATE LAW CLAIMS JURY TRIAL DEMANDED The plaintiffs in the above-captioned action ("Plaintiffs") hereby allege as follows: INTRODUCTION 1. The above-captioned action (this "Action") arises out of multiple mergers, acquisitions and agreements through which the defendants in this Action ("Defendants") have taken control of, gained market power in, or benefitted from control of, two markets: (i) the market within the United States of America for services of advertising representatives willing to provide ad rep services with respect to news radio and talk radio programming that is produced for syndication in the national radio market by companies which are not radio station owners and are not affiliates of any such station owners (the "Independent National Syndication Ad Rep Market"); and (ii) the market within the United States of America for distribution of spoken word news and/or talk content by a producer or syndicator via individual terrestrial radio stations, which_ then broadcast such programming in their local markets (the "News/Talk Radio Spoken Word Content Intellectual Property Market"). This Action also arises out of continuing actions by Defendants,“Action”) arises out of multiple wrongful actions, from and after February 28, 2014, to further increase their market power in the Independent National Syndication Ad Rep Market and the News/Talk Radio Spoken Word Content Intellectual Property Market (the Page 2 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 2 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 3 of 48 "Subject Markets") by ongoing unlawful, improper, unfair and anticompetitive actions, as hereinafter alleged, and by unlawful, wrongful and improper use of leverage based upon the market power of defendant CUMULUS MEDIA, INC. ("Cumulus") in yet a third radio market- ownership of AM and FM terrestrial radio stations within the United States of America which Cumulus obtained by multiple mergers and acquisitions. In this latter regard, Cumulus has become one of the largest terrestrial radio station owners in the United States in terms of total stations and total markets, and the primary radio station owner in the United States in terms of strength of markets and strength of stations within the top national markets, and Plaintiffs are informed and believe, and on that basis allege, that Defendants, on an ongoing basis, utilize the market power of Cumulus in the ownership of AM and FM terrestrial stations within the United States, in combination with other anticompetitive, improper and, unlawful tactics alleged, in this Complaint, as improper and anticompetitive leverage to further increase and maintain the market power of Defendants in the Subject Markets.by the defendants in this Action (“Defendants”). 2. In addition to the unlawful, anticompetitive conduct of Defendants hereinabove alleged, Plaintiffs are informed and believe, and on that basisPlaintiffs allege, that Defendants, whethereither collectively or in varying combinations, also: (i) since at least October of 2015, have converted money owing to certain of their national radio syndication clients who are not station owners or affiliates of, or collaborators with, station owners ("“Independent Radio Syndicators"”), by failing to pay funds clearly due to certain of such Independent Radio Syndicators or their duly designated representatives, including in particular the plaintiffs in this Action ("Plaintiffs"), from advertising revenues collected by. Defendants, in their capacities as advertising sales representatives for Independent Radio Syndicators ("“Contracted Ad Reps"”), for the accounts of such Independent Radio Syndicators; (ii) subsequent to February 28, Page 3 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 3 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 4 of 48 2014,from and after March 5, 2014 have converted additional amounts from Independent Radio Syndicators, including without limitation Plaintiffs, by engaging in fraudulent allocations of advertising revenues collected and/or handled by Defendants, in their capacities, as Contracted Ad Reps, pursuant to which Defendants overstate the portion of the amounts from certain "“bundled"” bulk advertising buys (in which an advertiser pays a specified price for advertisements to run in multiple radio programs produced by multiple content producers) that are properly allocable to programming ,of certain Defendants or their affiliates and collaborators, and correspondingly understate the portions of such bundled advertising revenues that are properly allocable to Plaintiffs and other Independent Radio Syndicators ("“Allocation Fraud"”), for the purpose of knowingly and intentionally converting funds properly payable to Plaintiffs and other Independent Radio Syndicators into overpayments to certain Defendants and their affiliates and/or collaborators; (iii) induced Plaintiffs to enter into various transactions on or about February 28, 2014, through false, misleading and fraudulent promises and other misrepresentations, without any bona fide intention of meeting these representations, and without complying with such representations at the time for performance; (iv) subsequent to February 28,from and after March 5, 2014, have routinely breached binding contractual commitments concerning advertising representation services, including without limitation failure to pay revenue balances clearly due to Independent Radio Syndicators, including in particular Plaintiffs, from and after October of 2015, in addition to engaging in Allocation Fraud,; (iv) from and after March 5, 2014, have engaged in deliberate underperformance and/or nonperformance of advertising sales responsibilities, and(v) have engaged in outright failure and refusal from and after October of 2015 to provide required reports on ad revenues collected for the accounts of Plaintiffs, and of the resulting distributions due with respect thereto; and (v) subsequent to Page 4 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 4 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 5 of 48 February 28, 2014,vi) have engaged in multiple other improper, wrongful and/or unlawful actions from and after March 5, 2014, as alleged in this Complaint. 3. In addition to violating federal and state statutes and common law, Defendants' conduct poses a significant risk to free speech under the First Amendment because it holds the prospect of eliminating or substantially reducing the number of Independent Radio Syndicators, and limiting the news and talk radio broadcasts available within the Unites States. As a consequence of that conduct, the diversity of voices and viewpoints produced on news and talk radio within the United States is likely to decline.Plaintiffs are further informed and believe, and on that basis allege, that Defendants, on or about February 28, 2014, induced Plaintiffs to enter into various transactions through false, misleading and fraudulent promises and other misrepresentations, without any bona fide intention of meeting these representations, and without complying with such representations at the time for performance. PARTIES 4. Plaintiff TALK RADIO NETWORK ENTERPRISES, LLC ("“TRNE"”) is an Oregon limited liability company with its principal place of business in the State .of Oregon. 5. Plaintiff AMERICA'’S TALK NETWORK, INC. ("“ATN"”) is an Oregon corporation with its principal place business in the State of Oregon. 6. Plaintiff AMERICA'’S LIFESTYLE RADIO NETWORK, INC. ("“ALRN"”) is an Oregon corporation with its principal place of business in the State of Oregon. 7. Plaintiff TALK RADIO NETWORK ENTERTAINMENT, INC ("“TRN-ENT"”) is an Oregon corporation with its principal place of business in the State of Oregon. Page 5 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 5 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 6 of 48 8. Plaintiffs are informed and believe, and on that basis allege, that defendant CUMULUS MEDIA, INC. (“Cumulus”) is a Delaware corporation with its principal place of business located in the State of Georgia for most of the time periods at issue in this Complaint. 9. Plaintiffs are informed and believe, and on that basis allege, that defendant WESTWOOD ONE, INC. ("“Westwood"”) is a Delaware corporation with its principal place of business in the State of New York. 10. Plaintiffs are informed and believe, and on that basis allege, that defendant COMPASSWYD MEDIA NETWORKSMANAGEMENT, LLC ("Compass Media"“WYD”) is a DelawareConnecticut limited liability company with its principal place of business in the State of New YorkConnecticut. 11. Plaintiffs are informed and believe, and on that basis allege, that defendant COMPASS MEDIA MARKETING, LLC ("Compass Marketing") is a Delaware limited liability company with its principal place of business in the State of New York. 12. Plaintiffs are informed and believe, and on that basis allege, that defendant WYD MEDIA MANAGEMENT, LLC ("WYD") is a Connecticut 'limited liability company with its principal place of business in the State of Connecticut.13. Plaintiffs are informed and believe, and on that basis allege, that defendant WYM MEDIA MANAGEMENT, LLC ("“WYM"”) is a Connecticut limited liability company with its principal place of business in the State .of Connecticut. 14.12. Defendant LEWIS W. DICKEY, JR. ("“Dickey"”) is an adult individual. Plaintiffs are informed and believe, and on that basis allege, that Dickey is a resident of the State of Georgia. Page 6 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 6 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 7 of 48 15.13. Defendant CHARLES STEINHAUER ("“Steinhauer"”) is an adult individual. Plaintiffs are informed and believe, and on that basis allege, that Steinhauer is a resident of the State of New York. JURISDICTION AND VENUE 16.14. This Court has subject matterdiversity jurisdiction over this Action: (i) pursuant to 28 U.S.C. § 1331 because one or more claims arise under the laws of the United States; (ii) pursuant to 15 U.S.C. § 15 and 28 U.S.C. § 1337, because one or more claims are asserted under the Clayton Act, 15 U.S.C. §§ 12 27; (iii) pursuant to § 28 U.S.C. §1337, because one or more claims are asserted under § 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, and § 2 of the Sherman Antitrust Act, 15 U.S.C. § 2; and (iv) pursuant to 28 U.S.C. § 1367, because the claims arising under state law are related to the claims within the Court's original jurisdiction. Additionally, as all of the parties1332 because Plaintiffs and the Defendants are citizens of different states and the amount in controversy exceeds $75,000, there exists Diversity Jurisdiction pursuant to 28 U.S.C sec. 1332.is greater than $75,000. 