Reilly v. Wozniak et al, No. 2:2018cv03775 - Document 99 (D. Ariz. 2020)
Court Description: ORDER granting in part and denying in part Doc. 46 Defendants' Motion to Dismiss Counts II, IV and V of Plaintiff's Complaint. The Motion is granted with respect to Counts II (Money Had and Received) and V (Accounting); these claims are dismissed. The Motion is denied with respect to Count IV (Declaratory Relief). IT IS FURTHER ORDERED that Defendant Steve Wozniak's Motion for Judgment on the Pleadings as To Count I of Plaintiff's Complaint (Doc. 58 ) is denied. See attached order for additional information. Signed by Judge Michael T. Liburdi on 3/3/2020. (RMW)
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Ralph T Reilly, Plaintiff, 10 11 v. 12 Steve Wozniak, et al., 13 No. CV-18-03775-PHX-MTL ORDER Defendants. 14 15 Plaintiff Ralph T. Reilly (“Plaintiff” or “Reilly”) filed suit against Steve Wozniak 16 (“Wozniak”) and three entities (Doc. 1 at 3). The case arises from Plaintiff’s allegations 17 that after he worked for years on—and obtained copyright protection for—his idea of the 18 “Woz Institute of Technology,” Wozniak and his co-Defendants formed “Woz U” without 19 compensating Plaintiff. (Id. at 6.) Plaintiff alleges claims of breach of an implied-in-fact- 20 contract, money had and received, copyright infringement, declaratory relief, and 21 accounting. 22 Before the Court are two motions: Defendants’ Motion to Dismiss Counts II, IV and 23 V of Plaintiff’s Complaint (“Defendants’ Motion”) (Doc. 46); and Defendant Steve 24 Wozniak’s Motion for Judgment on the Pleadings as to Count I of Plaintiff’s Complaint 25 (“Wozniak’s Motion”) (Doc. 58). Defendants’ Motion is granted in part and denied in part; 26 Wozniak’s Motion is denied.1 27 28 1 The Court believes that oral argument would not significantly aid the decisional process. See Fed. R. Civ. P. 78(b) (court may decide motions without oral hearing); LRCiv 7.2(f) (same). 1 I. BACKGROUND 2 Plaintiff is an Assistant Professor of Management Information Systems at the 3 Barney School of Business, University of Hartford. (Doc. 1 ¶ 3.) He alleges that on 4 September 12, 2010, he emailed Wozniak, the co-founder of Apple Computers Inc., stating 5 “I want to start a high tech university.” (Id. ¶ 4; at 16.) Wozniak replied, “Great idea.” (Id.) 6 Wozniak also provided advice and noted “I’m too busy to do anything more.” (Id.) Plaintiff 7 claims that over the next two years, he and Wozniak took steps to develop the idea. For 8 example, Plaintiff claims that he introduced Wozniak and Charter Oak State College, who 9 ultimately executed a Personal Service Agreement for purposes of developing the “Woz 10 School of Technology.” (Id. ¶ 5.) Plaintiff also states that he met with Wozniak on March 11 25, 2011 to discuss the idea, at which time they “agreed to proceed with a ‘deal’ handshake 12 depicted in a photograph[.]” (Id. ¶ 6.) Plaintiff also claims that Wozniak permitted him to 13 proceed with potential investors in a November 21, 2011 email, stating “I figure it’s your 14 idea.” (Id. ¶ 6, at 34.) Plaintiff created a website and logo for the project2 (Id. ¶ 8; 46–58) 15 and obtained copyright protection for the “graphic images, photographs, and tangible 16 expressions” attached as Exhibit I to the Complaint. (Id. at 4, 59–76.) 17 Plaintiff alleges that on November 11, 2017, he learned that Wozniak entered into a 18 business arrangement with Defendant Southern Careers Institute, Inc. (“SCI”) to form 19 “Woz U.” (Id. ¶ 10.) Plaintiff states that Wozniak and SCI formed Woz U Education, LLC 20 (“Woz Arizona”) and Woz U Education Holdings, LLC (“Woz Delaware”) to formalize 21 Woz U business arrangements. Plaintiff emailed Wozniak to congratulate him on 22 November 21, 2017. Wozniak responded on December 24, 2017, stating, “You are right 23 on the mark. You had the right idea.… I doubt it would have happened without your initial 24 idea.” (Id. ¶ 14, at 91.) 25 Plaintiff filed the Complaint against Wozniak, SCI, Woz Arizona, and Woz 26 Delaware (collectively, “Defendants”) on November 3, 2018. It alleges that Defendants 27 28 2 The Complaint states that this included an A+ Certification, Ethical Hacker Certification, Web Design and Development Certification, Network Security Certification, Network Administration Certification, and Could Essentials Certification. (Id. at 4.) -2- 1 “used, applied, and exploited” Plaintiff’s work, and infringed on his copyrighted work, in 2 marketing and publicizing Woz U. (Id. ¶¶ 12, 13.) The Complaint alleges claims of breach 3 of an implied-in-fact contract against Wozniak; and claims of money had and received, 4 copyright infringement, declaratory relief, and accounting against all Defendants. (Id. at 5 7–11.) Plaintiff seeks damages of at least $1,000,000, disgorgement of Defendants’ profits, 6 an accounting, declaratory judgment, and attorneys’ fees. (Id. at 13.) 7 Defendants, for their part, characterize the underlying events as follows: “Plaintiff 8 tried, albeit unsuccessfully, t[o] market an online school using Defendant Steve Wozniak’s 9 name and likeness. Long after the Plaintiff failed in his attempts to do so, another group 10 that was already operating an online school approached Wozniak with what would 11 ultimately become WOZ U.” (Doc. 54 at 2.) Defendants filed an Answer on January 16, 12 2019. 3 (Doc. 19.) Then, on May 13, 2019, Defendants filed the pending Motion to Dismiss 13 Counts II, IV and V of the Complaint. (Doc. 46.) After briefing on Defendants’ Motion 14 was complete, Defendant Wozniak filed a Motion for Judgment on the Pleadings as to 15 Count I. (Doc. 58.) Both motions are fully briefed; the Court will address them in turn. 16 II. LEGAL STANDARDS 17 A. Rule 12(b)(6) 18 To survive a motion to dismiss, a complaint must contain “a short and plain 19 statement of the claim showing that the pleader is entitled to relief” such that the defendant 20 is given “fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. 