Case 4:20-cv-01534-YGR Document 57 Filed 11/17/20 Page 1 of 20
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
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`ORDER RE: MOTIONS TO DISMISS
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`Case No. 20-cv-01523-YGR
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`Dkt. No. 47
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`Case No. 20-cv-01525-YGR
` Dkt. No. 44
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`Case No. 20-cv-01530-YGR
` Dkt. No. 43
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`Case No. 20-cv-01534-YGR
` Dkt. No. 50
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`MARK MAHON,
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`v.
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`MAINSAIL LLC, ET AL.,
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`Defendants.
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`v.
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`YOUTUBE LLC, ET AL.,
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`Defendants.
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`v.
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`ALPHABET INC., ET AL.,
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`Defendants.
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`v.
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`APPLE INC., ET AL.,
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`Plaintiff,
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`Defendants.
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`Plaintiff Mark Mahon brings five copyright infringement actions, alleging that each
`defendant infringes Mahon’s copyrights in the motion picture and screenplay titled “Strength and
`Honor.” In a previous omnibus order, the Court dismissed the complaints against YouTube and
`Alphabet and dismissed in part the claims against Mainsail and Entertainment One, as well as
`those against Apple Distribution International Ltd. (“ADI”), all with leave to amend. (See Dkt.
`No. 44 (“Omnibus Order”) in Case no. 20-1523.) The Court further granted Mahon leave to
`conduct jurisdictional discovery against Entertainment One. Mahon has filed amended complaints
`in the remaining four cases. Now before the Court are the four defendants’ renewed motions to
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`Case 4:20-cv-01534-YGR Document 57 Filed 11/17/20 Page 2 of 20
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`dismiss. Mainsail, YouTube, and Alphabet move to dismiss for failure to state a claim under
`Federal Rule of Civil Procedure 12(b)(6), and ADI moves to dismiss for lack of personal
`jurisdiction under Federal Rule of Civil Procedure 12(b)(2).
`Having considered the papers and pleadings in this action, and the arguments made at the
`hearing held on November 3, 2020, the Court GRANTS IN PART and DENIES IN PART Mainsail’s
`and YouTube’s motions and GRANTS Alphabet’s and Apple’s motions.
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`I.
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`BACKGROUND
`The nature of these cases was previously described, and the Court does not repeat the
`allegations in full here.1 (See Omnibus Order at 2:11-4:24.)
`In summary, Mahon is an independent Irish filmmaker who created the film “Strength and
`Honor” (the “Film”) in 2005. (Mainsail SAC ¶¶ 7, 23.) Mahon entered into agreement with
`Mainsail2 to distribute the Film in 2009. (Id. ¶ 27.) As part of the agreement, Mahon sent master
`copies of the Film to Visual Data Media Services, Inc., which is based in Burbank, California. (Id.
`¶ 27.) However, in January 2010, the Film was released with unauthorized covers and trailers,
`which Mahon believes violated the agreement. (Id. ¶ 28.) Mahon immediately sent “cease and
`desist” letters to Mainsail, instructing it to remove the Film from distribution, and eventually filed
`suit in the Los Angeles Superior Court. (Id. ¶¶ 29-30.) Mahon also sent similar letters to
`Entertainment One, which had subcontracted distribution from Mainsail. (Id. ¶ 31.)
`During the subsequent exchange, Mainsail allegedly offered, and then repeatedly delayed,
`mediation until two years had passed. (Id. ¶¶ 35-40.) When Mahon finally filed suit, the Superior
`Court found Mahon’s claims time-barred, except for his claim for accounting. (Id. ¶¶ 42; Case
`No. 20-1523, Dkt. No 31-32.) During trial on the accounting claim, Mainsail introduced evidence
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`1 The Court references the relevant paragraph numbers of the case with the lowest filing
`number. See Mahon v. Mainsail LLC, No. 20-cv-01523, Dkt. No. 45 (“Mainsail SAC.”). Where,
`and when appropriate, direct references to the other complaints are made. See Mahon v. YouTube
`LLC, No. 20-cv-1525, Dkt. No. 42 (“YouTube SAC.”); Mahon v. Alphabet Inc., No. 20-cv-1530,
`Dkt. No. 41 (“Alphabet SAC.”); Mahon v. Apple Inc., No. 20-1534, Dkt. No. 46 (“Apple SAC.”).