17.15. Venue is proper pursuant to 15 U.S.C. § 4, 15 U.S.C. § 5 and 15 U.S.C. § 22 because Defendants transact business in this District, and Plaintiffs are informed and believe, and on that basis allege, that Cumulus owns and/or operates multiple radio stations in the State of Oregonthis District, including without limitation a cluster of radio stations within the Eugene, Oregon radio market, within this District. Plaintiffs are further informed and believe, and on that basis allege, that venue is proper in this District, Medford Division because it is the District and Division in which Plaintiffs have their principal places of business, and in which the principal consequences of the anticompetitive actions and violations of the federal antitrust lawsDefendants alleged in this Complaint have occurred. Page 7 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 7 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 8 of 48 FACTUAL BACKGROUND 18.16. Plaintiffs are engaged in the production and/or national syndication of non-music, non-sports, spoken word radio programming, including both news and talk radio programming ("“Spoken Word Syndication"”). In particular, ATN, ALRN and TRN-ENT (the "“Syndication Plaintiffs"”) produce and syndicate, and/or have produced or syndicated, long form spoken word news and/or talk radio programming, and TRNE represents the Syndication Plaintiffs, and/or has represented the Syndication Plaintiffs, in affiliate relations and advertising sales.. 19.17. Radio syndicators or producers must share, on a confidential basis, a significant amount of confidential, proprietary information with their Contracted Ad Reps, and Plaintiffs have shared confidential and proprietary information with Westwood and Steinhauer as Contracted Ad Reps for Plaintiffs. 18. Plaintiffs are informed and believe, and on that basis allege, that: (i) subsequent to February 28,from and after March 5, 2014, Westwood and Steinhauer have shared confidential and proprietary information concerning Plaintiffs, obtained by Westwood and Steinhauer in the course of acting as Contracted Ad Reps for Plaintiffs, with the rest of the Defendants; and (ii) Defendants, subsequent to February 28,from and after March 5, 2014, have utilized Plaintiffs'’ confidential and proprietary information, provided to Westwood in confidence as Plaintiffs'’ Contracted Ad Rep, to the detriment of Plaintiffs, and to the benefit of Defendants in their efforts to expand, by improper and unlawful means, their market power within the News/Talk Radio Spoken Word Content Intellectual Property Market. A. The Market For Contracted Ad Rep Services 20.19. Radio programming can be produced by a station owner (whether directly or through an affiliated entity) or by Independent Radio Syndicators, such as Plaintiffs. When a Page 8 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 8 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 9 of 48 station owner produces a program, whether news/talk or some other format, it can place the program on its own stations and sell advertising time on those stations to air during that program. Such vertically integrated entities aremay be referred to as "“integrated networks."” Those stations may or may not also license the right to broadcast programming from Independent Radio Syndicators such as Plaintiffs. 21.20. Cumulus is an example of a company that operates an integrated network. Cumulus, both directly and via a merger with Westwood, and prior mergers with, and/or acquisitions of; producers .and/or syndicators of other radio programs, produces and syndicates numerous spoken word news/talk programs, as well as substantial programming in other genres (e.g., sports programming), in competition with Independent Radio Syndicators. At the same time, Cumulus owns, licenses and/or otherwise controls in excess of 450 radio stations, in approximately 90 radio markets, throughout the country. 22. Indeed, on a national basis; as a result of multiple mergers and acquisitions, Cumulus is the dominant force in ownership and/or operation of top radio stations within the largest radio markets in the United States. 23.21. In contrast to an integrated network, Plaintiffs and other Independent Radio Syndicators offer programs that are produced independently of station ownership. After a program is produced, it is syndicated across a series of radio station affiliates (which receive licenses to broadcast the programming and in turn agree to broadcast the programming in accordance with the applicable affiliation/licensing agreement), throughout a relevant geographic area. In Plaintiffs'’ case, programs which Plaintiffs produce, or, in the case of TRNE, represent, are syndicated nationally, ,in as many markets as Plaintiffs can find affiliate stations for their programs on acceptable terms. 24.22. Plaintiffs and other Independent Radio Syndicators generally engage in a barter-type exchange with radio' stations, pursuant to which Plaintiffs provide the stations with long form spoken word intellectual property content in exchange for Plaintiffs'’ right to sell Page 9 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 9 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 10 of 48 commercial advertising time, most of which is broadcast during Plaintiffs'’ programs, but some of which might be at other specified times ("“Commercial Inventory"”). Plaintiffs and other Independent Radio Syndicators generate revenue by selling the Commercial Inventory that they obtain through that barter exchange. 25.23. Plaintiffs sell the Commercial Inventory they obtain for two primary fowlsforms of advertising: (i) "“direct response"” advertising; and (ii) "“institutional"” advertising. 26. "24. “Direct response"” advertising is advertising from companies that seek to make a direct connection with the listener. Such advertising often asks the listener to contact the advertiser directly through a website, an e-mail address, or a toll-free phone number, and typically tracks those contacts to measure the response to the advertising. Direct response advertisers often purchase' Commercial Inventory within a specific program, generally for thirty seconds or one minute of air time. Plaintiffs sell direct response advertising both through Westwood and through other advertising representatives. 27.25. In contrast to direct response advertising, "“institutional"” advertising comes from companies that seek to advertise a brand image or announcements for a product, service, or store, and generally do not seek to track the response to specific advertisements via a website, e-mail addresses, or toll-free phone number. Solely by way of example, :“institutional"” advertising can include car brands such as Ford, consumer brands such as Tide or Skippy, appliance manufacturers such as Maytag, or national retail chains. such as Sears (e.g., advertisements announcing "“the '‘X'’ Labor Day sale going on now at your local '‘X'’ store"” are examples of institutional advertising, whereas an advertisement of special Valentine'’s Day gifts, that can be ordered by calling "“Y"” toll free number is an example of direct response advertising);. 28.26. Companies purchasing Commercial Inventory for "“institutional"” advertising generally do so through an agency, and do not buy Commercial Inventory on a program by program basis. Instead, they pay to reach a certain estimated number of listeners and/or listening time within a relevant demographic. For example, the principal demographic for national Page 10 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 10 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 11 of 48 "“institutional"” radio advertising is persons between the ages of 25-54. "“Institutional"” advertisers generally buy Commercial Inventory from a bundle of programs packaged together to provide the estimated number of listeners and/or listening time that they want to reach (or buy Commercial Inventory from existing program bundles with the price they pay based upon the total listening characteristics of the applicable bundle). The cost of the purchase generally is based on a single price for the totality of the Commercial Inventory they purchased in the bundle of programs that is subject to the buy. 29.27. The programs of Plaintiffs and other Independent Radio Syndicators, taken separately, generally do not reach a sufficient audience for institutional advertising. Thus, as a rule, Independent Radio Syndicators cannot sell institutional advertising directly to the institutional advertisers or their ad agencies. Instead, they must use the services of a Contracted Ad Rep, which pulls together programs from multiple syndicators to offer an advertiser, via their agency, a bundle of programs having a sufficient number of estimated listeners and/or total listening time. This market dynamic creates a nationwide market for the services of Contracted Ad Reps - the Independent National Syndication Ad Rep Market. 30.28. Contracted Ad Reps generally sell agencies Commercial Inventory from a "“bundle"” of programs at an agreed-upon total cost, and then distribute the net proceeds of that sale (after deduction of the agency fee of the ad agency), less the separate ad rep'’s commission, to the various syndicators whose programs comprised the "“bundle"”. 31.29. Having bundled Commercial Inventory for multiple programs for a price based upon the total size of the bundle of programs (i.e., for the total size and/or listening time of the audience for all of the programs or other broadcast times combined), the Contracted Ad Rep must allocate the amount paid by the advertiser, for the bundle of programs, combined, between the various programs which made up the bundle sold to the advertiser. 32.30. As the price paid by the advertiser for the bundle is based upon the audience size and/or listening time for the bundle as a. whole, which can be calculated by adding the aggregate Page 11 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 11 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 12 of 48 measurements for those factors for all programs or broadcast times in the bundle, it is possible to determine the relative proportion that each program contributed to the total listener characteristics of the bundle, and thus to determine the proportional value each program in the bundle contributed to the total amount paid by the advertiser for the "“bundle"”. As a result, it is possible to allocate the total payment for the "“bundle"” fairly between the multiple programs making up the "“bundle",” according to the relative portion each of the programs contributed to the total audience measurements for the "“bundle"” (but, as explained below, Westwood, under the implementation and oversight of Steinhauer, wrongfully fails to do so). 33.31. The gross amount of an advertising sale generally is reduced by two commissions before the remaining balance is distributed to the syndicators. First, the agency that is purchasing the advertising on behalf of the advertiser takes a commission, generally referred to as an "“agency fee."” Then, the Contracted Ad Rep takes a percentage commission (which is generally referred to as a "“sales commission"” or a "“sales rep commission"”) out of the remaining money. Only then are the remaining proceeds distributed to the syndicators. 