Opinion
18 Civ. 5205 (GBD)(HBP)
01-18-2019
DAVID BRAY, Plaintiff, v. PURPLE EAGLE ENTERTAINMENT, INC., et al., Defendants.
REPORT AND RECOMMENDATION
: TO THE HONORABLE GEORGE B. DANIELS, United States District Judge,
I. Introduction
By notice of motion dated August 14, 2018, defendants seek an Order dismissing plaintiff's amended complaint pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure and for partial summary judgment pursuant to Rule 12(d) (Notice of Mot., dated Aug. 14, 2018, (Docket Item ("D.I.") 21)). By separate notice of motion, also dated August 14, 2018, defendants seek an Order striking portions of plaintiff's amended complaint pursuant to Rule 12(f) (Notice of Mot., dated Aug. 14, 2018 (D.I. 23)).
For the reasons set forth below, I respectfully recommend that (1) the motion to dismiss for lack of subject matter jurisdiction be denied, (2) the motion to dismiss for failure to state a claim be granted with leave to replead, (3) the motion for partial summary judgment be denied and (4) the motion to strike be granted in part and denied in part.
II. Background
This case arises from the contentious departure of plaintiff David Bray from the band Madison Rising, which was founded and managed by defendant Robert Mgrdechian and his corporation, Purple Eagle Entertainment, Inc. A separate but related action is pending before this court under docket number 18 Civ. 3767.
In 2011, Bray, a Pennsylvania resident, responded to an online advertisement posted by Purple Eagle, a New York corporation, seeking musicians to join a band (Amended Complaint, dated Aug. 3, 2018 (D.I. 19) ("Am. Compl."), ¶¶ 17-18, 33-34, 36). On May 31, 2011, Bray and Mgrdechian entered into the Band Member Agreement ("the Agreement"), under which Bray agreed to join defendants' band (Am. Compl., ¶ 37 and Ex. A at 8). The Agreement provided that Bray would work for Purple Eagle "as a work-for-hire . . . band member in recording and performing (the 'Obligations') the music, songs and lyrics (the 'Material') as provided to [Bray] by the Company" (Am. Compl., ¶ 37 and Ex. A, ¶ 1). With respect to the ownership of any Material created in the course of the Agreement, paragraph 2 provided that:
Except as otherwise provided in this Agreement or at law:(Am. Compl., Ex. A, ¶ 2). Paragraph 6 of the Agreement provided that:
a) the Obligations and the Material shall be a work-for-hire, and the Company shall own the Material, and shall be the sole and exclusive owner of the copyright in the Material, including all rights of copyright registration, renewal and extension;
b) the Company (or an assignee of the Company) shall also be considered to be the author of the Material for the purposes of U.S. copyright law, and for the purposes of any other applicable state or federal laws;
c) Musician shall make no claim to ownership of the copyright in the Material unless expressly agreed to otherwise by the Company in writing or as set forth herein, nor shall Musician attempt to exercise any rights, privileges or protections afforded to a copyright holder; and
d) Musician waives all moral rights in the Material.
Subject to paragraph 6 below, Musician understands that all material prepared, written, and/or created by Musician, or contributed to the Material by Musician shall be on a work-for-hire basis as that term is defined under U.S. copyright law and shall belong solely to the Company. In the even any such contribution or material is not considered a work-made-for hire, Musician hereby irrevocably assigns to the Company all of Musician's right, title and interest in such Material.
in the event that Musician contributes materially to the authorship of any of the Material, Musician shall receive writers' credit and royalties in conjunction with all other co-author's [sic] of such Material for such Material per the terms of this Agreement, other third party agreements and pursuant to the music industry standards. Musician acknowledges and agrees that Musician shall contribute if and only when request [sic] by the Company, and then Musician shall only contribute at his reasonable discretion.(Am. Compl., ¶ 38 and Ex. A, ¶ 6). The Agreement specified a three-year term, with the option for the parties "to mutually agree, in good faith, to extend the Employment Period for an additional three (3) year period upon payment of a mutually agreed to extension fee to Musician not to exceed $25,000" (Am. Compl., ¶ 41 and Ex. A, ¶ 3).
The band, under the new name Madison Rising, released its debut album on October 17, 2011 (Am. Compl., ¶¶ 42-43). Bray wrote or contributed to four songs on the album and received a writer's credit, but no royalties (Am. Compl., ¶ 46). On March 11, 2012, Madison Rising performed Bray's adaptation of "The Star-Spangled Banner" at a show in Nashville and then recorded the song in April 2012 (Am. Compl., ¶¶ 51-53, 55, The band released its second album, American Hero, on November 5, 2013; it consisted of original songs composed by Bray and Bray's adapta- tion of "America the Beautiful" (Am. Compl., ¶ 62). On June 15, 2015, Madison Rising released American Hero (Red), "a deluxe remastered edition of American Hero," with all but one of the same songs as the original album, two new songs by Bray and "rock versions" of "The Marine Hymn" and "God Bless America" (Am. Compl., ¶ 66). Purple Eagle did not pay Bray any royalties for his contributions to either of these albums or "some associated singles," nor did it pay Bray for designing the artwork on either album (Am. Compl., ¶¶ 67, 69).
