Helping Hands Support Services et al v. Destiny 508 et al
Filing
38
ORDER granting in part and denying in part Defendants' 29 Motion to Dismiss for Failure to State a Claim. Plaintiffs have insufficiently pled four of the copyright claims (counts 1, 2, 4, and 7). Defendants' motion to dismiss these c laims is GRANTED. The claims are dismissed without prejudice and with leave to amend. Any amended complaint must be submitted within 21 days of this order. Defendants' motion to dismiss the remaining copyright infringement claims (counts 3, 5, 6) is DENIED. Plaintiffs' claims for statutory damages and attorney's fees on these copyright infringement claims are DISMISSED with prejudice. The Court dismisses the state law claims without prejudice and without leave to amen d. The Court does not have personal jurisdiction over individual defendants Peter Nieves, Rob Thomas, David LeRoy, Elaine LeRoy, Jim Moniak, and Suzanne Moniak. Plaintiffs' claims against these defendants are DISMISSED without prejudice. Signed by Judge Benjamin H. Settle.(MW)
1
2
3
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT TACOMA
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HELPING HANDS SUPPORT SERVICES,
a Washington General Partnership;
NORTHWEST CORPORATE SERVICES
LLC, a Washington Limited Liability
Company; FUTCH & ASSOCIATES,
PLLC, a Washington Professional Limited
Liability Company; DAN PETERSON, an
individual; CLEVELAND FUTCH, an
individual,
v.
Plaintiffs,
DESTINY 508, a Washington Non-profit
Corporation, dba DESTINY 508
MENTORING; DIVINE ALLIANCE
INTERNATIONAL MINISTRIES, a
Washington Non-profit Corporation;
LEGACY 508 SERVICES LLC, a
Washington limited liability company;
DESTINY 508 NON-PROFIT SERVICES,
a Washington entity dba DESTINY 508
MENTORING; IMPACT 508 NONPROFIT SERVICES, a Washington entity;
TAMARA ENGWALL, an individual;
TODD ENGWALL, an individual; PETER
NIEVES, an individual; JIM MONIAK, an
individual; SUZANNE MONIAK, an
individual; DAVID LEROY, an individual;
ELAINE LEROY, an individual; MARK
MORRIS, an individual; ROB THOMAS,
an individual; RENEE GRABLE, an
individual,
21
Defendants.
22
ORDER - 1
CASE NO. 3:24-cv-5566-BHS
ORDER
1
This matter is before the Court on Defendants’ motion to dismiss. Dkt. 29.
2
Plaintiff Helping Hands Support Services (HHSS) is a Washington general partnership
3
that assists churches seeking to incorporate as tax-exempt non-profit entities under
4
Section 508(c)(1)(a) of the Internal Revenue Code. Dkt. 1 at 6–7. For a fee, it registers
5
the organization with the Washington Secretary of State and provides relevant formation
6
documents, such as a certificate of incorporation and articles of incorporation. Id. at 5,
7
98. It alleges that these materials are copyright protected, and that Defendants infringed
8
on the copyrights by selling similar services to similar customers.
9
I.
10
BACKGROUND
Plaintiffs allege that in 2014 and 2018, defendants Tamara and Todd Engwall used
11
HHSS’s services to form two Washington non-profit corporations under IRC
12
508(c)(1)(a), Divine Alliance International Ministries and Destiny 508. Id. at 6–7.
13
From 2016 to 2021, HHSS contracted with Tamara Engwall, agreeing to pay
14
Engwall a commission for referring customers to HHSS. Dkt. 1, Exhibit A at 42–43. The
15
contract does not place any obligations on Engwall. Section 7.2.1 of the agreement states
16
that HHSS exclusively owns and has licensing rights to all its “intellectual property and
17
proprietary information and know-how.” Id. at 39. Engwall “has no rights or interest in
18
any Content, Information, Materials, and any other intellectual property or proprietary
19
information and know-how . . . in connection with” HHSS’s website or services. Id. The
20
agreement additionally specifies that Engwall and HHSS are “independent contractors”
21
with no “joint venture, partnership, employee, agency or fiduciary relationship.” Id. at 44.