34.32. By way of example, if an agency were to buy advertising from Westwood at a cost of $1 million for a specified audience size, Westwood would, in turn, assemble a bundle of programs which provides the requisite estimated audience size (or, alternatively, market a pre-bundled set of programs for sale with the pricing based upon the aggregate audience size and/or listening time for the pre-bundled set of programs), potentially including one or more programs syndicated by Plaintiffs. Of the total $1 million buy, if the advertiser'’s agency took a 15% agency fee off the top, that would leave $850,000 in advertising proceeds. Westwood should then determine the portion of the remaining $850,000 in net proceeds which is properly allocable to each program within the "“bundle"”, deduct Westwood'’s agreed commission for each program, and remit the remaining balance for each such program to the program'’s syndicator. If Plaintiffs'’ programs contributed 50% of the listeners and/or listening time to the Page 12 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 12 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 13 of 48 overall bundle, then Plaintiffs should receive 50% of the net proceeds (after agency), less Westwood'’s agreed commission amount(s), for Plaintiffs'’ programs. 35.33. In order for this system to work, the Contracted Ad Rep has to be honest about the Variousvarious aspects of each transaction, including the amount that the advertiser paid for the bundle and the share of listeners and/or listening time that any particular program provided for the bundle (and the proper proportional allocation that should be made based on the total amount paid and the prorata share of the measurement parameters contributed by the respective programs). If the Contracted Ad Rep is not forthcoming or honest about that, then the opportunity exists for substantial wrongdoing. As explained below, Defendants have taken advantage of that opportunity for wrongdoing to enrich themselves through a series of anticompetitive, fraudulent tactics, which Plaintiffs are informed and believe, and on that basis allege, include Allocation Fraud. 36.34. In particular, Westwood is not buying Commercial Inventory from the Independent Radio Syndicators, including Plaintiffs, at agreed 'prices and then reselling that Commercial Inventory to the advertisers for Westwood'’s .account;, as. to any profit it makes or loss it sustains in the resale. To the contrary Westwood is the sales agent/representative for the sale of the syndicators'’ Commercial Inventory, for the syndicators'’ accounts, collecting what the advertiser pays for the Commercial Inventory (less the agency fees claimed by the advertiser'’s ad agency), and remitting that balance, less only Westwood'’s agreed sales rep commission, stated as a percentage of what is collected (net of agency fees) for the applicable Commercial Inventory. 37.35. As such, Westwood is collecting sales proceeds for the sale of Commercial Inventory as the agent and representative of the syndicators, for the account of the syndicators, and holds and disburses such proceeds in trust for the syndicators. Accordingly, Plaintiffs are informed and believe, and on that basis allege, that Westwood and others involved in collecting, handling and disbursing the ad revenues received in trust for the accounts of their clients Page 13 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 13 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 14 of 48 (including Plaintiffs), assume the fiduciary duties of a trustee with respect to collection, allocation, disbursement and truthful reporting of the actual sales proceeds of the Commercial Inventory. 38. The radio advertising market within the United States has three identifiable submarkets: (i) national syndication advertising (the "Syndication Market"); (ii) national spot advertising (the "National Spot Market"); and (iii) the local advertising market (the "Local Market"). 39. The Local Market primarily consists of local businesses advertising on radio stations located in their market area, for the purpose of attracting local customers to their local place of business. 40. The National Spot Market consists of national advertisers, through their ad representatives, contracting' directly with radio stations throughout the country, in specific target markets. 41. As such, the Syndication Market is the relevant advertising market for the sale of Commercial. Inventory by Independent Radio Syndicators, such as Plaintiffs, and the Independent National Syndication Ad Rep Market is the relevant market for Contracted Ad Rep services within the Syndication Market for the particular Contracted Ad Rep services at issue in this Action. B. Westwood's Monopolization of the Independent National Syndication Ad Rep Market Through Mergers, Acquisitions And Collusive Agreements 42. Westwood is a product of multiple mergers and acquisitions, which, over time, allowed Westwood to achieve monopoly power within the Independent National Syndication Ad Rep Market. 43. The initial chain of such anticompetitive mergers and acquisitions includes the combination of two separate companies to form the company then known as Dial Global ("Dial Global"). Page 14 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 14 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 15 of 48 44. In or about June of 2008, Dial Global acquired Jones Media Group and its operating companies, Jones Media America, Jones Radio Networks, and JonesTM, from Jones International Ltd. (the "Dial/Jones Merger"). 45. Through the Dial/Jones Merger, Dial Global eliminated its major competitor in the Independent National Syndication Ad' Rep Market, and increased Dial Global's own market share within that market. 46. In August 2011, Dial Global announced an agreement to merge with Westwood (the "Dial/Westwood Merger"). The Dial/Westwood Merger was consummated on or about October 21, 2011, and Westwood is the resulting combined company. 47. Thereafter, on or about the end of December, 2013, Cumulus acquired Westwood. 48. As a result of 'such multiple. mergers and acquisitions, and other anticompetitive collaborations, partnerships, investments and other agreements, . . including without limitation partnerships, investments and/or collaborations with and by Cumulus and/or other Defendants subsequent to February 28, 2014, Defendants now face no meaningful competition in the Independent National Syndication Ad Rep Market. Indeed, Defendants now have an overwhelming share of, and control over, that market, which, upon information and belief, Plaintiffs allege to be well over 90%. 49. There are substantial barriers to entry to the independent National Syndication Ad Rep Market, due at least in part to significant network effects in that market. 50. In particular, any Contracted Ad Rep must have a stable of clients whose programs can be packaged together into bundles of sufficient size to attract larger institutional advertising buys. It also must have requisite relationships with the four major agencies that buy institutional advertising, and those major agencies generally have a strong preference for dealing with Contracted Ad Reps with which they have prior experiences, rather than new market entrants. Page 15 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 15 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 16 of 48 51. Perhaps due to the dominant position which Defendants, via Westwood, hold in the Independent National Syndication Ad Rep Market, Defendants continue to attempt to project certain false appearances of competition in that market. 52. To cite just one particular example, Compass Marketing was formed in late 2011 or early 2012, purportedly as an independent Contracted Ad Rep. Although Compass Marketing ostensibly competes with Westwood, Plaintiffs allege, on information and belief, that Westwood owns at least 50% of Compass Marketing, and further allege, on information and belief, that Compass Media (or its affiliates) also owns a significant stake in Compass Marketing. 53. Plaintiffs are informed and believe, and on that basis allege, that Westwood provides Compass Marketing with support systems and marketing services, and that, even though Compass Marketing is partly owned by Compass Media (or its affiliates), Compass Media uses Westwood as its Contracted Ad Rep, rather than its own affiliated Contracted Ad Rep company, thus creating the false impression to Independent Radio Syndicators of purported competition which is more illusory than real on close examination of the nature of the collaboration between the applicable entities. Plaintiffs are further informed and believe, and on that basis allege, that Defendants are continuing, to the present time, to take various actions to reduce active competition within the National Syndication Ad Rep Market by additional collusive collaboration agreements and other arrangements. 54. WYD produces and syndicates spoken word radio programming. WYD's founder and owner, Ron Hartenbaum, worked for Jones Media prior to the Dial/Jones Merger, and WYD maintains significant connections with Westwood, including involvement with various news/talk programs in which Westwood, and now Cumulus, apparently maintains an interest. 36. On or about July 7, 2014, WYD announced that it was launching a new ad rep “sales arm” WYD Media Ad Sales, LLC ("MAS"), with the Westwood Executive Vice President of Talk Sales (“Westwood’s Key Ad Rep”), who was at the time contractually committed by Westwood to be the primary Westwood contact and executive for Westwood’s sales rep services Page 16 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 16 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 17 of 48 for Plaintiff, now serving as the President of MAS. In doing so, Westwood and WYD collaborated to make Westwood’s Key Ad Rep unavailable to Plaintiffs. 55.37. Plaintiffs are informed and believe, and on that basis allege, that WYM is an affiliate of WYD that serves as a Contracted Ad Rep for, and offers "“affiliate relations"” services (i.e., assisting syndicators to find radio stations to carry a show and to handle customer relations with those stations once they do) to, WYD. C. Westwood's Relationship With Plaintiffs 56.38. On or about February 28, 2014, Westwood and TRNE (as the ad sales representative for the Syndication Plaintiffs) entered into a written Sales Representation Agreement (the '‘Rep Agreement"”), pursuant to which TRNE engaged Westwood as a sales representative for America'’s Morning News ("“AMN"”), and ,other programming which Plaintiffs produce or represent, to provide sales representation services, for Plaintiffs and their designated programs throughout the United States., and which provided that Westwood was to designate Westwood’s Key Ad Rep as the primary sales contact for Plaintiffs, which was a key determining factor for Plaintiffs in entering in to the Rep Agreement. 