Paisley Park Enterprises, Inc. et al v. Boxill
Filing
437
ORDER granting 306 Motion to Dismiss/General; granting 330 Motion to Dismiss/General; granting 360 Motion to Supplement Record; denying as moot 188 Motion to Dismiss/General. See Order for Details. (Written Opinion) Signed by Judge Wilhelmina M. Wright on 2/22/2019. (RJE)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Paisley Park Enterprises, Inc. and Comerica
Bank & Trust, N.A., as Personal
Representative of the Estate of Prince
Rogers Nelson,
Plaintiffs,
v.
George Ian Boxill; Rogue Music Alliance,
LLC; Deliverance, LLC; David Staley;
Gabriel Solomon Wilson; Brown & Rosen,
LLC; and Sidebar Legal, PC,
Case No. 17-cv-1212 (WMW/TNL)
ORDER GRANTING DEFENDANT’S
MOTION TO DISMISS, GRANTING
PLAINTIFFS’ MOTION TO
SUPPLEMENT THE RECORD, AND
GRANTING IN PART AND DENYING
IN PART PLAINTIFFS’ MOTION TO
DISMISS
Defendants.
This case was initiated by Plaintiffs Paisley Park Enterprises, Inc., and Comerica
Bank & Trust, N.A., after a dispute arising from the posthumous release of several sound
recordings by internationally renowned recording artist Prince Rogers Nelson. Several
motions are pending before the Court. Defendant Brown & Rosen, LLC, moves to dismiss
the claims against it in Plaintiffs’ third amended complaint. (Dkt. 330.) Plaintiffs oppose
this motion and move to supplement the record. (Dkt. 360.) In addition, Plaintiffs move
to dismiss the tortious interference counterclaim brought by Defendants George Ian Boxill;
Rogue Music Alliance, LLC; Deliverance, LLC; David Staley; and Gabriel Solomon
Wilson. (Dkts. 188, 306.) For the reasons addressed below, the Court grants Brown &
Rosen’s motion to dismiss the claims against it and grants Plaintiffs’ motion to supplement
the record. The Court also grants in part and denies in part Plaintiffs’ motion to dismiss
the tortious interference counterclaim.
BACKGROUND
This lawsuit arises from the attempted commercialization of previously unreleased
recordings of the acclaimed recording artist Prince Rogers Nelson (Prince), who died in
2016. Plaintiffs are Paisley Park Enterprises, Inc., and Comerica Bank & Trust, N.A., as
Personal Representative of the Estate of Prince Rogers Nelson. Defendants are George Ian
Boxill, Rogue Music Alliance, LLC (RMA); Deliverance, LLC; David Staley; Gabriel
Solomon Wilson; Brown & Rosen, LLC (B&R); and Sidebar Legal, PC.1 Plaintiffs allege
that Defendants unlawfully possess and have commercially exploited several of Prince’s
sound recordings (Prince Recordings). Defendants counter that Plaintiffs have interfered
with Defendants’ lawful attempts to release these recordings.
Boxill is a sound engineer who worked with Prince during his lifetime, both as a
remodeling consultant for Paisley Park and a sound engineer. RMA is a music labelling
service company operated by Staley and Wilson. Boxill, RMA, and Sidebar Legal jointly
own Deliverance, LLC, an entity created to market and release the Prince Recordings.
B&R is a Massachusetts law firm that provided legal advice to RMA and Boxill regarding
the authorship status of the Prince Recordings.
1
The Clerk of Court entered default against Sidebar Legal on September 12, 2018.
2
Plaintiffs allege that Boxill executed a Confidentiality Agreement with Paisley Park
Enterprises in 2004. The Confidentiality Agreement provides that recordings and other
physical materials that resulted from Boxill’s work with Prince “shall remain Paisley’s sole
and exclusive property, shall not be used by [Boxill] in any way whatsoever, and shall be
returned to Paisley immediately upon request.”2 Two years later, in 2006, Boxill provided
sound engineering services to Prince with respect to the recordings at issue in this lawsuit.
Plaintiffs assert that they own copyrights in the Prince Recordings and filed applications to
register those copyrights.
