Young Money Entertainment LLC et al v. Digerati Holdings LLC et al, No. 2:2012cv07663 - Document 41 (C.D. Cal. 2012)
Court Description: ORDER GRANTING IN PART WITHOUT LEAVE TO AMEND AND DENYING IN PART DEFENDANT JOSHUA KRAUSES MOTION TO DISMISS 12 by Judge Otis D Wright, II. (lc) .Modified on 11/15/2012 (lc).
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Young Money Entertainment LLC et al v. Digerati Holdings LLC et al Doc. 41 O 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA 9 10 11 12 13 14 15 16 YOUNG MONEY ENTERTAINMENT, LLC; YOUNG MONEY PUBLISHING, INC; and DWAYNE MICHAEL CARTER, JR., Plaintiffs, v. Case No. 2:12-cv-07663-ODW(JCx) ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT JOSHUA KRAUSE’S MOTION TO DISMISS [12] DIGERATI HOLDINGS, LLC; QD3 ENTERTAINMENT, INC.; QUINCY DELIGHT JONES III; JOSHUA A. KRAUSE; JARED FREEDMAN; and DOES 1–10, inclusive, Defendants. 17 18 I. INTRODUCTION 19 Young Money Entertainment LLC; Young Money Publishing, Inc.; and 20 Dwayne Michael Carter, Jr. (commonly known by his stage name, Lil Wayne) 21 (collectively “Young Money”) bring suit for (1) copyright infringement; 22 (2) contributory copyright infringement; (3) unfair competition; and (4) accounting. 23 Defendant Joshua A. Krause moves to dismiss the claims under Federal Rule of Civil 24 Procedure 12(b)(1) and 12(b)(6), or in the alternative to strike under 12(f). Having 25 carefully considered the papers filed in support of and in opposition to the instant 26 Motion, the Court deems the matter appropriate for decision without oral argument. 27 Fed. R. Civ. P. 78; Local R. 7-15. For the reasons discussed below, Krause’s motion 28 is GRANTED in part and DENIED in part. Dockets.Justia.com II. 1 FACTUAL BACKGROUND In 2007, Defendants (including Krause) began working on a documentary film 2 3 about Carter’s stage persona as Lil Wayne titled The Carter, which was ultimately 4 released in 2009. (FAC ¶ 14.) During the production process, Defendants decided to 5 use several copyrighted works from Carter’s album Tha Carter III in the film. (FAC 6 ¶ 15.) Young Money alleges that Defendants never obtained authorization to use the 7 following Tha Carter III works in the film: (1) “Mr. Carter”; (2) “La La”; 8 (3) “Stuntin’ Like My Daddy”; (4) “Lollipop”; (5) “Let the Beat Build”; (6) “Pussy 9 Monster”; (7) “A Milli”; and (8) “Dontgetit.” (FAC ¶¶ 16–17.) Young Money alleges that Defendants began distributing the film in late 2010 10 11 and continue to do so today. (FAC ¶ 18.) Defendants utilized numerous national and 12 international commercial channels to distribute The Carter, including iTunes and 13 Amazon. (Id.) Young Money further alleges the film was shown in numerous 14 locations, including in Venice, California, in the spring of 2012. (Id.) Young Money contends that while Defendants were allegedly informed that 15 16 including music from Tha Carter III was not authorized, Defendants facilitated, 17 approved, organized, and ensured infringing use of the works anyway. (FAC ¶¶ 24– 18 25.) Krause helped to market, distribute, produce, and screen the film. (FAC ¶ 26.) 19 On March 29, 2009, Young Money Entertainment and Carter filed suit in Los 20 Angeles Superior Court against Digerati Holdings, LLC; QD3 Entertainment, Inc.; 21 and Quincy Delight Jones III for breach of contract and other claims related to the 22 release and distribution of The Carter. (RJN Ex. A (the “State Complaint”).) At issue 23 in this action was an agreement Digerati entered into with Carter and Young Money, 24 whereby (among other things) Carter would provide various services, photos, and 25 videos for use in connection with The Carter. (Id. ¶ 18.) Under this agreement, 26 Carter held the right to object to and give final approval for any content or scenes that 27 depicted activities that are criminal in nature. (Id. ¶ 21.) 