Bill G Perry Family Design LLC et al v. New Generation Homes LLC et al

Filing 86

ORDER denying 46 Motion to Dismiss, as more fully set out. Signed by Honorable David L. Russell on 3/25/19. (jw)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
(1) BILL G. PERRY FAMILY DESIGN,
LLC, an Oklahoma limited liability
company; and
(2) BILLY PERRY, JR., an individual,
Plaintiffs,
v.
(1) NEW GENERATION HOMES, LLC,
an Oklahoma limited liability company;
(2) MATTHEW ANDERSON, an individual;
(3) SAND PROPERTIES, LLC,
an Oklahoma limited liability company;
(4) DEREK SHANNON, an individual; and
(5) JOHN DOES 1–99, true names unknown,
Defendants.

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ORDER
Before this Court is Defendants’ Motion to Dismiss Plaintiffs’ Amended Complaint
(Doc. 46).1 For the reasons stated herein, Defendants’ motion is DENIED.
I.

Background
Plaintiffs filed this suit on December 20, 2017, asserting copyright infringement and

breach of contract claims. See Doc. 1; see also First Am. Compl., Doc. 40. Taking as true

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On January 14, 2019, the Court consolidated Case No. CIV-17-1357-R with Case No. CIV-18-1082-R.
See Doc. 62. Defendants filed a motion to dismiss in the latter suit, to which Plaintiffs had responded by
the time of consolidation. See Case No. CIV-18-1082-R, Docs. 15–16. The issues presented in the instant
motion and the motion to dismiss filed in CIV-18-1082-R are virtually indistinguishable, with the major
difference between the two matters being the parties named as Defendants. Following consolidation, the
operative complaint and motion to dismiss are those filed in CIV-17-1357-R. To the extent the motion to
dismiss in CIV-18-1082-R differs from the instant motion, the Court has considered the former in its
analysis of the motion now before it.

all well-pleaded factual allegations in the complaint and viewing them in the light most
favorable to Plaintiffs, see Burnett v. Mortg. Elec. Registration Sys., Inc., 706 F.3d 1231,
1235 (10th Cir. 2013), Plaintiff Bill Perry, Jr., “creates and authors architectural works,
pictorial works, and graphic works” for Plaintiff Bill G. Perry Family Design, LLC
(“Family Design”). Doc. 40, at 2–3. These works include “house designs, house design
plans, blueprints, and related pictorial and graphic works.” Id. at 3. Family Design licenses
these works for profit. Plaintiffs allege that Defendants “advertised, constructed, offered
and at various times sold houses” based on Plaintiffs’ works, thereby infringing on the
works’ copyright. Id. at 6–12; see also Doc. 40-2. Plaintiffs identify these purportedly
infringing houses by street address, along with codes used by the parties to denote the
designs on which the houses are based. Doc. 40, at 6–12.; see also Doc. 40-1.2 Plaintiffs
also allege that Defendant breached the single-use licenses to which these plans and others
were subject by constructing additional houses based on the plans and copying or otherwise
producing derivations of the plans. See Doc. 40, at 12–13; see also Doc. 40-1; Doc. 40-3.
II.

Legal Standards for a Fed. R. Civ. P. 12(b)(6) Motion to Dismiss
A legally-sufficient complaint must include “a short and plain statement of the claim

showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a).3 Operationalizing the
Rule, a complaint must contain “sufficient factual matter, accepted as true, to ‘state a claim
to relief that is plausible on its face’” to survive a motion to dismiss. Ashcroft v. Iqbal, 556

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“In evaluating a Rule 12(b)(6) motion to dismiss, courts may consider not only the complaint itself, but
also attached exhibits and documents incorporated into the complaint by reference.” Smith v. United States,
561 F.3d 1090, 1098 (10th Cir. 2009) (citations omitted).
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A legally-sufficient complaint must also include “a short and plain statement of the grounds for the court’s
jurisdiction” and “a demand for the relief sought.” Id.

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U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). This
standard “is ‘a middle ground between heightened fact pleading . . . and allowing
complaints that are no more than labels and conclusions or a formulaic recitation of the
elements of a cause of action.’” Khalik v. United Air Lines, 671 F.3d 1188, 1191 (10th Cir.
2012) (quoting Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008)). That is, the
plaintiff’s complaint “need only give the defendant fair notice of what the claim is and the
grounds upon which it rests.” Id. at 1192 (internal quotation marks and citations omitted).
While assessing plausibility is “a context-specific task . . . requir[ing] . . . court[s] to draw
on [their] judicial experience and common sense,” Iqbal, 556 U.S. at 679, complaints
“‘plead[ing] factual content that allows the court to . . . reasonabl[y] infer[] that the
defendant is liable for the misconduct alleged’” are facially plausible. See S.E.C. v. Shields,
744 F.3d 633, 640 (10th Cir. 2014) (quoting Iqbal, 556 U.S. at 678).
III.

