Published on FierceWireless (http://www.fiercewireless.com)

VMU complaint against Ultramercial

By Jason
Created Aug 11 2009 - 7:02am

COSNER COSNER & YOUNGELSON

197 Highway 18, Suite 308

East Brunswick, NJ 08816

(732) 937-8000

Attorneys for Plaintiff Virgin Mobile USA, L.P. 

SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK

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VIRGIN MOBILE USA, L.P.,  :

                                    : Civil Action

v.      : 

ULTRAMERCIAL, LLC,    :

                                    :

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      Plaintiff Virgin Mobile USA, L.P. ("Virgin Mobile" or "plaintiff"), by and through its undersigned attorneys, Cosner Cosner & Youngelson, as and for its complaint against defendant Ultramercial, LLC ("Ultramercial" or "defendant"), alleges as follows:

Preliminary Statement

  1. This action arises out of Ultramercial's misappropriation from Virgin Mobile of more than $800,000 in revenue resulting from advertisements placed on Virgin Mobile's Sugar Mama service.  Sugar Mama is a Virgin Mobile product which provides Virgin Mobile customers with the ability to earn free airtime minutes by viewing advertisements from various corporate and other sponsors placed on Virgin Mobile's website or delivered to the customer's handset.  Due to Ultramercial's wrongful conduct, Virgin Mobile recently ceased offering the Sugar Mama product indefinitely. 
  1. Pursuant to a master partnership agreement between the parties, Ultramercial is the Sugar Mama service administrator.  Among other things, the parties' agreement obligates Ultramercial to collect all advertising revenue from the corporate sponsors and, in turn, promptly to remit such monies to Virgin Mobile.  Rather than doing so, however, Ultramercial over the past several months has failed to remit payments, thereby converting hundreds of thousands of revenue dollars rightfully belonging to Virgin Mobile. 
  1. Despite repeated demands, Ultramercial - which admits its outstanding debt to Virgin Mobile - has refused to pay Virgin Mobile the monies it is owed.  Accordingly, by this action, Virgin Mobile seeks (i) to recover at least $814,543 - the amount of advertising revenue converted by Ultramercial; (ii) the attorneys' fees its incurs in this action, as provided for under the parties' agreement; and (iii) punitive damages for Ultramercial's wrongful conduct.  

Parties, Jurisdiction and Venue

  1. Plaintiff Virgin Mobile is a Delaware limited partnership with its principal place of business at 10 Independence Boulevard, Warren, New Jersey 07059. 
  1. Upon information and belief, defendant Ultramercial is a Delaware limited liability company with its principal place of business at 51 Malaga Cover Plaza, Palos Verdes Estates, CA 90275.  According to its website, Ultramercial LLC is a technology firm that markets its patented end-to-end business solution and ad unit to leading Fortune 500 advertising clients and Tier-1 Internet sites.  
  1. Jurisdiction and venue are proper herein because defendant contractually has consented, and is subject, to the jurisdiction of the state courts of New York, as set forth in paragraph 19 of the parties' Master Partnership Agreement. 

Facts

  1. Virgin Mobile is a leading national provider of wireless communications services that offers prepaid services targeted at the youth market.  Virgin Mobile's customers are attracted to its products and services because of its flexible terms, easy to understand and value-oriented pricing structures, stylish handsets that are offered at affordable prices, and relevant mobile data and entertainment content.   
  1. Virgin Mobile offers a range of products and services that are designed to meet the lifestyles of its target market.  One such service is the Virgin Mobile Sugar Mama program ("Sugar Mama").  Sugar Mama is a service enhancement and mobile media platform that allows Virgin Mobile prepaid customers to earn additional monthly airtime minutes by viewing advertisements from several Virgin Mobile business partners.  Generally, to receive additional minutes, Virgin Mobile customers must view an advertisement and answer certain questions about it. 
  1. Virgin Mobile launched Sugar Mama in May of 2006.  As of December 31, 2008, the Sugar Mama program had approximately 900,000 registered customers. 
  1. Pursuant to a Master Partnership Agreement executed by the parties (the "Agreement"), Ultramercial provided the underlying technology that enabled the Sugar Mama program, which runs on what is known as a "microsite" - i.e., an individual web page (or pages) which are meant to function as an auxiliary supplement to a primary website.  (A true and correct copy of the Agreement is annexed hereto as Exhibit A.)  
  1. In return for creating the Sugar Mama site, Virgin Mobile paid Ultramercial a substantial fee. 
  1. Ultramercial is the administrator of the Sugar Mama site.  As such, the Agreement requires Ultramercial to (i) invoice and collect all monies from the sponsors running advertisements on Sugar Mama; (ii) remit all advertising revenue received to Virgin Mobile within ten (10) days of receipt; and (iii) provide monthly collection reports to Virgin Mobile: 