28 /// 2 The State Complaint alleged that before the film was released, Carter exercised 1 2 his right under the agreement to object to selected content that portrayed him in a 3 negative light. (Id. ¶¶ 23–24.) The complaint also set forth specific dates and 4 locations where the film was shown in early 2009 without Carter’s final approval. (Id. 5 ¶ 27.) Judgment on a jury verdict in Defendants’ favor was entered in this action on 6 November 8, 2012. On April 28, 2010, Lavell Crump, Darius Harrison, and the Royalty Network 7 8 sued QD3 Entertainment and Virgil Films and Entertainment, LLC in the Southern 9 District of New York for using three of the copyrighted musical compositions in Tha 10 Carter III at issue here: “Pussy Monster,” “La La,” and “Lollipop.” (RJN Ex. B.) On 11 February 8, 2011, the District Court for the Southern District of New York held on 12 summary judgment that Carter (not a party to the action, but nevertheless a co-owner 13 of the copyrighted works), had granted the Crump defendants a valid, non-exclusive 14 license to use the musical compositions in the film, and thus the co-owner plaintiffs in 15 the action were barred from suing for infringement. Crump v. QD3 Entm’t, Inc., No. 16 10 civ. 3564, 2011 WL 446296, at *5 (S.D.N.Y. Feb 8., 2011). On September 6, 2012, Young Money and Carter filed a copyright-infringement 17 18 action before this Court against Digerati Holdings, QD3 Entertainment, Quincy 19 Delight Jones III, Joshua A. Krause, and Jared Freedman. (ECF No. 1.) On 20 October 16, Carter filed a First Amended Complaint, adding Young Money 21 Publishing, Inc., as a party. (ECF No. 27.) Krause now moves to dismiss the First 22 Amended Complaint.1 23 /// 24 /// 25 26 27 28 1 Krause originally moved to dismiss the original Complaint on October 3, 2012. (ECF No. 12.) Young Money filed the First Amended Complaint as a matter of course under Rule 15(a)(1)(B) on October 16, 2012. (ECF No. 27.) Because the FAC only adds a Plaintiff without changing any of the factual contentions contained in the Complaint, the Court construes Krause’s Motion as moving to dismiss the FAC. 3 1 2 III. LEGAL STANDARD Dismissal under Rule 12(b)(6) can be based on “the lack of a cognizable legal 3 theory” or “the absence of sufficient facts alleged under a cognizable legal theory.” 4 Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). A complaint 5 need only satisfy the minimal notice pleading requirements of Rule 8(a)(2)—a short 6 and plain statement—to survive a motion to dismiss for failure to state a claim under 7 Rule 12(b)(6). Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003); Fed. R. Civ. P. 8 8(a)(2). For a complaint to sufficiently state a claim, its “[f]actual allegations must be 9 enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. 10 Twombly, 550 U.S. 544, 555 (2007). While specific facts are not necessary so long as 11 the complaint gives the defendant fair notice of the claim and the grounds upon which 12 the claim rests, a complaint must nevertheless “contain sufficient factual matter, 13 accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. 14 Iqbal, 556 U.S. 662, 678 (2009). 15 Iqbal’s plausibility standard “asks for more than a sheer possibility that a 16 defendant has acted unlawfully,” but does not go so far as to impose a “probability 17 requirement.” Id. Rule 8 demands more than a complaint that is merely consistent 18 with a defendant’s liability—labels and conclusions, or formulaic recitals of the 19 elements of a cause of action do not suffice. Id. Instead, the complaint must allege 20 sufficient underlying facts to provide fair notice and enable the defendant to defend 21 itself effectively. Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The 22 determination whether a complaint satisfies the plausibility standard is a “context- 23 specific task that requires the reviewing court to draw on its judicial experience and 24 common sense.” Iqbal, 566 U.S. at 679. 25 When considering a Rule 12(b)(6) motion, a court is generally limited to the 26 pleadings and must construe “[a]ll factual allegations set forth in the complaint . . . as 27 true and . . . in the light most favorable to [the plaintiff].” Lee v. City of L.A., 250 28 F.3d 668, 688 (9th Cir. 2001). Conclusory allegations, unwarranted deductions of 4 1 fact, and unreasonable inferences need not be blindly accepted as true by the court. 