Cabell v. Zorro Productions, Inc. et al

Filing 118

ORDER granting 105 Motion for Leave to File Second Amended and Supplemental Complaint; denying without prejudice 101 Motion to Dismiss. The court schedules a Case Management Conference for 10:00 a.m. on 11/17/2016. The parties shall file an updated Joint Case Management Conference Statement on or before 11/10/2016. Signed by Judge Edward J. Davila on 9/23/2016. (ejdlc1S, COURT STAFF) (Filed on 9/23/2016)

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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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ROBERT W CABELL,

Case No. 5:15-cv-00771-EJD

Plaintiff,
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v.
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ZORRO PRODUCTIONS INC., et al.,

United States District Court
Northern District of California

Defendants.
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ORDER GRANTING PLAINTIFF’S
MOTION FOR LEAVE TO FILE
SECOND AMENDED AND
SUPPLEMENTAL COMPLAINT;
DENYING WITHOUT PREJUDICE
DEFENDANTS’ MOTION TO DISMISS
Re: Dkt. Nos. 101, 105

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This action for copyright infringement and related claims was filed by Plaintiff Robert W.

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Cabell (“Plaintiff”) against Defendants Zorro Productions, Inc. (“ZPI”), that company’s owner

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John Gertz, and a Netherlands company, Stage Entertainment Licensed Productions (“SELP”), in

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relation to a musical Plaintiff published based on the fictional character “Zorro.” Presently before

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the court are two matters: (1) Plaintiff’s Motion for Leave to File a Second Amended and

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Supplemental Complaint (Dkt. No. 105), and (2) a Motion to Dismiss under Federal Rules of Civil

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Procedure 12(b)(2), 12(b)(6) and forum non conveniens filed by ZPI and Gertz (Dkt. No. 101).

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Having reviewed the pleadings submitted by both parties, the court has determined that

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Plaintiff is entitled to amend his complaint. Thus, his motion will be granted and the Motion to

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Dismiss will be denied without prejudice for the reasons explained below.

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I.

BACKGROUND

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A.

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The character “Zorro” is a familiar one to most people. He is “well-known as the masked

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Case No.: 5:15-cv-00771-EJD
ORDER GRANTING PLAINTIFF’S MOTION FOR LEAVE TO FILE SECOND AMENDED
AND SUPPLEMENTAL COMPLAINT; DENYING WITHOUT PREJUDICE DEFENDANTS’
MOTION TO DISMISS

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Factual Allegations

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outlaw who defends the public against tyrannical officials and other villains.” First Am. Compl.

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(“FAC”), Dkt. No. 8, at 1:25-2:1. “Zorro” is the secret identity of Don Diego de la Vega, a

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Spanish nobleman, who transforms into the freedom fighter by wearing a black cape or cloak, a

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black sombrero, and a black mask that covers the top of his head from eye level upwards. Id. at ¶

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8. And as a fictional character, “Zorro” has been around for a while; the first “Zorro” story was

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written in 1919 by Johnston McCulley, and the first movie featuring the character was made in

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1920 by Douglas Fairbanks, Sr. Id. at ¶¶ 7, 9. Based on this history, Plaintiff alleges that any

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copyright interest in the works of McCulley and Fairbanks expired in 1975 and 1976 respectively.

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Id. at ¶¶ 10, 11.

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In 1996, Plaintiff published a musical entitled “Z - The Musical of Zorro” based

United States District Court
Northern District of California

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“expressly” on McCulley’s 1919 story and Fairbanks’ 1920 movie. Id. at ¶ 13. Zorro is portrayed

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in Plaintiff’s musical as “a masked avenger leading a double life, donned in a black mask, black

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sombrero, black cape, and with a sword and whip.” Id. at ¶ 14. The musical was initially released

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on audio cassette and then CD format, and a stage production premiered in Eugene, Oregon in

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2000. Id. at ¶ 19. Plaintiff has registered his original and revised scripts and the audio versions

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with the U.S. Copyright Office, and his copyright interest “extends only to the original, novel

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elements of his work and do not include those elements present in any Zorro works that were in

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the public domain as of 1996.” Id. at ¶¶ 16-18.