` The Mainsail defendants include Mainsail LLC, Shoreline Entertainment, Inc., Sam
`Eigen, Morris Ruskin, and Does 1 through 21 (collectively, “Mainsail”).
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`Case 4:20-cv-01534-YGR Document 57 Filed 11/17/20 Page 3 of 20
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`that Mahon never delivered the Film and that it had stopped all licensing after receiving Mahon’s
`“cease and desist” letter, which allegedly surprised Mahon and to which Mahon had no response.
`(Mainsail SAC ¶¶ 44, 87-88.) Accordingly, Mahon recovered nothing. (Id. ¶ 46.)
`Notwithstanding the Superior Court’s findings, the Film continued to be distributed around
`the world, which Mahon claims could only occur based on master copies provided to Mainsail
`through Visual Data. (Id. ¶¶ 44, 47.) In December 2019, Visual Data revealed to Mahon, for the
`first time, that it had shipped copies of the Film to companies around the world, on Mainsail’s
`instruction, after Mahon’s “cease and desist” letter. (Id. ¶¶ 56, 65; Dkt. No. 19-5 at 55, 61; Dkt.
`No. 45-3 at 2.) Visual Data’s records show that it shipped DVDs of the Film directly to Mainsail
`in 2017.3 (Dkt. No. 19-5 at 61.)
`To document his claims, Mahon purchased the Film from YouTube, Google Play, and
`iTunes in December 2019, and then sent those companies “cease and desist” letters. (YouTube
`SAC ¶¶ 32, 34; Alphabet SAC ¶¶ 33, 35; Apple SAC ¶¶ 35, 37.) The companies took down the
`Film, and both Google and Apple identified Entertainment One as the provider of their license and
`copy. (Case No. 20-1530, Dkt. No. 16-5 at 39; Apple SAC ¶ 41; Case No. 20-1534, Dkt. No. 15-5
`at 45.) Entertainment One reached out to Mahon directly in January 2020, stating:
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`As you might recall, Entertainment One were granted all linear
`distribution rights, which included ‘all means of download and
`streaming,’ in this film by way of an agreement with Mainsail LLC
`on behalf of [Mahon’s production company] dated 16 May 2009.
`Those rights have been granted for a fifteen year term from early
`2010. As such, we have been and remain the exclusive licensee of
`this title for a further five years. Please be re-assured that we have
`authorised the likes of iTunes, Google and other digital platforms in
`the UK and Eire to offer the title for sale and they have not been
`infringing the copyright of this film.
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`(Case No. 20-1530, Dkt. No. 16-5 at 33.) Mahon filed suit against all defendants shortly after.4
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`3 Mahon also received a royalty report from Entertainment One showing around $10,000 in
`royalties owed for Q4 2017 in February 2018. (Mainsail SAC ¶ 70.) However, Mahon claims he
`believed the report was in error and did not pursue his claims at the time.
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`4 The Court omits details regarding Mahon’s production company, copyright registration
`and assignment history, and appeals in the California state court litigation, which are not directly
`relevant to the instant motions. For ease of reference, the Court uses “Mahon” to refer both to
`plaintiff in his individual capacity and to his wholly-owned production company, Maron Pictures,
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`Northern District of California
`United States District Court
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`Case 4:20-cv-01534-YGR Document 57 Filed 11/17/20 Page 4 of 20
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`II.
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`LEGAL STANDARD
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`A.
`Rule 12(b)(2)
`Rule 12(b)(2) places the burden on the plaintiff to demonstrate that the court has personal
`jurisdiction over the defendants. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800
`(9th Cir. 2004). A Rule 12(b)(2) motion to dismiss may test either plaintiff’s allegations of
`jurisdiction or the facts supporting those allegations. Where defendants’ motion rests on the
`written materials, rather than an evidentiary hearing, “the plaintiff need only make a prima facie
`showing of jurisdictional facts. Id. (citing Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990)).
`Although plaintiff cannot rest on conclusions, “uncontroverted allegations in the complaint must
`be taken as true.” Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir 2011).
