Case 1:11-cv-08665-PAC Document 25 Filed 03/27/13 Page 1 of 10
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`US DC SONY
`DOCUMENT
`ELECTRONICALLY FILED
`DOC#:
`DATE FILED: Ma",h 27. 2013
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`I I Civ. 8665 (PA C)
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`OPINION & ORDER
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`ROBERT ALLEN LEE, individually
`and on behalf of all others similarly situated,
`Plaintiffs,
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`- against ­
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`- - - -x
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`STACEY MAKHNEVICH and ASTER DENTAL,
`a/kJa CHRYSLER BUILDING DENTAL
`ASSOCIATION, aJkJa NORTH EAST P.C., aJkJa
`SOUTH EAST DENTAL SUIT, aJkJa LINCOLN
`SQUARE DENTAL ARTS, aJkJa LINCOLN
`SQUARE DENTAL ARTS OF MANHATTAN,
`aJkJa CHRYSLER DENTAL,
`Defendants.
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`HONORABLE PAUL A. CROTTY, Uni ted States District Judge:
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`This lawsuit about a toothache and a denti st's attempt to insulate herself from criticism
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`by patients has tumed into a headache. After appealing to his dentist for pain relief, Plaintiff
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`Robert Allen Lee, ironically. is appealing to the court for relie f from his denti st. The Defendants
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`are New York dentist Stacey Makhnevich and her practice Aster Dental. Defendants would not
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`treat any patients unless they signed a confidentiality agreement as a precondition to treatmenl.
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`The agreement purports to assign (0 Defendants a copyright over any comments creared or made
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`by patients about Defendants.
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`Lee seeks a declaration that Derendants' confidentiality agreement is vo id for lack of
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`consideration and is unconscionable under New York common law, and further constitutes a
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`deceptive practice in viol ation of Section 349(et) of the New York General Business Law.
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`(C laims Three, Four, and Fi ve.) Alternatively, Lee seeks a declaration that patient commentS
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`constitute a protected fair use under Section 107 of the Copyright Act, and that the class is
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`entitled to equitable defenses. (C laims One and Two.) Tn additi on, Lee seeks on his own behalf
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`Case 1:11-cv-08665-PAC Document 25 Filed 03/27/13 Page 2 of 10
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`a declaration that his comments were not defamatory because they were truthful, a declaration
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`that his postings constituted fai r use, and seeks damages for breach of contract for Defendants'
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`failure to submit Lee's claim to his insurance company. (Claims Six, Seven and Eight.)
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`Defendants mov ed to dismiss th e co mplaint for lack of subject matter jUJisdiction and failure to
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`state a claim pursuant to Fed . R. e iv. P. Rule J2(b)(J) and 12(b){6) . For the reasons set forth
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`below, Defendants' mot ions to dism iss pu rsuant to both Rule 12(b)(I) and 12(b)(6) are denied.
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`BACKGROUNO
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`In late October 2010, Lee experienced severe toothache pain. (CampI. ~ 16.) Lee chose
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`Aster Dental because his insurance company listed them as preferred providers. (llL) The
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`Defendants told Lee that he would have to pay Defendants directly and that Defendants would
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`then submit Lee's paperwork 10 his insurer for reimbursement. CllL
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`17 .) Defendants also
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`required Lee, as with all patients, to sign a confidentiality agreement entitled "Mutual Agreement
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`to Maintain Pri vacy" before providing treatment, regardless of the severity of their condition.
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`(ld. '1'12, 18 .) Lee was in severe pain; and he signed the agreement in th e hope of relief. (ld·'1
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`20)
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`The agreement precludes patients from posting comments about Defendants and assigns
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`to Defendants all copyrights in those comments. It provides, in relevant part:
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`"Tn consideration for treatment .. . Patient agrees to refrain from directly o{ indirectly
`publishing ... conunentary upon Dentist and his practice, expertise andlor treatment ...