57.39. Cumulus and Westwood, through Dickey, the then CEO of Cumulus, induced TRNE, as the representative for Plaintiffs'’ programs, to enter into the Rep Agreement by making multiple representations to Plaintiffs that Cumulus, as the new owner of Westwood, would ensure that prior wrongful conduct and other improprieties by Westwood would not be repeated, and, that, in particular, Cumulus would ensure that allocations of revenues from bundled sales of Commercial Inventory would be made in a fair, proper and correct manner from that point forward, such that Plaintiffs would receive the proper level of advertising revenues they were entitled to going forward. Dickey, on behalf of Cumulus and Westwood, also represented that Cumulus would arrange for fair placements of Plaintiffs'’ programs on Cumulus stations, such that Plaintiffs would have fair and open access to stations constituting, as a whole, the most important news/talk stations in the country, and not have Plaintiffs'’ programs Page 17 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 17 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 18 of 48 artificially denied access to those Cumulus stations, going forward, thus substantially increasing the value of Commercial Inventory for Plaintiffs'’ programming, and that Westwood would pursue aggressive sales efforts on behalf of Plaintiffs and other Independent Radio Syndicators, and that the key sales representative at Westwood’s Key Ad Rep, who previously was in charge of the sales of Commercial Inventory for portions of Plaintiffs' programming, and demonstratedPlaintiffs relied upon for his clear expertise and ability in that field, would be the principal sales rep at Westwood in charge of such sales going forward, under the Rep Agreement, and that Cumulus would take the necessary actions to ensure that Plaintiffs would be treated fairly, properly and favorably by Cumulus and Westwood from that point forward, such that the prior histories of epic wrongdoing, on the part of Westwood and its predecessor would not be repeated following the• execution of the Rep Agreement .on or about February 28, 2014 (collectively, the "“Dickey Representations"”). 58.40. Plaintiffs'’ reasonably relied on the Dickey Representations as coming from, and having the specific assurances of, the then CEO of Cumulus, as sincere commitments based upon information only recently obtained by Cumulus given that it had just recently acquired Westwood. 59.41. Under the Rep Agreement, Westwood agreed to use its commercially reasonable efforts to sell advertising for radio programs which were the subject of the Rep Agreement, and TRNE agreed to pay Westwood a sales rep commission on ad revenues collected, as the sole compensation which would_ be due to Westwood for its Contracted Ad Rep Services. D. Defendants' Anticompetitive Conduct, Breach Of The Rep Agreement, And Tortious Conduct Directed Towards Plaintiffs 60.42. Rather than undertaking to eliminate unlawful, wrongful and improper actions from February 28,March 5, 2014 forward, from and after February 28,March 5, 2014 to the present time, Defendants have continued to engage in unlawful, wrongful and improper actions, and used their power in the Independent National Syndication Ad Rep Market, as well as other Page 18 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 18 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 19 of 48 unlawful, improper and/or tortious actions, in order to enrich themselves at the expense of Plaintiffs and other Independent Radio Syndicators. 61.43. As described above, after Westwood sells Commercial Inventory to advertisers on a bundled basis, it should allocate the resulting revenues in proportion to the estimated audience parameters generated by each program in an advertising bundle. 62.44. Defendants have not been transparent in their allocations. from and after March 5, 2014. They do not tell Plaintiffs or, to Plaintiffs'’ knowledge, other Independent Radio Syndicators whose programs are included in. an. advertising bundle, what the relative, share of listeners and/or listening time generated by any particular program in the bundle is. Nor do they tell Plaintiffs or other Independent Radio Syndicators whose programs are included in particular bundles what the advertiser actually paid, in total, for the bundle. Plaintiffs are informed and believe, and on that basis allege, that Defendants instead only state the amount purportedly paid for Commercial Inventory of the Independent Radio Syndicators, separately, without specifying that the information instead is of the amount unilaterally allocated by. Defendants, rather than the amount paid, because Defendants conceal this information from Plaintiffs and other Independent Radio Syndicators (i.e., Defendants present the pricing information to Plaintiffs and other Independent Radio Syndicators in a manner which states, or is intended to give the impression, that this is the proportional price paid for their Commercial Inventory, rather than the amount which Defendants unilaterally chose to allocate to their Commercial Inventory from the actual price received). Plaintiffs are informed and believe, and on that basis allege, that this improper procedure gives Defendants the opportunity to manipulate, unlawfully, wrongfully and improperly, ultimate payments made to the participants in a particular bundle, and that one or more of the Defendants, including without limitation Steinhauer, Westwood and Cumulus, take full advantage of that opportunity to their personal benefit, and to the extreme detriment of Plaintiffs. Page 19 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 19 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 20 of 48 63.45. In particular, Plaintiffs are informed and believe, and on that basis allege, that from and after March 5, 2014, Defendants have taken advantage of their opportunity to manipulate the allocation process by enriching themselves. In particular, as Westwood has increasingly pushed into the News/Talk Radio Spoken Word Content Intellectual Property Market, Defendants have included in advertising bundles programs that Defendants produce and/or syndicate. Plaintiffs are informed and believe, and on that basis allege, that Defendants also increasingly steer outsized shares of the net advertising revenue from "“institutional"” advertisers to Defendants, at the expense of Plaintiffs and other Independent Radio Syndicators, by over allocating the amounts actually paid for Defendants'’ Commercial Inventory, and under allocating the amounts actually paid for the Commercial Inventory of Plaintiffs and other Independent Radio. Syndicators. 64.46. Plaintiffs are informed and believe, and on that basis allege, that: (i) Westwood is able to steer outsized shares of net advertising revenue to itself and other Defendants because it fails to state the amounts that advertisers have paid for the audience characteristics of each program in a particular bundle; (ii) Westwood then either retains the excess for itself or it credits it to programs that it or other Defendants own, produce, and/or syndicate and that were included in the same advertising bundle; and (iii) Westwood has engaged in such actions on an ongoing basis from and after February 28,March 5, 2014. 65.47. In engaging in such actions, from and after March 5, 2014, as hereinabove alleged, Westwood also effectively misrepresents to Plaintiffs the amounts that the advertiser is paying for Plaintiffs'’ Commercial Inventory. 66.48. Plaintiffs are informed and believe, and on that basis allege, that Defendants are able to do this from and after March 5, 2014 because they refuse to disclose to Plaintiffs or other producers or syndicators the specifics of programs in any particular bundle, and, more specifically, the percentage of the audience parameters represented by each program, the separate allocations to each program, or the total amount paid. Page 20 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 20 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 21 of 48 67.49. Plaintiffs are informed and believe, and on that basis allege, that, by misrepresenting the amounts paid for the Commercial Inventory of the Independent Radio Syndicators, including Plaintiffs, Defendants, on an ongoing basis from and after February 28,March 5, 2014, fraudulently reduce the disclosed allocation of ad revenue that Westwood owes to Plaintiffs and other Independent Radio Syndicators for programs that are owned, produced, or syndicated by anyone but Westwood and its affiliates (including without limitation Cumulus), and Westwood then claims an outsized share of the total ad revenue from a bundle for itself or its . affiliates (including without limitation Cumulus). 68.50. Plaintiffs are informed and believe, and on that basis allege, that, since February 28,from and after March 5, 2014, Westwood, in conjunction with other Defendants, also has failed to perform its ad rep services reasonably, caused the sales representativeWestwood’s Key Ad Rep, as to who Plaintiffs were promised would lead the sales efforts for Plaintiffs, to fail to perform such duties, at all, after February 28, 2014, and transferred his services, at least for the record, to an affiliate of one of the other Defendants not providing services to Plaintiffs, in order to fail to provide any performance at all to Plaintiffs initially following the commencement of the term of the Rep Agreement, and then to under performunderperform in sales activity under the Rep Agreement. In addition, commencing in October of 2015, and continuing to the present, Westwood has failed to pay over even those amounts actually due to Plaintiffs, based upon the sale of Plaintiffs'’ Commercial Inventory which Defendants actually acknowledged (after the deductions for the extensive amounts of sales revenues actually converted by Defendants through Allocation Fraud), and failed to issue the revenue and disbursement reports due to Plaintiffs under the Rep Agreement. 69.51. Plaintiffs are informed and believe, and on that basis allege, that Steinhauer is the key overseer, on behalf of Defendants, in the formulation and implementation of Defendants'’ unlawful scheme to convert millions of dollars in ad revenues, collected by Westwood in trust Page 21 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 21 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 22 of 48 for Plaintiffs and other Independent Radio Syndicators, to the benefit of Defendants, through massive use and application of Allocation Fraud. from and after March 5, 2014. 70. Plaintiffs are informed and believe, and on that basis allege, that Defendants, subsequent to February 28, 2014, continue to utilize their market power within the Independent National Syndication Ad Rep Market to further procure confidential and proprietary information concerning programs of Independent Radio Syndicators, including Plaintiffs, as well as host or news anchor relationships, and advertising and affiliate relationships, for such programs, and then act in ways calculated .to inhibit the ability of the Independent Radio Syndicators to continue such programming, in order to then appropriate such programs, and/or the programming hosts, anchors, and/or methodologies, to themselves for the purpose of expanding Defendants' programming and/or market share in the News/Talk Radio Spoken Word Content Intellectual Property Market. 71.52. Plaintiffs are now informed and believe, and on that basis allege, that the Dickey Representations inducing Plaintiffs to enter into (directly or indirectly) the Rep Agreement, and the following nonperformance and/or underperformance of Defendants thereunder, were undertaken by Defendants as part of a conspiracy by and between Defendants, and were, in part, designed to prevent Plaintiffs from expanding on the news programming of AMN, and other potential news programming of Plaintiffs, in order to facilitate the launch of separate news programming by Westwood, and to minimize the capacity of Plaintiffs to operate against new Westwood news programming, which Defendants intended to, and did, announce and then launch, in 2014, after the execution of the Rep Agreement. 