1:18-cv-02191-JMC Date Filed 09/12/19 Entry Number 185 Page 1 of 18
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF SOUTH CAROLINA
`AIKEN DIVISION
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` Civil Action No.: 1:18-cv-02191-JMC
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` ORDER AND OPINION
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`Deanna Brown-Thomas, an individual and )
`in her capacity as intestate heir and pending )
`Personal Representative of the estate of her )
`sister, the deceased Venisha Brown;
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`Yamma Brown, an individual; Michael D.
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`Brown, an individual; Nicole C. Brown, an )
`individual; Jeanette Mitchell Bellinger, an )
`individual; Sarah LaTonya Fegan, an
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`individual; Ciara Pettit, an individual; and
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`Cherquarius Williams, an individual,
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`Plaintiffs,
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`v.
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`Tommie Rae Hynie, an individual also
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`known as Tommie Rae Brown; James J.
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`Brown, II, an individual; Russell L.
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`Bauknight, as the Personal Representative
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`of the Estate of James Brown and Trustee
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`of the James Brown I Feel Good Trust;
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`David C. Sojourner, Jr., as the Limited
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`Special Administrator of the Estate of
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`James Brown and Limited Special Trustee
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`of the James Brown I Feel Good Trust; and )
`Does, 1 through 10, inclusive,
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`Defendants.
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`This matter is before the court on Defendant Tommie Rae Hynie (“Defendant Hynie”),
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`Defendant James Brown, II (“Defendant Brown”), and Defendant Russell L. Bauknight’s
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`(“Defendant Bauknight”) (collectively, “Defendants”) Motions to Dismiss (ECF Nos. 80-1, 81,
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`101).1 Specifically, Defendants move to dismiss Plaintiffs’ Complaint pursuant to a myriad of
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`1 The court observes that Defendants’ respective Motions to Dismiss each made substantially
`similar arguments regarding their Rule 12(b)(6) analysis. In the interest of judicial economy, the
`court addresses all three Defendants’ Motions (ECF Nos. 80-1, 81, 101) in this order. Connor v.
`1
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`1:18-cv-02191-JMC Date Filed 09/12/19 Entry Number 185 Page 2 of 18
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`Federal Rules of Civil Procedure including Rules 12(b)(1), 12(b)(2), 12(b)(5), and 12(b)(6). The
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`court has already denied challenges brought forth by Defendants within their Motions to Dismiss
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`on Rule 12(b)(1), 12(b)(2), and 12(b)(5) grounds. See Brown-Thomas v. Hynie, 367 F. Supp. 3d
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`452, 469 (D.S.C. 2019); (see also ECF No. 183.) The court now decides Defendants’ last
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`remaining ground supporting their Motions to Dismiss—the Rule 12(b)(6) challenge. Defendants
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`assert that the action fails to plead a plausible claim under the Copyright Act and, therefore,
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`Plaintiffs’ declaratory judgment action (claim 1) must be dismissed.
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`After careful consideration of all relevant filings, the court DENIES Defendants’ Motions
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`to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6) (ECF Nos. 80-1, 81, 101) without prejudice.
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`I. FACTUAL, PROCEDURAL, AND STATUTORY BACKGROUND
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`A. Relevant Factual Background and State Court Litigation
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`James J. Brown (“James Brown”) was an American singer. He married Defendant Hynie
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`in December 2001. (ECF No. 1 at 10 ¶ 38.) Through the union of Defendant Hynie and James
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`Brown, Defendant Brown was born in 2001. (ECF No. 81 at 10.) On the morning of December 25,
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`2006, James Brown died. (ECF No. 1 at 3 ¶ 7.) James Brown’s will omitted both Defendant Hynie
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`and Defendant Brown. (Id. at 11 ¶ 41.)
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`In 2007, Defendant Hynie and Defendant Brown brought challenges to James Brown’s will
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`and trust in the state courts of South Carolina. (Id. at 11 ¶ 42.) Defendant Hynie filed for her
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`spousal rights in South Carolina, which would have entitled her to a statutory elective share and a
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`one-half omitted spouse’s share, while Defendant Brown asserted his state statutory child share as
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`Lifewatch, Inc., No. CIV.A. 2:13-03507, 2014 WL 4198883, at *1 (D.S.C. Aug. 20, 2014) (where
`several cases are closely related, involving the same parties, the same causes of action, same facts,
`and same legal issues—a court is able to address identical issues in the interest of judicial
`economy).
