Case 2:12-cv-07663-ODW-JC Document 41 Filed 11/15/12 Page 1 of 16 Page ID #:500
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`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`
`Case No. 2:12-cv-07663-ODW(JCx)
`
`ORDER GRANTING IN PART AND
`DENYING IN PART DEFENDANT
`JOSHUA KRAUSE’S MOTION TO
`DISMISS [12]
`
`
`
`
`YOUNG MONEY ENTERTAINMENT,
`LLC; YOUNG MONEY PUBLISHING,
`INC; and DWAYNE MICHAEL
`CARTER, JR.,
`
`
`
`Plaintiffs,
`
`v.
`
`DIGERATI HOLDINGS, LLC; QD3
`ENTERTAINMENT, INC.; QUINCY
`DELIGHT JONES III; JOSHUA A.
`KRAUSE; JARED FREEDMAN; and
`DOES 1–10, inclusive,
`
`
`Defendants.
`
`
`
`
`
`I.
`INTRODUCTION
`Young Money Entertainment LLC; Young Money Publishing, Inc.; and
`Dwayne Michael Carter, Jr. (commonly known by his stage name, Lil Wayne)
`(collectively “Young Money”) bring suit for (1) copyright infringement;
`(2) contributory copyright infringement; (3) unfair competition; and (4) accounting.
`Defendant Joshua A. Krause moves to dismiss the claims under Federal Rule of Civil
`Procedure 12(b)(1) and 12(b)(6), or in the alternative to strike under 12(f). Having
`carefully considered the papers filed in support of and in opposition to the instant
`Motion, the Court deems the matter appropriate for decision without oral argument.
`Fed. R. Civ. P. 78; Local R. 7-15. For the reasons discussed below, Krause’s motion
`is GRANTED in part and DENIED in part.
`
`

`
`Case 2:12-cv-07663-ODW-JC Document 41 Filed 11/15/12 Page 2 of 16 Page ID #:501
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`II. FACTUAL BACKGROUND
`In 2007, Defendants (including Krause) began working on a documentary film
`about Carter’s stage persona as Lil Wayne titled The Carter, which was ultimately
`released in 2009. (FAC ¶ 14.) During the production process, Defendants decided to
`use several copyrighted works from Carter’s album Tha Carter III in the film. (FAC
`¶ 15.) Young Money alleges that Defendants never obtained authorization to use the
`following Tha Carter III works in the film: (1) “Mr. Carter”; (2) “La La”;
`(3) “Stuntin’ Like My Daddy”; (4) “Lollipop”; (5) “Let the Beat Build”; (6) “Pussy
`Monster”; (7) “A Milli”; and (8) “Dontgetit.” (FAC ¶¶ 16–17.)
`Young Money alleges that Defendants began distributing the film in late 2010
`and continue to do so today. (FAC ¶ 18.) Defendants utilized numerous national and
`international commercial channels to distribute The Carter, including iTunes and
`Amazon. (Id.) Young Money further alleges the film was shown in numerous
`locations, including in Venice, California, in the spring of 2012. (Id.)
`Young Money contends that while Defendants were allegedly informed that
`including music from Tha Carter III was not authorized, Defendants facilitated,
`approved, organized, and ensured infringing use of the works anyway. (FAC ¶¶ 24–
`25.) Krause helped to market, distribute, produce, and screen the film. (FAC ¶ 26.)
`On March 29, 2009, Young Money Entertainment and Carter filed suit in Los
`Angeles Superior Court against Digerati Holdings, LLC; QD3 Entertainment, Inc.;
`and Quincy Delight Jones III for breach of contract and other claims related to the
`release and distribution of The Carter. (RJN Ex. A (the “State Complaint”).) At issue
`in this action was an agreement Digerati entered into with Carter and Young Money,
`whereby (among other things) Carter would provide various services, photos, and
`videos for use in connection with The Carter. (Id. ¶ 18.) Under this agreement,
`Carter held the right to object to and give final approval for any content or scenes that
`depicted activities that are criminal in nature. (Id. ¶ 21.)