22
ORDER - 2
1
The remaining plaintiffs are Dan Peterson, Cleveland Futch, Northwest Corporate
2
Services, and Futch & Associates, PLLC. The complaint alleges that Futch & Associates
3
is a “general partner” of HHSS. Id. at 2. Peterson and Futch are the creators and owners
4
of HHSS’s copyrighted works. Northwest Corporate Services is the registered agent for
5
HHSS’s customers, though there are no other allegations about it. Id. at 51.
6
Defendants are the Engwalls and their 508(c)(1)(a) entities, Destiny 508 and
7
Divine Alliance, as well as Legacy 508 Services LLC, Destiny 508 Non-Profit Services,
8
and Impact 508 Non-Profit Services. Destiny 508 Non-Profit Services is the registered
9
agent for Destiny 508. The complaint does not describe the roles of the other entities.
10
The complaint also lists several other individual defendants: Mark Morris, Renee
11
Grable, and out of state defendants Peter Nieves, Jim Moniak, Suzanne Moniak, Rob
12
Thomas, David Leroy, and Elaine Leroy. It asserts that each of these defendants were
13
past members of Destiny 508’s board of directors. Id. at 2–3.
14
Plaintiffs claim that starting in July 2021, Defendants used HHSS’s proprietary
15
know-how and copyrighted works to assist customers with the formation of non-profit
16
entities. Id. at 7–8. Plaintiffs allege Defendants infringed on several copyrights for:
17
• 2015 articles of incorporation;
18
• 2018 by-laws;
19
• website pages;
20
• a cover letter;
21
• an explanation letter;
22
ORDER - 3
1
• a paper titled “Why All Churches Should Be A 508(c)(1)(a); and
2
• a brochure titled “Free Your Ministry From IRS Controls.”
3
Id. at 10–26.
4
The complaint asserts the works were created between 2015 and 2018 and
5
includes copyright registration certificates with effective registration dates in 2023 and
6
2024. Dkt. 1, Exhibits C, E, G, I, K, M, and O. Four of the registrations—TX 9-399-794,
7
TX 9-232-707, TX 9-260-500, TX 9-399-792—indicate some material is excluded from
8
the copyright claim. Dkt. 1, Exhibits C, E, I, and O. HHSS is the exclusive licensee of all
9
the copyrighted works. Id. at 8–10.
Plaintiffs additionally assert a breach of contract against Engwall, and tortious
10
11
interference, misappropriation of trade secrets, and unjust enrichment claims against all
12
Defendants, without further identification of which defendant did what. Id. at 26–30.
13
Defendants move to dismiss all claims, arguing all the state law claims are
14
preempted by federal copyright law and that the copyrights are invalid. Dkt. 29 at 11, 19.
15
The out of state defendants also move to dismiss the claims against them for lack of
16
personal jurisdiction. Id. at 8.
II. DISCUSSION
17
18
19
A.
Rule 12(b)(6) standard
Dismissal under Federal Rule of Civil Procedure 12(b)(6) may be based on either
20
the lack of a cognizable legal theory or the absence of sufficient facts alleged under a
21
cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir.
22
1988). A plaintiff’s complaint must allege facts to state a claim for relief that is plausible
ORDER - 4
1
on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A claim has “facial plausibility”
2
when the party seeking relief “pleads factual content that allows the court to draw the
3
reasonable inference that the defendant is liable for the misconduct alleged.” Id. Although
4
courts must accept as true the complaint’s well-pleaded facts, conclusory allegations of
5
law and unwarranted inferences will not defeat an otherwise proper Rule 12(b)(6) motion
6
to dismiss. Vasquez v. Los Angeles County, 487 F.3d 1246, 1249 (9th Cir. 2007);
7
Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). “[A] plaintiff’s
8
obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than
9
labels and conclusions, and a formulaic recitation of the elements of a cause of action will
10
not do. Factual allegations must be enough to raise a right to relief above the speculative
11
level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). This
12
requires a plaintiff to plead “more than an unadorned, the-defendant-unlawfully-harmed-
13
me accusation.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555). The Court’s
14
review is “limited to the complaint, materials incorporated into the complaint by
15
reference, and matters of which the Court may take judicial notice.” Metzler Inv. GMBH
16
v. Corinthian Colleges, Inc., 540 F.3d 1049, 1061 (9th Cir. 2008).