21 Corp. v. Twombly, 550 U.S. 545, 555 (2007) (quoting Fed. R. Civ. P. 8(a)(2); Conley v. 22 Gibson, 355 U.S. 41, 47 (1957)). Dismissal under Rule 12(b)(6) “can be based on the lack 23 of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable 24 legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). The 25 Court must accept Plaintiff’s material allegations as true and construe them in the light 26 3 27 28 At no point in this case were Defendants instructed that they were required to file an Answer. (Doc. 16) (ordering that “Defendants WozU Education, LLC, and Woz U Education Holdings, LLC shall have until January 18, 2019 to file their Answer or responsive pleading to Plaintiff’s Complaint (Doc. 1) (emphasis added)).” -3- 1 most favorable to Plaintiff. North Star Int’l v. Arizona Corp. Comm’n, 720 F.2d 578, 580 2 (9th Cir. 1983). A complaint should not be dismissed “unless it appears beyond doubt that 3 the plaintiff can prove no set of facts in support of the claim that would entitle it to relief.” 4 Williamson v. Gen. Dynamics Corp., 208 F.3d 1144, 1149 (9th Cir. 2000). Review of a 5 Rule 12(b)(6) motion is “limited to the content of the complaint.” North Star Int’l, 720 F.2d 6 at 581. Rule 12(b) states that a motion asserting defenses stated in Rule 12(b)(1)-(7) “must 7 be made before pleading if a responsive pleading is allowed.” Fed. R. Civ. P. 12(b). 8 B. Rule 12(c) 9 Rule 12(c) of Federal Rules of Civil Procedure 12(c) states, “[a]fter the pleadings are 10 closed—but early enough not to delay trial—a party may move for judgment on the 11 pleadings.” The legal standard for Rule 12(c) is “substantially identical” to the standard for 12 a motion to dismiss under Rule 12(b)(6) because under both rules, “a court must determine 13 whether the facts alleged in the complaint, taken as true, entitle the plaintiff to a legal 14 remedy.”4 Chavez v. United States, 683 F.3d 1102, 1108 (9th Cir. 2012) (quotation 15 omitted). As with a motion to dismiss, a court must assume that the non-moving party’s 16 allegations are true and must draw all reasonable inferences in its favor. See Hal Roach 17 Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1989). Although Rule 18 12(c) does not expressly provide for partial judgment on the pleadings, “neither does it bar 19 them; it is common to apply Rule 12(c) to individual causes of action.” Larsen v. Trader 20 Joe’s Co., 917 F. Supp. 2d 1019, 1022 (N.D. Cal. 2013). “Courts have discretion to grant 21 leave to amend in conjunction with 12(c) motions, and may dismiss causes of action rather 22 than grant judgment.” Moran v. Peralta Cmty. Coll. Dist., 825 F. Supp. 891, 893 (N.D. 23 24 25 26 27 28 4 Motions to dismiss and motions for judgment on the pleadings differ in only two respects: “(1) the timing (a motion for judgment on the pleadings is usually brought after an answer has been filed, whereas a motion to dismiss is typically brought before an answer is filed), and (2) the party bringing the motion (a motion to dismiss may be brought only by the party against whom the claim for relief is made, usually the defendant, whereas a motion for judgment on the pleadings may be brought by any party).” Sprint Telephony PCS, L.P. v. Cty. of San Diego, 311 F. Supp. 2d 898, 902–03 (S.D. Cal. 2004), opinion clarified sub nom. Sprint Tel. PCS, L.P. v. Cty. of San Diego, No. 03-CV-1398-K(LAB), 2004 WL 859333 (S.D. Cal. Jan. 23, 2004) (internal citation omitted). -4- 1 Cal. 1993). 2 III. ANALYSIS 3 A. 4 Defendants’ Motion (Doc. 46) argues that the Copyright Act preempts Plaintiff’s 5 claims for money had and received (Count II), declaratory relief (Count IV), and 6 accounting (Count V). The Court will first analyze whether it may consider the motion as 7 one for judgment on the pleadings; it will then address the substantive arguments. 8 Motion to Dismiss (Counts II, IV, and V) 1. Conversion of Motion 9 Defendants’ Motion is styled as a motion to dismiss for failure to state a claim under 10 Rule 12(b)(6). (Doc. 46 at 1.) However, it was filed nearly four months after Defendants’ 11 Answer. Rule 12(b) provides that “[e]very defense to a claim for relief in any pleading 12 must be asserted in the responsive pleading if one is required.” Fed. R. Civ. P. 12(b). 13 Plaintiff argues that the Court should strike the motion in light of this procedural defect. 14 (Doc. 51 at 8.) Defendants state for the first time in their reply that the motion should be 15 treated as one for judgment on the pleadings under Rule 12(c) or 12(h)(2), as there is “no 16 shortage of case law in the Ninth Circuit” permitting the conversion. (Doc. 54.) The Court 17 agrees with Defendants and, in light of the procedural flaws, will construe Defendants’ 18 Motion as a motion for judgment on the pleadings under Rule 12(c). 19 Rule 12(h)(2) authorizes the use of a Rule 12(c) motion to raise the defense of failure 20 to state a claim. Fed. R. Civ. P. 12(h)(2). The Ninth Circuit has specifically held that a 21 “motion to dismiss” filed after the close of pleadings may be converted to a motion for 22 judgment on the pleadings: “[b]ecause it is only after the pleadings are closed that the 23 motion for judgment on the pleadings is authorized (Rule 12(c)), Rule 12(h)(2) should be 24 read as allowing a motion for judgment on the pleadings, raising the defense of failure to 25 state a claim, even after an answer has been filed.” Aldabe v. Aldabe, 616 F.2d 1089, 1093 26 (9th Cir. 1980). Rules 12(c) and 12(h)(2) therefore constitute a “qualification” of Rule 27 12(b)(6). Id.; see also 5C Charles Alan Wright & Arthur R. Miller, Federal Practice and 28 Procedure § 1367 (3d ed.) (“In this context, Rule 12(c) is merely serving as an auxiliary or -5- 1 supplementary procedural device to determine the sufficiency of the case before 2 proceeding any further and investing additional resources in it.”). 