246 F. Supp. 3d 1097
E.D. Pa.2017Background
- Vantage Learning (plaintiff) licensed adaptive online grading software to Edgenuity (defendant) under a Master Service Agreement that charged per essay submitted.
- Defendant administered anonymous, single-essay exams; completed exams were sent to Vantage for grading and Vantage billed per submission.
- In April–May 2014, thousands of duplicate submissions (same essays with different submission IDs) were sent and graded; Vantage rescored and billed for duplicates; Edgenuity withheld payment and refused interest charges.
- Vantage sued for breach of contract (Count I), unjust enrichment (Count II), negligence (Count III), and copyright infringement (Count IV) for post-termination use of 20 registered essay prompts.
- Edgenuity moved to dismiss Counts II–IV; the court accepts pleaded facts as true for the motion to dismiss and resolves legal sufficiency.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Unjust enrichment (Count II) | Alternative pleading under Fed. R. Civ. P. 8(d)(2) is permitted because defendant’s refusal to pay implies dispute over contract validity | An express written Agreement governs the entire relationship, so unjust enrichment is unavailable | Dismissed with prejudice — contract governs; no dispute over contract validity that would allow alternative unjust enrichment claim |
| Negligence (Count III) | Defendant owed an independent public duty not to flood Vantage’s servers; breach gives rise to tort separate from contract | Gist-of-the-action doctrine: claims arise from performance of contractual duties and thus sound in contract, not tort | Dismissed with prejudice — negligence barred by gist-of-the-action; no independent public duty alleged |
| Copyright statutory damages & attorney’s fees (Count IV) | For five prompts it’s unclear whether infringement began before registration; discovery needed | 17 U.S.C. § 412(2) bars statutory damages/fees if infringement began before registration; all 20 prompts were registered as one work and first infringement predated registration | Dismissed with prejudice as to statutory damages and fees — single registration ties all components to the earliest infringement date, which predated registration |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for pleading)
- ALA, Inc. v. CCAIR, Inc., 29 F.3d 855 (3d Cir. 1994) (accept allegations as true at motion to dismiss)
- Wilson Area School Dist. v. Skepton, 586 Pa. 513, 895 A.2d 1250 (Pa. 2006) (unjust enrichment barred where contract governs relationship)
- Bruno v. Erie, 630 Pa. 79, 106 A.3d 48 (Pa. 2014) (framework for the gist-of-the-action doctrine)
- Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101 (7th Cir. 1984) (pleading must allege elements supporting a viable legal theory)
- Whelan Associates, Inc. v. Jaslow Dental Lab., Inc., 609 F. Supp. 1325 (E.D. Pa.) (statutory damages and fees unavailable where defendant infringed before registration)