Discussion
In their motion to dismiss, Defendants offer four arguments, or “propositions”: (1)

Plaintiffs’ allegations of willful and intentional copying fail to state a claim, (2) Plaintiffs’
allegations that Defendants are “legally interchangeable” fail to state a claim, (3) Plaintiffs
fail to state an actionable claim of copyright infringement, and (4) Plaintiffs’ breach of
contract claim is preempted by the Copyright Act. Doc. 46, at 4–11. All of Defendant’s
“propositions” fail to show that Plaintiffs’ amended complaint is fatally deficient.
(A)

Propositions I–III

Defendants’ first three propositions rest on the same legal argument: portions of
Plaintiffs’ amended complaint are pled formulaically and implausibly, such that they fail
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to satisfy Fed. R. Civ. P. 8(a)(2). Doc. 46, at 4–6. Specifically, Defendants argue under
Proposition I that Plaintiffs’ allegations of willful, intentional, and malicious copyright
infringement are the types of “conclusory allegations” that the United States Supreme
Court held insufficient to state a claim in Ashcroft v. Iqbal. See Doc. 40, at 7–13; Doc. 46,
at 4–5; see also Iqbal, 556 U.S. at 678 (“Threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not suffice.”). Similarly, Proposition
II asserts that Plaintiffs’ allegations relating to the liability of each Defendant—that is, that
they are “legally interchangeable and are the alter egos [of one] another”—are conclusory
and, thus, insufficient. Doc. 46, at 5–6. Finally, Proposition III attacks the sufficiency of
Plaintiffs’ copyright claims as pled. Id. at 6–8.
The elements of a copyright infringement claim are straightforward: Plaintiffs must
prove “‘(1) ownership of a valid copyright, and (2) copying of constituent elements of the
work that are original.’” Savant Homes, Inc. v. Collins, 809 F.3d 1133, 1138 (10th Cir.
2016) (quoting Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991)).
Plaintiffs have alleged ownership of a valid copyright, and Defendants do not appear to
contest this. See Doc. 40, at 6 (“The Plaintiffs have registered with the United States
Copyright Office . . . the architectural works, house designs, and house design plans at
issue herein . . . .”); Doc. 40-2, at 1 (stating works at issue registered under designation
“VA-1-381-273”); see also Doc. 46, at 6–8. Rather, Defendants argue that Plaintiffs

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insufficiently pled the second element of copyright infringement: that Defendant copied
original elements of the work. See Doc. 46, at 6–8.4
As to whether Defendants “copied” the works in question, Plaintiffs clearly allege
that they did. See Doc. 40, at 8 (“Defendants have infringed upon several of the Plaintiffs’
copyrights by copying and duplicating the Plaintiffs’ . . . works . . . .” (emphasis added)).
And as to whether those elements copied were sufficiently “original,” this issue involves
factual questions inappropriate for resolution at the motion-to-dismiss stage. See McNeese
Photography, L.L.C. v. Access Midstream Partners, L.P., No. CIV-14-0503-HE, 2014 WL
3919575, at *2 (W.D. Okla. Aug. 11, 2014) (“A determination of whether plaintiffs’ works
contain sufficient originality to entitle them to copyright protection, however, involves
questions of fact not ordinarily appropriate for resolution on a motion to dismiss.”); see
also FragranceNet.com, Inc. v. FragranceX.com, Inc., 679 F. Supp. 2d 312, 320 (E.D.N.Y.
2010) (noting that originality is “a factual issue . . . inappropriate for determination on a
motion to dismiss” and one best resolved “on a motion for summary judgment, after the
parties have conducted discovery and had the opportunity to submit evidence on the
issue”). Accordingly, the Court concludes that it is premature to resolve issues of

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Specifically, Defendants argue that Plaintiffs have failed to properly plead the two subparts of the second
element of a copyright infringement claim: that Defendants (1) “as a factual matter, copied portions of
Plaintiffs’ work; and (2) that those elements of the work that were copied were protected expression and of
such importance to the copied work that the appropriation is actionable.” Doc. 46, at 7 (internal quotation
marks, citations, and brackets omitted); see also Gates Rubber Co. v. Bando Chem. Indus., Ltd., 9 F.3d 823,
832 (10th Cir. 1993) (noting that whether a defendant unlawfully copied original elements of a work
“involves two separate inquiries: 1) whether the defendant, as a factual matter, copied portions of the
plaintiff’s [work]; and 2) whether, as a mixed issue of fact and law, those elements . . . that have been copied
are protected expression and of such importance to the copied work that the appropriation is actionable.”).

