Andersen et al v. Stability AI Ltd. et al

Filing 173

RESPONSE re 165 Request for Judicial Notice and Consideration of Documents Incorporated by Reference in Support of Defandant Runway AI, Inc.'s Motion to Dismiss First Amended Complaint by Sarah Andersen, Gerald Brom, Adam Ellis, Julia Kaye, Gregory Manchess, Kelly McKernan, Karla Ortiz, Grzegorz Rutkowski, H Southworth, Jingna Zhang. (Saveri, Joseph) (Filed on 3/21/2024) Modified on 3/22/2024 (kmm2, COURT STAFF).

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Joseph R. Saveri (State Bar No. 130064)
Cadio Zirpoli (State Bar No. 179108)
Christopher K.L. Young (State Bar No. 318371)
David W. Lerch (State Bar No. 229411)
Elissa A. Buchanan (State Bar No. 249996)
Kathleen J. McMahon (State Bar No. 340007)
JOSEPH SAVERI LAW FIRM, LLP
601 California Street, Suite 1000
San Francisco, CA 94108
Telephone: [phone]
Facsimile:
[phone]
Email:
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
Matthew Butterick (State Bar No. 250953)
1920 Hillhurst Avenue, #406
Los Angeles, CA 90027
Telephone: [phone]
Facsimile:
[phone]
Email:
[e-mail]

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Counsel for Individual and Representative
Plaintiffs and the Proposed Class

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[Additional Counsel Listed on Signature Page]

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION

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SARAH ANDERSEN, et al.,

Case No. 3:23-cv-00201-WHO

Individual and Representative Plaintiffs,
v.
STABILITY AI LTD., et al.,
Defendants.

PLAINTIFFS’ OPPOSITION TO
DEFENDANT RUNWAY AI, INC.’S
REQUEST FOR JUDICIAL NOTICE AND
CONSIDERATION OF DOCUMENTS
INCORPORATED BY REFERENCE IN
SUPPORT OF DEFENDANT RUNWAY AI,
INC.’S MOTION TO DISMISS
PLAINTIFFS’ FIRST AMENDED
COMPLAINT
Date:
Time:
Location:
Before:

May 8, 2024
2:00 pm
Videoconference
Hon. William H. Orrick

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Case No. 3:23-cv-00201-WHO
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PLAINTIFFS’ OPPOSITION TO DEFENDANT RUNWAY AI, INC.’S REQUEST FOR JUDICIAL NOTICE
AND CONSIDERATION OF DOCUMENTS INCORPORATED BY REFERENCE

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TABLE OF CONTENTS

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I.

INTRODUCTION .............................................................................................................. 1

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1.

Runway’s Request for Judicial Notice of Exhibits A and B Is Improper. .................2

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2.

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Runway’s Request to Incorporate Exhibits C, D, E, F, and G by Reference
Improperly Seek to Raise Factual Disputes and Fails to Demonstrate that The
Exhibits are Central to Plaintiffs’ Claims. ................................................................ 3

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A.

Exhibits C-E. ................................................................................................ 3

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B.

Exhibits F and G. ......................................................................................... 5

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III.

CONCLUSION ...................................................................................................................6

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Case No. 3:23-cv-00201-WHO
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PLAINTIFFS’ OPPOSITION TO DEFENDANT RUNWAY AI, INC.’S REQUEST FOR JUDICIAL NOTICE
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TABLE OF AUTHORITIES

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Cases

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Anschutz Corp. v. Merrill Lynch & Co., 785 F. Supp. 2d 799 (N.D. Cal. 2011) .................................2

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Ashcroft v. Iqbal, 556 U.S. 662 (2009) .............................................................................................. 3

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Coto Settlement v. Eisenberg, 593 F.3d 1031 (9th Cir. 2010) .............................................................. 5

