Valencia et al v. Midnite Rodeo, LLC et al

Filing 21

ORDER adopting in part and declining to adopt in part the Magistrate Judge's 16 Memorandum and Recommendations. Defendants' 12 Motion to Dismiss is GRANTED in PART and DENIED in part as stated herein. Signed by Senior Judge Robert J. Conrad, Jr on 9/24/2024. (brl)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
3:22-cv-00665-RJC-DCK
SANDRA VALENCIA, BRENDA
GEIGER, EVA PEPAJ, JESSICA
NICHOLE ROCKEWELL, LUCY
PINDER, MONICA LEIGH
BURKHARDT, PAOLA CANAS, ALYSSA
NOBRIGA, AND MARIANA DAVALOS,
Plaintiffs,
v.
MIDNITE RODEO, LLC, D/B/A
MIDNITE RODEO, SEAN SCOGGINS,
AND PAUL ALEXANDER SCOGGINS,
Defendants.

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ORDER

THIS MATTER is before the Court on Defendants’ Motion to Dismiss, (Doc.
No. 12), and the Magistrate Judge’s Memorandum and Recommendations (“M&R”).
(Doc. No. 16). For the reasons below, the M&R is ADOPTED in part and NOT
ADOPTED in part, and the Motion to Dismiss is GRANTED in part and DENIED
in part, as explained herein.
I.

BACKGROUND
Neither party has objected to the Magistrate Judge’s statement of the factual

and procedural background of this case. Therefore, the Court adopts the facts as set
forth in the M&R, reviewing only those facts most pertinent to the issues at hand.

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Plaintiffs Sandra Valencia, Brenda Geiger, Eva Pepaj, Jessica Nichole
Rockwell, Lucy Pinder, Monica Leigh Burkhardt, Paola Canas, Alyssa Nobriga, and
Mariana Davalos brought this action against Defendants Midnite Rodeo, LLC, Sean
Scoggins, and Paul Alexander Scoggins, alleging misappropriation, alteration, and
unauthorized publication and use of Plaintiffs’ images, photos, and likenesses. (Doc.
No. 1). Plaintiffs included the following claims: false advertising under the Lanham
Act (Count I), false association under the Lanham Act (Count II), common law right
of privacy—misappropriation (Count III), violation of the North Carolina Unfair and
Deceptive Trade Practices Act (Court IV), North Carolina state law claims for
negligence, gross negligence, and respondeat superior (Count V), conversion, (Count
VI), unjust enrichment (Count VII), and quantum meruit (Count VIII). (Doc. No. 1 at
15-23).
Defendants moved to dismiss the complaint pursuant to Federal Rule of Civil
Procedure 12(b)(6) for failure to state a claim upon which relief can be granted,
arguing that the corporate veil prevents the Scoggins Defendants from being sued in
their individual capacities and that many of Plaintiffs’ claims are barred by the
applicable statutes of limitations.1 (Doc. No. 12-1). The Magistrate Judge addressed
each of Defendants’ arguments in turn and recommended that Defendants’ Motion to

As both the Magistrate Judge and Plaintiffs note, of the nine Plaintiffs named,
only six are mentioned in Defendants’ Motion to Dismiss regarding their state law
claims. Thus, the Magistrate Judge declined to analyze the statute of limitations as
it relates to the unmentioned Plaintiffs. Accordingly, Plaintiffs Burkhardt, Davalos,
and Pinder were not subject to Defendants’ motion and only Plaintiffs Valencia,
Geiger, Pepaj, Rockwell, Canas, and Nobriga object to the M&R.
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Dismiss be granted as to the negligence, conversion, unjust enrichment, quantum
meruit, and misappropriation claims of Plaintiffs Valencia, Geiger, Pepaj, Rockwell,
Canas, and Nobriga. Further, the Magistrate Judge recommended that the motion be
otherwise denied.
II.