`The court does not assume the truth of allegations contradicted by affidavit, but conflicts among
`parties’ affidavits are resolved in plaintiff’s favor. Id.; AT&T Co. v. Compagnie Bruxelles
`Lambert, 94 F.3d 586, 588-89 (9th Cir. 1996) (citation omitted).
`Substantively, “[t]here are two limitations on a court’s power to exercise personal
`jurisdiction over a nonresident defendant: the applicable state personal jurisdiction rule and
`constitutional principles of due process.” Sher, 911 F.2d at 1360. California’s long arm statute
`allows courts to exercise personal jurisdiction over defendants to the extent permitted by the due
`process clause of the United States Constitution. Cal. Civ. P. Code § 410.10. In addition, the
`federal long-arm statute—codified as Federal Rule of Civil Procedure 4(k)—allows a court to
`exercise jurisdiction over “any defendant who is not subject to the jurisdiction of the courts of
`general jurisdiction of any state” through service of process, as long as doing so complies with due
`process. See Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1155 (9th Cir. 2006).
`
`B.
`Rule 12(b)(6)
`Under Rule 12(b)(6), a complaint may be dismissed for failure to state a claim upon which
`relief may be granted. Dismissal under Rule 12(b)(6) is proper if there is a “lack of a cognizable
`legal theory or the absence of sufficient facts alleged under a cognizable legal theory.”
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`through which Mahon acted until 2015. (See Mainsail SAC ¶ 25.)
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`Conservation Force v. Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (quoting Balistreri v. Pacifica
`Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988)). The complaint must plead “enough facts to state
`a claim [for] relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
`(2007). A claim is plausible on its face “when the plaintiff pleads factual content that allows the
`court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
`Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). If the facts alleged do not support a reasonable
`inference of liability, stronger than a mere possibility, the claim must be dismissed. Id. at 678-79;
`see also In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (stating that a court is
`not required to accept as true “allegations that are merely conclusory, unwarranted deductions of
`fact, or unreasonable inferences”).
`If a court dismisses a complaint, it should give leave to amend unless “the pleading could
`not possibly be cured by the allegation of other facts.” Cook, Perkiss & Liehe, Inc. v. N. Cal.
`Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990).
`
`III. MAINSAIL’S MOTION TO DISMISS
`Mahon asserts claims for direct and contributory copyright infringement, illicit trafficking
`in counterfeit labels, fraud, and conversion against Mainsail. The Court previously found that
`Mahon adequately alleged direct and contributory copyright infringement, but dismissed the illicit
`trafficking claims as time-barred, the fraud claim as insufficiently pled, and the conversion claim
`as preempted by the Copyright Act. Mahon amended the complaint reasserting the claims, and
`Mainsail moves to dismiss on similar grounds.
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`A.
`Contributory Copyright Infringement
`The Court has already found Mahon’s contributory infringement allegations sufficient.
`Mainsail therefore did not have leave to reassert its challenge to this claim, especially given the
`nature of the new allegations. The Court addresses Mainsail’s motion nonetheless.
`Contributory copyright infringement occurs when a party “(1) has knowledge of another’s
`infringement and (2) either (a) materially contributes to or (b) induces that infringement.” Perfect
`10 v. Visa Int’l Serv. Assoc., 494 F.3d 788, 795 (9th Cir. 2007). “Material contribution” may
`involve, for example, providing materials or services that help another infringe. See Fonovisa,
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`Inc. v. Cherry Auction, Inc., 76 F.4f 259, 264 (9th Cir. 1996). Inducement may involve actively
`encouraging others to infringe, such as by providing instructions. Metro-Goldwyn-Mayer Studios
`Inc. v. Grokster, Ltd., 545 U.S. 913, 936-67 (2005).
`In the previous motion to dismiss order, the Court found that Mahon adequately alleged
`contributorily infringement on three grounds. First, Mahon claims that he does not know the exact
`role of each Mainsail defendant and seeks to preserve his right to recover from all of them.
`Second, Mahon alleged, in other complaints, that Entertainment One represented to him that it
`distributed the Film to Apple, YouTube, and Google pursuant to its contract with Mainsail. The
`Court took judicial notice of these allegations and found that if Mainsail licensed and provided the
`appearance of right to Entertainment One’s infringement, it may be liable as a contributory
`infringer. Finally, Mahon alleged that Mainsail directed Visual Data to distribute the Film. The
`Court found each of these grounds sufficient to state a claim for contributory infringement, but
`advised Mahon to include the additional allegations in the amended complaint “to make explicit
`the link.” (Omnibus Order at 10:16-11:11.)