`/ / /
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`Case 2:12-cv-07663-ODW-JC Document 41 Filed 11/15/12 Page 3 of 16 Page ID #:502
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`The State Complaint alleged that before the film was released, Carter exercised
`his right under the agreement to object to selected content that portrayed him in a
`negative light. (Id. ¶¶ 23–24.) The complaint also set forth specific dates and
`locations where the film was shown in early 2009 without Carter’s final approval. (Id.
`¶ 27.) Judgment on a jury verdict in Defendants’ favor was entered in this action on
`November 8, 2012.
`On April 28, 2010, Lavell Crump, Darius Harrison, and the Royalty Network
`sued QD3 Entertainment and Virgil Films and Entertainment, LLC in the Southern
`District of New York for using three of the copyrighted musical compositions in Tha
`Carter III at issue here: “Pussy Monster,” “La La,” and “Lollipop.” (RJN Ex. B.) On
`February 8, 2011, the District Court for the Southern District of New York held on
`summary judgment that Carter (not a party to the action, but nevertheless a co-owner
`of the copyrighted works), had granted the Crump defendants a valid, non-exclusive
`license to use the musical compositions in the film, and thus the co-owner plaintiffs in
`the action were barred from suing for infringement. Crump v. QD3 Entm’t, Inc., No.
`10 civ. 3564, 2011 WL 446296, at *5 (S.D.N.Y. Feb 8., 2011).
`On September 6, 2012, Young Money and Carter filed a copyright-infringement
`action before this Court against Digerati Holdings, QD3 Entertainment, Quincy
`Delight Jones III, Joshua A. Krause, and Jared Freedman. (ECF No. 1.) On
`October 16, Carter filed a First Amended Complaint, adding Young Money
`Publishing, Inc., as a party. (ECF No. 27.) Krause now moves to dismiss the First
`Amended Complaint.1
`/ / /
`/ / /
`
`
`1 Krause originally moved to dismiss the original Complaint on October 3, 2012. (ECF No. 12.)
`Young Money filed the First Amended Complaint as a matter of course under Rule 15(a)(1)(B) on
`October 16, 2012. (ECF No. 27.) Because the FAC only adds a Plaintiff without changing any of
`the factual contentions contained in the Complaint, the Court construes Krause’s Motion as moving
`to dismiss the FAC.
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`Case 2:12-cv-07663-ODW-JC Document 41 Filed 11/15/12 Page 4 of 16 Page ID #:503
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`III. LEGAL STANDARD
`Dismissal under Rule 12(b)(6) can be based on “the lack of a cognizable legal
`theory” or “the absence of sufficient facts alleged under a cognizable legal theory.”
`Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). A complaint
`need only satisfy the minimal notice pleading requirements of Rule 8(a)(2)—a short
`and plain statement—to survive a motion to dismiss for failure to state a claim under
`Rule 12(b)(6). Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003); Fed. R. Civ. P.
`8(a)(2). For a complaint to sufficiently state a claim, its “[f]actual allegations must be
`enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v.
`Twombly, 550 U.S. 544, 555 (2007). While specific facts are not necessary so long as
`the complaint gives the defendant fair notice of the claim and the grounds upon which
`the claim rests, a complaint must nevertheless “contain sufficient factual matter,
`accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v.
`Iqbal, 556 U.S. 662, 678 (2009).
`Iqbal’s plausibility standard “asks for more than a sheer possibility that a
`defendant has acted unlawfully,” but does not go so far as to impose a “probability
`requirement.” Id. Rule 8 demands more than a complaint that is merely consistent
`with a defendant’s liability—labels and conclusions, or formulaic recitals of the
`elements of a cause of action do not suffice. Id. Instead, the complaint must allege
`sufficient underlying facts to provide fair notice and enable the defendant to defend
`itself effectively. Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The
`determination whether a complaint satisfies the plausibility standard is a “context-
`specific task that requires the reviewing court to draw on its judicial experience and
`common sense.” Iqbal, 566 U.S. at 679.
`
`When considering a Rule 12(b)(6) motion, a court is generally limited to the
`pleadings and must construe “[a]ll factual allegations set forth in the complaint . . . as
`true and . . . in the light most favorable to [the plaintiff].” Lee v. City of L.A., 250
`F.3d 668, 688 (9th Cir. 2001). Conclusory allegations, unwarranted deductions of
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`Case 2:12-cv-07663-ODW-JC Document 41 Filed 11/15/12 Page 5 of 16 Page ID #:504
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`fact, and unreasonable inferences need not be blindly accepted as true by the court.
`Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Yet, a
`complaint should be dismissed only if “it appears beyond doubt that the plaintiff can
`prove no set of facts” supporting plaintiff’s claim for relief. Morley v. Walker, 175
`F.3d 756, 759 (9th Cir. 1999).
`
`As a general rule, leave to amend a complaint that has been dismissed should be
`freely granted. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when
`“the court determines that the allegation of other facts consistent with the challenged
`pleading could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well
`Furniture Co., 806 F.2d 1393, 1401 (9th Cir.1986); see Lopez v. Smith, 203 F.3d
`1122, 1127 (9th Cir. 2000).
`
`IV. DISCUSSION
`Krause moves to dismiss Young Money’s First Amended Complaint on
`grounds that (1) Young Money’s claims are barred by issue and claim preclusion;
`(2) the statute of limitations have expired on Young Money’s copyright claims; and
`(3) Young Money’s claim for violation of California’s Unfair Competition Law
`(“UCL”) and request for an accounting are preempted by the Copyright Act. Because
`the determination of whether certain documents are judicially noticeable—a point the
`parties hotly contest—factors into the Court’s disposition on the motion to dismiss,
`the Court first considers whether documents presented by Krause in his request are
`proper for judicial notice. Following that discussion, the Court evaluates the merits of
`Krause’s motion to dismiss Young Money’s four claims.
`A. Krause’s Request for Judicial Notice
`Young Money opposes Krause’s request that the Court take judicial notice of
`four items: (1) the State Complaint filed in Los Angeles Superior Court; (2) the
`complaint filed in the Crump litigation in the Southern District of New York; (3) the
`Declaration of Quincy Delight Jones III (“Jones Declaration”) filed in the Crump
`/ / /
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`Case 2:12-cv-07663-ODW-JC Document 41 Filed 11/15/12 Page 6 of 16 Page ID #:505
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`litigation; and (4) the summary-judgment order issued in Crump. (ECF No. 24 at 4–
`6.)
`
`As a general rule, a district court may not consider any material beyond the
`pleadings when ruling on a Rule 12(b)(6) motion. Lee v. City of Los Angeles, 250
`F.3d 668, 688 (9th Cir. 2001). There are two exceptions to this well-established
`doctrine: (1) material that is properly submitted as part of the complaint; and
`(2) matters of public record, of which the Court may take judicial notice under Federal
`Rule of Evidence 201. Id. at 688–89. Documents not physically attached to the
`complaint may be considered if their authenticity is uncontested and the plaintiff’s
`complaint necessarily relies on them. Id. at 688.
`Under Rule 201, a court may judicially notice a fact that is “not subject to
`reasonable dispute in that it is either (1) generally known within the territorial
`jurisdiction of the trial court or (2) capable of accurate and ready determination by
`resort to sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid.
`201(b). Judicial notice of a filing before another court is limited to recognition that
`the filing exists—the very fact of the filing—which is not subject to a reasonable
`dispute. Lee, 250 F.3d at 690. But the disputed facts contained within the filing and
`the factual determinations by a judge in another case “ordinarily are not admissible for
`their truth in another case through judicial notice.” Wyatt v. Terhune, 315 F.3d 1108,
`1114 n.5 (9th Cir. 2003); Lee, 250 F.3d at 690.
`Krause seeks judicial notice of the Sate Complaint to establish the dates on
`which The Carter was publicly exhibited in early January 2009. Young Money
`contests Krause’s request insofar as it seeks judicial notice of the State Complaint for
`the truth of the factual allegations asserted therein. (ECF No. 24 at 4–5.) While
`Young Money’s objections border on absurd in light of the fact that the parties and
`general subject matter of the State Complaint (which was filed by the exact same
`plaintiffs in this action) are identical to those in this action, the Court nevertheless
`may not judicially notice the facts contained within the State Complaint. Lee, 250
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`Case 2:12-cv-07663-ODW-JC Document 41 Filed 11/15/12 Page 7 of 16 Page ID #:506
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`F.3d at 690; Wyatt, 315 F.3d at 1114 n.5. The Court therefore declines to judicially
`notice the State Complaint beyond its mere existence.