17
When granting a Rule 12(b)(6) motion to dismiss, “a district court should grant
18
leave to amend even if no request to amend the pleading was made, unless it determines
19
that the pleading could not possibly be cured by the allegation of other facts.” Cook,
20
Perkiss & Liehe v. N. Cal. Collection Serv., 911 F.2d 242, 247 (9th Cir. 1990). However,
21
when the facts are not in dispute and the sole issue is whether there is liability as a matter
22
ORDER - 5
1
of substantive law, courts may deny leave to amend. Albrecht v. Lund, 845 F.2d 193,
2
195–96 (9th Cir. 1988).
3
B.
Defendants’ motion to dismiss Plaintiffs’ copyright claims as invalid is
denied.
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Plaintiffs’ complaint, Dkt. 1, and response to the motion to dismiss, Dkt. 36,
concedes they did not register their copyrights for more than five years after they first
published their works. Defendants argue the copyrights are not valid and that the
copyright claims therefore fail as a matter of law. Dkt. 29 at 20. Plaintiffs respond that
the validity of their copyrights is a factual question that cannot be resolved on a motion to
dismiss. Dkt. 36 at 26.
The Copyright Act protects a copyright holder’s rights of reproduction,
preparation of derivative works, distribution, and display. Altera Corp. v. Clear Logic,
Inc., 424 F.3d 1079, 1089 (9th Cir. 2005) (citing 17 U.S.C. § 106). A plausible copyright
infringement claim requires proof of (1) the plaintiff’s ownership of a valid copyright,
and (2) copying of constituent elements of the work that are original. Feist Publ’n, Inc. v.
Rural Telephone Serv. Co., Inc., 499 U.S. 340, 361 (1991). There is a statutory
presumption of validity when the copyright has a “certificate of a registration made
before or within five years after first publication of the work.” 17 U.S.C. § 410(c). “The
evidentiary weight to be accorded the certificate of registration made thereafter shall be
within the discretion of the court.” Id. Statutory damages and attorney’s fees are
unavailable for infringement actions where “infringement of [the] copyright commenced
22
ORDER - 6
1
after first publication of the work and before the effective date of registration,” unless the
2
registration occurs “within three months after the first publication.” 17 U.S.C. § 412(2).
3
First, Plaintiffs assert each of the seven copyrighted works were created between
4
2015 and 2018. Dkt. 1 at 8–10. The registration certificates indicate effective registration
5
dates more than five years after the works’ initial publication, in 2023 and 2024. See, e.g.,
6
Dkt. 1, Exhibit N–O (work was first published in 2018 and its copyright was effectively
7
registered in 2024). The copyrights are therefore not presumptively valid because all were
8
registered more than five years after they were first published. This is fatal to any claim
9
for statutory damages or attorney’s fees. 17 U.S.C. § 412(2). But it is not fatal to
10
Plaintiffs’ copyright infringement claim.
11
The registration certificates list only Dan Peterson and Cleveland Futch as the
12
owners of the copyrights. While the complaint explains HHSS is the sole licensee of the
13
copyrights, the pleadings do not address the other plaintiffs’ relationship to the
14
copyrights.
15
A Rule 12(b)(6) motion to dismiss tests the plausibility of Plaintiffs’ allegations,
16
not the sufficiency of their evidence. See Mangiaracina v. Penzone, 849 F.3d 1191, 1198
17
(9th Cir. 2017); Laatz v. Zazzle, Inc., 682 F.Supp.3d 791, 806 (N.D. Cal. 2023).
