RN'D Productions, Inc v. Walt Disney Records
MEMORANDUM OPINION granting 18 MOTION to Dismiss 17 Amended Complaint/Counterclaim/Crossclaim etc. Defendant Walt Disney Records Direct's Motion to Dismiss Plaintiff's First Amended Complaint for Lack of Subject-Matter Jurisdiction, Lack of Personal Jurisdiction, (Signed by Magistrate Judge Nancy K Johnson) Parties notified.(sjones, 4)
United States District Court
Southern District of Texas
October 30, 2017
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
RN’D PRODUCTIONS, INC.,
WALT DISNEY RECORDS DIRECT,
David J. Bradley, Clerk
CIVIL ACTION NO. H-17-142
Pending before the court1 is Defendant’s Motion to Dismiss
Plaintiff’s First Amended Complaint (Doc. 18).2
The court has
considered the motion, Plaintiff’s response, Defendant’s reply, all
other relevant filings, and the applicable law.
For the reasons
set forth below, the court GRANTS Defendant’s motion.
Plaintiff filed this action on January 17, 2017, alleging that
Defendant violated the Copyright Act3 by infringing Plaintiff’s
copyrights on recordings of three songs.4
[Defendant] violated the [Copyright] [A]ct by selling
copywritten [sic] recordings, “What I’ve Been Looking
For,” “Breaking Free,” and “Get’cha Head in the Game”
The parties consented to proceed before the undersigned magistrate
judge for all proceedings, including trial and final judgment, pursuant to 28
U.S.C. § 636(c) and Federal Rule of Civil Procedure 73. See Doc. 13, Ord. Dated
Feb. 21, 2017.
Also pending is Defendant’s Motion to Dismiss (Doc. 14). Plaintiff
responded with an amended complaint, after which Defendant filed a motion to
dismiss the amended complaint. Therefore, Defendant’s first motion to dismiss
is DENIED AS MOOT.
See 17 U.S.C. §§ 101-1332.
See Doc. 2, Pl.’s Orig. Compl.
owned by [Plaintiff] under an Exclusive Production
Agreement with Jamaica Johnson [(“Johnson”)] and his
artist, Andrew Seeley, which granted [Plaintiff] the
exclusive ownership any [sic] copy written [sic]
recordings produced or performed during the term of the
contract ending June 12, 2006.5
According to Plaintiff, all three of the recordings were created in
[P]laintiff’s copyright by publishing and placing on the market the
Plaintiff requested $9,000,000 in
actual damages or, alternatively, an unspecified sum in statutory
damages as increased for willfulness.7
exclusive production agreement entered on June 12, 2000, with
Johnson by which Johnson agreed to furnish the exclusive services
of five individuals and their band Nu Ground in exchange for the
advancement of funds for recording costs and subsequent royalty
The contract provided that each master and derivative
recording created during the contract period would be considered a
“work made for hire” and would “be entirely the property of
[Plaintiff] in perpetuity throughout the world, under copyright and
Doc. 2, Pl.’s Orig. Compl. p. 2.
Id. pp. 3-4.
Id. p. 5.
See Doc. 2-2, Ex. A to Pl.’s Orig. Compl., Exclusive Prod. Agreement
pp. 1, 6-10.
The agreement is also an exhibit to Plaintiff’s First Amended
See Doc. 17-2, Ex. B to Pl.’s 1st Am. Compl., Exclusive Prod.
copyrights in such master recordings and [r]ecordings derived
therefrom in [its] name or in the name(s) of [its] designee(s) and
to secure any and all renewals and extensions thereof.”10
contract also stated that Johnson and Artist assigned to Plaintiff
all of their rights and title to the copyrights and exclusive
rights, including manufacturing records and publicly performing the
Plaintiff’s original complaint.12
Defendant argued that: (1) the
court lacked subject matter jurisdiction; (2) the court lacked
personal jurisdiction over Defendant; (3) Plaintiff’s claims were
barred by the doctrine of collateral estoppel in light of a prior
limitations; and (5) Plaintiff failed to state a claim because it
did not plead that it owned copyrights from the U.S. Copyright
Id. p. 4.
See id. pp. 4-5.
