Minden Pictures, Inc v. Pearson Education, Inc.

Filing 57

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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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 MINDEN PICTURES, INC., 11 For the Northern District of California United States District Court 10 12 13 14 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. / 15 16 17 18 INTRODUCTION In this copyright action involving stock photos used in educational textbooks, plaintiff 19 seeks leave to file a third amended complaint. For the reasons explained below, plaintiff’s 20 motion is GRANTED IN PART AND DENIED IN PART. 21 22 STATEMENT The background of plaintiff’s efforts to plead its case is discussed at length in a prior 23 order (Dkt. No. 39). Plaintiff now seeks leave to amend its complaint for the third time. The 24 proposed amendments primarily pertain to plaintiff’s wish to add a claim for contributory 25 copyright infringement by defendant resulting from defendant’s transmission and distribution of 26 infringing works to third parties. 27 28 Plaintiff also moves to add allegations concerning ancillary and custom publications, and 1 to remove the “John Doe Printer” defendants. This aspect of the motion is unopposed by 2 defendant. 3 4 ANALYSIS Under Rule 15, leave to amend should be given when justice so requires. The underlying 5 purpose of Rule 15 is to facilitate decisions on the merits, rather than on the pleadings or 6 technicalities. United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981). In the absence of an 7 apparent reason, such as undue delay, bad faith, undue prejudice, or futility of amendment, leave 8 should be “freely given.” Foman v. Davis, 371 U.S. 178, 182 (1962). In assessing these factors, 9 all inferences should be made in favor of granting the motion. Griggs v. Pace Am. Group, Inc., 11 For the Northern District of California United States District Court 10 170 F.3d 877, 880 (9th Cir. 1999). Nevertheless, “when a district court has already granted a plaintiff leave to amend, its 12 discretion in deciding subsequent motions to amend is ‘particularly broad.’” Chodos v. West 13 Publ’g Co., 292 F.3d 992, 1003 (9th Cir. 2002). A court does not abuse its discretion in denying 14 a motion to amend a complaint when the movant presents no new facts but only new theories, 15 and provides no satisfactory explanation for his failure to develop his contentions originally. 16 Vincent v. Trend Western Tech. Corp., 828 F.2d 563, 570–71 (9th Cir. 1987). 17 Rule 16(b) requires that the time to amend the pleadings be limited by a scheduling order. 18 A party seeking to amend after the date set in a scheduling order must first show “good cause.” 19 FRCP 16(b)(4). 20 1. 21 As a threshold matter, defendant contends that the Court lacks subject-matter jurisdiction SUBJECT-MATTER JURISDICTION. 22 over plaintiff’s proposed claims for contributory infringement based on the actions of third 23 parties outside the United States. This order disagrees. 24 It is a well-established principle that, as a general rule, the Copyright Act has no 25 extraterritorial effect. L.A. News Serv. v. Reuters Television Int’l, Ltd., 149 F.3d 987, 990 (9th 26 Cir. 1998). There is an exception known as the predicate act doctrine whereby a plaintiff can 27 collect damages for foreign copyright violations that are directly linked to the domestic 28 copyright violation. Id. at 991–992. Defendant contends this exception is inapplicable because 2 1 the predicate act doctrine “applies to damages arising from infringement within the United 2 States; it does not permit a plaintiff to assert claims for contributory infringement arising from 3 direct infringement that occurs outside the United States” (Opp. 11 (emphasis in original)). 4 There is a split in authority as to whether the extraterritoriality question is jurisdictional 5 in nature, or should instead be analyzed in terms of whether the extraterritorial acts state a claim 6 for infringement. Litecubes, LLC v. Northern Light Prods., Inc., 523 F.3d 1353, 1367–68 (Fed. 7 Cir. 2008). Assuming, arguendo, that it is jurisdictional, this order finds that subject-matter 8 jurisdiction exists. 9 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 11 For the Northern District of California United States District Court 10 specifically refer to “contributory infringement,” our court of appeals was squarely faced with a 12 contributory infringement claim involving foreign infringements and predicate domestic 13 infringement. In that context, our court of appeals held that the plaintiff was “entitled to recover 14 damages flowing from exploitation abroad of the domestic acts of infringement committed by 15 defendants.” 149 F.3d at 992. 16 The present action is analogous. Here, plaintiff’s proposed third amended complaint 17 alleges that “[u]pon information and belief, Pearson’s unauthorized reproduction and distribution 18 to the Third Parties took place in the United States” (Dkt. No. 49-1 ¶ 31). Thus, plaintiff alleges 19 a domestic predicate act of infringement. The third-party extraterritorial acts flow from this 20 infringement because plaintiff alleges that the foreign third parties then published local reprints 21 of the domestically-infringing works (id. ¶ 32). UNDUE DELAY AND PREJUDICE. 22 2. 