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Mrc Ii Distribution Company L.P.; and Oaktree Entertainment, Inc v. Laura Archer Dick Coelho; Isolde Freya Dick Hackett

September 4, 2012

MRC II DISTRIBUTION COMPANY L.P.; AND OAKTREE ENTERTAINMENT, INC., PLAINTIFFS,
v.
LAURA ARCHER DICK COELHO; ISOLDE FREYA DICK HACKETT; CHRISTOPHER KENNETH DICK; AND DOES 1--10, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Otis D. Wright, II United States District Judge

ORDER DENYING DEFENDANTS' MOTION TO DISMISS AND MOTION TO STAY [20]

Defendants' Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(1) and Motion for Stay are pending before the Court.*fn1 (ECF No. 20.)

I.BACKGROUND

This case arises from a contract between Plaintiffs' predecessor in interest, Gorge Nolfi, and the Philip K. Dick Testamentary Trust (represented by Defendants), regarding the licensed use of Philip K. Dick's Adjustment Team short story. (Compl. ¶¶ 17, 19.) The parties formed a contract on May 23, 2001, where Defendants granted Nolfi an 18-month option to acquire the rights to Adjustment Team for use in film and other media in exchange for an initial monetary advance. (Id. ¶ 17.) Nolfi and Defendants subsequently extended the option's expiration date. (Id. ¶ 18.) On June 19, 2009, after acquiring the option from Nolfi, Plaintiffs exercised the option and paid the balance of the option-purchase price. (Id. ¶ 21.) To date, Plaintiffs have paid $1,612,500 to Defendants for rights to Adjustment Team. (Id.) In March of 2011, Plaintiffs released the motion picture Adjustment Bureau, starring Matt Damon and Emily Blunt, based on Philip K. Dick's Adjustment Team. (Id. ¶¶ 2, 22.)

Plaintiffs contend they later discovered that Defendants falsely represented that: they owned all rights to Adjustment Team; and Adjustment Team remained copyrighted and had not entered the public domain in the U.S. or elsewhere. (Id. ¶¶ 20, 23.) Plaintiffs argue that the U.S. Copyright for Adjustment Team expired in 1982 and was not renewed. (Id. ¶ 24.) This caused Adjustment Team to fall into the public domain, not just in the U.S., but in other jurisdictions abroad. (Id. ¶¶ 24--26.)

Defendants previously brought suit against Plaintiffs in this Court, seeking a determination of copyright validity and contract-related damages. Plaintiffs brought a motion there to dismiss the contract claims. The Court granted Plaintiffs' motion, and kept the copyright claim, but declined to exercise supplemental jurisdiction over the contract claims. Coelho v. MRC II Distribution Co, L.P., No. 2:11-cv-8913-ODW(JCGx), slip op. at 6 (C.D. Cal. Feb. 8, 2012). Defendants then voluntarily dismissed that case without prejudice, and filed an action in state court against Plaintiffs, once against seeking contract-related damages. (Mot. 1.)

Plaintiffs then brought this action for declaratory relief, asking the Court to decide whether Adjustment Team entered the public domain, and if so, to declare that it is not copyrighted. (Opp'n 2.)

II.LEGAL STANDARD

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).

A Rule 12(b)(1) motion for lack of subject-matter jurisdiction 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.

Further, in a Rule 12(b)(1) motion, the well-pleaded facts alleged in the complaint are taken as true. Orsay v. U.S. Dep't of Justice, 289 F.3d 1125, 1127 (9th Cir. 2002). But the court is not restricted to the face of the pleadings-the court "may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction." McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988).

III.DISCUSSION

In a declaratory relief action, the Declaratory Judgment Act controls and provides that a federal court may declare the rights and other legal relations of any interested party seeking such declaration. 28 U.S.C. § 2201(a). But there must be an actual controversy: the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.

MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). District courts regularly take jurisdiction over declaratory judgment actions where "if the declaratory judgment defendant brought a coercive action to enforce its rights, that suit would necessarily present a federal question." ...


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