When Bray's initial employment term was about to expire, Mgrdechian refused to pay the fee to extend the contract (Am. Compl., ¶ 92). Instead, Mgrdechian told Bray that "they did not need a new or extended contract because, with all of the valuable contributions [Bray] had made, they would continue without a contract and were 'basically partners'" (Am. Compl., ¶ 95). Although Mgrdechian promised to issue Bray stock certificates reflecting his partnership in Purple Eagle, he never issued the certificates (Am. Compl., ¶ 95).
On February 29, 2016, Mgrdechian suspended Bray without pay for 30 days for "alleged behavioral issues" (Am. Compl., ¶ 101). In addition to the suspension, Mgrdechian insisted that Bray sign a new contract or be fired within seven days (Am. Compl., ¶ 102). Bray refused to sign the new contract, and Mgrdechian fired him (Am. Compl., ¶ 102).
Plaintiff commenced this action on June 10, 2018, alleging five claims which he denominates as: (1) declaratory relief; (2) copyright infringement; (3) accounting; (4) unjust enrichment and (5) constructive trust (Compl., dated June 10, 2018 (D.I. 1), ¶¶ 112-147). Defendants moved to dismiss the complaint on July 13, 2018 and moved to strike certain allegations three days later (Notice of Mot., dated July 13, 2018 (D.I. 10); Notice of Mot., dated July 16, 2018 (D.I. 12)). Plaintiff then filed an amended complaint on August 3, 2018, alleging the same five claims that he previously alleged (Am. Compl., ¶¶ 115-154). Plaintiff's amended complaint alleges that plaintiff has registered copyright interests in the songs "Soldier's Christmas," "Warrior Inside," "Last Call," "God Bless America (original arrangement)" and "Amazing Grace/Taps (original arrangement)" (Am. Compl., ¶ 127). Plaintiff further claims that he filed copyright registrations of eleven other works (Am. Compl., ¶ 128).
On October 16, 2018, Judge Daniels denied defendants' July motions to dismiss and to strike as moot, in light of plaintiff's amended complaint (Mem. Decision and Order, dated Oct. 16, 2018 (D.I. 41) at 2).
III. Analysis
A. Applicable Legal Standards
Where, as here, a defendant seeks dismissal of the complaint on multiple Rule 12(b) grounds, a court should ordinarily address the movant's jurisdictional arguments before considering whether the complaint states a claim. Arrowsmith v. United Press Int'l, 320 F.2d 219, 221 (2d Cir. 1963) (Friendly, Cir. J.); see also Prout v. Vladeck, 18 Civ. 260 (JSR), 2018 WL 6332898 at *2 (S.D.N.Y. Nov. 1, 2018) (Rakoff, D.J.); Backus v. U3 Advisors, Inc., 16 Civ. 8990 (GHW), 2017 WL 4600430 at *10 (S.D.N.Y. Aug. 18, 2017) (Woods, D.J.); Artists Rights Enf't Corp. v. Jones, 268 F. Supp. 3d 491, 495 (S.D.N.Y. 2017) (Marrero, D.J.). If the court concludes that subject matter jurisdiction is lacking, it should not consider any remaining grounds asserted for dismissal. See Arrowsmith v. United Press Int'l, supra, 320 F.2d at 221.
1. Motion to Dismiss Pursuant to Rule 12(b)(1)
"A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). The party asserting that the court has subject matter jurisdiction bears the burden of proving the court's jurisdiction. FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231 (1990); Chayoon v. Chao, 355 F.3d 141, 143 (2d Cir. 2004) (per curiam); Bd. of Educ. v. N.Y. State Teachers Ret. Sys., 60 F.3d 106, 109 (2d Cir. 1995). In resolving a motion to dismiss for lack of subject matter jurisdiction,
"[T]he court must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of plaintiff, Natural Res. Def. Council v. Johnson, 461 F.3d 164, 171 (2d Cir. 2006) (citation and internal quotation marks omitted), but "jurisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it." APWU v. Potter, 343 F.3d 619, 623 (2d Cir. 2003). In resolving a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1) a district court may consider evidence outside the pleadings. Makarova, 201 F.3d at 113.Morrison v. Nat'l Australia Bank Ltd., 547 F.3d 167, 170 (2d Cir. 2008), aff'd, 561 U.S. 247 (2010).
