The Regulatory Fundamentals Group LLC v. Governance Risk Management Compliance, LLC et al

Filing 35

MEMORANDUM OPINION & ORDER re: 27 MOTION to Dismiss Amended Complaint filed by Greg V. Wood, Manhattan Advisers LLC, Governance Risk Management Compliance, LLC. For the reasons discussed herein, Defendants' Motion to Dismiss is hereby DENIED. The Clerk of Court is directed to close the open motion at Docket No. 27. (Signed by Judge Katherine B. Forrest on 10/23/2013) (mro)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NE\V YORK
--------------------------------------------------------------}(
THE REGULATORY FUNDAMENTALS
GROUPLLC,
Plaintiff,

USDCSDNY
DOCUMENT
ELECTRONICALLY FILED
DOC#:

--......-::=-=:----­

DATE FILEO:OCT

2 3 2013

13 Civ. 2493 (KBF)
MEMQJ~ANDUM

-v-

O~INION

& ORDER

GOVERNANCE RISK MANAGEMENT
COMPLIANCE, LLC d/b/a MANHATTAN
ADv1SERS, et~t!l1.'
Defendants.
------------------------------------------------------ ------KATHERINE B. FORREST, District Judge:

)(

On April 15, 2013, Plaintiff The Regulatory Fundamentals Group LLC
("Plaintiff' or "RFG") filed this action against Defendants Governance Risk
Management Compliance, LLC d/b/a Manhattan Advisers ("GRMC"), Manhattan
Advisers, LLC ("MA") , Greg V. Wood ("Wood"), and John Does 1-10 (collectively,
"Defendants"), alleging copyright infringement in violation of Section 501 of the
Copyright Act, 17 U.S.C. § 501. On July 12, 2013, Plaintiff filed an Amended
Complaint, and on August 12, 2013, Defendants filed a Motion to Dismiss.
For the reasons discussed below, the Court hereby DENIES Defendants'
Motion to Dismiss.

RFG provides "consulting service and business solutions to investment funds,
advisors, investors, and their service providers." (Amend. CompI.

1

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1, dated July

12, 2013, ECF 21.) RFG delivers content in three ways: (1) a database of original
articles (called the "RFG Pathfinder"); (2) a blog on which it posts original material;
and (3) email communications (the "RFG Watch service," the "RFG Deep Dives,"
and the "RFG Weekly Roundup"). (ld.

~~r

14-16.)

On October 30, 2012, RFG entered into a Services Agreement ("the Services
Agreement") with GRMC.l (ld,

~r

23.) Pursuant to the Services Agreement, GRMC

would obtain customers to whom RFG would provides access to RFG Pathfinder and
RFG vVatch (collectively, "the Services") through a "white-label website created by
RFG" ("the Site"). (Id.

~

24.)2 The idea was that customers would sign up through

GRMC - via the Site - to access the Services. (Id.

~[26.)

Plaintiff argues that the

Services Agreement "is completely clear that the Site would be created by RFG and
controlled by RFG." (ld.

~

29.)

Plaintiff contends that on or about March 15, 2013, it learned that
Defendants "had misappropriated, copied, distributed, created derivative works of,
and publicly displayed on MA's website, www.manhattanadvisers.com. RFG's
[works] without RFG's license, permission, or authorization." (Id.

~

41.)

Defendant Wood allegedly entered into the Agreement on behalf of GRMC. (See

Amend. Compi. ~ 2.)

2 RFG allegedly also provided the services via email to Defendant Wood. (Sefl.

Amend. Compi. ,; 25.)

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2

In its Complaint, RFG lists six allegedly infringed upon original works for
which it has copyright registrations; it also includes a number of other original
works for which its copyright registration is pending. 3 (ld.

~.~

20-21.)

On April 15, 2013, Plaintiff filed the Complaint in this action. On June 7,
2013, Defendants filed a Motion to Dismiss. On June 19, 2013, the undersigned
held a status conference in this matter, providing Plaintiff with an opportunity to
amend its Complaint to add a breach of contract claim. On July 12, 2013, Plaintiff
filed an Amended Complaint where it added additional copyrighted works to its
claim but did not raise a breach of contract claim. On August 12, 2013, Defendant
filed the Motion to Dismiss that is the subject of this Memorandum Opinion &
Order; the Motion to Dismiss became fully briefed on October 7, 2013.

