Laborde-Perez et al v. Pineiro-Caballero et al

Filing 79

OPINION AND ORDER re 39 MOTION for Judgment on the Pleadings filed by Department of Education, Commonwealth of PR, 40 MOTION to Dismiss for Failure to State a Claim as to Co-defendants filed by Odette Pineiro-Caballero, Josefina Caballero, 41 MOTION to Dismiss/Lack of Jurisdiction as to Department of Education, Commonwealth of PR, Department of Justice Commonwealth of PR filed by Department of Justice Commonwealth of PR, Department of Education, Commonwealth of PR. Partial Judgment is to be entered. Signed by US Magistrate Judge Camille L. Velez-Rive on 8/25/14.(ljt)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
DR. ILIA M. LABORDE PEREZ, et als.,
Plaintiffs,
v.

CIVIL NO. 14-1276 (CVR)

DR. ODETTE PIÑEIRO CABALLERO, et als.,
Defendants.
OPINION AND ORDER
INTRODUCTION
On March 31, 2014, Plaintiffs Dr. Ilia M. Laborde Pérez (“Laborde”) and Global
Education & Instructional Technology Consulting, Inc. (“GEITC”) (collectively “Plaintiffs”)
filed the present case against Defendants Odette Piñeiro Caballero (“Piñeiro”), Josefa
Caballero (“Caballero”), Global Education Exchange Opportunities, Inc. (“GEEO”), the
Puerto Rico Department of Education (“DOE”) and the Puerto Rico Department of Justice
(“DOJ”), alleging causes of action from infringement under the Copyright Act, 17 U.S.C.
§101, et. seq., the Puerto Rico Intellectual Property Act, P.R. Laws Ann., tit. 31 §401, and for
breach of contract under P.R. Laws Ann., tit. 31 §3373, and damages flowing therefrom.
(Docket Nos. 1 ). On August 22, 2014, Plaintiffs filed an Amended Verified Complaint.
(Docket No. 78).
Before the Court now are a variety of motions by the Defendants, to wit, the DOE’s
“Motion for Judgment on the Pleadings” (Docket No. 39); Piñeiro and Caballero’s “Motion
to Dismiss” (Docket No. 40) and the DOE and DOJ’s “Motion to Dismiss for Lack of Subject
Matter Jurisdiction” (Docket No. 41). Before the Court are also Plaintiffs’ oppositions to

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all of these motions (Docket Nos. 61, 60, and 62, respectively), and Defendants’ replies
thereto (Docket Nos. 63 and 69). For the following reasons, the Court GRANTS both
motions filed by the DOE and DOJ and DENIES co-Defendants’ Piñeiro and Caballero’s
motion.1
STANDARD
Federal Rule of Civil Procedure 8(a) requires plaintiffs to provide “a short and plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).
A “short and plain” statement needs only enough detail to provide a defendant with “ ‘fair
notice of what the ... claim is and the grounds upon which it rests.’ ” Bell Atlantic v.
Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955 (2007); see also Erickson v. Pardus, 551 U.S.
89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (“Federal Rule of Civil Procedure 8(a)(2)
requires only ‘a short and plain statement....’ Specific facts are not necessary.”). Yet, in
order to “show” an entitlement to relief a complaint must contain enough factual material
“to raise a right to relief above the speculative level on the assumption that all the
allegations in the complaint are true (even if doubtful in fact).” See, Twombly, 550 U.S. at
555, 127 S.Ct. 1955.
When addressing a motion to dismiss under Rule 12, the court must “accept as true
all well-pleaded facts in the complaint and draw all reasonable inferences in favor of the
plaintiffs.” Gargano v. Liberty Int’l Underwriters, Inc., 572 F.3d 45, 48-49 (1st Cir. 2009).

1
The Amended Verified Complaint was filed after the dispositive motions, entertained herein, were filed.
However, a review of the Amended Verified Complaint shows that it only adds some facts. Thus, the Amended Verified
Complaint does not render moot the pending dispositive motions.