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Plaintiff alleges that ZPI, despite knowing that any copyright interest in Zorro expired, has

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for years falsely asserted that it owns worldwide trademarks and copyrights in the name and visual

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likeness of Zorro. Id. at ¶¶ 20, 21. To that end, Plaintiff alleges that ZPI obtained several

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registered trademarks from 1987 to 1997, concerning the use of the word mark “ZORRO” in story

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and comic books, television shows, videos featuring music and entertainment, and theater

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productions. Id. at ¶¶ 26-31. In addition, Plaintiff alleges that ZPI has unsuccessfully asserted

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copyright and trademark infringement claims concerning Zorro in a prior federal court action. Id.

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at ¶¶ 23-24.

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Case No.: 5:15-cv-00771-EJD
ORDER GRANTING PLAINTIFF’S MOTION FOR LEAVE TO FILE SECOND AMENDED
AND SUPPLEMENTAL COMPLAINT; DENYING WITHOUT PREJUDICE DEFENDANTS’
MOTION TO DISMISS

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Plaintiff alleges his script and audio performances were successful, and his musical was
“poised to become a Broadway hit.” Id. at ¶ 33. By 2001, he had retained a well-known

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choreographer and producer in anticipation of a Broadway production, and engaged the William

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Morris agency to represent his interess in relation to the musical. Id. at ¶ 34. Plaintiff alleges,

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however, that the producer and the William Morris agency were approached by Defendants and

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told that any performance of Plaintiff’s musical would require licenses from Defendants, and any

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unauthorized production would result in litigation. Id. at ¶35. As a result of Defendants’ contact,

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the producer and the William Morris agency ceased work on Plaintiff’s behalf and his musical did

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not appear on Broadway. Id. at ¶ 36. Plaintiff alleges that Defendants have also approached and

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discouraged other third parties from London, Brazil and Japan from producing Plaintiff’s musical.

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United States District Court
Northern District of California

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Id. at ¶ 37.

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Plaintiff licensed his Zorro musical to affiliates in Germany so that it could be performed

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at the Clingenburg Festival in June, 2013, and spent significant time and money promoting the

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production. Id. at ¶ 38. However, Plaintiff alleges that on February 20, 2013, Gertz sent an email

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to the director of the festival, falsely claiming that ZPI owned all right, title and interest in Zorro.

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Id. at ¶ 39. Gertz also stated that Plaintiff’s musical has never been produced professionally and

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infringes ZPI’s copyrights and trademarks, and he urged the director to “avoid an inevitable

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lawsuit” by refusing to produce Plaintiff’s musical and instead produce ZPI’s musical version of

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Zorro. Id. A similar letter was sent the next day to the festival’s director from ZPI’s general

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counsel, and another email insinuating legal action was sent by SELP’s general manager to the

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festival’s legal counsel on February 22, 2013. Id. at ¶¶ 40, 41.

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Furthermore, Plaintiff alleges ZPI’s general counsel contacted another production company

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in Germany who had licensed Plaintiff’s musical and made the same representations it made to the

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festival organizers, as well as others that Plaintiff considers false. Id. at ¶¶ 44-48. Plaintiff alleges

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the “real purpose” of these communications was to convince the licensees in Germany to cancel

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the production of Plaintiff’s musical so that ZPI’s musical could be produced in its place. Id. at ¶

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Case No.: 5:15-cv-00771-EJD
ORDER GRANTING PLAINTIFF’S MOTION FOR LEAVE TO FILE SECOND AMENDED
AND SUPPLEMENTAL COMPLAINT; DENYING WITHOUT PREJUDICE DEFENDANTS’
MOTION TO DISMISS

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42-43.
Additionally, Plaintiff alleges that ZPI financed and holds a copyright interest in a 2005

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book entitled “Zorro,” which copies original and novel material from Plaintiff’s script. Id. at ¶ 49-

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50. Defendants have since produced a musical based on the book, which has been performed in

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various jurisdictions. Id. at ¶ 51.

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B.

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On March 13, 2013, Plaintiff filed a Complaint against ZPI, Gertz and SELP in the United

Procedural Background

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States District Court for the Western District of Washington. He filed the FAC on April 8, 2013,

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asserting the following claims: (1) copyright infringement, (2) declaratory judgment of noninfringement, (3) preliminary and permanent injunctive relief, (4) cancellation of federal

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United States District Court
Northern District of California

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trademark registration, (5) tortious interference with contract and business expectancy, (6) fraud,

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and (7) violation of Consumer Protection Act. SELP was dismissed on September 23, 2013. Dkt.