`If Patient does prepare co mmentary for publicat ion about Dentist, the Patient exclusiv el y
`assigns all [ntellectu al Property rights, including copyrights, to Dentist for any written,
`pictorial, and/or electronic commentary .. .. This agreement shall be operative and
`etTeclive at the time of creation (prior to publication) of the commentary .... In addition,
`Patient will not denigrate. defame, di sparage, or cast aspersioos upon the Dentist; and.
`will use all reasonable efforts to prevent any member ortheir immediate fam ily or
`acquaintance from engaging in any such activit y."
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`Case 1:11-cv-08665-PAC Document 25 Filed 03/27/13 Page 3 of 10
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`(CampI. Ex. A ~ 3). In return for this restraint 011 speech, Defendants made th e disturbing
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`promise not 10 do exactly whalthey are not supposed to do in the first instance. Defendants
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`promised not to exploit loopholes in HIPPA that Defendants asserted allow them to pass along
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`Lee's palient information to third party marketers. (ld. ~ 2.)
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`Only after Lee signed this agreement did Dr. Makhnevich proceed to treat Lee's infected ,
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`painful tooth. lliL' 21 .) Lee was billed nearly $4,800 for his troubles and paid Ihis amount.
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`((d. 'l~ 21-22.) Despite Lee 's numerous tel ephone cal ls, Defendants never forwarded Lee's
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`paperwork to his insurer fo r reimbursem ent. (llL ~ 23). When Lee requested a copy ofllis dental
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`records to submit the claim himself, Defendants refused to provide them , bu t instead referred
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`him to a third party U1at dem anded a $200 charge. CllL ~ 24).
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`On August 24, 20 11, Lee recounted his experience at Aster Dental on several websites,
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`including Yelp and DoctorBase. (Id. ' 126). Lee's comments critic ized Defend rmts for
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`overcharging him, refusing to submit his insurance claim, and refusing to provide him with his
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`dental records. ([d. Ex. B.) rmmediatel y thereafter on August 25, 2011, Defenda nts sent a letter
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`to Lee threatening him with an action for breach of contract, defamation, and copyright
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`infringement. (CampI. ~ 27). The Jelter stated that Defendants would seek $100,000 in damages
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`and attached a draft or tile complaint Ihat they intend ed to file. (Id . Ex. D.) The letter wa rned
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`th at "[tJhis Jetter shall serve you as the only notice prior to litigation." (Id.) In the draft
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`complaint, entitled Notice of Commencement of Legal Actions, Defendants claimed they were
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`"damaged thereb y in the sum 0($85 ,000 plus in terest" and a lso sought "525,000 general
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`damages for . . . fraud ." QQ...) On Septemher 12 and October 5, 20 ) L Defendants issued
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`invoices to Lee, chargi ng him $ 100 per day for copyright infringement. (Compl. '129). The
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`invoices provided that "[a]ccounts not paid within 7 days of an in vo ice are subject to a \.5% late
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`Case 1:11-cv-08665-PAC Document 25 Filed 03/27/13 Page 4 of 10
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`charge fee and a service charge 0[$20." (Ex. F.) On October 24, 2011, l ee received another
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`letter threatening litigation, this time from Defendants' atto rney, stating that "all legal possible
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`actions will be taken against you in whi ch you will be responsible for any judgment made against
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`YOu." (CompJ. 11 30; Ex . G.)
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`Tn September 2011, D efendants continued the ir aggressive and threatening conduct.
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`They sent takedow n notices to the web sites where Lee had made comments about Defendants.
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`(Campi. 'if 28; Ex. E.) The letters stated that th e Digital Millennium Copyright Acl ("DMCA")
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`provided a safe harbor to lnlemet Service Providers ("JSPs") who "expeditiously remove
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`unauthori zed posting[ sJ of copyrighted material Ollce notified." (l!L Ex . E.) The takedown
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`noli ce wamed thaI if the websites did not remove the comm entary immediately, however, th ey
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`wou ld Jose the DMCA 's protection and Defendants would "consider coordinating with counsel
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`to implement any and ail remedi es allowable by Jaw." (Ca mpI. ~ 28; Ex. E.)
