Case 2:12-cv-07149-CAS-JCG Document 15 Filed 11/26/12 Page 1 of 5 Page ID #:81
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`Case No.
`Title
`
`CIVIL MINUTES - GENERAL
`CV 12-7149-CAS (JCGx)
`Date November 26, 2012
`KINGS ROAD ENTERTAINMENT, INC. V. WEST COAST
`PICTURES, ET AL.
`
`CHRISTINA A. SNYDER
`Present: The Honorable
`N/A
`Debbie Gale
`Catherine Jeang
`Tape No.
`Court Reporter / Recorder
`Deputy Clerk
`Attorneys Present for Defendants
`Attorneys Present for Plaintiffs:
`Oscar Ramallo
`Lee Williams
`DEFENDANTS’ MOTION TO DISMISS FOR LACK OF
`SUBJECT MATTER JURISDICTION (filed October 26, 2012)
`
`Proceedings:
`
`I.
`
`INTRODUCTION & BACKGROUND
`
`On August 20, 2012, plaintiff Kings Road Entertainment, Inc. filed the instant
`action against defendants West Coast Pictures, LLC and Sven Ebeling, alleging claims
`for declaratory relief and slander of title related to ownership of a copyright for the
`motion picture “All of Me.” See Dkt. No. 1. On October 9, 2012, plaintiff filed a Second
`Amended Complaint (“SAC”) alleging a single claim for declaratory relief arising under
`the Copyright Act, 17 U.S.C. §§ 101 et seq. SAC ¶ 3, 6. Plaintiff alleges that this Court
`has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1338. Id. ¶ 6.
`
`The gravamen of plaintiff’s SAC is that defendants have wrongfully asserted
`ownership over the copyrighted work in regards to a potential remake of the film. SAC ¶
`10. Plaintiff alleges that defendants’ only “access” to the copyright at issue was pursuant
`to a written contract, the Production Services Agreement, entered into between plaintiff
`and WCP. Id. ¶ 8. Allegedly, this contract further provided that all interest in the work
`performed by defendants pursuant to this agreement would be transferred to plaintiff. Id.
`However, plaintiff complains that “[n]otwithstanding the provisions of the Production
`Services Agreement and plaintiff’s rights under applicable law,” defendants have made
`claims to plaintiff and others asserting an ownership interest in the copyright. Id. ¶ 10.
`Accordingly, plaintiff seeks a declaration from the Court that none of the defendants have
`any ownership interest in the copyrighted work and an order enjoining defendants from
`making any such claim to ownership. Id. ¶ 15.
`
`CV-90 (06/04)
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`CIVIL MINUTES - GENERAL
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`Case 2:12-cv-07149-CAS-JCG Document 15 Filed 11/26/12 Page 2 of 5 Page ID #:82
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`Case No.
`Title
`
`CIVIL MINUTES - GENERAL
`CV 12-7149-CAS (JCGx)
`Date November 26, 2012
`KINGS ROAD ENTERTAINMENT, INC. V. WEST COAST
`PICTURES, ET AL.
`
`On October 26, 2012, defendants filed a motion to dismiss for lack of subject
`matter jurisdiction. Dkt. No. 10. Plaintiff opposed the motion on November 9, 2012,
`Dkt. No. 13, and defendants replied on that same date, Dkt. No. 14. The Court held a
`hearing on November 26, 2012. After considering the parties’ arguments, the Court finds
`and concludes as follows.
`
`II.
`
`LEGAL STANDARD
`
`A.
`
`Federal Rule of Civil Procedure 12(b)(1)
`
`A motion to dismiss an action pursuant to Fed. R. Civ. P. 12(b)(1) raises the
`question of the federal court’s subject matter jurisdiction over the action. The objection
`presented by this motion is that the court has no authority to hear and decide the case.
`This defect may exist despite the formal sufficiency of the allegations in the complaint.
`See T.B. Harms Co. v. Eliscu, 226 F. Supp. 337, 338 (S.D. N.Y. 1964), aff'd 339 F.2d
`823 (2d Cir. 1964) (the formal allegations must yield to the substance of the claim when a
`motion is filed to dismiss the complaint for lack of subject matter jurisdiction). When
`considering a Rule 12(b)(1) motion challenging the substance of jurisdictional
`allegations, the Court is not restricted to the face of the pleadings, but may review any
`evidence, such as declarations and testimony, to resolve any factual disputes concerning
`the existence of jurisdiction. See McCarthy v. United States, 850 F.2d 558, 560 (9th Cir.
