Weihnacht v. WestEd

Filing 30

ORDER by Judge Beth Labson Freeman granting 15 Motion to Dismiss; granting in part and denying in part 16 Motion for Leave to File Second Amended Complaint. (blflc3S, COURT STAFF) (Filed on 8/1/2014)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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DOUG WEIHNACHT individually and dba
SCHEMATIC MEDIA,
Plaintiff,

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v.

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WESTED, a Joint Powers Agency, and
DOES 1through 10,

United States District Court
Northern District of California

Defendant.

Case No. 14-cv-01564-BLF
ORDER
(1) GRANTING DEFENDANT'S
MOTION TO DISMISS; AND
(2) GRANTING IN PART PLAINTIFF’S
MOTION FOR LEAVE TO FILE A
SECOND AMENDED COMPLAINT
[Re: ECF 15, 16]

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I.

INTRODUCTION
Plaintiff Doug Weihnacht, individually and dba Schematic Media (“Plaintiff”), brings the

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above-captioned action against Defendant WestEd (“Defendant”), alleging that Defendant has

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infringed, and continues to infringe, Plaintiff’s copyrighted intellectual property in violation of the

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Copyright Act, 17 U.S.C. §§ 101 et seq., and seeking declaratory judgment to establish co-

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ownership of “jointly developed intellectual property pursuant to [a contractual] agreement” with

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Defendant. (First Am. Compl. (“FAC”), ECF 13 ¶ 1)

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Defendant moves to dismiss the operative FAC under two theories. Defendant seeks

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dismissal under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which

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relief can be granted, asserting that Plaintiff cannot pursue the copyright infringement claim

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because he has not registered the alleged copyrighted intellectual property with the United States

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Copyright Office, and second, under Rule 12(b)(1) for lack of subject matter jurisdiction and Rule

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12(b)(6) for failure to state a claim because Plaintiff lacks standing to seek declaratory relief due

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to the fact that he is not the real party in interest to the contract at issue. Separately, Plaintiff

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moves for leave to file a Second Amended Complaint (“SAC”).

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For the reasons set forth below, the Court GRANTS Defendant’s Motion to Dismiss

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pursuant to Rule 12(b)(1) and 12(b)(6) with leave to amend so as to permit Plaintiff to allege a

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claim in quasi-contract as discussed by Plaintiff at the July 24, 2014 hearing on the Motion. The

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Court also GRANTS IN PART Plaintiff’s Motion for Leave to File a Second Amended Complaint

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(“Mot. for Leave”) as to proposed amended Count I for Copyright Infringement. As to the

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proposed amended Count II, the Motion is DENIED.

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II.

BACKGROUND
Plaintiff filed the FAC in the name of “Doug Weihnacht individually and dba Schematic

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Media.” (See FAC) Plaintiff alleges that on or about April 1, 2011, Doug Weihnacht, as the

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authorized signatory of “Schematic Media, Inc.” entered into a subcontract with Defendant. (FAC
¶ 2, Exh. A) Under the terms of the subcontract, Plaintiff was to jointly develop a federally

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United States District Court
Northern District of California

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funded educational project, entitled “Voyage to Galapagos,” with Defendant and Carnegie Mellon

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University. (Id. ¶ 13) Plaintiff alleges that his pre-existing copyrighted intellectual property,

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including various designs and graphics, were used in order to help develop the program under the

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subcontract. (Id. ¶ 18) The subcontract provides that “[a]ll pre-existing Subcontractor Intellectual

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Property . . . used in the performance by Subcontractor of its obligations under the Subcontract

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shall remain Subcontractor’s property.” (Id. ¶ 15) Plaintiff also alleges that he is entitled to the

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right to access and use the intellectual property jointly created with Defendant and Carnegie

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Mellon University. (Id. ¶ 2) Under the subcontract, the joint intellectual property created by the

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“Subcontractor together with WestEd and Carnegie Mellon . . . shall reside jointly, but not

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severally” with the three parties. (Id. ¶ 16)

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Defendant “terminated the Subcontract prior to the end of the term,” and Plaintiff alleges

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that Defendant “has continued to use the Subcontractor Intellectual Property in violation of the

