United States District Court, S.D. Ohio, Western Division, Dayton
FINDINGS OF FACT, CONCLUSIONS OF LAW AND JUDGMENT AS
TO LIABILITY ONLY
M. ROSE, UNITED STATES DISTRICT JUDGE
May 15-17, 2017, the Court held a bench trial as to liability
on the claims and counterclaims between Plaintiff Levtec, LLC
("Levtec") and Defendants Michelle Barkan
("Barkan"), Barkan Advertising, LLC ("Barkan
Advertising") and Turn, LLC ("Turn"). On May
31, 2017, the parties each filed proposed findings of fact
and conclusions of law for the Court's consideration.
to Federal Rule of Civil Procedure 52(a) and having reviewed
the pleadings and the parties' post-trial submissions,
the Court now makes the following findings of fact and
conclusions of law and enters judgment as to liability as
FINDINGS OF FACT
Levtec is an Ohio limited liability company based in
Montgomery County, Ohio.
Dove is the President of Levtec and a closely affiliated
company, Levin Services, Inc. ("Levin Services").
Levtec owns the rights to a line of products known as Morph
Fire, which are comprised of kits that convert different
brands of paintball guns to BB machine guns. Morph Fire was
created in 2012 and was first available for sale in September
early 2013, Levtec decided to develop an online advertising
and marketing plan to roll out the Morph Fire products for
sale to the public.
Barkan and her prior business, Agencies Direct, had acted as
a media buyer for Levin Services. Dove was familiar with
Barkan's business from her prior engagement with Levin
Levtec approached Barkan and asked if she could recommend
someone to assist Levtec with the advertising and marketing
campaign to launch the Morph Fire products.
response, on March 8, 2013, Barkan made a PowerPoint
presentation (Plaintiffs Exhibit ("PX")-47) to
Levtec and began to discuss an advertising campaign, which
would include media and electronic advertising for the launch
of Morph Fire.
PowerPoint presentation refers to a group of businesses and
individuals, including Barkan Advertising, and the general
services each could provide on the marketing campaign.
2 of the PowerPoint states: "Who We Are/We are a
collaboration group of marketing experts that specializes in
end to end marketing solutions. Specifically: strategy,
design, technology and production."
Page 3 of the PowerPoint lists an overview of the "Key
Services" that could be provided in the areas of
strategy, design, technology and production.
Page 4 of the PowerPoint presentation, which is titled
"We are Complete", states that "Each of our
clients works directly with one or more of our partners.
Complete is how we describe the combined services between our
partners, a group of business owners who are all leaders in
their individual creative fields."
PowerPoint presentation did not include specific details as
to the cost or scope of "services" to be performed
by each business or individual and it did not indicate a time
for performance of the services.
After the March 8, 2013 PowerPoint presentation, Levtec
decided to move forward with the Morph Fire marketing
campaign and asked Barkan for a referral to a marketing
company. Barkan provided three company names to Dove, who
researched the companies.
a subsequent meeting, Barkan introduced Levtec
representatives to one of her team members, Barbara Gorder,
and Gorder's company, Undisclosed Locations, or
"UNLO." Levtec entered a written contract with UNLO
to produce the creative art in the Morph Fire marketing
campaign. Neither Barkan nor her company was a party to that
contract, nor did Levtec and Barkan agree that Barkan would
be paid any compensation for UNLO's services.
UNLO performed customer surveys and market research, and
created the packaging for the Morph Fire products, the
creative part of the campaign, including the photo shoots,
art design, and the video for the website. As Greg Dove
testified, "[UNLO] created the look and feel for our
merchandise, basically creating the brand." (Doc. 103 at
17-18, 20, 28.)
Levtec looked to UNLO to oversee the Morph Fire marketing
campaign. After Levtec contracted with UNLO, UNLO presented
an overall marketing campaign strategy and plan to Levtec,
which included the services to be performed by Barkan.
Unrelated to any introduction made by Barkan, Levtec
contracted with Website Pipeline, Inc. ("Website
Pipeline") to establish and host a website for the Morph
Fire marketing campaign. Levtec determined that Website
Pipeline's software integrated with Levtec's existing
accounting software, unlike the website candidate suggested
by Barkan. Website Pipeline created the website and performed
website analytics. It was also tasked with placing pixels on
Levtec and Barkan Advertising agreed that Barkan Advertising
would assist Levtec in the purchase of traditional and
digital media advertising or "media buys" for the
Morph Fire marketing campaign. In exchange for Barkan
Advertising's services, Levtec agreed to pay Barkan 15%
of the total amount Levtec invested in digital and
traditional advertising placements, with her assistance, over
the course of the campaign.
Barkan did not agree to provide all the services listed in
the 2013 PowerPoint presentation. Barkan did not promise a
successful campaign or that Levtec's purchase of digital
or traditional media advertisements would produce a certain
number of sales.