28 U.S.C. § 1332 confers subject matter jurisdiction on district courts when the parties are citizens of different states and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332. The only aspect of diversity jurisdiction relevant to the present dispute is the jurisdictional amount.
In determining whether the amount in controversy requirement is satisfied, "the sum claimed by the plaintiff controls, if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal." St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938); accord Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S. Ct. 547, 553 (2014); Pyskaty v. Wide World of Cars, LLC, 856 F.3d 216, 223 (2d Cir. 2017). A party seeking dismissal on the ground that the amount in controversy is insufficient bears a heavy burden:
"[T]he legal impossibility of recovery must be so certain as virtually to negative the plaintiff's good faith in asserting the claim." Chase Manhattan Bank, N.A. v. Am. Nat. Bank and Trust Co. of Chicago, 93 F.3d 1064, 1070-71 (2d Cir. 1996) (quoting Tongkook, 14 F.3d at 785). "[E]ven where [the] allegations leave grave doubt about the likelihood of a recovery of the requisite amount, dismissal is not warranted." Zacharia v. Harbor Island Spa, Inc., 684 F.2d 199, 202 (2d Cir. 1982); see also Tongkook, 14 F.3d at 785 ("Where the damages sought are uncertain, the doubt should be resolved in favor of the plaintiff's pleadings.")Scherer v. Equitable Life Assurance Soc'y of U.S., 347 F.3d 394, 397 (2d Cir. 2003).
2. Motion to Dismiss Pursuant to Rule 12(b)(6)
The general standards applicable to a motion to dismiss pursuant to Rule 12(b)(6) are well settled and require only brief review:
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). As the Supreme Court has explained, this standard creates a "two-pronged approach," id. at 679, 129 S.Ct. 1937, based on "[t]wo working principles," id. at 678, 129 S.Ct. 1937.
First, although a complaint need not include detailed factual allegations, it must provide "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Id. "A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Id. (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955). "Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Id. (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955). "Although for the purposes of a motion to dismiss we must take all of the factual allegations in the complaint as true, we 'are not bound to accept as true a legal conclusion couched as a factual allegation.'" Id. (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955). . . .
Second, "[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. This "facial plausibility" prong requires the plaintiff to plead facts "allow[ing] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678, 129 S.Ct. 1937. Importantly, the
complaint must demonstrate "more than a sheer possibility that a defendant has acted unlawfully." Id. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged -- but it has not 'show[n]' -- 'that the pleader is entitled to relief.'" Id. at 679, 129 S.Ct. 1937 (quoting Fed.R.Civ.P. 8(a)(2)). "Determining whether a complaint states a plausible claim for relief [is] . . . a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id.Pension Benefit Guar. Corp. ex rel. St. Vincent Catholic Med. Ctrs. Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 717-18 (2d Cir. 2013).
In ruling on a motion pursuant to Rule 12(b)(6), a court is ordinarily limited to considering the allegations in the complaint, documents annexed to the complaint as exhibits, documents which are integral to the complaint and facts which are judicially noticeable. Bryant v. New York State Educ. Dep't, 692 F.3d 202, 208 (2d Cir. 2012); Magiafico v. Blumenthal, 471 F.3d 391, 398 (2d Cir. 2002).
A properly plead copyright infringement claim must 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) (Conner, D.J.); accord Jose Luis Pelaez, Inc. v. McGraw-Hill Glob. Educ. Holdings LLC, 16 Civ. 5393 (KMW), 2017 WL 3432303 at *2 (S.D.N.Y. Aug. 9, 2017) (Wood, D.J.); Energy Intelligence Grp., Inc. v. Jefferies, LLC, 101 F. Supp. 3d 332, 338 (S.D.N.Y. 2015) (Preska, D.J.) ("In this District, courts apply the Kelly court's four-prong test to determine whether a claim of copyright infringement satisfies the requirements of Rule 8"); LivePerson, Inc. v. 24/7 Customer, Inc., 83 F. Supp. 3d 501, 507-08 (S.D.N.Y. 2015) (Sweet, D.J.); Domino Recording Co., Inc. v. Interscope Geffen A&M Records, 09 Civ. 8400 (GBD), 2010 WL 3001953 at *1 (S.D.N.Y. July 22, 2010) (Daniels, D.J.).