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`1.
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`Motion to Dismiss Pursuant to Rule 12(b)(1)
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`DISCUSSION
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`In resol vin g a motion 10 dismiss a case for lack ofsubjecl matter jurisdiction, the COlin must
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`accept as Irue all factual allegations ml:lde in the complaint and draw all inferences in the light
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`most fa vorable 10 the plaintiff. Sweet v. Sheahan, 235 F.3d 80, 83 (2d Cir. 2000). The Court is
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`not limited 10 Ihe face of the complainl and ma y consider evidence o utsid e the pJeadings. Phifer
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`v. New York , 289 F.3d 49,55 (2d Cir. 2002). A plainliffmust pro ve jurisdiction by a
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`preponderance of the evidence. Id.
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`The Declaratory Judgment Act, 28 U.S.C. § 2201, does not provide a federal court with
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`subject mailer jurisdiction, but merely expands the spectrum of re li ef and remedies a federal
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`com1 may grant; an independent basis for jurisdiction must fi rst exist before relief may be
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`Case 1:11-cv-08665-PAC Document 25 Filed 03/27/13 Page 5 of 10
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`granted under 28 U.S.c. § 220 1. Garan t; Finansal Kiralama A.S. v. Aq ua Marine and Trading
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`I..n c., 679 F.3d 59, 66 (2d e ir. 20 t 2). Federal district courts have subject-matter jurisdiction over
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`copyright infringement actions based on 28 U.S.C. § t 33 1, which co nfers federal question
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`j urisdiction, and 28 U.S.C. § 1338, which confers ori ginal, excl usive jurisdiction over copyright
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`claims. Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154,1 30 S. CL 1237, 1246 (20 10). Lee
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`brings his claims for a declarati on of copyright non-infringement under the Copyright Act, 17
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`u.S.c. §§ 101 et ~ . Specificall y, Lee asks th e Co urt to apply the fair use provisions of the
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`Copyright Act, 17 U. S.c. § 107, and fo r a declaration relat ing to copyright ownershi p- claims
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`that arise under the Copyright Act. Accordingly, the Court is satisfi ed that it has an independent
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`basis of juri sdiction over these copyrigh t cla ims. \ As the Co un wi II disc uss be low, in add ition,
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`Lee has properl y asserted diversit y jurisdiction under 28 U. S.c. § 1332 over aU claims and
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`suppl emental j uri sdiction under 28 U.S.c. § 1367 over the remai ni ng state law claims.
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`A.
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`Actu a l Case or Controversy
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`Art icle III of the Constit ution and the Declaratory Judgment Act impose the ad di tiona l
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`j uri sdictional requiremen t of an ac tual controversy. See Nikc, Inc. v. Al read y, LLC, 663 F.3d
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`89, 9S (2d eir. 201 1). The Act provides that "[i] n a case of actual contro versy," a federal court
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`" may dec lare the ri ghts .. . of any interested part y seekin g such declaration." 28 U.S.c. §
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`220 l(a). The Second Circuit applies a totality-or-the-circumstances test 10 determi ne a
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`j usticiable controversy in intellectual property cases. See Nike, 663 F.3d at 9S (citing
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`Medlrnmune. Inc. v. Geneniech, Inc., 549 U.S. 11 8, 126- 27 (2007)). Und er this test, the COllt1 'S
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`tusk is to consider wheth er "the adversity oflegal interests that ex ists between the parties is real
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`I De fen dants concede that Secu on 411 (a) of \he Copyright Act does not present a j urisdictional bar to Lee's causes
`of aclion. Indeed, Section 41 1 (a)'5 registration require ment is a precondi tion 10 fil ing suit that docs nOI restTicl a
`coun ' s subject mauer j urisdicti on . Reed Elsev ier v. Muchnick, 559 U.S. 154 , 130 S. Ct. 1237, 1247 (20 10).