3 An important consideration in converting the motion is whether the pleadings raised 4 the affirmative defense at issue. As the Aldabe court noted, “[t]he case for adopting such a 5 position is further strengthened where, as here, each of the answers included the defense of 6 failure to state a claim. The motions to dismiss were not based on new arguments for which 7 appellant could claim to have been unprepared.” Id. at 1093. See also Wright & Miller 8 § 1367 (“It should be stated again, however, that Rule 12(c) cannot be used to assert Rule 9 12(b) defenses that have not been raised previously in the pleadings or by preliminary 10 motion or are not expressly preserved by Rule 12(h).”). Here, Defendants’ Answer raised 11 the defense of failure to state a claim: “A[nd] a[s] for a separate defense, and in the 12 alternative, Defendants allege Plaintiff’s Complaint fails to state a claim upon which relief 13 may be granted against Defendants.” (Doc. 19 at 4.)5 In light of these considerations, the 14 Court will treat Defendants’ Motion as a motion for judgment on the pleadings. See Aldabe 15 at 1093; see also Elvig v. Calvin Presbyterian Church, 375 F.3d 951, 954–55 (9th Cir. 16 2004) (“Here, the Defendants filed their motion to dismiss after filing their answer. Thus, 17 the motion should have been treated as a motion for judgment on the pleadings, pursuant 18 to Rule 12(c) or 12(h)(2).”). 19 2. Merits of Defendants’ Motion 20 Defendants’ Motion argues that the Copyright Act, 17 U.S.C. §§ 101–810, 21 preempts three of Plaintiff’s claims brought under California law.6 The Copyright Act gives 22 “the owner of copyright ... the exclusive rights to do and to authorize” others to display, 23 perform, reproduce or distribute copies of the work, and to prepare derivative works. 24 17 U.S.C. § 106. Sections 301(a) and (b) describe when the Copyright Act preempts legal 25 26 27 28 Plaintiff argues that the motion cannot be converted because it “makes no reference to its own Answer.” (Doc. 51 at 8.) A motion for judgment on the pleadings must be submitted after the answer. Fed. R. Civ. P. 12(c). However, there does not appear to be authority specifically stating that the motion must reference the answer. 6 Plaintiff’s third claim is for copyright infringement pursuant to 17 U.S.C. § 501. (Doc. 1 at 10–11.) 5 -6- 1 and equitable rights granted by state law. Section (a) states: 2 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. 3 4 5 6 7 8 9 10 Id. § 301(a). Section (b) states: 11 Nothing in this title annuls or limits any rights or remedies under the common law or statutes of any State with respect to ... subject matter that does not come within the subject matter of copyright as specified by sections 102 and 103, including works of authorship not fixed in any tangible medium of expression.... 12 13 14 15 16 Id. § 301(b). 17 As the parties recognize, the Ninth Circuit employs a two-part test to determine 18 whether a state law is preempted by the Copyright Act. “First, we decide ‘whether the 19 ‘subject matter’ of the state law claim falls within the subject matter of copyright as 20 described in 17 U.S.C. §§ 102 and 103.’ Second, assuming it does, we determine ‘whether 21 the rights asserted under state law are equivalent to the rights contained in 17 U.S.C. § 106, 22 which articulates the exclusive rights of copyright holders.” Maloney v. T3Media, Inc., 853 23 F.3d 1004, 1010 (9th Cir. 2017) (citing Laws v. Sony Music Entm’t, Inc., 448 F.3d 1134, 24 1137-38 (9th Cir. 2006)) (Doc. 46 at 3; Doc. 51 at 22). 25 Defendants argue that the Copyright Act preempts Plaintiff’s claims for money had 26 and received (Count II), declaratory relief (Count IV), and accounting (Count V). The 27 Court will address these claims in turn.7 28 7 Plaintiff argues that “Defendants’ ‘converted’ MJP would be a ‘partial’ MJP not -7- 1 a. Money Had and Received (Count II) 2 Defendants first argue that Plaintiff’s claim for money had and received (Count II) 3 is preempted by the Copyright Act. The Complaint asserts that Defendants are indebted to 4 Plaintiff “for money had and received by Defendants and each of them from their use, 5 application and exploitation of Reilly’s Work in the operation, marketing and promotion 6 of Woz U[.]” (Doc. 1 ¶ 29.) “Reilly’s Work” is defined as “ideas, designs, business plans, 7 curricula, images, sale strategies and educational training concepts original to and created 8 by Reilly.” (Id. ¶ 1(A).) The claim is brought under California law. (Id. ¶ 15.) In response, 9 Plaintiff argues that the claim should not be dismissed because it is an “alternative legal 10 ground for relief based on the same nucleus of operative facts alleged in all Causes of 11 Action[.]” (Doc. 51 at 27.) 12 The first inquiry is whether the subject matter of the state law claim falls within the 13 subject matter of copyright as described in Sections 102 and 103 of the Copyright Act. 14 Maloney, 853 F.3d at 1010. The Court concludes that it does. Plaintiff brings a claim for 15 money had and received based on the benefit obtained from his “ideas, designs, business 16 plans, curricula, images, sale strategies and education training concepts.” (Doc. 1 at 2.) 17 Some of these works—including at least the “designs” and “business plans”—are 18 specifically included in Section 102 as “original works of authorship” such as “pictorial” 19 or “graphic” works. 