Righthaven LLC v. Newman
Filing
25
MOTION to Dismiss for Lack of Jurisdiction Subject Matter and Personal First Amended Complaint by Defendant Garry Newman. Responses due by 8/18/2011. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I, # 10 Exhibit J)(DiRaimondo, Anthony)
Exhibit D
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Righthaven LLC v. Democratic Underground, LLC, --- F.Supp.2d ---- (2011)
2011 WL 2378186
Only the Westlaw citation is currently available.
United States District Court,
D. Nevada.
RIGHTHAVEN LLC, a Nevada limited-liability
company, Plaintiff,
v.
DEMOCRATIC UNDERGROUND, LLC, a District
of Columbia limited-liability company; and David
Allen, an individual, Defendants.
Democratic Underground, LLC, a District of
Columbia limited-liability company,
Counterclaimant,
v.
Righthaven, LLC, a Nevada limited-liability
company; and Stephens Media LLC, a Nevada
limited-liability company, Counterdefendants.
No. 2:10–cv–01356–RLH–GWF.June 14, 2011.
Attorneys and Law Firms
Joseph C. Chu, Righthaven LLC, Shawn A. Mangano,
Shawn A. Mangano, Ltd, Steven A. Gibson, Dickinson
Wright PLLC, Las Vegas, NV, for Plaintiff.
Cliff C. Webb, Jennifer J. Johnson, Laurence F. Pulgram,
Fenwick & West LLP, Corynne McSherry, Kurt Opsahl,
Electronic Frontier Foundation, San Francisco, CA, Chad
A. Bowers, The Law Office of Chad A. Bowers, Ltd., Las
Vegas, NV, for Defendants.
J. Colby Williams, Philip R. Erwin, Campbell &
Williams, Las Vegas, NV, for Counterdefendants.
Opinion
ORDER
(Motion for Voluntary Dismissal with Prejudice—#
36; Motion to Dismiss or Strike—# 38; Motion for
Summary Judgment—# 45)
ROGER L. HUNT, Chief Judge.
*1 Before the Court is Plaintiff/Counterdefendant
Righthaven LLC’s Motion for Voluntary Dismissal
with Prejudice (# 36, filed Aug. 10, 2010). The Court has
also considered Defendant/Counterclaimant Democratic
Underground, LLC and David Allen’s (collectively
{00629655.1}
“Democratic Underground”) Opposition (# 44, filed Dec.
7, 2010), and Righthaven’s Reply (# 57, filed Jan. 7,
2011).
Also before the Court is Counterdefendant Stephens
Media LLC’s Motion to Dismiss or Strike (# 38, filed
Nov. 17, 2010). The Court has also considered the
Democratic Underground’s Opposition (# 46, filed Dec.
7, 2010), and Stephens Media’s Reply (# 56, filed Jan. 7,
2011).
Also before the Court is Democratic Underground’s
Motion for Summary Judgment (# 45, filed Dec. 7,
2010). The Court has also considered Righthaven’s
Opposition (# 58, filed Jan. 8, 2011), and Democratic
Underground’s Reply (# 62, filed Jan. 28, 2011).
Finally, the Court allowed and ordered supplemental
briefing relevant to the three motions under consideration
because of important evidence that only came to light
after these motions were fully briefed. Accordingly, the
Court has considered Democratic Underground’s
Supplemental Memorandum Addressing Recently
Produced Evidence (# 79, filed Mar. 9, 2011), Stephens
Media’s Response (# 99, filed May 9, 2011),
Righthaven’s Response (# 100, filed May 9, 2011), and
Democratic Underground’s Replies (107 and 108, filed
May 20, 2011).
BACKGROUND
This dispute arises out of Democratic Underground’s
allegedly copyright infringing conduct. About May 13,
2010, a Democratic Underground user posted a comment
on Democratic Underground’s website which included a
portion of a Las Vegas Review–Journal (“LVRJ”) article
about Nevada politics, particularly about the Tea Party
effect on Sharon Angle’s senatorial campaign (the
“Work”). The posting included a link to the full article
and the LVRJ’s website. As such, Democratic
Underground displayed this selection from the article on
its website and Righthaven claims that this infringed on
the copyright.
Righthaven claims that after the Work was posted on
Democratic Underground’s website, it purchased the
copyright to the Work from Stephens Media, the owner of
the LVRJ, along with the right to sue for past
infringement. (Dkt. # 102, Decl. of Steve Gibson, Ex. 1,
Copyright Assignment (hereinafter referred to as the
“Assignment”) .) Righthaven then registered the
copyright with the United States Copyright office.
Thereafter, Righthaven sued Democratic Underground
alleging
copyright
infringement.
Democratic
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1
Exhibit D
Righthaven LLC v. Democratic Underground, LLC, --- F.Supp.2d ---- (2011)
Underground, in turn, filed a counterclaim for a
declaratory judgment of non-infringement against both
Righthaven and Stephens Media, which was not originally
a party to this case. Righthaven has since filed a motion
for voluntary dismissal with prejudice due to an adverse
fair use ruling by the Honorable Larry R. Hicks, United
States District Judge for this district (Righthaven is
appealing that decision), Stephens Media has filed a
motion to dismiss or strike the counterclaim and a partial
joinder to Righthaven’s motion, and Democratic
Underground has filed a motion for summary judgment
on Righthaven’s claim.
responsibilities of each party, and limits and defines
future copyright assignments between them. (See
generally, id.) As such, it limits and explains the intent
behind the Assignment, which was executed in July 2010.
Critically, the SAA expressly denies Righthaven any
rights from future assignments (including the Assignment
of the Work) other than the bare right to bring and profit
from copyright infringement actions. This conclusion is
clearly expressed in Section 7.2 of the SAA:
As stated above, before the Court are two motions to
dismiss and a motion for summary judgment. However,
the Court must first address the supplemental briefing
addressing the SAA and the question of Righthaven’s
standing to pursue this copyright infringement claim. The
Court will then address the outstanding motions.
7.2 Despite any such Copyright Assignment, Stephens
Media shall retain (and is hereby granted by
Righthaven ) an exclusive license to Exploit the
Stephens Media Assigned Copyrights for any lawful
purpose whatsoever and Righthaven shall have no
right or license to Exploit or participate in the
receipt of royalties from the Exploitation of the
Stephens Media Assigned Copyrights other than the
right to proceeds in association with a Recovery. To
the extent that Righthaven’s maintenance of rights to
pursue infringers of the Stephens Media Assigned
Copyrights in any manner would be deemed to
diminish Stephens Media’s right to Exploit the
Stephens Media Assigned Copyrights, Righthaven
hereby grants an exclusive license to Stephens Media to
the greatest extent permitted by law so that Stephens
Media shall have unfettered and exclusive ability to
Exploit the Stephens Media Assigned Copyrights....
*3 (Id., Section 7.2 (bold emphasis added, italicization in
original)). The plain and simple effect of this section was
to prevent Righthaven from obtaining, having, or
otherwise exercising any right other than the mere right to
sue as Stephens Media retained all other rights. Even
Righthaven’s right to sue is not absolute. The SAA gives
Stephens Media the right to prevent Righthaven from
suing an alleged copyright infringer for various specific
reasons, including that the lawsuit might “result in an
adverse result to Stephens Media.” (Id., Section 3.3.)
Other sections also give Stephens Media a right to
reversion and other rights which, collectively, destroy
Righthaven’s supposed rights in the Work. (See generally,
id.) Now that the SAA has shed light upon Righthaven’s
true interest in the copyright to the Work, Democratic
Underground asserts that Righthaven lacks standing to
maintain this lawsuit.
A. Background—The Strategic Alliance Agreement
B. Legal Standard
Months prior to purportedly assigning the Work to
Righthaven, Stephens Media and Righthaven signed a
Strategic Alliance Agreement governing future copyright
assignments between them. (Dkt. # 79, Ex. 1, SAA, dated
Jan. 18, 2010.) The SAA details the relationship between
Righthaven and Stephens Media, explains the rights and
Pursuant to Section 501(b) of the 1976 Copyright Act, 17
U.S.C. § 101, et. seq., (the “Act”) only the legal or
beneficial owner of an exclusive right under copyright
law is entitled, or has standing, to sue for infringement.
Silvers v. Sony Pictures Entm’t Inc., 402 F.3d 881, 884
(9th Cir.2005) (en banc ). In so holding, the Ninth Circuit
*2 After these motions were fully briefed, Stephens
Media disclosed to Democratic Underground the Strategic
Alliance Agreement (“SAA”) between Stephens Media
and Righthaven. The SAA defines their relationship and
governs all future copyright assignments between them
(including the assignment at issue here). (Dkt. # 79,
Supplemental Mem. Ex. 1, SAA, dated Jan. 18, 2010.)
After learning the details of this agreement, Democratic
Underground sought leave to file a supplemental
memorandum addressing this newly discovered evidence
and its effect on the outstanding motions. The Court
allowed the supplemental briefing as it too considered the
SAA highly relevant to Righthaven’s standing in this and
a multitude of other pending Righthaven cases. After
considering the supplemental brief and for the reasons
discussed below, the Court dismisses Righthaven for lack
of standing and, therefore, denies both Righthaven’s
motion and Democratic Underground’s motion as moot.
The Court also denies Stephens Media’s motion.
DISCUSSION
I. Righthaven’s Standing to Assert Copyright Claims
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Righthaven LLC v. Democratic Underground, LLC, --- F.Supp.2d ---- (2011)
followed the Second Circuit’s decision in Eden Toys, Inc.
v. Florelee Undergarment Co., 697 F.2d 27 (2d Cir.1982),
superseded by rule and statute on other grounds. See
also, ABKCO Music, Inc. v. Harrisongs Music, Ltd., 944
F.2d 971, 980 (2d Cir.1991) (citing Eden Toys, “the
Copyright Act does not permit copyright holders to
choose third parties to bring suits on their behalf.”)
Section 106 of the Act defines and limits the exclusive
rights under copyright law. Id. at 884–85. While these
exclusive rights may be transferred and owned separately,
the assignment of a bare right to sue is ineffectual because
it is not one of the exclusive rights. Id. Since the right to
sue is not one of the exclusive rights, transfer solely of the
right to sue does not confer standing on the assignee. Id.
at 890. One can only obtain a right to sue on a copyright if
the party also obtains one of the exclusive rights in the
copyright. See id. Further, to obtain a right to sue for past
infringement, that right must be expressly stated in the
assignment. See generally, id.
*4 Righthaven contends that the Court should construe
the SAA to grant Righthaven whatever rights are
necessary for it to have standing in a copyright
infringement action. First, Righthaven argues that the
Court should construe the contract in this manner because
in situations where a contract is ambiguous, the Court
should look to the parties’ intent. Sheehan & Sheehan v.
Nelson Malley and Co., 117 P.3d 219, 223–24
(Nev.2005). Accordingly, Righthaven argues that the
plain intent of the SAA is to give Righthaven all rights
necessary to bring a copyright infringement action. The
Court, however, disagrees with Righthaven’s premise
because the SAA is not ambiguous. Righthaven and
Stephens Media went to great lengths in the SAA to be
sure that Righthaven did not obtain any rights other than
the bare right to sue. Thus, the Court finds that the plain
language of the SAA conveys the intent to deprive
Righthaven of any right, save for the right to sue alleged
infringers and profit from such lawsuits. As such, the
SAA is not ambiguous and the Court shall not read any
ambiguity into it.
C. Analysis
1. Contract Construction
Righthaven argues that the SAA’s provisions, which
necessarily include Section 7.2, do not alter the
unambiguous language of the Assignment or limit the
rights it obtained from Stephens Media in the
Assignment. This conclusion is flagrantly false—to the
point that the claim is disingenuous, if not outright
deceitful. The entirety of the SAA was designed to
prevent Righthaven from becoming “an owner of any
exclusive right in the copyright....,” Silvers, 402 F.3d at
886 (emphasis in original), regardless of Righthaven and
Stephens Media’s post hoc, explanations of the SAA’s
intent or later assignments, (see generally Dkt. # 101,
Decl. of Mark A. Hineuber; Dkt. # 102, Decl. of Steven
A. Gibson). Prior to the Assignment, Stephens Media
possessed all of the exclusive rights to the Work and,
therefore, the right to sue. Because the SAA limited the
language of the Assignment, the Assignment changed
nothing save for Righthaven’s claim to have the right to
sue. The companies’ current attempt to reinterpret the
plain language of their agreement changes nothing. In
reality, Righthaven actually left the transaction with
nothing more than a fabrication since a copyright owner
cannot assign a bare right to sue after Silvers. To approve
of such a transaction would require the Court to disregard
the clear intent of the transaction and the clear precedent
set forth by the en banc Ninth Circuit in Silvers.
2. Stephens Media and Righthaven’s Intent
{00629655.1}
Second, Righthaven argues that Section 15.1 of the SAA
gives the Court authority to correct any provision of the
SAA that is deemed void or unenforceable to approximate
the manifest intent of the parties. The problem is that this
argument requires a provision of the SAA to be void or
unenforceable. However, Righthaven’s problem is not
that any provision of the SAA is void or unenforceable
but that the SAA simply does not grant Righthaven any of
the exclusive rights defined in Section 106 of the Act
required for standing. Therefore, the SAA is not void or
unenforceable, it merely prevents Righthaven from
obtaining standing to sue from the Assignment.
Accordingly, the Court need not and shall not amend or
reinterpret the SAA to suit Righthaven’s current desires.
3. Righthaven and Stephens Media’s Amendment to
the SAA
Notwithstanding the actual transaction that occurred,
Righthaven argues that the amendment it executed with
Stephens Media on May 9, 2011, the day that they filed
their response to the supplemental memorandum validates
or fixes any possible errors in the original SAA that
would prevent Righthaven from having standing in this
matter. (Dkt. # 102, Gibson Decl. Ex. 3, Clarification and
Amendment to SAA.) However, this amendment cannot
create standing because “ ‘[t]he existence of federal
jurisdiction ordinarily depends on the facts as they exist
when the complaint is filed.’ “ Lujan v. Defenders of
Wildlife, 504 U.S. 555, 571 n. 4 (1992) (quoting
Newman–Green, Inc. v. Alfonzo–Larrain, 490 U.S. 826,
830 (1989)) (emphasis in Lujan ). Although a court may
allow parties to amend defective allegations of
jurisdiction, it may not allow the parties to amend the
© 2011 Thomson Reuters. No claim to original U.S. Government Works.
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Righthaven LLC v. Democratic Underground, LLC, --- F.Supp.2d ---- (2011)
facts themselves. Newman–Green, 490 U.S. at 830. As an
example, a party who misstates his domicile may amend
to correctly state it. This is an amendment of the
allegation. However, that party is not permitted to
subsequently move in order to change his domicile and
amend accordingly. This would be an amendment of the
jurisdictional facts, which is not allowed. See id. Here,
Righthaven and Stephens Media attempt to impermissibly
amend the facts to manufacture standing. Therefore, the
Court shall not consider the amended language of the
SAA, but the actual transaction that took place as of the
time the complaint was filed.1
1
The Court does not determine whether or not the
amended SAA would transfer sufficient rights to
Righthaven for it to have standing in suits filed after
amendment as the Court need not make that
determination to rule on these motions. Nonetheless,
the Court expresses doubt that these seemingly
cosmetic adjustments change the nature and practical
effect of the SAA.
*5 Regardless of this legal principle, Righthaven argues
that courts routinely allow parties to a copyright transfer
to subsequently clarify or amend their agreements in order
to express their original intent to grant the assignee the
right to sue for infringement. Righthaven’s assertion is
not entirely wrong, but the cases Righthaven cites in
support of its proposition are all distinguishable as they
deal with matters significantly different than those
presently before the Court. For instance, Righthaven cites
multiple cases where courts allowed an oral assignment
made prior to initiation of a lawsuit to be confirmed in
writing after the initiation of the lawsuit. See Billy–Bob
Teeth, Inc. v. Novelty, Inc., 329 F.3d 586, 591 (7th
Cir.2003) (allowing an oral assignment to be confirmed in
a later writing).2 These cases are all distinguishable in that
the assignor and assignee in these cases had agreements to
transfer the necessary, exclusive rights prior to the
initiation of a lawsuit. The only thing lacking was the
written document necessary for a court to recognize the
transfer. In each of these cases, the courts merely gave
effect to what the parties had actually done, i.e.