23 The parties exchanged initial disclosures on February 9, 2012 (Dkt. No. 41) and full 24 discovery began by at least May 4 (due to an order stating that discovery should begin upon 25 resolution of defendant’s motion to dismiss). Plaintiff filed the instant motion to amend more 26 than six months later, on the last day permitted for pleading amendments in the case 27 management scheduling order. Defendant complains that this constitutes undue delay, and that it 28 3 1 would be prejudiced by the amendment both because of the additional discovery burdens, and 2 because adding the new claim would delay resolution of the existing claims. 3 Plaintiff’s arguments against prejudice are unpersuasive. The contributory infringement 4 claim, as pled in the proposed amendments, does not pertain to a single, or even a handful of 5 third parties. The proposed amendment asserts that defendant facilitates international 6 distribution through its own international rights management group. This group “arranges for 7 approximately 4,000 third-party licenses annually, which includes translations in approximately 8 50 languages read around the world” (Dkt. No. 49-1 ¶ 30). There is no indication that the “third 9 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 11 For the Northern District of California United States District Court 10 implications — and an onerous resulting burden on defendant. 12 Plaintiff asserts that this discovery would not result in additional delay given that the 13 non-expert discovery cutoff is April 30. This date is less than four months from the date of the 14 present order. Given that the parties have not yet completed what plaintiff terms the “opening 15 round” of discovery after seven months, plaintiff’s optimism is unwarranted. Defendant, for its 16 part, faces a choice between heavy discovery burdens within a narrow window or additional 17 delay to complete discovery. Prejudice to the defendant seems very likely. Against this 18 backdrop, plaintiff’s timing of the proposed amendments can only be seen as a dilatory tactic. 19 Plaintiff fails to provide an explanation for why it didn’t plead contributory infringement 20 in prior versions of its complaint. Instead, plaintiff’s justification for the amendments is 21 contemporaneous. Plaintiff asserts that defendant has refused to provide discovery related to 22 contributory infringement because it was not pled in the complaint. Plaintiff seeks to amend in 23 order to make this discovery relevant and proceed with its document requests. Put differently, 24 plaintiff seeks to amend its complaint so that it can conduct a discovery fishing expedition. The 25 clear objective of the amendments would be to shore up the amended allegations, which were 26 earlier thinly pled “on information and belief.” 27 There is no apparent reason why plaintiff did not plead contributory infringement in the 28 4 1 prior versions of its complaint. Given the likely prejudice to defendant, plaintiff will not be 2 permitted an additional chance to amend at this late stage. This is not a situation where 3 documents produced during discovery made a party aware of potential claims. Plaintiff was 4 clearly aware of this potential claim for contributory infringement at the time it propounded its 5 unanswered discovery requests. The appropriate time to have pled it was at the outset of the 6 action — or at least at the time plaintiff filed its second amended complaint. 7 Plaintiff points out that the filing of its motion for leave to amend fell within the window 8 specified in the case management scheduling order. Given that plaintiff filed its motion after the 9 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 11 For the Northern District of California United States District Court 10 management scheduling order specifically states that the parties should “not ask for any 12 extensions on the ground of settlement discussions or on the ground that the parties experienced 13 delays in scheduling settlement conferences” (Dkt. No. 44 at ¶ 13). By at least mid-May, it was 14 plaintiff’s responsibility to plow ahead with discovery. Plaintiff chose not to do so. 15 Plaintiff’s reliance on the pending action Carr Clifton v. Pearson Education, Inc., No. 16 11-3640 (N.D. Cal.) (Judge Davila), is likewise misplaced. In that action, the plaintiff was 17 permitted to file a first amended complaint where the stipulated amendments were limited to the 18 issue of ancillary and custom editions (see No. 11-3640, Dkt. Nos. 63, 65). The issue of 19 international contributory infringement was not present. 20 3. ANCILLARY AND CUSTOM PUBLICATIONS, AND JOHN DOE PRINTER DEFENDANTS. 21 Defendant does not oppose plaintiff’s motion insofar as it seeks to add allegations 22 concerning ancillary and custom publications, and to remove John Doe Printer defendants. 23 Accordingly, plaintiff’s motion to amend regarding these issues (deletion of ¶¶ 4, 36–38, and 24 modification of ¶¶ 24, 27) is GRANTED. 25 CONCLUSION 26 Plaintiff’s motion for leave file a third amended complaint is GRANTED IN PART AND 27 DENIED IN PART. Plaintiff shall file its third amended complaint containing only the 28 5 1 amendments permitted by subsection three of this order by JANUARY 9 AT NOON, and the 2 answer thereto is due by JANUARY 23 AT NOON. The January 10 hearing is VACATED. 3 4 5 IT IS SO ORDERED. 6 7 Dated: January 7, 2013. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 8 9 11 For the Northern District of California United States District Court 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6

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