`In response, Mahon added allegations that (i) Mainsail “directed Visual Data to distribute
`and export the Motion Picture from inside California and the United States,” (ii) Mainsail
`distributed master copies of the Film “to numerous companies around the world . . . , who in turn
`also distributed the counterfeit copies to other companies,” (ii) Mainsail may have “knowingly
`allowed Entertainment One to perform distribution . . . and contributed to this infringement by
`providing an appearance of right,” and (iv) Mahon received a royalty report from Entertainment
`One, which shows that Mainsail “continued to avail itself of the benefit of the distribution . . . and
`gave the appearance of right.” (Mainsail SAC ¶¶ 68, 69, 70.)
`Mainsail now claims that these allegations are insufficiently explicit and overspeculative.
`Mainsail’s argument is meritless. Mahon attaches an email to the complaint where Visual Data
`expressly confirms that it distributed copies of the Film on instruction from Mainsail. (Dkt. No.
`45-3 at 2.) This email is sufficiently explicit.5 Moreover, Mahon includes detailed factual
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`5 During the hearing for these motions, Mainsail argued that Visual Data’s report is
`insufficient because it does not show copying. The Court reminds Mainsail that distributing—or,
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`Case 4:20-cv-01534-YGR Document 57 Filed 11/17/20 Page 7 of 20
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`allegations regarding Mainsail’s sublicensing of the Film’s distribution rights to others. Courts
`routinely find a party who knowingly licenses others’ infringement liable as a contributory
`infringer. See Ryan v. Editions Ltd. W., Inc., 417 F. App’x 699, 700-01 (9th Cir. 2011) (finding
`publisher who licensed another’s unauthorized art reproduction liable); Paramount Pictures Corp.
`v. Int’l Media Films Inc., No. CV 11-09112 SJO (AJWx), 2013 WL 3215189, at *13 (C.D. Cal.
`June 12, 2013) (finding contributory infringement where defendant licensed other companies to
`distribute the film La Dolca Vita); see also 17 U.S.C. § 106 (granting copyright owners exclusive
`right to do or to authorize the listed actions).6 Although Mahon fails to reallege the specifics of
`other defendants’ direct infringement in the Mainsail complaint, the Court finds the allegation that
`Mainsail distributed the film to other companies, who “in turn distributed the counterfeits to other
`companies,” plausible and sufficient.7
`The gravamen of Mahon’s complaint is that despite years-long litigation, Mainsail
`continues to license and distribute the Film, without paying Mahon royalties, confident that
`Mahon will not be able to enforce his claims. Mainsail’s conduct allegedly caused not only its
`own infringement, but the infringement of several other companies that inadvertently distributed
`the Film without authorization. Mahon plausibly alleges that Mainsail knew that its conduct was
`unauthorized, given its representations to the state court disavowing any licensing or business
`dealings after 2010. In light of these alleged facts, Mahon states a plausible claim for Mainsail’s
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`in this case, directing another party to distribute—an existing copy of a work without authorization
`violates the exclusive rights of copyright. See 17 U.S.C. § 106(3).
` Indeed, Congress added the words “to authorize” to the Copyright Act to confirm that
`authorization of others’ infringing conduct suffices for contributory liability. See Subafilms, Ltd.
`v. MGM-Pathe Commn’s Co., 24 F.3d 1088, 1092-93 (9th Cir. 1994). The legislative history
`shows that the amendment meant to cover “a person who lawfully acquires an authorized copy of
`a motion picture” and “engages in the business of renting it to others for purposes of unauthorized
`public performance.” Id. at 1093 (quoting H.R. Rep. No. 94-1476 at 61 (1976)).
` By “explicit link,” the Court referred to the allegations that YouTube, Google, and Apple
`distributed the Film in 2019 pursuant to license from Entertainment One, which identified
`Mainsail as the source of its license. In order to prove Mainsail’s contributory infringement,
`Mahon must show that the other defendants directly infringed his copyrights. See Subafilms, Ltd.