`Young Money also challenges Krause’s request that the Court take judicial
`notice of the Crump complaint to establish that Crump and Harrison (two of the
`plaintiffs in Crump) are joint authors of some of the works at issue here. (ECF No. 24
`at 4–5.) For the reasons discussed above, Young Money’s objections are well-
`founded.2 The Court therefore takes judicial notice of the existence of the Crump
`complaint, but does not take notice of the allegations it contains.
`Young Money argues next that the Jones Declaration and its attachments are
`not the proper subject of judicial notice. (ECF No. 24 at 5–6.) Krause seeks judicial
`notice of the Jones Declaration and its attachments for their discussion of the
`agreement between Carter and QD3 Entertainment governing the The Carter. (See
`Mot. 5.) The Court may not take judicial notice of a fact that is subject to reasonable
`dispute simply because it is filed as a public record or contained within another
`document that is the proper subject of judicial notice. Lauter, 642 F. Supp. 2d at
`1077. The Court therefore recognizes the existence of the Jones Declaration and
`attachments, but does not consider any of the facts therein because they are subject to
`reasonable dispute. See id.; (ECF No. 24 at 5–6 (disputing facts contained with the
`Jones Declaration and noting they contradict allegations made in the Complaint).)
`Further, the Court cannot judicially notice the agreement because the document is not
`a public record. Therefore, the Court judicially notices that the Jones Declaration and
`its attachments were filed in Crump, but does not take notice of their contents.
`Finally, Young Money argues the Southern District of New York’s summary-
`judgment order in Crump is not the proper subject of judicial notice. But the Ninth
`
`2 But the Court again notes the petty nature of Young Money’s objection on this point, as the
`Certificates of Registration establishing authorship in the works are also before the Court. These
`documents are public records and not subject to a reasonable dispute as to their authenticity.
`Because Young Money does not contest judicial notice of the certificates, the Court takes notice of
`these documents. (RJN Ex. E–L); see Gilbrook v. City of Westminster, 177 F.3d 839, 858 (9th Cir.
`1999).
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`Case 2:12-cv-07663-ODW-JC Document 41 Filed 11/15/12 Page 8 of 16 Page ID #:507
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`Circuit recognizes the need for courts to judicially notice prior judgments of other
`courts to determine whether collateral estoppel applies. Holder v. Holder, 305 F.3d
`854, 866 (9th Cir. 2002). The Court finds it appropriate to extend this reasoning to
`claim preclusion, as well. Therefore, the Court must necessarily consider the
`substance of the Crump summary-judgment order insofar as it bears upon Krause’s
`issue- and claim-preclusion arguments.
`In sum, the Court takes judicial notice of the existence of the State Complaint,
`the Crump complaint, and the Jones Declaration, but not the allegations therein. The
`Court declines to judicially notice any of the attachments to the Jones Declaration.
`The Court does, however, take judicial notice of the Certificates of Registration and
`the summary-judgment order in Crump for the limited purpose of evaluating whether
`issue and claim preclusion apply to this suit.
`B. Collateral Estoppel
`On the merits, Krause first contends that Young Money improperly seeks to re-
`litigate claims that were already decided by the Southern District of New York in
`Crump and are therefore barred by the doctrines of collateral estoppel (issue
`preclusion) and res judicata (claim preclusion).
`Collateral estoppel precludes the retrying of an issue previously determined by
`a “valid and final judgment.” Ashe v. Swenson, 397 U.S. 436, 443 (1970). The
`doctrine of collateral estoppel both “protect[s] litigants from the burden of relitigating
`an identical issue with the same party or his privy and promot[es] judicial economy.”
`Parklane Hosiery Co. v. Shore, 439 U.S. 332, 326 (1979).
`When applying collateral estoppel to cases arising under California or federal
`law,3 courts must find that (1) the issue decided in the previous proceeding is identical
`
`
`3 “For judgments in federal-question cases . . . federal courts participate in developing uniform
`federal rules of res judicata . . . .” Taylor v. Sturgell, 553 U.S. 880, 891 (2008) (internal quotation
`marks and alterations omitted). In contrast, “[f]or judgments in diversity cases, federal law
`incorporates the rules of preclusion applied by the State in which the rendering court sits.” Id. n.4.