`1988).
`
`The burden of proof in a Rule 12(b)(1) motion is on the party asserting jurisdiction.
`See Sopcak v. N. Mountain Helicopter Serv., 52 F.3d 817, 818 (9th Cir. 1995); Ass’n of
`Am. Med. Coll. v. United States, 217 F.3d 770, 778-79 (9th Cir. 2000). If jurisdiction is
`based on a federal question, the pleader must show that he has alleged a claim under
`federal law and that the claim is not frivolous. See 5B Charles A. Wright & Arthur R.
`Miller, Federal Practice and Procedure, § 1350, pp. 211, 231 (3d ed. 2004). On the other
`hand, if jurisdiction is based on diversity of citizenship, the pleader must show real and
`complete diversity, and also that his asserted claim exceeds the requisite jurisdictional
`amount of $75,000. See id.
`
`CV-90 (06/04)
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`Case 2:12-cv-07149-CAS-JCG Document 15 Filed 11/26/12 Page 3 of 5 Page ID #:83
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`Case No.
`Title
`
`CIVIL MINUTES - GENERAL
`CV 12-7149-CAS (JCGx)
`Date November 26, 2012
`KINGS ROAD ENTERTAINMENT, INC. V. WEST COAST
`PICTURES, ET AL.
`
`III. ANALYSIS
`
` Neither party addresses the import of the Declaratory Judgment Act, 28 U.S.C. §
`2201, which must form the basis of plaintiff’s claim here. “The Declaratory Judgment
`Act (the Act) permits a federal court to ‘declare the rights and other legal relations’ of
`parties to a case of actual controversy.” Societe de Conditionnement en Aluminium v.
`Hunter Eng’g Co., Inc., 655 F.2d 938, 942 (9th Cir. 1981). First, an actual Article III
`controversy is required between the parties. To determine whether such a controversy
`exists, “the question in each case is whether the facts alleged, under all the circumstances,
`show that there is a substantial controversy, between parties having adverse legal
`interests, of sufficient immediacy and reality to warrant the issuance of a declaratory
`judgment.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). Defendants
`do not dispute that they have asserted an ownership interest in the copyright in question
`and have made “numerous written claims to plaintiff and others” regarding their
`ownership of the copyright. SAC ¶ 10. Moreover, there is an ongoing state lawsuit
`between these parties, albeit one involving potentially distinct issues of contract validity
`and interpretation. See Dkt. No. 11 (discussed infra). This is sufficient to demonstrate
`that there is a “substantial controversy” of “sufficient immediacy and reality” for bringing
`a declaratory judgment action.
`
`Second, there must be an independent jurisdictional basis to bring an action in
`federal court under the Declaratory Judgment Act; the Act itself does not confer federal
`jurisdiction. The standard is as follows: “[i]f the declaratory judgment defendant could
`have brought a coercive action in federal court to enforce its rights, then [the Court has]
`jurisdiction.” Standard Ins. Co. v. Saklad, 127 F.3d 1179, 1181 (9th Cir. 1997) (citations
`and alterations omitted). That is, “[a] person may seek declaratory relief in federal court
`if the one against whom he brings his action could have asserted his own rights there.”
`Id.
`
`Federal courts have exclusive jurisdiction over cases “arising under” any statute
`relating to copyrights. See 28 U.S.C. § 1338(a).1 To determine whether a case “arises
`
`1 This exclusivity also extends to counterclaims as well, which a defendant may not
`attempt to assert in state court. See 28 U.S.C. § 1338(a) (“No State court shall have
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`Case 2:12-cv-07149-CAS-JCG Document 15 Filed 11/26/12 Page 4 of 5 Page ID #:84
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`Case No.
`Title
`
`CIVIL MINUTES - GENERAL
`CV 12-7149-CAS (JCGx)
`Date November 26, 2012
`KINGS ROAD ENTERTAINMENT, INC. V. WEST COAST
`PICTURES, ET AL.