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In re Google Assistant Priv. Litig., 457 F. Supp. 3d 797 (N.D. Cal. 2020) .........................................2
Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988 (9th Cir. 2018) .............................................. 3, 4
M/V Am. Queen v. San Diego Marine Constr. Corp., 708 F.2d 1483 (9th Cir. 1983) ......................... 3
Mophie, Inc. v. Shah, No. CV 13-1321-DMGJEMX, 2014 WL 10988339 (C.D. Cal.
July 24, 2014) ............................................................................................................................. 5
In re NVIDIA Corp. Sec. Litig., 768 F.3d 1046 (9th Cir. 2014)......................................................... 5

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Pirani v. Netflix, Inc., No. 22-CV-02672-JST, 2024 WL 69069 (N.D. Cal. Feb. 5,
2024) ..........................................................................................................................................2

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Rollins v. Dignity Health, 338 F. Supp. 3d 1025 (N.D. Cal. 2018) ....................................................6

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Sgro v. Danone Waters of N. Am., Inc., 532 F.3d 940 (9th Cir. 2008)...............................................4

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United States v. Ritchie, 342 F.3d 903 (9th Cir. 2003) .................................................................. 4, 5
Wyatt v. Terhune, 315 F.3d 1108 (9th Cir. 2003) .............................................................................. 3

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Case No. 3:23-cv-00201-WHO
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PLAINTIFFS’ OPPOSITION TO DEFENDANT RUNWAY AI, INC.’S REQUEST FOR JUDICIAL NOTICE
AND CONSIDERATION OF DOCUMENTS INCORPORATED BY REFERENCE

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I.

INTRODUCTION
In response to Plaintiffs’ sufficiently alleged First Amended Complaint (“FAC”),

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Defendant Runway AI, Inc. (“Runway”) attempts to impermissibly use both the doctrines of

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incorporation by reference and judicial notice to introduce factual issues at the pleading stage. In

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its Request for Judicial Notice and Incorporation by Reference, Runway asks the Court to take

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notice of judicial of pleadings from a separate case, Kadrey et al., v. Meta Platforms, Inc

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(“Kadrey”), which involved different parties, different allegations, and different AI models from

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the present case. ECF No. 165 at 1 (“Runway RJN”). Although the Court could properly

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judicially notice these pleadings for purposes other than the facts and content included within

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them (i.e., that the pleadings were filed on a certain date or in a certain sequence), Runway

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instead argues that the Court should judicially notice these documents for the similarity of the

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issues and arguments in the Kadrey case to the issues and arguments in this action. Runway RJN

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at 3. Because Runway has not set forth a proper reason for requesting judicial notice of the Kadrey

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pleadings, the Court should decline to grant Runway’s request and refrain from allowing Runway

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to short-circuit fact-finding in this litigation by importing facts from another case which are not

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subject to fact-finding by a jury or this Court.

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Runway also seeks to have the Court incorporate by reference three research papers to

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which the FAC already includes website citations. Therefore, all the content that Runway refers

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to in its RJN has already been incorporated into the FAC. In addition, the doctrine of

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incorporation by reference is inappropriate in this context because Exhibits C through E are not

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“central” to Plaintiffs’ direct infringement claim against Runway. Further, Runway aspires to use

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Exhibits C through G for the sole purpose of contesting Plaintiffs’ factual allegations and in clear

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contravention of the Court’s obligation at the motion to dismiss stage to “assume that the

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plaintiff’s allegations are true and . . . draw all reasonable inferences in the plaintiff’s favor.”

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Anschutz Corp. v. Merrill Lynch & Co., 785 F. Supp. 2d 799, 810 (N.D. Cal. 2011).