2 Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Yet, a 3 complaint should be dismissed only if “it appears beyond doubt that the plaintiff can 4 prove no set of facts” supporting plaintiff’s claim for relief. Morley v. Walker, 175 5 F.3d 756, 759 (9th Cir. 1999). As a general rule, leave to amend a complaint that has been dismissed should be 6 7 freely granted. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when 8 “the court determines that the allegation of other facts consistent with the challenged 9 pleading could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well 10 Furniture Co., 806 F.2d 1393, 1401 (9th Cir.1986); see Lopez v. Smith, 203 F.3d 11 1122, 1127 (9th Cir. 2000). IV. 12 DISCUSSION Krause moves to dismiss Young Money’s First Amended Complaint on 13 14 grounds that (1) Young Money’s claims are barred by issue and claim preclusion; 15 (2) the statute of limitations have expired on Young Money’s copyright claims; and 16 (3) Young Money’s claim for violation of California’s Unfair Competition Law 17 (“UCL”) and request for an accounting are preempted by the Copyright Act. Because 18 the determination of whether certain documents are judicially noticeable—a point the 19 parties hotly contest—factors into the Court’s disposition on the motion to dismiss, 20 the Court first considers whether documents presented by Krause in his request are 21 proper for judicial notice. Following that discussion, the Court evaluates the merits of 22 Krause’s motion to dismiss Young Money’s four claims. 23 A. Krause’s Request for Judicial Notice Young Money opposes Krause’s request that the Court take judicial notice of 24 25 four items: (1) the State Complaint filed in Los Angeles Superior Court; (2) the 26 complaint filed in the Crump litigation in the Southern District of New York; (3) the 27 Declaration of Quincy Delight Jones III (“Jones Declaration”) filed in the Crump 28 /// 5 1 litigation; and (4) the summary-judgment order issued in Crump. (ECF No. 24 at 4– 2 6.) 3 As a general rule, a district court may not consider any material beyond the 4 pleadings when ruling on a Rule 12(b)(6) motion. Lee v. City of Los Angeles, 250 5 F.3d 668, 688 (9th Cir. 2001). There are two exceptions to this well-established 6 doctrine: (1) material that is properly submitted as part of the complaint; and 7 (2) matters of public record, of which the Court may take judicial notice under Federal 8 Rule of Evidence 201. Id. at 688–89. Documents not physically attached to the 9 complaint may be considered if their authenticity is uncontested and the plaintiff’s 10 11 complaint necessarily relies on them. Id. at 688. Under Rule 201, a court may judicially notice a fact that is “not subject to 12 reasonable dispute in that it is either (1) generally known within the territorial 13 jurisdiction of the trial court or (2) capable of accurate and ready determination by 14 resort to sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 15 201(b). Judicial notice of a filing before another court is limited to recognition that 16 the filing exists—the very fact of the filing—which is not subject to a reasonable 17 dispute. Lee, 250 F.3d at 690. But the disputed facts contained within the filing and 18 the factual determinations by a judge in another case “ordinarily are not admissible for 19 their truth in another case through judicial notice.” Wyatt v. Terhune, 315 F.3d 1108, 20 1114 n.5 (9th Cir. 2003); Lee, 250 F.3d at 690. 