1. Legal Standard

To survive a Rule 12(b)(6) motion to dismiss, "the plaintiff must provide the
grounds upon which [its] claim rests through factual allegations sufficient 'to raise a
right to relief above the speculative leveL'" ATSI Commc'ns, Inc. v. Shaar Fund,
Ltd~,

493 F.3d 87, 98 (2d Cir. 2007) (quoting Bell Alt. Corp. v. Twombly, 550 U.s.

544, 555 (2007». In other words, the complaint must allege "enough facts to state a
3 These additional works for which copyright registration is pending were added by
Plaintiff when it amended its Complaint.

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claim to relief that is plausible on its face." Starr v. SOIlV BMG Music Entm't, 592
F.3d 314, 321 (2d Cir. 2010) (quoting Twombly, 550 U.S. at 570); see also Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (same). "A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at
678. In applying that standard, the court accepts as true all well-plead factual
allegations, but does not credit "mere conclusory statements" or "threadbare recitals
of the elements of a cause of action." Id. If the court can infer no more than "the
mere possibility of misconduct" from the factual averments, dismissal is
appropriate. St&r, 592 F.3d at 321 (quoting Iqbql, 556 U.S. at 679).
On a motion to dismiss, a court may properly consider documents attached to
or referenced in a complaint.

Se~ Tim~JVarner,

Inc. v. Cbmnbers, 282 F.3d 147,

153 (2d Cir. 2002) (explaining that '''where plaintiff has actual notice of all the
information in the movant's papers and has relied upon these documents in framing
the complaint[,] the necessity of translating a Rule 12(b)(6) motion into under Rule
56 is largely dissipated'" (quoting Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d
42,48 (2d Cir. 1991»; DiFolcoy,JMSNI3J.tCable LLC, 622 F.3d 104, 111 (2d Cir.
2010). In this case, the Services Agreement is referenced in and integral to the
Amended Complaint.
II.

An_alysi~

Defendants' primary contention is that Plaintiff has failed to state a claim for
copyright infringement because Plaintiffs claims sound in contract law.

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A review of the case law indicates that there is support for the proposition
that, under certain circumstances, there is a cause of action under copyright law
where a party has allegedly exceeded a license agreement so as to infringe upon a
licensor's copyrighted works. See Tasini v. New York Times Co., 206 F.3d 161, 170
(2d Cir. 2000), affd on other grounds, 533 U.s. 483 (2000); see also Harris v. Simon
& Schuster, Inc., 646 F. Supp. 2d 622,631 (S.D.N.Y. 2009); Amy Axelrod, Inc. v.

Simon & Schuster, Inc., No. 07 Civ. 891, 2007 WL 2412257 (S.D.N.Y. Aug. 27, 2007)
(citing cases). The Court notes that case law exists on the other side of the issue, as
well. See, e.g., TufAmerica, Inc. v. The Orchard Enters.) Inc., No. 11 Civ. 1816,
2011 WL 4946663, at *3 (S.D.N.Y. Oct. 14,2011).
Accordingly, based on the materials before the Court and the allegations
included in the Complaint, the Court hereby DENIES Defendants' Motion to
Dismiss. However, it appears that a prompt Motion for Summary Judgment by
Defendants will either dispose of this case entirely or at least will significantly
narrow it. (The Service Agreement on its face appears to address many issues.)
The Court therefore directs the parties (in particular, Defendants) to make a
Motion for Summary Judgment within 30 days of the date of this Order. A
response shall be submitted 14 days thereafter. A reply, if any, shall be submitted
7 days after the filing of the response.
Should it become evident that discovery is required, such discovery shall be
narrow and targeted so as to apply only to the issues relevant to summary

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judgment. No discovery shall proceed unless the parties confer and deem it
necessary to briefing on summary judgment.

CONCLUSION
For the reasons discussed herein, Defendants' Motion to Dismiss is hereby
DENIED.
The Clerk of Court is directed to close the open motion at Docket No. 27.

SO ORDERED.
Dated:

New York~ew York
October 'Z~2013

..
KATHERINE B. FORREST

United States District Judge

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