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Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 1 of 22
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`11 Civ. 2182
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`OPINION
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`
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` Plaintiff,
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`GARY MILLER,
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`
`
`
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`v.
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`BERN LOIBL, SHERRY-STAFFORD LOIBL,
`and INTERNATURALLY, INC.,
`
`
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`Defendants.
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`
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`This is an action for copyright infringement brought by Gary Miller against
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`Internaturally, Inc. and its owners Bern Loibl and Sherry Stafford-Loibl. Miller and
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`Internaturally both are in the business of selling movies and other materials promoting the
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`naturist lifestyle – that is, materials promoting a life free from clothes. In the course of this
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`business both have developed a business relationship with a naturist filmmaker named
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`Peter Dietrich and both have sold his work in North America.
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`In the course of these dealings, Miller contends that he was granted the exclusive
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`rights to distribute certain of Dietrich’s films and photographs in North America.
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`Accordingly, he has registered and maintained the copyrights to them in the United States.
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`Internaturally, Miller claims, has infringed upon some or all of these copyrights by
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`distributing several naturist films which consist largely of compilations of excerpts from
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`Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 2 of 22
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`other Dietrich films, including those to which Miller owns the copyright, and by using the
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`copyrighted photographs in promoting the allegedly infringing products.
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`Internaturally, however, claims that it was previously granted exclusive distribution
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`rights to all of Dietrich’s films in the United States. Therefore, Internaturally argues,
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`Dietrich could never have conveyed to Miller the rights he purports to be vindicating in this
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`suit. Internaturally brings counterclaims against Miller for breach of contract, tortious
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`interference with prospective economic advantage and contract, and for an accounting of
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`Miller’s sales in violation of Internaturally’s exclusive distribution rights.
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`Several motions are pending: on March 20, 2012, Miller moved for summary
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`judgment on Internaturally’s counterclaims. Both parties moved for leave to amend their
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`pleadings on June 15, 2012. On July 15, 2012, Miller moved for summary judgment on
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`the defendants’ liability. On July 18, 2012, defendants cross-moved for summary judgment
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`on Miller’s claims. Finally, on August 13, 2012, defendants moved to strike Miller’s
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`affidavit in support of his July 15, 2012 motion, the affidavit of an expert witness, and
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`Miller’s July 25, 2012 request to supplement the record with the allegedly-infringed
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`materials.
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`Defendants’ motion to strike is granted with respect to the late submission of the
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`allegedly-infringed films. For the reasons detailed below, this conclusion moots
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`defendants’ motion for summary judgment and, in turn, the remainder of their motion to
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`strike. Miller may choose: he may either 1) submit the allegedly-infringed DVDs and
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`reimburse defendants for the costs of preparing their motion to strike and their now-moot
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`Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 3 of 22
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`motion for summary judgment or 2) adhere to the course he had set during discovery, to
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`proceed in this action with the DVDs excluded from the record, and reimburse defendants
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`only for the costs of preparing their motion to strike. Miller’s motion for summary
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`judgment on defendants’ counterclaims is granted, and the counterclaims dismissed.
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`Miller’s motion for summary judgment on liability is denied. Miller’s motion for leave to
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`amend his pleadings is granted. Defendants’ motion to amend their pleadings is denied.
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`Discovery may be reopened for the limited purpose of permitting Miller, if he
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`chooses, to furnish copies of the allegedly-infringed work. If Miller does do, defendant
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`may then move once more for summary judgment.
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`Defendants’ Motion to Strike
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`FACTUAL BACKGROUND
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`Miller made his required initial disclosures to defendants on July 26, 2011 in which he
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`identified DVDs of the infringed films as relevant materials. But he did not actually
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`produce copies of the allegedly infringed films, claiming that defendants already possessed
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`copies of them. Defendants requested these films in their first discovery request and their
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`first set of interrogatories, both dated February 3, 2012. Miller objected to this request
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`arguing once more that defendants already possessed copies of the DVDs at issue and
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`asserting that defendants had also not produced copies of the infringing DVDs. In
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`response to defendants’ interrogatory, Miller produced a chart partially listing a minute-by-
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`minute comparison of the allegedly infringing and infringed works, but he did not produce
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`Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 4 of 22
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`the infringed works themselves. Miller objected to providing additional details because to
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`do so had “proven expensive.”