`v. MGM-Pathe Commn’s Co., 24 F.3d 1088, 1092 (9th Cir. 1994). The challenge here will be to
`show that YouTube, Google, Apple, or Entertainment One distributed the Film or committed
`another directly infringing act in the United States.
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`contributory infringement based on material contribution (through distribution) and inducement
`(through licensing) of Visual Data’s and Entertainment One’s direct infringement, with knowledge
`that these companies’ activities may violate Mahon’s copyrights.
`Moreover, given the liberal standard for construing pro se complaints, the Court finds that
`Mahon states a claim for vicarious and willful copyright infringement. See Haines v. Kerner, 404
`U.S. 519, 520 (1972); Balisteri v. Pacifica Police Dept., 901 F.3d 696, 699 (9th Cir. 1990).
`Vicarious infringement occurs where defendant (1) has the right and ability to supervise infringing
`conduct, and (2) receives a direct financial benefit from the infringing activity. Visa, 494 F.3d at
`802. Here, Mahon alleges that Mainsail “failed to exercise their right and ability to supervise
`persons within their control to prevent infringement, . . . with intent to further their own financial
`interests.” (Mainsail SAC ¶ 71.) This allegation is plausible because Mahon alleges that Mainsail
`profited from its licensing activity. (Id. ¶ 53.) While the extent of Mainsail’s control over its
`licensees depends on the nature of the contracts, the Court finds plausible that Mainsail could have
`stopped their infringement by informing the licensees of its own lack of authorization.
`Willful infringement requires “intentional” or “reckless” behavior. In re Barboza, 545
`F.3d 702, 707 (9th Cir. 2008). To establish willful infringement, plaintiff must show “(1) that the
`defendant was actually aware of the infringing activity, or (2) that the defendant’s actions were the
`result of ‘reckless disregard’ for, or ‘willful blindness’ to, the copyright holder’s rights.” Louis
`Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., 658 F.3d 936, 944 (9th Cir. 2011) (citation
`omitted). Here, Mahon alleges that Mainsail acted “with intent to further their own financial
`interests with the willful infringement of” Mahon’s rights. (Mainsail SAC ¶ 71.) This allegation
`is plausible because Mahon alleges facts to show that Mainsail knew or must have known that it
`had no right to license or distribute the Film, but did so anyway. Mahon thus states a plausible
`claim for willful infringement.8
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`8 Although Mahon cites 17 U.S.C. § 506 in relation to willful infringement, that statute
`provides for criminal liability and cannot be enforced by a private party. However, to the extent
`that Mahon fails to demonstrate entitlement to actual damages and defendants’ profits (for reasons
`of extraterritoriality or otherwise), he may ask the Court for statutory damages of up to $150,000
`under 17 U.S.C. § 503(c) if he proves willful infringement. See Erickson Prods., Inc. v. Kast, 921
`F.3d 822, 833 (9th Cir. 2019). The Court construes this reference as one for willful infringement
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`Accordingly, the Court DENIES Mainsail’s motion on the contributory infringement claim
`and further construes the claims to include a sufficient basis for vicarious and willful infringement.
`In amending the complaint, Mahon should make those separate claims.
`
`B.
`Illicit Trafficking
`In the previous motion to dismiss order, the Court found that distribution of unauthorized
`posters states a claim for illicit trafficking under 18 U.S.C. § 2318, but that Mahon failed to allege
`any trafficking act by Mainsail within the three-year statute of limitations. In response, Mahon
`added allegations that Mainsail’s trafficking “is clearly evident by purchases from iTunes,
`YouTube and Google Play in 2019,” which were “still using the counterfeit copies and covers that
`were provided to them by Entertainment One and other distributors via [Mainsail].” (Mainsail
`SAC ¶ 78.) Mahon further seeks an extension of the statute of limitations under the continuous
`accrual, separate accrual, and equitable tolling doctrines.
`The Court has already explained that Mahon cannot succeed under continuous or separate
`accrual doctrines (or the discovery rule) because he alleges that he discovered Mainsail’s label
`trafficking in 2010.9 (See Omnibus Order at 15:20-17:6.) As to equitable tolling, a plaintiff that
`seeks equitable tolling must establish “(1) that he has been pursuing his rights diligently, and (2)
`that some extraordinary circumstance stood in his way.” Pace v. DiGulielmo, 544 U.S. 408, 418
`(2005); Smith v. Davis, 953 F.3d 582 (9th Cir. 2020) (en banc). Claims may be equitably tolled
`while a plaintiff pursues a state court action on the same claims. See Burnett v. N. Y. Cent. RR.
