Minden Pictures, Inc v. Pearson Education, Inc.
Filing
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ORDER GRANTING IN PART MOTION FOR LEAVE TO FILE THIRD AMENDED COMPLAINT AND VACATING HEARING by Hon. William Alsup granting in part and denying in part 49 Motion to Amend/Correct ;.(whalc1, COURT STAFF) (Filed on 1/7/2013)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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MINDEN PICTURES, INC.,
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For the Northern District of California
United States District Court
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No. C 11-05385 WHA
Plaintiff,
ORDER GRANTING IN PART
AND DENYING IN PART
MOTION FOR LEAVE TO FILE
THIRD AMENDED COMPLAINT
AND VACATING HEARING
v.
PEARSON EDUCATION, INC., et al.,
Defendants.
/
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INTRODUCTION
In this copyright action involving stock photos used in educational textbooks, plaintiff
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seeks leave to file a third amended complaint. For the reasons explained below, plaintiff’s
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motion is GRANTED IN PART AND DENIED IN PART.
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STATEMENT
The background of plaintiff’s efforts to plead its case is discussed at length in a prior
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order (Dkt. No. 39). Plaintiff now seeks leave to amend its complaint for the third time. The
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proposed amendments primarily pertain to plaintiff’s wish to add a claim for contributory
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copyright infringement by defendant resulting from defendant’s transmission and distribution of
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infringing works to third parties.
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Plaintiff also moves to add allegations concerning ancillary and custom publications, and
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to remove the “John Doe Printer” defendants. This aspect of the motion is unopposed by
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defendant.
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ANALYSIS
Under Rule 15, leave to amend should be given when justice so requires. The underlying
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purpose of Rule 15 is to facilitate decisions on the merits, rather than on the pleadings or
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technicalities. United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981). In the absence of an
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apparent reason, such as undue delay, bad faith, undue prejudice, or futility of amendment, leave
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should be “freely given.” Foman v. Davis, 371 U.S. 178, 182 (1962). In assessing these factors,
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all inferences should be made in favor of granting the motion. Griggs v. Pace Am. Group, Inc.,
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For the Northern District of California
United States District Court
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170 F.3d 877, 880 (9th Cir. 1999).
Nevertheless, “when a district court has already granted a plaintiff leave to amend, its
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discretion in deciding subsequent motions to amend is ‘particularly broad.’” Chodos v. West
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Publ’g Co., 292 F.3d 992, 1003 (9th Cir. 2002). A court does not abuse its discretion in denying
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a motion to amend a complaint when the movant presents no new facts but only new theories,
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and provides no satisfactory explanation for his failure to develop his contentions originally.
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Vincent v. Trend Western Tech. Corp., 828 F.2d 563, 570–71 (9th Cir. 1987).
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Rule 16(b) requires that the time to amend the pleadings be limited by a scheduling order.
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A party seeking to amend after the date set in a scheduling order must first show “good cause.”
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FRCP 16(b)(4).
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As a threshold matter, defendant contends that the Court lacks subject-matter jurisdiction
SUBJECT-MATTER JURISDICTION.
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over plaintiff’s proposed claims for contributory infringement based on the actions of third
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parties outside the United States. This order disagrees.
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It is a well-established principle that, as a general rule, the Copyright Act has no
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extraterritorial effect. L.A. News Serv. v. Reuters Television Int’l, Ltd., 149 F.3d 987, 990 (9th
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Cir. 1998). There is an exception known as the predicate act doctrine whereby a plaintiff can
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collect damages for foreign copyright violations that are directly linked to the domestic
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copyright violation. Id. at 991–992. Defendant contends this exception is inapplicable because
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the predicate act doctrine “applies to damages arising from infringement within the United
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States; it does not permit a plaintiff to assert claims for contributory infringement arising from
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direct infringement that occurs outside the United States” (Opp. 11 (emphasis in original)).
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There is a split in authority as to whether the extraterritoriality question is jurisdictional
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in nature, or should instead be analyzed in terms of whether the extraterritorial acts state a claim
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for infringement. Litecubes, LLC v. Northern Light Prods., Inc., 523 F.3d 1353, 1367–68 (Fed.
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Cir. 2008). Assuming, arguendo, that it is jurisdictional, this order finds that subject-matter
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jurisdiction exists.
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Defendant misreads the holding of the controlling precedent in this circuit, L.A. News
Services v. Reuters Television International, Ltd. Although the holding in that decision did not
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For the Northern District of California
United States District Court
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specifically refer to “contributory infringement,” our court of appeals was squarely faced with a
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contributory infringement claim involving foreign infringements and predicate domestic
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infringement. In that context, our court of appeals held that the plaintiff was “entitled to recover
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damages flowing from exploitation abroad of the domestic acts of infringement committed by
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defendants.” 149 F.3d at 992.
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The present action is analogous. Here, plaintiff’s proposed third amended complaint
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alleges that “[u]pon information and belief, Pearson’s unauthorized reproduction and distribution
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to the Third Parties took place in the United States” (Dkt. No. 49-1 ¶ 31). Thus, plaintiff alleges
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a domestic predicate act of infringement. The third-party extraterritorial acts flow from this
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infringement because plaintiff alleges that the foreign third parties then published local reprints
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of the domestically-infringing works (id. ¶ 32).
