LAURA ARCHER DICK COELHO, AS TRUSTEE OF THE PHILIP K. DICK TESTAMENTARY TRUST, Plaintiff, v. MRC II DISTRIBUTION COMPANY, L.P.; MRC II HOLDINGS L.P., OAKTREE ENTERTAINMENT, INC.; GEORGE NOLFI; AND MICHAEL HACKETT, Defendants.
Case No. CV 11-8913-ODW (JCGx)
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION
February 8, 2012
HON. OTIS D. WRIGHT, II
Before the Court are Defendants’ two motions to dismiss—a first combined motion under
I. BACKGROUND
Plaintiff, the Philip K. Dick Testamentary Trust, was formed to maintain, promote, and develop the creative works of the late science fiction author Philip K. Dick. Mr. Dick‘s works numbered over 200, which include works that have been the basis for nearly a dozen feature films, including Blade Runner, Total Recall, and Minority Report.
The sudden success of The Adjustment Bureau ushered in newfound wealth, and disputes about how that wealth is to be distributed. The parties now dispute the amount owed to the Trust under the alleged agreements relating to Mr. Dick‘s work.
Based on the foregoing, Plaintiff asserts the following claims: (1) declaratory relief to determine whether Adjustment Team was in the public domain for purposes of Copyright; (2) declaratory relief regarding rights under contract; (3) breach of contract; (4) money had and received; (5) quantum meruit; (6) unjust enrichment; and, (7) accounting.
II. DEFENDANTS’ RULE 12(B)(1) MOTION
The Court first considers Defendants’ Rule 12(b)(1) motion for lack of subject matter jurisdiction. Defendants ask the Court to retain the narrow copyright question, but to dismiss the remaining, and overarching, contract claims.
Federal courts are courts of limited jurisdiction and “have only the power that is authorized by Article III of the Constitution and the statutes enacted by Congress pursuant thereto.” Couch v. Telescope, Inc., 611 F.3d 629, 632 (9th Cir. 2010) (quoting Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986)). A case arises under federal law if the complaint “establishes either that federal law creates the cause of action or that the plaintiff‘s right to relief necessarily depends on resolution of a substantial question of federal law.” Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 690 (2006).
So long as the complaint sets forth a claim arising under federal law, a court may exercise supplemental jurisdiction over the remaining state law claims if they form part of the same case or controversy—that is, if they derive from a common nucleus of
(1) the claim raises a novel or complex issue of State law; (2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction; (3) the district court has dismissed all claims over which it has original jurisdiction; or, (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.
A Rule 12(b)(1) motion may be brought as either a facial or factual attack. Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004). In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction. Id. But, in a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction. Id.
In this case, Defendants concede that the copyright claim should remain in federal court and only bring a facial attack against supplemental jurisdiction of the remaining six causes of action concerning the underlying contract. Therefore, for this analysis, the Court accepts the allegations in the complaint as true and draws all reasonable inferences in plaintiff‘s favor. See id.
A. The copyright cause of action is a federal question
Both sides correctly argue that federal courts have original and exclusive jurisdiction in actions arising out of the federal Copyright Act.
B. The other six causes of action arise under different operative facts and substantially predominate over the copyright issue
Plaintiff‘s six other causes of action concern the Adjustment Team contract between the parties. First, there is no common nucleus of operative fact between the copyright validity determination and the six contract claims. The Court finds that there are some common background facts, e.g., both the copyright and contract arise from Mr. Dick‘s Adjustment Team work. But that is all. The operative facts concerning the rights under the contract and breach of that contract have nothing do to with the copyright. See Trilithic, Inc. v. Wavetek U.S., 6 F. Supp. 2d 803, 806-07 (S.D. Ind. 1998) (the court declining supplemental jurisdiction, finding the facts needed for resolving the two claims are “separate and distinct“: where one claim is for patent infringement, and the other is for breach of a non-disclosure agreement concerning the same patent).
Second, even if there is a common nucleus of operative fact, the copyright issue is mere fodder compared to the remaining contract claims. The Court finds nothing in Plaintiff‘s pleading to suggest that the contract becomes void or otherwise unenforceable if the copyright is rendered invalid. In fact, Plaintiff downplays the importance of the copyright and alleges that Defendants profited from the Adjustment Team contract, regardless of the copyright:
Defendants have profited enormously from these benefits, none of which has anything to do with copyright. Under any circumstances—with Adjustment Team fully protected by copyright worldwide, or protected internationally, or not protected at all—Defendants still received the full value they have paid under the Agreement.
(Compl. ¶ 66.) In other words, Plaintiff‘s recovery under the contract is independent of the validity of its copyright. Because of the relative unimportance of the copyright in this dispute, the Court finds that Plaintiff‘s six state law claims substantially predominate over the copyright issue.
Plaintiff cites Ackoff-Ortega for the proposition that supplemental jurisdiction is
Still, Plaintiff argues that preceding cases have found a sufficient nexus between a copyright claim and a contract claim. See S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1091 (9th Cir. 1989). Yet, Plaintiff forgets to consider the Gibbs factors, and the discretion given to the Court to decline supplemental jurisdiction when “the state law claim substantially predominates over the claim on which the court‘s original jurisdiction is based.”
Third, even if the validity of the copyright has a bearing on the determination of contract damages, the Court finds that the limited determination of the validity of the copyright; that is, whether Adjustment Team is or was in the public domain; can be quickly achieved on a Rule 56 motion, after a brief opportunity for discovery. The present case is still in the pleading stage, and the parties have not yet held their Rule 26(f) conference. This is not an instance where Plaintiff‘s contract claims are kicked out right before trial. At this early stage, the Court finds it is imprudent to exercise supplemental jurisdiction over the six contract claims because the federal copyright claim will be resolved imminently.
Moreover, there will be no prejudice to Plaintiff if its contract claims are tried in
C. Plaintiff does not allege diversity jurisdiction as a fall back
Under
IV. CONCLUSION
For the above reasons, Defendants’ Rule 12(b)(1) motion is GRANTED and Plaintiff‘s second, third, fourth, fifth, sixth, and seventh causes of action are DISMISSED WITHOUT PREJUDICE.
The Court declines to further analyze the parties’ forum selection clause and DENIES Defendants’ Rule 12(b)(3) motion as MOOT. The Court also DENIES Defendants’ Rule 12(b)(6) motion as MOOT. Plaintiff‘s first cause of action concerning its copyright remains before this Court. Defendants have until February 22, 2012 to file a responsive pleading.
IT IS SO ORDERED.
February 8, 2012
HON. OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE