Brett Lauter v. Michael Rosenblatt et al

Filing 183

ORDER RE MOTIONS TO DISMISS by Judge Dean D. Pregerson: EBAC's Motion to Dismiss is GRANTED in part and DENIED in part. EBAC's motion is denied withrespect to Plaintiff's copyright claim and claims predicated upon EBAC's successo r liability. Plaintiff's UVTA claim and intentional interference claims are DISMISSED, with leave to amend. Plaintiff's Lanham Act claim is DISMISSED, with prejudice. Defendant Rosenblatt's Motion is GRANTED. Plaintiff's claimsagainst Rosenblatt are DISMISSED, with leave to amend. Any amended complaint shall be filed within fourteen days of the date of this Order. See order for details. (shb)

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1 2 O 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 BRETT LAUTER, 12 13 14 15 Plaintiff, v. MICHAEL ROSENBLATT; ECHO BRIDGE ENTERTAINMENT, LLC; PLATINUM DISC. LLC; ECHO BRIDGE HOME ENTERTAINMENT;, 16 Defendants. 17 ___________________________ ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. CV 15-08481 DDP (KSx) ORDER RE: MOTIONS TO DISMISS [DKT. NOS. 121, 126 and 179] 18 19 20 21 Presently before the Court are a Motion to Dismiss Plaintiff’s 22 Second Amended Complaint filed by Defendant Echo Bridge Acquisition 23 Corp. LLC (“EBAC”) and a separate Motion to Dismiss filed by 24 Defendant Michael Rosenblatt. (Dkt. 121, 126.) 25 the submissions of the parties, the court grants the EBAC motion in 26 part and denies the motion in part, grants the Rosenblatt motion, 27 and adopts the following Order. 28 Having considered 1 I. 2 Background Plaintiff Brett Lauter (“Lauter”) is the sole proprietor of 3 Pan Global Entertainment (“PGE”). (Second Amended Complaint (“SAC”) 4 ¶ 18.) 5 media and licenses those rights to other distributors. 6 early 2014, Lauter had sold numerous films to distributors Avail- 7 TVN and Vubiquity, and had an “output agreement” with both 8 companies regarding future releases. 9 placed numerous films on distribution platforms such as Amazon’s Plaintiff acquires distribution rights to movies and other (SAC ¶ 198.) As of Lauter had also 10 Instant Rentals, Google Play, and YouTube. (Id.) 11 engaged in license negotiations with Apple and VUDU. 12 Id. Lauter had also (Id.) On June 15, 2011, Plaintiff and Defendant Echo Bridge 13 Entertainment (“EBE”) entered into a “Multi Picture 14 Deal/Acquisition of Digital Rights” Agreement (“the Agreement”) 15 with respect to ten films.1 (SAC ¶ 23.) 16 a digital distribution license for the ten films (not including 17 film “587: The Great Train Robbery”) in North America in exchange 18 for royalty payments to Lauter. 19 permit EBE to distribute free digital copies of the ten films or to 20 use free copies of the films as marketing promotions. (Id. ¶ 127.) 21 The Agreement provided that all relevant notices would be directed 22 to Vince Ravine, EBE’s attorney, agent, and representative. 23 26.) The Agreement granted EBE (Id. ¶ 25.) The Agreement did not (SAC ¶ 24 Lauter alleges that EBE breached the Agreement by packaging 25 free digital copies of the films together with DVD copies of the 26 1 27 28 The SAC alleges that Defendant Rosenblatt is Chairman, CEO, President, managing partner, member, and majority shareholder of EBE and related entities. (SAC ¶¶ 111, 114.) 2 1 same film and other films that Lauter did not own. 2 EBE also failed to pay royalties owed. 3 state court suit against EBE and obtained a default judgment for 4 the unpaid royalties. 5 regarding subsequent alleged breaches of the Agreement, but 6 received no response. 7 a result of EBE’s silence, continued breach, and perceived 8 insolvency, the Agreement terminated in February 2014. 9 150.) 10 (Id.) (SAC ¶ 44.) (SAC ¶ 127.) Lauter filed a Lauter attempted to contact EBE (Id. ¶ 45, 48.) Lauter concluded that, as (SAC ¶¶ 50, Nevertheless, Lauter alleges, EBE and associated entities continue to distribute the films. 11 (Id. ¶¶ 51-72.) After the initial filing of this lawsuit, Lauter alleges, EBE 12 shut down its office and disconnected all phone and e-mail 13 accounts. 14 EBE’s lenders, foreclosed upon EBE’s assets to satisfy a debt of 15 $37 million. 16 sufficient to cover its debts, but that BHCIF, an alleged insider, 17 nevertheless obtained EBE’s assets for only $15 million in canceled 18 debt. 19 (SAC ¶ 78.) Sometime later, Defendant BHCIF, one of (Id. ¶ 77.) Lauter alleges that EBE had assets (Id. ¶ 185.) Soon after, BHCIF transferred some of EBE’s former assets to 20 another entity, Defendant Echo Bridge Acquisition Corporation 21 (“EBAC”). 22 of EBE’s former assets. 23 EBAC were not good faith transferees of EBE’s assets, but rather 24 are EBE’s successors. 