See Doc. 14, Def.’s Mot. to Dismiss.
See RN’D Prods. Inc. v. Seeley, Civ. Action No. 4:13-cv-1751 (S.D.
Tex. June 15, 2013), Doc. 1, Pl.’s Orig. Compl. On January 31, 2014, the court
granted the defendants’ motion to dismiss without prejudice, allowing Plaintiff
an opportunity to amend. See id. at Doc. 80, Min. Entry Dated Jan. 31, 2014.
Plaintiff did not amend, and, on September 16, 2014, the court entered final
judgment. See id. at Doc. 84, Final J.
regarding the alleged infringement.14
Rather than respond to Defendant’s arguments in an opposition
brief, Plaintiff filed an amended complaint, in which it made
complaint was the copyright information for the three songs at
registered each of the songs with the U.S. Copyright Office on July
Plaintiff reworded a portion of each of the copyright
counts to state that, “[s]ince July 12, 2006,” Defendant “has
infringed [P]laintiff’s copyright by publishing and [sic] the
without the consent of [Plaintiff].”18
Plaintiff also added that
distribute the recordings.19
Defendant then filed the pending motion to dismiss the amended
presented in its first motion with the one exception of arguing
See Doc. 17, Pl.’s 1 st Am. Compl.
See id. p. 2.
Id. pp. 4-6.
See Doc. 18, Def.’s Mot. to Dismiss Pl.’s 1 st Am. Compl.
Plaintiff opposed the motion, arguing that the
court can exercise both subject matter and personal jurisdiction,
that its claims are not barred by collateral estoppel or the
statute of limitations, and that it is the exclusive owner of the
recordings in question.22
On May 11, 2017, Defendant filed a
As the motion is fully briefed, it is ripe for the court’s
Dismissal of an action is appropriate whenever the court lacks
subject matter jurisdiction.
Fed. R. Civ. P. 12(b)(1), 12(h)(3).
A district court’s jurisdiction is limited to actual cases or
Lujan v. Defenders of Wildlife, 504 U.S. 555, 559
Constitutional “standing is an essential and unchanging
part of the case-or-controversy requirement . . . .”
Id. at 560;
2004)(explaining that standing is an essential component of federal
subject matter jurisdiction).
To plead constitutional standing, a plaintiff must satisfy
See OCA-Greater Houston v. Tex., 867 F.3d 604,
See Doc. 19, Pl.’s Resp. to Def.’s Mot. to Dismiss Pl.’s 1 st Am.
See Doc. 20, Def.’s Reply.
609-10 (5th Cir. 2017)(listing the “well-known requirements of
First, a plaintiff must have sustained “an injury in
fact,” which is defined as “an invasion of a legally protected
interest” that is “concrete and particularized” and “actual or
imminent, not conjectural or hypothetical.”
Id. at 610 (internal
quotation marks omitted)(quoting NAACP v. City of Kyle, Tex., 626
F.3d 233, 237 (5th Cir. 2010)).
Second, a plaintiff must show a
causal connection between the injury and defendant’s actions. Id.
(quoting NAACP, 626 F.3d at 237).
“Third, it must be likely, as
opposed to merely speculative, that the injury will be redressed by
omitted)(quoting NAACP, 626 F.3d at 237).
Additionally, a district court may dismiss an action against
a defendant when the court lacks personal jurisdiction over that
See Fed. R. Civ. P. 12(b)(2).
On a motion to dismiss
decided without benefit of an evidentiary hearing, the burden is on
the plaintiff to establish a prima facie case in support of
Johnston v. Multidata Sys. Int’l Corp., 523 F.3d
602, 609 (5th Cir. 2008).
The district court may receive “any
combination of the recognized methods of discovery,” including
affidavits, interrogatories, and depositions to assist it in the
Walk Haydel & Assocs., Inc. v. Coastal
Power Prod. Co., 517 F.3d 235, 241 (5th Cir. 2008)(quoting Thompson
v. Chrysler Motors Corp., 755 F.2d 1162, 1165 (5th Cir. 1985)). The
court resolves all conflicts in the evidence in favor of the
plaintiff and accepts as true all of the plaintiff’s uncontroverted
Johnston, 523 F.3d at 609.