STANDARD OF REVIEW
A district court may assign dispositive pretrial matters, including motions to

dismiss, to a magistrate judge for “proposed findings of fact and recommendations.”
28 U.S.C. § 636(b)(1)(A) & (B). The Federal Magistrate Act provides that a district
court “shall make a de novo determination of those portions of the report or specified
proposed findings or recommendations to which objection is made.” Id. § 636(b)(1)(C);
Fed. R. Civ. P. 72(b)(3). However, “when objections to strictly legal issues are raised
and no factual issues are challenged, de novo review of the record may be dispensed
with.” Orpiano v. Johnson, 687 F.2d 44, 47 (4th Cir. 1982). De novo review is also
not required “when a party makes general and conclusory objections that do not direct
the court to a specific error in the magistrate’s proposed findings and
recommendations.” Id. Likewise, merely reiterating the same arguments made in
the pleadings or motion submitted to the Magistrate Judge does not warrant de novo
review. Durkee v. C.H. Robinson Worldwide, Inc., 765 F. Supp. 2d 742, 747 (W.D.N.C.
2011), aff’d sub nom., Durkee v. Geologic Sols., Inc., 502 F. App’x 326 (4th Cir. 2013).
“A motion to dismiss under Rule 12(b)(6) ‘challenges the legal sufficiency of a
complaint,’ including whether it meets the pleading standard of Rule 8(a)(2).” Fed.
Nat’l Mortg. Ass’n v. Quicksilver LLC, 155 F. Supp. 3d 535, 542 (M.D.N.C. 2015)

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(quoting Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009)). A complaint
attacked under Rule 12(b)(6) will survive if it contains enough factual matter “to state
a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007). An allegation is facially plausible if it “allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged, but
“[t]hreadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Rule 8(a)(2) requires “a short and plain statement of the claim showing that
the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Specific facts are not
necessary, and the statement need only “give the defendant fair notice of what the
claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 555 (alteration
omitted). Additionally, when ruling on a motion to dismiss, a court must “view the
complaint in a light most favorable to the plaintiff,” Mylan Lab’ys, Inc. v. Matkari, 7
F.3d 1130, 1134 (4th Cir. 1993), accept the complaint’s factual allegations as true,
Erickson v. Pardus, 551 U.S. 89, 94 (2007), and refrain from weighing the facts or
assessing the evidence. Potomac Conf. Corp. of Seventh-Day Adventists v. Takoma
Acad. Alumni Ass’n, Inc., 2 F. Supp. 3d 758, 768 (D. Md. 2014). Nonetheless, a court
is “not bound to accept as true a legal conclusion couched as a factual allegation,”
Papasan v. Allain, 478 U.S. 265, 286 (1986), and though the Court views the facts in
the light most favorable to the plaintiff, a complaint tendering “naked assertions
devoid of further factual enhancement” cannot proceed. Iqbal, 556 U.S. at 678.

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III.

DISCUSSION
Plaintiffs object only to the Magistrate Judge’s recommendation that the

misappropriation claim is barred by the statute of limitations and should be
dismissed. (Doc. No. 17 at 1). Specifically, Plaintiffs argue that the M&R does not
analyze the accrual date of Plaintiffs’ misappropriation claims, that it ignores
Plaintiffs’ republication allegations in the Complaint and the ongoing nature of
Defendants’ alleged wrongful conduct, and that the Discovery Rule should have been
applied. (Doc. No. 17).
“Invasion of privacy” may describe a number of different torts of which
misappropriation of a plaintiff’s name or likeness is one. Phillips v. J.P. Stevens &
Co., 827 F. Supp. 349, 352 (M.D.N.C. 1993). North Carolina courts have recognized
misappropriation as an invasion of privacy tort. Id. (citing Flake v. Greensboro News
Co., 212 N.C. 780, 195 S.E. 55, 64 (1938)). The applicable statute of limitations for
invasion of privacy torts, such as misappropriation, is three years. Losing v. Food
Lion, L.L.C., 185 N.C. App. 278, 284, 648 S.E.2d 261, 265 (2007) (citing N.C. Gen.
Stat. § 1-52(d)).
In general, “a defense based on the statute of limitations must be raised by the
defendant through an affirmative defense.” Goodman v. Praxair, Inc., 494 F.3d 458,
464 (4th Cir. 2007) (citing Fed. R. Civ. P. 8(c)). “[A] motion to dismiss filed under
Federal Rule of Procedure 12(b)(6), which tests the sufficiency of the complaint,
generally cannot reach the merits of an affirmative defense, such as the defense that
the plaintiff’s claim is time-barred.” Id. “But in the relatively rare circumstances