25 Ravine, EBE’s former attorney, agent, and representative, sent 26 Lauter an e-mail stating that EBAC had no relationship to Lauter or 27 to EBE. (SAC ¶ 82.) Within three months, EBAC had obtained all (Id. ¶ 85.) Lauter alleges that BHCIF and (Id. ¶¶ 86, 100-108.) In May 2015, Vince (Id. ¶ 73.) Lauter further alleges that EBAC now 28 3 1 distributes two films in violation of Lauter’s exclusive 2 distribution rights.2 3 (SAC ¶ 75.) Lauter’s SAC asserts the following claims against Defendants, 4 including EBAC: (1) Breach of Contract, (2) Relief from Transfer 5 under the Uniform Voidable Transaction Act (UVTA), (3) Interference 6 with Prospective Economic Advantage, (4) Copyright Infringement or 7 in the alternative Contributory or 8 Infringement, (5) Unfair Competition Claims in violation of 15 9 U.S.C. §1125 (a) [Lanham Act § 43 (a)] and California Business & Vicarious Liability Copyright 10 Professions Code § 17200. 11 unfair competition, intentional interference, and copyright 12 infringement against individual Defendant Michael Rosenblatt 13 (“Rosenblatt”) as well. 14 against it. 15 against him. 16 II. 17 Of these, the SAC alleges claims for EBAC now moves to dismiss all claims Rosenblatt moves separately to dismiss all claims Legal Standard A complaint will survive a motion to dismiss when it contains 18 “sufficient factual matter, accepted as true, to state a claim to 19 relief that is plausible on its face.” 20 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 21 570 (2007)). 22 “accept as true all allegations of material fact and must construe 23 those facts in the light most favorable to the plaintiff.” 24 v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). 25 need not include “detailed factual allegations,” it must offer 26 “more than an unadorned, the-defendant-unlawfully-harmed-me Ashcroft v. Iqbal, 556 U.S. When considering a Rule 12(b)(6) motion, a court must Although a complaint 27 2 28 Films “587: The Great Train Robbery” and “Disturbed.” 4 Resnick 1 accusation.” 2 allegations that are no more than a statement of a legal conclusion 3 “are not entitled to the assumption of truth.” Id. at 679. 4 other words, a pleading that merely offers “labels and 5 conclusions,” a “formulaic recitation of the elements,” or “naked 6 assertions” will not be sufficient to state a claim upon which 7 relief can be granted. 8 quotation marks omitted). 9 Iqbal, 556 U.S. at 678. Conclusory allegations or In Id. at 678 (citations and internal “When there are well-pleaded factual allegations, a court 10 should assume their veracity and then determine whether they 11 plausibly give rise to an entitlement of relief.” Id. at 679. 12 Plaintiffs must allege “plausible grounds to infer” that their 13 claims rise “above the speculative level.” Twombly, 550 U.S. at 14 555. “Determining whether a complaint states a plausible claim for 15 relief” is a “context-specific task that requires the reviewing 16 court to draw on its judicial experience and common sense.” 17 556 U.S. at 679. 18 III. Discussion Iqbal, 19 A. Successor Liability 20 Several of Plaintiff’s claims against EBAC are predicated upon 21 the allegation that EBAC is EBE’s successor in interest. 22 “[A] successor company has liability for a predecessor’s actions 23 if: (1) the successor expressly or impliedly agrees to assume the 24 subject liabilities; (2) the transaction amounts to a consolidation 25 or merger of the successor and the predecessor; (3) the successor 26 is a mere continuation of the predecessor; or (4) the transfer of 27 assets to the successor is for the fraudulent purpose of escaping 28 5 1 liability for the seller’s debts.” 2 Fargo & Co., 22 F.Supp.3d 1047, 1062 (C.D. Cal. 2014). 3 4 1. City of Los Angeles v. Wells Implied Assumption of Liability Under California law, “to allege that a company is a 5 successor-in-interest because it expressly or impliedly agreed to 6 assume the liabilities of a predecessor, plaintiff must not only 7 plead the existence of an assumption of liability but either the 8 terms of that assumption of liability (if express) or the factual 9 circumstances giving rise to an assumption of liability (if 10 implied).” 11 1104, 1127 (C.D. Cal. 2015). 12 implied assumption of liability, a plaintiff must allege that the 13 liabilities transferred were not limited, and that the parties 14 intended those unlimited liabilities to be transferred. 15 Nationstar Mortg., LLC, No. C 12-04606 SI, 2013 WL 2924441, at *5 16 (N.D. Cal. June 13, 2013). 