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`On April 3, 2012 defendants responded with a demand that Miller provide a complete
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`minute-by-minute accounting of the allegedly infringing portions of their films and a
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`warning that they would move for summary judgment with respect to any title that Miller
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`could not specifically demonstrate was copied.
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`Miller replied simply that he was familiar with the infringed and infringing work and
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`that a minute-by minute accounting was not necessary. Miller also contended here, and
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`elsewhere, that the fact that the allegedly-infringing materials were, in fact, promoted as
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`being composed of excerpts of other Dietrich films would be all the proof they needed to
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`settle the factual question of infringement. Defendants point out that the DVD jacket and
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`promotional materials also describe the allegedly-infringing films as containing “many
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`scenes unseen before.” Defendants further contend that these general promotional
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`statements may not be precisely true and that, even if they are, this evidence is not enough
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`to allow a fact-finder to determine exactly how many films were infringed, let alone which
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`ones.
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`Finally, on April 6, 2012, defendants reiterated their discovery request for copies of the
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`allegedly-infringed DVDs, but were met with the same objection.
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`Discovery closed on May 16, 2012.
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`However, on July 25, 2012, Miller wrote to the court to request permission to
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`supplement the record with the infringed films. Miller wrote: “[a]t the time I was preparing
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`Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 5 of 22
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`plaintiff’s summary judgment motion, I was concerned that the films might need to be a
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`part of the record in case of a dispute about their content.” This request came more than
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`two months after the close of discovery and approximately one week after defendants had
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`moved for summary judgment against Miller. Among other grounds, this motion sought
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`summary judgment on exactly the grounds that defendants had apprised Miller of in their
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`April 3, 2012 letter, i.e. that Miller had failed to prove infringement by submitting the
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`infringing DVDs.
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`DISCUSSION
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`Federal Rule of Civil Procedure 26 requires that a party must provide either a copy or
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`“a description by category and location” of any documents, information, or other tangible
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`things that he has in his possession and that he may use to support his claims or defenses.
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`A party’s failure to disclose relevant information triggers “automatic sanctions”; among
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`other possible sanctions, that party may be barred from using the withheld evidence to
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`“supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially
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`justified or is harmless.” Fed. R. Civ. P. 37(c)(1). A district court has wide discretion in
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`crafting sanctions under Rule 37 – even severe sanctions such as total preclusion – and
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`accordingly its imposition of these sanctions is reviewable only for abuse of discretion.
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`Design Strategy, Inc. v. Davis
`, 469 F.3d 284, 294 (2d Cir. 2006).
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`In this case, the degree of prejudice to the defendant is unclear. Miller argues, with
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`some plausibility, that defendants have had copies of the infringed works all along. Indeed,
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`Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 6 of 22
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`they point to an email in which defendants describe having conducted their own
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`comparison of the allegedly-infringed and infringing works. Therefore, total preclusion of
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`the allegedly infringed DVDs, potentially the lynchpin of Miller’s case, is unnecessarily
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`harsh.
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` However, regardless of whether defendants were indeed “hamstrung” in their ability to
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`defend the suit by the withholding of the infringed DVDs, this much is clear. Defendants
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`were caused to waste their litigation resources due to Miller failure to comply with the
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`discovery rules.
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` Defendants, in preparing their motion for summary judgment after the close of
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`discovery, were entitled to rely on the completeness of the factual record at that point. And
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`there can certainly be no contention that Miller’s need to introduce this evidence was
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`unforeseeable. Defendants explicitly communicated to Miller, before the close of
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`discovery, that they intended to move for summary judgment specifically for lack of this
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`and other evidence.
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`Miller, before the close of discovery, apparently decided that he would not need to rely
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`on the films as evidence. While that was his right, he may not, after repeated demands
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`from defendants for timely production, reverse course after the close of discovery and after
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`defendants had already moved for summary judgment.