53. Such new programming was announced by Cumulus and Westwood towards the end of July, 2014, shortly after the time that the formation of MAS was announced, and Plaintiffs are. informed and believe, and on that basis allege, that it involved acquisition by Westwood of news content of CNN, after Westwood had a negative effect on the syndication and distribution of CNN's radio news content, and further involved the substitution of Westwood's own branded Page 22 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 22 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 23 of 48 news content (now consisting of CNN news content with Westwood/Cumulus branding and related modifications) for ABC news content previously distributed by Westwood, such that Westwood's prior representation of CNN and ABC radio news led to the ultimate loss of that separate programming previously distributed under their own independent branding (CNN and ABC). Plaintiffs are informed and believe, and on that basis allege, that Westwood'’s actions towards Plaintiffs and AMNthe America’s Morning News program produced by ALRN and represented by TRNE, after February 28, 20142014, were designed, at least in part, to limit the ability of Plaintiffs to expand Plaintiffs'’ news programming in competition with Westwood. 72. Defendants would not be able to engage in the conduct alleged above but for their monopoly power in the Independent National Syndication Ad Rep Market. If Defendants did not have a monopoly, but rather faced meaningful competition in the Independent National Syndication Ad Rep Market, Defendants would face competitive pressure to be transparent in handling bundles of programs and the related Commercial Inventory for such programs. However, Defendants face no such competitive pressure and therefore have no perceived need to be transparent in their dealings with Plaintiffs or any other Independent Radio Syndicators. 73. 54. Plaintiffs are informed and believe, and on that basis allege, that, after February 28, 2014, in addition to engaging in Allocation Fraud by manipulating advertising revenue allocations, Defendants use their monopoly power in the Independent National Syndication Ad Rep Market to advantage their own programs at the expense of programs of Independent Radio Syndicators, including without limitation Plaintiffs. In this regard, Plaintiffs are informed and believe, and on that basis allege, that Defendants have utilized Westwood's position as a Contracted Ad Rep for Plaintiffs and other Independent Radio Syndicators to weaken the independent programs of Plaintiffs and other Independent Radio Syndicators, to the benefit, in various respects, of the efforts of Defendants to expand upon their market power within the News/Talk Radio Spoken Word Content Intellectual Property Market, as hereinabove alleged. In Page 23 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 23 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 24 of 48 particular, Plaintiffs are further informed and believe, and on that basis allege, that, in addition to all other actions of the Defendants subsequent to February 28, 2014 alleged in this Complaint: (i) Westwood includes Defendants' programs in more bundles, and/or more profitable bundles, of programs, at the expense of programs produced and/or syndicated by Plaintiffs and other Independent Radio Syndicators; (ii) Westwood underperforms with respect to sales of AMN and other programs of Plaintiffs and other Independent Radio Syndicators; and (iii) Defendants. wrongfully interfere with host and other relationships of Plaintiffs .and other Independent Radio Syndicators. 74. Plaintiffs are informed believe, and on that basis allege, that Defendants could not engage in such conduct but for their monopoly power in the Independent National Syndication Ad Rep Market. Plaintiffs are informed and believe, and on that basis allege, that, in particular, if Westwood faced any meaningful constraint on its market power in the Independent National Syndication Ad Rep Market, it would be forced to include more programs from other producers in its advertising bundles, even at the expense of Defendants' own programs, and, in addition, Defendants would be constrained, by competitive market forces, from providing services to particular news and/or talk programs of Plaintiffs and other Independent Radio Syndicators for temporary periods (whether or not Defendants elected to introduce underperformance and/or non performance into such temporary service), to weaken such programs due to such temporary performance periods, followed by discontinuing services to those programs, followed by launches, and/or expansions, of similar programs of Defendants within the News/Talk Radio Spoken Word Content Intellectual Property Market, and that Westwood has repeated that pattern of conduct with respect to Plaintiffs and the Rep Agreement. 75. Plaintiffs are informed believe, and on that basis allege, that Defendants' Defendants’ financial results, as reported by Defendants, since the execution of the Rep Agreement,from and after March 5, 2014, evidence the effect of Defendants'’ conversion of sales Page 24 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 24 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 25 of 48 revenue, collected by Westwood in trust for Plaintiffs and other Independent Radio Syndicators, as hereinabove alleged, and, in particular, the use of Allocation Fraud. 76.55. Pursuant to their rights under the Rep Agreement, Plaintiffs have soughtdemanded access to Westwood'’s books and records relating to the sale of, advertising. on Plaintiffs'’ programs, but Defendants have• failed. to permit Plaintiffs to conduct any such audit. Plaintiffs have therefore been unable to determine the exact amount by which they have been underpaid. 77. Westwood's conduct subsequent to February 28, 2014, all of which is a product of its power in the Independent National Syndication Ad Rep Market, has a significant effect on consumers and consumer welfare, in several respects. 78. Independent Radio Syndicators, who are the consumers of Westwood's services as a Contracted Ad Rep, must pay what amounts to a higher price to Westwood for its services, because the Independent Radio Syndicators' programs receive an artificially smaller share of the total ad revenue than programs that Westwood or its affiliates control. The net effect of that conduct is the same as if Defendants were to use their market power to raise their commission rates - Independent Radio Syndicators receive less than they otherwise would because Cumulus and Westwood One have market power. Indeed, in essence,56. Plaintiffs are informed and believe, and on that basis allege, that Westwood fraudulently takes more than its agreed commission rates from Plaintiffs and other Independent Radio Syndicators by fraudulently deflating sales revenues actually earned by programs of Plaintiffs and other Independent Radio Syndicators and fraudulently increasing the revenues allocated to programs of Defendants. 79. Because Independent Radio Syndicators receive less revenue from Westwood, they produce and syndicate fewer programs. Relatedly, as Defendants consolidate programs to their own account or the account of their affiliates, they become increasingly able to exclude programs of Independent Radio Syndicators from Westwood's bundles entirely. As a result, those Independent Radio Syndicators are precluded and/or inhibited from selling Commercial Page 25 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 25 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 26 of 48 Inventory to "institutional" advertisers, and many therefore are forced to stop producing or syndicating programs. As a result of all of this, there are fewer programs produced in total, and/or fewer programs able to provide competition to Defendants' programs within the News/Talk Radio Spoken Word Content Intellectual Property Market, and the listening public has fewer options from which to choose, and, as well, Defendants further expanded their new programming, and their market power, in the News/Talk Radio Spoken Word Content Intellectual Property Market by virtue of such unlawful, wrongful and improper tactics. 80.57. Plaintiffs are informed and believe, and on that basis allege, that: from and after March 5, 2014, (i) Steinhauer is a, if not the, focal point in implementing and overseeing the Allocation Fraud schemes of Defendants, from and after March 5, 2014, in converting the ad revenues of Independent Radio Syndicators, including Plaintiffs, to prop up the financial fortunes of Cumulus and Westwood by engaging in Allocation Fraud, as hereinabove alleged, and in hiding such actions from the Independent Radio Syndicators, including Plaintiffs; (ii) contrary to the express representations of Dickey, from and after March 5, 2014, Cumulus has not undertaken any meaningful actions to stop such Allocation Fraud, and other unlawful, wrongful and improper actions of Westwood, but, instead, Cumulus permits such actions to continue and/or directly encourages, promotes and/or requires such actions, in order to reap the financial benefits of converting substantial amounts of money from Plaintiffs and other Independent Radio Syndicators to Defendants; (iii) Defendants are further converting funds of Plaintiffs from and after October of 2015, by knowingly and intentionally refusing to pay over to Plaintiffs even those funds clearly remaining due to Plaintiffs from funds collected by Defendants, in trust, for Plaintiffs'’ account, from sales revenues generated from sales by Westwood of Plaintiffs'’ Commercial Inventory, even after the effects of the initial conversions of Plaintiffs'’ funds held in trust by Defendants resulting from Defendants'’ ongoing Allocation Fraud; and (iv) from and after October of 2015, Defendants have failed and refused even to issue to Plaintiffs the ad sale revenue receipts and disbursement reports expressly required under the Page 26 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 26 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 27 of 48 Rep Agreement. Plaintiffs have demanded that Defendants perform their obligations to deliver such reports and pay over the amounts due, but Defendants have failed and refused, from and after October of 2015, and continue to fail and refuse, to do so. 81.58. Defendants have, on multiple occasions, from and after March 5, 2014, interacted improperly with various hosts with whom Plaintiffs have or had ongoing contractual relationships, resulting in damages to Plaintiffs'’ relationships with such hosts and loss of certain of Plaintiffs'’ programs, resulting in further damages to Plaintiffs in addition to the substantial revenue losses sustained by Plaintiffs by virtue of the other unlawful, wrongful and improper actions of Defendants, as hereinabove alleged. FIRST CAUSE OF ACTION (Monopolization of the Independent National Syndication Ad Rep Market) (Against Cumulus and Westwood One) 82. Plaintiffs incorporate by reference the allegations in paragraphs 1 81, above. 83. The Independent National Syndication Ad Rep Market is a discreet, nationwide product market for the services of Contracted Ad Reps within the national Syndication Market. 84. Plaintiffs are informed and believe, and on that basis allege, that: Cumulus and Westwood have monopoly power in the Independent National Syndication Ad Rep Market, within the national Syndication Market, by virtue of their approximately 90% market share in that market. 