17 Gerritsen v. Warner Bros. Entm’t Inc., 116 F. Supp. 3d In order to adequately plead an Pacini v. Here, Plaintiff does not allege that EBAC expressly assumed 18 all of EBE’s liabilities. With respect to implicit assumption of 19 liabilities, although Plaintiff alleges that BHCIF transferred 20 assets to EBAC, he specifically alleges that BHCIF transferred only 21 “certain” of EBE’s assets to EBAC. 22 account, the transfer to EBAC was not unlimited. 23 Plaintiff later alleges that EBAC did ultimately acquire all of 24 EBE’s assets, there is no allegation in the SAC about the nature of 25 that eventual takeover nor any allegation that EBAC or BHCIF 26 intended EBAC to assume all of EBE’s assets or liabilities. 27 28 6 Thus, by Plaintiff’s own Although Thus, 1 Plaintiff fails to allege sufficient facts to support an assumption 2 of liability theory. 3 4 2. Consolidation, Merger, and Mere Continuation The merger theory of successor liability applies only “where 5 one corporation takes all of another’s assets without providing any 6 consideration that could be made available to meet claims of the 7 other creditors.” 8 quotation marks and emphasis omitted). 9 continuation” theory for imposing successor liability as “merely a Gerritsen, 112 F. Supp. 3d at 1039 (internal Courts view the “mere 10 subset of the [consolidation or merger theory.]” Id. at 1040; see 11 also Franklin v. USX Corp., 87 Cal. App. 4th at 615, 626 (2001). 12 To prevail on such a theory, Plaintiff must demonstrate that “(1) 13 no adequate consideration was given for the predecessor 14 corporation’s assets and made available for meeting the claims of 15 its unsecured creditors; [and] (2) one or more persons were 16 officers, directors, or stockholders of both corporations.” 17 CenterPoint Energy, Inc. v. Superior Court, 157 Cal. App. 4th 1101, 18 1120 (2007). 19 As discussed above, the SAC is somewhat internally 20 inconsistent. On the one hand, Plaintiff alleges that BHCIF only 21 transferred “certain” assets to EBAC, including a film library, 22 trademarks, replication plant, businesses, and goodwill. 23 appears to be no dispute that other assets, including the 24 Agreement, were not initially assigned to EBAC.3 There Such allegations 25 26 27 3 Although the parties appear to agree that the Agreement was not initially conveyed to EBAC, they differ as to why. Plaintiff (continued...) 28 7 1 of a limited transfer of assets cannot support a merger theory of 2 successor liability. 3 Gerritsen, 112 F. Supp. 3d at 1039. At the same time, however, Plaintiff alleges that EBAC did 4 eventually acquire all of EBE’s assets. Such an allegation, 5 although relatively undeveloped in the SAC, could support a merger 6 claim. 7 regarding a mere continuation theory. 8 example, that as of May 31, 2013, EBE owed nearly $58 million to 9 creditors, of which $37 million was owed to BHCIF. Furthermore, the SAC makes other, more detailed allegations Plaintiff alleges, for Plaintiff 10 further alleges that, although EBE’s assets had a saleable value 11 sufficient to cover all of its debts, BHCIF acquired all of those 12 assets for only $15 million of canceled debt, leaving no assets to 13 pay EBE’s unsecured creditors. 14 App. 4th at 1120. 15 and corporate leadership among the various entities involved. 16 Plaintiffs alleges, for example, that BHCIF was a stockholder of 17 both EBE and EBAC, that Nathan Hart served as President of both 18 EBHE (an EBE entity) and EBAC, and that Gerald Houghton was a 19 Managing Member of both EBAC and BHCIF, which in turn controlled 20 EBAC. 21 enterprise, including EBAC’s use of EBE’s “same Wisconsin location, 22 with the same telephone number, the same President and employees, See CenterPoint Energy, 157 Cal. Plaintiff also alleges an overlap of ownership (SAC ¶¶ 101-1, 102.) Plaintiff also alleges a continuity of 23 3 24 25 26 27 28 (...continued) appears to suggest that the Agreement was not conveyed because it had already been terminated, while Defendant relies upon documentary evidence such as an “Assignment of Intangibles” to demonstrate that only some of EBE’s assets were assigned to EBAC. The parties’ arguments regarding the contents and meaning of this evidence and other documents, including an “Assignment of Specified Copyrights” and “Assignment of Bid” are ill suited to proceedings at the 12(b)(6) stage. 8 1 same film library, products, and packaging, and the same customers 2 . . . .” (SAC ¶ 101-4.) 3 allegations that BHCIF did not initially transfer all of EBE’s 4 assets to EBAC, the allegations of the SAC are sufficient to 5 sustain a de facto merger or mere continuation theory of successor 6 liability. 7 960 F.Supp.2d 1025, 1041 (E.D. Cal. 2013). 