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`Therefore, defendants’ motion to strike Miller’s submission of DVDs is granted, and
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`defendants awarded the cost of preparing their motion to strike. Miller may supplement
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`the record with the allegedly-infringed films but, if he chooses to do so, he must also
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`Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 7 of 22
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`reimburse the defendants for the cost of preparing their July 18, 2012 motion for summary
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`judgment. In either case, defendant’s motion for summary judgment is denied as moot,
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`but with leave to renew once plaintiff has either furnished the films or chosen, once and for
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`all, not to do so. In addition, this disposition renders moot defendants’ motion to strike
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`the Miller and Pierle affidavits, attached as they were to Miller’s opposition to defendants’
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`here-denied motion for summary judgment. This motion to strike is also, therefore,
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`denied.
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`
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`Miller’s Motion for Summary Judgment on Defendants’ Counterclaims
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`FACTUAL BACKGROUND
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`Defendants bring three counterclaims against Miller: breach of contract, tortious
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`interference with prospective economic advantage, tortious interference with contract, and
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`for an accounting of unauthorized use of defendants’ copyrighted materials.
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`Defendants’ breach of contract counterclaim is based on the exclusive distribution
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`agreement between Internaturally and Dietrich. Miller, defendants claim, was aware of this
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`contract but nonetheless attempted to purchase the rights to films covered by it.
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`Defendants claim that Miller now distributes these films inconsistently with defendants’
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`exclusive distribution agreement with Dietrich. Miller disputes whether the exclusive
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`distribution agreement actually covered the work he distributed but, otherwise, these facts
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`are undisputed.
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`Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 8 of 22
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`Defendants’ counterclaims for tortious interference with contract and prospective
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`economic advantage are based on the same facts. Defendants claim that Miller’s dealings
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`with Dietrich were inconsistent with their exclusive distribution agreement and were
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`conducted wrongfully and with knowledge that Miller was interfering with defendants’
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`ongoing contract and business relationship with Dietrich.
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`Finally, defendants’ counterclaim for an accounting seeks a tabulation of Miller’s sales
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`of Dietrich titles inconsistent with their exclusive distribution agreement – that is, the sales
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`that give rise to defendants’ first three counterclaims.
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` DISCUSSION
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`A state law cause of action is preempted by federal copyright law to the extent that “it is
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`merely based on allegations that the defendant did something that the copyright laws
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`reserve exclusively to the plaintiff.”
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`Am. Movie Classics Co. v. Turner Entm't Co., 922 F.
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`Supp. 926, 931 (S.D.N.Y. 1996). Under these circumstances, the federal copyright law can
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`
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`preempt both state breach of contract and tortious interference law. See id. at 931-32.
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`The facts of
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`Am. Movie Classics Co. are closely analogous to those in this case. In
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`Am. Movie Classics Co., American Movie Classics sued Turner Classic Movies for
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`inducing Turner Entertainment to license certain films to them in violation of Turner
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`Entertainment’s exclusive distribution agreement with American Movie Classics. American
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`Movie Classics sued Turner Entertainment for breach of contract and sued Turner Classic
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`Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 9 of 22
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`Movies for tortious interference. Id. at 929. The Second Circuit held that both claims
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`were preempted by federal copyright law. Id. at 931-32.
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`
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`The same result obtains here. Here, as in Am. Movie Classics Co.
`, defendants’
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`counterclaims allege nothing more than that Miller violated their exclusive distribution
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`rights. That they did so in violation of a contract does nothing to change this conclusion
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`since the infringed contractual right is congruent with a right under copyright law.
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`Therefore, defendants’ first three counterclaims are dismissed. And, since the fourth
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`counterclaim is a claim for accounting of Miller’s sales in violation of the rights asserted by
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`defendants’ in the previous three counts, it is dismissed as well.
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`Miller’s Motion for Summary Judgment on Liability
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`Miller moves for summary judgment on liability. Defendants oppose on the ground
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`that their exclusive distribution agreement actually gave them the legal rights asserted by
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`Miller, that Miller has not proven his ownership of the copyrights, that Miller has not
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`proven copying, that Miller has committed copyright misuse, and because any copying by
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`defendants as described by Miller would have been fair use.