17 U.S.C. § 102(a)(5). As to the remaining components of “Reilly’s 20 Work,” the works at issue need “not actually be protected, or even protectable, under the 21 Copyright Act” to fall within the “subject matter of copyright.” Idema v. Dreamworks, Inc., 22 162 F. Supp. 2d 1129, 1189 (C.D. Cal. 2001), aff’d in part, dismissed in part, 90 F. App’x 23 496 (9th Cir. 2003), as amended on denial of reh’g (Mar. 9, 2004). Put another way, “the 24 shadow actually cast by the Act’s preemption is notably broader than the wing of its 25 protection.” Endemol Entertainment B.V. v. Twentieth Television Inc., No. CV 98-0608 26 27 28 authorized by the express language of FRCP 12(c), thus requiring this Court to plunge into that unnecessary analysis solely by reason of Defendants’ failure to follow the Rules.” (Doc. 51 at 8.) However, as referenced above, “it is common to apply Rule 12(c) to individual causes of action.” Larsen, 917 F. Supp. 2d at 1022. -8- 1 ABC (BQRX, 1998 WL 785300, at *3 (C.D. Cal. Sept. 29, 1998) (citation omitted). And 2 while “ideas” are specifically excluded from copyright protection, 17 U.S.C. § 102(b), 3 “courts have consistently held that they fall within the ‘subject matter of copyright’ for the 4 purposes of preemption analysis.” Entous v. Viacom Int’l, Inc., 151 F. Supp. 2d 1150, 1159 5 (C.D. Cal. 2001) (citing Selby, 96 F.Supp.2d at 1058). The Court therefore concludes that 6 the subject matter of Count II falls within the subject matter of copyright. 7 The next issue, accordingly, is whether the rights asserted under state law are 8 equivalent to the rights contained in Section 106 of the Copyright Act. See Maloney, 9 853 F.3d at 1010. Section 106 provides a copyright owner with the “exclusive rights” of 10 reproduction, preparation of derivative works, distribution, and display. 17 U.S.C. § 106. 11 To survive preemption, the state claim “must protect rights which are qualitatively different 12 from the copyright rights. The state claim must have an ‘extra element’ which changes the 13 nature of the action.” Del Madera Properties v. Rhodes & Gardner, Inc., 820 F.2d 973, 14 977 (9th Cir. 1987). (citation omitted). 15 The Court agrees with Defendants that Plaintiff’s state law claim for money had and 16 received is functionally equivalent to the rights protected under the Copyright Act. The 17 elements of a claim for money had and received under California law are: “(1) defendant 18 received money; (2) the money defendant received was for plaintiff's use; and (3) defendant 19 is indebted to plaintiff.” Lincoln Nat’l Life Ins. Co. v. McClendon, 230 F. Supp. 3d 1180, 20 1190 (C.D. Cal. 2017) (citing Fireman’s Fund Ins. Co. v. Commerce & Indus. Co., No. C- 21 98-1060VRW, 2000 WL 1721080, at *8 (N.D. Cal. Nov. 7, 2000)). This claim is not 22 “qualitatively different” from a claim that Defendants violated Plaintiff’s exclusive right 23 to copyrighted materials. Del Madera Properties, 820 F.2d at 977. Multiple other courts 24 have reached the same conclusion. See, e.g., Pizarro v. Aguilar, No. CV 10-2252-GHK 25 (SSX), 2010 WL 11598015, at *3 (C.D. Cal. July 6, 2010) (claim for money had and 26 received, though “camouflaged” as a common law cause of action, was “in fact equivalent 27 to federal copyright infringement claims.”); Kabehie v. Zoland, 102 Cal. App. 4th 513, 530 28 (2002) (a claim for money had and received was preempted because it was “not -9- 1 qualitatively different from a copyright infringement action”); Saint-Amour v. Richmond 2 Org., Inc., 388 F. Supp. 3d 277, 292 (S.D.N.Y. 2019) (“The Plaintiffs’ claim for money 3 had and received is preempted by the Copyright Act.”); Olivares v. Univ. of Chicago, 213 4 F. Supp. 3d 757, 766 (M.D.N.C. 2016) (“No extra element transforms a claim for money 5 had and received into something qualitatively different from a copyright infringement 6 claim.”). 7 The Court is not persuaded by Plaintiff’s argument that the claim should remain 8 because it is an “alternative legal ground for relief.” (Doc. 51 at 27.) The Copyright Act 9 does, admittedly, permit alternative causes of action for claims that are “not equivalent to 10 any of the exclusive rights within the general scope of copyright as specified by section 11 106…” 17 U.S.C. § 301(b)(3). However, because the Court concludes that the claim for 12 money had and received is equivalent to the rights within the scope of Section 106, this 13 argument fails. To rule otherwise would essentially nullify the Copyright Act’s preemption 14 provisions by permitting a plaintiff to argue that each claim is an “alternative” claim for 15 relief. Ultimately, “[a]lthough the elements of [Plaintiff’s] state law claims may not be 16 identical to the elements in a copyright action, the underlying nature of [Plaintiff’s] state 17 law claims is part and parcel of a copyright claim.” Laws, 448 F.3d at 1144. Accordingly, 18 Count II is dismissed. 19 b. Declaratory Relief (Count IV) 20 Defendants next move to dismiss Plaintiff’s claim for declaratory relief (Count IV) 21 on grounds that it is preempted by the Copyright Act. Plaintiff seeks a declaratory 22 judgment from the Court stating: 23 24 25 26 A. Woz U embodies the Reilly Work in its operation, marketing and promotion. B. Defendants and each of them are obligated to account and pay to Reilly the reasonable and fair value of Reilly’s Work. 27 (Doc. 1 ¶ 40.) Defendants argue that Plaintiff’s claim for declaratory relief is “rooted 28 primarily on the contentions that defendants infringed on Plaintiff’s copyrighted works,” - 10 - 1 and therefore preempted. (Doc. 46 at 6.) In response, Plaintiff argues in part that the 2 declaratory relief claim is brought pursuant to the federal Declaratory Judgment Act, 3 28 U.S.C. § 2201,8 and that “Defendants cite no authority for their claim that Section 301 4 can preempt declaratory relief through another Federal law and there is no such authority. 5 Congress cannot preempt itself.” (Doc. 51 at 23.) 