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One of the papers that Runway seeks to incorporate by reference is only cited once in the
FAC. The FAC does describe the other two research papers in more detail, but as examples

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Case No. 3:23-cv-00201-WHO
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PLAINTIFFS’ OPPOSITION TO DEFENDANT RUNWAY AI, INC.’S REQUEST FOR JUDICIAL NOTICE
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which bolster and corroborate the allegations in the FAC as to how the AI models work, rather

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than as documents which are central and dispositive to the claims (i.e., a contract which is the

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subject of a breach of contract claim). Therefore, these research papers are not central to the

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FAC, and in addition, Runway has not explained how the portions of the research papers that

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Plaintiffs have cited and referred to would somehow be misleading to the Court standing alone.

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Instead, Runway has attempted to add its own additional facts to Plaintiffs’ allegations in the

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FAC.

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Finally, in Exhibits F and G, Runway seeks to incorporate two documents which are also

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available on websites that Plaintiffs have already included in the FAC (a Stable Diffusion license

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and webpage depicting a Stable Diffusion model card). To the extent that Runway requests that

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the Court make particular findings of fact as to content on the website, Runway has provided no

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satisfactory argument or rationale for the Court to do so. Because the FAC already includes links

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to the two websites, incorporation by reference is unnecessary.

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II.

ARGUMENT

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In general, courts “may not consider any material beyond the pleadings in ruling on a Rule

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12(b)(6) motion.” Pirani v. Netflix, Inc., No. 22-CV-02672-JST, 2024 WL 69069, at *6 (N.D. Cal.

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Feb. 5, 2024) (quoting United States v. Corinthian Colls., 655 F.3d 984, 998 (9th Cir. 2011)).

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However, two doctrines allow a court to consider material beyond the complaint: incorporation by

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reference in the complaint and judicial notice under Federal Rule of Evidence 201. In re Google

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Assistant Priv. Litig., 457 F. Supp. 3d 797, 812 (N.D. Cal. 2020). Regardless, the Ninth Circuit has

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warned that “[i]f defendants are permitted to present their own version of the facts at the

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pleading stage—and district courts accept those facts as uncontroverted and true—it becomes

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near impossible for even the most aggrieved plaintiff to demonstrate a sufficiently ‘plausible’

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claim for relief.” Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 999 (9th Cir. 2018) (quoting

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Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

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1.

Runway’s request for judicial notice of Exhibits A and B is improper.

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Runway expressly states that it seeks judicial notice of the Kadrey pleadings because “[t]he

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PLAINTIFFS’ OPPOSITION TO DEFENDANT RUNWAY AI, INC.’S REQUEST FOR JUDICIAL NOTICE
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court records show how other parties in this District have approached similar issues to this case”

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Runway RJN at 3. This is plainly an improper reason for the Court to take judicial notice of these

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documents. “As a general rule, a court may not take judicial notice of proceedings or records in

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another cause so as to supply, without formal introduction of evidence, facts essential to support a

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contention in a cause then before it.” M/V Am. Queen v. San Diego Marine Constr. Corp., 708 F.2d

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1483, 1491 (9th Cir. 1983); see also Wyatt v. Terhune, 315 F.3d 1108, 1108 n.5 (9th Cir. 2003)

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(“Factual findings in one case ordinarily are not admissible for their truth in another case through

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judicial notice.”) (overruled on other grounds).

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Runway does not provide any specific argument regarding whether the issues in Kadrey

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are similar to the issues before this Court. Nor does Runway provide any indication of what the

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Court should take judicial notice of in the Kadrey pleadings. The Ninth Circuit is clear that a

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court should not take judicial notice of facts in another case as a way to short-circuit the

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adjudicative process and introduce facts into the record deemed as true without any further

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factfinding. See Khoja, 899 F.3d at 998-99 (“[T]he unscrupulous use of extrinsic documents to

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resolve competing theories against the complaint risks premature dismissals of plausible claims

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that may turn out to be valid after discovery.”). Accordingly, Plaintiffs ask the Court to deny

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Runway’s Request for Judicial Notice as to the Kadrey pleadings.