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`Case 1:11-cv-08665-PAC Document 25 Filed 03/27/13 Page 6 of 10
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`an d substantial and admits of specific reliefthrough a decree ora conclusive character, as
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`distinguished fro m an opinion advising what tne law would be on a hypotheti cal stale of facts."
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`ld. at 95-96 (citing Medlmmune, 549 U.S . at 127) ( internal qllotatio n marks and alterations
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`omitted); Telebrands Com. v, Exceptional Prods., 2011 U.S. Dist. LEXfS 139308, at *5 (D.N.J.
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`Dec. 5, 2011 ) ("[T]he Court mLlst decide 'whether the facts alleged, under a ll the c ircumstances,
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`show that there is a s ubstantial controversy, between parties having adverse legal interests, of
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`sufficient immediacy and rea lity to warrant th e issuance o f a declaratory judgmenl. '" (quo ting
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`Med lmmune, 549 U.S. at 127)).
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`Defendants' argument that no actual controversy ex ist s is specious. Defen dants created
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`the controversy with Lee by attemptin g to enforce the agreement, which they extra cted as a
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`condition for gelling dental treatment. Further, under the totality of circumstances, the
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`controversy is su rticiently "real" and " im.mediate." Defendunls cannot pretend now that their
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`notices to Lee were "just kidding," or that Lee lacked any reasonable ap prehensio n of li nb iliiy. Z
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`A brie f review o f D efendants' conduct in response to Lee's exercise of basic right s shows how
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`ridicu lous their arguments are: (1) Defendants twice threatened Lee with suit, the second
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`not ification being from an anomey who did not speci fy a dead lin e by whi ch suit would
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`commence; (2) Defendant s prepared and senl a dra ft version of the co mpl ain t Ihey would fil e in a
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`New York state court (Ex . D); and (3) Defendants se nt (wo invoices, one whi ch threatened
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`refe rral to a collection agency. C r. Telebrands, 2011 U.S. Dis!. LEXIS 139308, at *6 (finding
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`that Defendants ' communications to Plaintiff notifying them o f potential causes of action
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`While Lee re lies on Ihe reasonable apprehension leSt, Med lmmunc d isavow(u th:lI lesl and lowc red the
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`Jequirement for a showing of atl actual conlroversy. Ni!.;e, 663 F.3d al 95-96; Telebrallds, 20 II U.S. f)isl. LEXI S
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`' 39308. at ·6 0.2. Eve'. under the older lest, however, Lee has alleged su fficient fa cts to show a reilsonable
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`apprehcllsion of liability. ID Cosa Instrument Corp v. Hobre Instruments PV, 698 F. Supp. 2d 345, 346-47, 349
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`(E.D.N.Y . 20 10) (findin g a reasonable allprehenslon where defendant ,HId counsel sent two )(tte rs thai
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`commu,licated their inlent to bring an infril"lgemenl SU it for plaintiffs' continued sale o f ils producll .
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`Case 1:11-cv-08665-PAC Document 25 Filed 03/27/13 Page 7 of 10
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`adequately showed an immediate and real controversy}. No reasonable person cou ld vi ew
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`Defendants' constant balTage o f threats as anything other than a real controversy.
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`Further, Defendants have not rel eased Lee from liability fo r the amo unt threatened in the
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`draft complaint, which is in excess of$J lO,OOO, or the amount charged by the two invoices.
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`There is an objectivel y supported threat of future il1jury- which Defendants' condu ct as created.
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`In light o f Defendants ' threats of liabil ity, Lee is not required to await Defendants' initiation of
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`an actio n to sen Ie this actual controversy. Medlmmune, 549 U.S. at 134.
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`B.
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`Diversity of Citizenship
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`The Court has detennined that it has jurisdiction over th e coPYlight claims, and there is
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`no basis for dismissing them pursuant to Rul e 12(h)(6). Th e complainl's remaining state law
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`claims are relat ed 10 th e copyright claims; they ari se from th e same incidents invo lving Lee' s
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`visit to the dentist, his execution orthe agreement, and his suhsequent internet postings. See
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`Treglia v. Town of Manlius, 3 13 FJd 713 , 723 (2d Cir. 2002) (fi nd ing thaI state claims were
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`sufficiently related when they arose "out of ap proximatel y the same sel o f events as .. . federal .
