Case3:12-cv-03932-NC Document25 Filed10/25/12 Page1 of 11
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE NORTHERN DISTRICT OF CALIFORNIA
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`MATTHEW WARD,
`Plaintiff,
`
` v.
`DENNIS MITCHELL; FARM HAND
`PRODUCTIONS, INC., dba FUTURE
`FARMER RECORDINGS; and DOES
`1–50, inclusive,
`Defendants.
` /
`
`No. C 12-03932 WHA
`
`ORDER GRANTING
`IN PART AND DENYING
`IN PART DEFENDANTS’
`MOTION TO DISMISS
`AND VACATING HEARING
`
`INTRODUCTION
`In this copyright-infringement action, defendants move to dismiss the action pursuant to
`Rule 12(b)(6). For the reasons stated below, the motion is GRANTED IN PART AND DENIED IN
`PART. The hearing scheduled for November 1, 2012 is VACATED.
`STATEMENT
`According to the first amended complaint, whose allegations must be accepted as true
`on this motion to dismiss, plaintiff Matthew Ward is a famous musical recording artist and
`songwriter. In 2001, plaintiff wrote fifteen compositions in an album entitled “End of Amnesia”
`that was released by defendant Dennis Mitchell, president of defendant Farm Hand Productions,
`Inc., dba Future Farmer Recordings, Inc. Prior to recording the musical compositions, and until
`2011, plaintiff’s complaint alleges that defendant Mitchell repeatedly made oral and written
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`Case3:12-cv-03932-NC Document25 Filed10/25/12 Page2 of 11
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`representations that defendants would enter into a written agreement to pay plaintiff certain
`amounts for the right to use sound recordings and musical compositions embodied in “End of
`Amnesia” (First Amd. Compl. ¶ 40). Although the parties were in negotiations to enter into
`a written recording agreement, they never entered into nor executed one. Plaintiff, however,
`created sound recordings of the musical compositions that made up “End of Amnesia” and
`allowed defendants to hold the masters pending the execution of a written agreement (id. at
`¶ 41). Plaintiff registered the copyrights for “End of Amnesia” in 2005 (id. at ¶ 12; Exh. A)
`
`Plaintiff initially filed a lawsuit in December 2011 in San Francisco Superior Court,
`alleging that defendants were distributing and selling plaintiff’s copyrighted material without
`a license. Plaintiff alleged that defendants have failed to properly compensate plaintiff for
`the distribution and sale of “End of Amnesia.” Instead of removing to federal court, defendant
`Mitchell served a demurrer arguing that the complaint must be dismissed since the claims
`relating to copyright infringement must be heard in federal court. Plaintiff dismissed the
`state action without prejudice in lieu of filing an opposition to the demurrer. The state court
`action was dismissed in its entirety in June 2012. Plaintiff then commenced this action.
`Defendants now move to dismiss plaintiff’s first amended complaint in its entirety.
`ANALYSIS
`A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the claims alleged
`in the complaint. See Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995).
`On a motion to dismiss, a court may consider materials “submitted with and attached to”
`the complaint. United States v. Corinthian Colleges, 655 F.3d 984, 998–999 (9th Cir. 2011).
`All material allegations of the complaint are to be taken as true and considered in the light most
`favorable to the nonmoving party. Ibid. The complaint must contain sufficient factual matter to
`“state a claim for relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
`555 (2007).
`RES JUDICATA.
`1.
`Under 28 U.S.C. 1738, federal courts are required to give state court judgments the
`preclusive effects they would be given by another court of that state. Migra v. Warren City Sch.
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`Dist. Bd. of Educ., 465 U.S. 75, 84 (1984); Maldonado v. Harris, 370 F.3d 945, 951 (9th Cir.
`2004). Pursuant to California Code of Civil Procedure Section 581(c), “[a] plaintiff may
`dismiss his or her complaint . . . without prejudice prior to the actual commencement of trial.”
`Consequently, “a voluntary dismissal without prejudice is not a final judgment on the merits.”
`Associated Convalescent Enterprises v. Carl Marks & Co., 33 Cal. App. 3d 116, 121
`(1973). Here, plaintiff’s voluntary dismissal of the state action, without prejudice,
`before any adjudication on the merits, did not bar plaintiff from filing in federal court.
`Accordingly, defendants’ motion to dismiss plaintiff’s complaint on grounds of res
`judicata is DENIED.
`2.
`STATUTE OF LIMITATIONS.