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`Miller’s motion for summary judgment is denied because there is a genuine factual
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`dispute regarding the meaning (and, indeed, authenticity) of the agreement between
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`Dietrich and Internaturally. If the agreement is genuine and means what defendants claim
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`it means, then Miller cannot maintain a claim for copyright infringement against
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`Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 10 of 22
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`Internaturally because Internaturally is actually the owner of the copyrights that Miller
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`seeks to enforce.
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`Miller’s motion for summary judgment on liability appears to only concern itself with
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`the matter of the allegedly-infringed films, and not the photos originally mentioned in his
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`complaint but largely ignored in the parties’ subsequent motions. Therefore, it is
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`construed as a motion for summary judgment only with respect to the alleged infringement
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`of Miller’s rights in the Dietrich films.
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`FACTUAL BACKGROUND
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`Defendants contend that, on March 19, 2002, they signed an agreement with Dietrich
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`titled “Agreement of Exclusive Distribution Rights between Peter Dietrich (KCN
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`Productions) and Internaturally, Inc.” The agreement reads, in its entirety:
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`In consideration for the sum of US $6,000, advance payment toward future
`sales, KCN Productions and Peter Dietrich hereby grant Internaturally, Inc
`exclusive distribution rights in the USA for its family naturist films. This
`agreement does not restrict Internaturally, Inc. from selling same in other
`countries where Peter Dietrich and KCN may have established other entities
`to market titles on an exclusive basis. Internaturally, Inc. will be responsible
`for the marketing of these films, which include replicating to VHS,
`packaging, advertising in print and on the World Wide Web. Remuneration
`from sales of KCN/Dietrich is to be paid monthly in the form of royalties
`based on 1/3rd the retail price that is established by Internaturally, Inc.
`This agreement is legal and binding and may only be terminated or altered
`by mutual consent between Peter Dietrich (KCN Productions) and
`Internaturally, Inc.
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`The agreement appears to have been signed by Bernard Loibl on March 18, 2002 and
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`Dietrich on March 19, 2002.
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`Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 11 of 22
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`Defendants argue that this agreement entitles Internaturally to exclusive distribution
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`rights to all Dietrich titles in the United States. Defendants have provided affidavits (and,
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`in Bern Loibl’s case, deposition testimony) by both parties to the contract, Dietrich and
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`Bern Loibl, indicating that this is indeed their understanding of the contract’s meaning.
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`Miller, however, argues that the contract has been fabricated for the purposes of
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`defending this litigation. Miller also argues that the course of dealing between Dietrich,
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`defendants, and himself indicates that whatever agreement did exist between Dietrich and
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`Internaturally in March of 2002 either did not cover all of Dietrich’s work or was implicitly
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`modified by the parties’ course of dealing subsequently. At most, Miller argues, the
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`contract entitles Internaturally to distribute all films made by Dietrich bearing the KCN
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`name, which would bear on only four of the 45 allegedly infringed films – the remaining 41
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`instead bear the name “AWWC.”
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`In support of his contention that the contract is a fabrication, Miller points to emails
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`exchanged between Bern Loibl and Dietrich. On May 12, 2011 (43 days after Miller
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`initiated this suit) Bern Loibl wrote to Dietrich
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`I need a copy of our exclusive distribution agreement. I lost it when we had
`a computer crash several years ago....If you can’t find it, please send me a
`deposition that such an executive agreement has existed since the year 2002.
`I believe that is accurate.
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`On May 13, 2011 Dietrich wrote back, in part:
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`I’ve combed through all my documents and cannot find a copy of our initial
`agreement, sorry. It was also lost in my robbery and computer crash.
`Perhaps Andrii has a copy somewhere, but I doubt it.
`11
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`Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 12 of 22
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`Finally, on May 29, 2011, Dietrich replied again:
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`Sadly Andrii has no copy of that elusive contract. I was thinking, could we
`not ‘re-invent’ it and date it from that period, or would that be too dishonest
`and unusable? I did send you a declaration in which I said you had exclusive
`distribution rights from 2002. Or would Cheryl possibly still have records in
`her files?