18
Plaintiffs’ copyrights were not timely registered but that does not necessarily mean
19
the copyrights are invalid. Defendants’ motion to dismiss all seven copyright claims on
20
this basis is DENIED.
21
22
ORDER - 7
1
2
3
C.
Four of Plaintiffs’ copyright claims (counts 1, 2, 4, and 7) are implausible.
Defendants argue Plaintiffs fail to demonstrate “what text is protected” in view of
the limitations listed on the registration certificates. Dkt. 37 at 11.
4
The Court agrees that Plaintiffs have not sufficiently alleged which portions of the
5
four works with limitations (registration nos. ’794, ’707, ’500, and ’792) are copyrighted.
6
Leave to amend a complaint under FRCP 15(a) “shall be freely given when justice
7
so requires.” Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 892 (9th Cir. 2010).
8
This policy is “to be applied with extreme liberality.” Eminence Cap., LLC v. Aspeon,
9
Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (internal quotation omitted). In determining
10
whether to grant leave under Rule 15, courts consider five factors: “bad faith, undue
11
delay, prejudice to the opposing party, futility of amendment, and whether the plaintiff
12
has previously amended the complaint.” United States v. Corinthian Colls., 655 F.3d 984,
13
995 (9th Cir. 2011). Among these factors, prejudice to the opposing party carries the
14
greatest weight. Eminence Cap., 316 F.3d at 1052.
15
Allowing Plaintiffs to amend their complaint would not prejudice Defendants, and
16
there is no claim or evidence or of bad faith or undue delay. It would not necessarily be
17
futile for Plaintiffs to amend their copyright claims to address these deficiencies.
18
Defendants’ motion to dismiss counts 1, 2, 4, and 7 as pled is GRANTED but Plaintiffs
19
may amend their complaint to address and remedy these pleading defects. They should
20
do so within 21 days.
21
22
The amended complaint should also clarify which Plaintiffs own each of the seven
copyrights and which Defendants purportedly infringed on them.
ORDER - 8
1
2
Defendants’ motion to dismiss the remaining copyright infringement claims
(counts 3, 5, 6) is DENIED.
Plaintiffs’ claims for statutory damages and attorney’s fees are DISMISSED with
3
4
prejudice.
5
D.
6
7
Plaintiffs’ state law claims (counts 8–11) are not plausible.
Defendants argue that HHSS’s state law claims are not cognizable because they
are preempted by the Copyright Act. Dkt. 29 at 10.
8
The Ninth Circuit has “adopted a two-part test to determine whether a state law
9
claim is preempted by the [Copyright] Act.” Laws v. Sony Music Entm’t, Inc., 448 F.3d
10
1134, 1137 (9th Cir. 2006). First, the “‘subject matter’ of the state law claim must fall
11
within the subject matter of copyright as described in 17 U.S.C. §§ 102 and 103.”
12
Id. Then, if the subject matter falls within the statute, “the rights asserted under state law”
13
must be “equivalent to the rights contained in 17 U.S.C. § 106, which articulates the
14
exclusive rights of copyright holders.” Id. at 1137-38. To avoid preemption, the state law
15
claim must have an “extra element” which changes the nature of the cause of action. Id.
16
at 1143 (citing Del Madera Props. v. Rhodes & Gardner, 820 F.2d 973 (9th Cir. 1987),
17
overruled on other grounds, Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994)).
18
1.
Plaintiffs’ fail to plausibly allege breach of contract.
19
Plaintiffs allege Engwall breached Section 7.2.1 of the agreement by “knowingly
20
and intentionally using and reproducing HHSS’ proprietary and copyrighted materials
21
without authorization for the formation of non-profit entities in the State of Washington
22
in direct competition with HHSS, and sharing those materials with other Defendants.”
ORDER - 9
1
Dkt. 1 at 27. Defendants argue the contract “contains no promise to pay or any other extra
2
element beyond the ideas and concepts expressed in the Alleged Works.” Dkt. 29 at 13.
