Palmer/Kane LLC v. Scholastic Corporation et al

Filing 54

OPINION: Plaintiff's motion to compel is denied to the extent plaintiff requests information already provided by defendant, denied to the extent plaintiff seeks expenses incurred in making the motion, but granted to the extent plaintiff seeks information related to pre-March 31, 2014 uses of its photographs. Plaintiff's motion for leave to file a second amended complaint is granted. This opinion resolves the motions numbered 38 and 45 on the docket. (As further set forth in this Order) (Signed by Judge Thomas P. Griesa on 12/10/2015) (kl)

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PALMER/KANE LLC,
Plaintiff,
14-cv-7805

v.
OPINION

SCHOLASTIC CORPORATION et al.
Defendants.

Before the court are plaintiff Palmer/Kane's motions to compel
defendant Scholastic to produce certain documents and for leave to file a
second amended complaint. For the reasons stated below, the motion to
compel is denied in part and granted in part, and the motion for leave to
file a second amended complaint is granted.

Background
Plaintiff Palmer/Kane first

filed

infringement claims against

defendant Scholastic in 2012 in Palmer Kane LLC v. Scholastic Corp. et
al.,

12-cv-3890 (TPG) ("Palmer Kane I").

The claims arose out of

Scholastic's unlicensed use of certain Palmer/Kane photographs in some
of Scholastic's publications ("Accused Publications").
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On March 31,

2014, the court dismissed plaintiff’s claims in that case for failure to
state a claim. Palmer Kane I, Dkt. 40.
On September 26, 2014, plaintiff filed its complaint in the current
case.

Palmer/Kane LLC v. Scholastic Corp. et al., 14-cv-7805 (“Palmer

Kane II ”), Dkt. 1.

Defendant responded with a motion to dismiss the

complaint as barred under the doctrine of res judicata. Palmer Kane II,
Dkts. 9–11. The parties arrived at an agreement under which plaintiff
would limit its claims to alleged infringements that occurred after March
31, 2014—the date the prior claims were dismissed—and defendant
would withdraw its motion to dismiss.
agreement on December 10, 2014.

The court endorsed that

Palmer Kane II, Dkt. 21.

In

accordance with the agreement, plaintiff filed an amended complaint
limiting its claims to infringements occurring after March 31, 2014
(“Existing Claims”). Palmer Kane II, Dkt. 17.
On April 8, 2015, the court endorsed a scheduling order setting
May 15, 2015 as the deadline for amended pleadings. Palmer Kane II,
Dkt. 24.
On September 21, 2015, more than four months after the deadline
set by the scheduling order, plaintiff filed a motion seeking leave to file a
second amended complaint. Palmer Kane II, Dkt. 38. Plaintiff seeks to
add claims pertaining to alleged infringements it says it discovered in
June 2015 (“New Claims”).

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On October 7, 2015, plaintiff filed a motion to compel defendant to
produce certain documents. Palmer Kane II, Dkt. 45. In the motion to
compel, plaintiff seeks documents responsive to three Requests for
Production: in Request Number 5, plaintiff seeks information on how
many copies of each of the Accused Publications were printed in the
United States since April 1, 2014; in Request Number 16, plaintiff seeks
information on how many e-books were sold or distributed for each of the
Accused Publications; in Request Number 22, plaintiff seeks information
on the gross revenues of each of the Accused Publications since April 1,
2014. In its briefing on the motion, plaintiff also asks the court to order
defendant to provide information related to pre-March 31, 2014 uses of
plaintiff’s photographs.

See Palmer Kane II, Dkt. 50.

Finally, plaintiff

asks the court to order defendant to pay its expenses incurred in making
the motion. See id.

Discussion
1) Plaintiff’s motion to compel defendant to produce certain
documents is denied in part and granted in part.
Under Federal Rule of Civil Procedure 26(b), parties are entitled to
obtain discovery on any matter that is relevant to a claim or defense.
However, the court must limit the extent of the discovery when the
information sought is unreasonably cumulative or duplicative. Fed. R.
Civ. P. 26(b)(2)(C)(i).