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`(Plf’s Ex. 19). A copy (or, as Miller maintains, a document masquerading as a copy) of that
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`elusive contract was subsequently attached as Exhibit A of the defendants’ answer eleven
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`days later on June 9, 2011. Plaintiffs allege that this document is the “re-invention”
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`proposed by Dietrich, not the original contract defendants claim it to be.
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`In their depositions, however, the Loibls both testified that the contract was eventually
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`found in the Loibls’ own files. Sherry Stafford-Loibl testified that she and Bern Loibl
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`began searching when they were served with the complaint, though she did not become
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`aware of the complaint until sometime after the service date because somebody else in her
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`office signed for it. She testified that the search took “a while” and that, though she could
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`not remember exactly how long it took, it “seemed like a week.” Bern Loibl testified that
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`the search took “about three days” after defendants’ lawyers suggested that they might need
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`to see the original wording, but he does not indicate when that was.
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`Miller suggests that the Loibls’ timelines do not add up: he argues that this testimony, if
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`true, would require that the contract have been found no later than April 24, five days after
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`the complaint was served. Meanwhile, Miller argues, the evidence shows that Bern Loibl
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`emailed Dietrich asking for a copy of the contract on May 12, 2012, 23 days after
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`Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 13 of 22
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`defendants were served with the complaint. However the Loibls’ testimony, described
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`above, is much less precise than Miller implies and is not, strictly speaking, contradicted by
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`the evidence Miller highlights – probably the most one could fairly say is that there is a
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`slight tension between the testimony and the documentary evidence.
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`Finally, Miller points out that, though Bern Loibl testified that he had emailed Dietrich
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`when the contract was found (and that this email had been produced to Miller in
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`discovery), defendants have not in fact produced any such email.
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`The evidence regarding the meaning of the 2002 contract is conflicting.
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`On one hand, both Bern Loibl and Dietrich have sworn in affidavits that they
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`understood the contract to cover all existing and future “family naturist” work by Dietrich.
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`Bern Loibl also testified to this effect in his deposition.
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`However, emails between defendants, Miller, and Dietrich tell a more complicated
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`story. The record discloses several instances where Dietrich sold films to Miller instead of
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`Internaturally because he needed money quickly; Miller, it would seem, was in the habit of
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`paying a fixed amount up front for Dietrich’s films but with no royalties, while
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`Internaturally compensated Dietrich through ongoing royalty payments. In multiple cases,
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`Internaturally seems to assent to this arrangement acknowledging at one point that the
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`contract covered only whatever titles Dietrich actually supplied to Internaturally.
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`Defendants do not dispute these facts, but they draw a different conclusion from them.
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`Defendants argue that these were simply one-time concessions made by gentle-minded
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`naturists. Because the defendants were able to purchase titles for resale through Miller,
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`Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 14 of 22
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`defendants argue that there was little financial reason for them to force the issue. Buying
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`the titles from Miller simply meant that Internaturally would pay Miller’s price per disk
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`instead of the 1/3rd of the retail price they would have paid to Dietrich in royalties
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`otherwise.
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`Ultimately, however, defendants did confront Dietrich about his dealings with Miller.
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`The precipitating event appears to have been Dietrich’s agreement to sell to Miller certain
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`films produced in connection with his trip to Brazil along with some AWWC and “Russian
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`Bare” films. Dietrich seems to have given these titles to Miller for him to sell despite
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`Internaturally’s having invested money promoting them.
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`However, never in the course of this discussion did defendants insist that Dietrich stop
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`selling his titles to Miller, or claim that their contract forbade him from doing so. The
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`clearest reference to the contract comes in an August 25, 2009 email from Bern Loibl to
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`Dietrich which began:
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`Please Peter, stop acting dumb. You know exactly what you did. This is not
`about what you own, but about agreements you made with Internaturally. If
`you wish to license or sell your titles you have every right. But you are also
`responsible to inform us, so we can remove these titles from the ones we
`manage. I will not promote AWWC titles that are not exclusive.