3
The Copyright Act does not preempt contract claims so long as they are
4
“qualitatively different from those protected under the Copyright Act.” Id. See Northwest
5
Home Designing Inc. v. Sound Built Homes Inc., 776 F.Supp.2d 1210, 1216 (W.D. Wash.
6
2011) (a breach of contract claim must have an “an alleged exchange of
7
promises/representations between the parties . . . more than the mere act of copying or
8
distribution regulated by the federal Copyright Act.”). See also Attachmate Corp. v.
9
Sentry Insurance a Mutual Co., No. C08-1035RAJ, 2009 WL 1547264 (W.D. Wash.
10
2009) (breach of contract claim was preempted because the agreement only prohibited
11
installation of more than one copy of software and had no extra element distinguishing it
12
from a copyright claim).
13
Section 7.2.1 of HHSS’s agreement with Engwall states merely that HHSS owns
14
and has licensing rights to its “intellectual property and proprietary information and
15
know-how.” Dkt. 1 at 39. Plaintiffs’ breach of contract claim hinges solely on Engwall’s
16
alleged copying and distribution of HHSS’s “proprietary and copyrighted materials.” Id.
17
at 27. The claim does not have any extra elements beyond the scope of the Copyright Act.
18
Id. at 27.
19
20
The Court concludes the breach of contract claim is not cognizable because it is
preempted by the Copyright Act.
21
22
ORDER - 10
1
2.
Plaintiffs fail to plausibly allege tortious interference.
2
Plaintiffs allege Defendants “intentionally interfered with [HHSS’s] business
3
expectancy” by poaching potential customers, rather than referring them to HHSS as
4
required by the agreement. Dkt. 1 at 28. Defendants argue Plaintiffs have not sufficiently
5
pled two elements—a business expectancy that Engwall refer potential customers to
6
HHSS and that Engwall interfered for an improper purpose. Id. at 16–17.
7
In Washington, tortious interference requires (1) the existence of a valid
8
contractual relationship or business expectancy; (2) that the defendant had knowledge of
9
that relationship; (3) an intentional interference inducing or causing a breach or
10
termination of the relationship or expectancy; (4) that the defendant interfered for an
11
improper purpose or used improper means; and (5) resultant damage. Leingang v. Pierce
12
County Medical Bureau, Inc., 131 Wn.2d 133, 157 (1997). At issue here are the first and
13
fourth elements.
14
The nature of Plaintiffs’ claim is unclear, partly because they refer to all Plaintiffs
15
and Defendants collectively. They appear to base their tortious interference claim on their
16
contract-based business expectancy that Engwall would refer customers to them, and,
17
implicitly, not compete with them. Dkt. 1 at 28. But the contract imposes no duty on
18
Engwall to refer customers to HHSS, or to do anything else. It does not include any
19
provision prohibiting Engwall from competing for customers and selling her own
20
products to them. The contract instead imposes only a duty on HHSS to pay Engwall for
21
any customers she brought to HHSS. Id., Exhibit A at 42–43 (“In consideration of your
22
ORDER - 11
1
referral we will pay to you . . . a fee based on the Net Sales Price. . . In order to qualify
2
for the fee stated above, the Customer must have referred you to HHSS.”).
3
Furthermore, Plaintiffs fail to specify which Defendants, and what specific
4
conduct, allegedly caused the tortious interference. The complaint instead alleges vaguely
5
that “Defendants,” as a whole, “intentionally interfered” with HHSS’s business
6
expectancy, with someone. Dkt. 1 at 28. To the extent Plaintiffs allege Engwall tortiously
7
interfered with the contract, that argument fails as well. Houser v. City of Redmond, 16
8
Wn. App. 743, 746 (1977) (a party to a contract cannot tortiously interfere with that
9
contract).
10
Plaintiffs have not pled a cognizable tortious interference claim. HHSS had no
11
business expectancy that Engwall would continue to refer customers to it; she plainly did
12
not have any such duty under the agreement attached to Plaintiffs’ complaint. Dkt. 1,
13
Exhibit A.