3. Rule 12(d)
Rule 12(d) allows the court to treat a motion to dismiss under Rule 12(b)(6) as a motion for summary judgment under Rule 56 where "matters outside the pleadings are presented to and not excluded by the court." Fed.R.Civ.P. 12(d). When presented with matters outside the pleadings, "federal courts have complete discretion to determine whether or not to accept the submission of any material beyond the pleadings that is offered in conjunction with a Rule 12(b)(6) motion and rely on it, thereby converting the motion, or to reject it or simply not consider it." 5C Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 1366 at 159 (3d ed. 2004); accord Friedl v. City of New York, 210 F.3d 79, 83-84 (2d Cir. 2000); Fonte v. Bd. of Managers of Cont'l Towers Condo., 848 F.2d 24, 25 (2d Cir. 1988). "'When the extra-pleading material is comprehensive and will enable a rational determination of a summary judgment motion, the court is likely to accept it; when it is scanty, incomplete, or inconclusive, the court probably will reject it.'" Estate of Lennon by Lennon v. Screen Creations, Ltd., 939 F. Supp. 287, 292 (S.D.N.Y. 1996) (Baer, D.J.), quoting 5A Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 1366 at 493 (2d ed. 1990).
When conversion to a summary judgment motion is appropriate, the standards to be applied are well-settled and require only brief review.
Summary judgment may be granted only where there is no genuine issue as to any material fact and the moving party . . . is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c). In ruling on a motion for summary judgment, a court must resolve all ambiguities and draw all factual inferences in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 91 L.Ed.2d 202 (1986). To grant the motion, the court must determine that there is no genuine issue of material fact to be tried. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine factual issue derives from the "evidence [being] such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S. Ct. 2505. The nonmoving party cannot defeat summary judgment by "simply show[ing] that there is some metaphysical doubt as to the material facts," Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L.Ed.2d 538 (1986), or by a factual argument based on "conjecture or surmise," Bryant v.
Maffucci, 923 F.2d 979, 982 (2d Cir. 1991). The Supreme Court teaches that "all that is required [from a nonmoving party] is that sufficient evidence supporting the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial." First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288-89, 88 S. Ct. 1575, 20 L.Ed.2d 569 (1968); see also Hunt v. Cromartie, 526 U.S. 541, 552, 119 S. Ct. 1545, 143 L.Ed.2d 731 (1999). It is a settled rule that "[c]redibility assessments, choices between conflicting versions of the events, and the weighing of evidence are matters for the jury, not for the court on a motion for summary judgment." Fischl v. Armitage, 128 F.3d 50, 55 (2d Cir. 1997).McClellan v. Smith, 439 F.3d 137, 144 (2d Cir. 2006) (brackets in original); accord Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150-51 (2000); Estate of Gustafson ex rel. Reginella v. Target Corp., 819 F.3d 673, 675 (2d Cir. 2016); Cortes v. MTA N.Y.C. Transit, 802 F.3d 226, 230 (2d Cir. 2015); Deep Woods Holdings, L.L.C. v. Sav. Deposit Ins. Fund of Republic of Turk., 745 F.3d 619, 622-23 (2d Cir. 2014); Hill v. Curcione, 657 F.3d 116, 124 (2d Cir. 2011).
Although the Court in Reeves was reviewing the denial of a motion for judgment as a matter of law pursuant to Fed.R.Civ.P. 50, the same standards apply to a motion for summary judgment pursuant to Fed.R.Civ.P. 56. Reeves v. Sanderson Plumbing Prods., Inc., supra, 530 U.S. at 150-51.
4. Motion to Strike
Rule 12(f) allows the court to "strike from a pleading . . . any redundant, immaterial, impertinent, or scandalous matter." Fed.R.Civ.P. 12(f). The court may strike such pleadings on its own or on motion by the parties. Fed.R.Civ.P. 12(f). A Rule 12(f) motion "will be denied, unless it can be shown that no evidence in support of the allegation would be admissible." Lipsky v. Commonwealth United Corp., 551 F.2d 887, 893 (2d Cir. 1976).
Courts in this District have found that to prevail on a motion under Rule 12(f), the moving party must show that "[i] no evidence in support of the allegations would be admissible; [ii] that the allegations have no bearing on the issues in the case; and [iii] that to permit the allegations to stand would result in prejudice to the movant."Trodale Holdings LLC v. Bristol Healthcare Inv'rs, L.P., 16 Civ. 4254 (KPF), 2017 WL 5905574 at *15 (S.D.N.Y. Nov. 29, 2017) (Failla, D.J.), quoting Landesbank Baden-Württemberg v. RBS Holdings USA, Inc., 14 F. Supp. 3d 488, 497 (S.D.N.Y. 2014) (Gardephe, D.J.). "Courts have found allegations to be prejudicial when they are 'amorphous, unspecific and cannot be defended against' and where the allegations, if publicized 'harm [the defendant] in the public eye and could influence prospective jury members.'" Low v. Robb, 11 Civ. 2321 (JPO), 2012 WL 173472 at *9 (S.D.N.Y. Jan. 20, 2012) (Oetken, D.J.) (brackets in original), quoting G-I Holdings, Inc. v. Baron & Budd, 238 F. Supp. 2d 521, 556 (S.D.N.Y. 2002) (Sweet, D.J.).
