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Intercall, Inc. v. Examination Management Services, Inc.

United States District Court, D. Nebraska

August 28, 2014

INTERCALL, INC., a Delaware corporation, Plaintiff,
v.
EXAMINATION MANAGEMENT SERVICES, INC., Defendant.

MEMORANDUM AND ORDER

LAURIE SMITH CAMP, Chief District Judge.

This matter is before the Court on the Motion for Summary Judgment or, in the alternative, Partial Summary Judgment (Filing No. 22) filed by Plaintiff InterCall, Inc. ("InterCall"), and the Motion for Partial Summary Judgment (Filing No. 25) filed by Defendant Examination Management Services, Inc. ("EMSI"). Also before the Court are EMSI's Motions to Strike (Filing Nos. 28 and 44), and InterCall's Motion to Strike (Filing No. 31). For the reasons stated, InterCall's Motion for Partial Summary Judgment will be denied, EMSI's Motion for Partial Summary Judgment will be granted in part, and the Motions to Strike will be denied as moot.

FACTUAL BACKGROUND

I. Undisputed Facts

Unless otherwise indicated, the following facts were presented in the parties' briefs and were supported by pinpoint citations to admissible evidence in the record that the parties have admitted, or that the parties have not properly resisted as required by NECivR 56.1[1] and Fed.R.Civ.P. 56.

InterCall is a Delaware corporation with its principal place of business in Omaha, Nebraska. Intercall provides audio, web, and video conferencing services. EMSI is an information service provider and a Nevada corporation with its principal place of business in the state of Texas. The parties assert diversity jurisdiction under 28 U.S.C. §1332(a).

In providing its services, EMSI regularly makes presentations for training and information sharing purposes. On August 23, 2010, EMSI executed a Subscription Order Form (the "Brainshark Order Form") with Brainshark Inc. ("Brainshark") for use of the "Brainshark Presentations Package" software to fulfill EMSI's presentation and training needs. The initial term of the Brainshark Order Form commenced on August 23, 2010, and was to renew automatically on each anniversary thereafter unless terminated according its terms, or terminated by one of the parties in the event of an uncured breach of the agreement. The Brainshark Order Form required notice by the terminating party. EMSI asserts that no notice of termination or default of the Brainshark Order Form was given or received by EMSI, and the Brainshark Order Form was not terminated. (Filing No. 27-1 ¶ 7.)

During the first term of the Brainshark Order Form, EMSI contemplated enhancing EMSI's use of Brainshark's "Rapid Learning" services with functionality that would better report training completed and certificates obtained by EMSI personnel. EMSI approached Brainshark about obtaining customized access to Rapid Learning. Brainshark proposed certain product enhancements, but to expand its services, Brainshark required EMSI to prepay the entire fee for the first year's use. EMSI rejected Brainshark's proposal because of the up-front billing and payment requirements.

Brainshark referred EMSI to InterCall to see whether InterCall could arrange the enhanced Rapid Learning services through Brainshark, while allowing EMSI to make monthly payments. InterCall and Brainshark previously entered into a reseller agreement allowing InterCall to act as an outside independent sales representative for Brainshark's services. On June 30, 2011, EMSI and InterCall entered into the "Brainshark Unlimited Edition Services Order Form" (the "InterCall Order Form") (Filing No. 27-5 or Filing No. 24-4 at ECF 13), with an effective date of July 1, 2011. The InterCall Order Form gave EMSI access to "Brainshark Unlimited Edition" that permitted unlimited use of Brainshark's "Content Management" software. ( Id. ) The InterCall Order Form also provided for other Brainshark services, including the requested product enhancements to Brainshark's Rapid Learning software. ( Id. ) The total annual fee under the InterCall Order Form was $174, 000.

The InterCall Order Form stated: "This Order Form shall automatically renew without interruption for successive 12 month periods unless customer gives written notice of its intent not to renew the Order Form at least 30 days before the beginning of any renewal term." (Filing No. 27-5 at ECF 1; see also Filing No. 24-4 at ECF.) The InterCall Order Form incorporated InterCall's own Terms and Conditions or, if applicable, a written service agreement executed by the parties.[2] ( Id. ) The Terms and Conditions permitted either party to terminate the InterCall Order Form for cause upon a material breach by the other party after written notice. (Filing No. 24-4 at ECF 17.) With respect to notices, the Terms and Conditions stated: "Notices to InterCall must be sent to the address mentioned in InterCall's invoice to Customer with a courtesy copy to 8420 W. Bryn Mawr Ave., Suite 400, Chicago, Illinois 60631, Attn: Legal Department; Fax: 706.634.3735; Email: legal@intercall.com."[3] (Filing No. 24-4 at ECF 22.)

Over the first four months of the InterCall Order Form, Brainshark attempted to develop specific plans to provide EMSI with the enhancements requested for the Rapid Learning software, but Brainshark was unable to implement Rapid Learning services for EMSI. By letter dated November 14, 2011, and addressed to Jon Davagian of Brainshark, EMSI attempted to terminate the InterCall Order Form for cause for several reasons, including Brainshark's failure to complete and implement the enhancements to Rapid Learning on behalf of InterCall. EMSI did not send the November 14, 2011, letter to InterCall, nor is there evidence of any written notice to InterCall of termination for cause, or notice to InterCall that EMSI did not intend to renew the InterCall Order Form.

II. Disputed Facts

InterCall seeks to recover damages for EMSI's failure to pay for the unlimited use of Brainshark's Content Management services as agreed in the InterCall Order Form. EMSI states that it is excused from payment under the InterCall Order Form because InterCall failed to provide the enhancements to Brainshark's Rapid Learning software, as contemplated by the InterCall Order Form. Further, EMSI seeks damages, in part, for InterCall's breach of the InterCall Order Form related to Rapid Learning services.

The parties' dispute at this stage centers on which order form governs EMSI's use of Brainshark's "Content Management" services from July 1, 2011, through January 11, 2013. EMSI argues that its legal obligation to pay for Content Management was governed by the terms of the Brainshark Order Form because the Brainshark Order Form continued in effect after execution of the InterCall Order Form, and any services EMSI used were covered by the terms of the Brainshark Order Form. EMSI also claims that it validly rescinded the InterCall Order Form following InterCall's failure to provide the promised enhancements to Brainshark's Rapid Learning.

InterCall argues that the InterCall Order Form replaced and extinguished the Brainshark Order Form, and that the InterCall Order Form governs EMSI's legal obligation because EMSI used Content Management on an unlimited-seat basis from July 1, 2011, through January 11, 2013, rather than a ten-seat limited basis as contemplated by the Brainshark Order Form. Further, InterCall argues that EMSI's unlimited use of Content Management, irrespective of the failure to have ...


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