After Prince’s death in 2016, Defendants sought to distribute the previously
unreleased Prince Recordings. On March 16, 2017, B&R drafted a letter to Sidebar Legal,
opining that the Prince Recordings were a joint work by Prince and Boxill, and that both
Prince and Boxill had rights to the recordings. To support their position that Boxill is not
a joint author of the Prince Recordings, Plaintiffs sent a copy of the 2004 Confidentiality
Agreement to B&R on March 21, 2017. As relevant to Plaintiffs’ claims against B&R,
Plaintiffs allege that B&R allowed Defendants to circulate the March 16, 2017 opinion
letter to third parties, even after being put on notice of the Confidentiality Agreement.
Plaintiffs contend that Defendants, in turn, used the opinion letter to convince third parties
2
The Confidentiality Agreement provides that the term “Paisley” includes “Paisley
Park Enterprises and all its affiliated and related entities, and the confidentiality obligations
to ‘Paisley’ hereunder shall extend and apply equally to any information or material of any
kind concerning Prince Rogers Nelson or any of his family members, agents, business
managers, and other representatives.”
3
to advertise and distribute the Prince Recordings. Boxill, RMA, and Deliverance began
distributing the Prince Recordings online in April 2017.
Plaintiffs initiated a lawsuit and removed the state-court action to this Court on April
18, 2017. Plaintiffs filed the third amended complaint, the subject of B&R’s pending
motion, on June 14, 2018. In the third amended complaint, Plaintiffs assert four claims
against B&R: tortious interference with contract, indirect copyright infringement, and
requests for a declaratory judgment and injunctive relief. B&R moves to dismiss Plaintiffs’
claims against it for lack of personal jurisdiction or, alternatively, for failure to state a claim
on which relief can be granted. Boxill, RMA, Deliverance, Wilson and Staley have
answered Plaintiffs’ third amended complaint and asserted counterclaims against Plaintiffs.
Plaintiffs move to dismiss Defendants’ tortious interference counterclaim for failure to
state a claim on which relief can be granted.3
ANALYSIS
There are four pending motions before the Court. The Court first addresses the two
motions related to the third amended complaint, B&R’s motion to dismiss and Plaintiffs’
3
There are two pending motions to dismiss Defendants’ tortious interference
counterclaim. Plaintiffs first moved to dismiss Defendants’ tortious interference
counterclaim on April 3, 2018. (Dkt. 188.) Later, Plaintiffs filed a third amended
complaint, to which Defendants filed an answer and the same counterclaims. Plaintiffs
then renewed their motion to dismiss Defendants’ tortious interference counterclaim on
July 26, 2018. (Dkt. 306.) As both motions are substantively identical, the Court analyzes
the motions together.
4
motion to supplement the record.4 The Court then addresses Plaintiffs’ two motions to
dismiss Defendants’ counterclaim.
I.
Motion to Dismiss Plaintiffs’ Third Amended Complaint
Defendant B&R moves to dismiss Plaintiffs’ third amended complaint for lack of
personal jurisdiction. Fed. R. Civ. P. 12(b)(2). To survive a Rule 12(b)(2) motion to
dismiss for lack of personal jurisdiction, a “plaintiff must make a prima facie showing that
personal jurisdiction exists.” K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 59192 (8th Cir. 2011). This showing requires the plaintiff to plead “sufficient facts to support
a reasonable inference that the defendant can be subjected to jurisdiction within the state.”
Id. (alteration omitted) (internal quotation marks omitted).
Although the evidence
necessary to make this prima facie showing is minimal, this evidence must be tested by the
affidavits and exhibits supporting or opposing the motion, and not by the pleadings alone.
Id. at 592. When deciding whether the plaintiff has succeeded in making this requisite
showing, the district court views the evidence in the light most favorable to the plaintiff
and resolves all factual conflicts in the plaintiff’s favor. Digi-Tel Holdings, Inc. v. Proteq
Telecommunications (PTE), Ltd., 89 F.3d 519, 522 (8th Cir. 1996).
A federal court follows state law when determining the bounds of the federal court’s
personal jurisdiction. Walden v. Fiore, 134 S. Ct. 1115, 1121 (2014). Because Minnesota’s
long-arm statute extends jurisdiction to the maximum limit permitted by due process, a
federal court in Minnesota must determine only whether its exercise of personal
4
See the Court’s ruling in footnote 5, infra.