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`2
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`1:18-cv-02191-JMC Date Filed 09/12/19 Entry Number 185 Page 3 of 18
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`a lawful heir. (ECF No. 80-1 at 3.) James Brown’s adult children also brought challenges to set
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`aside his will. See Wilson v. Dallas, 743 S.E.2d 746, 750–51 (S.C. 2013). (See also ECF No. 80-1
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`at 3; ECF No. 80-2 at 29.) As a result of these collective challenges, James Brown’s will was
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`submitted to the Probate Court of Aiken County, South Carolina. (ECF No. 1 at 11 ¶ 42.)
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`Eventually, the Probate Court of Aiken County, South Carolina, transferred the administration of
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`James Brown’s estate to the Aiken County Court of Common Pleas. (ECF No. 1 at 11 ¶ 43; ECF
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`No. 80-1 at 4.)
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`Following extensive litigation in the Aiken County Court of Common Pleas, in 2013, the
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`South Carolina Supreme Court reversed the trial court’s approval of a family settlement regarding
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`James Brown’s estate, upheld the removal of several fiduciaries, and remanded the case for the
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`appointment of new fiduciaries. (ECF No. 85 at 4 (citing Wilson, 743 S.E.2d at 768).) On October
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`1, 2013, the Aiken County Court of Common Pleas appointed Defendant Bauknight to serve as
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`the personal representative of the estate and trustee of the trust. (ECF No. 85-1 at 27–29.) On
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`October 10, 2013, Defendant Sojourner was appointed as a limited special administrator of James
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`Brown’s estate and tasked with defending the estate against legal challenges. (ECF No. 85-1 at
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`35–36 ¶¶ 3–4.)
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`In 2015, the Aiken County Court of Common Pleas determined that Defendant Hynie was
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`the surviving spouse of James Brown. (ECF No. 80-1 at 6.) Currently, Plaintiffs are appealing the
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`spousal status of Defendant Hynie to the South Carolina Supreme Court (ECF No. 151 at 4).2
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`2 During a hearing on January 22, 2019, Plaintiffs and Defendants readily acknowledge that
`Plaintiffs are seeking review of Defendant Hynie’s spousal status by the South Carolina Supreme
`Court. Pursuant to the Federal Rules of Evidence, the court takes judicial notice that this issue is
`currently pending before the South Carolina Supreme Court. See Fed. R. Evid. 201(b). See also
`City of Amsterdam v. Daniel Goldreyer, Ltd., 882 F. Supp. 1273, 1278 (E.D.N.Y. 1995) (“[T]his
`[c]ourt is required to take judicial notice of the pending state court action.”).
`3
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`1:18-cv-02191-JMC Date Filed 09/12/19 Entry Number 185 Page 4 of 18
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`The instant matter does not concern the probate issues before the South Carolina Supreme
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`Court. Instead, this matter focuses exclusively on Defendants’ Motions to Dismiss Plaintiffs’
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`declaratory judgment action. (ECF No. 80-1 at 31-33; ECF No. 81 at 20-22; ECF No. 101 at 12-
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`13.)
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`Plaintiffs’ Allegations and the Current Action
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`Plaintiffs originally filed their Complaint on January 12, 2018, in the United States District
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`Court for the Central District of California. (ECF No. 1.) The United States District Court for the
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`Central District of California transferred the matter to this court. (ECF No. 70.)