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Under Twombly, 550 U.S. at 555, however, a plaintiff must “provide the grounds of his
entitlement [with] more than labels and conclusions.” See also, Ocasio-Hernández v.
Fortuño-Burset, 640 F.3d 1, 12 (1st Cir. 2011). Thus, a plaintiff is now required to present
allegations that “nudge [his] claims across the line from conceivable to plausible” in order
to comply with the requirements of Rule 8(a). Id. at 570; see, e.g. Ashcroft v. Iqbal, 129
S.Ct. 1937 (2009).
When considering a motion to dismiss, the Court’s inquiry occurs in a two-step
process under the current context-based “plausibility” standard established by Twombly
and Iqbal. First, the Court must “accept as true all of the allegations contained in a
complaint[,]” discarding legal conclusions, conclusory statements and factually threadbare
recitals of the elements of a cause of action. Iqbal, 129 S.Ct. at 1940. Yet, the court “need
not accept as true legal conclusions from the complaint or ‘naked assertion[s]’ devoid of
‘further factual enhancement.’” Maldonado v. Fontanes, 568 F.3d 263, 268 (1st Cir. 2009).
Under the second step of the inquiry, the Court must determine whether, based upon
all assertions that were not discarded under the first step of the inquiry, the complaint
“states a plausible claim for relief.” Iqbal, 129 S.Ct. at 1950. This second step is “contextspecific” and requires that the Court draw from its own “judicial experience and common
sense” to decide whether a plaintiff has stated a claim upon which relief may be granted or
whether dismissal under Rule 12(b)(6) is appropriate. Id.

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FACTS
The heart of this dispute involves an educational model known as “Modelo de
Educación Global” (“MEG”), which Plaintiff Laborde alleges she created. Laborde is the
sole owner of GEITC, which she alleges to be the only corporation authorized to use and sell
the rights for the use and copy of MEG. (Docket No. 78, ¶ 12). Laborde represents that she
wrote about MEG in her dissertation, and that she registered MEG in the University of
Michigan Catalog, the ProQuest Catalog, and the United States Copyright Office. (Id. at ¶
11). Laborde claims to have created and authored MEG. (Id. at ¶ 1).
On February 6, 2012, co-defendant Piñeiro met with Laborde “to negotiate and
allow” Piñeiro and her corporation, GEEO to use Laborde’s MEG model in presenting a
proposal to the DOE’s “School Improvement Grant” programs. (Id. at ¶ 13). After that
meeting, Laborde, together with GEITC and GEEO personnel, incorporated the MEG
model into GEEO’s “MAGIC” model, and Laborde claims that in return, she was to be
compensated.

(Id. at ¶ 18).

According to Laborde, after her MEG program was

incorporated into the MAGIC model, Co-Defendants Piñeiro, Caballero and GEEO have
since procured several professional services contracts for the MAGIC model with the
Commonwealth of Puerto Rico’s DOE, and have earned over six million dollars from those
contracts. (Id. at ¶¶ 43-50). Plaintiffs allege Defendants Piñeiro, Caballero and/or GEEO
have not paid them for the use of MEG, however, and their corporate profile, brochures,
and proposals state that GEEO, not Laborde or GEITC, has the exclusive representation
rights of MEG. (Id. at ¶¶ 20-21). Consequently, Laborde claims that Defendants are

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currently infringing upon and engaging in acts of misappropriation of her copyrighted
work.
On March 31, 2014, Plaintiffs filed a motion for both a TRO and a preliminary
injunction against all Defendants, asking the Court to enjoin Co-Defendants GEEO, Piñeiro
and Caballero from “further infringing Plaintiff’s copyrighted work.”(Docket No. 4-1 at ¶
22). As to the DOE, they sought a cease and desist order preventing them from further
illegal use of the MEG model.
On April 15, 2014, the Court denied both the TRO and the injunction at that time on
procedural grounds, finding that Plaintiffs had not only failed to give notice to Defendants,
but had failed to explain why notice was not required in this specific case. (Docket No. 14).

LEGAL ANALYSIS
A.

DOE’s “Motion on the Pleadings” and DOE and DOJ’s “Motion to
Dismiss for Lack of Subject Matter Jurisdiction”.