85. Plaintiffs are informed and believe, and on that basis allege, that: Cumulus and Westwood willfully acquired, maintained and exercised their monopoly in the Independent National Syndication Ad Rep Market within the national Syndication Market, by their acts and practices described above, including their active involvement in, and/or their deliberate failure to curtail, the unlawful Allocation Fraud scheme which Westwood and Steinhauer continued to pursue, if not increase, following the execution of the Rep Agreement, all in violation of Section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2, and by continuing, subsequent to February 28, Page 27 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 27 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 28 of 48 2014, their actions and course of conduct in acquiring, contracting with, partnering with and/or otherwise neutralizing businesses seen as presenting actual or potential competition to the monopoly power and dominance of Defendants in the Independent National Syndication Ad Rep Market. In this regard, Plaintiffs are informed and believe, and on that basis allege, that WYD and WYM are operated in collusion with Cumulus and Westwood, in order to provide the appearance of other parties engaged in the Subject Markets, while acting in collusion with Westwood and Cumulus and that on or about July 7, 2014, WYD formed a subsidiary limited liability advertising sales company, WYD Media Ad Sales, LLC ("WYD Ad Sales") to create the appearance of competition, and for the further purpose of having the senior sales rep expressly designated to oversee and work on sales for Plaintiffs' programs purportedly leave Westwood to serve as president of WYD Ad Sales. Thereafter, after Westwood learned of the identity of a Contracted Sales Rep which Plaintiffs intended to use to attempt to address the virtually nonexistent level of advertising sales undertaken by Westwood with respect to Plaintiffs' Commercial Inventory, Defendants arranged for WYD Ad Sales to enter into some form of `partnership" with that company, and then inhibited and prevented that company from performing any viable level of ad sales activity for Plaintiffs. 86. The goal, purpose, and/or effect of Defendants' scheme was to reduce payments made to Independent Radio Syndicators, such as Plaintiffs, by steering money to Westwood, Cumulus and/or their affiliates via unlawful Allocation Fraud, direct conversion of amounts clearly due to Plaintiffs even after application of the unlawful Allocation Fraud scheme, and other improper practices. 87. Plaintiffs have been injured in their business and property by reason of Defendants' unlawful conduct, as hereinabove alleged. In particular, as a result of Defendants' Page 28 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 28 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 29 of 48 violations, Westwood's payments to Plaintiffs and to other Independent Radio Syndicators have been lower than they should have been, and/or otherwise would have been. 88. Defendants' conduct affected Plaintiffs and most, if not all, other consumers of Westwood's services, such as other Independent Radio Syndicators. Defendants' conduct also eliminates programs from the market, and therefore diminishes consumer choice and damages consumer welfare. 89. Such unlawful conduct .on the part of Westwood and Cumulus threatens continuing loss and damage to Plaintiffs if not enjoined by this Court, and unless Defendants divest, or are divested of, all assets giving rise to monopoly powers to Defendants, or any of them, in the Subject Markets, or either of them, and divestment of all operations by Defendants across multiple markets, including without limitation the Subject Market and/or any other market for radio ownership, Plaintiffs have demanded, and by issuance of this Complaint do hereby further demand, that Defendants promptly agree to such divestiture, and immediately confirm their agreement to do so. SECOND CAUSE OF ACTION (Attempted Monopolization of the Independent National Syndication Ad Rep Market) (Against Cumulus and Westwood) 90. Plaintiffs incorporate by reference the allegations in Paragraphs 1 ¬89, above. 91. If Cumulus and Westwood do not already have monopoly power in the Independent National Syndication Ad Rep Market, then they have a dangerous probability of success in achieving monopoly power in the Independent National Syndication Ad Rep Market. 92. With the specific intent to achieve a monopoly, Westwood and Cumulus, by their acts and practices described herein, including their conduct with respect to Allocation Fraud concerning advertising revenues due to Independent Radio Syndicators, such as Plaintiffs, and Page 29 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 29 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 30 of 48 'Cumulus, by acquisition of Westwood and subsequent acquiescence and participation in Westwood's unlawful and improper actions, and exercise of its own monopoly and/or dominant market power within the market for radio station ownership within the United States of America as leverage to assist in the expansion of the market power of Westwood and Cumulus in the Independent National Syndication Ad Rep Market, in connection with the actions of Westwood, have attempted to monopolize the Subject Markets, in violation of Section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2. 93. The goal, purpose, and/or effect of Defendants' scheme was to reduce payments made to Independent Radio Syndicators such as Plaintiffs by diverting money due and/or otherwise available to Plaintiffs and other Independent Radio Syndicators to Defendants and/or their affiliates. 94. Plaintiffs have been injured in their business and property by reason of Defendants' unlawful conduct. In particular, as a result of Westwood's violations, Westwood's payments to Plaintiffs and to other Independent Radio Syndicators have been lower than they otherwise would have been, and, in particular, lower than they should be. 95. Such unlawful conduct threatens continuing loss and damage to Plaintiffs and to competition in the market more generally if not enjoined by this Court. THIRD CAUSE OF ACTION (Conspiracy to Monopolize) (Against All Defendants) 96. Plaintiffs incorporate by reference the allegations in paragraphs 1 81, above. 97. Defendants shared a conscious commitment to a common scheme • designed to achieve the unlawful objective of the monopolization of .the Independent National Syndication Page 30 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 30 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 31 of 48 Ad Rep Market and the monopolization of the News/Talk Radio Spoken Word Content Intellectual Property Market. 98. At the time of such actions, the Defendants were actual and/or potential competitors in the Independent National Syndication Ad Rep Market. 99. Defendants conspired with the specific intent, knowledge, and purpose that their anticompetitive agreements would result in Cumulus and Westwood willfully maintaining and/or securing or attempting to secure a monopoly in the Independent National Syndication Ad Rep Market and/or the News/Talk Radio Spoken Word Content Intellectual Property Market. 100. Compass Media, Compass Marketing, WYD, WYM, Dickey and Steinhaur knew that the natural and probable consequences of their actions and agreements as herein alleged would be the monopolization of the Subject Markets by Cumulus and Westwood. 101. Defendants have committed overt acts in furtherance of their conspiracy. Thus, Defendants have entered into, complied with, and implemented agreements relating to Allocation Fraud, monopolization, and other improper actions in the Subject Markets, in violation of Section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2. 102. But for the Defendants' conspiracy to monopolize, Defendants or their competitors would have honestly allocated revenues generated by programs within advertising bundles, and otherwise engaged in proper sales activities for Plaintiffs and other Independent Radio Syndicators, without improper actions designed to convert Plaintiffs' funds held in trust by Westwood, and without interfering with Plaintiffs' hosts and damaging the viability of Plaintiffs' programming, and Plaintiffs and other Independent Radio Syndicators would have been paid more as a result. Page 31 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 31 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 32 of 48 103. Plaintiffs have been injured in their business and property by reason of Defendants' unlawful conduct. During the relevant period after February 28, 2014, Defendants sold significant numbers of advertisement bundles including Plaintiffs' programs, and, as a result of the illegal conduct alleged herein, Plaintiffs were not paid a market rate for Commercial Inventory on the programs that they produce and represent. 104. This unlawful conduct hereinabove alleged threatens continuing loss and damage to Plaintiffs if not enjoined by this Court. FOURTH CAUSE OF ACTION (Unlawful Agreements in Restraint of Trade) (Against All Defendants) 105. Plaintiffs incorporate by reference the allegations in paragraphs 1 81 above. 106. Westwood, Cumulus, Compass Media, Compass Marketing, WYD and WYM were, ostensibly, actual and/or potential competitors in the Independent National Syndication Ad Rep Market. 107. Those Defendants, Dickey and Steinhauer engaged in continuing illegal contracts, combinations, and conspiracies in restraint of trade, the purpose and effect of which was to create the false appearance of competition in the Independent National Syndication Ad Rep Market, allocate the Independent National Syndication Ad Rep Market between them, and fix and/or misallocate amounts that Contracted Ad Reps would have to pay Independent Radio Syndicators such as Plaintiffs. 108. Defendants shared a conscious commitment to a common scheme designed to achieve the unlawful objective of controlling and/or dividing the Independent National .Syndication Ad Rep Market and reaping unlawful, improper and excessive revenues from it by unlawful actions and a pattern of unlawful, wrongful and improper dealing. Page 32 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 32 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 33 of 48 109. By entering into such unlawful agreements, Defendants have unlawfully conspired in restraint of trade and violated Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1 ("Section 1"). Defendants' agreements constitute a horizontal market allocation and price fixing agreement between actual or potential competitors, which is apex se violation of Section I. 110. In the alternative, Defendants' agreements are an unreasonable restraint of trade in violation of Section 1 under either a "quick look" or a "rule of reason" analysis. There are no precompetitive justifications for the agreements between Westwood and/or Cumulus and the other Defendants. On the other hand, there are significant anticompetitive effects as a result of those agreements. 