6 The Complaint does not state whether the claim for declaratory relief is brought 7 under state or federal law. (Doc. 1 at 11–12.) However, in construing the Complaint in the 8 light most favorable to Plaintiff, as it is required to do, Hal Roach Studios, Inc., 896 F.2d 9 at 1550. the Court considers Plaintiff’s claim for declaratory relief as brought under the 10 Declaratory Judgment Act, 28 U.S.C. § 2201. For one, the declaratory relief claim is not 11 included in the Complaint’s statement that the claims “for implied-in-fact contract, money 12 had and received and accounting arose by reason of conduct in, or based on contracts with, 13 the State of California. As a result, California law determines the rights and obligations of 14 … Defendants … with respect to each of such Causes of Action.” (Doc. 1 ¶ 15.) When 15 viewed in the light most favorable to Plaintiff, this suggests that the remaining claims— 16 including Count IV—are brought under federal law. 17 The Court also relies on relevant legal authority, which states that the federal 18 Declaratory Judgement Act applies in cases arising under both federal question and 19 diversity jurisdiction. The federal Declaratory Judgment Act provides that “[i]n a case of 20 actual controversy within its jurisdiction ... any court of the United States ... may declare 21 the rights and other legal relations of any interested party seeking such declaration, whether 22 or not further relief is or could be sought.” 28 U.S.C. § 2201(a). It creates a federal remedy 23 but is not itself a basis for federal jurisdiction. See Fiedler v. Clark, 714 F.2d 77, 79 (9th 24 Cir.1983). Plaintiff alleges that both federal question jurisdiction and diversity jurisdiction 25 exist in this case. (Doc. 1 ¶¶ 16–17.) The Court may properly construe Plaintiff’s claim as 26 brought under the federal Declaratory Judgment Act in both contexts. 27 28 Although Plaintiff refers to the “Declaratory Relief Act,” 28 U.S.C. § 2201 is titled the Declaratory Judgment Act. 8 - 11 - 1 Plaintiff first alleges that federal question jurisdiction exists, pursuant to 2 28 U.S.C. § 1331, because the action arises under the Copyright Act of 1976. (Id. ¶ 16.) 3 For federal question jurisdiction cases, the declaratory judgment plaintiff must establish an 4 “actual controversy.” Societe de Conditionnement v. Hunter Eng’g Co., 655 F.2d 938, 943 5 (9th Cir.1981). Defendants do not dispute this or move to dismiss Plaintiff’s copyright 6 infringement claim (Count III). Further, other courts have concluded that declaratory 7 judgment claims in the copyright infringement context should be interpreted as brought 8 under the Declaratory Judgment Act. See Adobe Sys. Inc. v. Kornrumpf, 9 780 F. Supp. 2d 988, 992 (N.D. Cal. 2011) (“Nor does [Plaintiff] articulate any authority 10 for its request for a declaration of copyright misuse. [Plaintiff] did not cite any provision 11 of the Copyright Act affirmatively providing such relief. Thus, the Court presumes 12 [Plaintiff] 13 28 U.S.C. § 2201(a).”); Acorne Prods., LLC v. Tjeknavorian, 33 F. Supp. 3d 175, 183 14 (E.D.N.Y. 2014) (“The declaratory judgment remedy is not expressly stated in the 15 Copyright Act; it is available by virtue of a separate statute, The Declaratory Judgment 16 Act. See 28 U.S.C. § 2201.”). seeks a declaration pursuant to the Declaratory Judgment Act, 17 Plaintiff also alleges that diversity jurisdiction exists in this case pursuant to 18 28 U.S.C. § 1332(a)(1). (Doc. 1 ¶ 17.) Courts apply the Declaratory Judgment Act, rather 19 than the state law counterpart, to diversity jurisdiction cases. See, e.g., Mardian Equip. Co. 20 v. St. Paul Fire & Marine Ins. Co., No. CV–05–2729–PHX–DGC, 2006 WL 2456214, at 21 *4 (D. Ariz. Aug. 22, 2006) (“Because this action has been removed to federal court, 22 however, Plaintiff’s state law [declaratory judgment] claim must be converted to a claim 23 brought under the Federal Declaratory Judgment Act.... This is so because under the Erie 24 doctrine, federal courts sitting in diversity apply state substantive law and federal 25 procedural law, and the Act is a procedural statute.”); In Golden Eagle Insurance Co. v. 26 Travelers Cos., 103 F.3d 750, 753 (9th Cir.1996), overruled on other grounds by Gov’t 27 Emps. Ins. Co. v. Dizol, 133 F.3d 1220 (1998) (en banc) (applying Declaratory Judgment 28 Act where “[t]he complaint [plaintiff] filed in state court for declaratory relief was filed - 12 - 1 under California’s declaratory relief statute,” but “[w]hen [defendant] removed the case to 2 federal court, based on diversity of citizenship, the claim remained one for declaratory 3 relief, but the question whether to exercise federal jurisdiction to resolve the controversy 4 became a procedural question of federal law.”). 5 Defendants’ Motion does not argue that the Copyright Act preempts a federal law 6 such as the Declaratory Judgment Act, 28 U.S.C. § 1332(a)(1). Defendants also do not raise 7 any other arguments for dismissing this claim. (Doc. 46 at 5–6.) Accordingly, the motion 8 for judgment on the pleadings as to Count IV is denied. 9 c. Accounting (Count 5) 10 Defendants also argue that Plaintiff’s claim for an accounting (Count V) is 11 preempted by the Copyright Act. Plaintiff seeks an accounting from Defendants on “the 12 revenues derived from, and expenses incurred in, the operation, marketing and promotion 13 of Woz U.” (Id. ¶ 45.) This claim is brought under California law. (Doc. 1 ¶ 15.) The Court 14 agrees with Defendants that this claim is preempted by the Copyright Act. 15 First, the Court finds that the subject matter of the accounting claim falls within the 16 subject matter of the Copyright Act. Maloney, 853 F.3d at 1010. As noted, Plaintiff seeks 17 an accounting of Defendants’ involvement in Woz U. Plaintiff argues that Defendants 18 “used, applied and exploited Reilly’s Work in the creation, formation, operation, 19 management and publicity of Woz U” and “infringed Reilly’s Copyrighted Work in the 20 marketing and publicity of Woz U” (Doc. 1 ¶¶ 12, 13). Accordingly, for the same reasons 21 as stated with respect to Count II, the subject matter of Plaintiff’s Count V falls within the 22 subject matter of copyright. See Idema, 162 F. Supp. 2d at 1189 (works need “not actually 23 be protected, or even protectable, under the Copyright Act” to fall within the “subject 24 matter of copyright.”). 