The Court analyzes both motions together, as the principal ground for dismissal for
both petitions is the same. The DOE’s motion at Docket No. 39 requests dismissal on two
grounds: 1) that the present suit should be dismissed because it is barred by Eleventh
Amendment immunity, and 2) that the present case is not a copyright case, but a garden
variety breach of contract and damages claim between Plaintiffs and the remaining parties,
which the DOE had nothing to do with. The motion at Docket No. 41, filed by the DOE and

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the DOJ2 re-alleges the request for dismissal on Eleventh Amendment immunity grounds,
and further avers that dismissal against them is appropriate as no allegations of copyright
infringement have been brought against either party. The Court agrees with these CoDefendants that the claims against them are barred by Eleventh Amendment immunity.
It has long been held that ... “[A] suit by private parties seeking to impose a liability
which must be paid from public funds in the state treasury is barred by the Eleventh
Amendment.” Edelman v. Jordan, 415 U.S. 651, 663, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974).
This is the case whether the named defendant is the state itself or a state official in her
official capacity. Rosie D. ex rel. John D. v. Swift, 310 F.3d 230, 234 (1st Cir.2002) (“As a
general matter, the Eleventh Amendment bars suits in federal courts against unconsenting
states (including ‘official capacity’ suits against state hierarchs).”); see also, Will v. Mich.
Dep't of State Police, 491 U.S. 58, 71, 109 S.Ct. 2304, 105 L.Ed.2d 45 (1989) (“[A] suit
against a state official in his or her official capacity is not a suit against the official but rather
is a suit against the official’s office. As such, it is no different from a suit against the State
itself.” (citation omitted)).
However, in what has become known as part of the Ex parte Young doctrine, a suit
for prospective injunctive relief provides a narrow, but well-established exception to
Eleventh Amendment immunity. Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714
(1908), Edelman, 415 U.S. at 677, 94 S.Ct. 1347. Ex parte Young held that the Eleventh
Amendment did not bar a federal suit against a state attorney general for enforcing a statute
2

Although a named party, no claims were alleged against the DOJ in the Amended Verified Complaint.

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which allegedly violated the Fourteenth Amendment. The reason for the Ex parte Young
exception from Eleventh Amendment immunity is that the court found that an official could
not be acting on behalf of the state when he or she acted illegally or unconstitutionally.
Therefore, while it is clear that it may be possible to sue a state official in his or her official
capacity for prospective injunctive relief without violating the Eleventh Amendment,
monetary claims against the state agency should be dismissed, even if claims against state
officials for prospective injunctive relief can be allowed to go forward. See, Monroe v.
Arkansas State Univ., 495 F.3d 591, 594 (8th Cir.2007) (a §1981 suit by a student for
injunctive relief against a state university and university officials was viable against the state
officials, in their official capacities, but the district court erred in permitting the claim for
injunctive relief to proceed against the university).
As applied to the situation before the Court today, it has long been held that for
Eleventh Amendment purposes, the Commonwealth of Puerto Rico is considered a state,
see, Negrón Gaztambide v. Hernández Torres, 145 F.3d 410 (1st Cir. 1998), and
furthermore, that it enjoys the full benefits of the Eleventh Amendment. Ezratty v.
Commonwealth of Puerto Rico, 648 F.2d 770, 776 n.7 (1st Cir. 1981). There are, however,
two general exceptions to the reach of the Eleventh Amendment: (1) “Congress may
abrogate a State’s immunity by expressly authorizing such a suit pursuant to a valid exercise
of power”; and (2) “[A] State may waive its sovereign immunity by consenting to be sued
in federal court.” Maysonet-Robles v. Cabrero, 323 F.3d 43, 49 (1st Cir. 2003) (citing
College Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666, 670, 119

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S.Ct. 2219, 144 L.Ed.2d 605 (1999)). Neither of these exceptions is present here. As far as
the Court is aware, no case has found that Puerto Rico has waived its sovereign immunity.
The Commonwealth has not been directly sued in the present case, but rather, two
of its instrumentalities. Since a state only exists through its instrumentalities, it has further
been held that Eleventh Amendment immunity also extends to arms or “alter egos” of the
state. Ainsworth Aristocrat Int'l Pty. Ltd. v. Tourism Co. of Puerto Rico, 818 F.2d 1034,
1036 (1st Cir. 1987); see, Mount Healthy City School Dist. Bd. of Educ. v. Doyle, 429 U.S.
274, 280, 97 S.Ct. 568 (1977). In particular, it has been held that the DOE and DOJ also
enjoy this benefit. See, Sánchez Arroyo v. Dept. of Educ. of P.R., 842 F.Supp.2d 416 (D.
Puerto Rico 2012)(Dismissing claims against the Department of Education on Eleventh
Amendment grounds), and García-Parra v. Puerto Rico, 616 F.Supp.2d 206 (D. Puerto Rico,
2009) (Dismissing Plaintiff's claims against the Commonwealth and the Department of
Justice as barred by Eleventh Amendment immunity).
Therefore, in accordance with the line of cases herein cited, the Court finds the
Eleventh Amendment bars suit for monetary damages against the DOE and the DOJ.
Plaintiffs are only entitled to prospective injunctive relief against an official of said agency,
under Ex parte Young. No officials have been sued in the instant case. As such, this is
moot.
Plaintiffs aver in their opposition to the motions that under § 511 of the copyright
law, a state, instrumentality of the state, or an office or employee of the state cannot be
immune on Eleventh Amendment grounds. The DOE answers by stating that many courts

