18-1028-cv
FPP, LLC v. Xaxis US, LLC

                                 UNITED STATES COURT OF APPEALS
                                     FOR THE SECOND CIRCUIT

                                          SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.



        At a stated Term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the
10th day of April, two thousand nineteen.

Present:         ROSEMARY S. POOLER,
                 DENNY CHIN,
                      Circuit Judges,
                 RICHARD K. EATON,1
                              Judge.

_____________________________________________________

FPP, LLC, FKA PANTHER PANACHE, LLC,

                                   Plaintiff-Appellant,

                            v.                                               18-1028-cv

XAXIS US, LLC, FKA 24/7 REAL MEDIA US, INC.,

                        Defendant-Appellee.2
_____________________________________________________

Appearing for Appellant:           Ellen M. Ahrens, Madel PA (Christopher W. Madel, Aaron R.
                                   Thom, on the brief), Minneapolis, MN.

Appearing for Appellee:            Paul F. Corcoran, Davis & Gilbert LLP (Daniel A. Dingerson,
                                   Joshua B. Podolnick, on the brief), New York, NY.

1
    Judge Richard K. Eaton, United States Court of International Trade, sitting by designation.
2
    The Clerk of Court is directed to amend the caption as above.
Appeal from a judgment of the United States District Court for the Southern District of New
York (Hellerstein, J.).

     ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of said District Court be and it hereby is AFFIRMED.

         Appellant FPP, LLC appeals from the March 15, 2018, judgment of the United States
District Court for the Southern District of New York (Hellerstein, J.), dismissing its claim of
fraud as duplicative of its breach of contract claim. We assume the parties’ familiarity with the
underlying facts, procedural history, and specification of issues for review.

        FPP, LLC (“FPP”) and Xaxis US, LLC (“Xaxis”) dispute the meaning of a term in an
asset purchase agreement between the two companies’ predecessors, Panther Panache, LLC
(“Panther”) and 24/7 Real Media US, Inc. (“24/7”), respectively. FPP claims that 24/7 falsely
represented to Panther that the company would calculate fees owed to Panther under the disputed
term using one methodology but 24/7 intended to and Xaxis did calculate the fees using another
methodology. The parties do not dispute the district court’s interpretation of the contractual term
at issue, but instead dispute the district court’s sua sponte dismissal of FPP’s fraud claim as
duplicative of FPP’s contract claim.

        This case was originally before Judge Laura T. Swain of the Southern District of New
York, who denied Xaxis’s motion to dismiss FPP’s fraud claim as duplicative of FPP’s contract
claim, FPP, LLC v. Xaxis US, LLC, No. 14-cv-6172-LTS, 2015 WL 5123129, at *4-5 (S.D.N.Y.
Sept. 1, 2015), and denied Xaxis’s motion for summary judgment on FPP’s fraud claim, FPP,
LLC v. Xaxis US, LLC, No. 14-cv-6172-LTS, 2016 WL 5477768, at *5-6 (S.D.N.Y. Sept. 29,
2016). Before trial, the case was reassigned to Judge Alvin K. Hellerstein of the Southern
District of New York. At the parties’ first appearance before Judge Hellerstein, Judge Hellerstein
questioned whether FPP’s fraud claim was duplicative of FPP’s breach of contract claim,
indicating that he would likely dismiss the parallel fraud claim as duplicative. During the parties’
opening statements, Judge Hellerstein again provided FPP an opportunity to explain why its
fraud claim was not duplicative and thereafter dismissed the claim because there was “no fraud
outside the contract.” App’x at 99-100. The district court memorialized the dismissal in its
Findings of Fact and Conclusions of Law After Trial. App’x at 89, n.9.

         FPP now claims that the district court (1) erred by sua sponte dismissing the fraud claim
without providing FPP notice and an opportunity to respond, (2) abused its discretion by
deviating from the law of the case, and (3) incorrectly concluded that FPP’s fraud claim was
duplicative. We review a district court’s decision to dismiss a claim for failure to state a claim de
novo. See McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir. 2007). “[W]e review
a district court’s application of the law of the case doctrine for abuse of discretion only,” Devilla
v. Schriver, 245 F.3d 192, 198 (2d Cir. 2001), observing that a district court abuses its discretion
in deviating from the law of the case when it makes “a change of ruling” that “cause[s] prejudice
to the appellant,” Colvin v. Keen, 900 F.3d 63, 69 (2d Cir. 2018).