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`In the Complaint, Plaintiffs assert that Defendants have wrongfully deprived them of their
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`termination interests pursuant to a Settlement Agreement and Concealed Terms and failed to
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`comply with the appropriate procedures of the Copyright Act. (ECF No. 1 at 17, 20–21 ¶¶ 60–62,
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`75–76.) Specifically, Plaintiffs allege that Defendants have “conspired…to usurp [their] rights and
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`interests in [James] Brown’s [c]ompositions.” (Id. at 4 ¶ 13.) Accordingly, Plaintiffs seek relief
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`from the court under the Copyright Act and the Declaratory Judgment Act. (Id. at 20–22 ¶¶ 74–
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`77.) Plaintiffs seek a declaration establishing, inter alia,3 that a “Settlement Agreement” or any
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`3 Plaintiffs request the following declarations:
`This declaration should establish that Hynie’s Purported Settlement Agreement to
`sell a majority of the proceeds from the termination interests is void and
`unenforceable as a matter of law and public policy. 17 U.S.C. §§ 304(c)(5),
`(c)(6)(D) and 203(a)(5), (b)(4). The declaration should further establish that any
`agreement by Hynie and/or James II, in the Concealed Terms or otherwise, not to
`exercise the termination right(s) as to any Composition(s) is void, unenforceable
`and prohibited as a matter of law and public policy. Id. The declaration should
`further establish that any agreement by Hynie, in the Concealed Terms or
`otherwise, (i) to transfer to anyone the future copyright interests to be recaptured
`via statutory termination before exercising the respective termination right in any
`Composition, or (ii) to transfer to anyone that is not an original grantee or its
`successor-grantee the future copyright interests in any Composition to be
`recaptured via statutory termination, after service of the applicable termination
`notice, but before its termination date, is void, unenforceable and prohibited as a
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`1:18-cv-02191-JMC Date Filed 09/12/19 Entry Number 185 Page 5 of 18
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`“Concealed Terms” amongst Defendants is unenforceable and void as a matter of law. (Id. at 21 ¶
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`76.)
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`Secondly, Plaintiffs maintain that they are “entitled to a preliminary injunction during the
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`pendency of this action, and thereafter to a permanent injunction…” (Id. at 22 ¶ 77.) Finally,
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`Plaintiffs bring a range of claims arising under South Carolina law. (Id. at 22–31 ¶¶ 78–114.)4
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`Defendant Bauknight filed his Motion to Dismiss on September 10, 2018, while Defendant
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`Hynie filed her Motion to Dismiss on September 11, 2018. (ECF Nos. 80, 81.) Defendant Brown
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`filed his Motion to Dismiss on October 10, 2018. (ECF No. 101.) On October 4, 2018 Plaintiffs
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`filed their response (ECF No. 96) to Defendant Hynie’s Motion to Dismiss (ECF No. 81). On
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`October 8, 2018, Plaintiffs filed their response (ECF No. 97) to Defendant Baucknight’s Motion
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`to Dismiss (ECF No. 80), and on October 24, 2018, Plaintiffs filed their response to Defendant
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`Brown’s Motion to Dismiss (ECF No. 101). As mentioned, the court has already denied challenges
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`brought forth by Defendants within their Motions to Dismiss pursuant to Fed. R. Civ. P. 12(b)(1),
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`12(b)(2), and 12(b)(5). See Brown-Thomas v. Hynie, 367 F. Supp. 3d 452, 469 (D.S.C. 2019); (see
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`also ECF No. 183.) The court now decides Defendants’ last remaining ground brought forth in
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`matter of law and public policy. 17 U.S.C. §§ 304(c)(6)(D) and 203(b)(4). The
`declaration should further establish that any agreement by any Defendant that
`directly or indirectly diverts and/or converts Plaintiffs’ share of the financial
`proceeds as a co-owner of the termination interests in the Compositions is void,
`unenforceable and prohibited as a matter of law and public policy under the Act
`and state common law.
`(ECF No. 1 at 21 ¶ 76.)
`4 Plaintiffs allege the following state law claims: (1) accounting; (2) conversion; (3) unjust
`enrichment; (4) intentional interference with prospective economic advantage; (5) intentional
`interference with prospective economic advantage; (6) negligent interference with prospective
`economic advantage; and (7) common law unfair competition. (Id. at 22–23, 27–28, 30 ¶¶ 79, 84,
`97, 102, 109.) Defendants assert that, “if the First Claim is dismissed, the seven supplemental state
`law claims must be dismissed as well.” (ECF No. 80-1 at 33; ECF No. 81 at 22; ECF No. 101 at
`12.) The court will, therefore, only address Plaintiffs’ first claim for declaratory judgment.