8 9 Thus, notwithstanding Plaintiff’s See, e.g. United States v. Sterling Centrecorp, Inc., 3. Fraudulent Purpose Plaintiff has also adequately alleged facts that support a 10 plausible inference that the transfer of assets from EBE to 11 EBAC through BHCIF was for the purpose of escaping liability. 12 See CenterPoint Energy, 157 Cal. App. 4th at 1120. 13 alleging that BHCIF obtained EBE’s assets for insufficient 14 consideration, thus frustrating claims by EBE’s unsecured 15 creditors, Plaintiff alleges that BHCIF was an insider of EBE. 16 BHCIF had a warrant to purchase sufficient shares of EBE stock to 17 take control of EBE, and received monthly reports of EBE’s 18 financial condition. 19 of EBE’s insolvency and well-positioned to orchestrate a fraudulent 20 transfer of EBE’s assets to EBAC, which BHCIF also owned and 21 managed. 22 as discussed above, further supports an interference that BHCIF 23 orchestrated the transfer of assets from EBE to EBAC for the 24 purpose of avoiding the former’s liabilities. 25 In addition to Thus, Plaintiff alleges, BHCIF was well aware The fact that EBAC allegedly continued EBE’s operations, Accordingly, to the extent EBAC seeks to dismiss claims 26 predicated upon a successorship theory of liability, the motion is 27 denied. 28 9 1 B. Uniform Voidable Transactions Act 2 EBAC also argues that Plaintiff’s Uniform Voidable 3 Transactions Act (“UVTA”) claim must be dismissed for failure to 4 specify the law under which the claim is brought. 5 formerly the Uniform Fraudulent Transfer Act, is a model code 6 section drafted by the Uniform Law Commission, and has not yet been 7 adopted in most states. See 8 9 0Act%20Amendments%20%282014%29%20- The UVTA, 10 %20Formerly%20Fraudulent%20Transfer%20Act. Claims under the UVTA, 11 or “in the nature of a claim for relief” under UVTA, are governed 12 “by the local law of the jurisdiction in which the debtor is 13 located when the transfer is made or the obligation is incurred.” 14 UVTA § 10 (b). 15 related Defendants are citizens of states that have not adopted the 16 UVTA. 17 See Cal. Civil Code § 3439 et seq. 18 asserts that EBE’s headquarters were in California and that EBAC is 19 currently headquartered there, the SAC contains no such 20 allegations, nor any other indication that Plaintiff’s UVTA claims 21 are based upon California law.4 22 does not give Defendant fair notice of the nature of or basis for 23 the claim. 24 Accordingly, Plaintiff’s UVTA claim is dismissed, with leave to 25 amend. Plaintiff’s SAC, however, alleges that EBE and California, in contrast, has adopted portions of the UVTA. Although Plaintiff’s Opposition Plaintiffs UVTA claim, therefore, See Twombly, 550 U.S. at 554; Fed. R. Civ. P. 8. 26 27 28 4 Plaintiff’s Opposition also asserts that California law applies by dint of a choice of law provision in the Agreement. 10 1 C. Interference With Prospective Economic Advantage 2 To satisfy the elements of the tort of intentional 3 interference with prospective economic advantage, a plaintiff must 4 show (1) an economic relationship between the plaintiff and some 5 third party, with the probability of future economic benefit to the 6 plaintiff; (2) the defendant’s knowledge of the relationship; (3) 7 intentional acts on the part of the defendant designed to disrupt 8 the relationship; (4) actual disruption of the relationship; and 9 (5) economic harm to the plaintiff proximately caused by the acts 10 of the defendant. Marsh v. Anesthesia Serv. Med. Group. Inc., 200 11 Cal. App. 4th 480, 504 (2011) (citing Korea Supply Co. v. Lockheed 12 Martin Corp., 29 Cal.4th 1134, 1153.) 13 element, “to show an economic relationship, the cases generally 14 agree that it must be reasonably probable the prospective economic 15 advantage would have been realized but for defendant’s 16 interference.” 17 Western Dietrich Bldg. Sys. LLC, No. CV 12-10791 DDP MRWX, 2014 WL 18 5475214, at *4 (C.D. Cal. Oct. 29, 2014) (citation omitted). 19 Plaintiff’s SAC alleges that Defendants interfered with For purposes of the first California Expanded Metal Prod. Co. v. Clark 20 Plaintiff’s economic relationships with seven third-party 21 licensees. 22 relationships with, or had already licensed films to, Avail-TVN, 23 Vubiquity, Amazon, and Google. 24 however, to support a claim that Plaintiff had an economic 25 relationship with Dish Network. 26 the SAC alleges only that Plaintiff “had been in negotiations” with 27 those distributors prior to entering into the Agreement with EBE. Of those, Plaintiff alleges that he had ongoing The SAC does not allege any facts, With respect to Apple and VUDU, 28 11 1 The SAC fails to allege, therefore, the existence of an economic 2 relationship between Plaintiff and Dish Network, Apple, or VUDU, 3 let alone the probability that Plaintiff would derive an economic 4 benefit from any such relationship. 