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`. claim[ s]."). Thus the court has supplemental jurisdiction over these claims, and there is no
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`basis to decline to exercise that jurisdiction pursuan t to the factors contained in I 367(c}(l)·(4}.
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`See Har-Tass Russian News Agency v. Ru ss ian Kurier, [nc., 140 F.3d 442, 447 (2d Cir. 1998).
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`Independently, Lee has properl y invoked the Court's diversity jurisdiction over aU claims
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`under 28 U.S.c. § 1332(a). As the parties are from different states, the onl y remaining quest ion
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`is whether the jurisdictional amount of $75,000 has been satisfi ed. (Compl. ~ 13.) Courts
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`presume that th e amount alleged on the face of the complaint is the actual amount in controversy.
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`Scherer v. Equitable Life Assurance Soc 'y of U.S., 347 FJd 394, 397 (2d Ci r. 2003). This
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`presumption may be rebutted only by showing "to a legal certainly that th e amount reco verable
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`Case 1:11-cv-08665-PAC Document 25 Filed 03/27/13 Page 8 of 10
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`does not meet the jurisdictional thresh old." Id. (internal quotation marks omitted). " Tn actions
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`seeking declaratory or injunctive rclief, it is well established lhallhe amount in controversy is
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`mea sured by the value orthe object of the liti gation." Hunt v, Wash. Stale Apple Adver.
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`Comm' n, 432 U.S. 333 , 347 (1977). That is to say, courts may consider Ihe va lue of the inju ry
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`being averted in delennining whether the amount in co nlroversy has been met. Beueon Constr.
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`Co. v. Mateo Elec. Co., 52 1 F.2d 392, 399 (2d Cir. 1975); ~ Docto r's Assocs. v. Hamilton, 150
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`F.3d 157, 160-61 (2d eir. 1998).3 This am ount is calculated from Ihe plaintiffs viewpoi nt.
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`Kheel v. Port o f New York Auth., 457 F.2d 46, 49 (2d Ci r. 1972).
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`Defendants argue that from Lee's standpoint, Lee 's only requested damages are
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`$4,766.00 for breach o f contract. That is wishfullhinking. The complaint values the injury at
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`approximatel y $100,000, based on Defendants' own conduct in threatening litigati on against
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`Lee. Defendants' demand Jetter and draft complaint, and their own conduct to enforce the
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`agreem ent they extracted befo re Lee was treated have created the situation in which Lee finds
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`himself. Defendants cannot walk away from the jurisdictional amou nt, $75,000, by arguing that
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`their $ 1 00,000 threats were meaningl ess. Indeed, accepting the value which De fendants placed
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`on thei r threats, Lee has made an ad equate showing that he meets th e amo unt-in-controversy
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`threshold.
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`II.
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`Motion to Dismiss Pursuant to Rule l2(b)(6)
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`When considering a motion to dismi ss fo r failure 10 state a claim under Fed. R. Civ. P.
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`12(b)(6), the Court "mu st accepl as true all of the factual allegations contained in the complaint"
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`Accord Alli. St:lndard, Inc . v. Qakfa bco, Inc. 498 f . Supp. 2d 711 , 7 17 (S.D. N.Y. 2007) (" (T]hc vallie o f the
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`requested relief i!; Ihe mOJletary va.lue of the benefit that would Oow to the plaintiff if injunCTi ve o r dec1:::JralOf)' relid
`were granted."): Hough v.l\·lerrill Lvnch. Pierce, Fenner & Smith, Inc., 757 f. Supp. 283, 286 (S.D .N .Y. 199 1),
`arrd 946 F.2d 883 (2d Cir. (99 1) ("'In this action to vacate the arbitration award The amount III controvers y maybe
`regarded as either !.he value to plaintitT o f the re lief sought or the loss to defenda\ll if the relief i ~ granted .'").