25 Second, the rights asserted in the accounting claim are equivalent to those exclusive 26 rights identified in Section 106 of the Copyright Act. Maloney, 853 F.3d at 1010. An 27 accounting claim requires a showing “(1) that a relationship exists between the plaintiff 28 and defendant that requires an accounting; and (2) that some balance is due to the plaintiff - 13 - 1 that can only be ascertained by an accounting.” Brosious v. JP Morgan Chase Bank, N.A., 2 No. 2:15-CV-00047-KJM, 2015 WL 5173063, at *3 (E.D. Cal. Sept. 2, 2015) (citing 3 Teselle v. McLoughlin, 173 Cal.App.4th 156, 179, 92 Cal.Rptr.3d 696 (2009)). The Court 4 agrees with other courts to find that the accounting claim is “rooted primarily on 5 contentions that defendants infringed on plaintiffs’ copyrighted works.” Motown Record 6 Corp. v. George A. Hormel & Co., 657 F. Supp. 1236, 1241 (C.D. Cal. 1987). See also 7 Alexander v. Timberlake, No. 207CV00590RLHGWF, 2008 WL 11452529, at *4 (D. Nev. 8 Jan. 3, 2008) (finding that Plaintiff’s claim for accounting was preempted because it 9 “assert[ed] the same wrongs alleged to support his claim for copyright infringement.”). 10 Further, “the Copyright Act already affords [Plaintiff] an adequate means by which to 11 calculate damages in this action. See 17 U.S.C. § 504.” Young Money Entm’t, LLC v. 12 Digerati Holdings, LLC, No. 2:12-CV-07663-ODW, 2012 WL 5571209, at *9 (C.D. Cal. 13 Nov. 15, 2012). 14 The Court notes the case relied on by Plaintiff, Oddo v. Reis, 743 F.2d 630 (9th Cir. 15 1984), is readily distinguishable. Plaintiff states that the case “represents just another area 16 where state contract law and [Copyright] Act principles easily co-exist[.]” (Doc. 51 at 26.) 17 However, that case involved two business partners who each had “an independent right to 18 use or license the use of the copyright.” Id. at 633. Because the parties were co-owners of 19 the copyright, the defendant “could not infringe the partnership’s copyrights[.]” Id. He 20 could, however, “be required to account to [plaintiff] for any profits he has made from use 21 of those copyrights.” Id. In the present case, there is no indication that Plaintiff and 22 Defendants were co-owners in the Plaintiff’s copyrighted works. According to the face of 23 the Complaint, Defendants could have violated Plaintiff’s copyright protection; the claim 24 for an accounting is accordingly preempted and will be dismissed. 25 B. 26 In the second motion, Defendant Wozniak moves for judgment on the pleadings 27 with respect to Count I, for breach of an implied-in-fact contract. Wozniak states that 28 “based on Plaintiff’s allegations, and the exhibits to his Complaint, an implied-in-fact Motion for Judgment on the Pleadings (Count I) - 14 - 1 contract was never entered into between the parties.” (Doc. 58 at 1.) The Court will first 2 address whether it may consider Wozniak’s Motion; it will then address the merits. 3 1. Second Motion for Judgment on the Pleadings 4 The first issue is whether the Court may consider Wozniak’s Motion in light of the 5 fact that, for the reasons discussed above, it would be the second motion for judgment on 6 the pleadings in this case. Plaintiff argues that “Rules 12(g)(2) and 12(h)(1)(A) prohibit 7 successive MJP’s pursuant to Rule 12(c) and successive MTD’s made pursuant to Rule 8 12(b)(6), when the issue raised is one that could have been raised in the earlier MTD or 9 MJP, as the case may be.” (Doc. 59 at 2.) In reply, Wozniak argues that Rule 12(g)(2) 10 specifically authorizes the second motion for judgment on the pleadings. (Doc. 61 at 3.) 11 The Court agrees with Wozniak. 12 Rule 12(g)(2) states, in pertinent part, “Except as provided in Rule 12(h)(2) or (3), 13 a party that makes a motion under this rule must not make another motion under this rule 14 raising a defense or objection that was available to the party but omitted from its earlier 15 motion.” Fed. R. Civ. P. 12(g)(2) (emphasis added). Therefore, although the general rule 16 prohibits a party from asserting defenses available when that party made its initial motion, 17 Rules 12(h)(2) and 12(h)(3) provide exceptions. Rule 12(h)(2) specifically permits a 18 motion for “failure to state a claim upon which relief can be granted…by a motion under 19 Rule 12(c).” Fed. R. Civ. P. 12(h)(2)(B). Accordingly, a motion for judgment on the 20 pleadings alleging failure to state a claim, such as Wozniak’s Motion (Doc. 58), is 21 specifically exempt from Rule 12’s prohibition on successive motions.9 22 There is limited case law on this topic. Plaintiff cites a Northern District of Texas 23 case holding that “when a party files a Rule 12(c) motion, the opposing party does not file 24 an intervening pleading (e.g., an amended complaint) that is subject to challenge for failure 25 26 27 28 Plaintiff also cites Rule 12(h)(1)(A), which states, “A party waives any defense listed in Rule 12(b)(2)-(5) by: omitting it from a motion under the circumstances described in Rule 12(g)(2).” Fed. R. Civ. P. 12(h)(1)(A). This is not helpful for Plaintiff for two reasons: first, Wozniak does not raise a defense listed in Rule 12(b)(2)-(5), and second, the circumstances described in Rule 12(g)(2), as noted above, exempt motions listed under Rule 12(h)(2)—including Rule 12(c) motions for judgment on the pleadings. 