5 Furthermore, the SAC does not plausibly allege that EBAC knew 6 of Plaintiff’s alleged relationship with any third party 7 distributors. 8 “Defendants,” without specifying which Defendant knew what, or how. 9 In addition, the SAC alleges that Defendants (as an As an initial matter, the SAC refers only to 10 undifferentiated group) knew of the relationships because (1) there 11 are few licensees of digital media rights in North America and (2) 12 Plaintiff had a “background as a film sales agent” and therefore 13 “could sell” to third party licensees. 14 assuming these allegations in the light most favorable to 15 Plaintiff, the mere fact that Plaintiff had the requisite 16 background and theoretical ability to grant licenses to the small 17 number of customers in the relevant market does not give rise to a 18 plausible inference that EBAC knew that Plaintiff had an economic 19 relationship with any of those potential customers. 20 21 22 (SAC ¶¶ 195-196.) Even Plaintiff’s intentional interference claims are, therefore, dismissed, with leave to amend.5 D. Copyright Infringement 23 24 5 25 26 27 28 The court notes that, with respect to films “587: The Great Train Robbery” and “Disturbed,” if Plaintiff successfully establishes EBAC’s successor liability, EBAC, as a potential party to a contract involving distribution of the two films, may not be liable for intentional interference with that same contract. See Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503, 514 (1994). 12 1 Plaintiff alleges that, notwithstanding the alleged 2 termination of the Digital Agreement between Plaintiff and EBE on 3 June 30, 2014, EBE continued to distribute digital copies of the 4 films. 5 liable for copyright infringement. However, even if not a successor 6 to EBE, Plaintiff alleges that EBAC is liable for copyright 7 infringement for its DVD distribution of the films “587: The Great 8 Train Robbery” and “Disturbed.” 9 Plaintiff asserts that as a successor to EBE, EBAC is To prove a claim for copyright infringement, a plaintiff must 10 show (1) ownership of a valid copyright and (2) copying of 11 constituent elements of the work that are original. 12 L.A. Printex Indus., Inc.v. Aeropostale, Inc., 676 F.3d 841, 846 13 (9th Cir. 2012) (citing Feist Publ’ns, Inc. v. Rural Tel. Serv. 14 Co., 499 U.S. 340, 361, (1991)); see also S.O.S., Inc. v. Payday, 15 Inc., 886 F.2d 1081, 1085 (9th Cir. 1989) (“To prevail on its claim 16 of copyright infringement, [the copyright owner] must prove . . . 17 ‘copying’ of protectable expression by [the accused infringer] 18 beyond the scope of [the] license.”). 19 regularly apply these requirements at the pleading stage. 20 v. Rubin Postaer & Assocs., No. CV 12-09263 DDP AGRX, 2014 WL 21 4627099, at *2 (C.D. Cal. Sept. 16, 2014). 22 contributorily or vicariously liable for copyright infringement. 23 MDY Indus., LLC v. Blizzard Entm't, Inc., 629 F.3d 928, 937 (9th 24 Cir. 2010). 25 it has “intentionally induced or encouraged direct infringement.” 26 Id. A defendant is liable for vicarious infringement if it (1) has 27 the right and ability to control the infringing party’s infringing Courts in this circuit Muromura A defendant may be held A defendant is liable for contributory infringement if 28 13 1 activity, and (2) derives a direct financial benefit from the 2 activity. 3 Id. at 937-8. EBAC’s arguments regarding Plaintiff’s copyright claim are 4 somewhat unclear.6 5 allege that EBAC copied any of his works, but rather premises his 6 copyright claim against EBAC on the allegation that EBE infringed. 7 (Mot. at 21:3-9.) 8 adequately alleged that EBAC is a successor to EBE. 9 the SAC does allege “that EBAC is selling and distributing two 10 films, ‘Disturbed’ and ‘Old 587: The Great Train Robbery,’ for 11 which Lauter is the exclusive North American licensee and 12 distributor,” and incorporates that allegation into Plaintiff’s 13 copyright claim. 14 First, EBAC contends that Plaintiff does not As discussed above, however, Plaintiff has Furthermore, (SAC ¶¶ 75, 210.) EBAC proceeds to argue that, even if Plaintiff’s allegations 15 are true, its DVD distribution of the two films does not “implicate 16 the digital rights at issue under the Digital Agreement.” 17 21:15.) 