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`1:18-cv-02191-JMC Date Filed 09/12/19 Entry Number 185 Page 6 of 18
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`their Motions to Dismiss—the Rule 12(b)(6) challenge. Defendants assert that Plaintiffs’
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`Complaint fails to plead a plausible claim under §§ 203 and 304 of the Copyright Act and,
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`therefore, Plaintiffs’ declaratory judgment action must be dismissed.
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`II. LEGAL STANDARDS AND APPLICABLE STATUTES
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`A. Declaratory Judgment Action
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`A Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be
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`granted “challenges the legal sufficiency of a complaint.” Francis v. Giacomelli, 588 F.3d 186,
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`192 (4th Cir. 2009) (citations omitted); see also Republican Party of N.C. v. Martin, 980 F.2d 943,
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`952 (4th Cir. 1992) (“A motion to dismiss under Rule 12(b)(6) . . . does not resolve contests
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`surrounding the facts, the merits of a claim, or the applicability of defenses.”). To be legally
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`sufficient, a pleading must contain a “short and plain statement of the claim showing that the
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`pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2) (2012).
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`A court should not grant a Rule 12(b)(6) motion unless it appears certain that the plaintiff
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`can prove no set of facts that would support her claim and would entitle her to relief. Mylan Labs.,
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`Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). When considering a Rule 12(b)(6) motion, the
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`court should accept as true all well-pleaded allegations and should view the complaint in a light
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`most favorable to the plaintiff. Ostrzenski v. Seigel, 177 F.3d 245, 251 (4th Cir. 1999); Mylan
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`Labs., Inc., 7 F.3d at 1134.
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`“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
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`accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
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`U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A
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`claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw
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`the reasonable inference that the defendant is liable for the misconduct alleged.” (Id.) Courts
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`1:18-cv-02191-JMC Date Filed 09/12/19 Entry Number 185 Page 7 of 18
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`commonly refer to this as the Twombly/Iqbal standard for federal pleadings, which a plaintiff needs
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`to overcome to survive a Rule 12(b)(6) dismissal.
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`Under the Declaratory Judgment Act, a district court, in a case or controversy otherwise
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`within its jurisdiction, “may declare the rights and other legal relations of any interested party
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`seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a).
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`“Basically, the question in each case is whether the facts alleged, under all the circumstances, show
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`that there is a substantial controversy, between parties having adverse legal interests, of sufficient
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`immediacy and reality to warrant the issuance of a declaratory judgment.” Md. Cas. Co. v. Pac.
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`Coal & Oil Co., 312 U.S. 270, 273 (1941) (citing Aetna Life Ins. Co. v. Haworth, 300 U.S. 227,
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`239–42 (1937)). “[T]he dispute [must] be ‘definite and concrete, touching the legal relations of
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`parties having adverse legal interests.” Medimmune, Inc. v. Genentech, Inc., 549 U.S. 118, 126
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`(2007) (quoting Haworth, 300 U.S. at 240–41).
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`The Supreme Court has “repeatedly characterized the Declaratory Judgment Act as ‘an
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`enabling Act, which confers a discretion on the courts rather than an absolute right upon the
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`litigant.’” Wilton v. Seven Falls Co., 515 U.S. 277, 287 (1995) (quoting Pub. Serv. Comm’n of
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`Utah v. Wycoff Co., 344 U.S. 237, 241 (1952)). Courts have long interpreted the Act’s permissive
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`language “to provide discretionary authority to district courts to hear declaratory judgment cases.”
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`United Capitol Ins. Co. v. Kapiloff, 155 F.3d 488, 493 (4th Cir. 1998). “[A] declaratory judgment
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`action is appropriate ‘when the judgment will serve a useful purpose in clarifying and settling the
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`legal relations in issue, and ... when it will terminate and afford relief from the uncertainty,
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`insecurity, and controversy giving rise to the proceeding.’” Centennial Life Ins. Co. v. Poston, 88
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`F.3d 255, 256 (4th Cir. 1996) (quoting Aetna Cas. & Sur. Co. v. Quarles, 92 F.2d 321, 325 (4th
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`Cir. 1937)).