recognized rights already actually transferred. Here,
Righthaven does not ask the Court to recognize an oral
transfer with a late made written memorandum of the
deal, but to fundamentally rewrite the agreement between
Righthaven and Stephens Media to grant Righthaven
rights that it never actually received.
2
See also, Imperial Residential Design, Inc. v. Palms
Dev. Group, Inc., 70 F.3d 96, 99 (11th Cir.1995) (“[A]
copyright owner’s later execution of a writing which
confirms an earlier oral agreement validates the
transfer ab initio.”); Arthur Rutenberg Homes, Inc. v.
Drew Homes, Inc., 29 F.3d 1529, 1532 (11th
Cir.1994); Sabroso Publ’g, Inc. v. Caiman Records
Am., Inc., 141 F.Supp.2d 224, 228 (D.P.R.2001).
{00629655.1}
Righthaven cites three other district court cases from
other circuits which deal with matters other than oral
assignments later ratified by written agreements. First is a
district court case, Intimo Inc. v. Briefly Stated, Inc., 948
F.Supp. 315 (S.D.N.Y.1996), wherein the court allowed
the parties to the assignment agreement to amend the
agreement to include the right to sue for pre-assignment
copyright violations. Notably, the plaintiff in that case
would have maintained standing as not all claims were
based on pre-assignment copyright violations. Id. at 318–
19. Nonetheless, the Intimo court allowed amendment to
correct what it found was merely an oversight on the part
of the parties because the agreement was silent on preassignment copyright violations despite the parties intent
to transfer the right to sue on those violations. Here,
Righthaven and Stephens Media may have wanted
Righthaven to be able to sue, but the SAA was anything
but silent in making sure that Stephens Media retained
complete control over the Work rather than actually
effectuate the necessary transfer of rights. The entirety of
the SAA is concerned with making sure that Righthaven
did not obtain any rights other than the right to sue. This
careful exclusion of rights made even that transfer
ineffectual under Silvers.
The other two cases are also distinguishable. The second
case, Infodek, Inc. v. Meredith–Webb Printing Co., Inc.,
830 F.Supp. 614 (N.D.Ga.1993), is based on facts largely
similar to Intimo and the same analysis distinguishes it
from the present case. The third is an unreported district
court case, Gondinger Silver Art Co., Ltd. v. Int’l Silver
Co., No. 95 CIV. 9199, 1995 WL 702357 (S .D.N.Y.
Nov. 28, 1995), that dealt with a later assignment because
there was a dispute as to whether the relevant work was a
work made for hire or whether the plaintiff was a
coauthor of the work. The Gondinger court did not
expressly determine the issue, finding that it was
irrelevant as there was another basis for standing. Id. at
*4–5. In sum, not one of the cases cited by Righthaven
persuade, much less require, the Court to find standing
based on Righthaven and Stephens Media’s Amended
SAA.
4. Democratic Underground’s Standing to Challenge
the SAA
*6 Righthaven also contends that Democratic
Underground lacks standing to challenge the validity of
the SAA. However, Democratic Underground does not
actually attack the SAA’s validity, Democratic
Underground only contends that the SAA prevented the
Assignment from transferring the rights Righthaven and
Stephens Media currently argue the Assignment
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Righthaven LLC v. Democratic Underground, LLC, --- F.Supp.2d ---- (2011)
transferred. In essence, Democratic Underground simply
argues that, under the SAA, the Assignment only
transferred one particular right, which failed to have the
effect Righthaven wishes it had. Democratic Underground
does not contest the SAA’s validity or argue that it should
be undone in any way. Further, the Sylvers court
necessarily allowed the defendant to challenge whether
the necessary rights were transferred from the rights
holder to the plaintiff in that action. Otherwise the Ninth
Circuit would not have been able address the plaintiff’s
lack of standing in Silvers and hold that a mere right to
sue is insufficient to bring a copyright infringement
action.