`The standard for collateral estoppel that the Court sets out here applies with equal force to federal-
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`to the current issue; (2) there was final judgment on the merits in the first proceeding;
`and (3) the party seeking to relitigate the issue was a party or privy to the first
`proceeding. Hydranautics v. FilmTec Corp., 204 F.3d 880, 885 (9th Cir. 2000)
`(quoting Younan v. Caruso, 51 Cal. App. 4th 401, 406–07 (1996)). When a party
`asserts preclusion, it bears the burden of demonstrating “with clarity and certainty” the
`issue was decided by the prior judgment. Offshore Sportswear, Inc. v. Vuarnet Int’l,
`B.V., 114 F.3d 848, 850 (9th Cir. 1997).
`Generally, a non-party to a suit “has not had a full and fair opportunity to
`litigate the claims and issues” decided in a prior suit. Taylor v. Sturgell, 553 U.S. 880,
`892 (2008) (internal quotation marks omitted). Well-established traditions support the
`notion that “everyone should have his own day in court.” Roberts v. Jefferson Cnty.,
`517 U.S. 793, 798 (1996). But this rule is subject to exceptions through which a non-
`party to a prior action may nevertheless be precluded from asserting an identical issue
`previously determined by a final valid judgment on the merits. Taylor, 553 U.S. at
`893.
`
`The Supreme Court recognizes six scenarios where nonparty preclusion is
`acceptable: (1) a nonparty agrees to be bound by the determination of issues in another
`proceeding; (2) a substantive legal relationship exists, binding the parties (traditional
`privity); (3) adequate representation by a party to the suit holding the same interests as
`a nonparty; (4) a nonparty assumes control of the litigation in which that judgment
`was rendered; (5) a nonparty to previous litigation brings suit as “the designated
`representative” of a party to the prior action; or (6) a special statutory scheme
`“expressly foreclos[es] successive litigation by nonlitigants.” Taylor, 553 U.S. at
`893–95.
`Here, Krause argues that Carter is collaterally estopped by the Crump decision
`from asserting his claims in this action because a substantive legal relationship exists
`
`
`question cases and diversity-of-citizenship cases where the Court must apply California law. See
`Hydranautics v. FilmTec Corp., 204 F.3d 880, 885 (9th Cir. 2000).
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`to bind the parties (traditional privity) and because Carter was adequately represented
`in the prior suit. In their Opposition, Plaintiffs challenge only the third prong of the
`collateral-estoppel test—that Carter is in privity with the Crump plaintiffs. (Opp’n 3.)
`Thus, the Court assumes without deciding that the first two prongs of issue
`preclusion—identity of issues and a final judgment on the merits—have been
`established and examines only whether Krause has established that Carter is in privity
`with the Crump plaintiffs through one of the six categories above.
`1.
`Privity between co-owners to a copyrighted work
`Krause first argues privity is created by the substantive legal relationship
`between the Crump plaintiffs and Carter because they are co-owners to a copyrighted
`work. Traditionally, privity “[arises] from a limited number of legal relationships in
`which two parties have identical or transferred rights” including “co-owners . . . of
`property.” Headwaters Inc. v. U.S. Forest Serv., 399 F.3d 1047, 1053 (2005). When
`a work is the product of joint authorship, each co-author automatically holds an
`undivided interest in the whole. Pye v. Mitchell, 574 F.2d 476, 480 (9th Cir. 1978);
`17 U.S.C. § 201(a) (“The authors of a joint work are coowners of copyright in the
`work.”).
`In order to properly apply collateral estoppel to bar this action, the Court must
`find that co-owners of a copyright are in privity. Krause asks the Court to create a
`new legal principle to do so, that is, to find privity between co-authors of a
`copyrighted work. Whether co-owners of a copyright can be held in privity for
`purposes of collateral estoppel and res judicata is thus a matter of first impression for
`this Court.
`Co-owners in copyright cannot be liable to each other for infringement, and
`each co-owner holds an independent right to use or license the work, subject only to
`accounting by co-owners. Oddo v. Ries, 743 F.2d 630, 632–33 (9th Cir. 1984). Thus,
`co-owners in copyright are generally considered similar to tenants in common. Cmty.