21 Krause seeks judicial notice of the Sate Complaint to establish the dates on 22 which The Carter was publicly exhibited in early January 2009. Young Money 23 contests Krause’s request insofar as it seeks judicial notice of the State Complaint for 24 the truth of the factual allegations asserted therein. (ECF No. 24 at 4–5.) While 25 Young Money’s objections border on absurd in light of the fact that the parties and 26 general subject matter of the State Complaint (which was filed by the exact same 27 plaintiffs in this action) are identical to those in this action, the Court nevertheless 28 may not judicially notice the facts contained within the State Complaint. Lee, 250 6 1 F.3d at 690; Wyatt, 315 F.3d at 1114 n.5. The Court therefore declines to judicially 2 notice the State Complaint beyond its mere existence. Young Money also challenges Krause’s request that the Court take judicial 3 4 notice of the Crump complaint to establish that Crump and Harrison (two of the 5 plaintiffs in Crump) are joint authors of some of the works at issue here. (ECF No. 24 6 at 4–5.) For the reasons discussed above, Young Money’s objections are well- 7 founded.2 The Court therefore takes judicial notice of the existence of the Crump 8 complaint, but does not take notice of the allegations it contains. Young Money argues next that the Jones Declaration and its attachments are 9 10 not the proper subject of judicial notice. (ECF No. 24 at 5–6.) Krause seeks judicial 11 notice of the Jones Declaration and its attachments for their discussion of the 12 agreement between Carter and QD3 Entertainment governing the The Carter. (See 13 Mot. 5.) The Court may not take judicial notice of a fact that is subject to reasonable 14 dispute simply because it is filed as a public record or contained within another 15 document that is the proper subject of judicial notice. Lauter, 642 F. Supp. 2d at 16 1077. The Court therefore recognizes the existence of the Jones Declaration and 17 attachments, but does not consider any of the facts therein because they are subject to 18 reasonable dispute. See id.; (ECF No. 24 at 5–6 (disputing facts contained with the 19 Jones Declaration and noting they contradict allegations made in the Complaint).) 20 Further, the Court cannot judicially notice the agreement because the document is not 21 a public record. Therefore, the Court judicially notices that the Jones Declaration and 22 its attachments were filed in Crump, but does not take notice of their contents. Finally, Young Money argues the Southern District of New York’s summary- 23 24 25 26 27 28 judgment order in Crump is not the proper subject of judicial notice. But the Ninth 2 But the Court again notes the petty nature of Young Money’s objection on this point, as the Certificates of Registration establishing authorship in the works are also before the Court. These documents are public records and not subject to a reasonable dispute as to their authenticity. Because Young Money does not contest judicial notice of the certificates, the Court takes notice of these documents. (RJN Ex. E–L); see Gilbrook v. City of Westminster, 177 F.3d 839, 858 (9th Cir. 1999). 7 1 Circuit recognizes the need for courts to judicially notice prior judgments of other 2 courts to determine whether collateral estoppel applies. Holder v. Holder, 305 F.3d 3 854, 866 (9th Cir. 2002). The Court finds it appropriate to extend this reasoning to 4 claim preclusion, as well. Therefore, the Court must necessarily consider the 5 substance of the Crump summary-judgment order insofar as it bears upon Krause’s 6 issue- and claim-preclusion arguments. 7 In sum, the Court takes judicial notice of the existence of the State Complaint, 8 the Crump complaint, and the Jones Declaration, but not the allegations therein. The 9 Court declines to judicially notice any of the attachments to the Jones Declaration. 10 The Court does, however, take judicial notice of the Certificates of Registration and 11 the summary-judgment order in Crump for the limited purpose of evaluating whether 12 issue and claim preclusion apply to this suit. 13 B. Collateral Estoppel On the merits, Krause first contends that Young Money improperly seeks to re- 14 15 litigate claims that were already decided by the Southern District of New York in 16 Crump and are therefore barred by the doctrines of collateral estoppel (issue 17 preclusion) and res judicata (claim preclusion). Collateral estoppel precludes the retrying of an issue previously determined by 18 19 a “valid and final judgment.” Ashe v. Swenson, 397 U.S. 436, 443 (1970). The 20 doctrine of collateral estoppel both “protect[s] litigants from the burden of relitigating 21 an identical issue with the same party or his privy and promot[es] judicial economy.” 