`Defendants’ argument here is ambiguous. Although the heading reads “Plaintiff [sic]
`First Amended Complaint Facially Violated of [sic] the Statute of Frauds,” defendants’
`argument makes no mention of the statute of frauds. Instead, defendants refer only to the
`statute of limitations. Accordingly, this order assumes that defendants are making an argument
`for dismissal based upon the statute of limitations, although defendants do not specify which
`claim is barred. The statute of limitations for all of the claims for relief in plaintiff’s first
`amended complaint is four years or less.
`The statute of limitations does not bar plaintiff’s claims as pled. The damages sought
`cover the last four years. To the extent that the complaint seeks damages for incidents occurring
`more than four years ago, the damages will likely be barred by statute of limitations. At this
`time, there is no necessity for such a determination without a more complete record.
`Accordingly, defendants’ motion to dismiss based on the statute of limitations is DENIED.
`3.
`BREACH OF ORAL CONTRACT.
`From 2001 until 2011, plaintiff allegedly had an oral agreement with defendants wherein
`he would allow defendants to use his copyrighted music in exchange for bi-annual accounting
`and payment of royalties (First Amd. Compl. ¶ 63). The complaint also alleges that the
`agreement included a promise by defendants to enter into a written recording agreement, which
`defendants have failed to perform (ibid.). At this pleading stage, this order finds that plaintiff
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`adequately set forth facts alleging: (1) the existence of the oral contract; (2) that the parties
`entered into the agreement with an intent to be bound; (3) that plaintiff performed the oral
`contract; (4) that defendants breached the contract; and (4) that plaintiff has suffered damages
`resulting from this breach. See First Commercial Mortgage Co. v. Reese, 89 Cal. App. 4th 731,
`745 (2001). Accordingly, defendants’ motion to dismiss plaintiff’s claim for breach of oral
`contract is DENIED.
`4.
`FRAUD AND DECEIT.
`Rule 9(b) imposes a “particularity” requirement on “all averments of fraud and mistake.”
`To allege a claim of fraud under California law, a plaintiff must plead (1) a misrepresentation;
`(2) knowledge of falsity or scienter; (3) intent to induce reliance; (4) justifiable reliance; and
`(5) and resulting damages. Engalla v. Permanente Med. Group, 15 Cal. 4th 951, 974 (1997).
`The complaint alleges that from 2001 until 2011, defendant Mitchell repeatedly made
`oral and written representations that defendants would enter into a written agreement to pay
`plaintiff certain amounts for the right to use sound recordings and musical compositions
`embodied in “End of Amnesia” (First Amd. Compl. ¶ 40). The complaint alleges that defendant
`Mitchell made the false promises to induce plaintiff to create the record so that defendants
`could then take possession of the production masters to exploit the sound recordings and
`musical compositions (ibid.). According to the complaint, when defendant Mitchell made
`the representations, defendant Mitchell knew them to be false and made them with the intention
`to deceive and induce plaintiff to act in reliance (ibid.). At the time these representation were
`made, plaintiff believed them to be true, and consequently did record the compositions and
`allowed defendants to hold the master pending the execution of a written agreement (id. at ¶ 41).
`According to the complaint, plaintiff’s reliance on defendants’ representation was justified
`because defendants took initial steps to abide by a written agreement; consequently, the fraud
`and deceit of defendants was not discovered until July 2011, when defendants allegedly made it
`clear that they were not going to pay plaintiff or enter into a written recording agreement (id. at
`¶¶ 41–42). As a proximate result of defendants’ conduct, plaintiff was induced to expend time,
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`money, and efforts to provide services and compositions to defendants for purposes of
`exploitation (id. at ¶ 43).
`Based on the foregoing, plaintiff adequately pled fraud in compliance with Rule 9(b).
`Accordingly, defendants’ motion to dismiss plaintiff’s claim for fraud is DENIED.
`* * *
`Defendants seek judicial notice of a “cease and desist” email from plaintiff’s attorney
`to defendant Mitchell. Under Rule 12(b)(6), review is generally limited to the contents of the
`complaint. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001) (citing Enesco
`Corp. v. Price/Costco, Inc., 146 F.3d 1083, 1085 (9th Cir. 1998)). A court may take judicial
`notice of any fact “not subject to reasonable dispute in that it is . . . capable of accurate and ready
`determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed. R.
`Evid. 201. An ordinary email is not the sort of document that deserves judicial notice.
`Consequently, this order declines to extend judicial notice to defendants’ Exhibit Number 1;
`however, if and when properly authenticated, this email would be strong evidence against
`plaintiff’s fraud claim. Also, it is worth noting that one can only wonder, if the allegations are
`true, why plaintiff sat on his rights for almost a dozen years, knowing full well that he had been
`defrauded; still, we are only at the pleading stage and the claim must go forward.