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No. 51.
On March 16, 2013, ZPI and Gertz moved to dismiss the FAC under Federal Rules of Civil

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Procedure 12(b)(2) and 12(b)(6), and under the doctrine of forum non conveniens. Dkt. No. 20.

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After Plaintiff conducted early discovery on personal jurisdiction, the court granted the 12(b)(2)

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motion, dismissed the action with respect to ZPI and Gertz, and entered judgment in their favor.

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Dkt. Nos. 71, 72. In response, Plaintiff moved the court to reconsider the dismissal. Dkt. Nos. 73.

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The court did so, reinstated the claims against ZPI and Gertz, and transferred the action to this

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court. Dkt. No. 84. The instant motions followed once the case was transferred.

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II.

LEGAL STANDARD
Plaintiff’s motion for leave to file an amended complaint is governed by Federal Rule of

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Civil Procedure 15(a), which instructs courts to permit leave to amend with liberality. Fed. R.

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Civ. P. 15(a)(2) (“The court should freely give leave when justice so requires.”); Carrico v. City &

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Cnty. of San Francisco, 656 F.3d 1002, 1008 (9th Cir. 2011). Leave need not be granted,

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however, where the amendment of the complaint would cause the opposing party undue prejudice,

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Case No.: 5:15-cv-00771-EJD
ORDER GRANTING PLAINTIFF’S MOTION FOR LEAVE TO FILE SECOND AMENDED
AND SUPPLEMENTAL COMPLAINT; DENYING WITHOUT PREJUDICE DEFENDANTS’
MOTION TO DISMISS

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is sought in bad faith, constitutes an exercise in futility, or creates undue delay. Foman v. Davis,

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371 U.S. 178, 182 (1962); Janicki Logging Co. v. Mateer, 42 F.3d 561, 566 (9th Cir. 1994). But

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in light of Rule 15’s mandate, the examination of these factors is generally performed “with all

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inferences in favor of granting the motion.” Griggs v. Pace Am. Grp., Inc., 170 F.3d 877, 880 (9th

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Cir. 1999).
The motion for leave to file a supplemental complaint is governed by Federal Rule of Civil

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Procedure 15(d). Pursuant to that section, the court may “on just terms, permit a party to serve a

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supplemental pleading setting out any transaction, occurrence, or event that happened after the

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date of the pleading to be supplemented.” Fed. R. Civ. P. 15(d). The same factors relevant to a

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Rule 15(a) are generally considered on a Rule 15(d) motion (Yates v. Auto City 76, 299 F.R.D.

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United States District Court
Northern District of California

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611, 614 (N.D. Cal. 2013)), keeping in mind that “[t]he purpose of Rule 15(d) is to promote as

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complete an adjudication of the dispute between the parties as possible by allowing the addition of

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claims which arise after the initial pleadings are filed.” William Inglis & Sons Baking Co. v. ITT

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Continental Baking Co., 668 F.2d 1014, 1057 (9th Cir. 1981).
For both Rules 15(a) and 15(d), “it is the consideration of prejudice to the opposing party

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that carries the greatest weight.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052

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(9th Cir. 2003). “The party opposing the amendment bears the burden of showing prejudice.” In

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re Fritz Cos. Sec. Litig., 282 F. Supp. 2d 1105, 1109 (N.D. Cal. Aug. 27, 2003) (citing DCD

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Programs Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987)).

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III.

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DISCUSSION
At issue is whether Plaintiff to should be permitted leave to file a Second Amended and

Supplemental Complaint under the standard articulated above.

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According to Plaintiff, the purpose of his amended pleading is to address many of the

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issues raised by ZPI and Gertz in their motion to dismiss. Specifically, the amended pleading

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eliminates the Consumer Protect Act claim under Washington state law and eliminates the claim

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for injunctive relief, removes SELP as a defendant, adds factual allegations to the claim for

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Case No.: 5:15-cv-00771-EJD
ORDER GRANTING PLAINTIFF’S MOTION FOR LEAVE TO FILE SECOND AMENDED
AND SUPPLEMENTAL COMPLAINT; DENYING WITHOUT PREJUDICE DEFENDANTS’
MOTION TO DISMISS

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copyright infringement, adds factual allegations in response to the argument that the trademark

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cancellation claims are barred by laches, and adds factual allegations describing the domestic

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conduct of ZPI and Gertz in response to the forum non conveniens argument.