14
3.
15
Plaintiffs assert Defendants misappropriated “valuable and proprietary know-how
16
relating to particular methods for establishing and maintaining non-profit organizations
17
under IRS code section 508(c)(1)(a)” in violation of RCW 19.108.010. Dkt. 1 at 29.
18
Defendants argue the claim is not cognizable because Plaintiffs do not identify a legally
19
protected trade secret. Dkt. 29 at 15.
20
Plaintiffs fail to plausibly allege misappropriation of trade secrets.
Under the Uniform Trade Secrets Act, RCW Chapter 19.108, a trade secret must
21
not be “generally known to, and not . . . readily ascertainably by proper means” by others
22
who can obtain economic value from its disclosure or use. RCW 19.108.010(4).
ORDER - 12
1
“Although the complaint need not spell out the details of the trade secret, a plaintiff
2
seeking relief for trade secret misappropriation must identify the trade secret with
3
sufficient particularity . . . to permit the defendant to ascertain at least the boundaries
4
within which the secret lies.” Bombardier Inc. v. Mitsubishi Aircraft Corp., 383
5
F.Supp.3d 1169, 1178 (W.D. Wash. 2019) (internal quotations omitted).
6
Plaintiffs have not pled a trade secret with enough particularity to warrant
7
protection under Chapter RCW 19.108. The complaint vaguely refers to “methods for
8
establishing and maintaining non-profit organizations” under 26 U.S.C. § 508(c)(1)(a).
9
Dkt. 1 at 29. But the tax code, including section 508(c)(1)(a), is generally and publicly
10
known, and to the extent Plaintiffs allege the copyrighted works contained the trade
11
secret, Plaintiffs distributed the documents to HHSS’s customers. Thus, the trade secret
12
would have been readily ascertainably by HHSS customers by proper means.
13
14
The Court concludes Plaintiffs fail to sufficiently allege that Defendants
misappropriated trade secrets.
15
4.
16
Plaintiffs claim Defendants were unjustly enriched through their “wrongful acts
17
described above,” referring to the breach of contract, misappropriation of trade secrets,
18
and tortious interference claims. Dkt. 1 at 29–30. Defendants argue the unjust enrichment
19
claim is preempted by the Copyright Act because it “boils down to a claim for
20
misappropriation of copyrighted matter.” Dkt. 1 at 29.
21
22
ORDER - 13
Plaintiffs fail to plausibly allege unjust enrichment.
1
Because the Court concludes none of the other state law claims—breach of
2
contract, misappropriation of trade secrets, and tortious interference—are cognizable, the
3
Court concludes for similar reasons that the unjust enrichment claim is not cognizable.
4
5
Plaintiffs do not plausibly allege unjust enrichment.
E.
Rule 12(b)(2) standard
6
When a defendant moves to dismiss a complaint for lack of personal jurisdiction,
7
the plaintiff bears the initial burden of demonstrating that jurisdiction is appropriate, after
8
which the burden shifts to the defendant to demonstrate that jurisdiction is unreasonable.
9
Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). A plaintiff
10
cannot simply rest on the bare allegations of its complaint, but rather is obligated to come
11
forward with facts, by affidavit or otherwise, supporting personal jurisdiction. Amba
12
Marketing Sys., Inc. v. Jobar Int’l, Inc., 551 F.2d 784, 787 (9th Cir. 1977). Where the
13
motion is based on written materials rather than an evidentiary hearing, the plaintiff need
14
only make a prima facie showing of jurisdictional facts. Schwarzenegger, 374 F.3d at
15
800. A prima facie showing means that the plaintiff has produced admissible evidence,
16
which, if believed, is sufficient to establish the existence of personal jurisdiction. Ballard
17
v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995). “Conflicts between parties over statements
18
contained in affidavits must be resolved in the plaintiff's favor.” Schwarzenegger, 374
19
F.3d at 800. However, a district court also may order discovery where “pertinent facts
20
bearing on the question of jurisdiction are controverted or where a more satisfactory
21
showing of the facts is necessary.” Laub v. U.S. Dep't of Interior, 342 F.3d 1080, 1093
22
ORDER - 14
1
(9th Cir. 2003) (quoting Butcher's Union Local No. 498 v. SDC Inv., Inc., 788 F.2d 535,
2
540 (9th Cir. 1986)).