`for Creative Non-Violence v. Reid, 846 F.2d 1485, 1498 (D.C. Cir. 1988). But
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`typically a tenancy in common does not create privity sufficient to make a judgment
`“for or against one operate as an estoppel for or against others.” 40A Cal. Jur. 3d
`Judgments § 231 (2006).
`Co-owners in copyright have a duty to account to one another for profits
`derived from the use of that copyright. Zuill v. Shanahan, 80 F.3d 1366, 1369 (9th
`Cir. 1996). If one tenant in common licenses the copyright to a third party, the other
`tenant in common can seek the profits from the licensor. Id. Krause contends that
`because co-owners can seek the profits of a suit in an action for accounting, if they
`lose, another co-owner is barred from bringing suit. (ECF No. 33 at 4–5.) The Court
`rejects this argument.
`In Davis v. Blige, the Second Circuit considered whether a co-owner of a
`copyright could retroactively convey his copyright interest to a third party as a means
`to defeat a claim of copyright infringement against that third party by another co-
`owner. 505 F.3d 90, 97–98, 101 (2d Cir. 2007). The court explained that the right to
`prosecute an accrued cause of action for infringement is a right bestowed by copyright
`ownership. Id. at 99. A co-owner can exercise this right independently of other co-
`owners and is not required to join the co-owners as parties. Id. (citing 17 U.S.C.
`§ 501(b)). Drawing on general principles of property law, the Second Circuit further
`noted that a co-owner in copyright may not transfer “more than he owns,” id., and thus
`found that “a co-owner who purports to convey not only his right to prosecute past
`infringements violates the basic rule that an owner cannot convey more than he
`owns.” Id. at 103. And the same is true in the context of settlements: a settlement
`agreement “can only waive or extinguish claims held by a settling owner; it can have
`no effect on co-owners who are not parties to the settlement agreement. Id. at 102.
`The court therefore concluded that by retroactively transferring ownership interest, the
`transferring co-owner was taking away the accrued interest of another, thereby
`transferring more than he had. Id. at 97–98.
`/ / /
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`Case 2:12-cv-07663-ODW-JC Document 41 Filed 11/15/12 Page 12 of 16 Page ID #:511
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`The Court finds the reasoning in Davis persuasive and applicable here by
`analogy. Here, at least one co-owner of a copyrighted work, Darius Harrison, sued a
`purported infringer in Federal District Court in New York. (RJN Ex. D.) The suit
`concerned whether Digerati Holdings and others committed copyright infringement by
`including works in The Carter co-authored by the plaintiffs. (RJN Ex. D.) In its
`decision, the New York court evaluated an agreement between Carter and the
`defendants and determined that the agreement granted a non-exclusive license to use
`the works in the film. Krause contends that the New York suit acts to collaterally
`estop Carter in the current action.
`But as the court in Davis reasoned, a co-owner in copyright may not transfer
`away more rights than he holds or enter into a settlement that binds other owners. 505
`F.3d at 99, 102. Applying collateral estoppel here would effectively allow one co-
`owner to rob another co-owner’s own right to sue for an accrued cause of action by
`being the first to the courthouse steps. The Court therefore finds it improper to
`conclude the co-owners in the copyrighted works at issue here had a substantive legal
`relationship creating traditional privity for purposes of collateral estoppel. As a result,
`the Court DENIES Krause’s motion to dismiss for collateral estoppel insofar as it
`relies on traditional privity to establish nonparty preclusion.
`2.
`Adequate representation and privity
`Krause argues next that nonparty preclusion is proper because Carter was
`adequately represented in the prior action. (Mot. 10–12.) The Supreme Court has
`narrowly defined what adequate representation means in the context of nonparty
`preclusion and privity. See Taylor, 553 U.S. at 894. Specifically, the Supreme Court
`has noted that a preclusive effect on the basis of adequate representation can be
`established through “properly conducted class actions and suits brought by trustees,
`guardians, and other fiduciaries.” Id. (citations omitted). The current action does not
`fall into either grouping, as Carter was not represented in a prior class action, nor did
`the Crump plaintiffs act as trustees guardians or other fiduciaries by virtue of the co-
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`ownership right in the copyrighted works. And while the Supreme Court’s list of
`adequate-representation scenarios in Tyler was non-exclusive, the Court finds that this
`particular action does not qualify as the type properly included in such a narrowly
`defined class of cases, as there were no special procedural or legal safeguards in the
`Crump action to ensure adequate representation (such as those provided by Federal
`Rule of Civil Procedure 23 or by fiduciary duties). Therefore, the Court DENIES
`Krause’s motion to dismiss for collateral estoppel insofar as it relies on adequate
`representation to establish nonparty preclusion.