Righthaven. Eden Toys, 697 F.2d at 32 n. 3 (“While
[Federal Rule of Civil Procedure] 17(a) ordinarily permits
the real party in interest to ratify a suit brought by another
party, the Copyright Law is quite specific in stating that
only the owner of an exclusive right under a copyright
may bring suit.” (internal citations and quotations
omitted).) Also, as Stephens Media has already been
brought into this suit as a counter-defendant to a
declaratory judgment claim, the Court finds it
unnecessary to join Stephens Media as a plaintiff. If
Stephens Media wishes to assert claims against
Democratic Underground, it may do so separately.
5. Prior Rulings within this District
II. Righthaven’s Motion and Democratic
Underground’s Motion are Both Moot
Finally, Righthaven contends that multiple courts within
this district have already determined that Righthaven has
standing to bring claims for past infringement under the
Silver standard based on the plain language of the
copyright assignment. At best, this argument is
disingenuous. As the undersigned issued one of the orders
Righthaven cites for this argument, the undersigned is
well aware that Righthaven led the district judges of this
district to believe that it was the true owner of the
copyright in the relevant news articles. Righthaven did
not disclose the true nature of the transaction by
disclosing the SAA or Stephens Media’s pecuniary
interests. As the SAA makes abundantly clear, Stephens
Media retained the exclusive rights, never actually
transferring them to Righthaven regardless of
Righthaven’s and Stephens Media’s current contentions.
Further, Righthaven also failed to disclose Stephens
Media in its certificates of interested parties, despite
Stephens Media’s right to proceeds from these lawsuits.
(Dkt. # 79, Ex. 1, SAA Section 5 (granting Stephens
Media a fifty percent interest in any recovery, minus
costs).) Since those orders were tainted by Righthaven’s
failure to disclose the SAA and Stephens Media’s true
interest, those decisions are not persuasive and do not
support standing here.
D. Righthaven Lacks Standing to Bring this Action
Because the SAA prevents Righthaven from obtaining
any of the exclusive rights necessary to maintain standing
in a copyright infringement action, the Court finds that
Righthaven lacks standing in this case. Accordingly, the
Court dismisses Righthaven from this case. However,
Righthaven requests that upon such a finding, the Court
grant it leave to join Stephens Media as a plaintiff to cure
the jurisdictional defect. Adding Stephens Media,
however, would not cure the jurisdictional defect as to
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*7 Because the Court has dismissed Righthaven for lack
of standing, the Court denies both Righthaven’s motion
for voluntary dismissal with prejudice and Democratic
Underground’s motion for summary judgment on
Righthaven’s claim as moot. Since Righthaven has been
dismissed, its complaint is also dismissed. This, of course,
does not affect Democratic Underground’s right to bring a
motion for attorney fees under the Act. Also, the
counterclaim against Stephens Media remains and so the
Court now turns its attention to Stephens Media’s motion.
III. Stephens Media’s Motion to Dismiss or Strike
A. Legal Standard
1. Motion to Dismiss Standard
“In this action, as in all actions before a federal court, the
necessary and constitutional predicate for any decision is
a determination that the court has jurisdiction—that is the
power—to adjudicate the dispute.” Toumajian v. Frailey,
135 F.3d 648, 652 (9th Cir.1998). The purpose of a
complaint is two-fold: to give the defendant fair notice of
the basis for the court’s jurisdiction and of the factual
basis of the claim. See Fed.R.Civ.P. 8; Skaff v. Meridien
North Am. Beverly Hills, LLC., 506 F.3d 832, 843 (9th
Cir.2007). Rule 12(b)(1) of the Federal Rules of Civil
Procedure allows defendants to seek dismissal of a claim
or action for a lack of subject matter jurisdiction.