22 Parklane Hosiery Co. v. Shore, 439 U.S. 332, 326 (1979). When applying collateral estoppel to cases arising under California or federal 23 24 law,3 courts must find that (1) the issue decided in the previous proceeding is identical 25 26 27 28 3 “For judgments in federal-question cases . . . federal courts participate in developing uniform federal rules of res judicata . . . .” Taylor v. Sturgell, 553 U.S. 880, 891 (2008) (internal quotation marks and alterations omitted). In contrast, “[f]or judgments in diversity cases, federal law incorporates the rules of preclusion applied by the State in which the rendering court sits.” Id. n.4. The standard for collateral estoppel that the Court sets out here applies with equal force to federal- 8 1 to the current issue; (2) there was final judgment on the merits in the first proceeding; 2 and (3) the party seeking to relitigate the issue was a party or privy to the first 3 proceeding. Hydranautics v. FilmTec Corp., 204 F.3d 880, 885 (9th Cir. 2000) 4 (quoting Younan v. Caruso, 51 Cal. App. 4th 401, 406–07 (1996)). When a party 5 asserts preclusion, it bears the burden of demonstrating “with clarity and certainty” the 6 issue was decided by the prior judgment. Offshore Sportswear, Inc. v. Vuarnet Int’l, 7 B.V., 114 F.3d 848, 850 (9th Cir. 1997). 8 Generally, a non-party to a suit “has not had a full and fair opportunity to 9 litigate the claims and issues” decided in a prior suit. Taylor v. Sturgell, 553 U.S. 880, 10 892 (2008) (internal quotation marks omitted). Well-established traditions support the 11 notion that “everyone should have his own day in court.” Roberts v. Jefferson Cnty., 12 517 U.S. 793, 798 (1996). But this rule is subject to exceptions through which a non- 13 party to a prior action may nevertheless be precluded from asserting an identical issue 14 previously determined by a final valid judgment on the merits. Taylor, 553 U.S. at 15 893. 16 The Supreme Court recognizes six scenarios where nonparty preclusion is 17 acceptable: (1) a nonparty agrees to be bound by the determination of issues in another 18 proceeding; (2) a substantive legal relationship exists, binding the parties (traditional 19 privity); (3) adequate representation by a party to the suit holding the same interests as 20 a nonparty; (4) a nonparty assumes control of the litigation in which that judgment 21 was rendered; (5) a nonparty to previous litigation brings suit as “the designated 22 representative” of a party to the prior action; or (6) a special statutory scheme 23 “expressly foreclos[es] successive litigation by nonlitigants.” Taylor, 553 U.S. at 24 893–95. 25 Here, Krause argues that Carter is collaterally estopped by the Crump decision 26 from asserting his claims in this action because a substantive legal relationship exists 27 28 question cases and diversity-of-citizenship cases where the Court must apply California law. See Hydranautics v. FilmTec Corp., 204 F.3d 880, 885 (9th Cir. 2000). 9 1 to bind the parties (traditional privity) and because Carter was adequately represented 2 in the prior suit. In their Opposition, Plaintiffs challenge only the third prong of the 3 collateral-estoppel test—that Carter is in privity with the Crump plaintiffs. (Opp’n 3.) 4 Thus, the Court assumes without deciding that the first two prongs of issue 5 preclusion—identity of issues and a final judgment on the merits—have been 6 established and examines only whether Krause has established that Carter is in privity 7 with the Crump plaintiffs through one of the six categories above. 8 1. 