`Co., 380 U.S. 424, 434-35 (1965) (tolling claims where plaintiff brought a timely state court
`action that was dismissed for improper venue); Oltman v. Holland Am. Line, Inc., 538 F.3d 1271,
`1280 (9th Cir. 2008) (same for claims dismissed under forum selection clause). However, in this
`circuit, the state court action must be “the case at bar and not merely a related action on the same
`facts.” See Pace Indus., Inc. v. Three Phoenix Co., 813 F.2d 234, 240-41 (9th Cir. 1987); see also
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`under the civil rubric, as opposed to the criminal statute.
` As explained, Mahon cannot avail himself of continuous accrual unless the last act of the
`violation occurred within the statutory time period.
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`Mir v. Little Co. of Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988). Here, while Mahon may have
`diligently pursued the state court action, his claims were different from those asserted here, and
`thus cannot create equitable tolling.10 (See Mainsail SAC ¶ 40.)
`Thus, Mahon must allege an act of trafficking in counterfeit labels by Mainsail which he
`discovered in the last three years. See 18 U.S.C. § 2318(6). Mahon fails to do so. Although he
`adds allegations that unauthorized covers shown by YouTube, Apple, and Alphabet came from
`Mainsail, that does not establish that Mainsail trafficked in those covers in the last three years.
`(This confusion may stem from unclear wording in the Court’s last order.) In other words, Mahon
`must allege that Mainsail actually trafficked in labels within the time period. While this may not
`be a difficult standard—the statute defines “trafficking” to include even possessing counterfeit
`labels with intent to transport—the allegations are nevertheless missing. 18 U.S.C. § 2320(f)(5).
`Accordingly, the Court GRANTS Mainsail’s motion to dismiss the illicit trafficking claims.
`Mahon may amend the complaint if he can allege, in good faith, that Mainsail possessed or
`transferred counterfeit labels within the last three years. Otherwise, should discovery uncover
`currently unknown facts that Mainsail has done so, Mahon may seek leave from the Court to add
`the illicit trafficking claim back to the complaint, any time before trial, pursuant to the
`requirements of Federal Rule of Civil Procedure 15 which include diligence and a lack of
`prejudice. See Johnson v. Buckley, 356 F.3d 1067, 1077 (9th Cir. 2004) (noting that courts grant
`leave to amend complaints before trial “with extreme liberality”).11
`
`
`10 The Court does not decide whether Mahon pursued his claims diligently, but notes that
`the Superior Court found his claims time-barred due to delay after Mainsail stopped cooperating
`with mediation. (See Dkt. Nos. 31-32, 31-19.) The Court further notes that California standards
`for equitable tolling do not apply to Mahon’s federal law claims. Although California courts
`allow tolling while plaintiff pursues one of several available legal remedies, the Ninth Circuit has
`not articulated a similar standard. See McDonald v. Antelope Valley Comm. Col. Dist., 45 Cal. 4th
`88, 100 (2008).
`
`11 Accordingly, Mahon is advised not to delay seeking leave to amend if discovery shows
`that Mainsail trafficked in counterfeit labels beyond the currently known events. Leave to amend
`may be denied if Mahon is not diligent or if amendment would prejudice defendants. See Aspeon,
`316 F.3d at 1052. Given the discovery rule, Mahon may seek to proceed on any currently-
`unknown label trafficking, regardless of whether it occurred in the last three years.
`
`
`10
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`Northern District of California
`United States District Court
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`Case 4:20-cv-01534-YGR Document 57 Filed 11/17/20 Page 11 of 20
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`C.
` Fraud
`Mahon brings a common law fraud claim under California law. The Court has previously
`dismissed Mahon’s claims sounding in fraud for lack of particularized allegations under Rule 9.