9 - 15 - 1 to state a claim on which relief can be granted, and the party files a second Rule 12(c) 2 motion that is addressed to the same pleading that is the subject of the first Rule 12(c) 3 motion, the second motion is successive and can be denied on that basis.” Fisher v. Dallas 4 Cty., No. 3:12-CV-3604-D, 2014 WL 4797006, at *9 (N.D. Tex. Sept. 26, 2014). Plaintiff 5 does not cite a Ninth Circuit case, and the Court has not located one on point. However, 6 district courts in other circuits have reached the opposite conclusion of the Fisher case. For 7 example, in Palmer v. New York State Office of Court Admin., the Northern District of New 8 York addressed the “contention that Defendant’s third motion for judgment on the 9 pleadings is foreclosed by Ru1e 12(g), which precludes the bringing of motions that raise 10 arguments that the defendant did not raise at the first available opportunity.” No. 11 5:00CV00110(HGM/GHL), 2007 WL 2362360, at *4 (N.D.N.Y. Aug. 13, 2007). Based 12 on a review of the relevant rules, the Court concluded that the “contention is without merit” 13 and permitted the third Rule 12(c) motion. Id. 14 Further, district courts in the Ninth Circuit have considered the merits of multiple 15 motions for judgment on the pleadings without specifically addressing whether they were 16 permitted. See, e.g., Qwest Commc’ns Corp. v. City of Berkeley, 208 F.R.D. 288, 292 (N.D. 17 Cal. 2002) (considering plaintiff’s two motions for judgment on the pleadings); Lanuza v. 18 Love, 134 F. Supp. 3d 1290, 1293 (W.D. Wash. 2015) (“Defendant United States’ motions 19 to dismiss are properly construed as motions for judgment on the pleadings.”); Patel v. 20 Callies, No. 07-CV-474-WFD, 2009 WL 10713058, at *2 (D. Idaho Jan. 26, 2009) (“This 21 order will address first those elements common to all defendants’ motions for judgment on 22 the pleadings, after which it will address those elements specific to individual 23 defendants.”). 24 Finally, courts in the Ninth Circuit have noted that Rule 12(g) applies to “situations 25 in which a party files successive motions under Rule 12 for the sole purpose of delay.” 26 Davidson v. Countrywide Home Loans, Inc., No. 09–CV–2694–IEG JMA, 2011 WL 27 1157569, at *4 (S.D. Cal. Mar. 29, 2011) (internal quotations omitted); see also Kilopass 28 Tech. Inc. v. Sidense Corp., No. C 10–02066 SI, 2010 WL 5141843, at *3 (N.D. Cal. Dec. - 16 - 1 13, 2010) (same); Allstate Ins. Co. v. Countrywide Fin. Corp., 824 F.Supp.2d 1164, 1175 2 (C.D.Cal.2011) (“Rule 12(g) is designed to avoid repetitive motion practice, delay, and 3 ambush tactics.”). There is no indication that Wozniak’s Motion was filed for the “sole 4 purpose of delay.” It was filed just over one month after briefing on the first motion 5 concluded, and the Court is able to address both motions simultaneously. For all of these 6 reasons, the Court will consider Wozniak’s Motion. 7 2. Merits of Wozniak’s Motion 8 Wozniak argues that Count I should be dismissed because Plaintiff has not stated a 9 Desny claim for breach of implied-in-fact contract.10 (Id. at 4.) The claim is brought under 10 California law and only against Wozniak. (Doc. 1 ¶ 15.) Plaintiff argues that the Complaint 11 alleges the elements of a Desney implied-in-fact contract claim, including that “Plaintiff 12 approached Woz about his idea for the Woz Institute of Technology and asked Woz if he 13 was interested. Woz said he was and authorized plaintiff to attempt to execute this idea 14 which involved both Plaintiff and Woz[.]… As will be proven at trial, Woz fully 15 understood that Plaintiff expected to be compensated from implementation of Plaintiff’s 16 concept and use of the Reilly Work, as did Woz himself.” (Doc. 59 at 7.) For the reasons 17 discussed below, the Court finds that the Complaint states a claim for breach of an implied- 18 in-fact contract. 19 As Wozniak notes, the Complaint does not specifically describe Count I as a 20 “Desny” claim.11 A district court generally limited to the contents of the pleadings when 21 ruling on a Rule 12(c) motion. See Fed. R. Civ. Proc. 12(c). However, the Court need not 22 rely on material outside the pleadings here. A “contract implied in fact ‘consists of 23 obligations arising from a mutual agreement and intent to promise where the agreement 24 and promise have not been expressed in words.’” Retired Employees Ass’n of Orange 25 26 27 28 10 Although Wozniak did not raise this argument, the Court notes that the Ninth Circuit has held that Desny claims for breach of implied contract are not preempted by federal copyright claims. Montz v. Pilgrim Films & Television, Inc., 649 F.3d 975, 976 (9th Cir. 2011). 11 “[T]here was no reference to Desny in the Plaintiff’s Complaint, nor the Plaintiff’s Mandatory Initial Disclosures.” (Id. at 3.) - 17 - 1 Cnty., Inc. v. Cnty. of Orange, 52 Cal.4th 1171, 1178 (2011) (citation omitted). Under 2 California law, “when an idea is furnished by one party to another, a contract sometimes 3 may be implied even in the absence of an express promise to pay.” Grosso v. Miramax 4 Film Corp., 383 F.3d 965, 967 (9th Cir. 2004), opinion amended on denial of reh’g, 400 5 F.3d 658 (9th Cir. 2005). 6 This principle arose from the leading California Supreme Court case in this area, 7 Desny v. Wilder, 299 P.2d 257 (Cal. 1956). In that case, the plaintiff alleged that Paramount 8 Pictures turned his pitched idea into a feature film without compensation. Id. at 726–27. 