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have held this precise statute to be unconstitutional, because they found that Congress had
illegally abrogated state sovereign immunity.

There is abundant case law for this

proposition, including the First Circuit. See, Lane v. First Nat. Bank of Boston, 871 F.2d
166, 169 (1st Cir. 1989)(“...in the post- Atascadero era, no court to our knowledge has held
that the Copyright Act passes the reformulated test for abrogation of Eleventh Amendment
protection”); see also, BV Engineering v. University of California Los Angeles, 858 F.2d
1394 (9th Cir. 1987); Chávez v. Arte Público Press, 204 F.3d 601 (5th Cir. 2000) (Congress’
purported abrogation of the States’ immunity under the Copyright Act was not justified
under the Fourteenth Amendment’s enforcement provision); Rodríguez v. Texas Comm'n
on the Arts, 199 F.3d 279 (5th Cir.2000) (holding that the Patent Remedy Act did not
effectively abrogate the States’ sovereign immunity because its attempt to do so was not a
valid act of Congressional power); Jacobs v. Memphis Convention and Visitors Bureau, 710
F.Supp.2d 663 (W.D. Tenn. 2010) and Whipple v. Utah, 2011 WL 4368568 (D.Utah,2011).
Therefore, this argument is inapposite.
The Court needs to go no further and does not reach the parties’ additional
arguments, as it DISMISSES the monetary claims brought against the DOE and the DOJ,
WITH PREJUDICE, on Eleventh Amendment immunity grounds.
B.

Piñeiro and Caballero’s “Motion to Dismiss”.

Co-Defendants Piñeiro and Caballero also move to dismiss all claims against them,
averring that Plaintiffs have failed to state a claim against them, as all allegations are
against the corporation, GEEO, and not against them personally. Specifically, they allege

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that if anything, they acted as “agents duly representing GEEO for the execution of the
proposals, verbal agreements and negotiations with Plaintiffs” and since the corporate veil
has not been lifted, they cannot be liable in an individual capacity. (Docket No. 40, p. 7).
The Court disagrees.
Co-Defendants forget that at this stage, the Court must evaluate the claims
presented, making all reasonable inferences in favor of Plaintiffs. As previously discussed,
and contrary to these Co-Defendants’ assertions, Plaintiffs have alleged a multitude of
claims against these specific Co-Defendants, and actions which, if taken as true as the Court
must at this stage, defeat Co-Defendants’ Motion to Dismiss. Among them are the
following:
1)

Co-Defendant Piñeiro led Plaintiffs to believe that the agreement of economic
compensation for the use of the educational model would be honored, but
was not. (Docket No. 78, ¶ 20).

2)

Plaintiffs formally requested on several occasions from Defendant GEEO,
and their representatives and other Co-Defendants (Piñeiro and Caballero),
to draft an agreement in order to evidence in writing their verbal agreement
and stating that GEEO and/or Defendants would pay the required
compensation to Laborde for the use of the copyright of the MEG for every
proposal or contract signed by GEEO with Puerto Rico’s DOE or any other
entity, and this never materialized. (Docket No. 78, ¶ 27).

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3)

Laborde worked to implement her program at the Ramón Power y Giralt
School and co-Defendant Piñeiro was told about this both by her and the
school officials, in order for Laborde to be reimbursed. (Docket No. 78, ¶ 34,
35, 36).

4)

On October 30 and again on November 12, 2012, all Defendants (including
Piñeiro and Caballero) were notified by Plaintiffs in writing to cease use of
Laborde’s educational model. (Docket No. 78, ¶ 39).