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`It seems clear that, at the time Bern Loibl wrote that email, he either did not believe or
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`did not wish to assert that, as he asserts now, their 2002 contract actually did prohibit
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`Dietrich from selling titles to Miller. This email and another sent the next day also include
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`Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 15 of 22
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`suggestions that Internaturally and Dietrich might enter into a new contract that would
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`expressly prohibit Dietrich from selling titles to any other American distributor.
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`Finally, on March 1, 2011, in what appears to be the run-up to this litigation, Bern
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`Loibl sent Miller an email which began “I don’t doubt you are the owner of the titles Peter
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`[Dietrich] sold you. I don’t question your copyright.”
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`DISCUSSION
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`Summary judgment is appropriate under Fed.R.Civ.P. 56 if, on the entire record,
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`“there is no genuine issue as to any material fact and the moving party is entitled to
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`judgment as a matter of law.”
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`Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).
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`It is the movant’s burden to demonstrate that no such dispute remains. Gallo v. Prudential
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`Residential Services, L.P., 22 F.3d 1219, 1223 (2d Cir. 1994). The Court must “assess the
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`record in the light most favorable to the non-movant and ... draw all reasonable inferences
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`in its favor.” Delaware & Hudson Ry. Co. v. Consol. Rail Corp.
`, 902 F.2d 174, 177 (2d
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`Cir.1990).
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`Once the movant has borne this initial burden, the opposing party must produce
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`sufficient evidence to permit a reasonable jury to return a verdict in its favor, identifying
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`“specific facts showing that there is a genuine issue for trial.”
`Anderson, 477 U.S. at 248,
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`256. The non-movant “must do more than simply show that there is some metaphysical
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`doubt as to the material facts.” Repp & K & R Music, Inc. v. Webber, 132 F.3d 882, 889
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`(2d Cir.1997). Conclusory allegations will not suffice. Id.
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`Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 16 of 22
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`Here, is it clear that a factual dispute remains regarding the meaning of the exclusive
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`distribution agreement. Certainly the emails highlighted by Miller provide some evidence
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`that the parties’ course of dealing was inconsistent with the meaning attributed to it by
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`defendants. However, this evidence is directly contradicted by testimony provided by both
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`parties to the contract. The meaning, then, of the contract as it was actually understood by
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`the parties is subject to a judgment of the credibility of Dietrich and Loibl. And even if a
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`fact-finder were to conclude that the parties’ course of dealing had altered the contract, it
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`would remain for a fact-finder to determine the contours of that new contract. The
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`evidence of record certainly does not, for example, disclose whether the parties’ course of
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`dealing indicated an intention to terminate the contract or whether the parties intended to
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`carve out more limited exceptions from it.
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`Therefore, because resolution of this factual question is a prerequisite to granting
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`judgment in Miller’s favor, and a genuine dispute remains with regard to it, Miller’s motion
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`for summary judgment on liability is denied.
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`
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`The Parties’ Motions to Amend Their Pleadings
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`Both Miller and defendants move to amend their pleadings. Miller moves to add
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`Internaturally LLC as a defendant in addition to the Loibls and Internaturally, Inc.
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`Defendants move to add as a party Andrii Litovchenko, with whom Dietrich coauthored
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`some of the works at issue, and to add a counterclaim for copyright infringement. Both
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`motions were filed before the June 18, 2012 amendment deadline.
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`Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 17 of 22
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`MILLER’S PROPOSED ADDITION OF INTERNATURALLY, LLC
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`Miller’s proposal to add Internaturally, LLC as a defendant is granted.
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`Defendants protest that Miller should have known all along that Internaturally, LLC
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`and not Internaturally, Inc. is the proper entity. This may or may not be true, but that in
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`itself is not reason to deny Miller’s timely request to add Internaturally, LLC to the action.
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`As defendants point out, such an amendment should be freely granted unless the non-
`
`movant can demonstrate that it is made in bad faith or that they would be unduly
`
`, 649 F.3d 151,
`prejudiced by the amendment. City of New York v. Group Health, Inc.