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terms of the Subcontract . . . and has prohibited Plaintiff from accessing and using the Joint

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Intellectual Property” in violation of the subcontract. (Id. ¶ 20)

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On April 4, 2014, Plaintiff filed an initial Complaint alleging copyright infringement and

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seeking declaratory judgment. (Compl., ECF 1) Plaintiff thereafter filed the operative FAC on

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May 5, 2014, stating “that Plaintiff (i) is a co-owner of certain intellectual property jointly

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developed by Plaintiff, Defendant WestEd and Carnegie Mellon University and (ii) has a right to
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access and use this jointly developed intellectual property pursuant to an agreement between its

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co-owners.” (FAC ¶ 1) On June 9, 2014, Defendant filed a Motion to Dismiss the FAC under

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both Rule 12(b)(1) for lack of subject-matter jurisdiction and Rule 12(b)(6) for failure to state a

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claim upon which relief can be granted. (Mot. to Dismiss, ECF 15)
Before responding to the Motion to Dismiss, Plaintiff filed the Motion for Leave on June

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19, 2014. (ECF 16) Thereafter, on June 23, 2014, Plaintiff filed an Opposition to Defendant’s

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Motion to Dismiss. (ECF 21) On June 30, 2014, Defendant timely replied. (ECF 23)

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III.

LEGAL STANDARD
A. Rule 12(b)(1)
On a motion to dismiss pursuant to Rule 12(b)(1), the burden is on the plaintiff to establish

United States District Court
Northern District of California

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subject-matter jurisdiction. See, e.g., Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375,

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377 (1994). A jurisdictional challenge may be either facial or factual. See White v. Lee, 227 F.3d

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1214, 1242 (9th Cir. 2000). A facial challenge asserts that the factual allegations in a complaint,

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even if assumed true, “are insufficient on their face to invoke federal jurisdiction.” Safe Air for

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Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). By contrast, “a factual attack . . .

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disputes the truth of the allegations that, by themselves, would otherwise invoke federal

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jurisdiction.” Id. The Court need not presume the truthfulness of the plaintiff’s allegations. See,

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e.g., White, 227 F.3d 1214, 1242. Once the factual basis for jurisdiction is challenged, the plaintiff

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bears the burden of coming forward with “competent proof” to support his allegations of

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jurisdiction. McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178, 189 (1936).

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B. Requests for Judicial Notice

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The Court has been presented with two Requests for Judicial Notice, the first by Defendant

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and the second by Plaintiff. Defendant asks the Court to take judicial notice of three print-outs of

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web pages describing various federal research grants awarded to fund the “Voyage of Galapagos”

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project, which Plaintiff helped to develop under the subcontract. (Def.’s Req. for Judicial Not.

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(“Def.’s RJN”), ECF 15-1) Exhibit 1 is “from the Institute of Education Sciences’ website”

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describing “a [federal] research grant awarded to [Defendant].” (Def.’s RJN at 2; see ECF 15-1

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Exh. 1) Exhibit 2 is “from the National Science Foundation’s website” summarizing another
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federal research grant funding the “Voyage to Galapagos” project in 1997. (Def.’s RJN at 2; see

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ECF 15-1 Exh. 2) Finally, Exhibit 3 is “from the National Science Foundation’s website”

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summarizing yet another federal research grant funding a related project in 2001. (Def.’s RJN at

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3; see ECF 15-1 Exh. 3)
Plaintiff requests that the Court take judicial notice of the Proposed Second Amended

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Complaint. (Pl.’s RJN, ECF 22)
A court “may judicially notice a fact that is not subject to reasonable dispute.” Fed. R.

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Evid. 201(b). Thus, matters presented to the Court, but not contained in the pleadings, may be

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noticed on a motion to dismiss when they are “generally known within the trial court’s territorial

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jurisdiction[] or [] can be accurately and readily determined from sources whose accuracy cannot

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United States District Court
Northern District of California

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reasonably be questioned.” Id.; see MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir.