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where facts sufficient to rule on an affirmative defense are alleged in the complaint,
the defense may be reached by a motion to dismiss filed under Rule 12(b)(6).” Id. To
be sure, this is only true when the necessary facts clearly appear on the face of the
complaint. Id.; see also Arku v. Wells Fargo Bank, Nat’l Ass’n, 621 F. Supp. 3d 602,
608 (W.D.N.C. 2022) (“A statute of limitations defense may properly be asserted in a
Rule 12(b)(6) motion to dismiss if it appears on the face of the complaint that such a
statute bars the claim.” (quotations omitted)).
A. Plaintiff’s Complaint contains allegations of republication and
describes the ongoing nature of Defendants’ continuing wrongs.
In North Carolina, the continuing wrong doctrine is recognized as “an
exception to the general rule that a claim accrues when the right to maintain a suit
arises.” Birtha v. Stonemor, N. Carolina, LLC, 220 N.C. App. 286, 292, 727 S.E.2d 1,
7 (2012) (quoting Babb v. Graham, 190 N.C. App. 463, 481, 660 S.E.2d 626, 637
(2008)). The continuing wrongs doctrine applies when a plaintiff shows a continuing
violation by the defendant. Marzec v. Nye, 203 N.C. App. 88, 94, 690 S.E.2d 537, 542
(2010). Continual ill effects from the same violation will not suffice to implicate the
continuing wrongs doctrine. Id. Rather, continuing violations fall into two categories.
The first category arises when there has been a longstanding policy of discrimination
and the second arises when there is a continually recurring violation. Birtha, 220
N.C. App. at 292, 727 S.E.2d at 7.
As to their misappropriation claim, Plaintiffs direct the Court to allegations in
their Complaint in which they plead that

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Plaintiffs are further informed and believe and heron allege that
discovery will prove that Defendants’ republicized Plaintiffs’ image and
likeness on various occasions, via different mediums, after the initial
date of the posting of their image and likeness and through the filing of
this complaint.
(Doc. No. 1 at ¶ 101). Here, Plaintiffs allege more than “continuing ill effects” from
the same violation. Plaintiffs explain that their image and likeness were republished
on different mediums which amounts to more than an assertion that the posts remain
online. This allegation from Plaintiffs’ Complaint is sufficient to show a continuing
violation by Defendants. Therefore, Defendants’ Motion to Dismiss Plaintiffs’
misappropriation claim is denied, and the Court declines to adopt the M&R with
regards to the recommended dismissal of Plaintiffs’ misappropriation claim.
Because the Court finds that the misappropriation claim should not be
dismissed under the continuing wrongs doctrine, the Court declines to address
Plaintiffs’ arguments regarding application of the discovery rule and the M&R’s
treatment of the misappropriation claim’s accrual date.
Regarding the aspects of the M&R to which no party objected, the Court has
nevertheless conducted a full, thorough, and independent review of the M&R and
record and concludes that those findings and conclusions of the M&R are correct and
in accordance with law.
IV.

CONCLUSION
IT IS, THEREFORE, ORDERED that:
1.

The Court ADOPTS the M&R in part and DECLINES TO ADOPT the
M&R in part, (Doc. No. 16), as explained herein;

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2.

Defendants’ Motion to Dismiss, (Doc. No. 12), is GRANTED in part
and DENIED in part; and

3.

Plaintiffs’ claims for negligence, conversion, unjust enrichment, and
quantum merit are DISMISSED WITH PREJUDICE. The Motion to
Dismiss is otherwise denied, as explained above.

Signed: September 24, 2024

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