`
`157 (2d Cir. 2011). Defendants have shown neither: their arguments that this new party
`
`might have conducted litigation differently and that they may have contacted an insurance
`
`carrier are unavailing because they do not show that defendants – that is, those already
`
`named as defendants in this suit – would be prejudiced. These arguments only state the
`
`obvious fact that the new party will suffer the same inconvenience of defending a lawsuit as
`
`Internaturally, Inc. suffered.
`
`It may be defendants’ contention that the individual defendants will be prejudiced
`
`because they, as principles of both Internaturally, Inc. and Internaturally, LLC, would have
`
`defended the case differently had Internaturally, LLC been named. But this argument
`
`actually cuts against them. If, as this line of argument concedes, it is true that there is such
`
`an identity of control and interests between Internaturally, Inc. and Internaturally, LLC,
`
`then Internaturally LLC has been on notice all along that it might be named in this lawsuit.
`
`And, as for prejudice to the individual defendants, this argument asserts merely that they
`
`
`
`17
`
`

`
`Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 18 of 22
`
`would be prejudiced because they had assumed throughout this litigation that an
`
`amendment to name Internaturally, LLC would not be allowed. If this is true, then
`
`certainly they may be prejudiced, but only by their own litigation strategy.
`
`And defendants make no serious contention that the amendment is made in bad faith
`
`– they simply recite the various ways in which Miller could (or should) have learned of this
`
`new party before the beginning of litigation. And, indeed, it appears there was ample
`
`information to allow Miller to discover this other entity before filing suit. But it would be a
`
`much greater injustice to prevent Miller from amending his pleadings than to allow it.
`
`Weighed against these (largely abstract) arguments presented by defendants’ is the possible
`
`result that if Miller is not permitted to amend he may not be able to recover at all on his
`
`possible copyright claim, since it appears that Internaturally, Inc. may have been dissolved
`
`and that Internaturally, LLC actually was the distributor of the allegedly-infringing titles.
`
`Or, he may simply be forced to file a new, separate lawsuit, inevitably causing all the same
`
`harms that defendants warn of, in addition to a great loss of judicial economy.
`
`This conclusion is bolstered by the fact, apparently uncontroverted, that Internaturally,
`
`LLC is, in practice, the same entity as Internaturally, Inc. The same people manage both
`
`entities (i.e. the Loibls) and Internaturally, LLC appears to have been designed to be the
`
`successor entity of Internaturally, Inc. as the Loibls redistributed management
`
`responsibilities amongst themselves.
`
`Therefore, Miller’s motion to amend his complaint is granted.
`
`
`
`18
`
`

`
`Case 1:11-cv-02182-TPG Document 96 Filed 03/13/13 Page 19 of 22
`
`DEFENDANTS’ PROPOSED COUNTERCLAIM FOR COPYRIGHT INFRINGEMENT
`
`Defendants’ proposed addition of a counterclaim for copyright infringement is denied;
`
`it is subject to dismissal because defendants fail to allege which works Miller infringed.
`
`A party’s proposal to amend its pleadings may be denied if the proposed amendment
`
`would not survive a motion to dismiss. Ricciuti v. N.Y.C. Transit Auth., 941 F.2d 119, 123
`
`(2d Cir. 1991). In the case of an action for copyright infringement, this requires that a
`
`plaintiff allege “1) which specific original works are the subject of the copyright claim, 2)
`
`that plaintiff owns the copyrights in those works, 3) that the copyrights have been registered
`
`in accordance with the statute, and 4) by what acts during what time the defendant infringed
`
`the copyright.” Kelly v. L.L. Cool J., 145 F.R.D. 32, 36 (S.D.N.Y. 1992) aff'd sub nom.
`
`Kelly v. L.L. Cool J, 23 F.3d 398 (2d Cir. 1994).1
`
`
`
`Defendants’ proposed amendment founders on the first prong. It simply alleges that
`
`they possess an exclusive license to distribute all Dietrich films (regardless of whether they
`
`are KCN or AWWC films, and regardless of whether they were coauthored by
`
`Litovchenko) and that Miller has distributed and registered the copyrights to some of these
`
`films. Perhaps, given the context of this litigation, defendants intended their counterclaim
`
`to be for Miller’s infringement of defendants’ copyri

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