3
F.
Plaintiffs have failed to establish personal jurisdiction over the out of state
defendants.
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
The out of state defendants seek to dismiss the claims against them for lack of
personal jurisdiction because, they argue, they do not have sufficient minimum contacts
with the state of Washington. Dkt. 29 at 8.
Plaintiffs respond that as members of Destiny 508’s board, the individual out of
state defendants “had the opportunity to direct, control, and ratify the infringing activity”
and “were therefore the moving, active, conscious force behind the infringing activity for
purposes of personal jurisdiction.” Dkt. 36 at 13. They further state that the defendants
have “a high level of knowledge and participation in the formation of non-profit 508
entities and the business of” Destiny 508 because they formed—or served on the boards
of—other non-profit 508(c)(1) entities based in Washington. Id. at 14.
A court’s personal jurisdiction analysis begins with the “long-arm” statute of the
state in which the court sits. Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain
Co., 284 F.3d 1114, 1123 (9th Cir. 2002). Washington’s long-arm statute extends the
court’s personal jurisdiction to the broadest reach that the United States Constitution
permits, so the jurisdictional analysis under state law and federal due process are the
same. Byron Nelson Co. v. Orchard Mgmt. Corp., 95 Wn. App. 462, 465 (1999);
Schwarzenegger, 374 F.3d at 800–01.
22
ORDER - 15
1
Personal jurisdiction exists in two forms: general and specific. Dole Food Co. v.
2
Watts, 303 F.3d 1104, 1111 (9th Cir. 2002). For specific jurisdiction, which is at issue
3
here, the Ninth Circuit applies a three-prong test. Schwarzenegger, 374 F.3d at 802. First,
4
“[t]he non-resident defendant must purposefully direct his activities or consummate some
5
transaction with the forum or resident thereof; or perform some act by which he
6
purposefully avails himself of the privilege of conducting activities in the forum, thereby
7
invoking the benefits and protections of its laws.” Id. Second, “the claim must be one
8
which arises out of or relates to the defendant’s forum-related activities.” Id. Finally, “the
9
exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be
10
reasonable.” Id.
11
For the first prong, the “purposeful direction” analysis typically applies in tort
12
cases and “usually consists of evidence of the defendant’s actions outside the forum state
13
that are directed at the forum, such as the distribution in the forum state of goods
14
originating elsewhere.” Id. at 803. To determine if the defendant purposefully directed
15
activities at the forum, the Ninth Circuit applies the “effects test” from Calder v. Jones,
16
465 U.S. 783 (1984). Under this test, “the defendant allegedly must have (1) committed
17
an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the
18
defendant knows is likely to be suffered in the forum state.” Mavrix Photo, Inc. v. Brand
19
Techs., Inc., 647 F.3d 1218, 1228 (9th Cir. 2011) (quoting Brayton Purcell LLP v.
20
Recordon & Recordon, 606 F.3d 1124, 1128 (9th Cir. 2010)).
21
The Ninth Circuit has held that simply maintaining a passive website is not
22
enough to satisfy the express aiming prong. Id. at 1229. But “a passive website in
ORDER - 16
1
conjunction with ‘something more’—conduct directly targeting the forum—is sufficient.”
2
Id. (quoting Rio Props., Inc. v. Rio Int'l Interlink, 284 F.3d 1007, 1020 (9th Cir. 2002)).
3
Knowingly taking advantage of the forum state’s consumer market, id. at 1230, or
4
competing directly with the plaintiff in the forum state may qualify as “something more.”
5
See CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1077 (9th Cir. 2011).
6
However, it is not enough that the defendant merely infringed on the plaintiff’s
7
intellectual property rights while knowing of the plaintiff’s location in the forum state.