9 Krause first argues privity is created by the substantive legal relationship 10 between the Crump plaintiffs and Carter because they are co-owners to a copyrighted 11 work. Traditionally, privity “[arises] from a limited number of legal relationships in 12 which two parties have identical or transferred rights” including “co-owners . . . of 13 property.” Headwaters Inc. v. U.S. Forest Serv., 399 F.3d 1047, 1053 (2005). When 14 a work is the product of joint authorship, each co-author automatically holds an 15 undivided interest in the whole. Pye v. Mitchell, 574 F.2d 476, 480 (9th Cir. 1978); 16 17 U.S.C. § 201(a) (“The authors of a joint work are coowners of copyright in the 17 work.”). 18 Privity between co-owners to a copyrighted work In order to properly apply collateral estoppel to bar this action, the Court must 19 find that co-owners of a copyright are in privity. Krause asks the Court to create a 20 new legal principle to do so, that is, to find privity between co-authors of a 21 copyrighted work. Whether co-owners of a copyright can be held in privity for 22 purposes of collateral estoppel and res judicata is thus a matter of first impression for 23 this Court. 24 Co-owners in copyright cannot be liable to each other for infringement, and 25 each co-owner holds an independent right to use or license the work, subject only to 26 accounting by co-owners. Oddo v. Ries, 743 F.2d 630, 632–33 (9th Cir. 1984). Thus, 27 co-owners in copyright are generally considered similar to tenants in common. Cmty. 28 for Creative Non-Violence v. Reid, 846 F.2d 1485, 1498 (D.C. Cir. 1988). But 10 1 typically a tenancy in common does not create privity sufficient to make a judgment 2 “for or against one operate as an estoppel for or against others.” 40A Cal. Jur. 3d 3 Judgments § 231 (2006). Co-owners in copyright have a duty to account to one another for profits 4 5 derived from the use of that copyright. Zuill v. Shanahan, 80 F.3d 1366, 1369 (9th 6 Cir. 1996). If one tenant in common licenses the copyright to a third party, the other 7 tenant in common can seek the profits from the licensor. Id. Krause contends that 8 because co-owners can seek the profits of a suit in an action for accounting, if they 9 lose, another co-owner is barred from bringing suit. (ECF No. 33 at 4–5.) The Court 10 rejects this argument. 11 In Davis v. Blige, the Second Circuit considered whether a co-owner of a 12 copyright could retroactively convey his copyright interest to a third party as a means 13 to defeat a claim of copyright infringement against that third party by another co- 14 owner. 505 F.3d 90, 97–98, 101 (2d Cir. 2007). The court explained that the right to 15 prosecute an accrued cause of action for infringement is a right bestowed by copyright 16 ownership. Id. at 99. A co-owner can exercise this right independently of other co- 17 owners and is not required to join the co-owners as parties. Id. (citing 17 U.S.C. 18 § 501(b)). Drawing on general principles of property law, the Second Circuit further 19 noted that a co-owner in copyright may not transfer “more than he owns,” id., and thus 20 found that “a co-owner who purports to convey not only his right to prosecute past 21 infringements violates the basic rule that an owner cannot convey more than he 22 owns.” Id. at 103. And the same is true in the context of settlements: a settlement 23 agreement “can only waive or extinguish claims held by a settling owner; it can have 24 no effect on co-owners who are not parties to the settlement agreement. Id. at 102. 25 The court therefore concluded that by retroactively transferring ownership interest, the 26 transferring co-owner was taking away the accrued interest of another, thereby 27 transferring more than he had. Id. at 97–98. 28 /// 11 1 The Court finds the reasoning in Davis persuasive and applicable here by 2 analogy. Here, at least one co-owner of a copyrighted work, Darius Harrison, sued a 3 purported infringer in Federal District Court in New York. (RJN Ex. D.) The suit 4 concerned whether Digerati Holdings and others committed copyright infringement by 5 including works in The Carter co-authored by the plaintiffs. (RJN Ex. D.) In its 6 decision, the New York court evaluated an agreement between Carter and the 7 defendants and determined that the agreement granted a non-exclusive license to use 8 the works in the film. Krause contends that the New York suit acts to collaterally 9 estop Carter in the current action. 