Dismissal under Rule 12(b)(1) is appropriate if the
complaint, considered in its entirety, fails to allege facts
on its face that are sufficient to establish subject matter
jurisdiction. In re Dynamic Random Access Memory
(DRAM) Antitrust Litigation, 546 F.3d 981, 984–85 (9th
Cir.2008). Although the defendant is the moving party in
a motion to dismiss brought under Rule 12(b)(1), the
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Righthaven LLC v. Democratic Underground, LLC, --- F.Supp.2d ---- (2011)
plaintiff is the party invoking the court’s jurisdiction. As a
result, the plaintiff bears the burden of proving that the
case is properly in federal court. McCauley v. Ford Motor
Co., 264 F.3d 952, 957 (9th Cir.2001) (citing McNutt v.
General Motors Acceptance Corp., 298 U.S. 178, 189
(1936)).
Attacks on jurisdiction pursuant to Rule 12(b)(1) can be
either facial, confining the inquiry to the allegations in the
complaint, or factual, permitting the court to look beyond
the complaint. See Savage v. Glendale Union High Sch.,
343 F.3d 1036, 1039 n. 2 (9th Cir.2003). “In a facial
attack, the challenger asserts that the allegations contained
in a complaint are insufficient on their face to invoke
federal jurisdiction. By contrast, in a factual attack, the
challenger disputes the truth of the allegations that, by
themselves, would otherwise invoke federal jurisdiction.”
Safe Air for Everyone v. Myer, 373 F.3d 1035, 1039 (9th
Cir.2004). A “factual” attack made pursuant to Rule
12(b)(1) may be accompanied by extrinsic evidence.
Whitethorn v. F.C.C., 235 F.Supp.2d 1092, 1095–96
(D.Nev.2002) (citing St. Clair v. City of Chico, 880 F.2d
199, 201 (9th Cir.1989). Dismissal for lack of subject
matter jurisdiction is appropriate if the complaint,
considered in its entirety, fails to allege facts that are
sufficient to establish subject matter jurisdiction. In re
Dynamic Random Access Memory (DRAM) Antitrust
Litigation, 546 F.3d 981, 984–85 (9th Cir.2008).
2. Motion to Strike Standard
*8 Under Rule 12(f) a “court may strike from a pleading
... any redundant, immaterial, impertinent, or scandalous
matter.” Matter is “immaterial” if it has no bearing on the
controversy before the court. In re 2TheMart.com, Inc
Sec. Litig., 114 F.Supp.2d 955, 965 (C.D.Cal.2000).
Allegations are “impertinent” if they are not responsive to
the issues that arise in the action and that are admissible
as evidence. Id. “Scandalous” matter is that which casts a
cruelly derogatory light on a party or other person. Id. A
court need not wait for a motion from the parties; it may
act on its own to strike matter from a pleading.
Fed.R.Civ.P. 12(f)(1).
B. Analysis
Stephens Media’s motion essentially relies on two
separate arguments for its position that there is no
justiciable case or controversy: (1) that Stephens Media
assigned all of the rights in and to the Work to
Righthaven, thus negating the possibility of any case or
controversy between Stephens Media and Democratic
Underground, and (2) that Democratic Underground’s
counterclaim will necessarily be adjudicated by a decision
{00629655.1}
on the original complaint and, therefore, should be
stricken. The Court dispelled Stephens Media’s first
argument in the analysis above. Stephens Media expressly
avoided transferring the exclusive rights to the Work to
Righthaven by neutering future assignments in the SAA.
As to Stephens Media’s second argument, setting aside
the fact that Stephens Media was never a party to
Righthaven’s complaint, that argument is now moot as the
Court has dismissed Righthaven’s complaint. Since the
complaint has been dismissed, the issues raised by the
counterclaim can only be adjudicated by litigating the
counterclaim, not the now defunct complaint.
1. Justiciable Case or Controversy
Stephens Media’s principle contention for why there is no
justiciable case or controversy between Stephens Media
and Democratic Underground relied on the Assignment of
rights to Righthaven. Though the Court has refuted this
particular argument, the Court will, nonetheless, quickly
address the case or controversy requirement for a
declaratory judgment action as it still pertains to this case.