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Runway’s request to incorporate Exhibits C, D, E, F, and G by reference
improperly seek to raise factual disputes and fails to demonstrate that the
Exhibits are central to Plaintiffs’ claims.

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A.

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2.

Exhibits C-E.

Incorporating the research papers in Exhibits C through E by reference for the mere

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purpose of bolstering Runway’s factual disputes is contrary to the purpose of the doctrine; to

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ensure that that a plaintiff cannot circumvent pleading requirements by selectively quoting

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documents out of context to state a claim when it is clear from undisputable facts that the

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contract or other document featured in the complaint actually states the opposite of what the

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Plaintiff alleges. See Khoja, 899 F.3d at 1002. Admission of the three research papers would

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provide a vehicle for the Court to establish the facts that Runway has selected as true, weigh those

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AND INCORPORATION BY REFERENCE

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facts against the allegations that Plaintiffs have pled in the FAC, and then decide whether to

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dismiss the claims, all without the benefit of fact discovery. This is not the purpose of the

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incorporation by reference doctrine and risks “resolving factual disputes at the pleading stage.”

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Id. at 1003 (“[I]t is improper to assume the truth of an incorporated document if such

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assumptions only serve to dispute facts stated in a well-pleaded complaint.”); see also Sgro v.

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Danone Waters of N. Am., Inc., 532 F.3d 940, 942, n.1 (9th Cir. 2008) (finding it proper to consider

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disability benefits plan referenced in complaint, but declining to accept truth of the plan’s

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contents where the parties disputed whether defendant actually implemented the plan according

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to its terms). Finally, the FAC includes a hyperlink to each of the three papers, such that the

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allegations regarding the papers are not misleading or otherwise incomplete.
Further, contrary to Runway’s assertions, the FAC does not cite extensively to the three

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research papers that Runways seeks to incorporate. Neither are these papers central or dispositive

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to the claims set forth in the FAC. The Webster paper (Ex. D), which Runway seeks to

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incorporate by reference in its entirety is referred to only once by the FAC. FAC at ¶ 138. See

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Khoja, 899 F.3d at 1003 (stating that where a document was quoted once in a two-sentence

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footnote, incorporation by reference was improper because “[f ]or ‘extensively’ to mean anything

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under Ritchie, it should, ordinarily at least, mean more than once”) (quoting Coto Settlement v.

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Eisenberg, 593 F.3d 1031, 1038 (9th Cir. 2010)).

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Likewise, as to Ex. E, the FAC briefly discusses the Casper paper to describe how

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researchers analyzed the ability of diffusion models to classify art from named artists and showed

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that Stable Diffusion was “exceptionally good at creating convincing images resembling the work

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of specific artists if the artist’s name is provided in the prompt.” FAC ¶¶ 141-43, 146. The Carlini

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paper is cited more frequently, but is included in the FAC for the same reasons as the other two:

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to bolster the allegations as to how the Stable Diffusion models functions. None of the papers

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serve as documentary evidence central to a claim. Finally, the FAC also includes a hyperlink to all

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three research papers. Therefore, there is nothing left for the Court to incorporate.

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B.

Exhibits F and G.

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Runway also requests that the Court incorporate two additional documents made available

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on websites. Runway RJN at 4; Exs. F, G; FAC ¶¶ 352, 355, 368. Again, because the websites that

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Runway seeks to incorporate are already included in the FAC, there is no need for the Court to

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incorporate them by reference with regard to specific factual findings as to the contents of the

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website. In addition, it is clear that incorporation by reference is not proper.

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To the extent that Runway wants the Court to make particular findings of fact as to

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content within those websites, Runway has provided no argument or rationale for the Court to do

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so other than a cite to cases for the proposition that the court should consider the content on the

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website that it cites. See RJN at 4-5, (citing In re NVIDIA Corp. Sec. Litig., 768 F.3d 1046, 1058

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n.10 (9th Cir. 2014)); see Mophie, Inc. v. Shah, No. CV 13-1321-DMGJEMX, 2014 WL 10988339,

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at *3 n.2 (C.D. Cal. July 24, 2014) (considering policy described on website where complaint

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relied on same website). The Court however, can already do so based on the link to the website

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provided in the FAC.