`(Omnibus Order at 17:7-18:4.) In response, Mahon added allegations that Mainsail committed
`fraud in four instances.12 First, Mainsail allegedly represented to the Los Angeles Superior Court
`that Mahon never made a full delivery of the Film. (Mainsail SAC ¶ 87.) Second, Mainsail
`allegedly testified in the state court action that Mainsail stopped all licensing activity after
`receiving Mahon’s “cease and desist” letter. (Id. ¶ 88.) Third, Mainsail allegedly removed master
`copies of the Film from Visual Data in 2017. (Id. ¶ 90.)
`As to the first two instances, the Court finds that they constitute inactionable “intrinsic”
`fraud. Under California law, “[t]he rule is that fraud internal to the adversary proceeding, such as
`perjury committed during trial or error or mistake during the trial, is intrinsic and is not a basis for
`relief” but “fraud that prevented the trial of a claim or prevented the defrauded party from getting
`into court at all, is intrinsic to the proceeding and is a basis for relief.” In re Marriage of Brennan,
`124 Cal. App. 3d 598, 604 (1981). The purpose of this distinction is to avoid “collateral” attacks
`on final judgments. Id. Thus, the trial is “[plaintiff’s] opportunity for making the truth appear”
`and if “unfortunately, he fails, being overborne by perjured testimony, . . . and the judgment is
`affirmed on appeal, he is without remedy.” Id. at 605 (quoting Pico v. Cohn, 91 Cal. 129, 133-34
`(1891). Generally, “the introduction of perjured testimony or false documents, or the concealment
`or suppression of material evidence is deemed intrinsic fraud.” Home Ins. Co. v. Zurich Ins. Co.,
`96 Cal. App. 4th 17, 27 (2002).
`Here, Mahon litigated his claims extensively and received a final judgment that was
`affirmed on appeal. (See Mainsail SAC ¶¶ 40-55.) Mahon’s alleged surprise at Mainsail’s
`testimony suggests that he did not take discovery of Mainsail’s case. While unfortunate, if true,
`
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`12 The complaint states four “counts,” but two of them are duplicative as based on the same
`conduct but different facts that demonstrate falsity. (See Mainsail SAC ¶¶ 87, 88.) To the extent
`that the allegation in paragraph 89 relates to nondisclosure of Entertainment One’s distribution,
`Mahon may amend the complaint to clarify that he is proceeding on an omission theory, consistent
`with requirements outlined in this Order for the Visual Data allegations.
`11
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`Northern District of California
`United States District Court
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`

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`Case 4:20-cv-01534-YGR Document 57 Filed 11/17/20 Page 12 of 20
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`for Mahon, it is not a ground for a collateral attack under any circumstance. See Heyman v.
`Franchise Mortgage Acceptance Corp., 107 Cal. App. 4th 921, 926 (2003); see also Home Ins., 96
`Cal. App. 4th at 27 (noting that “[a] reasonable investigation and use of discovery would have
`disclosed” the concealed facts). These instances cannot support a fraud claim as a matter if law.
`As to the third instance, Mahon proceeds on an omission theory of fraud. Generally, to
`state a claim for fraud or deceit based on concealment under California law, plaintiff must allege
`that (1) the defendant concealed or suppressed a material fact, (2) the defendant was under a duty
`to disclose the fact to the plaintiff, (3) the defendant intentionally concealed or suppressed the fact
`with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and
`would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a
`result of the concealment or suppression of fact, the plaintiff sustained damage.13 Boschma v.
`Home Loan Ctr., Inc., 198 Cal. App. 4th 230, 248 (2011).
`An actionable omission or nondisclosure occurs in four circumstances, namely where the
`defendant: (i) is in a fiduciary relationship with the plaintiff, (ii) has exclusive knowledge of
`material facts not known to the plaintiff, (iii) actively conceals a material fact from the plaintiff, or
`(iv) makes partial representations while suppressing material facts. LiMandri v. Judkins, 52 Cal.
`App. 4th 326, 336-37 (1997). Each of these circumstances “presupposes the existence of some . . .
`relationship between the plaintiff and defendant in which a duty to disclose can arise.” Id. Any
`relationship between the parties to a transaction may create a duty to disclose. Id. at 337; see also
`Warner Costr. Corp. v. City of L.A., 2 Cal. 3d 285, 294 (1970) (finding that exclusive knowledge,
`active concealment, and partial representations create a duty to disclose in the absence of fiduciary
`relationship