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In its motion to compel, plaintiff seeks documents that provide
information on how many copies of each of the Accused Publications
were printed in the United States since April 1, 2014, how many e-books
were sold or distributed for each of the Accused Publications, and the
gross revenues of each of the Accused Publications since April 1, 2014.
Defendant produced summary charts that contain this information.
Thus, to the extent plaintiff seeks information already provided by
defendant, the motion to compel is denied.
Plaintiff also requests that defendant provide information relating
to uses of plaintiff’s photographs prior to March 31, 2014. In response,
defendant argues that, because the Existing Claims are limited to
infringements occurring after March 31, 2014, only uses after that date
are relevant and therefore discoverable.
While the claims are limited to infringements occurring after March
31, 2014, discovery should not be so limited. That is, there are reasons
why it may be necessary to refer to circumstances before March 31,
2014. Some of plaintiff’s Existing Claims involve photographs licensed
by defendant for a certain number of copies or for a certain number of
years. Plaintiff alleges that defendant exceeded those limits. Because of
those allegations, when and how many of the Accused Publications were
printed is relevant, even if those printings occurred before March 31,
2014. Also relevant is any license obtained prior to March 31, 2014. For
example, one photograph was licensed for 5,000 copies.
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Am. Compl.

¶ 19, Dkt. 17. It is necessary to know how many copies were printed
before March 31, 2014 in order to determine how many copies defendant
was authorized to print after that date. And information on how many
copies defendant was authorized to print after March 31, 2014 is
necessary to determine whether the license was violated. So even though
the claims are limited to infringements occurring after March 31, 2014,
information about uses before that date is relevant and discoverable.
Thus, to the extent plaintiff seeks information related to uses prior to
March 31, 2014, the motion to compel is granted.
Finally, plaintiff asks the court to require defendant to pay its
reasonable expenses incurred in making the motion to compel. Under
Federal Rule of Civil Procedure 37(a)(5)(A):
If the motion [to compel] is granted—or if the disclosure or
requested discovery is provided after the motion was filed—
the court must, after giving an opportunity to be heard,
require the party or deponent whose conduct necessitated
the motion, the party or attorney advising that conduct, or
both to pay the movant’s reasonable expenses incurred in
making the motion, including attorney’s fees. But the court
must not order this payment if:
(i)

the movant filed the motion before attempting in
good faith to obtain the disclosure or discovery
without court action;

(ii)

the opposing party’s nondisclosure, response, or
objection was substantially justified; or

(iii)

other circumstances make an award of expenses
unjust.

Here, awarding expenses would be inappropriate. While defendant did
provide certain documents after the motion to compel was filed, it had
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already produced the summary charts which it believed responded
adequately to plaintiff’s request. Thus, the court will not award expenses
to plaintiff.
In sum, plaintiff’s motion to compel is denied to the extent plaintiff
requests information already provided by defendant, denied to the extent
plaintiff seeks expenses incurred in making the motion, but granted to
the extent plaintiff seeks information related to pre-March 31, 2014 uses
of its photographs.
2) Plaintiff’s motion for leave to file a second amended complaint
is granted.
Leave to amend a pleading should be freely granted when justice
so requires. Fed. R. Civ. P. 15(a). However, a district court may “deny
leave for good reason, including futility, bad faith, undue delay, or undue
prejudice to the opposing party.” McCarthy v. Dun & Bradstreet Corp.,
482 F.3d 184, 200 (2d Cir. 2007) (citing Foman v. Davis, 371 U.S. 178,
182 (1962)).
Additionally, in this case, the court must consider Federal Rule of
Civil Procedure 16(b), under which a “schedule may be modified only for
good cause.”

See Kassner v. 2nd Avenue Delicatessen, Inc., 496 F.3d

229, 243 (2d Cir. 2007).

“[A] finding of ‘good cause’ depends on the

diligence of the moving party.” Parker v. Columbia Pictures Indus., 204
F.3d 326, 340 (2d Cir. 2000).

To satisfy the good cause standard, a

party must show that, despite its diligence, the deadline could not have

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been met. Rent-A-Ctr., Inc. v. 47 Mamaroneck Ave. Corp., 215 F.R.D. 100,
104 (S.D.N.Y. 2003).

On the other hand, a “party fails to show good

cause when the proposed amendment rests on information that the party
knew, or should have known, in advance of the deadline.” Perfect Pearl
Co. v. Majestic Pearl & Stone, Inc., 889 F. Supp. 2d 453, 457 (S.D.N.Y.
2012) (citation omitted).
Here, plaintiff learned of the alleged infringements in the New
Claims in June 2015, after the scheduled deadline for amended
pleadings. See Kane Decl. ¶¶ 11–13, Palmer Kane II, Dkt. 40. Pat Kane,
Palmer/Kane’s co-owner, examined scores of Scholastic publications in
her visits to libraries and book fairs to find infringing uses of
Palmer/Kane photographs. See id. ¶¶ 3–4. However, her job was made
difficult by the large number of Scholastic books and the limited public
access to them.