UNDUE DELAY AND PREJUDICE.
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2.
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The parties exchanged initial disclosures on February 9, 2012 (Dkt. No. 41) and full
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discovery began by at least May 4 (due to an order stating that discovery should begin upon
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resolution of defendant’s motion to dismiss). Plaintiff filed the instant motion to amend more
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than six months later, on the last day permitted for pleading amendments in the case
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management scheduling order. Defendant complains that this constitutes undue delay, and that it
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would be prejudiced by the amendment both because of the additional discovery burdens, and
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because adding the new claim would delay resolution of the existing claims.
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Plaintiff’s arguments against prejudice are unpersuasive. The contributory infringement
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claim, as pled in the proposed amendments, does not pertain to a single, or even a handful of
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third parties. The proposed amendment asserts that defendant facilitates international
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distribution through its own international rights management group. This group “arranges for
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approximately 4,000 third-party licenses annually, which includes translations in approximately
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50 languages read around the world” (Dkt. No. 49-1 ¶ 30). There is no indication that the “third
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parties” implicated in the amendments will be limited to any reasonable number of entities. This
creates the potential for a massive expansion of the scope of discovery — with international
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For the Northern District of California
United States District Court
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implications — and an onerous resulting burden on defendant.
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Plaintiff asserts that this discovery would not result in additional delay given that the
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non-expert discovery cutoff is April 30. This date is less than four months from the date of the
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present order. Given that the parties have not yet completed what plaintiff terms the “opening
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round” of discovery after seven months, plaintiff’s optimism is unwarranted. Defendant, for its
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part, faces a choice between heavy discovery burdens within a narrow window or additional
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delay to complete discovery. Prejudice to the defendant seems very likely. Against this
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backdrop, plaintiff’s timing of the proposed amendments can only be seen as a dilatory tactic.
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Plaintiff fails to provide an explanation for why it didn’t plead contributory infringement
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in prior versions of its complaint. Instead, plaintiff’s justification for the amendments is
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contemporaneous. Plaintiff asserts that defendant has refused to provide discovery related to
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contributory infringement because it was not pled in the complaint. Plaintiff seeks to amend in
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order to make this discovery relevant and proceed with its document requests. Put differently,
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plaintiff seeks to amend its complaint so that it can conduct a discovery fishing expedition. The
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clear objective of the amendments would be to shore up the amended allegations, which were
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earlier thinly pled “on information and belief.”
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There is no apparent reason why plaintiff did not plead contributory infringement in the
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prior versions of its complaint. Given the likely prejudice to defendant, plaintiff will not be
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permitted an additional chance to amend at this late stage. This is not a situation where
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documents produced during discovery made a party aware of potential claims. Plaintiff was
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clearly aware of this potential claim for contributory infringement at the time it propounded its
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unanswered discovery requests. The appropriate time to have pled it was at the outset of the
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action — or at least at the time plaintiff filed its second amended complaint.
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Plaintiff points out that the filing of its motion for leave to amend fell within the window
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specified in the case management scheduling order. Given that plaintiff filed its motion after the
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courthouse closed on the last possible day, plaintiff’s position is not compelling. Nor can
plaintiff shift the blame to defendant because of settlement overtures sent via email. The case
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For the Northern District of California
United States District Court
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management scheduling order specifically states that the parties should “not ask for any
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extensions on the ground of settlement discussions or on the ground that the parties experienced
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delays in scheduling settlement conferences” (Dkt. No. 44 at ¶ 13). By at least mid-May, it was
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plaintiff’s responsibility to plow ahead with discovery. Plaintiff chose not to do so.
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Plaintiff’s reliance on the pending action Carr Clifton v. Pearson Education, Inc., No.
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11-3640 (N.D. Cal.) (Judge Davila), is likewise misplaced. In that action, the plaintiff was
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permitted to file a first amended complaint where the stipulated amendments were limited to the
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issue of ancillary and custom editions (see No. 11-3640, Dkt. Nos. 63, 65). The issue of
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international contributory infringement was not present.
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3.
ANCILLARY AND CUSTOM PUBLICATIONS, AND JOHN DOE PRINTER
DEFENDANTS.
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Defendant does not oppose plaintiff’s motion insofar as it seeks to add allegations
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concerning ancillary and custom publications, and to remove John Doe Printer defendants.
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Accordingly, plaintiff’s motion to amend regarding these issues (deletion of ¶¶ 4, 36–38, and
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modification of ¶¶ 24, 27) is GRANTED.
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CONCLUSION
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Plaintiff’s motion for leave file a third amended complaint is GRANTED IN PART AND
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DENIED IN PART. Plaintiff shall file its third amended complaint containing only the
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amendments permitted by subsection three of this order by JANUARY 9 AT NOON, and the
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answer thereto is due by JANUARY 23 AT NOON. The January 10 hearing is VACATED.
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IT IS SO ORDERED.
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Dated: January 7, 2013.
WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE
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For the Northern District of California
United States District Court
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