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originality and that Plaintiffs have pled sufficient factual content to state copyright
infringement claims.
Defendants’ Propositions I and II fare no better. As to Proposition I, the Court finds
that Plaintiffs sufficiently pled willful copyright infringement. “Willfully” in the copyright
infringement context means that Defendants knew their conduct constituted copyright
infringement or recklessly disregarded Plaintiffs’ rights. Moos v. Craft Outlet, Inc., No.
CIV-16-750-C, 2017 WL 238445, at *1 (W.D. Okla. Jan. 19, 2017). The willfulness of the
infringement, if proven, is germane to the damages available to Plaintiffs. See 17 U.S.C. §
504(c)(2) (“In a case where the copyright owner sustains the burden of proving, and the
court finds, that infringement was committed willfully, the court in its discretion may
increase the award of statutory damages . . . .”); Rocking Chair Enters., L.L.C. v. Macerich
SCG Ltd. P’ship, 407 F. Supp. 2d 1263, 1269 (W.D. Okla. 2005) (“Enhanced statutory
damages are available when plaintiff sustains the burden of proving that the copyright
infringement was committed willfully.”). While Plaintiffs could have alleged “willfulness”
with greater clarity or detail, the Court is satisfied that the factual content in the amended
complaint makes out a claim for willful copyright infringement. See, e.g., Doc. 40, at 6–11
(noting that Defendants intentionally used Plaintiffs’ works in unauthorized ways).
As to Proposition II, Defendants’ arguments are unavailing. In asserting that
Plaintiffs’ liability theories are deficiently pled, Defendants greatly emphasize language
from an unpublished Sixth Circuit Court of Appeals decision, Trustees of Detroit
Carpenters Fringe Benefit Funds v. Patrie Construction Co. (“Patrie”). See Doc. 46, at 5–
6. In Patrie, the Sixth Circuit noted that “generalized and conclusory allegations regarding
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common ownership, employees, management, control, and decisionmaking are essentially
a recitation of the legal standard and are plainly insufficient to state a claim of alter ego
status.” Patrie, 618 F. App’x 246, 254 (6th Cir. 2015) (internal quotation marks, citations,
brackets, alterations, and ellipsis omitted). Defendants surely know that Sixth Circuit
decisions—especially unpublished ones—do not bind this Court. Moreover, Patrie deals
with the equitable “alter-ego doctrine” at play in the collective bargaining context. Id. at
252. This doctrine “developed to prevent employers from evading obligations under the
National Labor Relations Act” and “operates to bind an employer to a collective bargaining
agreement if it is found to be an alter ego of a signatory employer.” Trs. of Detroit
Carpenters Fringe Benefit Funds v. Indus. Contracting, LLC, 581 F.3d 313, 317–18 (6th
Cir. 2009) (internal quotation marks, citations, and brackets omitted). Given that the instant
suit concerns copyright infringement and breach of contract claims—not labor disputes—
Defendants’ cited caselaw is of dubious persuasive value.
More to the point, what Plaintiffs’ allegations regarding alter ego status, respondeat
superior, and the like aim to establish is vicarious and contributory liability on the part of
each Defendant. “One infringes contributorily by intentionally inducing or encouraging
direct infringement, and [one] infringes vicariously by profiting from direct infringement
while declining to exercise a right to stop or limit it.” Metro-Goldwyn-Mayer Studios Inc.
v. Grokster, Ltd., 545 U.S. 914, 930 (2005). “[T]hese doctrines of secondary liability . . .
are well established in the law.” Id. Again, Plaintiffs likely could have submitted an
amended complaint with a more vivid factual narrative. But Plaintiffs’ factual allegations