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`1:18-cv-02191-JMC Date Filed 09/12/19 Entry Number 185 Page 8 of 18
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`Generally speaking, however, “a motion to dismiss ‘is rarely appropriate in a declaratory
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`judgment action.’” Palmer v. Audi of Am., Inc., No. GJH-14-03189, 2015 WL 222127, at *2 (D.
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`Md. Jan. 13, 2015).
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`When evaluating a motion to dismiss an action for a declaratory judgment, courts in this
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`circuit have advised that:
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`Where a bill of complaint shows a subject matter that is within the contemplation
`of the relief afforded by the declaratory decree statute, and it states sufficient facts
`to show the existence of the subject matter and the dispute with reference thereto,
`upon which the court may exercise its declaratory power, it is immaterial that the
`ultimate ruling may be unfavorable to the plaintiff. The test of the sufficiency of
`the bill is not whether it shows that the plaintiff is entitled to the declaration of
`rights or interest in accordance with his theory, but whether he is entitled to a
`declaration at all; so, even though the plaintiff may be on the losing side of the
`dispute, if he states the existence of a controversy which should be settled, he states
`a cause of suit for a declaratory decree.
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`Palmer, 2015 WL 22212, at *2 (quoting Broadwater v. State, 494 A2s. 934, 936 (Md.1985)).
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`When a complaint fails to allege a justiciable controversy, however, a motion to dismiss is
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`proper. Id.
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`B. The Copyright Act of 1976
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`The Copyright Act of 1976 contains two provisions expressly relating to the termination
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`of copyright grants. See 17 U.S.C. §§ 203, 304(c). See also Lydia Pallas Loren, Renegotiating the
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`Copyright Deal in the Shadow of the “Inalienable” Right to Terminate, 62 FLA. L. REV. 1329,
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`1331 (2010) (“Few people realize that many contracts that purport to transfer ‘all right, title and
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`interest’ in a copyright can be terminated by the author of the copyrighted work after thirty-five
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`years (in some cases), after fifty-six years (in other cases), and sometimes even after seventy-five
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`years.”). Congress enacted these statutory provisions to address “the unequal bargaining position
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`of authors, resulting in part from the impossibility of determining a work’s value until it has been
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`exploited” and safeguard authors from the “unremunerative transfers” of copyright grants. H.R.
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`1:18-cv-02191-JMC Date Filed 09/12/19 Entry Number 185 Page 9 of 18
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`REP. NO. 94-1476, at 124 (1976). See also Mills Music, Inc. v. Snyder, 469 U.S. 153, 172–73
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`(1985) (“[T]he termination right was expressly intended to relieve authors of the consequences of
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`ill-advised and unremunerative grants that had been made before the author had a fair opportunity
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`to appreciate the true value of his work product.” (footnote omitted)); Peter S. Menell & David
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`Nimmer, Judicial Resistance to Copyright Law’s Inalienable Right to Terminate Transfers, 33
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`COLUM. J.L. & ARTS 227, 227 (2010) (“For a century, Congress has sought to protect authors and
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`their families by allowing them to grant their copyrights for exploitation and then, decades later,
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`recapture those same rights.”). As to the special nature of these provisions, the United States
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`Supreme Court has noted that the Copyright Act of 1976 “provides an inalienable termination
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`right” for both authors and his or her statutory heirs. Stewart v. Abend, 495 U.S. 207, 230 (1990)
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`(citing 17 U.S.C. §§ 203, 304).