`
`under” the Copyright Act, the Ninth Circuit has adopted the T.B. Harms test. Under this
`test, a district court shall exercise jurisdiction if: “(1) the complaint asks for a remedy
`expressly granted by the Copyright Act; (2) the complaint requires an interpretation of
`the Copyright Act; or (3) federal principles should control the claims.” Scholastic
`Entm’t, Inc. v. Fox Entm't Group, Inc., 336 F.3d 982, 983 (9th Cir. 2003). The test is
`essentially a restatement of the well-pleaded complaint rule. Id. Applying this test, “[a]ll
`of the federal circuit courts of appeal that have addressed the issue. . .agree that a
`determination of copyright ownership based on a disputed allegation of co-authorship
`presents a federal question that arises under, and must be determined according to, the
`Copyright Act.” Cambridge Literary Properties, Ltd. v. W. Goebel Porzellanfabrik, 510
`F.3d 77, 86 (1st Cir. 2007); see 17 U.S.C. § 201(a) (“Copyright in a work protected under
`this title vests initially in the author or authors of the work. The authors of a joint work
`are coowners of copyright in the work.”). On the other hand, a federal court lacks subject
`matter jurisdiction over an action that seeks nothing more than a determination of
`ownership based on contract principles, because “questions regarding the ownership of a
`copyright are governed by state law.” Scholastic Entm’t, 336 F.3d at 983.
`
`Defendants contend that this case arises solely under state contract law, because the
`only issue contained within plaintiff’s complaint is whether the Production Services
`Agreement assigns all interest to plaintiff, not defendants. Mot. at 3. Defendants argue
`that a “mere contract dispute is insufficient to confer federal jurisdiction,” and therefore
`plaintiff’s claims must be litigated in state court. Defendants also note that another case
`between these two parties, Ebeling, et al. v. Kings Road Entertainment, Inc., et al., is
`currently pending in Los Angeles County Superior Court, Case No. BC471327. In this
`action Ebeling and West Coast Pictures (there plaintiffs) contend that the Production
`Services Agreement was induced by fraud, and that Kings Road Entertainment
`intentionally interfered with Ebeling’s and West Coast Pictures’s “right to be attached as
`a producer of the film All of Me.” See Dkt. No. 11.
`
`Contrary to defendants’ contentions, plaintiff’s SAC alleges that
`“[n]otwithstanding the provisions of the Production Services Agreement and plaintiff’s
`
`jurisdiction over any claim for relief arising under any Act of Congress relating to
`patents, plant variety protection, or copyrights.”).
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`Case 2:12-cv-07149-CAS-JCG Document 15 Filed 11/26/12 Page 5 of 5 Page ID #:85
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`Case No.
`Title
`
`CIVIL MINUTES - GENERAL
`CV 12-7149-CAS (JCGx)
`Date November 26, 2012
`KINGS ROAD ENTERTAINMENT, INC. V. WEST COAST
`PICTURES, ET AL.
`
`rights under applicable law,” defendants have claimed an ownership interest in the
`copyright. SAC ¶ 10 (emphasis added). Given the balance of plaintiff’s complaint, this
`“applicable law” is clearly the Copyright Act, including the provisions governing co-
`authorship noted above. See 17 U.S.C. § 201(a). Therefore, while defendants are correct
`that a dispute over the validity and interpretation of the Production Services Agreement
`does not alone confer federal jurisdiction, a dispute about defendants’ rights to co-
`authorship (and therefore ownership) of the “All of Me” copyright clearly arises under
`the Copyright Act, because such a dispute requires an interpretation of the Copyright Act.
`In other words, “unlike a case where a dispute as to copyright ownership arises [solely]
`under an agreement between the parties, resolution of which depends on state contract
`law. . . copyright ownership by reason of one’s status as a co-author of a joint work arises
`directly from the terms of the Copyright Act itself.” Merch. v. Levy, 92 F.3d 51, 55 (2d
`Cir. 1996). Accordingly, this Court has subject matter jurisdiction over this action.2
`
`IV. CONCLUSION
`
`In accordance with the foregoing, defendants’ motion is hereby DENIED.
`
`IT IS SO ORDERED.
`
`Initials of Preparer
`
` CMJ
`
`00
`
`:
`
`06
`
`2 Because the Court finds that a determination of co-ownership here arises at least
`in part under the Copyright Act, there is no dispute that defendants could have brought
`suit in federal court for infringement or other claims—such as for payment of royalties or
`an accounting—and that such suit would have required an interpretation of the Copyright
`Act. Since “the declaratory judgment defendant could have brought a coercive action in
`federal court to enforce its rights,” this Court has jurisdiction. Standard Ins. Co., 127 F.3d
`at 1181.
`CV-90 (06/04)
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`CIVIL MINUTES - GENERAL
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