10 But as the court in Davis reasoned, a co-owner in copyright may not transfer 11 away more rights than he holds or enter into a settlement that binds other owners. 505 12 F.3d at 99, 102. Applying collateral estoppel here would effectively allow one co- 13 owner to rob another co-owner’s own right to sue for an accrued cause of action by 14 being the first to the courthouse steps. The Court therefore finds it improper to 15 conclude the co-owners in the copyrighted works at issue here had a substantive legal 16 relationship creating traditional privity for purposes of collateral estoppel. As a result, 17 the Court DENIES Krause’s motion to dismiss for collateral estoppel insofar as it 18 relies on traditional privity to establish nonparty preclusion. 19 2. Adequate representation and privity 20 Krause argues next that nonparty preclusion is proper because Carter was 21 adequately represented in the prior action. (Mot. 10–12.) The Supreme Court has 22 narrowly defined what adequate representation means in the context of nonparty 23 preclusion and privity. See Taylor, 553 U.S. at 894. Specifically, the Supreme Court 24 has noted that a preclusive effect on the basis of adequate representation can be 25 established through “properly conducted class actions and suits brought by trustees, 26 guardians, and other fiduciaries.” Id. (citations omitted). The current action does not 27 fall into either grouping, as Carter was not represented in a prior class action, nor did 28 the Crump plaintiffs act as trustees guardians or other fiduciaries by virtue of the co- 12 1 ownership right in the copyrighted works. And while the Supreme Court’s list of 2 adequate-representation scenarios in Tyler was non-exclusive, the Court finds that this 3 particular action does not qualify as the type properly included in such a narrowly 4 defined class of cases, as there were no special procedural or legal safeguards in the 5 Crump action to ensure adequate representation (such as those provided by Federal 6 Rule of Civil Procedure 23 or by fiduciary duties). Therefore, the Court DENIES 7 Krause’s motion to dismiss for collateral estoppel insofar as it relies on adequate 8 representation to establish nonparty preclusion. While the copyright-infringement issue may have been litigated and determined 9 10 by a final judgment, the Court does not find privity existed between the co-owners of 11 the copyrighted works. Accordingly, the Court DENIES Krause’s motion to dismiss 12 on collateral-estoppel grounds. 13 C. Res Judicata Res judicata prevents relitigation of the same cause of action between the same 14 15 parties or their privies. Headwaters Inc., 399 F.3d at 1051–52. It is undisputed that 16 the parties in this suit are not the same as the parties in the Crump litigation. See RJN 17 Ex. D; cf. FAC at 1. For the reasons discussed above, the parties are not in privity. 18 Therefore, res judicata does not apply to bar the action. The Court therefore DENIES 19 Krause’s motion to dismiss under the doctrine of res judicata. 20 D. 21 Statute of Limitations Krause contends next that this action is barred by a three-year statute of 22 limitations. Krause directs the Court’s attention to Roley v. New World Pictures, Ltd., 23 19 F.3d 479 (9th Cir. 1994). In Roley, the Ninth Circuit found that “in a case of 24 continuing copyright infringements, an action may be brought for all acts that accrued 25 within the three years preceding the filing of the suit.” Id. at 481. Because the First 26 Amended Complaint alleges ongoing or “continuing” violations, the suit is not barred 27 entirely by the statute of limitations. Nevertheless, Plaintiffs’ recovery will be strictly 28 limited to the harm they have suffered as the result of Defendant’s wrongful activity 13 1 after September 6, 2009 (three years prior to the date this action was filed). 2 Accordingly, Krause’s motion to dismiss on statute of limitations groundsis DENIED. 