Opinion
C.A. NO. 06-30060-MAP.
July 2, 2007
MEMORANDUM AND ORDER RE: REPORT AND RECOMMENDATION WITH REGARD TO MOTION TO DISMISS OF CO-DEFENDANT GORES (Dkt. Nos. 9 19)
Plaintiff, the author of computer maintenance materials, wrote a work entitled "PC Diagnostics and Repair Flowchart," which he published on his website in December of 2002. In this complaint, he contends that Defendant MPC Computers, LLC ("MPC"), under the supervision and management of co-defendant Gores Technology Group, LLC ("GTG"), copied the substance of his work, including a large portion of it verbatim.
Plaintiff charges both Defendants with federal copyright infringement, 17 U.S.C. § 501, violation of the Digital Millennium Copyright Act ("DMCA"), codified at 17 U.S.C. § 1202(b), violation of the Lanham Act, 15 U.S.C. § 1125(a), common law unfair competition, and violation of the Massachusetts Consumer Protection Statute, Mass. Gen. Laws ch. 93A.
Defendant MPC has filed an answer to Plaintiffs complaint, admitting that it published the materials identified in the complaint without authorization. GTG filed a Motion to Dismiss, both for failure to state a claim and for lack of personal jurisdiction (Dkt. No. 9).
The Motion to Dismiss was referred to Chief Magistrate Judge Kenneth P. Neiman for a report and recommendation. On March 14, 2007, Magistrate Judge Neiman issued his Report and Recommendation, to the effect that Defendant's motion should be denied. GTG has filed an objection to the Report and Recommendation.
Although the Motion to Dismiss was denied, Plaintiff has also filed an objection (Dkt. No. 22), contending that Judge Neiman's recommendation that long-arm jurisdiction did not exist under Mass. Gen. Laws ch. 223A, § 3(a) was incorrect. It is not necessary for the court to rule on this objection, since Judge Neiman was clearly correct that jurisdiction under the long-arm statute exists under an alternate provision, Mass. Gen. Laws ch. 223A, § 3(d). This court expresses no opinion with regard to Judge Neiman's discussion of Mass. Gen. Laws ch. 223A, § 3(a).
Upon de novo review of the arguments related to Defendant's Motion to Dismiss, and of Judge Neiman's Report and Recommendation, the court will adopt the Report and Recommendation and deny the Motion to Dismiss.
GTG's objection to the Magistrate Judge's finding that this court may properly exercise personal jurisdiction over this defendant breaks into two segments.
First, GTG alleges that the complaint lacks any adequate allegations that GTG caused tortious injury in this Commonwealth by an act or omission outside the Commonwealth, and that GTG regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in this Commonwealth, as required by Mass. Gen. Laws ch. 223A, § 3(d).
This argument was quickly and correctly disposed of by the Magistrate Judge. The complaint, fairly construed, does allege that GTG through its active supervision and management of MPC did cause tortious injury to Plaintiff in the Commonwealth. Moreover, the several contacts reviewed by the Magistrate Judge at 20-21 of the Report and Recommendation (Dkt. No. 19) demonstrate, at least at this stage, that Defendant has at a minimum engaged "in a persistent course of conduct" in the Commonwealth. Mass. Gen. Laws ch. 223A, § 3(d).
The second portion of Defendant's objection is that it was not GTG, but a closely-related corporation, GTG PC Holdings, LLC (the supposed actual owner of MPC during the relevant period) that was the true malefactor here. This attempt to hide the penny by shifting the corporate walnut shells has been criticized by the Massachusetts Supreme Judicial Court in My Bread Baking Co. v. Cumberland Farms, Inc., 353 Mass. 614, 619 (1968). In any event, the allegations in the complaint on their face are sufficient to warrant denial of the motion to dismiss directed at the current Defendant.
Alternatively, Plaintiff in his opposition to Defendant's objections (Dkt. No. 23) offered at n. 2 to seek leave to amend the complaint to add GTG PC Holdings, LLC as a co-defendant. To avoid possible problems as the case unfolds, it would appear wise for Plaintiff to take this step.
Defendant GTG also objects, substantively, to the Magistrate Judge's recommendation that the Motion to Dismiss, based upon a failure to state a claim, be denied. Defendant complains only that the "weakest of allegations" support Plaintiff's vicarious copyright infringement claim. Weak these allegations may be, at least in Defendant's eyes, but they are clearly adequate to survive a threshold motion to dismiss.
Defendant's argument with regard to the vicarious DMCA violation was not addressed in Defendant's memorandum in support of its Motion to Dismiss. The sketchy summary of the oral comments on this point presented to the Magistrate Judge are insufficient to provide a basis for this court to reject the Magistrate Judge's recommendation.
Defendant's objection to the denial of the Motion to Dismiss on the remaining counts may be addressed during discovery and, if appropriate, via a Motion for Summary Judgment pursuant to Fed.R.Civ.P. 56 once discovery closes.
For the foregoing reasons, upon de novo review, the Report and Recommendation of Chief Magistrate Judge Neiman dated March 14, 2007 is hereby ADOPTED. Defendant's Motion to Dismiss (Dkt. No. 9) is hereby DENIED. Co-defendant GTG will have twenty days from receipt of this memorandum to file its answer. The case will thereafter be referred to Chief Magistrate Judge Neiman for a pretrial scheduling conference.
It is So Ordered.