American Shooting Center, Inc. v. Secfor International et al, No. 3:2013cv01847 - Document 113 (S.D. Cal. 2016)
Court Description: ORDER Granting 105 Motion to Dismiss. Kurokawa's motion to dismiss is Granted. Plaintiffs' claim for retroactive monetary relief (including the claims for declaratory relief, constructive trust, accounting, and disgorgement) against Kurokawa is Dismissed with prejudice. Signed by Judge Barry Ted Moskowitz on 7/22/2016. (rlu)
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 13 AMERICAN SHOOTING CENTER, INC., a California Corporation, RECCE GROUP, INC., a California corporation, 14 Plaintiffs, 12 15 Case No.: 13cv1847 BTM(JMA) ORDER GRANTING MOTION TO DISMISS v. 16 SECFOR INTERNATIONAL, et al., 17 Defendants. 18 19 Defendant Linda Kurokawa (“Defendant” or “Kurokawa”), in her official 20 capacity as Director of Community Services & Business Development for 21 MiraCosta College, has filed a motion pursuant to Fed. R. Civ. P. 12(b)(1) and 22 12(b)(6) to dismiss the Second Amended Complaint’s claims against her for 23 retroactive monetary relief for copyright infringement. For the reasons discussed 24 below, Defendant’s motion is GRANTED. 25 26 I. BACKGROUND 27 This case involves claims by Plaintiffs American Shooting Center, Inc., and 28 Reece Group that two former employees and their companies infringed Plaintiffs’ 1 13cv1847 BTM(JMA) 1 copyrights by using certain materials in connection with training courses offered at 2 MiraCosta College. 3 In an order filed on March 28, 2016 [Doc. 101], the Court dismissed with 4 prejudice Plaintiffs’ claims against MiraCosta Community College District 5 (“District”) on the ground that the District is immune from suit under the Eleventh 6 Amendment. The Court also dismissed Plaintiffs’ claims for retroactive monetary 7 relief against Kurokawa because the District’s Eleventh Amendment immunity 8 extends to her as to those claims. However, the Court denied the motion to dismiss 9 as to Plaintiffs’ claims for prospective declaratory or injunctive relief. 10 On April 27, 2016, Plaintiffs filed a Second Amended Complaint (“SAC”). In 11 the SAC, Plaintiffs allege that Kurokawa deprived Plaintiffs of their constitutionally 12 protected property interests by wrongfully infringing Plaintiffs’ copyrights and failing 13 to provide Plaintiffs with notice or an opportunity to be heard before or after such 14 deprivation. 15 Clarification Act (“CRCA”), 17 U.S.C. § 511, strips Kurokawa of any immunity 16 under the Eleventh Amendment. (Id.) (SAC ¶ 62.) According to Plaintiffs, the Copyright Remedies 17 Plaintiffs seek the following relief against Kurokawa: (1) a declaration that 18 Kurokawa deprived Plaintiffs of their constitutionally protected property interests in 19 the copyrighted works at issue; (2) imposition of a constructive trust on all gains, 20 profits and advantages MiraCosta College derived from Kurokawa’s infringing 21 activity; (3) an accounting of all gains, profits, and advantages MiraCosta College 22 derived from Kurokawa’s infringement of the copyrighted works; (4) disgorgement 23 of all gains, profits, and advantages derived from Kurokawa’s infringement of the 24 copyrighted works; and (5) attorney’s fees and costs. (SAC ¶¶ 64, 65, Prayer for 25 Relief.) 26 // 27 // 28 // 2 13cv1847 BTM(JMA) 1 II. DISCUSSION 2 Plaintiffs contend that their claim for retroactive monetary relief is not barred 3 by the Eleventh Amendment because (1) the claim is an equitable claim for 4 disgorgement of ill-gotten gains; and (2) the CRCA abrogates any Eleventh 5 Amendment immunity applicable to Kurokawa. The Court does not find these 6 arguments to be persuasive. 7 8 A. Retroactive Monetary Relief against Immune State Agency 9 In the Court’s prior order, the Court dismissed with prejudice Plaintiffs’ claims 10 against the MiraCosta Defendants, with the sole exception of Plaintiffs’ claim 11 against Kurokawa, in her official capacity, for prospective injunctive relief. Yet in 12 the SAC, Plaintiffs seek retroactive monetary relief against Kurokawa in the form 13 of disgorgement of all gains and profits derived from use of the copyrighted 14 materials. 15 Plaintiffs attempt to justify their claim for retroactive monetary relief by 16 characterizing the relief as an “equitable” remedy. Plaintiffs argue that they do not 17 seek money damages but, rather, equitable recovery of ill-gotten profits the District 18 derived from Kurokawa’s infringement of Plaintiffs’ copyrights. 