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Nextel Spectrum Acquisition Corp. v. Hispanic Information and Telecommunications Network

July 31, 2008

NEXTEL SPECTRUM ACQUISITION CORPORATION, PLAINTIFF,
v.
HISPANIC INFORMATION AND TELECOMMUNICATIONS NETWORK, INC., DEFENDANT.



The opinion of the court was delivered by: Rosemary M. Collyer United States District Judge

MEMORANDUM OPINION

This matter comes before the Court on a Motion to Vacate, Alter, or Amend Judgment Dismissing First Amended Complaint ("Pl.'s Mot. to Amend") [Dkt. #20] filed by Plaintiff Nextel Spectrum Acquisition Corporation ("Nextel"). Nextel requests, pursuant to Rule 59(e) of the Federal Rules of Civil Procedure, that the Court vacate, alter, or amend its Memorandum Opinion and Order issued August 29, 2007 [Dkt. ## 18 & 19] granting the Motion to Dismiss [Dkt. # 3] filed by Defendant Hispanic Information and Telecommunications Network, Inc. ("HITN"), and grant Nextel leave to file a Second Amended and Supplemental Complaint pursuant to Rules 15(a) and (d) of the Federal Rules of Civil Procedure. See Pl.'s Mot. to Amend at 1. HITN contends that Nextel has failed to satisfy the stringent Rule 59(e) standard, that Nextel's motion to vacate, alter or amend the Court's judgment should be denied, and that Nextel's request to amend the complaint should likewise be denied as futile. See Def.'s Opp'n to Pl.'s Mot. to Amend [Dkt. #21].

I. BACKGROUND FACTS

Nextel Spectrum Acquisition Corporation and Hispanic Information and Telecommunications Network, Inc. were parties to a contract -- the Airtime Royalty Agreement (the "Royalty Agreement") -- whereby Nextel leased from HITN certain Educational Broadband Service ("EBS") channels regulated by the Federal Communications Commission ("FCC"), also referred to as "spectrum," in and around Washington, D.C. (the "DC Spectrum"). See Pl.'s Mem. in Support of Mot. to Amend. ("Pl.'s Mem.") at 2. The original parties to the lease were George Washington University ("GWU") and Eastern Cable Networks Corporation ("ENET"). Id. Nextel succeeded to ENET's rights in or around 2004, and, in 2005, HITN acquired the underlying spectrum from GWU subject to the surviving rights and obligations under the Royalty Agreement. Id. The Royalty Agreement contained a right of first refusal clause ("ROFR"), pursuant to which Nextel was given "the exclusive right to match the material terms and conditions of any bona fide offer to lease excess capacity from [HITN] during any or all of the period from the expiration of the automatic renewal term . . . through two years thereafter." Def.'s Mem. in Support of Mot. to Dismiss ("Def.'s Mem."), Ex. B § I.C.1. Neither party disputes that the term of the Royalty Agreement, with all automatic renewals, expired on February 21, 2005 and two years thereafter came in February 2007. Id., Ex. B § I.B.1.

The instant dispute revolves around the interplay between Nextel's ROFR and HITN's contracts with Clearwire Corporation and its affiliates ("Clearwire") that address leasing HITN excess EBS capacity in various markets. See Am. Compl. ¶¶ 22-41 [Dkt. # 9]. Nextel alleges that HITN and Clearwire entered into an "extensive web of agreements that requires HITN to tender exclusively to Clearwire use of any available spectrum HITN has or in which it acquires an interest."

Id. ¶ 22. Most relevant among these agreements is a Master Royalty and Use Agreement between HITN and Clearwire Spectrum Holdings II LLC, dated October 4, 2006 (the "Master Agreement"), which allegedly provides Clearwire with an "exclusive" right to all of HITN's licensed spectrum. See Am. Compl. ¶¶ 36, 38; Def.'s Mem., Ex. A. The Master Agreement states:

(b) Option for Future Spectrum Capacity. Licensee grants Clearwire an option (the "Option") to enter into IUAs with Licensee in respect of any and all spectrum (including, but not limited to, the Commercial Spectrum Capacity, EBS and BRS ("Spectrum") on FCC Licenses held by Licensee that is Available or that becomes Available during the Term, at prices to be negotiated in good faith based on the fair market value ("FMV") of such Spectrum at the time the Option is to be exercised, provided, however, that the negotiated price shall not exceed . . . per MHZ POP. The Option shall be exercisable in Clearwire's sole discretion each time Spectrum of Licensee or its Affiliates becomes Available during the Term . . . .