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1986). Courts have judicially noticed undisputed information available on a government agency

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website. See, e.g., Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998-99 (9th Cir. 2010)

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(judicially noticing information on web sites because “it was made publicly available by

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government entities . . . and neither party dispute[d] the authenticity of the web sites or the

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accuracy of the information displayed therein”); Gustavson v. Mars, Inc., No. 13-CV-04537, 2014

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WL 2604774, at *3 n.1 (N.D. Cal. June 10, 2014) (judicially noticing certain documents that were

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“readily available on a government agency website”).
Plaintiff did not oppose Defendant’s Request for Judicial Notice. Therefore, Plaintiff is

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not deemed to dispute the authenticity of any of the exhibits and the Court will take judicial notice

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of them. Further, the Court takes judicial notice that Plaintiff has presented the Court with a

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Proposed Second Amended Complaint, pursuant to Federal Rule of Evidence 201(b).

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VI.

DISCUSSION

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A. Count I: Copyright Infringement

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Defendant moves to dismiss Plaintiff’s copyright infringement claim on the ground that

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Plaintiff cannot state a claim under the Copyright Act without a registered copyright or an

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application for registration for a copyright, neither of which Plaintiff alleged in the FAC. See 17

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U.S.C. § 411(a); Funky Films, Inc. v. Time Warner Entm’t Co., L.P. 462 F.3d 1072, 1076 (9th Cir.
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2006); see also Craven Decl. ¶ 4. Plaintiff responds that his failure to register the copyright is not

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jurisdictional, relying on the Supreme Court’s decision in Reed Elsevier, Inc. v. Muchnick, 559

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U.S. 154 (2014). Plaintiff goes on to state that he has cured this deficiency in his proposed SAC.

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(Opp. to Mot. to Dismiss at 3) Based upon Plaintiff’s Motion for Leave, Defendant concedes that

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this issue is no longer properly resolved at this stage of the proceedings, (see Reply, ECF 23 at 1),

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and Defendant has thus abandoned this portion of its Motion because Plaintiff has since filed a

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registration application with the Copyright Office, which is the missing prerequisite to bringing a

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copyright infringement action. See 17 U.S.C. § 411(a).
The Court finds that Defendant’s arguments in its Motion to Dismiss are persuasive and

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agrees that the proposed amendment to the first claim appears sufficient to comply with the basic

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United States District Court
Northern District of California

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pleading requirements of the claim.
Therefore, the Court GRANTS Defendant’s Motion to Dismiss the copyright infringement

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claim and GRANTS Plaintiff’s Motion for Leave to File the SAC as to Count I as outlined by

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Plaintiff in his Proposed Second Amended Complaint. (Mot. for Leave, ECF 16)

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B. Count II: Declaratory Judgment

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Defendant moves to dismiss Plaintiff’s claim for declaratory relief by advancing a factual

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challenge to the Court’s jurisdiction on the premise that Plaintiff is not the “real party in interest”

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to the controversy. (Mot. to Dismiss, ECF 15 at 6) Defendant argues that the contract clearly

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shows that “Schematic Media, Inc. was the contracting party and that entity is non-existent. (See

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Craven Decl. ¶¶ 2, 3) Plaintiff alleges that he signed the subcontract individually, emphasizing that

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he used his personal Social Security Number where the subcontract stated to enter “the contracting

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party’s ‘SSN/EIN.’” (Opp. to Mot. to Dismiss, ECF 21 at 5-6)
Contrary to Plaintiff’s argument, the subcontract, which is attached to the FAC as Exhibit

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A,1 shows that the contracting party is “Schematic Media, Inc.” (FAC Exh. A) Plaintiff signed

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the subcontract as the owner and authorized signatory of that entity. (Opp. to Mot. to Dismiss at

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6; see also FAC, Exh. A).

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Written instruments attached to a pleading are considered “part of the pleading for all purposes.”
Fed. R. Civ. P. 10(c).
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It appears undisputed that there is no entity named “Schematic Media, Inc.” (See Craven

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Decl. ¶¶ 2, 3) Plaintiff does not argue otherwise. Thus, Plaintiff is not the real party in interest to

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the contract, and lacks the ability to maintain this claim. See Fed. R. Civ. P. 17(a); see also

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Lindsey v. Starwood Hotels & Restaurants Worldwide, Inc., 409 Fed. App’x 77, 78 (9th Cir. 2010)

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(finding that an individual attempting to bring an action for breach of contract in his individual

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capacity, but who signed the contract in his capacity as “Director” of one of the parties to the

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contract, “could not assert contractual claims” as an individual).