19 But Plaintiffs cannot avoid Eleventh Amendment immunity by dressing up 20 their claim for relief as an equitable remedy. In Edelman v. Jordan, 415 U.S. 651 21 (1974), the Supreme Court held that the Eleventh Amendment barred the recovery 22 of “equitable restitution” in the form of the retroactive release and payment of 23 AABD (Aid to the Aged, Blind, and Disabled) benefits wrongfully withheld by the 24 State of Illinois. The Supreme Court explained that the funds to satisfy such an 25 award would inevitably be paid from the general revenues of the State of Illinois, 26 not the pocket of the petitioner Edelman, and that such relief would run afoul of the 27 Eleventh Amendment. Id. at 665. Responding to the argument that the award was 28 in the form of “equitable restitution,” the Supreme Court stated: 3 13cv1847 BTM(JMA) 1 2 3 4 We do not read Ex parte Young or subsequent holdings of this Court to indicate that any form of relief may be awarded against a state officer, no matter how closely it may in practice resemble a money judgment payable out of the state treasury, so long as the relief may be labeled ‘equitable’ in nature. The Court's opinion in Ex parte Young hewed to no such line. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Id. at 666. Relying on the cases of Taylor v.Westly, 402 F.3d 924, 929-930 (9th Cir. 2005) and Suever v. Connell, 439 F.3d 1142, 1146-47 (9th Cir. 2006), Plaintiffs argue that they are not seeking monetary relief, but, rather, are just seeking the recovery of ill-gotten gains that are being held in constructive trust for Plaintiffs. But Taylor and Suever are distinguishable. As explained by the Ninth Circuit, those cases concerned the return of the plaintiffs’ own property that was being held in the California state escheat fund pursuant to a unique statutory regime that required the state Controller to “safeguard and conserve” unclaimed property in a trust fund. North East Med. Serv. v. California Dept. of Health Care Services, 712 F.3d 461, 469 (9th Cir. 2013). Here, as in North East Med. Serv., Plaintiffs “do not seek the return of their own property seized pursuant to a unique statutory scheme.” Id. at 470. This case is more akin to Ford Motor Co. v. Dept. of Treasury, 323 U.S. 459 (1945), where a taxpayer sought a refund of paid taxes, arguing that the taxes had been imposed in violation of the United States Constitution. The Supreme Court determined that the petitioner’s claim for a “refund” was, “in essence one for the recovery of money from the state,” meaning that the state was entitled to invoke its sovereign immunity from suit. Id. at 464. Whether Plaintiffs’ disgorgement claim is “equitable,” or not, it seeks a monetary award that will be paid from state funds, not Kurokawa personally. Therefore, the state is the real party in interest, and Plaintiffs’ claim for retroactive monetary relief is barred by the Eleventh Amendment. 4 13cv1847 BTM(JMA) 1 2 3 B. CRCA Plaintiffs contend that the CRCA abrogates the state’s sovereign immunity in this case. The Court disagrees. 4 Pursuant to the CRCA, the Copyright Act was modified to provide: 5 Any State, any instrumentality of a State, and any officer or employee of a State or instrumentality of a State . . . shall not be immune, under the Eleventh Amendment . . . from suit in Federal Court . . . for a violation of any of the exclusive rights of a copyright owner . . . . 6 7 8 9 17 U.S.C.A. § 511(a) (1994). Since passage of the CRCA, courts have held that Congress did not have 10 the authority to abrogate the states’ Eleventh Amendment immunity pursuant to 11 Article I of the Constitution. See Rodriguez v. Texas Comm’n on the Arts, 199 F.3d 12 13 14 15 16 279, 280-81 (5th Cir. 2000); see also Florida Prepaid Postsecondary Ed. Expense Bd. v. College Sav. Bank, 527 U.S. 627, 636 (1999) (explaining that Patent Remedy Act, which contained language substantially similar to that in the CRCA, could not be sustained under either the Commerce Clause or the Patent Clause in Article I). Courts have also uniformly held that the CRCA was not a valid exercise 17 of Congress’s power under § 5 of the Fourteenth Amendment1 because the CRCA 18 failed to meet the “congruence and proportionality” test established by City of 19 20 21 22 23 24 25 Boerne v. Flores, 521 U.S. 507, 639 (1997). See, e.g., Chavez v. Arte Publico Press, 204 F.3d 601, 605-07 (5th Cir. 2000) (“Since the record does not indicate that Congress was responding to the kind of massive constitutional violations that have prompted proper remedial legislation, that it considered the adequacy of state remedies that might have provided the required due process of law, or that it sought to limit the coverage to arguably constitutional violations, we conclude that the CRCA is . . . an improper exercise of Congressional legislative power.”); 26 27 28 Section 5 provides, “The Congress shall have the power to enforce, by appropriate legislation, the provisions of this article.” 