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regarding Defendants’ relationships between and among each other are sufficient—at this
stage—to avoid dismissal.
Broadly, the gravamen of Plaintiffs’ amended complaint is clear: Defendants
infringed on Plaintiffs’ copyright by using Plaintiffs’ works in unauthorized ways and
exceeding the single-use license attached to them. See generally Doc. 40. Though perhaps
not a paragon of pleading proficiency, Plaintiffs’ amended complaint is not the hodgepodge
of “unadorned, the-defendant-unlawfully-harmed-me accusation[s]” that Twombly and its
progeny targeted. Iqbal, 556 U.S. at 678. Moreover, the Tenth Circuit, while characterizing
the “Twombly/Iqbal standard” as a “middle ground” between heightened pleading and
naked, formulaic recitation of legal conclusions, recognized that Twombly and Iqbal merely
“refined” Rule (8)(a)(2)’s longstanding requirement that Plaintiffs need only give
Defendants “fair notice” of the claims and the grounds upon which they rest. Khalik v.
United Air Lines, 671 F.3d 1188, 1191–92 (10th Cir. 2012); see also supra Section II.
Defendants ground much of their motion in a rigid application of Twombly and Iqbal,
when, in truth, Plaintiffs’ amended complaint plainly gives fair notice to Defendants of the
claims they face and the facts and theories supporting those claims. The Federal Rules—
even with Twombly and Iqbal’s patina—require nothing more. Accordingly, Defendants’
motion as to Propositions I, II, and III is denied.
(B)

Proposition IV

Defendants also argue that Plaintiffs’ breach of contract claim, see Doc. 40, at 12–
13, is preempted by the Copyright Act of 1976, which reads in pertinent part:

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On and after January 1, 1978, all legal or equitable rights that are equivalent
to any of the exclusive rights within the general scope of copyright as
specified by section 106 in works of authorship that are fixed in a tangible
medium of expression and come within the subject matter of copyright as
specified by sections 102 and 103, whether created before or after that date
and whether published or unpublished, are governed exclusively by this title.
Thereafter, no person is entitled to any such right or equivalent right in any
such work under the common law or statutes of any State.
17 U.S.C. § 301(a). As the Tenth Circuit has held, “§ 301 preempts a state common law
or statutory claim if: ‘(1) the work is within the scope of the subject matter of copyright as
specified in 17 U.S.C. §§ 102 and 103; and (2) the rights granted under state law are
equivalent to any exclusive rights within the scope of federal copyright as set out in 17
U.S.C. § 106.’” Harolds Stores, Inc. v. Dillard Dep’t Stores, Inc., 82 F.3d 1533, 1542–43
(10th Cir. 1996) (quoting Gates Rubber Co. v. Bando Chem. Indus., Ltd., 9 F.3d 823, 847
(10th Cir. 1993)). This standard, as applied, compares the elements of a copyright
infringement claim with the elements of the state-law claim in question. Thus, “‘if a state
cause of action requires an extra element, beyond mere copying, preparation of derivative
works, performance, distribution[,] or display, then the state cause of action is qualitatively
different from, and not subsumed within, a copyright infringement claim and federal law
will not preempt the state action.’” SCO Grp., Inc. v. Int’l Bus. Machs. Corp., 879 F.3d
1062, 1080 (10th Cir. 2018) (quoting Gates Rubber Co., 9 F.3d at 847).
As stated above, copyright infringement involves two elements: (1) ownership of a
copyright and (2) copying of a work’s original elements. See supra Section III(A).
Conversely, “[u]nder Oklahoma law, to recover under a claim for breach of contract a
plaintiff must show: 1) formation of a contract; 2) breach of the contract; and 3) damages
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as a direct result of the breach.” Terry v. Health Care Serv. Corp., 344 F. Supp. 3d 1314,
1320 (W.D. Okla. 2018) (internal quotation marks and citations omitted); accord Cates v.
Integris Health, Inc., 2018 OK 9, ¶ 11, 412 P.3d 98, 103. As an Oklahoma breach of
contract claim contains one or more elements not necessary to a federal copyright
infringement claim, the Copyright Act does not preempt the contract claim here. See
Chalfant v. Tubb, 453 F. Supp. 2d 1308, 1320 (N.D. Okla. 2006) (“[T]he weight of
authority supports[] that the promise and consideration elements qualitatively distinguish
breach of contract claims from copyright infringement cases.”); see also Storagecraft Tech.
Corp. v. Persistent Telecom Sols., Inc., No. 2:14-CV-76-DAK, 2016 WL 7155782, at *9
(D. Utah Dec. 6, 2016) (“[T]he identification of an extra element in the state law claim
beyond those required for the copyright infringement claim is sufficient to show that the
causes of action are qualitatively different from each other.”). Thus, Defendants’ motion
as to Proposition IV is denied.
IV.

Conclusion
Plaintiffs’ amended complaint is legally sufficient and includes no preempted

claims. Additionally, many of Defendants’ arguments are best raised on summary
judgment, as they require the Court to consider matters outside the pleadings. Thus,
Defendants’ motion to dismiss the amended complaint (Doc. 46) is DENIED.
IT IS SO ORDERED this 25th day of March, 2019.

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