5)

Despite the fact that they were told not to use Plaintiff’s model, coDefendants have sold, offered in their proposals, incorporated and used the
Laborde’s copyrighted educational model as an integral part of the MAGIC
model and are benefitting economically from said illegal use. (Docket No. 78,
¶ 39, 42).

6)

Co-Defendants have altered, modified and distorted Plaintiff’s copyrighted
educational model in a manner that is neither authorized nor desired by her,
and in this manner, have infringed upon her right to preserve the integrity of
the work. (Docket No. 78, ¶ 36, 41).

Event though Defendants posit they were only “acting as agents” for GEEO in the
transactions, this statement cannot be construed to stand for this proposition at this early
stage in the litigation, where no discovery has yet been effected and when the Court must
make all reasonable inferences in favor of Plaintiffs. Furthermore, the precise paragraph
that Co-Defendants quote to stand for the proposition that only corporate (and not

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personal) liability should attach, regarding Plaintiffs’ petition to draft a written agreement
to evidence their verbal contract, specifically states that Plaintiffs requested GEEO and/or
Defendants to pay the required compensation. On these facts, the Court cannot hold, as a
matter of law, that absolutely no actionable claim has been pled against these CoDefendants. Plaintiffs have surpassed the “conceivable to plausible” hurdle at this stage of
the litigation required under Twombly.
Furthermore, regarding the allegations of infringement that have been raised against
these Co-Defendants, it has been established that under the 1976 Copyright Act, 17 U.S.C.
§§ 101-914, an individual who is the dominant influence in a corporation and has the
capacity to control the acts of the corporation may be held jointly liable with the corporation
for any proved infringements, even in the absence of the individual's actual knowledge that
the infringements occurred. Nick-O-Val Music Co., Inc. v. P.O.S. Radio, Inc., 656 F.Supp.
826, 828 (M.D.Fla. 1987); Boz Scaggs Music v. KND Corp., 491 F.Supp. 908, 913-14
(D.Conn. 1980).
Another way to determine the issue of whether a corporate officer may be held
vicariously liable is examining: (1) whether the officer has a financial stake in the activity
and; (2) whether the officer has the ability and right to supervise the activity causing
infringement. Fermata Intern. Melodies v. Champions Golf Club, 712 F.Supp. 1257, 1262
(S.D.Tex. 1989), aff'd, 915 F.2d 1567 (5th Cir. 1990). All these elements have been applied
previously in this district for this particular analysis. See, Pedrosillo Music, Inc. v. Radio
Musical, Inc., 815 F.Supp. 511 (D. Puerto Rico 1993).

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At this stage, it has been established that Co-Defendant Piñeiro is the resident agent
for GEEO, that she and Co-Defendant Caballero were GEEO’s incorporators, that CoDefendant Piñeiro is a Director in said corporation, that at the time the events that gave rise
to this cause of action occurred, Co-Defendant Caballero was President of GEEO’s Board,
and that Co-Defendant Piñeiro herself has admitted to owning GEEO. It is clear from the
record so far that, wearing these different hats, these two Co-Defendants could have had the
right and ability to control the corporation’s activities, appear to have a financial interest
in those activities, and have had sufficient involvement with the negotiations of the model
at issue to be able to avoid infringements of the copyright at issue. Consequently, the Court
finds that at this stage, Plaintiffs have established a colorable claim that Co-Defendants
Piñeiro and Carrasquillo could be responsible for the copyright violations. The Court
therefore DENIES these Co-Defendants’ Motion to Dismiss these claims.
CONCLUSION
For the aforementioned reasons, the Court finds as follows regarding the pending
dispositive motions before it:
-

The Department of Education’s “Motion for Judgment on the Pleadings”
(Docket No. 39) is GRANTED.

-

Dr. Odette Piñeiro and Josefa Caballero’s “Motion to Dismiss” (Docket No.
40) is DENIED.

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-

The Department of Education and Department of Justice’s “Motion to
Dismiss for Lack of Subject Matter Jurisdiction” (Docket No. 41) is
GRANTED.

Accordingly, all claims filed against the Department of Education and the
Department of Justice are DISMISSED WITH PREJUDICE. Partial Judgment is to be
entered.
IT IS SO ORDERED.
In San Juan, Puerto Rico, on this 25th day of August, 2014.
S/CAMILLE L. VELEZ-RIVE
CAMILLE L. VELEZ RIVE
UNITED STATES MAGISTRATE JUDGE