18 opposed to digital distribution rights, to Platinum, a wholly-owned 19 subsidiary of EBE, under a “Video Agreement” separate from the ten- 20 film “Digital Agreement.” (Mot. at Plaintiff does not dispute that he granted DVD rights, as (Opp. at 20.) Although EBAC does not 21 22 23 24 25 26 27 6 The court notes that EBAC does not directly address its copyright arguments in its Reply. Instead, EBAC suggests that this court should dismiss Plaintiff’s rescission claims, upon which, EBAC argues, Plaintiff’s copyright claim depends. (Reply at 6-7.) As discussed below, Plaintiff’s copyright claim does not appear to be predicated exclusively upon EBE’s conduct. In any event, EBAC did not raise its rescission argument in its motion, and this court will not consider it here. See, e.g. Ass'n of Irritated Residents v. C & R Vanderham Dairy, 435 F. Supp. 2d 1078, 1089 (E.D. Cal. 2006) (“It is inappropriate to consider arguments raised for the first time in a reply brief.”). 28 14 1 state as much in its motion, it appears to suggest that it obtained 2 Platinum’s interest in the Video Agreement and, therefore, had a 3 license to engage in the alleged DVD distribution. 4 however, not only disputes the validity of any supposed assignment 5 of the Video Agreement from Plaintinum to EBAC, but also asserts 6 that Platinum’s rights under the Video Agreement expired as early 7 as 2015 and no later than April 2017.7 8 distinction between the rights at issue in the Digital Agreement 9 and Video Agreement, therefore, do not warrant dismissal of 10 Plaintiff, (Opp. at 20-21.) The Plaintiff’s copyright claims against EBAC. 11 Lastly, EBAC asserts that “Plaintiff has not properly alleged 12 his foundational assumption that the digital rights to 587 and the 13 10 films were assigned to EBAC.” 14 this argument is not clear to the court. 15 Plaintiff does allege that those digital rights were assigned to 16 EBAC, and indeed must so allege if he is to maintain claims based 17 upon successor liability. 18 copyright claim against EBAC appears to have little relation to 19 allegations regarding digital rights. 20 unlawfully distributes DVD copies of “Old 587” and “Disturbed.” 21 Possible infirmities in Plaintiff’s allegations regarding the 22 assignment of digital rights to EBAC have no bearing on this 23 allegedly infringing video distribution. (Mot. at 22:4-6.) The import of As discussed above, Furthermore, Plaintiff’s direct Plaintiff alleges that EBAC 24 25 26 27 7 Implicit disagreements about the meaning of certain declarations and exhibits appear to be beyond the scope of 12(b)(6) proceedings. (See n.2, supra.) 28 15 1 2 Accordingly, EBAC’s Motion to Dismiss is denied with respect to Plaintiff’s copyright claim. 3 E. Lanham Act Unfair Competition 4 Plaintiff’s Eighth Cause of Action alleges that EBAC’s 5 infringing use Plaintiff’s unregistered trademarks in the titles of 6 the ten films constitutes unfair competition in violation of the 7 Lanham Act, 15 U.S.C. § 1125(a). 8 duplicative of Plaintiff’s copyright claim and preempted by the 9 Copyright Act. 10 EBAC argues that this claim is The court agrees. The Copyright Act preempts rights under common law or state 11 statutes that “are equivalent to any of the exclusive rights within 12 the general scope of copyright . . . .” 13 Supreme Court has extended the Copyright Act’s preemptive effect to 14 trademark claims under the Lanham Act, 15 U.S.C. § 1125, as well. 15 See Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 16 33–8 (2003). 17 court must first determine whether the subject matter of the 18 arguably preempted claim falls within the subject matter of 19 copyright and, if so, determine whether the rights asserted are 20 equivalent to the copyright rights set forth in 17 U.S.C. § 106. 21 Lions Gate Entm't Inc. v. TD Ameritrade Servs. Co., Inc., 170 F. 22 Supp. 3d 1249, 1264 (C.D. Cal. 2016). 23 17 U.S.C. § 301(a). The In conducting a preemption analysis, the reviewing Here, there is no serious dispute that the subject matter of 24 Plaintiff’s Lanham Act claim falls within the subject matter of 25 copyright and seeks to vindicate the same rights. 26 the Copyright Act explicitly includes motion pictures. 27 102(a)(6). Section 102 of 17 U.S.C. § Although Plaintiff’s three-sentence opposition 28 16 1 contends, without any citation to authority, that his Lanham Act 2 claim is limited to “proprietary film titles,” that 3 characterization is inconsistent with the substance of the SAC. 4 (Opp. at 25.) 