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Nelson v. Peregrine Sports, LLC

United States District Court, D. Oregon

June 26, 2018

TODD NELSON, Plaintiff,
v.
PEREGRINE SPORTS, LLC, Defendant.

          ORDER

          Michael H. Simon, District Judge.

         Before the Court is Defendant's motion to dismiss Plaintiff's First Amended Complaint (“Complaint”) for failure to state a claim. United States Magistrate Judge Paul Papak issued Findings and Recommendation (“F&R”) in this case on April 14, 2018. ECF 30. The Court adopts Judge Papak's F&R with two exceptions explained below, and grants Defendant's motion to dismiss.

         Under the Federal Magistrates Act (“Act”), the Court may “accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate.” 28 U.S.C. § 636(b)(1). If a party files objections to a magistrate's findings and recommendations, “the court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.” Id.; Fed.R.Civ.P. 72(b)(3).

         For those portions of a magistrate's findings and recommendations to which neither party has objected, the Act does not prescribe any standard of review. See Thomas v. Arn, 474 U.S. 140, 152 (1985) (“There is no indication that Congress, in enacting [the Act], intended to require a district judge to review a magistrate's report to which no objections are filed.”); United States. v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (en banc) (holding that the court must review de novo magistrate's findings and recommendations if objection is made, “but not otherwise”). Although in the absence of objections no review is required, the Act “does not preclude further review by the district judge[] sua sponte . . . under a de novo or any other standard.” Thomas, 474 U.S. at 154. Indeed, the Advisory Committee Notes to Fed.R.Civ.P. 72(b) recommend that “[w]hen no timely objection is filed, ” the Court review the magistrate's recommendations for “clear error on the face of the record.”

         BACKGROUND

         Plaintiff Todd Nelson is a ticket broker who purchases and re-sells season tickets from various athletic teams, including the Portland Timbers (“Timbers”), Portland's Major League Soccer (“MLS”) team. The Timbers are owned by Defendant Peregrine Sports. Beginning in 2009, before the Timbers were an MLS team, Plaintiff began to purchase and re-sell Timbers season tickets.[1] In 2010, Plaintiff alleges, the Timbers advertised the Axe Society, an exclusive club for those who purchased season tickets for the 2010 season, the year in which the Timbers became an MLS team. The advertisement for the Axe Society allegedly promised that those who purchased an annual membership by December 31, 2010 would enjoy “lifetime membership” in the Axe Society. In order to maintain one's membership in the Axe Society, members were required to purchase at least one season ticket each year. Plaintiff alleges that he continued to buy a large number of season tickets, buying 111 season tickets each year between 2011 and 2016. In 2016, Plaintiff alleges, Defendant refused to allow Plaintiff to purchase future season tickets. Plaintiff sues Defendant, alleging breach of contract, [2] misrepresentation, and tortious interference with business expectancy.[3]

         Judge Papak recommended that Defendant's motion to dismiss be granted, and that Plaintiff's claims be dismissed without prejudice to the extent premised on a theory of express contract, but with prejudice to the extent premised on any other contract theory. Judge Papak further recommended that Plaintiff's misrepresentation claim be dismissed with prejudice, and that Plaintiff's claim for intentional interference with economic relations be dismissed without prejudice.

         Plaintiff timely filed an objection (ECF 32), to which Defendant responded (ECF 33). Plaintiff objects to Judge Papak's conclusions regarding Plaintiff's breach of contract claims, to Judge Papak's conclusion that Plaintiff's claim for intentional misrepresentation should be dismissed with prejudice, as opposed to without prejudice, and to Judge Papak's conclusion that Plaintiff fails to state a claim for intentional interference with economic relations.

         A. Contract Claims

         Plaintiff's Complaint alleges breach of contract under three theories of contract: express contract, implied-in-fact contract, and promissory estoppel. As Judge Papak explained, under each theory, Plaintiff's contract claims are premised on Plaintiff's assertion that he had a perpetual right to renew his season tickets.