`5.
`CONVERSION/MISAPPROPRIATION.
`A conversion occurs where someone wrongfully exercises dominion over the property
`of another. Greka Integrated, Inc. v. Lowry, 133 Cal. App. 4th 1572 (2005). To establish
`conversion, a plaintiff must show (1) his ownership of or right to possess the property at the
`time of conversion; (2) that the defendant disposed of the plaintiff’s property rights or converted
`the property by a wrongful act; and (3) damages. Messerall v. Fulwider, 199 Cal. App. 3d 1324
`(1988). A plaintiff in a conversion action must also prove that it did not consent to defendants’
`exercise of dominion. Bank of New York v. Fremont Gen. Corp., 523 F.3d 902, 914 (9th Cir.
`2008).
`The complaint alleges that defendants have converted profits that derive from the
`distribution and sales of all musical compositions and sound recordings that comprise “End of
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`Amnesia” (First Amd. Compl. ¶ 16). “A specific and identified amount of money can form the
`basis of a conversion claim, but when the money is not identified and not specific, ‘the action
`is to be considered as one upon contract or for debt and not for conversion.’” Ross v. U.S. Bank
`Nat. Ass’n, 542 F. Supp. 2d 1014, 1024 (N.D. Cal. 2008) (Illston, J.) (citing Baxter v. King,
`81 Cal. App. 192, 253 (1927)). Here, because the complaint does not allege an identified
`or specific sum, defendants’ motion to dismiss plaintiff’s claim for conversion of money is
`GRANTED. The complaint also alleges, however, conversion by defendants as to the master
`recordings and all related elements (Prayer ¶ 10). This claim for conversion is valid, and
`therefore, defendants’ motion to dismiss plaintiff’s claim for conversion of the “master
`recordings and all related elements” is DENIED.
`COPYRIGHT INFRINGEMENT.
`6.
`To establish a claim for copyright infringement, a plaintiff must prove (1) ownership of
`the copyright in question; and (2) that defendants violated one of the exclusive rights granted
`to the copyright’s holder. 17 U.S.C. 501(b). The complaint alleges that, since June 16, 2005,
`plaintiff is the exclusive owner of the copyrights in and to the musical compositions and sound
`recordings that make up “End of Amnesia” (First Amd. Compl. ¶ 12; Exh. A). The complaint
`alleges that without plaintiff’s consent or authorization, defendants’ advertising and display
`of the copyrighted compositions and sound recordings that make up “End of Amnesia”
`is an unauthorized public display of plaintiff’s copyrighted works. 17 U.S.C. 106(5).
`Additionally, the complaint alleges that the marketing of such alleged infringing goods is
`an unauthorized distribution of plaintiff’s copyrighted works. 17 U.S.C. 106(3).
`Defendants move for dismissal of plaintiff’s copyright infringement claim based on
`17 U.S.C. 412, which provides for no award of statutory damages or attorney’s fees for any
`infringement of copyright commenced after first publication of the work and before the effective
`date of its registration. Thus, according to defendants’ argument, plaintiff’s copyright claims
`should be dismissed as to any alleged infringement that occurred prior to June 16, 2005, the date
`of registration. Whether or not plaintiff may recover statutory damages or attorney’s fees for a
`certain period of time is not indicative of plaintiff’s failure to plead sufficient facts to support
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`his copyright infringement claim. Accordingly, defendants’ motion to dismiss plaintiff’s
`copyright infringement claim is DENIED.
`7.
`ACCOUNTING.
`The complaint alleges that the amount of money plaintiff is due from the musical
`compositions and sound recordings from “End of Amnesia” is not wholly known and cannot
`be ascertained without a full complete accounting (First Amd. Compl. ¶ 23). A request for legal
`accounting must be tethered to a relevant actionable claim, and the complaint must allege:
`(1) a relationship or other circumstances appropriate to the remedy; and (2) a balance due from
`the defendant to the plaintiff that can only be ascertained by an accounting. Brea v. McGlashan,
`3 Cal. App. 2d 454, 460 (1934). Defendants assert that plaintiff did not allege any facts
`demonstrating a fiduciary relationship. A fiduciary relationship between the parties, however, is
`not required to state a cause of action for accounting; all that is required is that some relationship
`exists that requires an accounting. Teselle v. McLoughlin, 173 Cal. App. 4th 156, 179 (2009).
`The facts alleged in the complaint establish such a relationship and the potential need for
`accounting. Accordingly, defendants’ motion to dismiss plaintiff’s claim for accounting is
`DENIED.
`SECTION 17200.
`8.