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`1. Section 203
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`Section 203 of the Copyright Act of 1976 concerns, besides a work made for hire, “the
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`exclusive or nonexclusive grant of a transfer or license of copyright or of any right under a
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`copyright” made “on or after” January 1, 1978. 17 U.S.C. § 203(a). It only applies to copyright
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`grants executed by the author. Id. § 203(a). As expressly contemplated by this provision, a previous
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`copyright grant may be terminated if certain conditions are met. See id. §§ 203(a)(1)–(5). For
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`example, as one condition, section 203 permits holders of the termination right to only effect
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`termination “during a period of five years beginning at the end of thirty-five years from the date
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`of execution of the grant.” See id. § 203(a)(3). Additionally, if an author is deceased, the
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`termination right is intricately divided among an author’s issue, which inevitably impacts whether
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`or not a termination right may be exercised because one-half of an author’s termination interest is
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`required for termination. See id. §§ 203(a)(1)–(2). If an author, or his or her statutory heirs,
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`successfully terminates a grant of a copyright, or any right thereunder, by complying with the
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`appropriate conditions, then those previous rights “that were covered by the terminated grants
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`revert to the author, authors, and other persons owning termination interests . . . , including those
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`owners who did not join in signing the notice of termination . . . ,” but subject to some statutory
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`limitations. Id. §§ 203(b)(1)–(6). “Termination of [a copyright] grant may be effected
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`notwithstanding any agreement to the contrary, including an agreement to make a will or to make
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`a future grant.” Id. § 203(a)(5) (emphasis added).
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`2. Section 304
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`Section 304(c) of the Copyright Act of 1976 is “a close but not exact counterpart of section
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`203.” H.R. REP. NO. 94-1476, at 140. Differentiating it from section 203, section 304(c) only
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`applies to “any copyright subsisting in either its first or renewal term on January 1, 1978,” and,
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`“other than a copyright in a work made for hire,” it only permits the termination of “the exclusive
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`or nonexclusive grant of a transfer or license of the renewal copyright or any right under it,
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`executed before January 1, 1978[] . . . .” 17 U.S.C. § 304(c). Similar to section 203, under section
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`304(c), terminations may be executed “at any time during a period of five years”, but “beginning
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`at the end of fifty-six years from the date [the] copyright was originally secured, or beginning on
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`January 1, 1978, whichever is later.” Id. § 304(c)(3). A termination under this provision may be
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`exercised by a simple majority of the holders of the termination right. Id. § 304(c)(1). Subject to
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`some limitations, when a successful termination is executed, “all rights . . . that were covered by
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`the terminated grant revert, upon the effective date of [the] termination, to all those entitled to
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`terminate the grant . . . .” Id. § 304(c)(6). In contrast to section 203, section 304(c) “extends to
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`grants executed by those beneficiaries of the author who can claim renewal under the present law:
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`his or her widow or widower, children, executors, or next of kin.” H.R. REP. NO. 94-1476, at 140.
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`Nevertheless, further corresponding to section 203, section 304(c) proclaims that “[t]ermination
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`of [a copyright] grant may be effected notwithstanding any agreement to the contrary, including
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`an agreement to make a will or to make a future grant.” 17 U.S.C. § 304(c)(5) (emphasis added).
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`In sum, both sections 203 and 304(c) allow authors or their statutory heirs “to terminate
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`the rights of a grantee to whom the author had transferred rights in the original work.” Marvel
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`Characters, Inc. v. Simon, 310 F.3d 280, 284 (2d Cir. 2002) (citations omitted). Of note, sections
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`203 and 304(c) do not mention who may challenge the existence of “an agreement to the contrary”
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`that impacts termination rights or the validity of termination notices. See 17 U.S.C. §§ 203, 304(c).
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`See also Ray Charles Found. v. Robinson, 795 F.3d 1109, 1113 (9th Cir. 2015) (“Both § 203 and
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`§ 304(c) are silent on who may challenge the validity of termination notices.”). Finally, an original
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`grant will remain in effect “[i]f the termination right is not exercised” during the applicable
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`statutory window. Penguin Grp. (USA) Inc. v. Steinbeck, 537 F.3d 193, 199 (2d Cir. 2008). See
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`also 17 U.S.C. §§ 203(a)(3), 304(c)(3).
