United States District Court, C.D. California
ORDER DENYING DEFENDANT’S MOTION FOR PARTIAL
SUMMARY JUDGMENT AND GRANTING PLAINTIFF’S MOTION FOR
L. REAL, UNITED STATES DISTRICT JUDGE
the Court are Plaintiff and Counterdefendant Viacom
International Inc. (“Viacom”) and Defendant and
Counterclaimant MGA Entertainment, Inc.’s
(“MGA”) Cross-Motions for Partial Summary
Judgment. (Dkt. Nos. 29, 52). After full briefing by the
parties, this Court took the matter under submission on July
judgment is appropriate where there is no genuine issue of
material fact and the moving party is entitled to judgment as
a matter of law. Celotex Corp. v. Catrett, 477 U.S.
317, 330 (1986). To meet its burden of production, “the
moving party must either produce evidence negating an
essential element of the non-moving party’s claim or
defense or show that the nonmoving party does not have enough
evidence of an essential element to carry its ultimate burden
of persuasion at trial.” Nissan Fire & Marine
Ins. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000).
Once the moving party meets its initial burden of showing
there is no genuine issue of material fact, the opposing
party has the burden of producing competent evidence and
cannot rely on mere allegations or denials in the pleadings.
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986). Where the record taken
as a whole could not lead a rational trier of fact to find
for the non-moving party, there is no genuine issue for
Viacom and MGA move for summary judgment on Viacom’s
second claim for relief against MGA for breach of contract.
Additionally, Viacom moves for summary judgment on two other
claims for breach of contract against MGA, as well as summary
judgment on MGA’s two counterclaims against Viacom.
second claim for relief against MGA is for breach of contract
pertaining to the Beacon Domestic Ad Sales Agreement
(“Viacom/Beacon Agreement”). A plaintiff who
claims breach of contract must establish all of the
following: (1) the existence of a contract; (2) the
performance by plaintiff of its obligation under the
contract; (3) the breach of contract by defendant; and (4)
damages as a result of defendant’s breach of contract.
See 4 Witkin, California Procedure (4th
Edition), Pleading § 476, p. 570. The undisputed
evidence demonstrates that Beacon entered into a contract
with Viacom, Viacom performed its obligation under that
contract, neither Beacon nor MGA paid Viacom for its
performance, and Viacom suffered damages as a result.
Although MGA is not a signatory to the Viacom/Beacon
Agreement, Viacom argues Beacon acted as MGA’s agent.
agent is one who represents another, called the principal, in
dealings with third persons. Cal. Civ. Proc. Code §
2295. An agent has authority that his principal
actually or ostensibly confers upon him and
represents his principal for all purposes within the scope of
his actual or ostensible authority. Cal.
Civ. Proc. Code §§ 2298, 2330. When “acting
within his actual or ostensible authority, [an agent] binds
the principal where the principal has intentionally or
negligently allowed others to believe the agent has
authority.” C.A.R. Transp. Brokerage Co., Inc. v.
Darden Restaurants, Inc., 213 F.3d 474, 479 (9th Cir.
2000). Therefore, in order for MGA to be liable for breach of
the Viacom/Beacon Agreement, Viacom bears the burden of
establishing that Beacon had actual or ostensible authority
to contract on MGA’s behalf. See Inglewood Teachers
Ass’n v. Pub. Emp’t Relations Bd., 227
Cal.App.3d 767, 780 (1991) (stating that the burden of
proving authority “rests upon the party asserting the
existence of the agency and seeking to charge the principal
with the representation of the agent”).
authority is that which “a principal intentionally
confers upon the agent, or intentionally, or by want of
ordinary care, allows the agent to believe himself to
possess.” Cal. Civ. Proc. Code § 2316. Here, the
evidence establishes that MGA intentionally conferred upon
Beacon the authority to bind MGA to the Viacom/Beacon
Agreement. In a 2006 letter from MGA to Beacon, MGA
acknowledges that Beacon is MGA’s agency of record and
notes that MGA guarantees payment for all authorized orders
placed by Beacon. While MGA argues that there is no evidence
that Viacom ever reviewed this letter prior to the instant
litigation, a third party’s knowledge of actual
authority is not required. See generally Cal. Civ.
Proc. Code § 2316; Inglewood Teachers
Ass’n, 227 Cal.App.3d at 781. Moreover, in 2015,
MGA’s General Counsel, Ellie Trope, circulated another
letter stating that Beacon is MGA’s agency of record
for authorized orders. Trope Dec. Ex. A. Therefore, it is
clear that MGA intended for Beacon to be its agent.