8
Axiom Foods, Inc. v. Acerchem Int'l, Inc., 874 F.3d 1064, 1070 (9th Cir. 2017).
9
Under the fiduciary shield doctrine, a corporation’s actions are not imputed to its
10
employees for jurisdictional purposes. Davis v. Metro Productions, Inc., 888 F.2d 515,
11
520 (9th Cir. 1989). “[A] person’s mere association with a corporation that causes injury
12
in the forum state is not sufficient in itself to permit that forum to assert jurisdiction over
13
the person . . . Rather, there must be a reason for the court to disregard the corporate
14
form.” Id. Thus, the Court must evaluate each individual defendant’s contacts with the
15
forum state individually.
16
All the out of state defendants, except Nieves, acknowledge that they joined board
17
meetings for Destiny 508. Dkts. 30–35. Plaintiffs argue Destiny 508’s infringing conduct
18
can therefore be imputed to the out of state defendants. Dkt. 36 at 12 (citing Matsunoki
19
Group, Inc. v. Timberwork Oregon, Inc., No. C 08–04078 CW, 2009 WL 1033818 (N.D.
20
Cal. 2009)). But participation in board meetings is a passive, indirect connection to
21
Washington, at best. Mavrix Photo Inc., 647 F.3d at 1229. There is little evidence that the
22
individual defendants directed any other actions at the state of Washington in connection
ORDER - 17
1
with Destiny 508. Although Plaintiffs assert many of the defendants formed or served on
2
the boards of other, non-party Washington based non-profit entities similar to Destiny
3
508, their “mere association” is insufficient to warrant specific personal jurisdiction.
4
Plaintiffs do not provide any compelling reasons for the Court to disregard these
5
corporate forms to reach the individual defendants; the fiduciary shield doctrine applies.
6
The Court agrees that it does not have personal jurisdiction over the out of state
7
defendants.
8
Defendants’ motion to dismiss for lack of personal jurisdiction over the out of
9
state defendants is GRANTED. Plaintiffs’ claims against these defendants are
10
DISMISSED without prejudice.
III. ORDER
11
12
Plaintiffs have insufficiently pled four of the copyright claims (counts 1, 2, 4, and
13
7). Defendants’ motion to dismiss these claims is GRANTED. The claims are dismissed
14
without prejudice and with leave to amend. Any amended complaint must be
15
submitted within 21 days of this order. It should indicate which portions of the works are
16
protected, which Plaintiffs own each of the seven copyrights, and which Defendants
17
purportedly infringed on them, consistent with this order.
18
19
20
21
Defendants’ motion to dismiss the remaining copyright infringement claims
(counts 3, 5, 6) is DENIED.
Plaintiffs’ claims for statutory damages and attorney’s fees on these copyright
infringement claims are DISMISSED with prejudice.
22
ORDER - 18
1
Plaintiffs fail to plausibly allege the state law claims. The Court is persuaded that
2
Plaintiffs cannot amend the complaint to articulate cognizable breach of contract, tortious
3
interference, trade secret misappropriation, and unjust enrichment claims. That, and the
4
pervasive failure to meet basic threshold requirements for the state statutes Plaintiffs sue
5
under, supports that amendment would be futile. Cook, 911 F.2d at 247. Defendants’
6
motion to dismiss all state law claims is GRANTED. The Court dismisses the state law
7
claims without prejudice and without leave to amend.
8
The Court does not have personal jurisdiction over individual defendants Peter
9
Nieves, Rob Thomas, David LeRoy, Elaine LeRoy, Jim Moniak, and Suzanne Moniak.
10
Defendants’ motion to dismiss the claims against the out of state defendants is
11
GRANTED, and Plaintiffs’ claims against these defendants are DISMISSED without
12
prejudice.
13
IT IS SO ORDERED.
14
Dated this 28th day of January, 2025.
15
A
16
BENJAMIN H. SETTLE
United States District Judge
17
18
19
20
21
22
ORDER - 19
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?