Courts in this circuit have stricken various categories of allegations based on their irrelevance and prejudicial effect. See, e.g., Petrello v. White, 01-CV-3082 (DRH)(AKT), 2018 WL 4344955 at *8 (E.D.N.Y. Sept. 11, 2018) ("The allegations regarding [plaintiff's] personal wealth and unrelated litigation have no bearing on the material issues in this case and could influence prospective jury members and therefor it is appropriate to strike [them]"; Prout v. Vladeck, 326 F.R.D. 407, 410-11 (S.D.N.Y. 2018) (Rakoff, D.J.) (striking paragraphs in defendants' Preliminary Statement to counterclaims that were "broad, ad hominem character attacks" on plaintiff's "integrity"); Gaughan v. Rubenstein, 261 F. Supp. 3d 390, 429 (S.D.N.Y. 2017) (Engelmayer, D.J.) (striking allegations that were "plainly irrelevant and serve no purpose other than to reveal embarrassing and personal information about Defendants and non-parties"); Donahue v. Asia TV USA Ltd., 208 F. Supp. 3d 505, 517 (S.D.N.Y. 2016) (Buchwald, D.J.) (striking allegations that defendant sexually harassed an employee other than plaintiff as irrelevant to plaintiff's claims of national origin and age discrimination).
B. Application of the Foregoing Principles
1. Motion to Dismiss Pursuant to Rule 12(b)(1)
Defendants argue that the court lacks subject matter jurisdiction over plaintiff's state law claims because the amount in controversy requirement is not met. Their argument is not persuasive.
Defendants claim that plaintiff "fails to allege any amount of damages he would be entitled to . . . for either accounting, unjust enrichment or a constructive trust" (Mem. of Law in Support of Defs.' Mot. to Dismiss, dated Aug. 14, 2018 (D.I. 22) at 14). To the contrary, plaintiff explicitly alleges in the complaint that the amount in controversy exceeds $75,000 (Am. Compl., ¶¶ 16, 145, 153). Defendants' opposition papers assert that the total receipts from the sales of songs allegedly owned by plaintiff did not exceed $75,000 (Mem. of Law in Support of Defs.' Mot. to Dismiss, dated Aug. 14, 2018 (D.I. 22) at 14-15). However, defendants have attached no documentation to corroborate that assertion, nor does Mgrdechian's affidavit contain any statements in support of defendants' position (see Aff. of Richard Mgrdechian, dated July 12, 2018 (D.I. 22-11)). Defendants' unsupported statements in their memorandum of law have no evidentiary weight. INS v. Phinpathya, 464 U.S. 183, 188 n.6 (1984); Ameti v. Holder, 536 F. App'x 126, 127 (2d Cir. 2013) (summary order); Lipton v. Nature Co., 71 F.3d 464, 469 (2d Cir. 1995); Spartan Capital Sec., LLC v. Stonbely, 18 Civ. 6819 (LAK)(JLC), 2018 WL 6070001 at *1 n.3 (S.D.N.Y. Nov. 21, 2018) (Report & Recommendation) (Cott, M.J.), adopted at 2019 WL 95476 (S.D.N.Y. Jan. 3, 2019) (Kaplan, D.J.).
Thus, defendants have failed to establish to a legal certainty that plaintiff's claims do not satisfy the amount in controversy requirement, and their motion to dismiss the state law claims should, therefore, be denied.
Defendants also argue that the court should not exercise supplemental jurisdiction over plaintiff's other claims. I need not reach this issue because plaintiff has alleged sufficient facts to establish diversity jurisdiction as to those state law claims.
2. Motion to Dismiss Pursuant to Rule 12(b)(6)
Plaintiff's copyright infringement claim should be dismissed because he has failed to allege any specific conduct by defendants that constitutes copyright infringement.
Plaintiff has identified at least sixteen works in which he claims either to own a copyright registration or to have filed an application for registration (Am. Compl., ¶¶ 127-28). Nowhere in the complaint, however, does plaintiff identify any reproduction, distribution, public performance or preparation of derivative works by defendants, other than a single conclusory allegation of infringement in paragraph 129. Plaintiff's copyright claim should, therefore, be dismissed with leave to replead.
In Gym Door Repairs, Inc. v. Young Equip. Sales, Inc., 206 F. Supp. 3d 869, 895 (S.D.N.Y. 2016) (Koeltl, D.J.), the plaintiffs alleged that defendant Total Gym "made unauthorized copies of the Manufacturer Materials and used them to submit falsified bids and perform and falsely document their work" and "made reproductions of all or significant portions of the Manufacturer Materials, emails and letters and used them to perform and document [their] performance of maintenance services." The Honorable John G. Koeltl, United States District Judge, found these allegations were insufficient, describing them as "bare allegations, devoid of allegations of specific conduct, are merely conclusory, and conclusory allegations are insufficient to survive a motion to dismiss." Gym Door Repairs, Inc. v. Young Equip. Sales, Inc., supra, 206 F. Supp. 3d at 895-96 (internal quotation marks and citations omitted).