See Am. Compl. ¶ 40; Def.'s Mem., Ex. A at 6-7. The term "Available" is defined in the Master Agreement as spectrum that "is not encumbered by any Lien, including, but not limited to, any purchase option, right of first refusal, or other contractual obligation of [HITN]." Def.'s Mem., Ex. A, Exhibit 1 subpart (b) "Definitions."

On March 26, 2007, HITN moved the Court to dismiss Nextel's Complaint*fn1 with prejudice for failure to state a claim under Rule 12(b)(6). HITN argued that pursuant to Section I.C.1 of the Royalty Agreement, only leases that would commence within the two-year period following the expiration of the Royalty Agreement could trigger the ROFR, and the Complaint failed to allege any such lease. See Def.'s Mem. at 7-8. Nextel, in opposition, argued that HITN had breached the Royalty Agreement by denying Nextel the ability to exercise a valid right of first refusal, and that HITN entered into separate agreements with Clearwire that had the specific purpose and effect of preventing Nextel from exercising the ROFR, something which HITN promised not to do in the Royalty Agreement. See Pl.'s Opp'n to Def.'s Mot. to Dismiss at 1 [Dkt. #5]. This Court held a hearing on HITN's Motion to Dismiss on August 16, 2007, and both parties presented oral arguments. The Court specifically inquired and heard argument, inter alia, on the parties' different interpretations of Section I.C.1, I.C.2 and I.C.3 of the Royalty Agreement. The Court issued a Memorandum Opinion and Order on August 29, 2007, granting HITN's motion to dismiss with prejudice, see Nextel Spectrum Acquisition Corp. v. HITN, No. 07-543, 2007 WL 2446213 (D.D.C. Aug. 29, 2007), and on September 13, 2007, Nextel filed the pending Motion to Vacate, Alter, or Amend Judgment Dismissing First Amended Complaint ("Motion to Amend"), which includes a request for leave to amend and supplement the Complaint.

II. LEGAL STANDARDS

"A Rule 59(e) motion is discretionary and need not be granted unless the district court finds that there is an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice." Fox v. Am. Airlines Inc., 389 F.3d 1291, 1296 (D.C. Cir. 2004) (quoting Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996)). A Rule 59(e) motion is not "simply an opportunity to reargue facts and theories upon which a court has already ruled." New York v. United States, 880 F. Supp. 37, 38 (D.D.C. 1995). Nor is it an avenue for a "losing party . . . to raise new issues that could have been raised previously." Kattan v. District of Columbia, 995 F.2d 274, 276 (D.C. Cir. 1993). Further, while leave to amend a complaint "shall be freely given when justice so requires," Fed. R. Civ. P. 15(a), a motion to amend should be denied if the amendment would be futile because the proposed claim would not survive a motion to dismiss.

James Madison Ltd. v. Ludwig, 82 F.3d 1085, 1099 (D.C. Cir. 1996); Robinson v. Detroit News, Inc., 211 F. Supp. 2d 101, 114 (D.D.C. 2002). Additionally, once a final judgment has been entered, a motion to amend a complaint under Rule 15(a) may not be granted "unless the plaintiff 'first satisfies Rule 59(e)'s more stringent standard' for setting aside that judgment." Ciralsky v. CIA, 355 F.3d 661, 673 (D.C. Cir. 1994) (quoting Firestone, 76 F.3d at 1208).

III. DISCUSSION

Nextel argues that the Court committed three distinct clear errors of law in granting the Defendant's Motion to Dismiss. See Pl.'s Mot. to Amend at 1-2. It requests that the Court vacate, alter or amend its judgment and grant Nextel leave to file a ...


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