1 5 13cv1847 BTM(JMA) 1 Marketing Info. Masters, Inc. v. Board of Trustees, 552 F. Supp. 2d 1088, 1093-95 2 (S.D. Cal. 2008); Oracle America, Inc. v. Oregon Health Ins. Exch. Corp., 80 F. 3 Supp. 3d 1168, 1172 (D. Or. 2015). 4 Plaintiffs argue that Congress has validly exercised its § 5 power to abrogate 5 state sovereign immunity because there have been actual violations of the 6 Fourteenth Amendment in this case. There are two ways that Congress may 7 validly exercise its § 5 power: (1) Congress may “creat[e] private remedies against 8 the States for actual violations of [the Fourteenth Amendment],” United States v. 9 Georgia, 546 U.S. 151, 158 (2006); or (2) “Congress may pass prophylactic 10 ‘legislation which deters or remedies [Fourteenth Amendment] violations . . . even 11 if in the process it prohibits conduct which is not itself unconstitutional,’ so long as 12 ‘there [is] a congruence and proportionality between the injury to be prevented or 13 remedied and the means adopted to that end.’” National Ass’n of Boards of Pharm. 14 v. Board of Regents, 633 F.3d 1297, 1316 (11th Cir. 2011) (quoting City of Boerne, 15 521 U.S. at 518-20). 16 Plaintiffs argue that there were actual violations of the Fourteenth 17 Amendment in this case because the MiraCosta Defendants failed to provide a 18 pre-deprivation hearing or post-deprivation remedies. Therefore, Plaintiffs reason, 19 under Georgia, the CRCA abrogates Kurokawa’s Eleventh Amendment immunity. 20 However, Plaintiffs’ reliance on Georgia is misplaced. 21 In a footnote in National Ass’n of Boards of Pharmacy, the Ninth Circuit 22 expressed doubt whether the appellant’s procedural due process claim actually 23 falls under Georgia’s framework: 24 25 26 27 28 In Georgia, the identical conduct that violated the Americans with Disabilities Act also violated the Eighth Amendment. 546 U.S. at 157, 126 S.Ct. at 880–81. Here, the action necessary to infringe a copyright is arguably distinct from the conduct constituting NABP's procedural due process claim. In its simplest form, one infringes a copyright by copying or distributing a work; no amount of process absent the owner's consent avoids liability under the statute. See, e.g., 17 U.S.C. 6 13cv1847 BTM(JMA) 1 2 3 4 5 6 § 106. NABP's due process claim argues that it should have received a pre-deprivation hearing before its copyright was infringed. This alleged conduct—failing to provide a hearing—is not identical to copyright infringement. Therefore, NABP's argument that it was owed a pre-deprivation hearing is not implicated by a strict understanding of what it is to infringe a copyright and thus arguably not covered by Georgia. We need not discuss this argument further, however, because it is clear that NABP has not shown an actual denial of procedural due process. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 National Ass’n, 633 F.3d at 1316 n. 32. In a recent case, Campinha-Bacote v. Regents of the University of Michigan, 2016 WL 223408 (S.D. Ohio Jan. 19, 2016), the district court rejected the plaintiff’s argument that under Georgia, the states’ sovereign immunity was validly abrogated pursuant to § 5 because the statutorily prescribed conduct also violated the guarantee of Due Process under the Fourteenth Amendment. The Court explained: Here, the Court concludes that Congress did not validly abrogate the states' Eleventh Amendment sovereign immunity and that the statutorily proscribed conduct, as explained in National Association of Boards of Pharmacy, does not simultaneously and independently violate a constitutional guarantee protected by the Fourteenth Amendment as it did in Georgia. Instead, the existence of a constitutional due process violation—which none has been properly pled in the Complaint—is an inquiry distinct from whether a copyright was infringed. As such, Campinha-Bacote's attempt to rely on Georgia is unavailing. Id. at * 5. The Court agrees with the reasoning in Campinha-Bacote and the footnote 24 in National Ass’n distinguishing Georgia. 25 establish that Congress validly abrogated the state’s Eleventh Amendment 26 immunity in this case. Georgia is inapplicable and does not 27 28 7 13cv1847 BTM(JMA) 1 III. CONCLUSION 2 For the reasons discussed above, Kurokawa’s motion to dismiss is 3 GRANTED. Plaintiffs’ claim for retroactive monetary relief (including the claims for 4 declaratory relief,2 constructive trust, accounting, and disgorgement) against 5 Kurokawa is DISMISSED WITH PREJUDICE. 6 IT IS SO ORDERED. 7 Dated: July 22, 2016 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 Plaintiff’s declaratory relief claim is dismissed because it is narrowly tailored to support Plaintiff’s position that Kurokawa’s sovereign immunity has been abrogated under Georgia. 8 13cv1847 BTM(JMA)
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