`While the copyright-infringement issue may have been litigated and determined
`by a final judgment, the Court does not find privity existed between the co-owners of
`the copyrighted works. Accordingly, the Court DENIES Krause’s motion to dismiss
`on collateral-estoppel grounds.
`C. Res Judicata
`Res judicata prevents relitigation of the same cause of action between the same
`parties or their privies. Headwaters Inc., 399 F.3d at 1051–52. It is undisputed that
`the parties in this suit are not the same as the parties in the Crump litigation. See RJN
`Ex. D; cf. FAC at 1. For the reasons discussed above, the parties are not in privity.
`Therefore, res judicata does not apply to bar the action. The Court therefore DENIES
`Krause’s motion to dismiss under the doctrine of res judicata.
`D.
`Statute of Limitations
`Krause contends next that this action is barred by a three-year statute of
`limitations. Krause directs the Court’s attention to Roley v. New World Pictures, Ltd.,
`19 F.3d 479 (9th Cir. 1994). In Roley, the Ninth Circuit found that “in a case of
`continuing copyright infringements, an action may be brought for all acts that accrued
`within the three years preceding the filing of the suit.” Id. at 481. Because the First
`Amended Complaint alleges ongoing or “continuing” violations, the suit is not barred
`entirely by the statute of limitations. Nevertheless, Plaintiffs’ recovery will be strictly
`limited to the harm they have suffered as the result of Defendant’s wrongful activity
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`Case 2:12-cv-07663-ODW-JC Document 41 Filed 11/15/12 Page 14 of 16 Page ID #:513
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`after September 6, 2009 (three years prior to the date this action was filed).
`Accordingly, Krause’s motion to dismiss on statute of limitations groundsis DENIED.
`E.
`Preemption
`Finally, Krause argues Young Money’s claims for violation of California
`Business and Professions Code section 17200 and for an accounting are preempted by
`federal copyright law. (Mot.18–19.) “Preemption analysis involves determining
`whether the state law claim contains an element not shared by the federal law.”
`Summit Mach. Tool Mfg. Corp. v. Victor CNC Sys., Inc., 7 F.3d 1434, 1439–40 (9th
`Cir. 1993). State-law claims are preempted by the Copyright Act if: (1) the rights
`protected under state law are equivalent to those under the Copyright Act; and (2) the
`work is the proper subject of the Copyright Act under 17 U.S.C. §§ 102, 103.
`Kodadek v. MTV Networks, Inc., 152 F.3d 1209, 1212 (9th Cir. 1998).
`In Kodadek, the Ninth Circuit considered whether section 17200 claims were
`preempted by the Copyright Act. 152 F.3d at 1212–13. The court looked to the
`plaintiff’s complaint to determine which rights the plaintiff sought to enforce through
`state law and noted that the pertinent paragraphs describing defendants’ alleged unfair
`competition incorporated by reference the paragraphs describing the plaintiff’s
`copyright-infringement claim. Id. The Ninth Circuit therefore held that the section
`17200 claims were preempted by the Copyright Act because the plaintiff “expressly
`base[d] his unfair competition claim on [equivalent] rights granted by the Copyright
`Act” Id.
`Because the musical compositions at issue here fall within the purview of the
`Copyright Act, the second preemption element (that the works are subject to the
`Copyright Act) is satisfied. See 17 U.S.C. § 102(a)(2), (7). With respect to the first
`element of preemption, Plaintiffs include no new or different allegations in their
`unfair-competition claim that they do not include in their copyright-infringement
`claim. Instead, the First Amended Complaint simply incorporates by reference the
`paragraphs describing copyright infringement as the basis for his section 17200 claim.
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