         In objecting to the F&R, Plaintiff argues that the Axe Society advertisement and other statements by Defendant clearly provided for a lifetime right to continuously purchase season tickets. Plaintiff alleges that the Timbers led Nelson to believe he would always have first rights to at least the same 111 seats he had purchased the previous year. Plaintiff alleges no actual facts or representations made by the Timbers, however, that plausibly suggest such a promise. Plaintiff alleges that the Timbers created this expectation in part by referring to Nelson as the owner of his season tickets, and by representing that season tickets could be “willed” or passed down to family members. At most, however, as Judge Papak found, these statements imply an ownership interest in a given annual membership or season ticket, which, by its terms, extends only for one year or season. Plaintiff also states, though he did not allege in his Complaint, that a “Guest Guide” indicated that season tickets could be revoked for cause, such as a breach of the code of conduct. This does not materially differ from or add to other facts alleged that Judge Papak properly found to be insufficient to state a claim. At most, it suggests only that an annual membership may be terminable only for cause, and does nothing to establish that the right to purchase future season tickets may be revoked only for cause. The Court agrees with the F&R's conclusion that Plaintiff has not alleged any express provision providing for a perpetual right to repurchase the same number of tickets purchased in the prior year.[4]

         Plaintiff also objects to the F&R's conclusion that Oregon law does not permit the enforcement of an implied-in-fact contract to the extent it purports to provide for perpetual rights. Plaintiff argues that this rule, derived from Klamath Off-Project Water Users, Inc. v. Pacificorp, 237 Or.App. 434 (2010), and the statute of frauds, Oregon Revised Statutes (“ORS”) § 41.580, in conjunction, is not found anywhere in Oregon case law. Plaintiff cites no case law, however, suggesting that it is improper to jointly consider both the requirement under Oregon law that perpetual agreements be “clearly provided” for, and Oregon's statute of frauds. In Portland Section of Counc. of Jewish Women v. Sisters of Charity of Providence in Ore., 266 Or. 448 (1973), a plaintiff sought to enforce an alleged contract that required a hospital, in return for payment, “to furnish ward accommodations and services in perpetuity” to a person designated by the plaintiff. Id. at 451. The defendant argued that the statute of frauds prevented the agreement from being enforced because no signed writing memorialized the agreement. The court concluded not that the statute of frauds did not apply to this alleged perpetual contract, but that “[t]he payment of the full consideration by plaintiff and the money's acceptance and retention constitute such performance of the contract sufficient to take the agreement out of the statute of frauds.” Id. at 453-54. In light of this case, the Court concludes that Judge Papak properly considered both Klamath and Oregon's statute of frauds in evaluating Plaintiff's claims.

         Plaintiff relies heavily on, and argues that Judge Papak's recommendation is inconsistent with, Paul Gabrilis, Inc. v. Dahl, 154 Or.App. 388 (1998). In Paul Gabrilis, a country club filed a trespass action against members whose contracts had allegedly been terminated. The members claimed that their memberships were perpetual and could not be terminated without cause. The Oregon Court of Appeals agreed, holding that the express terms of the written membership agreement between the club and the members provided for a perpetual agreement. That the court inferred that agreement from express terms did not negate the fact that the agreement itself was written, presumably signed (as no party argued it was not), and “clearly provided for.” Thus, Paul Gabrilis does not support Plaintiff's assertion that implied-in-fact contracts can establish perpetual rights, or that Plaintiff's claims are not subject to the statute of frauds.

         Plaintiff also argues that the statue of frauds, which Judge Papak relied on in part, was not substantially briefed by either of the parties. As Defendant notes, however, Defendant argued in its motion to dismiss that Plaintiff's claims failed due to the statute of frauds to the extent they were premised on an alleged oral agreement. Plaintiff now argues that the doctrines of ...


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