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`III. DISCUSSION
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`Defendants originally brought forth their Motions to Dismiss under Rules 12(b)(1),
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`12(b)(2), 12(b)(5), and 12(b)(6). Because the court has already denied all other grounds for
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`dismissal, the instant action solely addresses Defendants’ Rule 12(b)(6) challenge. In Defendants’
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`respective Memorandums in support (ECF Nos. 80-1, 81, 101), Defendants each devote a few
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`paragraphs to their 12(b)(6) analysis. (ECF No. 80-1 at 31-33; ECF No. 81 at 20-22; ECF No. 101
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`at 12-13.) Defendants argue that Plaintiffs’ “First Claim for Relief” must be dismissed because the
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`allegations are “insufficiently particularized”, and Defendants focus their entire Rule 12(b)(6)
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`analysis on Plaintiffs’ declaratory judgment action (First Claim). (Id.) Thus, the court narrowly
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`construes Defendants’ Rule 12(b)(6) challenge as applying only to Plaintiffs’ declaratory judgment
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`1:18-cv-02191-JMC Date Filed 09/12/19 Entry Number 185 Page 12 of 18
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`action (ECF No. 1 at 18-21 ¶¶ 1-77). Consequently, the court is guided by the legal principals
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`analyzing motions to dismiss a declaratory judgment action.
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`The Fourth Circuit has identified three elements to determine whether a plaintiff has stated
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`a claim under the Declaratory Judgment Act. First, the complaint must allege “an actual
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`controversy” between the parties’ ‘of sufficient reality to warrant issuance of a declaratory
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`judgment.’” Volvo Const. Equip. North America, Inc. v. CLM Equip. Co., 386 F.3d 581, 592 (4th
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`Cir. 2004) (citing 28 U.S.C. § 2201); see also MedImmune, Inc., 549 U.S. at 127 (quoting Md.
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`Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941)). Second, there must be an independent
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`basis for jurisdiction. Volvo, 386 F.3d at 592. Third, the court cannot abuse its discretion in
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`exercising jurisdiction. Id.
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`In an already decided companion opinion, the court ruled that an independent basis for
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`jurisdiction under the Copyright Act and 28 U.S.C. § 1338(a) exists because “Plaintiffs’ Complaint
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`requires a construction of the Copyright Act and because distinctive federal policies control the
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`disposition of the action.” (ECF No. 183 at 36-39.); See also T.B. Harms, 339 F.2d at 828
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`(explaining that a court’s review of the exercise of statutory termination rights assumes subject
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`matter jurisdiction under the Copyright Act). Thus, the court must only consider the dispute as it
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`relates to the first and third prongs of the Volvo test— (prong 1) actual controversy under §§ 203
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`and 304 of the Copyright Act and (prong 3) abuse of discretion.
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`1. Actual Controversy
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`The court first addresses whether the declaratory action in Plaintiffs’ Complaint establishes
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`an actual case or controversy under the Copyright Act. To state a case or controversy, a plaintiff
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`must establish a dispute that is “definite and concrete, touching the legal relations of parties with
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`adverse interests.” MedImmune, Inc., 549 U.S. at 127. In other words, the basic question is
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`1:18-cv-02191-JMC Date Filed 09/12/19 Entry Number 185 Page 13 of 18
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`“whether the facts alleged, under all the circumstances, show that there is a substantial controversy,
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`between parties having adverse legal interests, of sufficient immediacy and reality to warrant the
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`issuance of a declaratory judgment.” MedImmune, Inc., 549 U.S. at 127 (quoting Md. Cas. Co.,
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`312 U.S. at 273); see also Mintz v. Mark Bartelstein & Assocs. Inc., 906 F. Supp. 2d 1017, 1027-
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`28 (C.D. Cal. 2012). A claim under § 203 of the Copyright Act establishes “adverse legal
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`interests…if [they are] not hypothetical, conjectural, conditional, or based upon the possibility of
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`a factual situation that may never develop.” Coconut Grove House, Inc. v. U.S. Dept. of Health &
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`Human Servs., 805 F. Supp. 39, 41 (S.D. Fla. 1992).