9 Ruling in plaintiff’s favor, the court held that a contract exists where “the circumstances 10 preceding and attending disclosure, together with the conduct of the offeree acting with 11 knowledge of the circumstances, show a promise [to pay] of the type usually referred to as 12 ‘implied’ or ‘implied in fact.’” Id. at 738. The Ninth Circuit has endorsed Desny claims, 13 stating, “[t]o establish a Desny claim for breach of implied-in-fact contract, the plaintiff 14 must show that the plaintiff prepared the work, disclosed the work to the offeree for sale, 15 and did so under circumstances from which it could be concluded that the offeree 16 voluntarily accepted the disclosure knowing the conditions on which it was tendered and 17 the reasonable value of the work.” Grosso, 383 at 967. It has further explained that “rights 18 created under California law emanating from Desny [are] qualitatively different from the 19 rights protected by federal copyright law because a Desny claim includes an added element: 20 an agreement to pay for use of the disclosed ideas.” Montz v. Pilgrim Films & Television, 21 Inc., 649 F.3d 975, 980 (9th Cir.2011). 22 The Court finds that the Complaint states a Desny claim for breach of an implied- 23 in-fact contract. First, Plaintiff has alleged that he prepared the work at issue. Grosso, 383 24 at 967. (Doc. 1 ¶ 4 (Plaintiff emailed Wozniak stating “I want to start a high tech 25 university”); ¶ 6 (Wozniak emailed Plaintiff, stating “I figure it’s your idea”); ¶ 8 (Plaintiff 26 “created a website and logo”)). Second, the Court concludes that Plaintiff “disclosed the 27 work to the offeree for sale.” Grosso, 383 at 967. This issue is more difficult because at no 28 point does the Complaint explicitly state that Plaintiff tried to sell Reilly’s work to - 18 - 1 Wozniak. The Court is therefore sympathetic to Wozniak’s argument that “[t]he Plaintiff 2 wasn’t seeking to sell anything to Defendant Wozniak [sic]. On the contrary, the Plaintiff 3 was seeking to use Wozniak’s name and likeness to start his own online school.” (Doc. 61 4 at 4.) However, in accepting Plaintiff’s allegations as true and drawing all reasonable 5 inferences in Plaintiff’s favor, see Hal Roach Studios, Inc., 896 F.2d at 1550, the Court 6 concludes that Plaintiff has alleged that he disclosed his work to Wozniak “for sale.” 7 Considerations include Plaintiff’s allegations that he introduced Wozniak to at least one 8 potential business partner (Doc. 1 ¶ 5; 20–30); that Plaintiff and Wozniak met to discuss 9 Plaintiff’s idea and “agreed to proceed with a ‘deal’ handshake depicted in a photograph 10 taken at the Luncheon” (Id. ¶ 6, at 31–32); that Wozniak gave Plaintiff “the right to proceed 11 with potential investors and counter-parties” (Id. ¶ 6); that Plaintiff and Wozniak presented 12 the idea to Apollo Group (Id. ¶ 7); and that Wozniak “consented to all the obligations 13 arising from the acceptance of the benefits of Reilly’s work,” including the obligation to 14 “pay Reilly the fair and reasonable value of Reilly’s work.” Third, Plaintiff has alleged that 15 “the offeree voluntarily accepted the disclosure knowing the conditions on which it was 16 tendered and the reasonable value of the work.” Grosso, 383 at 967. Specifically, the 17 Complaint states that Defendants “voluntarily accepted [] the benefit of Reilly’s work with 18 full knowledge of the circumstances and the fact that Reilly did not submit and 19 communicate Reilly’s Work to Woz gratuitously” (Id. ¶ 25), and that they “consented to 20 all the obligations arising from the acceptance of the benefits” of Plaintiff’s work. (Id. ¶ 21 26.) 22 Wozniak also argues that “Plaintiffs have produced no evidence of the parties’ intent 23 or conduct relating to the creation of an implied-in-fact contract[.]” (Doc. 58 at 6.) 24 However, at this stage, “Plaintiff does not have to allege in detail all the facts upon which 25 he bases his claim. To the extent that Defendant argues that Plaintiff’s allegations, if true, 26 are insufficient in themselves to establish the existence of an implied-in-fact contract, that 27 is not the standard used to decide a motion to dismiss.… Therefore, the Court will not 28 dismiss Plaintiff's claim for breach of an implied-in-fact contract.” Maley v. Pulte Home - 19 - 1 Corp., No. C 06-3082 CW, 2006 WL 2168206, at *4 (N.D. Cal. July 31, 2006). 2 Ultimately, without commenting on the likelihood that Plaintiff will prevail on the 3 merits, the Court concludes that Plaintiff has sufficiently stated the minimal requirements 4 to proceed on his claim for breach of an implied-in-fact contract. See Goldberg v. Cameron, 5 482 F. Supp. 2d 1136, 1150 (N.D. Cal. 2007) (“While this is by no means a compelling 6 allegation that the work was disclosed to the defendants in a manner that would create an 7 implied contract … it is sufficient to state a claim for an implied contract.”); Quirk v. Sony 8 Pictures Entm’t Inc., No. C 11-3773 RS, 2012 WL 12920192, at *4 (N.D. Cal. July 5, 9 2012) (“Whether Quirk has adequately pleaded facts to support an inference that his novel 10 was transferred with such an expectation is a close call. To be sure, his allegations are to a 11 significant degree both conclusory and speculative, and he forthrightly concedes that 12 additional facts must be developed through discovery.” However, “the motion to dismiss 13 must be denied.”). The Court will deny Wozniak’s motion for judgment on the pleadings 14 as to Count I. 15 IV. CONCLUSION 16 Accordingly, 17 IT IS ORDERED that Defendants’ Motion to Dismiss Counts II, IV and V of 18 Plaintiff’s Complaint (Doc. 46) is granted in part and denied in part. The Motion is 19 granted with respect to Counts II (Money Had and Received) and V (Accounting); these 20 claims are dismissed. The Motion is denied with respect to Count IV (Declaratory Relief). 21 IT IS FURTHER ORDERED that Defendant Steve Wozniak’s Motion for 22 23 Judgment on the Pleadings as To Count I of Plaintiff’s Complaint (Doc. 58) is denied. Dated this 3rd day of March, 2020. 24 25 26 27 28 - 20 -
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