`California Business and Professions Code Section 17200 prohibits unlawful, unfair
`or fraudulent business acts or practices and unfair, deceptive, untrue or misleading advertising.
`“Each prong of [Section 17200] is a separate and distinct theory of liability.” Birdsong v. Apple,
`Inc., 590 F.3d 955, 959 (9th Cir. 2009). Defendants argue that plaintiff’s Section 17200 claim
`is insufficiently pled because plaintiff fails to allege that defendants violated any of the three
`prongs (Br. 9). Underlying this claim is the allegation that defendants attempted to take
`complete control over the copyrighted works and profitably promoted their record label by
`representing to the public that they had the authority and consent to exploit plaintiff’s
`copyrighted material (First Amd. Compl. ¶ 36).
`A claim based on the unlawful business and practice prong of Section 17200 incorporates
`other laws and treats violations of those laws as unlawful business practices independently
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`actionable under state law. Chabner v. United Omaha Life Ins. Co., 225 F.3d 1042, 1048
`(9th Cir. 2000). While plaintiff’s allegations may support a claim that defendants violated a law,
`it is unclear from plaintiff’s pleading what he claims the underlying violation to be.
`Likewise, a claim based on the unfair business act or practice prong of Section 17200
`must be tethered to allegations that defendants violated another law. Scripps Clinic v. Superior
`Court, 108 Cal. App. 4th 917, 938 (2003). The operative pleading must allege the way in
`which the practices violated the “borrowed” law by “stat[ing] with reasonable particularity the
`facts supporting the statutory elements of the violation.” Khoury v. Maly’s of California, Inc.,
`14 Cal. App. 4th 612, 618–19 (1993). Plaintiff has not explained how his allegations against
`defendants demonstrate that defendants violated an underlying constitutional or statutory
`provision. In order to prevail under the unfair prong of Section 17200, plaintiff must plead
`with greater specificity how defendants’ alleged actions violated another law.
`Lastly, in order to state a claim under the fraudulent business act or practice of
`Section 17200, a plaintiff must meet the heightened pleading standards for fraud mandated
`by Rule 9(b). Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009). A “fraudulent”
`business practice under [Section 17200] is one in which the members of the public are likely
`to be deceived. In re Tobacco II Cases, 46 Cal. 4th 298, 312 (2009). Merely alleging that
`defendants deceived the public by “representing . . . that they have the authority and consent
`to exploit [p]laintiff’s copyrighted material,” without more specificity, does not satisfy Rule 9b’s
`particularity requirements.
`Thus, plaintiff has failed to state a claim for relief under any of the three prongs of
`liability. Accordingly, defendants’ motion to dismiss the Section 17200 claim is GRANTED.
`9.
`CIVIL CODE SECTION 3344 AND RIGHT OF PUBLICITY.
`California Civil Code Section 3344 provides in relevant part:
`[a]ny person who knowingly uses another’s name, voice, signature,
`photograph, or likeness, in any matter . . . for purposes of
`advertising or selling, . . . of products . . . without such person’s
`prior consent . . . shall be liable for any damages sustained by
`the person or persons injured as a result thereof.
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`To sustain a claim for commercial misappropriation, a plaintiff must prove (1) the
`defendant’s use of the plaintiff’s identity; (2) the appropriation of plaintiff’s name or likeness to
`defendant’s advantage, commercially or otherwise; (3) lack of consent; and (4) resulting injury.
`Downing v. Abercrombie & Fitch, 265 F.3d 994, 1001 (9th Cir. 2001).
`Defendants argue that plaintiff’s publicity claim is preempted by the Copyright Act.
`Section 301 of the Copyright Act provides for exclusive jurisdiction over rights that are
`equivalent to any of the exclusive rights within the general scope of copyright as specified in the
`Act. Jules Jordan Video, Inc. v. 144942 Canada, Inc., 617 F.3d 1146 (9th Cir. 2010). Our court
`of appeals has adopted a two-part test to determine whether a state-law claim is preempted by the
`Copyright Act:
`We must first determine whether the “subject matter” of the state
`law claim falls within the subject matter of copyright as described
`in 17 U.S.C. §§ 102 and 103. Second, assuming that it does, we
`must determine whether the rights asserted under state law are
`equivalent to the rights contained in 17 U.S.C. § 106, which
`articulates the exclusive rights of copyright holders.
`Ibid. (citing Laws v. Sony Music Entm’t, Inc., 448 F.3d 1134,1137 (9th Cir. 2006)).