See id. ¶¶ 5–6.

Despite her research, Kane did not

discover the alleged infringements in the New Claims until after the
scheduled deadline for amended pleadings. Because Kane was diligent
in her attempts to uncover any unauthorized uses of the copyrighted
photographs, the court finds that plaintiff has shown good cause to
amend the complaint.
In opposition, defendant argues that the proposed amendment
would be futile because it is insufficiently pleaded. However, the New
Claims are pleaded in the same format and with the same specificity as

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the Existing Claims in this case.

As such, the proposed amendment

would not be futile.
Defendant also takes the position that allowing the amendment
would result in prejudice.
Defendant first points out that the time frame of the New Claims
would not be the same as the time frame of the Existing Claims. That is,
the New Claims are not limited to infringements occurring after March
31, 2014.

Defendant uses this fact to argue that a jury might be

confused by the differing time frames. However, any potential confusion
can be adequately addressed through jury instructions.
Second, defendant argues that the amendment might require
third-party joinder. This does not seem to be the case, as plaintiff states
that the alleged infringements in the New Claims are all found in books
published by Scholastic.
Third, defendant is concerned about the statute of limitations on
the New Claims. Copyright infringement claims have a three-year statute
of limitations. 17 U.S.C. § 507. According to the Supreme Court, “[e]ach
time an infringing work is reproduced or distributed, the infringer
commits a new wrong. Each wrong gives rise to a discrete claim . . . .”
Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962, 1969 (2014). The
Second Circuit follows the “discovery rule,” under which “copyright
infringement claims do not accrue until actual or constructive discovery
of the relevant infringement.” Psihoyos v. John Wiley & Sons, Inc., 748
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F.3d 120, 125 (2d Cir. 2014).

Here, plaintiff states exactly when it

learned of the alleged infringements in the New Claims, that is, June
2015.

See Kane Decl. ¶¶ 11–13.

As discussed above, plaintiff was

diligent in searching for infringements, and therefore it is not the case
that plaintiff should have known about the alleged infringements in the
New Claims prior to their discovery in June 2015.

In addition, the

proposed amended complaint expressly limits the infringement period to
the three years preceding its filing. Thus, there is no reason to believe
the New Claims are barred by the statute of limitations.
Fourth, defendant argues that certain of the New Claims may be
barred by the doctrine of res judicata because they involve some
photographs relevant to Palmer Kane I.

“Under the doctrine of res

judicata, or claim preclusion, a final judgment on the merits of an action
precludes the parties or their privies from relitigating issues that were or
could have been raised in that action.” St. Pierre v. Dyer, 208 F.3d 394,
399 (2d Cir. 2000) (citation omitted).

“Whether a claim that was not

raised in the previous action could have been raised therein depends in
part on whether the same transaction or connected series of transactions
is at issue, whether the same evidence is needed to support both claims,
and whether the facts essential to the second were present in the first.”
TechnoMarine SA v. Giftports, Inc., 758 F.3d 493, 499 (2d Cir. 2014)
(citation omitted). Defendant argues that certain of the New Claims may
be barred because they arise out of defendant’s use of the same
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photographs that served as the basis of claims made in the dismissed
Palmer Kane I. Defendant is mistaken. The photographs at issue in the
New Claims were allegedly used in a publication not mentioned in Palmer
Kane I. These uses serve as separate infringements, arise out of entirely
different transactions, involve entirely different evidence, and therefore
may form the basis of new, distinct claims.
For the reasons stated above, plaintiff’s motion for leave to file a
second amended complaint is granted.

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Conclusion
Plaintiffs motion to compel is denied to the extent plaintiff
requests information already provided by defendant, denied to the extent
plaintiff seeks expenses incurred in making the motion, but granted to
the extent plaintiff seeks information related to pre-March 31, 2014 uses
of its photographs. Plaintiff's motion for leave to file a second amended
complaint is granted.
This opinion resolves the motions numbered 38 and 45 on the
docket.

SO ORDERED.

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Dated: New York, New York
December 10, 2015

Thomas P. Griesa
U.S. District Judge

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