In Energy Intelligence Grp., Inc. v. Jefferies, LLC, supra, 101 F. Supp. 3d at 342, the plaintiffs alleged that the defendants reduced their number of subscriptions to one of the plaintiffs' newsletters but did not allege any "instances of copying, access, or distribution to support the conclusory assertion that [the defendants] ha[d] been infringing [the plaintiffs'] copyright for . . . seven years." The Honorable Loretta A. Preska, United States District Judge, concluded that without any such allegations of copying, access, or distribution, the plaintiffs' mere assertion that the defendants reduced their number of subscriptions to the plaintiffs' newsletter did not support a reasonable inference of copyright infringement. Energy Intelligence Grp., Inc. v. Jefferies, LLC, supra, 101 F. Supp. 3d at 342.
In this case, plaintiff's only allegation of infringement is that "[t]hrough their conduct averred herein, Defendant Purple Eagle has infringed Plaintiffs' [sic] copyright in these compositions in violation of Sections 106 and 501 of the Copyright Act, 17 U.S.C. §§ 106 and 501" (Am. Compl., ¶ 129). The preceding factual paragraphs, however, fail to mention any acts by defendants that can reasonably be construed as copying, distribution or performance of any of the songs plaintiff alleges he owns. Plaintiff has pled his copyright claim in precisely the same conclusory form that has repeatedly been found insufficient. Therefore, his copyright infringement claim should be dismissed.
In their submissions, both parties spend considerable effort arguing about what rights and obligations survived after the expiration of the initial contract period on May 30, 2014. Without any allegations of infringing acts, the Agreement's effect on the parties' ownership rights to the contested works is irrelevant. Thus, I need not decide the impact of the Agreement, if any, until plaintiff sufficiently identifies the copyrights defendants infringed and specifies how and when defendants infringed them.
Similarly, I need not decide whether plaintiff's applications for copyright registration are insufficient, as a matter of law, to sustain a claim for copyright infringement. Defendants cite numerous cases in which district courts have held pending registration applications are insufficient as a matter of law to sustain a copyright claim. Plaintiff, in response, cites recent decisions from the Court of Appeals declining to decide the issue. Here, in the absence of sufficient allegations of infringement, I shall follow the Second Circuit's example in A Star Grp., Inc. v. Manitoba Hydro, 621 F. App'x 681, 683-84 (2d Cir. 2015), and decline to decide this question at this time.
I also recommend that plaintiff's claims for declaratory relief, accounting, unjust enrichment and constructive trust be dismissed because they are all based on plaintiff's copyright infringement claim. As currently pled, these claims merely seek different remedies for the same alleged wrong.
Because plaintiff's claims for declaratory relief, accounting, unjust enrichment and constructive trust should be dismissed pursuant to Rule 12(b)(6), I need not address defendants' argument that these claims are preempted by the Copyright Act, 17 U.S.C. § 301.
3. Rule 12(d)
Defendants' motion for partial summary judgment pursuant to Rule 12(d) should be denied because their motion to dismiss should not be converted based on the limited factual material presented by defendants. Even if defendants' motion to dismiss were converted to a summary judgment motion, the same factual ambiguities that make conversion improper would make summary judgment in favor of defendants improper.
Defendants ask me to consider "the Band Member Agreement, [p]laintiff's continued work with Purple Eagle under the same terms and conditions pursuant to the three year extension provided in the Band Member Agreement, and the State Action stipulation" and convert their motion to dismiss into a motion for summary judgment (Mem. of Law in Support of Defs.' Mot. to Dismiss, dated Aug. 14, 2018 (D.I. 22) at 23). Defendants claim that this material establishes that there is no genuine issue of fact that defendants own the copyrights in any works created by plaintiff during the entire time period alleged in the complaint. However, the parties dispute whether, after May 30, 2014, plaintiff continued to perform under an extended contract or an unfulfilled promise of partnership or something else. Plaintiff alleges that Mgrdechian promised him a partnership in Purple Eagle, in lieu of the required extension fee (Am. Compl., ¶ 95). Defendants do not specifically controvert this allegation; instead, Mgrdechian claims that plaintiff agreed to extend the Agreement under the same terms, without any additional compensation or extension fees, and that plaintiff continued to work for the band accordingly (see Aff. of Richard Mgrdechian, dated July 12, 2018 (D.I. 22-11), ¶¶ 5-7). Defendants do not explain why plaintiff would simply waive the extension fee specified in the Agreement. If plaintiff was indeed promised a partnership, which defendants never honored, then arguably the terms of the original Agreement were no longer in force and any works created after May 30, 2014 would not be governed by its terms.