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Further, Runway can only point to three paragraphs in the FAC in which these documents

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are mentioned. FAC ¶¶ 352, 355, 368. The FAC also merely references Exhibit G as an example

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where Runway has distributed Stable Diffusion 1.5 and where the public can download, use, and

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deploy Stable Diffusion 1.5. Cf. Coto Settlement, 593 F.3d at 1038 (incorporating a billing

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agreement despite not explicitly being referred to because “the Billing Agreement is integral to

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the Amended Complaint”), with United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003)

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(holding that the plaintiff’s petition for return of property in a forfeiture claim was not

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incorporated because it was neither “reference[d] extensively” nor “integral to [her] claim”).

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Exhibit G is merely an example of Runway’s alleged violations and so references to Exhibit G in

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paragraphs 352 and 355 are not central to Plaintiffs’ claims.1 Accordingly, the Court should deny

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Further, the website content on this third-party web page was curated and authored by
Defendants’ researchers. This information is partial because it was written by individuals from
named defendants in this lawsuit. Rollins v. Dignity Health, 338 F. Supp. 3d 1025, 1032 (N.D. Cal.

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Case No. 3:23-cv-00201-WHO
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PLAINTIFFS’ OPPOSITION TO DEFENDANT RUNWAY AI, INC.’S REQUEST FOR JUDICIAL NOTICE
AND INCORPORATION BY REFERENCE

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Runway’s request for incorporation by reference.

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III.

CONCLUSION

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For the foregoing reasons, the Court should deny Runway’s Request for Judicial Notice

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and Incorporation by Reference in Support of Defendant Runway AI, Inc.’s Motion to Dismiss

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Plaintiffs’ First Amended Complaint.

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2018) (“[C]ourts should be cautious before taking judicial notice of documents simply because they
were published on a website” particularly “when a party seeks to introduce documents it created
and posted on its own website.”).

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Case No. 3:23-cv-00201-WHO
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PLAINTIFFS’ OPPOSITION TO DEFENDANT RUNWAY AI, INC.’S REQUEST FOR JUDICIAL NOTICE
AND INCORPORATION BY REFERENCE

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Dated: March 21, 2024

Respectfully Submitted,
By:

/s/ Joseph R. Saveri
Joseph R. Saveri

Joseph R. Saveri (State Bar No. 130064)
Cadio Zirpoli (State Bar No. 179108)
Christopher K.L. Young (State Bar No. 318371)
David Lerch (State Bar No. 229411)
Elissa A. Buchanan (State Bar No. 249996)
Kathleen McMahon (State Bar No. 340007)
JOSEPH SAVERI LAW FIRM, LLP
601 California Street, Suite 1000
San Francisco, CA 94108
Telephone: [phone]
Facsimile: [phone]
Email: [e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
Matthew Butterick (State Bar No. 250953)
1920 Hillhurst Avenue, #406
Los Angeles, CA 90027
Telephone: [phone]
Facsimile:
[phone]
Email:
[e-mail]
Brian D. Clark (pro hac vice)
Laura M. Matson (pro hac vice)
Arielle S. Wagner (pro hac vice)
Eura Chang (pro hac vice)
LOCKRIDGE GRINDAL NAUEN P.L.L.P.
100 Washington Avenue South, Suite 2200
Minneapolis, MN 55401
Telephone: [phone]
Facsimile:
[phone]
Email:
[e-mail]
[e-mail]
[e-mail]
[e-mail]

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Case No. 3:23-cv-00201-WHO
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PLAINTIFFS’ OPPOSITION TO DEFENDANT RUNWAY AI, INC.’S REQUEST FOR JUDICIAL NOTICE
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