Barkan proposed a budget to perform these services of $141,
000, but Levtec rejected this proposal. Levtec was running
short on cash and expressed to Barkan the need to control
costs by prepaying for Barkan's services.
Barkan introduced Levtec to Turn, a digital marketing
company, that, among other services, facilitates bidding and
ad serving for customers across digital media including
websites and social media platforms.
Turn facilitates the delivery of "impressions" for
its advertiser customers. An instance of a displayed ad to a
single user is known as an "impression."
Barkan received an Insertion Order dated September 25, 2013
(hereinafter, the "September 25, 2013 IO") from
Turn and forwarded it to Levtec by email. Dove signed the
September 25, 2013 IO on behalf of Levtec, and Turn's
Director of Revenue Operations countersigned it on September
Barkan did not provide Dove with the IAB Standard Terms and
Conditions (Defendant Turn's Exhibit
("DTX")-4), incorporated by reference in the
IAB Terms address, among other issues: (a) the specific terms
to be included in insertion orders, (b) inventory
availability, (c) ad placement and positioning, (d) payment
and payment liability, (e) Turn's reporting obligations,
(f) cancellation and termination of insertion orders, (g)
relationships between Turn, (h) the client and the
client's authorized agent, (i) indemnification, and (j)
limitation of liability.
Turn drafted pixel placement instructions for digital
advertisements to be implemented on the Morph Fire website by
Barkan forwarded Turn's pixel placement instructions to
Website Pipeline, Levtec and UNLO during the relevant time
period. Sometimes, Turn also communicated pixel placement
instructions and information directly to Website Pipeline,
Levtec, and UNLO.
or around early October 2013, Barkan recognized that there
were issues with the operation of the pixels on the Morph
Fire website. In particular, the pixels did not appear to be
correctly registering purchases and other information about
potential customers' visits to the website. (PX-53.)
to these technical issues in the operation of the Morph Fire
website, the marketing campaign was paused on November 5,
2013. The marketing campaign was restarted on November 22,
2013, after Barkan reported that the problems had been
resolved. It is unclear, however, whether or not the issues
with the Morph Fire website were ever actually corrected.
November 22, 2013, Levtec signed a written "Agency
Authorization" for Barkan to purchase traditional cable
advertising space on Levtec's behalf with Time Warner
Cable. (PX 45.) Pursuant to the oral agreement between Levtec
and Barkan Advertising, Barkan would be paid 15% commission
of the total amount Levtec invested in traditional cable
advertising space under the Agency Authorization.
the end of November 2013, Barkan purchased cable advertising
space with Time Warner Cable of Louisville. (PX 73.)
Levtec never paid Barkan for the advertisements that she
purchased on Levtec's behalf from Time Warner Cable of
Louisville. Levtec also never directly paid Time Warner Cable
of Louisville's invoice.
Barkan signed a second Insertion Order dated December 20,
2013 (hereinafter, the "December 20, 2013 IO") to
continue the Morph Fire campaign with Turn. (PX-2.)
Levtec did not authorize Barkan to sign the December 20, 2013
IO on its behalf. Dove was not aware of its existence until
it was produced in discovery-not by Barkan-but by Turn. (Doc.
103 at 38.)
According to Turn's reporting and invoicing system,
through October 15, 2013, Turn had delivered a total of 46,
642, 691 impressions for the Morph Fire campaign. (DTX 5 at
1.) This included totals of 45, 273, 874 impressions for Turn
Predictive Targeting, 105, 070 for Turn Retargeting, and 506,
488 for Turn Predictive Targeting PreRoll Video.
(Id. at 1-2.) According to Turn's reporting and
invoicing system, through December 18, 2013, Turn had
delivered a total of 247, 315, 409 impressions for the Morph
Fire campaign. (Id. at 10; DTX 9-10.)
According to Turn's reporting and invoicing system,
between December 18, 2013 and January 2, 2014, Turn had
delivered a total of 10, 964, 472 impressions for the Morph
Fire campaign. (DTX 5 at 10-11.) According to Turn's
reporting and invoicing system, through January 2, 2014, Turn
had delivered a total of 258, 279, 881 impressions for the
Morph Fire campaign. (Id.; DTX 10.)
Levtec produced no evidence of an alternate number of
impressions that were delivered by Turn.
Levtec never submitted a complaint regarding an inaccurate or
incomplete report to Turn.
Levtec paid two invoices from Turn for $549.29 and $28,
607.87, for a total of $29, 157.16, for Turn's services
pursuant to the September 25, 2013 IO. (PX-9; PX-10.) Levtec
made no further payment to Turn, either directly or through
any agents. Levtec paid nothing to Turn, either directly or
through any agent, in relation to the December 20, 2013 IO.
CONCLUSIONS OF LAW
of Levtec's Claims
Levtec asserts four causes of action in the Second Amended
Complaint: (1)b fraud in the inducement against the Barkan
Defendants, (2) breach of contract against the Barkan
Defendants, (3) declaratory judgment against Turn, and (4)