The Supreme Court has held that declaratory judgment
claims must arise from disputes that are “ ‘definite and
concrete, touching the legal relations of parties having
adverse legal interests,’ ... ‘real and substantial,’ “ and
beget “specific relief through a decree of a conclusive
character, as distinguished from an opinion advising what
the law would be upon a hypothetical state of facts.’ “
MedImmune, Inc. v. Genentech, Inc. 549 U.S. 118, 127
(2007). Nonetheless, a party need not “bet the farm” and
always actually engage in planned conduct that would
result in threatened legal action before bringing a
declaratory judgment suit. Id. at 133–34.
Contrary to its assertions in its moving papers, Stephens
Media has threatened Democratic Underground with
litigation because, according to the SAA, Stephens Media
approved or consented to suit against Democratic
Underground. (Dkt. # 79, Ex. 1, SAA Section 3.3.)
Additionally, Stephens Media’s then CEO, Sherman
Frederick, generally threatened potential defendants that
he would send his “little friend called Righthaven” after
them. (Dkt. # 13, Answer and Countercl. ¶ 33.) Here,
Stephens Media actually did send Righthaven after
Democratic
Underground.
Further,
Democratic
Underground desires to re-post the allegedly infringing
material to maintain a full archive of prior posts on its
website. This could result in new copyright infringement
litigation against Democratic Underground if the Court
does not declare that the post did not infringe the
copyright in the first instance. This threat of suit is
sufficiently real and substantial that an actual case and
controversy exists between these parties and warrants a
declaratory judgment suit. Accordingly, and because the
© 2011 Thomson Reuters. No claim to original U.S. Government Works.
6
Righthaven LLC v. Democratic Underground, LLC, --- F.Supp.2d ---- (2011)
Court dismissed Righthaven and its complaint, the Court
denies Stephens Media’s motion.
filed in this District. Accordingly, the Court orders
Righthaven to show cause, in writing, no later than two
(2) weeks from the date of this order, why it should not be
sanctioned for this flagrant misrepresentation to the Court.
IV. Order to Show Cause
*9 As shown in the preceding pages, the Court believes
that Righthaven has made multiple inaccurate and likely
dishonest statements to the Court. Here, however, the
Court will only focus on the most factually brazen:
Righthaven’s failure to disclose Stephens Media as an
interested party in Righthaven’s Certificate of Interested
Parties. (Dkt.# 5.) Rule 7.1–1 of the Local Rules of
Practice for the District of Nevada requires parties to
disclose “all persons, associations of persons, firms,
partnerships
or
corporations
(including
parent
corporations) which have a direct, pecuniary interest in
the outcome of the case.” This Local Rule requires greater
disclosure than Federal Rule 7.1, which only requires
non-governmental corporate parties to disclose parent
corporations or corporations owning more than 10% of
the party’s stock. Frankly, if receiving 50% of litigation
proceeds minus costs (Dkt. # 79, SAA Section 5) does not
create a pecuniary interest under Local Rule 7.1–1, the
Court isn’t sure what would.
Making this failure more egregious, not only did
Righthaven fail to identify Stephens Media as an
interested party in this suit, the Court believes that
Righthaven failed to disclose Stephens Media as an
interested party in any of its approximately 200 cases
End of Document
{00629655.1}
CONCLUSION
Accordingly, and for good cause appearing,
IT IS HEREBY ORDERED that Righthaven is dismissed
from this case for lack of standing. As such, Righthaven’s
complaint is dismissed in its entirety.
IT IS FURTHER ORDERED that Righthaven’s Motion
for Voluntary Dismissal with Prejudice (# 36) is DENIED
as moot.
IT IS FURTHER ORDERED that Stephens Media’s
Motion to Dismiss or Strike (# 38) is DENIED.
IT IS FURTHER ORDERED that the Democratic
Underground’s Motion for Summary Judgment (# 45) is
DENIED as moot.
IT IS FURTHER ORDERED that Righthaven show
cause, in writing, no later than two (2) weeks from the
date of this order, why it should not be sanctioned.
© 2011 Thomson Reuters. No claim to original U.S. Government Works.
© 2011 Thomson Reuters. No claim to original U.S. Government Works.
7
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