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         We will reverse a district court’s sua sponte dismissal if the court “gave the parties no
advance notice that dismissal was contemplated and afforded them no opportunity to brief the
question.” McGinty v. New York, 251 F.3d 84, 90 (2d Cir. 2001). That is not the case here. The
district court gave FPP multiple opportunities to “muster [its] best argument, to plan [its]
strategy, and to put [its] best foot forward” in defense of its fraud claim. Schlesinger Inv. P’ship
v. Fluor Corp., 671 F.2d 739, 742 (2d Cir. 1982). FPP briefed the issue in opposition to Xaxis’s
motion to dismiss, defended the fraud claim at summary judgment, and was twice asked to
explain why the claim was not duplicative before the district court finally decided to dismiss the
claim at the beginning of trial. FPP had advance notice and the opportunity to convince the court
that its fraud claim was not duplicative of its breach of contract claim and failed to do so.

         The district court also did not abuse its discretion by deviating from the law of the case.
“[J]udges of coordinate jurisdiction are not bound by each other[’]s rulings, but are free to
disregard them if they so choose,” United States v. Birney, 686 F.2d 102, 107 (2d Cir. 1982), as
long as the change in course does not “cause[] prejudice to a party that relied detrimentally on
the earlier ruling,” Colvin, 900 F.3d at 72. “Prejudice” in this context “does not mean the harm
[that] results from a failure to apply the doctrine; rather, it refers to a lack of sufficiency of notice
and an opportunity to prepare armed with the knowledge that one judge is disregarding the ruling
of another.” Birney, 686 F.2d at 107. FPP was on notice that its fraud claim could be dismissed if
it was duplicative of its breach of contract claim, and Judge Hellerstein properly “recognized
that, contrary to [the district court’s] earlier assessment, the complaint was insufficient.” Colvin,
900 F.3d at 70.

        Finally, we find no error in the district court’s dismissal of FPP’s fraud claim. Under
New York law—which applies pursuant to the New York choice-of-law provision in the Asset
Purchase Agreement, Special App’x at 143—“a fraud claim may not be used as a means of
restating what is, in substance, a claim for breach of contract.” Wall v. CSX Transp., Inc., 471
F.3d 410, 416 (2d Cir. 2006) (internal quotation marks omitted). A fraud claim is tenable only
when the fraud alleged is “collateral or extraneous to the contract.” Bridgestone/Firestone, Inc. v.
Recovery Credit Servs., Inc., 98 F.3d 13, 20 (2d Cir. 1996). A fraud claim may be considered
collateral to a contract if the contract, including its representations and warranties, does not
address the factual bases of the fraud claim. See Wall, 471 F.3d at 417. FPP’s fraud claim is, at
root, that 24/7 told FPP’s predecessor that the disputed term meant one thing and Xaxis later
interpreted the term to mean something different. The contract’s written terms therefore address
the factual bases for the fraudulent misrepresentation, and the fraud claim is duplicative. Even if
the fraud claim were not duplicative, however, the district court’s factual findings preclude FPP
from recovering for fraud. The district court concluded that Steven Robinson, one of FPP’s
negotiators, “testified that statements made by [Xaxis’s representative] during negotiations gave
him the understanding to base [Basic Video Media Fee] revenues on advertisers’ CPM. . . . I find
that testimony not to be credible.” App’x at 82, ¶ 23. The district court supported its credibility
determination with documentary evidence that “showed that Robinson knew that the CPM for
Basic Video Media . . . would be based, not on what advertisers pay, but on an implied ad-
serving fee.” App’x at 83-84, ¶ 25. Thus, even if we were to conclude that the district court
committed procedural error, its findings and credibility determinations on FPP’s contract claim
are dispositive of FPP’s fraud claim, and we would affirm. See Coulter v. Morgan Stanley & Co.,




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753 F.3d 361, 366 (2d Cir. 2014) (noting this Court “may affirm on any basis supported by the
record”).

       We have considered the remainder of FPP’s arguments and find them to be without merit.
Accordingly, the order of the district court hereby is AFFIRMED. Each side to bear its own
costs.


                                                   FOR THE COURT:
                                                   Catherine O’Hagan Wolfe, Clerk




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