3 E. Preemption 4 Finally, Krause argues Young Money’s claims for violation of California 5 Business and Professions Code section 17200 and for an accounting are preempted by 6 federal copyright law. (Mot.18–19.) “Preemption analysis involves determining 7 whether the state law claim contains an element not shared by the federal law.” 8 Summit Mach. Tool Mfg. Corp. v. Victor CNC Sys., Inc., 7 F.3d 1434, 1439–40 (9th 9 Cir. 1993). State-law claims are preempted by the Copyright Act if: (1) the rights 10 protected under state law are equivalent to those under the Copyright Act; and (2) the 11 work is the proper subject of the Copyright Act under 17 U.S.C. §§ 102, 103. 12 Kodadek v. MTV Networks, Inc., 152 F.3d 1209, 1212 (9th Cir. 1998). 13 In Kodadek, the Ninth Circuit considered whether section 17200 claims were 14 preempted by the Copyright Act. 152 F.3d at 1212–13. The court looked to the 15 plaintiff’s complaint to determine which rights the plaintiff sought to enforce through 16 state law and noted that the pertinent paragraphs describing defendants’ alleged unfair 17 competition incorporated by reference the paragraphs describing the plaintiff’s 18 copyright-infringement claim. Id. The Ninth Circuit therefore held that the section 19 17200 claims were preempted by the Copyright Act because the plaintiff “expressly 20 base[d] his unfair competition claim on [equivalent] rights granted by the Copyright 21 Act” Id. 22 Because the musical compositions at issue here fall within the purview of the 23 Copyright Act, the second preemption element (that the works are subject to the 24 Copyright Act) is satisfied. See 17 U.S.C. § 102(a)(2), (7). With respect to the first 25 element of preemption, Plaintiffs include no new or different allegations in their 26 unfair-competition claim that they do not include in their copyright-infringement 27 claim. Instead, the First Amended Complaint simply incorporates by reference the 28 paragraphs describing copyright infringement as the basis for his section 17200 claim. 14 1 (Compl. ¶¶ 27–29.) Accordingly, under the reasoning in Kodadek, this Court finds 2 Young Money’s unfair-competition claims are preempted because the First Amended 3 Complaint expressly bases the claims on equivalent rights granted by the Copyright 4 Act. Moreover, while the elements of a section 17200 claim and a copyright claim do 5 not precisely overlap, the Court discerns no qualitative difference between the 6 remedies afforded by Young Money’s UCL claim and its copyright claim. See 7 Penpower Tech. Ltd. v. S.P.C. Tech., 627 F. Supp 2d 1083, 1091–92 (N.D. Cal. 2008). 8 The Court therefore finds that any attempt to amend the UCL claim to avoid 9 preemption would be futile and declines to grant leave to amend. Schreiber, 806 F.2d 10 at 1401. For similar reasons, Young Money’s claim for accounting is also preempted. 11 12 Young Money contends an accounting is necessary because “[t]he amount of money 13 due to Plaintiffs from Defendants is unknown to Plaintiffs, and cannot be ascertained 14 without an accounting from Defendants.” (FAC ¶ 32.) But the Copyright Act already 15 affords Young Money an adequate means by which to calculate damages in this 16 action. See 17 U.S.C. § 504. Thus, Court likewise finds Young Money’s accounting 17 claim preempted by the Copyright Act. The Court therefore GRANTS Krause’s motion to dismiss insofar as it relates 18 19 to the state law claims for unfair competition and accounting WITHOUT LEAVE 20 TO AMEND. 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 15 V. 1 CONCLUSION For the reasons discussed above, the Court GRANTS in part and DENIES in 2 3 part Krause’s Motion to Dismiss. (ECF No. 12.) Specifically, the Court concludes 4 that Young Money’s claims are not barred by res judicata, collateral estoppel, or the 5 statute of limitations. However, the Court also holds that Young Money’s state-law 6 claims for violation of the UCL and for an accounting are preempted by the Copyright 7 Act. 8 9 10 IT IS SO ORDERED. November 15, 2012 11 12 13 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 16
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