111. But for such unlawful agreements, the Defendants would have competed in the Independent National Syndication Ad Rep Market, and, as a result, Defendants would have paid more to Independent Radio Syndicators such as Plaintiffs. 112. Plaintiffs have been injured in their business and property by reason of the unlawful contracts, combinations, and/or conspiracies. During the relevant period, Defendants sold substantial numbers of advertisement bundles including Plaintiffs' programs, and, as a result of the illegal conduct alleged herein, Plaintiffs were not paid a market rate for the Commercial Inventory on the programs that they produce and/or syndicate and/or represent. 113. Such unlawful conduct threatens continuing loss and damage to Plaintiffs if not enjoined by the Court. FIFTH CAUSE OF ACTION Violation of Clayton Act § 7 - Mergers) (Against Cumulus and Westwood) 114. Plaintiffs incorporate by reference the allegations in paragraphs 1 113 above of this Complaint. Page 33 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 33 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 34 of 48 115. Cumulus and Westwood, directly or indirectly, have acquired assets of their competitors, and then combined those assets themselves, the effect of which was likely to reduce competition, or to create a monopoly, in the Subject Markets, and have continued after February 28, 2014 to the present time to use such monopoly powers in a manner designed to maintain, extend and further their monopoly and/or market power and/or dominance in the Subject Markets, in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18. 116. As a result of the acquisitions and the anticompetitive conduct from and after February 28, 2014 enabled thereby, as set forth herein, Plaintiffs have been injured in their business or property in the form of receiving lower advertising revenues than they would have received, and sustaining additional damages which they would not have sustained, but for the wrongful, unlawful and improper actions hereinabove alleged. SIXTH CAUSE OF ACTION (Violation of Clayton Act § 7) (Against all Defendants) 117. Plaintiffs incorporate by reference the allegations in paragraphs 1 116 above of this Complaint. 118. As a result of the actions of the Defendants, as hereinabove alleged, Plaintiffs have been injured in their business or property in the form of receiving lower advertising revenues than they would have received but for such actions. SEVENTH CAUSE OF ACTION (Breach of Contract - Rep Agreement) (Against Westwood) 119. Plaintiffs incorporate59. Plaintiff Talk Radio Network Enterprises brings this claim against Defendant Westwood. Plaintiff incorporates by reference paragraphs 1 - 81- 58 of this Complaint. Page 34 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 34 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 35 of 48 120. 60. From and after March 5, 2014, Westwood has breached or otherwise violated multiple obligations that it owes to Plaintiffs under the Rep Agreement. Westwood'’s contractual violations include underpayment of, and failure to pay, advertising revenues collected by Westwood for Plaintiffs'’ Commercial Inventory, failure to include Plaintiffs'’ programs in appropriate advertising bundles, the inclusion of Plaintiffs'’ programs only in less favorable bundles, failure to pay other amounts clearly due for advertising revenues of Plaintiffs collected by Westwood, failure to account to Plaintiffs for ad revenues collected and disbursements due, failure to issue required reports relating thereto, failure to use commercially reasonable efforts in performing Westwood'’s duties to Plaintiffs, and refusal to permit Plaintiffs'’ required access to Westwood'’s books and accounting records. Defendant Westwood is required to take these actions under the terms of the Rep Agreement and has failed to do so. Although the Rep Agreement allows Westwood to bundle Plaintiffs’ programs at Westwood’s discretion, Westwood is required to act in good faith, and in a commercially reasonable manner under the Rep Agreement. Defendant Westwood has not complied with the terms of the Rep Agreement in good faith or in a commercially reasonable manner. 61. Prior to commencing the above-captioned action, Plaintiffs demanded the right to inspect relevant portions of the books and records of Westwood, production of reports and records to which Plaintiffs are entitled, and have given notice in writing to Westwood of the existence of a dispute covering underlying payments and lack of payments, and lack of reports, and, requested good faith efforts by the parties to resolve such disputes. This request was within the time frame outlined in the Rep Agreement. 62. Plaintiffs further submit that the filing and service of the initial complaint in this Action constitutes further notice of Plaintiffs’ demands to such effect and the existence Page 35 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 35 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 36 of 48 Plaintiffs’ dispute in advance of the filing of this amended Complaint. Notwithstanding the foregoing, Plaintiffs respectfully allege that no proper “final statement” has been provided to Plaintiffs by Westwood for any “years of the Term”, and that, as a result thereof, Plaintiffs are excused in any event from any obligations on the part of Plaintiffs which might otherwise be due had Westwood provided any such final statements under or with respect to the Rep Agreement. 121.63. Plaintiffs have been damaged in an amount to be determined at trial as a result of Westwood'’s conduct and breaches of the Rep Agreement, from and after March 5, 2014, as hereinabove alleged. At all relevant times Plaintiffs have been in full compliance with the Rep Agreement. 122.64. The accounts of Westwood'’s sales of bundles are so complicated that an ordinary fixed sum is likely impracticable. EIGHTHSECOND CAUSE OF ACTION (Conversion - Against Cumulus, Westwood and Steinhauer) 123.65. Plaintiffs incorporate by reference the allegations in paragraphs 1 118,- 64, above, of this CompliantComplaint. 124.66. In collecting revenues for Plaintiffs'’ account andfrom and after March 5, 2014, and in failing and refuisngrefusing to pay such revenues over to Plaintiffs, or to account to Plaintiffs for such revenues, Westwood, Cumulus and Steinhauer have converted funds of Plaintiffs to their personal uses, from and after March 5, 2014, and conspired between themselves to do so. 125.67. Plaintiffs have been damaged by such wrongful and unlawful conduct in amounts to be established by evidence in this Actionfrom and after March 5, 2014, in an amount to be determined at trial. Page 36 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 36 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 37 of 48 126.68. The wrongful actions of the responsible Defendants from and after March 5, 2014, were willful, wanton, oppressive and egregious, and justify an award of exemplary and punitive damages against the responsible Defendants, and each of them, in such amounts as to each of the responsible Defendants, separately, as are necessary to accomplish the purpose and objectives of such awards as to each of the responsible Defendants, separately. 127.69. The responsible Defendants each have substantial net worths, and substantial annual incomes, such that commensurate high exemplary and punitive damage awards are necessary, as to each of them, separately, to accomplish the purposes of such awards. NINTHTHIRD CAUSE OF ACTION (Breach of Fiduciary Duty - Against Westwood) 128.70. Plaintiffs incorporate by reference the allegations in paragraphs 12365 -127 69 of this Complaint. 129.71. Plaintiffs and Westwood are parties to a fiduciary relationship from and after March 5, 2014, because, when Westwood acts as a Contracted Ad Rep on Plaintiffs'’ behalf, it is acting as Plaintiffs'’ agent and is collecting funds, for Plaintiffs'’ account, from its sale of Plaintiffs'’ Commercial Inventory for Plaintiffs'’ account, in trust for Plaintiffs, and, thus, has fiduciary duties to Plaintiffs. 130.72. Westwood breached its fiduciary relationship with, and its fiduciary duties to, Plaintiffs from and after March 5, 2014, by engaging in the actions hereinabove alleged, to Plaintiffs'’ detriment and/or to the advantage of Defendants, all in violation of Westwood'’s fiduciary obligations to Plaintiffs. 131.73. Plaintiffs have been damaged as a result of Westwood'’s actions from and after March 5, 2014, as hereinabove alleged., in an amount to be proven at trial. Page 37 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 37 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 38 of 48 132.74. Plaintiffs are entitled to recover exemplary and punitive damages from each of the responsible Defendants, as hereinabove alleged. TENTHFOURTH CAUSE OF ACTION (Tortious Interference with Contractual Relations and Conspiracy to Tortiously Interfere With Contractual Relations) (Against All Defendants) 133.75. Plaintiffs incorporate by reference the allegations in paragraphs 1 ¬116- 74 of this Complaint. 134. From the date of creation of the Rep Agreement to the present time,76. From and after March 1, 2014, Plaintiffs have or have had contracts with various hosts of Plaintiffs. 135.77. Defendants were aware of the Plaintiffs'’ relationships with their hosts. On or after March 1, 2014, Defendants formed and/or participated in a conspiracy designed to rupture one or more of those relationships. 136. One78.On or after March 1, 2014, one or more of the Defendants has taken an intentional, overt act to induce one or more hosts to breach their contracts with Plaintiffs or otherwise to disrupt Plaintiffs'’ contractual relationships with those hosts. 137. There79. On or after March 1, 2014, there has been an actual breach or disruption of Plaintiffs'’ contracts with hosts, and/or interference with Plaintiffs'’ contracts with hosts, as a result of such conduct, as hereinabove alleged. 138.80. Plaintiffs have been damaged on or after March 1, 2014, as a result of such conduct. Page 38 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 38 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 39 of 48 139.81. Plaintiffs are entitled to recover exemplary and punitive damages from each of the responsible Defendants;, as hereinabove alleged. ELEVENTHFIFTH CAUSE OF ACTION (Fraud Against Dickey, Cumulus and Westwood) 140.82. Plaintiffs incorporate by reference the allegations of paragraphs 1 through 138,81, above, of this Complaint. 141.83. The misrepresentations by Dickey, and by Cumulus and Westwood, acting through Dickey as the then CEO of Cumulus, as hereinabove alleged, were false, knowing, intentional and fraudulent. 142.84. Plaintiffs reasonably relied on said representations, as Dickey cited the recent acquisition of Westwood by Cumulus and claimed to desire to start a new leaf for Westwood in its dealings with Independent Radio Syndicators, including Plaintiffs, and in correcting, eliminating and rectifying the past unlawful actions of Westwood. Defendants made representations at the time the parties entered into the Rep Agreement that Defendants would not engage in any of the wrongful or disputed conduct against Plaintiffs which was the basis for the first lawsuit between these parties. Plaintiff’s relied on this representation to their detriment. 