5
jurisdiction comports with due process. Wessels, Arnold & Henderson v. Nat’l Med.
Waste, Inc., 65 F.3d 1427, 1431 (8th Cir. 1995).
Due process requires a non-resident defendant to have sufficient minimum contacts
with the forum state such that the maintenance of the lawsuit does not offend “traditional
notions of fair play and substantial justice.” World-Wide Volkswagen Corp. v. Woodson,
444 U.S. 286, 291-92 (1980) (internal quotation marks omitted). Such minimum contacts
are sufficient when the defendant has engaged in an act “by which the defendant purposely
avails itself of the privilege of conducting activities within the forum State, thus invoking
the benefits and protections of its laws.” Fastpath, Inc. v. Arbela Techs. Corp., 760 F.3d
816, 821 (8th Cir. 2014) (internal quotation marks omitted). The nature of the contact with
the forum state must be “such that [the defendant] should reasonably anticipate being haled
into court there.” World-Wide Volkswagen, 444 U.S. at 297. When, as here, a plaintiff
asserts that a defendant is subject to specific personal jurisdiction, a district court may
adjudicate causes of action “arising from or related to the defendant’s actions in the forum
state.” Wessels, 65 F.3d at 1432, n.4.
A.
Minimum Contacts
B&R argues that Plaintiffs have not made a prima facie showing of specific personal
jurisdiction over B&R. Plaintiffs counter that B&R’s contact with Minnesota—through
sales, conversations with the Prince Estate, and client advice—establish sufficient
minimum contacts with the forum. Specifically, Plaintiffs allege that (1) with knowledge
that the nationwide distribution would include sales to Minnesota, B&R advised Boxill and
6
RMA to distribute the Prince Recordings; (2) B&R engaged in license negotiations and
discussed Boxill’s authorship status with the Prince Estate on multiple occasions; and (3)
B&R authored an opinion letter regarding a contract involving a Minnesota entity.
The United States Court of Appeals for the Eighth Circuit considers five factors to
determine the sufficiency of a defendant’s contacts with the forum state: (1) the nature and
quality of contacts, (2) the quantity of contacts, (3) the relation of the cause of action to the
contacts, (4) the interest of the forum state in providing a forum for its residents, and (5)
the convenience of the parties. Land-O-Nod Co. v. Bassett Furniture Indus., Inc., 708 F.2d
1338, 1340 (8th Cir. 1983). The first three factors are given “primary” importance,
whereas the last two are “secondary.” See Johnson v. Arden, 614 F.3d 785, 794 (8th Cir.
2010); accord Burlington Indus., Inc. v. Maples Indus., Inc., 97 F.3d 1100, 1102 (8th Cir.
1996). For the analysis here, factors one and two warrant further explanation.
The first factor, the nature and quality of a defendant’s contacts with the forum state,
considers how purposeful the defendant’s contact is. A defendant’s indirect sale to a forum
state generally is insufficient to establish personal jurisdiction. See Asahi Metal Indus. Co.
v. Superior Court of Cal., 480 U.S. 102, 112 (1987) (plurality) (“The placement of a
product into the stream of commerce, without more, is not an act of the defendant
purposefully directed toward the forum State.”); Stanton v. St. Jude Med., Inc., 340 F.3d
690, 694 (8th Cir. 2003) (holding that a company’s sale to a manufacturer, which in turn
sold a product to Minnesota, was insufficient to establish personal jurisdiction over
company). But a defendant’s direct sale to the forum state satisfies the first factor. See
7
Pope v. Elabo GmbH, 588 F. Supp. 2d 1008, 1020 (D. Minn. 2008) (“[A] single direct sale
by a manufacturer can be a sufficient contact to support personal jurisdiction in a suit
related to that sale.”).
Contact that is “random, fortuitous, and attenuated” does not satisfy the first factor.
Viasystems, Inc. v. EBM-Papst St. Georgen GmbH & Co., KG, 646 F.3d 589, 594 (8th Cir.