[Ultramercial,] as the contracted site administrator for the Sugar Mama Service (SERVICE), shall invoice all advertisers running campaigns on the SERVICE . . . and collect all monies.  [Ultramercial] shall pay [Virgin Mobile] all collected monies within ten (10) days of receipt of advertisers' monies, less all applicable commissions . . . [Ultramercial] shall provide [Virgin Mobile] with monthly billing and collections reports. . . .

(Agreement, ¶ 14.1.)  

  1. The Agreement also requires Ultramercial to indemnify Virgin Mobile for any losses, including attorneys' fees, resulting from or relating to "any breach by Ultramercial of any of Ultramercial's . . . obligations under the [Agreement. . .]."  (Agreement Part 2, at 17.)
  1. Ultramercial has failed to pay hundreds of thousands of dollars in advertising revenue it received to Virgin Mobile, thereby breaching its obligations under the Agreement.  Virgin Mobile suspects that Ultramercial misappropriated the advertising fees in order to fund its own operations, at the expense of Virgin Mobile.  Whatever the reason, the plain fact is that Ultramercial has not remitted payment of substantial funds that rightfully belong to Virgin Mobile.
  1. According to its March 31, 2009 Statement of Account, Ultramercial owes an "Outstanding Debt" to Virgin Mobile of at least $814,543 in payments it received for advertisements placed on the Sugar Mama site.      
  1. By letter dated June 30, 2009, Virgin Mobile provided notice to Ultramercial that it was terminating the Agreement. 
  1. Further, due to Ultramercial's failure to honor its obligations under the Agreement and its other wrongful conduct as described herein, including but not limited to its failure to remit revenues generated by the Sugar Mama product to Virgin Mobile, Virgin Mobile has ceased offering the Sugar Mama product indefinitely as of July 16, 2009.

      18. Virgin Mobile repeatedly has demanded that Ultramercial account for, and make good on, its debt.  Ultramercial has failed to do so. 

COUNT ONE

(Breach of the Agreement)

  1. Plaintiff repeats the foregoing allegations as if fully set forth herein.
  1. A valid, binding and enforceable agreement existed between Virgin Mobile and defendant concerning the administration of the Sugar Mama microsite and the payment of advertising revenue to Virgin Mobile. 
  1. Virgin Mobile performed all that was required of it under the parties' Agreement.
  1. Defendant unilaterally and materially breached the Agreement by, among other things, failing to transfer advertising revenues to Virgin Mobile. 
  1. As a direct result of Ultramercial's breaches, Virgin Mobile has suffered damages in an amount to be determined by the trier of fact but in no event less than $814,543.

COUNT TWO

(Conversion)

  1. Plaintiff repeats the foregoing allegations as if fully set forth herein.
  1. Ultramercial assumed and exercised control over advertising revenues rightfully belonging to Virgin Mobile by failing to transfer such monies to Virgin Mobile as required by the parties' Agreement. 
  1. Ultramercial's unauthorized conduct was in derogation of Virgin Mobile's ownership rights with respect to the advertising revenues. 
  1. As a result of Ultramercial's actions, Virgin Mobile has been damaged in an amount to be determined by the trier of fact but in no event less than $814,543.
  1. Ultramercial's actions were committed intentionally, knowingly, willfully and in conscious disregard of Virgin Mobile's rights.  Accordingly, Virgin Mobile is entitled to recover punitive damages in an amount to be determined by the trier of fact.

COUNT THREE

(Unjust Enrichment)

  1. Plaintiff repeats the foregoing allegations as if fully set forth herein. 
  1. Ultramercial obtained advertising fees belonging to Virgin Mobile by intentionally or negligently failing to remit such fees to Virgin Mobile, as required under the parties' Agreement.
  1. Ultramercial has been unjustly enriched by such advertising fees. 
  1. Ultramercial's actions were committed knowingly, willfully and in conscious disregard of Virgin Mobile's rights.  Accordingly, Virgin Mobile is entitled to recover punitive damages.

      WHEREFORE, Virgin Mobile demands judgment on all Counts in favor of it and against defendant Ultramercial as follows:

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