5 claim regarding trademarks to titles fall outside of the Copyright 6 Act. 7 1110 (W.D. Wash. 2007), the court concluded that a trademark claim 8 based upon the title of a book was not preempted because the title 9 served a source-identifying function that was at the core of Indeed, some courts have concluded that Lanham Act In Bach v. Forever Living Products U.S., Inc., 473 F.Supp.2d 10 trademark law, and did not involve the protection of creative work 11 underpinning copyright law. 12 Capcom Co. Lard v. MRK Group, Inc., No. C-08-0904 RS, 2008 WL 13 4661479 at *12 (N.D. Cal. Oct. 20, 2008) (“[Counterclaimant] 14 sufficiently pled source identifying elements[, including portions 15 of a motion picture title], rather than the ideas and creative 16 content that Dastar prohibits. 17 are what the Lanham Act is intended to protect . . . .”). 18 Bach, 473 F.Supp.2d at 1118; see also These source identifying elements Here, however, notwithstanding the SAC’s brief reference to 19 consumer confusion, Plaintiff’s Lanham Act claim does not emphasize 20 the source-identifying role of the films’ titles. 21 Plaintiff’s Lanham Act claim seeks redress for EBAC’s unauthorized 22 distribution of Lauter’s films. 23 authority advertised and offered for sale Lauter’s films 24 ‘Disturbed’ and ‘587: The Great Train Robbery’ on its website . . . 25 .”). Instead, See FAC ¶ 264 (“EBAC without any Because that unauthorized distribution falls squarely within 26 27 28 17 1 the Copyright Act, Plaintiff’s Lanham Act claim against EBAC is 2 preempted.8 3 F. Claims against Rosenblatt 4 Although only some of the SAC’s claims for relief name 5 Rosenblatt individually, Plaintiff appears to allege that 6 Rosenblatt is individually liable as an alter ego of EBE.9 7 111, 114-15, 120-21). 8 alter ego and other allegations against Rosenblatt are inadequately 9 pled. 10 (SAC ¶¶ Defendant Rosenblatt argues that the SAC’s (Dkt. 126.) “The alter ego doctrine arises when a plaintiff comes into 11 court claiming that an opposing party is using the corporate form 12 unjustly and in derogation of the plaintiff’s interests. In certain 13 circumstances the court will disregard the corporate entity and 14 will hold the individual shareholders liable for the actions of the 15 corporation.” 16 1101, 1115 (C.D. Cal. 2003). 17 is to avoid injustice when there is an abuse of the corporate 18 privilege. 19 Nielson v. Union Bank of Cal., N.A., 290 F. Supp. 2d The purpose of the alter ego doctrine Id. Only “exceptional circumstances” allow a court to disregard 20 the corporate form and find liability as to individuals. Leek v. 21 Cooper, 194 Cal. App. 4th 399, 411 (2011). 22 factors may be pertinent to the alter ego inquiry, depending on the A wide variety of 23 8 24 25 26 27 28 Because claims other than Plaintiff’s copyright claim survive, this court need not address EBAC’s argument that the Copyright Act preempts Plaintiff’s unfair business practices claim under California Business & Professions Code § 17200. 9 The SAC appears to allege that Rosenblatt is an alter ego of EBE, Platinum, and Echo Bridge Home Entertainment (collectively, the “EBE Entities”) as well as that each of the entities is an alter ego of the other entities. 18 1 circumstances of the particular case. Assoc. Vendors, Inc. v. 2 Oakland Meat Co., 210 Cal. App. 2d 825, 838 (1962). 3 include, but are not limited to, commingling of funds, unauthorized 4 diversion of corporate funds to other uses, failure to maintain 5 adequate corporate records, sole or family ownership of all of the 6 stock in a corporation, failure to adequately capitalize a 7 corporation, use of a corporation as a conduit for the business of 8 an individual, disregard of legal formalities, and diversion of 9 assets from a corporation to a stockholder to the detriment of These factors 10 creditors. 11 Cal. App. 4th 799, 811-12 (2010); Assoc. Vendors, 210 Cal. App. 2d 12 at 838-39; but see Leek, 194 Cal. App. 4th at 415 (“An allegation 13 that a person owns all of the corporate stock and makes all of the 14 management decisions is insufficient to cause the court to 15 disregard the corporate entity.”). 16 ‘alter ego’ status are insufficient to state a claim. 17 plaintiff must allege specific facts supporting both of the 18 elements of alter ego liability.” 19 Inc., 112 F. Supp. 3d 1011, 1042 (C.D. Cal. 2015). 20 Schwarzkopf, 626 F.3d at 1038; Zoran Corp. v. Chen, 185 “Conclusory allegations of Rather, a Gerritsen v. Warner Bros. Entm't Here, the SAC alleges that Defendant Rosenblatt “disregarded 21 corporate formalities” by serving as Chairman, CEO, President, 22 managing partner, and member of all of the EBE Entities, and was a 23 majority shareholder of the entities. 24 also alleges that the EBE Entities were undercapitalized, as 25 evidenced by their dissolution, described above. 26 Plaintiff further alleges that Rosenblatt “used the corporate 27 28 19 (SAC ¶¶ 111, 114.) The SAC (SAC 115.) 