2011). For example, scattered communication via emails and phone calls to individuals
within the forum state does not justify a court’s exercise of personal jurisdiction over the
defendant. Id. Similarly, a defendant’s communication with an out-of-state third party,
who in turn has contacts with the forum state, is a contact with the forum state that is too
tenuous to satisfy the first factor. See Nash Finch Co. v. Preston, 867 F. Supp. 866, 86869 (D. Minn. 1994). In Nash Finch, the district court did not have personal jurisdiction
over an out-of-state lawyer who provided an opinion letter to his Minnesota client. See id.
That the letter approved a deal with a Minnesota corporation or that the Minnesota
corporation relied on the letter was unavailing. See id. (explaining that a contrary rule
would lead to the “absurd” result of making a law firm potentially “susceptible to the
jurisdiction of every state in the union”).
The second factor in the Eighth Circuit’s minimum contacts analysis considers the
quantity of a defendant’s contacts. But a low volume of contacts will not defeat an
otherwise meaningful interaction with the forum state, nor will a high volume of contacts
bolster an otherwise deficient connection to the forum state. For example, a single, direct
sale may be sufficient to confer personal jurisdiction. See Pope, 588 F. Supp. 2d at 1020.
8
In contrast, even 100 phone calls will not establish jurisdiction if a defendant has no offices,
employees, inventory, real estate, or bank accounts in the forum state. See Burlington, 97
F.3d at 1103; see also Porter v. Berall, 293 F.3d 1073, 1076-77 (8th Cir. 2002) (finding
that when defendant did not solicit business from the forum state, subsequent phone calls
and mailings did not establish personal jurisdiction).
In support of its motion to dismiss, B&R argues that none of Plaintiffs’ proffered
contacts is sufficient to confer specific personal jurisdiction over B&R, nor are they when
considered together. Of the five minimum-contacts factors, the first factor—the quality
and nature of the contacts—most strongly disfavors the Court’s exercise of personal
jurisdiction over B&R. Although Plaintiffs allege that B&R encouraged Defendants to
distribute the Prince Recordings, Plaintiffs concede that B&R did not directly sell the
music. Merely encouraging another party to place an item in the stream of commerce does
not establish personal jurisdiction over B&R. See Asahi, 480 U.S. at 112. Plaintiffs’ other
allegations concerning phone calls, emails, and the opinion letter also fall short. B&R is
not a Minnesota law firm and its clients in this matter were not Minnesota residents.
Plaintiffs make no allegations that B&R was compensated by the Prince Estate, travelled
to Minnesota, or solicited business in Minnesota. Absent other contacts, B&R’s emails,
phone calls, and opinion letter are not so purposefully directed to Minnesota to justify this
Court’s exercise of personal jurisdiction over B&R. See Burlington, 97 F.3d at 1103; Nash
Finch Co., 867 F. Supp. at 868-69.
9
The second factor, the quantity of contacts, strongly favors neither Plaintiffs nor
B&R. Although Plaintiffs allege numerous phone and email conversations between B&R
and the Prince Estate, even a high volume of such contacts does not establish personal
jurisdiction where personal jurisdiction otherwise would be lacking. See Burlington, 97
F.3d at 1103; Porter, 293 F.3d at 1076. Plaintiffs’ allegations that there were “at least four
purchasers” of the Prince Recordings in Minnesota also is of limited significance, as B&R
did not directly sell to any of these customers.
The third factor favors Plaintiffs. B&R’s alleged conduct relates to the causes of
action asserted in the third amended complaint: tortious interference with contract, indirect
copyright infringement, and declaratory judgment. The tortious interference with contract
claim arises from B&R’s alleged notice of and response to the Confidentiality Agreement.
The indirect copyright infringement claim and requested declaratory relief relate to B&R’s
alleged encouragement of the distribution of the Prince Recordings.
Likewise, the final two factors favor Plaintiffs. Because the Prince Estate is located
in Minnesota, the state is both an interested and convenient forum. However, a state’s
interest in the litigation and convenience as a forum are of limited significance for the
purpose of this analysis. See Burlington, 97 F.3d at 1102.
In summary, because the nature and quality of the asserted contacts weigh strongly
against the Court’s exercise of personal jurisdiction over B&R, Plaintiffs have not made a
prima facie showing that B&R has sufficient minimum contacts with Minnesota.
10
B.
Calder Test
Plaintiffs allege that B&R committed intentional torts directed at Minnesota which,
in combination with the contacts described above, justify the Court’s exercise of personal
jurisdiction over B&R.