`Whether a claim is preempted under Section 301 turns on whether the rights asserted
`by the plaintiff are equivalent to any of the exclusive rights within the general scope of the
`copyright. Jules, 617 F.3d at 1154–55. Here, the complaint alleges that “[d]efendants have
`knowingly misappropriated [p]laintiff’s name and likeness for commercial purposes, including
`the unauthorized commercial use of [p]laintiff’s name and likeness within the promotion of
`[d]efendants’ record label and related website promoting such label” (First Amd. Compl. ¶ 48).
`This order finds that plaintiff’s publicity claim does not fall within the exclusive subject matter
`of the copyright, at least at the pleading stage. In contrast to the plaintiff in Jules, here plaintiff’s
`publicity claim is not entirely based on the alleged unauthorized distribution of the copyrighted
`material. Rather, the essence of plaintiff’s publicity claim is that defendants misappropriated
`plaintiff’s name and likeness in various promotional materials, including their website.
`Accordingly, defendants’ motion to dismiss plaintiff’s right of publicity claim is DENIED.
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`VIOLATION OF LANHAM ACT.
`10.
`Section 43(a) of the Lanham Act forbids the use of false designations of origin and
`false descriptions or representations in the advertising and sale of goods and service. Smith v.
`Montoro, 648 F.2d 602, 605 (9th Cir. 1981). 15 U.S.C. 1125(a) provides:
`Any person who shall affix, apply, or annex, or use in connection
`with any goods or services a false designation of origin or
`representation and shall cause such goods to enter into commerce
`shall be liable to a civil action by any person who believes that he
`or she is likely to be damaged by the use of such false designation
`or representation.
`Plaintiff argues that by using his name, likeness, and musical works within the promotion
`of defendants’ business and record label, defendants have deceived the public into believing
`that plaintiff is affiliated and/or participating in the promotion, constituting false designation
`of origin, false representation, and false description (First Amd. Compl. ¶¶ 54–55).
`Additionally, plaintiff’s complaint alleges that defendants have deceived and confused the
`public into believing that defendants have the authority and consent to sell and/or distribute
`plaintiff’s musical compositions, constituting unfair competition (First Amd. Compl. ¶ 59).
`Although defendants are correct in their argument that plaintiff’s complaint “wholly
`fails to explain how a false designation of origin has occurred,” plaintiff has adequately pled
`a claim for relief for false representation in advertising/promotion, at least at the pleading stage.
`See Waits v. Frito-Lay, Inc., 978 F.2d 1093 (1992). Accordingly, defendants’ motion to dismiss
`plaintiff’s claim for relief under the Lanham Act is DENIED.
`11.
`UNJUST ENRICHMENT AND RESCISSION.
`Plaintiff incorrectly pleads both unjust enrichment and rescission as claims for relief
`in his first amended complaint. Although plaintiff acknowledges in his opposition that unjust
`enrichment is not an independent claim for relief, neither is rescission. See Nakash v. Superior
`Court, 196 Cal. App. 3d 59, 70 (1987) (“[r]escission is not a cause of action; it is a remedy”).
`Accordingly, defendants’ motion to dismiss plaintiff’s unjust enrichment and rescissions claims
`are GRANTED. This is without prejudice to a possible disgorgement and/or rescission order as
`a form of relief.
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`PUNITIVE DAMAGES.
`12.
`Defendants contend that plaintiff’s request for punitive damages must be dismissed
`as inadequately pled. This order disagrees. Defendants contend that plaintiff has not met
`the pleading standard mandated by California Civil Code Section 3294. In federal court, while
`Section 3294 governs the substantive standard to obtain punitive damages for state law claims,
`the Federal Rules of Civil Procedure governs the pleading standard. A plaintiff’s short and plain
`request for punitive damages that is supported by plausible allegations is therefore sufficient to
`survive a motion to dismiss. Accordingly, defendants’ motion to dismiss plaintiff’s prayer for
`punitive damages is DENIED.
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`CONCLUSION
`Defendants’ motion to dismiss plaintiff’s first amended complaint is GRANTED IN PART
`AND DENIED IN PART. Plaintiff may seek leave to amend and will have 21 CALENDAR DAYS
`from the date of this order to file a motion, noticed on the normal 35-day track, for leave to
`file a second amended complaint. A proposed amended complaint must be appended to the
`motion and plaintiff must plead his best case. Any such motion should clearly explain how
`the amendments to the complaint cure the deficiencies identified herein. The opposition shall
`answer for any motion to dismiss so if the amendment is allowed, no more Rule 12(b)(6)
`motions will be allowed. The hearing set for November 1, 2012, is hereby VACATED.
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`IT IS SO ORDERED.
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`Dated: October 25, 2012.
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`
`WILLIAM ALSUP
`UNITED STATES DISTRICT JUDGE
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