The State Action stipulation, dated January 24, 2017, provides, in pertinent part: "David Bray and Rebecca Bray Shall [sic] not do business with Madison Rising's past and present contract partners for a period of one year starting on the date of this order" (Mem. of Law in Support of Defs.' Mot. to Dismiss, dated Aug. 14, 2018 (D.I. 22), Ex. E). Defendants claim that this stipulation, agreed to by the parties after the commencement of litigation in state court, proves that plaintiff "acknowledged that the Band Member Agreement's terms continued through the extension period" (Mem. of Law in Support of Defs.' Mot. to Dismiss, dated Aug. 14, 2018 (D.I. 22) at 25). Defendants' contention is nothing more than wishful thinking. The stipulation implies nothing regarding the vitality of the Agreement after May 30, 2014.
Furthermore, there are issues of fact concerning which works were created before May 30, 2014, while the Agreement was undeniably in force, and which were created after that date. Plaintiff does not allege when he created the contested works with sufficient precision. Mgrdechian claims, in a conclusory fashion, that all of the contested works were created "either during the initial three year terms [sic] of the Band Member Agreement or during the time the Band Member Agreement was agreed to be extended" (Aff. of Richard Mgrdechian, dated July 12, 2018 (D.I. 22-11), ¶ 10). In addition, Mgrdechian's accounting of the dates of creation of the contested works is incomplete (see Aff. of Richard Mgrdechian, dated July 12, 2018 (D.I. 22-11), ¶ 11). Putting aside the validity of Mgrdechian's claim that the Agreement was indeed extended, there is no clear evidence as to the dates on which each of the works in issue were created. Thus, there is a genuine issue as to a material fact.
While these factual issues remain in unresolved, defendants' motion to dismiss should not be converted to a summary judgment motion, and partial summary judgment is inappro- priate. Therefore, defendants' motion pursuant to Rule 12(d) should be denied.
4. Motion to Strike
Finally, I recommend that defendants' motion to strike paragraphs 27-29 and portions of paragraphs 4, 26, 30, 31, 35, 44, 50 and 63 be granted. These paragraphs contain allegations concerning Mgrdechian's political beliefs; they are irrelevant to plaintiff's claims and might prejudice prospective jury members. For example, paragraphs 27-29 describe Mgrdechian's authorship of two books with political themes. Portions of paragraphs 4, 26, 30, 31, 35, 44, 50 and 63 use terms like "divisive," "hateful," "alt-right," "extremist" and similar language to refer to Mgrdechian and his political beliefs. Mgrdechian's political beliefs have no relevance to this copyright infringement action.
I also recommend that defendants' motion to strike paragraphs 72-88 be granted. These paragraphs contain allegations regarding sexual misconduct, drug use and other similar behavior that are irrelevant to plaintiff's claims and inherently prejudicial. For example, these paragraphs allege Mgrdechian pursued sexual relationships with female fans and ex-girlfriends of band members, along with other, more salacious allegations. They also contain allegations that Mgrdechian used homophobic and racist language and disrupted several Madison Rising performances with his misbehavior. Again, none of these allegations have any relevance to any of plaintiff's claims.
Finally, I recommend that paragraph 91 be stricken. This paragraph contains allegations concerning completely unrelated litigation and serve only to besmirch Mgrdechian's character. Paragraph 91 alleges that various parties sued Mgrdechian because he "sabotaged many relationships by refusing to honor Purple Eagle's financial obligations" (Am. Compl., ¶ 91). Plaintiff then lists thirteen lawsuits in which Mgrdechian or Purple Eagle were named as defendants. Based on the limited information presented in the complaint, none of these lawsuits appear relevant to plaintiff's copyright infringement or other claims.
Defendants' motion to strike paragraphs 47-49, 51, 89, 94, 97, 100-03 and 105-08 should be denied. Paragraphs 47-49 relate to band business and decision-making and appear to be relevant. Paragraph 51 provides background concerning plaintiff's authorship of a particular work and is in no way prejudicial to defendants. Paragraph 89 appears to be relevant to plaintiff's role in marketing the band. Paragraphs 94, 97 and 100-03 are relevant because they concern plaintiff's departure from the band. Finally, paragraphs 105-08 appear to be relevant to the immediate aftermath of plaintiff's departure from the band.