1 entity unjustly to circumvent a statute . . . [by engaging] in 2 rampant copyright and trademark infringement . . . .” 3 (SAC ¶ 120.) Putting aside Plaintiff’s conclusory use of the elements of an 4 alter ego claim, the specific facts alleged cannot support the 5 imposition of alter ego liability upon Rosenblatt. 6 arguably allege a “critical fact” that the EBE Entities were 7 undercapitalized. 8, 394 F.3d 1143, 1149 (9th Cir. 2004). 9 have cautioned against relying too heavily in isolation on the The SAC does See Katzir's Floor & Home Design, Inc. v. However, “courts 10 factors of inadequate capitalization or concentration of ownership 11 and control.” 12 1205, 1213, 11 Cal. Rptr. 2d 918, 923 (1992). 13 disregard of corporate formalities, the SAC does not specify which 14 formalities Rosenblatt disregarded, but instead alleges only that 15 Rosenblatt served in multiple corporate roles and was a majority 16 shareholder.10 17 primary shareholder are inadequate as a matter of law to pierce the 18 corporate veil. 19 the corporation’s profits, and dominated and controlled the 20 corporation, that fact is insufficient by itself to make the 21 shareholder personally liable.” 22 F.3d at 1149 (9th Cir. 2004) (internal alteration, quotation marks, 23 and citation omitted). Mid-Century Ins. Co. v. Gardner, 9 Cal. App. 4th With respect to “Allegations that the defendant was the sole or Even if the sole shareholder is entitled to all of Katzir's Floor & Home Design, 394 Lastly, Plaintiff’s allegations regarding 24 25 26 27 28 10 The court does not address an apparent factual dispute regarding the timing of Rosenblatt’s resignation from the EBE’s entities. Although Plaintiff’s Opposition asserts that Rosenblatt either continued to be involved in the EBE Entities’ business or somehow disregarded corporate forms well into 2017, no such allegations appear in the SAC. 20 1 Rosenblatt’s unjust use of the corporate form to violate copyright 2 and trademark laws fails to identify any acts separate from those 3 of the corporate entity. 4 ego theory of liability, as “[c]orporate officers and directors 5 cannot ordinarily be held personally liable for the acts or 6 obligations of their corporations.” 7 Corp., 217 Cal. App. 3d 103, 113 (1990). 8 9 These allegations do not support an alter Taylor-Rush v. Multitech Nor has Plaintiff adequately alleged facts sufficient to establish Rosenblatt’s individual liability. Notwithstanding the 10 general distinction between the acts of corporate directors and 11 those of their corporations, individuals “may become liable if they 12 directly authorize or actively participate in wrongful or tortious 13 conduct.” 14 113 (1990). 15 Plaintiff intended allege Rosenblatt’s individual liability 16 separate from Plaintiff’s alter ego theory. 17 allege that Rosenblatt “engaged in tortious conduct,” it does so in 18 the context of alter ego allegations and an exhortation to this 19 Court to “disregard the corporate entities.” 20 Furthermore, each of the causes of action that lists Rosenblatt as 21 an individual Defendant alleges that “Rosenblatt is the alter ego 22 of EBE and is therefore liable for all damages herein described.” 23 (SAC ¶¶ 207, 229, 254, 271.) 24 that Rosenblatt “was aware of” tortious conduct and “had the right 25 and ability to supervise” other employees do not rise to the level 26 of active participation necessary to support individual liability. Taylor-Rush v. Multitech Corp., 217 Cal. App. 3d 103, As an initial matter, it is far from clear that Although the SAC does (SAC ¶ 121.) In any event, Plaintiff’s allegations 27 28 21 1 2 Accordingly, all claims against Rosenblatt are dismissed, with leave to amend. 3 IV. Conclusion 4 For the reasons stated above, EBAC's Motion to Dismiss is 5 GRANTED in part and DENIED in part. EBAC's motion is denied with 6 respect to Plaintiff's copyright claim and claims predicated upon 7 EBAC's successor liability. 8 interference claims are DISMISSED, with leave to amend. 9 Plaintiff's Lanham Act claim is DISMISSED, with prejudice. Plaintiff's UVTA claim and intentional 10 Defendant Rosenblatt's Motion is GRANTED. Plaintiff's claims 11 against Rosenblatt are DISMISSED, with leave to amend. 12 complaint shall be filed within fourteen days of the date of this 13 Order.11 Any amended 14 15 IT IS SO ORDERED. 16 17 Dated: December 6, 2017 18 DEAN D. PREGERSON United States District Judge 19 20 21 22 23 24 25 26 11 27 28 Leave to amend is limited to the scope described in this Order. Any amended claims with respect to Defendant Rosenblatt must also be consistent with the remainder of this Order. 22

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