MGA argues that even if Beacon was its agent, it was only
authorized to bind MGA to previously approved
transactions, and the Viacom/Beacon Agreement was not
previously approved. However, the evidence shows that Beacon
prepared, and MGA approved, specific “authorizations
for media placement.” These authorizations describe
orders made by MGA for the purchases that Beacon was to make
on MGA’s behalf during the June through December 2015
time period covered by the Viacom/Beacon Agreement. Dkt. 53,
Exs. 7-9. Email correspondence from June 26, 2015 between MGA
Global Sales and Licensing Assistant, Margot Lopez, and
Beacon representatives establish that MGA specifically
authorized the placement orders of advertising for MGA shows
including Lalaloopsy, MC2, and Little Tikes on Viacom
channels. Id. MGA does not, and cannot, dispute that
it sent those emails to Beacon authorizing the advertising
all of this is compounded by the fact that MGA actually paid
for Beacon-purchased advertising, and did so through
2015-including the commissions associated with the
Viacom/Beacon Agreement. Dkt. 38-4, Ex. 4 at 88:17-89:8.
Since MGA does not dispute that it paid Beacon commissions
for the Viacom/Beacon Agreement, this Court is left with no
other explanation other than the fact that Beacon had actual
authority to enter into the Viacom/Beacon Agreement.
addition to succeeding on its claim because Beacon had
actual authority, Viacom alternatively succeeds
since Beacon had ostensible authority. “An
agency is ostensible when the principal intentionally, or by
want of ordinary care, causes a third person to believe
another to be his agent who is not really employed by
him.” Cal. Civ. Code § § 2300, 2317. A
showing of ostensible authority requires three elements: (1)
the principal intentionally or carelessly created the
impression of authority; (2) a third party reasonably
believed that the ostensible agent had that authority; and
(3) that third party was harmed because it reasonably relied
on its belief. See CACI No. 3709; Cal. Civ. Code
§ § 2300, 2317. A principal need not “make
explicit representations regarding the agent’s
authority to the third party before ostensible authority can
be found, ” C.A.R. Transp. Brokerage Co., Inc. v.
Darden Restaurants, Inc., 213 F.3d 474, 480 (9th Cir.
2000). Instead, “ostensible authority may be proven
through evidence of the principal transacting business solely
through the agent, the principal knowing that the agent holds
himself out as clothed with certain authority but remaining
silent, the principal’s representations to the public
in general, and the customs and usages of the particular
trade in question.” Id.
evidence shows MGA intentionally, or at least carelessly,
caused third-party Viacom to believe that Beacon had
authority to purchase advertising on MGA’s behalf.
Although explicit representations are not required to
demonstrate ostensible authority, Justin Halliley, Vice
President of Sales & Marketing for Nickelodeon (a Viacom
entity), stated in his declaration that “Beacon’s
status as MGA’s agent, and its authorization to
purchase advertising on MGA’s behalf, ha[d] been
confirmed to [him] by both MGA and Beacon many times over the
years in the form of written correspondence and verbal
statements made at in-person meetings.” Halliley Decl.
¶ 4. Furthermore, MGA transacted all of its business
with Viacom through Beacon for years, throughout which,
Halliley states, “MGA never once suggested that Beacon
lacked authority to purchase advertising for MGA.”
Id. Moreover, the customs of this particular trade
recognize an advertising agent’s right to bind the
principal to contracts with third parties like Viacom.
See, e.g., R. H. Macy & Co. v. Robinson, 183
Cal.App. 2d 182, 188-90 (1960) (contract entered into by
advertising agency enforceable against principal); Store
of Happiness v. Carmona & Allen, Inc., 152 Cal.App.
2d 266, 271-72 (1957) (advertising agency contracted for
enforceable advertisements with a third-party television
the parties’ past dealings would lead a reasonable
person to believe that Beacon was acting on behalf of MGA.
The record is undisputed that MGA has previously authorized
Beacon to contract with Viacom for the purchase of
advertising. When MGA’s CEO, Isaac Larian, was asked in
his deposition whether MGA had authorized Beacon to place
television advertising with Viacom networks on MGA’s
behalf, he answered affirmatively. Dkt. 53, Ex. 2. at
75:23-76:4. Accordingly, Viacom representatives reasonably
believed that Beacon was an authorized agent of MGA.
Moreover, Viacom’s assumptions were reinforced by the
fact that MGA had always paid for the millions of dollars in
yearly advertising that Beacon placed on its behalf. Halliley
Decl. ¶ 4. If this does not demonstrate a clear intent
to cause third-party Viacom to believe that Beacon had
authority to purchase advertising on MGA’s behalf, at
the very least, MGA’s carelessness undoubtedly created
the impression of Beacon’s authority.
Viacom meets the third element of ostensible authority since
it relied on its reasonable belief that Beacon was authorized
to act on MGA’s behalf to its detriment. Because of
MGA’s express representations to Viacom, MGA’s
previous acknowledgment of Beacon’s authority, and the
parties’ past dealings, Viacom aired over $7, 348,
423.00 worth of advertisements in 2015 pursuant to the
Viacom/Beacon Agreement. Therefore, there is no genuine issue
of material fact as to whether Beacon had actual, or at the
very least, ostensible authority to bind MGA to the
Viacom/Beacon Agreement was a valid contract. Viacom
performed its obligation under it, MGA failed to pay, and
Viacom was damaged as a result. Therefore, MGA breached the
Viacom/Beacon Agreement. Accordingly, Viacom is entitled to
summary judgment on its second claim for relief. The parties
are directed to file ...