Plaintiff argues that the challenged paragraphs of the complaint are relevant to his claim for constructive trust (Mem. of Law in Opp'n to Mot. to Strike, dated Sept. 21, 2018 (D.I. 29) at 5-6). However, as discussed above, this claim is an alternative remedy to plaintiff's copyright infringement claim. The improper paragraphs and portions of paragraphs set forth above are no more relevant to plaintiff's constructive trust theory than to his copyright infringement theory; Mgrdechian's alleged liaisons have no bearing on his alleged obligations to plaintiff. Therefore, plaintiff's argument is unpersuasive. Accordingly, I recommend that defendants' motion to strike be granted as to paragraphs 27-29, 72-88, 91 and portions of paragraphs 4, 26, 30, 31, 35, 44, 50 and 63 of the amended complaint and denied in all other respects.
IV. Attorney's Fees
Defendants' request for an award of attorney's fees and costs with respect to the motion to dismiss should be denied. Defendants' request is premature, because the recommended dismissal of plaintiff's amended complaint with leave to replead does not qualify defendants as prevailing parties within the meaning of 17 U.S.C. § 505. See Ritani, LLC v. Aghjayan, 970 F. Supp. 2d 232, 265-66 (S.D.N.Y. 2013) (Sweet, D.J.); accord Maader v. Lee, 14 Civ. 8461 (JFK), 2015 WL 4887551 at *1-*2 (S.D.N.Y. Aug. 17, 2015) (Keenan, D.J.).
With respect to the motion to strike, defendants' request for an award of attorney's fees and costs should also be denied. Relying on Chambers v. NASCO, Inc., 501 U.S. 32 (1991), defendants ask me to exercise my inherent power to sanction plaintiff and his attorney.
A party seeking sanctions under the court's inherent power must make a showing sufficient to support "a finding of conduct constituting or akin to bad faith." In re 60 E. 80th St. Equities, Inc., 218 F.3d 109, 115 (2d Cir. 2000) (citation and internal quotation marks omitted); accord Star Mark Mgmt., Inc. v. Koon Chun Hing Kee Soy & Sauce Factory, Ltd., 682 F.3d 170, 178 (2d Cir. 2012). "[B]ad faith may be inferred only if actions are so completely without merit as to require the conclusion that they must have been undertaken for some improper purpose such as delay." Enmon v. Prospect Capital Corp., 675 F.3d 138, 143 (2d Cir. 2012) (internal quotation marks omitted) (emphasis added). "[T]he court's factual findings of bad faith must be characterized by 'a high degree of specificity.'" Milltex Indus. Corp. v. Jacquard Lace Co., Ltd., 55 F.3d 34, 38 (2d Cir. 1995), quoting Oliveri v. Thompson, 803 F.2d 1265, 1272 (2d Cir. 1986); accord Rates Tech. Inc. v. Broadvox Holding Co., LLC, 56 F. Supp. 3d 515, 527 (S.D.N.Y. 2014) (Scheindlin, D.J.).
In this case, plaintiff's challenged conduct comprises a single act, the filing of the complaint, albeit a complaint containing some improper allegations. Thus, defendants have not met their burden to set forth highly specific facts demonstrating plaintiff's bad faith. In addition, defendants' motion to strike was only partially successful. The proper remedy is only the partial grant of defendants' motion to strike.
V. Conclusion
For all of the foregoing reasons, I respectfully recommend that defendants' motion to dismiss plaintiff's state law claims for lack of subject matter jurisdiction be denied, defendants' motion to dismiss for failure to state a claim be granted with leave to replead and defendants' motion for partial summary judgment be denied. I further recommend that defendants' motion to strike be granted as to paragraphs 27-29, 72-88, 91 and portions of paragraphs 4, 26, 30, 31, 35, 44, 50 and 63 of the amended complaint and denied in all other respects. Finally, I recommend that defendants' requests for attorney's fees with respect to both motions be denied.
VI. OBJECTIONS
Pursuant to 28 U.S.C. § 636(b)(1)(c) and Rule 72 of the Federal Rules of Civil Procedure, the parties shall have fourteen (14) days from receipt of this Report to file written objections. See also Fed.R.Civ.P. 6(a). Such objections and responses thereto) shall be filed with the Clerk of the Court with courtesy copies delivered to the Chambers of the Honorable George B. Daniels, United States District Judge, 500 Pearl Street, Room 1310, New York, New York 10007 and to the Chambers of the undersigned, 500 Pearl Street, Room 1670, New York, New York 10007. Any requests for an extension of time for filing objections must be directed to Judge Daniels. FAILURE TO OBJECT WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. Thomas v. Arn, 474 U.S. 140, 155 (1985); United States v. Male Juvenile, 121 F.3d 34, 38 (2d Cir. 1997); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); Wesolek v. Canadair Ltd., 838 F.2d 55, 57-59 (2d Cir. 1988); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983) (per curiam). Dated: New York, New York
January 18, 2019
Respectfully submitted,
/s/_________
HENRY PITMAN
United States Magistrate Judge Copies transmitted to: All Counsel