A defendant’s tortious conduct can be a basis for personal jurisdiction. Calder v.
Jones, 465 U.S. 783, 790 (1984). To establish personal jurisdiction under an intentional
tort theory, a plaintiff must make a prima facie showing that “the defendant’s acts (1) were
intentional, (2) were ‘uniquely’ or expressly aimed at the forum state, and (3) caused harm,
the brunt of which was suffered—and which the defendant knew was likely to be
suffered—there.” Zumbro, Inc. v. Cal. Nat. Prods., 861 F. Supp. 773, 782-83 (D. Minn.
1994). The Eighth Circuit considers the Calder test in combination with the standard fivefactor analysis. See Johnson, 614 F.3d at 797 (“We therefore construe the Calder effects
test narrowly, and hold that, absent additional contacts, mere effects in the forum state are
insufficient to confer personal jurisdiction.”).
The Eighth Circuit has acknowledged the limited reach of Calder, accepting that
businesses often promote their products and solicit customers at the expense of
competitors. Although such actions “may have an effect on a competitor, absent additional
contacts, this effect alone will not be sufficient to bestow personal jurisdiction.” See
Hicklin Eng’g, Inc. v. Aidco, Inc., 959 F.2d 738, 739 (8th Cir. 1992) (holding that allegedly
defamatory statements about a business in Iowa, sent to out-of-state customers, did not
invoke Calder even though competitive effects were felt in Iowa). Instead, personal
11
jurisdiction under Calder is appropriate when a defendant purposefully targets the forum
state, such as by directly selling an infringing product to retailers or customers in that state.
See, e.g., Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1391 (8th Cir.
1991) (affirming exercise of personal jurisdiction over out-of-state company because
company was aware of competing trademark yet still used its infringing trademark when
selling to retailers and customers in the forum state).
B&R argues that its conduct was not expressly aimed at Minnesota. Plaintiffs allege
that B&R committed intentional torts by allowing its opinion letter to be circulated after
B&R was aware of the Confidentiality Agreement, thereby encouraging the unlawful
distribution of the Prince Recordings. And Plaintiffs maintain that B&R knew its actions
would primarily affect the Prince Estate, a Minnesota entity. Here, as in Hicklin, B&R is
an out-of-state entity that distributed a letter to out-of-state recipients.
Although
competitive effects were felt in Minnesota, this alone is not enough to invoke the Court’s
personal jurisdiction. See 959 F.2d at 739. Plaintiffs’ reliance on Dakota is unavailing.
Unlike directly selling a product with an infringing trademark, B&R passively allowed the
continued circulation of its opinion letter to third parties who, in turn, decided to distribute
and promote the Prince Recordings. Mere effects in Minnesota do not confer personal
jurisdiction over B&R. See Johnson, 614 F.3d at 797.
In sum, the contacts and conduct that Plaintiffs allege are insufficient to establish
that B&R has purposefully availed itself of Minnesota’s laws. An out-of-state law firm
provided advice to out-of-state clients. The advice happened to concern a Minnesota entity
12
and several sales happened to be to Minnesota residents. But to subject B&R to this Court’s
personal jurisdiction under these circumstances would discourage the dissemination of
legal advice and expand the reach of personal jurisdiction well beyond its current limits.
Accordingly, the Court dismisses without prejudice the claims in the third amended
complaint against B&R.5
II.
Motion to Dismiss Tortious Interference Counterclaim
Boxill, Deliverance, RMA, Wilson, and Staley (collectively, “Defendants”) assert a
counterclaim for tortious interference with contracts and prospective economic advantage.6
Defendants allege that Plaintiffs misrepresented legal documents to Defendants’ business
partners, which interfered with Defendants’ efforts to sell the Prince Recordings. Plaintiffs
move to dismiss Defendants’ counterclaim for failure to state a claim for either tortious
interference with contracts or tortious interference with prospective economic advantage.
Fed. R. Civ. P. 12(b)(6).
To survive a Rule 12(b)(6) motion to dismiss, a claim must allege sufficient facts
such that, when accepted as true, a facially plausible claim for relief is stated. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). When determining whether the claim is sufficient, a
5
The Court grants Plaintiffs’ motion to supplement the record with a newly produced
document for the limited purpose of this motion to dismiss. (Dkt. 360.) A careful review
of the supplemental document does not change the Court’s determination that B&R’s
contacts with Minnesota are insufficient to establish personal jurisdiction.