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` Examining the allegations within Plaintiffs’ first claim, Plaintiffs carry their burden of
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`establishing an actual controversy. Plaintiffs contend that Defendants have engaged in certain
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`actions that, if true, would violate §§ 203 and 304 of the Copyright Act. Taking these allegations
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`as true, as is required in consideration of a Rule 12(b)(6) motion, the court concludes that this
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`claim has been sufficiently pleaded to survive Defendants’ motion to dismiss. Indeed, no
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`conjecture must occur to create adverse legal interests between the parties here. Plaintiffs allege
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`that “Hynie’s disclosed agreement—to transfer to the Trust the majority of proceeds from the
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`termination interests (inclusive of the 2013 Hynie Terminations) or Concealed Terms to transfer
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`the copyright interests to be recaptured via notices of termination (inclusive of the 2013 Hynie
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`Terminations) prior to the effective dates thereof”— is a violation of the Copyright Act’s
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`provisions proscribing the ability to make grants of a copyright until after the effective date of a
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`termination. (See ECF No. 1 at 20–21 ¶¶ 74–75 (citing 17 U.S.C. §§ 304(c)(6)(D), 203(b)(4)).)
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`Not only do Plaintiffs allege violations of the Copyright Act, Plaintiffs also maintain that
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`“in the Concealed Terms, Hynie, . . . , improperly agreed, . . . that she would not exercise the
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`termination rights as to some or all of the remaining Compositions as to which she had not yet
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`served termination notices, to circumvent Plaintiffs’ statutory termination interests while
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`using the leverage of termination to enhance Hynie’s compensation.” (Id. at 19 ¶ 71.)
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`(emphasis added). In this same vein, Plaintiffs submit that Defendants’ “improper agreements
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`convert Plaintiffs’ share of the financial proceeds from their termination interests in the
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`[c]ompositions, encumbering, diluting and/or effectively destroying Plaintiffs’ termination
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`interests.” (Id. at 19–20 ¶ 72.) (emphasis added).
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`Plaintiffs clearly allege adverse legal interests in terms of both termination interests granted
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`by the Copyright Act and financial proceeds flowing from their proportionate ownership of
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`copyright interests under state and federal law, as legal heirs to James Brown. (Id. at 12, 16, 18,
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`23, 27–28, 30 ¶¶ 47, 58, 65); see Cottrell v. Alcon Labs., 874 F.3d 154, 164 (3d Cir. 2017) (“Both
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`federal law and state law–including state statutes–‘can create [legally cognizable] interests.’”
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`(quoting Cantrell v. City of Long Beach, 241 F.3d 674, 684 (9th Cir. 2001)).
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`By purporting to have their termination rights adversely affected by Defendants’ actions,
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`in violation of § 203, which Defendants have repudiated, Plaintiffs have created a controversy as
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`to whether Plaintiffs will be entitled to their full share of “[t]he future rights…upon termination of
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`the grant,” as provided by the statute. 17 U.S.C. § 203(b)(2). This controversy is therefore non-
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`speculative, and actual. Baldwin v. EMI Feist Catalog, Inc., No. 11-81354-CIV, 2012 WL
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`13019195, at *3 (S.D. Fla. Dec. 11, 2012) (stating that Plaintiffs’ § 203 claim established an actual
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`controversy where complaint put the stability of future termination rights at issue under 17 U.S.C.
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`§203(b)(2)).
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`Similarly, Plaintiffs have demonstrated that the controversy is “of sufficient immediacy
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`and reality” to survive Defendants’ Motions to Dismiss, and to sustain their declaratory judgment
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`action. MedImmune, Inc., 549 U.S. at 127. Indeed, Plaintiffs’ Complaint alleges that Defendants
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`have already engaged in unlawful agreements under the Copyright Act and Defendant Hynie has
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`already engaged in statutory terminations, which may have deprived them of proceeds. (See id. at
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`18–22 ¶¶ 66–77); see also Cottrell, 874 F.3d at 168 (holding that an injury was actual and imminent
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`when the “claimed financial harm . . . already occurred”). Moreover, of particular relevance, the
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`court “may consider evidence outside the pleadings without converting the proceeding to one for
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`summary judgment.” Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d
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`765, 768 (4th Cir. 1991). Here, the court observes that during the multiple hearings on the pending
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`Motions to Dismiss, Defendants have never denied the existence of these alleged, secret
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`agreements, which directly undermines any argument that Plaintiffs’ claims are “conjectural or
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`hypothetical.” (ECF Nos. 144, 180.)
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`