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`Case 1:11-cv-08665-PAC Document 25 Filed 03/27/13 Page 9 of 10
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`and construe the co mplaint in the light most favorable to the plaintiff Bell All. Corp. v.
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`Twombly, 550 U.S. 544, 572 (2007) (internal quotation marks omitted). The Court only
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`"assessles] the legal feasibility of the complaint"; it does not "assay the weig.ht of the evidence
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`which might be offered in support thereof." Lopez v. Jet Blue Airways, 662 F.3d 593, 596 (2d
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`Cir. 2011) (i nternal quotation marks omitted). To state a faci ally plausible claim, a plainliffmust
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`plead "factual content th ai allows the co urt to draw the reasonable inference that the defendant is
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`liable for the misconduct alleged." Ashcroft v.Iqbal, 556 U.S. 662, 678 (2009). "A pleading
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`that offers ' labels and conclusions' or 'a fonnulaic recitation oflhe elements of a cause of ac tion
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`will not do.' ''
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`The parties agree that Defendants' failure to comply with 17 U.S.c. § 411(a)'s
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`registration requirem ent does not deprive the Court of jurisdiction in copYTight actions. See
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`Reed Elsevier, 130 S.Ct. at 1247. Instead, the parties' disagreement is over whether registration
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`must be pled to survive dismissal in a declaratory action [or non-infringement under Fed. R. Civ.
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`P. 12(b)(6). Defendants contend that Lee's declaratory claims involving the Copyright Act fai I
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`to state a claim for relief because Defendants' purpolted copyrights were never registered.
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`Section 17 U.S.C. 411 (a) provides that "no civil action for infringement of the copyright in any
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`United States work shall be in stituted until preregistration or registration of the cop YTighl claim
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`has been made." But tlH'II is not what plainti ff seeks. He is seeking rel ief from Defendants'
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`assert ion Ihat Lee's co mments about Defendants' hard ly defensible practices are suhject to
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`copYIight protection. Defendants' argument that the COPYTighl must be registered before relief
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`can he granted to Plaintiff turns the law upsidedown.
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`Case 1:11-cv-08665-PAC Document 25 Filed 03/27/13 Page 10 of 10
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`Ill, Defendants' Referen ces to Class Members Other than Lee
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`Wh il e Defendants make much of the supposed failu re o f un identi fi ed class members 10
`satisfy Art icle mand the Dec laratory Judgment Act's justiciability requirement, the issue is not
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`germane at this time. At th e pre-motion con ference on March 5, 20 12, the COllrt infonned the
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`part ies that discussion of the propriety of cert ifyi ng a class wou ld be premature, and instructed
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`the parties to file their motions to dismiss w ith out analyz.ing the class action. Accordingl y, the
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`Court' s orde r here is specific to the abiJit y o f Lee to assert his claims. Defenda nts may renew
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`their object ions challenging the class' claims at the class certification stage.
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`CONCLUSION
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`The Co urt DENIES Defendants' motion to dismi ss pursuant to Rule 12(b)(l) and
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`12(b )(6) in their entirely. The Cou rt has ori ginalj uri sdictio n over the claims arising under the
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`Copyright Act (Claims One, Two, and Seven), s uppl emental jurisdiction over th e remai nin g
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`claims (Tlu'ee, Fo ur, Fi ve, Six and Eight), and di versil y jurisdiction over all cla ims. Since the
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`fai lu re to register is not di sposi tive in a declaratory ac ti on for non-i nfri ngement, Defendanls'
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`motion to dismiss the copyright claims is deni ed. The Clerk o rthe COllrt is directed to tenninate
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`the motions al docket nos. 18 and 20. The parties are ordered to su bmit a ci vil case management
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`pl an 10 the COllrt by April 26, 2013.
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`Dated: New York, New York
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`March 27, 20 13
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`PA
`United States District Judge
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`10