6
Defendants combine the tortious interference with contracts claim and tortious
interference with prospective economic advantage claim in a single count. Because
tortious interference with contracts and tortious interference with prospective economic
advantage have distinct elements, the Court analyzes each claim separately.
13
district court accepts as true all of the factual allegations in the claim and draws all
reasonable inferences in the nonmoving party’s favor. Blankenship v. USA Truck, Inc.,
601 F.3d 852, 853 (8th Cir. 2010); see also Reis v. Walker, 491 F.3d 868, 870 (8th Cir.
2007) (applying Rule 12(b)(6) standards to motion to dismiss counterclaim). The factual
allegations need not be detailed, but they must be sufficient to “raise a right to relief above
the speculative level” and “state a claim to relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007). Mere “labels and conclusions” or a
“formulaic recitation of the elements of a cause of action” are insufficient; and legal
conclusions couched as factual allegations may be disregarded. See id. at 555. A district
court may consider documents that are necessarily embraced by the claim when
considering a Rule 12(b)(6) motion to dismiss. See Kushner v. Beverly Enters., 317 F.3d
820, 831 (8th Cir. 2003).
A.
Tortious Interference with Contracts
Defendants allege that Plaintiffs misrepresented the scope of both the
Confidentiality Agreement and an April 19, 2017 temporary restraining order (TRO) to
Defendants’ business partners. After misrepresenting these legal documents, Defendants
contend, Plaintiffs improperly threatened to pursue legal action against any of Defendants’
business partners that continued distributing the Prince Recordings.
To state a claim for tortious interference with a contract, a party must allege (1) the
existence of a contract, (2) the accused’s knowledge of the contract, (3) intentional
procurement of its breach, (4) the absence of justification, and (5) damages. Kallok v.
14
Medtronic, Inc., 573 N.W.2d 356, 362 (Minn. 1998). Alleged negotiations or agreements
in principal are not sufficient. See Bouten v. Richard Miller Homes, Inc., 321 N.W.2d 895,
900 (Minn. 1982) (concluding that, because the contract at issue was void, it did not satisfy
the first element of the tortious interference claim).
Plaintiffs argue that Defendants have not alleged the existence of an actual contract.
Defendants identify various business partners with whom they had negotiated for the
Prince Recordings to be promoted and advertised. But negotiations and preliminary
agreements do not satisfy the first element of a tortious interference with contracts claim.
See id. Defendants fail to identify any agreement with its business partners that is an actual
contract. Without additional allegations, Defendants have not stated a cognizable claim.
Accordingly, the Court grants Plaintiffs’ motion to dismiss Defendants’
counterclaim for tortious interference with contracts, and dismisses that counterclaim
without prejudice.7
7
Plaintiffs argue that dismissal of the counterclaim should be with prejudice because
Defendants have had two previous attempts to state a claim for relief properly. A district
court, in its discretion, may dismiss a pleading for failure to state a claim with or without
prejudice. See Orr v. Clements, 688 F.3d 463, 465 (8th Cir. 2012). Dismissal with
prejudice may be warranted if amending the pleading would be futile. See Pet Quarters,
Inc. v. Depository Tr. & Clearing Corp., 559 F.3d 772, 782 (8th Cir. 2009). Here, although
Defendants have asserted this counterclaim on two prior occasions, this is the first instance
that Defendants’ counterclaim is the subject of a judicial ruling. And there is no indication
in the record that it would be impossible for Defendants to adequately plead a tortious
interference with contracts claim. For these reasons, the dismissal is without prejudice.
15
B.
Tortious Interference with Prospective Economic Advantage
Plaintiffs also argue that Defendants have not stated a claim for tortious interference
with prospective economic advantage. Defendants allege in their counterclaim that, but
for Plaintiffs’ misrepresentation of the Confidentiality Agreement and TRO, Defendants
“would have realized additional advantage and benefit from both current business
relationships and future business relationships.”
