Case 15-16885-LMI Doc 490 Filed 08/28/15 Page 1 of 5 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION www.flsb.uscourts.gov IN RE: ADINATH CORP. and SIMPLY FASHION STORES LTD., Debtors. CHAPTER 11 Jointly Administered EXACTTARGET, INC. S RESPONSE MEMORANDUM OF LAW IN OPPOSITION TO LATONYA SIMS MOTION FOR RELIEF FROM STAY TO CONTINUE LAWSUIT AGAINST NON-DEBTOR CO-DEFENDANT ExactTarget, Inc. ( ExactTarget, by and through undersigned counsel, respectfully submits this response memorandum of law in opposition to Movant Latonya Sims ( Movant Motion for Relief from Stay to Continue Lawsuit Against Non-Debtor Co-Defendant, filed in this action on August 5, 2015 (DE 433; the Motion. 1 In the Motion, Movant asks the Court to modify the automatic stay imposed by 11 U.S.C. 362(a so that Movant may proceed with a civil action in the United States District Court for the Southern District of Indiana that she filed in 2013 against Debtor Simply Fashion Stores Ltd. ( Debtor and non-debtor ExactTarget. She states that if the stay is lifted she will seek to dismiss Debtor from that action and proceed only against ExactTarget, a course that she claims will have no impact on this bankruptcy estate. Movant is mistaken. ExactTarget has submitted Proofs of Claim against the Debtor based on a contract requiring the Debtor to indemnify ExactTarget for legal violations based on 1 We note that although movant here is listed as Latonya Sims, in the civil action against the Debtor and ExactTarget, her name is listed as Simms.
Case 15-16885-LMI Doc 490 Filed 08/28/15 Page 2 of 5 its use of the ExactTarget services, including ExactTarget s attorney s fees (Claim #549, Claim # 582. Should the action proceed against ExactTarget, not only will ExactTarget incur additional fees for which it will seek reimbursement from the Debtor, but it also will seek to proceed immediately with discovery in the United States District Court for the Southern District of Indiana against the Debtor so that it can defend the claim that the text messages sent by the Debtor violated the TCPA. For these and other reasons set forth below, the Motion should be denied. I. BACKGROUND On July 23, 2013, Movant filed a putative class action lawsuit alleging that Debtor violated the Telephone Consumer Protection Act, 47 U.S.C. 227 et seq. ( TCPA, by sending her and others text messages promoting Debtor s retail sales without prior express consent and using an automatic telephone dialing system. On September 13, 2012, Movant amended her complaint to add as a co-defendant ExactTarget, the text message platform provider that Debtor used to send the texts at issue. The action was transferred to the Southern District of Indiana, where it remains pending but stayed due to Debtor s bankruptcy proceeding. Simms v. Simply Fashion Stores Ltd., No. 1:14-CV-00737-WTL-DKL, ECF No. 6 (S.D. Ind. ( Indiana Action. To date, the parties have engaged in only limited discovery relating to one element of Plaintiff s individual claim. Debtor s use of the ExactTarget texting platform was governed by a Master Subscription and Professional Services Agreement and a Text Messaging Rider (the Contract. It is ExactTarget s position that under the Contract, ExactTarget is entitled to be indemnified by the Debtor for all costs and attorneys fees incurred in defending the Indiana -2-
Case 15-16885-LMI Doc 490 Filed 08/28/15 Page 3 of 5 Action, as well as any ultimate judgment against ExactTarget. ExactTarget tendered its defense to the Debtor in October of 2012. It submitted Proofs of Claim in this proceeding and the related action on August 21, 2015 (Claim #549, Claim #582. In light of these facts, Movant has failed to carry her burden to show cause to lift the automatic stay, and ExactTarget respectfully submits that the Motion should therefore be denied. II. ARGUMENT A court may grant relief from the automatic stay imposed by 11 U.S.C. 362(a only for cause, 11 U.S.C. 362(d(1, and the burden of establishing a prima facie case of cause falls squarely on the movant. See, e.g., In re Rothstein Rosenfeldt Adler, P.A., No. 09-34791- RBR, 2011 Bankr. LEXIS 591, at *6 (S.D. Fla. Bankr. Jan. 24, 2011. In considering whether a movant has carried its burden, a court must consider the the totality of the circumstances in each particular case. In re Bryan Road, LLC, 382 B.R. 844, 854 (S.D. Fla. Bankr. 2008. Generally, the court should balance the potential hardship that will be incurred by the moving party if the stay is not lifted against the potential prejudice to the debtor and the debtor s estate. In re Gulfstream Crane, LLC, No. 09-37091-BKC-RBR, 2010 Bankr. LEXIS 5665, at *4 (S.D. Fla. Bankr. Mar. 4, 2010. Movant attempts to present a scenario where lifting the automatic stay will streamline the Debtor s bankruptcy proceedings. But in reality, lifting the stay does not eliminate the entanglement between the bankruptcy proceedings and the TCPA claim asserted in the Indiana Action. First, because ExactTarget s indemnification claim derives from the TCPA claim asserted in the Indiana Action, the claim will still need to be resolved, and the Debtor s liability determined even if the Debtor were dismissed from the Indiana Action. -3-
Case 15-16885-LMI Doc 490 Filed 08/28/15 Page 4 of 5 Second, if the automatic stay were lifted and the Debtor dismissed from the Indiana Action, discovery on other elements of Plaintiff s claim and ExactTarget s defenses may commence in the District Court in Indiana, and in order to defend the claim, ExactTarget would be right back in this Court seeking to take discovery from the Debtor. For example, should full merits discovery commence, both ExactTarget and Movant are likely to want discovery of documents reflecting any consent provided by the text recipients, and depositions to determine the Debtor s practice for obtaining consent and how it used the ExactTarget texting platform. As a result, even if the Motion were granted, ExactTarget (and likely Movant would be compelled to seek yet another lift of the bankruptcy stay in order to obtain discovery from Debtor in the Indiana Action, or ExactTarget may seek to obtain that discovery as part of the bankruptcy proceeding. In short, lifting the stay to allow Movant to seek to dismiss the Debtor from the Indiana Action will in no way rid this Court of that claim. In contrast, neither ExactTarget nor Debtor nor, for that matter, Movant is harmed if this Court maintains the status quo by keeping the stay in place. Movant asserts that the stay imposes a hardship on her, but she offers no authority or explanation to support that assertion. Moreover, the Movant has been litigating her claims for more than two years. There is no reason to believe that she would be prejudiced by having the Indiana Action on hold for a few more months. III. CONCLUSION For the foregoing reasons, ExactTarget respectfully requests that the Motion be denied. Respectfully submitted this 28th day of August, 2015. -4-
Case 15-16885-LMI Doc 490 Filed 08/28/15 Page 5 of 5 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing was served on the 28th day of August, 2015, via the Court s CM/ECF system which will generate electronic notice to the Debtors counsel and all parties of record authorized to receive electronic notice in this case. ORSHAN, P.A. Attorneys for ExactTarget, Inc. One Southeast 3rd Ave., Suite 1445 Miami, Florida 33131 Telephone: (305 529-9380 Facsimile: (305 414-2982 By: /s/ Paul L. Orshan Paul L. Orshan, Esq. Florida Bar No.: 776203 paul@orshanpa.com -5-