143.85. Such representations were, however, knowingly and intentionally false, misleading and fraudulent. 144.86. The true facts were that Westwood and Cumulus, under the leadership of Dickey, had no intentions of correcting the past wrongful conduct of Westwood, and, to the contrary, intended to continue such wrongful conduct, and, indeed, to expand upon it, in order to reap financial benefits for Defendants, going forward, from such wrongful conduct. Page 39 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 39 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 40 of 48 145.87. The falsity of such fraudulent misrepresentations was not known by Plaintiffs at the time that TRNE entered into the Rep Agreement for the benefit of all Plaintiffs. 146.88. Plaintiffs have been damaged as a direct and proximate result of the fraud and misrepresentations of Dickey, Cumulus and Westwood, as hereinabove alleged. 147.89. Plaintiffs are entitled to recover exemplary and punitive damages from each of the responsible Defendants, as hereinabove alleged. TWELFTHSIXTH CAUSE OF ACTION (Violation of Cartwright Act) (Against All Defendants) 148. Plaintiffs incorporate by reference the allegations in paragraphs 1 118 above of this Complaint. 149. Defendants have agreed and/or conspired to combine their resources for the purpose of restraining commerce and preventing competition in the Subject Markets. 150. Defendants have taken illegal actions in furtherance of their unlawful, wrongful, improper and collusive agreements. 151. Defendants' conduct violates the Cartwright Act, Cal Bus. and Prof. Code § 16700 et seq. 152. Plaintiffs have suffered economic damage as a proximate result of those acts. THIRTEENTH CAUSE OF ACTION (Violation of Cal. Bus. and Prof. Code § 17200) (Against All Defendants) 153. Plaintiffs incorporate by reference the allegations in paragraphs 1 ¬151 above of this Complaint. Page 40 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 40 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 41 of 48 154. Each of the Defendants has engaged in unfair competition by virtue of one or more unlawful, wrongful and/or improper acts, as hereunder alleged, in violation of Section 17200 of the California Business and Professions Code. 155. Plaintiffs have been damaged as a result of Defendants' conduct as hereinabove alleged. FOURTEENTH CAUSE OF ACTION (Unjust Enrichment) - (Oregon Law) (Against Cumulus and Westwood) 156.90. Plaintiffs incorporate by reference the allegations in paragraphs 1 ¬125- 89, above of this Complaint. 157.91. Plaintiffs conferred a benefit upon Westwood and Cumulus by permitting Westwood to sell Commercial Inventory for Plaintiffs'’ programs, and by paying Westwood a commission for that service. Defendants were actually enriched by these benefits. 158.92. Westwood and Cumulus were aware that they received those benefits. 159, Westwood and Cumulus have not conferred any corresponding benefit on Plaintiffs. 93. Under the circumstances, it would be unjust to allow Westwood and Cumulus to receive those benefits without paying Plaintiffs for them, in full.. a.94. By engaging in the conduct described above, Westwood and Cumulus have been unjustly enriched at the expense of Plaintiffs, and Cumulus and Westwood are required, in equity and good conscience, to disgorge and pay their ill-gotten gains to Plaintiffs. Page 41 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 41 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 42 of 48 FIFTEENTHSEVENTH CAUSE OF ACTION (Breach of the Implied CovenanttCovenant of Good Faith and Fair Dealing) (Against Westwood) 160.95. Plaintiffs incorporate by reference the allegations in paragraphs 1 through 160, inclusive94 above, of this Complaint. 161.96. There is an implied covenant of good faith and fair dealing inherent in every contract. 162.97. There is also an implied covenant of good faith and fair dealing inherent in the status of acting as an agent, fiduciary, trustee, custodian and/or bailee for Plaintiffs with respect to Plaintiffs'’ revenues from the sale by Westwood of Plaintiffs'’ Commercial Inventory for Plaintiffs'’ account. from and after March 5, 2014. 163.98. By engaging in the conduct described above, and by failing to act in a commercially reasonable manner, from and after March 5, 2014, Westwood has breached the implied covenant of good faith and fair dealing, from and after March 5, 2014 owed to Plaintiffs by Westwood under the Rep Agreement. 164.99. Plaintiffs have been damaged as a result of Westwood'’s violations of the implied covenant of good faith and fair dealing, in an amount to be determined at the trial of this Action.trail. 165.100. Plaintiffs are entitled to recover exemplary and punitive damages for Westwood's violation’s violations, from and after March 5, 2014 of the implied covenant of good faith and fair dealing with respect to Westwood'’s fiduciary obligations to Plaintiff as agent, trustee, custodian and bailee of the proceeds from the sale of Plaintiffs'’ Commercial Inventory sold by Westwood, as Plaintiffs'’ agent, for the account of Plaintiffs. Page 42 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 42 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 43 of 48 PRAYER FOR RELIEF WHEREFORE, for the reasons stated herein, Plaintiffs pray for judgment against Defendants, and each of them, as their responsibilities are determined in this Action, and for further relief, as the Court determines to be appropriate. as follows: A A judgment for three times all damages actually sustained by Plaintiffs, as determined by a jury. For an accounting; B. A declaration that Defendants have violated the antitrust laws, committed the torts described above, and/or breached their contracts with, and fiduciary duties and/or other obligations to, Plaintiffs; C. Permanent injunctive relief, which enjoins Defendants from entering into any further illegal, wrongful, improper or collusive agreements, and requires them to take affirmative steps to dissipate the anticompetitive effects of their prior violations, including without limitation their continuing unlawful, wrongful and improper use of monopoly power for leverage and other wrongful purposes, including but not limited to divestment of all assets according such monopoly powers to Defendants, and compelling divestitures of all operations by Defendants across multiple markets, such that each of the Defendants is restricted to operating solely in the market for station ownership, solely in the Independent National Syndication Ad Rep Market, or solely in the News/Talk Radio Spoken Word Content Intellectual Property Market, such as to preclude the improper continuing use by Defendants of market power in one market as improper leverage and/or instrumentalities to increase market power in other markets, as well as a requirement that Westwood represent Plaintiffs properly, and to the best of its ability, as a Contracted Ad Rep, until all such divestments are complete and/or competitive balance is restored to the Independent National Syndication Ad Rep Market and Plaintiffs are able to find Page 43 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 43 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 44 of 48 truly proper, adequate and independent Contracted Ad Rep services from independent and capable alternate providers within the Independent National Syndication Ad Rep Market; D. An accounting;For compensatory damages in an amount to be proven at trial; E. AC. For judgment awarding additional damages to Plaintiffs from each of the responsible Defendants, separately, as exemplary and punitive damages, in such amounts, in addition to all other damages awarded to Plaintiffs, as are necessary to punish the responsible Defendants adequately and to serve as an adequate and effective deterrent to others; FD. For interest on all amounts due and unpaid to Plaintiffs from Westwood for the sale of Plaintiffs'’ Commercial Inventory by Westwood, at the maximum rate allowed by law, from the dates such amounts were first due to the date of actual payment of each such amount to Plaintiffs;; GE. TheFor the costs of this suit, including an award of attorneys'’ fees; and HF. SuchFor such other and further relief as the Court deems just and proper. DEMAND FOR JURY TRIAL Plaintiffs demand a jury trial as to all issues so triable. DATED this 11th day of April, 2016. Dated: February 1, 2017 CAUBLE, CAUBLE & SELVIG, LLP By: s/Christopher LMax C. CaubleWhittington Christopher L. Cauble, OSB No. 96237 Rachele R. Selvig Max C. Whittington, OSB No. 095016 154474 CAUBLE, CAUBLE & SELVIG, LLP 111 SE Sixth St. Grants Pass, OR 97526 Telephone: (541) 476-8825 Facsimile: (541) 471-1704 Page 44 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 44 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 45 of 48 Joseph M. Alioto, SBN #42680 Admitted Pro hac vice jmalioto@aliotolaw.com ALIOTO LAW FIRM One Sansome Street San Francisco, CA 97104 Telephone: (415-) 434-8900 Facsimile: (415) 434-9200 SEVERAID & GLAHN, PC Ronald H. Severaid, SCBN #78923 Pro hac vice pending Rhseveraid@sbcglobal.net Carter Glahn, CSBN #242378, Pro hac vice pending cglahn@sbcglobal.net 1787 Tribute Road, Suite D Sacramento, CA 95815 Telephone: (916) 929-8383 Facsimile: (916) 925-4763 Of Attorneys for Plaintiff SEVERAID & GLAHN, PC Ronald H. Severaid, SCBN #78923 Pro hac vice pending Rhseveraid@sbcglobal.net Carter Glahn, CSBN #242378, Pro hac vice pending cglahn@sbcglobal.net 1787 Tribute Road, Suite D Sacramento, CA 95815 Telephone: (916) 929 8383 Facsimile: (916) 925 4763 Of Attorneys for Plaintiff Page 45 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 45 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 46 of 48 CERTIFICATE OF SERVICE I hereby certify that a true copy of the foregoing was served electronically via the Court’s electronic filing system on the 1st day of February, 2017, according to this Court’s provision for service and sent to the following counsel of record indicated below: Prashanth Chennakesavan Quinn Emanuel Urquhart & Sullivan, LLP 865 South Figueroa Street, 10th Floor Los Angeles, CA 90017 213-443-3000 213-443-3100 (fax) prashanthchennakesavan@quinnemanuel.com Attorneys for Cumulus Media Richard Schirtzer Quinn Emanuel Urquhart & Sullivan, LLP 865 South Figueroa Street, 10th Floor Los Angeles, CA 90017 213-443-3111 213-443-3100 (fax) richardschirtzer@quinnemanuel.com DATED this 1st day of February, 2017. Christopher Tayback Quinn Emanuel Urquhart & Sullivan, LLP 865 S. Figueroa Street 10th Floor Los Angeles, CA 90017-2543 213-443-3170 213-443-3100 (fax) christayback@quinnemanuel.com Vicki L. Smith Lane Powell, PC 601 SW Second Avenue Suite 2100 Portland, OR 97204-3158 503-778-2138 503-778-2200 (fax) smithv@lanepowell.com Attorneys for Defendants Cumulus Media, Inc., Lewis W. Dickey, Jr., and Charles Steinhauer CAUBLE, CAUBLE & SELVIG, LLP /s/ Max C. Whittington Christopher L. Cauble, OSB No. 962374 ccauble@thecaublefirm.com Max C. Whittington, OSB No. 154474 Page 46 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 46 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 47 of 48 mwhittington@thecaublefirm.com Of Attorneys for Plaintiffs Page 47 AntitrustSecond Amended Complaint 04.07.16 02.01.17 - 47 TRNE., et al. v Cumulus, et al. Case 1:16-cv-00609-CL Document 54-1 Filed 02/15/17 Page 48 of 48