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For their part, ZPI and Gertz argue the proposed amendments are prejudicial to them

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because it would cause their dismissal motion to be again delayed. In support of this contention,

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ZPI and Gertz point out that the currently pending motion to dismiss is the second one they have

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filed challenging the complaint for failure to state a claim and for forum non conveniens. Indeed,

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as indicated above, the Western District of Washington did not address those issues before it

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transferred the case to this court. Additionally, ZPI and Gertz find it prejudicial that Plaintiff did

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United States District Court
Northern District of California

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not file this motion until after they had already moved, again, to dismiss the complaint.
ZPI and Gertz also argue that Plaintiff’s proposed amendments are futile because they “fail

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to rectify the forum non conveniens and Rule 12(b)(6) problems of the FAC,” which problems

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they surmise the court would take up before entertaining the instant motion.

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The arguments of Gertz and ZPI reveal their understandable frustration with the manner in

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which this case was commenced and then litigated in one district court, but then transferred to

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another district court where they were forced to essentially restart their defense. Such frustration,

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however, cannot be equated with the sort of prejudice that defeats a Rule 15 motion, particularly

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when this case remains at an early stage of litigation. Issues of prejudice that arise when a motion

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to amend comes after significant discovery has been undertaken, or when the case is approaching

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the expiration of case management deadlines, are not implicated here. See, e.g.,

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AmerisourceBergen Corp. v. Dialysist West, Inc., 465 F.3d 946, 951-54 (9th Cir. 2006); see also

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Ascon Properties, Inc. v. Mobil Oil Co., 866 F.2d 1149, 1161 (9th Cir. 1989) (“Prejudice is

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heightened when a Plaintiff seeks to amend a complaint late in litigation.”). Moreover, the court

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observes that ordinary delay, like the type identified by ZPI and Gertz here, “is insufficient to

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justify denial of leave to amend.” Jones v. Bates, 127 F.3d 839, 847 n.8 (9th Cir. 1997).

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The futility argument is similarly unpersuasive for two reasons. First, the potential

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Case No.: 5:15-cv-00771-EJD
ORDER GRANTING PLAINTIFF’S MOTION FOR LEAVE TO FILE SECOND AMENDED
AND SUPPLEMENTAL COMPLAINT; DENYING WITHOUT PREJUDICE DEFENDANTS’
MOTION TO DISMISS

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procedural inefficiency arising from the order of rulings did not materialize. Second, nowhere in

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their opposition brief do ZPI and Gertz explain why Plaintiff’s amendments fail to address the

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issues raised in the motion to dismiss. Consequently, their unsupported conclusion is rejected as a

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reason to deny the motion.
In sum, nothing presented by ZPI and Gertz suggests that Plaintiff seeks to amend in bad

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faith, or that his proposed amendments are futile or will cause undue prejudice or delay.

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Accordingly, the court will permit Plaintiff to file the Second Amended and Supplemental

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complaint.

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IV.

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ORDER
Based on the foregoing, Plaintiff’s Motion for Leave to File a Second Amended and

United States District Court
Northern District of California

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Supplemental Complaint (Dkt. No. 105) is GRANTED. Plaintiff shall file the amended pleading

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as a separate docket entry within 3 days of the date this order is filed.

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In light of this ruling, and because the amendments may affect the continued availability of

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arguments in favor of dismissal, the Motion to Dismiss (Dkt. No. 101) is DENIED WITHOUT

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PREJUDICE.

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The court schedules a Case Management Conference for 10:00 a.m. on November 17,

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2016. The parties shall file an updated Joint Case Management Conference Statement on or

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before November 10, 2016.

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IT IS SO ORDERED.
Dated: September 23, 2016
______________________________________
EDWARD J. DAVILA
United States District Judge

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Case No.: 5:15-cv-00771-EJD
ORDER GRANTING PLAINTIFF’S MOTION FOR LEAVE TO FILE SECOND AMENDED
AND SUPPLEMENTAL COMPLAINT; DENYING WITHOUT PREJUDICE DEFENDANTS’
MOTION TO DISMISS