A federal court has personal jurisdiction over a nonresident
jurisdiction and if jurisdiction is consistent with due process
under the United States Constitution.
Johnston, 523 F.3d at 609.
contacts are “so continuous and systematic as to render” the
defendant “essentially at home in the forum State.”
Daimler AG v.
Bauman, ___ U.S. ___, 134 S. Ct. 746, 754 (2014)(internal quotation
marks omitted)(quoting Goodyear Dunlop Tires Operations, S.A. v.
Brown, 564 U.S. 915, 919 (2011)).
Specific jurisdiction exists if
the asserted cause of action “arises out of or relates to the
defendant’s contacts with the forum.”
Id. (quoting Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8
Federal Rule of Civil Procedure 12(b)(6) allows dismissal of
an action whenever the complaint, on its face, fails to state a
claim upon which relief can be granted.
When considering a motion
to dismiss, the court should construe the allegations in the
complaint favorably to the pleader and accept as true all wellpleaded facts.
Harold H. Huggins Realty, Inc. v. FNC, Inc., 634
F.3d 787, 803 n.44 (5th Cir. 2011)(quoting True v. Robles, 571 F.3d
412, 417 (5th Cir. 2009)).
A complaint need not contain “detailed
factual allegations” but must include sufficient facts to indicate
the plausibility of the claims asserted, raising the “right to
relief above the speculative level.”
Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662,
dismissal of the entire case, and the court is obligated to address
the challenges to subject matter jurisdiction before considering
challenges to the merits.
See Ramming v. United States, 281 F.3d
158, 161 (5th Cir. 2001).
The court then addresses Defendant’s
challenge to personal jurisdiction and concludes with the question
whether Plaintiff stated a claim entitling it to relief.
The Court Can Exercise Subject Matter Jurisdiction
Here, Defendant argues that Plaintiff lost its capacity to sue
when it forfeited its charter by failing to pay state franchise
Defendant contends that the issue of legal existence goes
to standing and negates subject matter jurisdiction.
argues that it is in the process of rehabilitating its corporate
The concern is whether Plaintiff has standing to bring this
Plaintiff alleged an injury of lost profits caused by
Defendant’s sales of recordings for which Plaintiff owned the
If the allegations proved true, this litigation could
redress that injury through the award of damages.
successfully pled constitutional standing.
While the court harbors serious concerns whether the factual
allegations support Plaintiff’s legal capacity to sue or reflect
infringement claims, the court finds that these problems do not
deny the court of subject matter jurisdiction.
See Rideau v.
2016)(citing William V. Dorsaneo, III, The Enigma of Standing
Doctrine in Texas Courts, 28 Rev. Litig. 35, 65 (2008))(noting that
constitutional standing differs from capacity to sue in that the
former raises a question of subject matter jurisdiction while the
latter does not).
The concerns of legal capacity and real party in
The Court Cannot Exercise Personal Jurisdiction Over Defendant
Defendant supports its motion with the declaration of Marsha
L. Reed (“Reed”), who is one of Defendant’s officers.24
testified that Defendant was incorporated in California with a
See Doc. 18-1, Ex. 1 to Def.’s Mot. to Dismiss, Decl. of Marsha L.
Id. p. 1.
classified Defendant as a dormant entity that has not conducted any
business and has not had any financial activity “since at least
As further indication of lack of personal jurisdiction,
Reed stated that Defendant has not engaged in business in Texas, is
not registered to do business in Texas, has not incurred or paid
taxes to Texas, has not appointed an agent for service of process
employees, personal or real property, mailing address, or place of
business in Texas.27
In response, Plaintiff contends that the court can exercise
continuously and purposely sold its products in Texas since 2006
under its WDR Records label.”28
Plaintiff submits no declaration
Even if supported by a declaration, the statement itself
lacks sufficient detail to support a finding that Defendant’s
contacts were so continuous and systematic that it was at home in
Texas or a finding that this action arose out of Defendant’s
contradicts Plaintiff’s assertion.
Id. pp. 1-2.