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As a further bar to this claim, there is no evidence that Mr. Weihnacht has ever registered a
fictitious business name for “Schematic Media, Inc.” (See Craven Decl. ¶ 3) A party may not
maintain an action on a contract where he used a fictitious business name until that fictitious

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United States District Court
Northern District of California

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business name has been registered pursuant to the requirements of the California Business and

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Professions Code. See Cal. Bus. & Prof. Code § 17918. Therefore, Plaintiff must register his

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fictitious business name before he can bring suit on a contract entered into by “Schematic Media,

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Inc.” See, e.g., Lovesy v. Armed Forces Benefit Ass’n, No. C 07-2745 SBA, 2008 WL 4856144, at

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*10-11 (2008) (granting the plaintiff leave to amend in order to file a fictitious business name

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statement and “include the requisite allegations of compliance with § 17918”).

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There is, however, a significant problem with Plaintiff’s choice of appending “Inc.” to the

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name “Schematic Media.” It appears that Plaintiff intended for Schematic Media, Inc. to simply

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act as a fictitious business name. (See Opp. to Mot. to Dismiss at 6) It is not a registered business

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entity, nor is Plaintiff organized as a corporation pursuant to the laws of California, or any other

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jurisdiction. (See Mot. to Dismiss at 2) Thus, appending “Inc.” to the fictitious business name

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runs afoul of § 17910.5 of the California Business and Professional Code, which states that “[n]o

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person shall adopt any fictitious business name which includes ‘Corporation,’ ‘Corp.,’

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‘Incorporated,’ or ‘Inc.’ unless that person is a corporation organized pursuant to the laws of the

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state or some other jurisdiction.” Cal. Bus. & Prof. Code § 17910.5 (emphasis added). Therefore,

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even if Plaintiff were granted leave to amend in order to file a fictitious business name statement,

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he would be unable to register a fictitious business name that would match the name of the

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contracting party because, under the statute, Plaintiff is prohibited from using “Inc.” in the name
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of any fictitious business entity. See id.; see also Opp v. St. Paul Fire & Marine Ins. Co., 154 Cal.

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App. 4th 71, 75-76 (2007).
Defendant’s Motion to Dismiss for lack of subject-matter jurisdiction of Plaintiff’s claim

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for declaratory judgment is therefore GRANTED WITH PREJUDICE. The Court further

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DENIES Plaintiff’s Motion for Leave in regard to the second claim, for the reasons stated above.

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Although Rule 15(a) permits a court to allow amendment when “justice so requires,” the Ninth

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Circuit also recognizes that it should not be granted when amendment would be futile. Fed. R.

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Civ. P. 15(a)(2); see Moore v. Kayport Package Express, Inc., 885 F.2d 531, 538 (9th Cir. 1989).
At the hearing, Plaintiff indicated that he would be able to amend the FAC to allege a

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quasi-contract claim. The Court will grant that motion for leave to file such a new claim. At the

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United States District Court
Northern District of California

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hearing, Defendant did not object to Plaintiff’s request.

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V.

ORDER

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For the foregoing reasons, IT IS HEREBY ORDERED that:

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1.

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The Court GRANTS Defendant’s Motion to Dismiss with respect to Count I with

leave to amend consistent with the Proposed Second Amended Complaint.
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The Court GRANTS Defendant’s Motion to Dismiss with respect to Count II,

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without leave to amend. Plaintiff is allowed to add causes of action to the Second Amended

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Complaint in order to state a claim arising in quasi-contract, as articulated by Plaintiff at the July

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24, 2014 oral argument.

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3.

The Court GRANTS Plaintiff’s Motion for Leave to File the SAC as to Count I,

and DENIES the Motion for Leave as to Count II.

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IT IS SO ORDERED.
Dated: August 1, 2014
______________________________________
BETH LABSON FREEMAN
United States District Judge

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