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Levtec, LLC v. Barkan

United States District Court, S.D. Ohio, Western Division, Dayton

August 28, 2017

LEVTEC, LLC, Plaintiff,
v.
MICHELLE BARKAN, BARKAN ADVERTISING, LLC, TURN INC., Defendants.

          FINDINGS OF FACT, CONCLUSIONS OF LAW AND JUDGMENT AS TO LIABILITY ONLY

          THOMAS M. ROSE, UNITED STATES DISTRICT JUDGE

         From 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.

         Pursuant 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 follows.

         I. FINDINGS OF FACT

         1. Levtec is an Ohio limited liability company based in Montgomery County, Ohio.

         2. Greg Dove is the President of Levtec and a closely affiliated company, Levin Services, Inc. ("Levin Services").

         3. 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 of 2013.

         4. In early 2013, Levtec decided to develop an online advertising and marketing plan to roll out the Morph Fire products for sale to the public.

         5. 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 Services.

         6. 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.

         7. In 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.

         8. The PowerPoint presentation refers to a group of businesses and individuals, including Barkan Advertising, and the general services each could provide on the marketing campaign.

         9. Page 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."

         10. 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.

         11. 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."

         12. The 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.

         13. 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.

         14. In 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.

         15. 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.)

         16. 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.

         17. 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 the website.

         18. 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.

         19. 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.

         20. 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.

         21. 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.

         22. 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."

         23. 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 27, 2013.

         24. Barkan did not provide Dove with the IAB Standard Terms and Conditions (Defendant Turn's Exhibit ("DTX")-4), incorporated by reference in the Insertion Order.

         25. 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.

         26. Turn drafted pixel placement instructions for digital advertisements to be implemented on the Morph Fire website by Website Pipeline.

         27. 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.

         28. In 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.)

         29. Due 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.

         30. On 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.

         31. At the end of November 2013, Barkan purchased cable advertising space with Time Warner Cable of Louisville. (PX 73.)

         32. 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.

         33. 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.)

         34. 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.)

         35. 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.)

         36. 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.)

         37. Levtec produced no evidence of an alternate number of impressions that were delivered by Turn.

         38. Levtec never submitted a complaint regarding an inaccurate or incomplete report to Turn.

         39. 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.

         II. CONCLUSIONS OF LAW

         Overview of Levtec's Claims

         40. 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) ...


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