Doc. 19, Pl.’s Resp. to Def.’s Mot. to Dismiss Pl.’s 1 st Am. Compl.
p. 7 (citing to the only exhibit to its response, which includes Texas franchise
tax reports filed by Plaintiff in April 2017 for the years 2011-2017).
In connection with Plaintiff’s amended complaint, Plaintiff
submitted a business search from the California Secretary of State
indicating that Defendant’s status is active to rebut Defendant’s
assertion that it has been dormant since 2006.29 The court need not
enter a semantics debate on the meanings of “active” and “dormant.”
An active status with the California Secretary of State falls well
short of implicating personal jurisdiction over Defendant in Texas.
Plaintiff fails to establish a prima facie case of personal
Plaintiff Failed to State a Valid Claim
Although the lack of personal jurisdiction is a sufficient
reason to grant Defendant’s motion to dismiss, the court finds it
necessary to address the two other problems mentioned above: lack
of capacity and real party in interest.
Pursuant to Federal Rule of Civil Procedure 17(b)(2), a
corporation’s capacity to sue is determined by the law under which
it was formed.
A corporation that has forfeited its charter lacks
capacity to sue in state courts.
See Tex. Tax Code § 171.252.
of May 11, 2017, Plaintiff’s status with the Texas Secretary of
State was listed as “Tax Forfeiture” and had been since February
Therefore, Plaintiff lacks the capacity to bring this
See Doc. 17-1, Ex. A to Pl.’s 1st Am. Compl., Printout from Cal.
Sec’y of State.
Doc. 20-1, Ex. 1 to Def.’s Reply, Decl. of Wesley D. Lewis p. 1.
Under Federal Rule of Civil Procedure 17(a), “[a]n action must
be prosecuted in the name of the real party in interest.”
Copyright Act requires registration of the copyright claim prior to
the institution of a civil action for infringement.
17 U.S.C. §
411(a); see also Baisden v. I’m Ready Prods., Inc., 693 F.3d 491,
499 (5th Cir. 2012)(stating that a copyright infringement claim
requires proof of a valid copyright and proof that the defendant
copied original elements of the plaintiff’s work).
In this case, Plaintiff claimed to own copyrights to the
recordings it alleges were infringed but failed to allege that it
registered its copyright claims in its own name.32
In fact, in its
amended complaint, Plaintiff identified Walt Disney Music Company
Plaintiff’s own pleading, then, concedes that Walt Disney Music
Company is the real party in interest to prosecute this action for
Aside from that concession, Plaintiff has
not shown that it filed copyright claims on the recordings and,
thus, has not satisfied a prerequisite to bringing this copyright
In its response to Defendant’s motion to dismiss the amended
complaint, Plaintiff represents that it is in the process of reinstating its
corporate status. See Doc. 19, Pl.’s Resp. to Def.’s Mot. to Dismiss Pl.’s 1 st
Am. Compl. p. 6. Plaintiff attached to its response franchise tax reports for
the years 2011-2017. Doc. 19-1, Ex. G to Pl.’s Resp. to Def.’s Mot. to Dismiss
Pl.’s 1st Am. Compl., Texas Franchise Tax Reports. However, Plaintiff has not
informed the court that it has been reinstated.
As of April 18, 2017, the U.S. Copyright Office listed no results for
copyrights registered to Plaintiff.
See Doc. 18-2, Ex. 2 to Def.’s Mot. to
Dismiss Pl.’s 1 st Am. Compl., Am. Aff. of Olga Marshall p. 1.
Given the nature of the above reasons for granting Defendant’s
motion, the court finds it unnecessary to address Defendant’s other
arguments in favor of dismissal.
The court finds that allowing
Plaintiff to amend would be futile.
Plaintiff has given no
indication that it could correct any of the foregoing reasons for
dismissal or the other bases raised in Defendant’s motion.
fact, Plaintiff already had the opportunity to do so and failed.33
The court GRANTS Defendant’s Motion to Dismiss Plaintiff’s First
SIGNED in Houston, Texas, this 30th
day of October, 2017.
U.S. MAGISTRATE JUDGE
With the exception of the res judicata argument not addressed herein,
Defendant raised identical issues in its motion to dismiss the amended complaint
as it had in its motion to dismiss the original complaint.
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