To recover under Minnesota law for tortious interference with prospective economic
advantage, Defendants must prove (1) the existence of a reasonable expectation of
economic advantage; (2) Plaintiffs’ knowledge of that expectation; (3) Plaintiffs’
intentional interference with Defendants’ expectation, such that the interference was either
independently tortious or in violation of a state or federal statute or regulation; (4) a
reasonable probability that Defendants would have realized the economic advantage or
benefit in the absence of Plaintiffs’ wrongful act; and (5) damages. Gieseke ex rel.
Diversified Water Diversion, Inc. v. IDCA, Inc., 844 N.W.2d 210, 219 (Minn. 2014).
Defendants must specifically identify the third party that is the source of the expected
future economic relationship because “a projection of future business or unidentified
customers, without more, is insufficient as a matter of law.” Id. at 221-22.
Plaintiffs’ argument is twofold. First, Plaintiffs argue that Defendants have not
stated a claim on which relief can be granted because they have not identified a specific
business partner or customer with whom Defendants could expect any future economic
advantage. But Plaintiffs rely on Gieseke, which provides only the elements required to
16
prove tortious interference with prospective economic advantage, not the elements required
to plead that claim. See id. It is not clear from the Gieseke decision that identifying a
specific business partner or customer is necessary to survive a motion to dismiss. However,
even assuming without deciding that identification of a specific business partner or
customer is a pleading requirement, Defendants satisfy this requirement.
In their
counterclaim, Defendants allege that one of the Prince Recordings, “Deliverance,” was the
top-selling pre-order on iTunes before Apple removed the song from its platform and the
second best-selling album pre-order on Amazon. These allegations clearly identify Apple
and Amazon as specific business partners with whom Defendants expected to have an
ongoing relationship. Accordingly, Plaintiffs’ first argument fails.
Second, Plaintiffs argue that Defendants have not alleged an independently tortious
act. Plaintiffs maintain that any interference with Defendants’ business partners was
justified because Plaintiffs are entitled to enforce their intellectual property rights.
Plaintiffs rely on Select Comfort Corp. v. Sleep Better Store, LLC, 838 F. Supp. 2d 889,
894 (D. Minn. 2012), which held that a party’s cease-and-desist letter, sent in good faith,
did not constitute tortious interference. But Select Comfort is inapposite here because
Defendants allege that Plaintiffs acted in bad faith. Defendants specifically allege that
Plaintiffs intentionally misrepresented the Confidentiality Agreement and TRO. And by
doing so, Plaintiffs knowingly made unfounded threats to take legal action against entities
that distributed certain Prince Recordings. Accepting Defendants’ allegations as true, as
the Court must for the purpose of this motion to dismiss, Defendants have alleged an
17
independently tortious act. The third element of a tortious interference with prospective
economic advantage claim is met.
Plaintiffs do not challenge the sufficiency of the pleadings with respect to the other
elements of Defendants’ tortious interference with prospective economic advantage
counterclaim, nor does the Court determine that Defendants’ allegations are lacking.
Accordingly, the Court denies Plaintiffs’ motion to dismiss Defendants’ tortious
interference with prospective economic advantage counterclaim.
ORDER
Based on the foregoing analysis and all the files, records and proceedings herein, IT
IS HEREBY ORDERED:
1.
Plaintiffs’ motion to supplement the record, (Dkt. 360), is GRANTED.
2.
Defendant Brown & Rosen, LLC’s motion to dismiss the third amended
complaint for lack of personal jurisdiction, (Dkt. 330), is GRANTED.
3.
Plaintiffs’ third amended complaint, (Dkt. 262), is DISMISSED
WITHOUT PREJUDICE with respect to Defendant Brown & Rosen, LLC.
4.
Plaintiffs’ motion to dismiss Defendants’ counterclaim, (Dkt. 306), is
GRANTED as to the tortious interference with contracts counterclaim and DENIED as to
the tortious interference with prospective economic advantage counterclaim. Defendants’
counterclaim for tortious interference with contracts is DISMISSED WITHOUT
PREJUDICE.
18
5.
Plaintiffs’ earlier motion to dismiss Defendants’ counterclaim, (Dkt. 188), is
DENIED AS MOOT.
Dated: February 22, 2019
s/Wilhelmina M. Wright
Wilhelmina M. Wright
United States District Judge
19
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