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Young Money Entertainment, LLC v. Digerati Holdings

November 15, 2012

YOUNG MONEY ENTERTAINMENT, LLC;
YOUNG MONEY PUBLISHING, INC; AND
DWAYNE MICHAEL CARTER, JR.,
PLAINTIFFS,
v.
DIGERATI HOLDINGS, LLC; QD3 ENTERTAINMENT, INC.;
QUINCY DELIGHT JONES III; JOSHUA A. KRAUSE;
JARED FREEDMAN; AND DOES 1--10, INCLUSIVE, DEFENDANTS.



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

O

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT JOSHUA KRAUSE'S MOTION TO DISMISS [12]

I.INTRODUCTION

Young Money Entertainment LLC; Young Money Publishing, Inc.; and Dwayne Michael Carter, Jr. (commonly known by his stage name, Lil Wayne) (collectively "Young Money") bring suit for (1) copyright infringement; (2) contributory copyright infringement; (3) unfair competition; and (4) accounting. Defendant Joshua A. Krause moves to dismiss the claims under Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6), or in the alternative to strike under 12(f). Having carefully considered the papers filed in support of and in opposition to the instant Motion, the Court deems the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; Local R. 7-15. For the reasons discussed below, Krause's motion is GRANTED in part and DENIED in part.

II.FACTUAL BACKGROUND

In 2007, Defendants (including Krause) began working on a documentary film about Carter's stage persona as Lil Wayne titled The Carter, which was ultimately released in 2009. (FAC ¶ 14.) During the production process, Defendants decided to use several copyrighted works from Carter's album Tha Carter III in the film. (FAC ¶ 15.) Young Money alleges that Defendants never obtained authorization to use the following Tha Carter III works in the film: (1) "Mr. Carter"; (2) "La La"; (3) "Stuntin' Like My Daddy"; (4) "Lollipop"; (5) "Let the Beat Build"; (6) "Pussy Monster"; (7) "A Milli"; and (8) "Dontgetit." (FAC ¶¶ 16--17.)

Young Money alleges that Defendants began distributing the film in late 2010 and continue to do so today. (FAC ¶ 18.) Defendants utilized numerous national and international commercial channels to distribute The Carter, including iTunes and Amazon. (Id.) Young Money further alleges the film was shown in numerous locations, including in Venice, California, in the spring of 2012. (Id.)

Young Money contends that while Defendants were allegedly informed that including music from Tha Carter III was not authorized, Defendants facilitated, approved, organized, and ensured infringing use of the works anyway. (FAC ¶¶ 24-- 25.) Krause helped to market, distribute, produce, and screen the film. (FAC ¶ 26.) On March 29, 2009, Young Money Entertainment and Carter filed suit in Los Angeles Superior Court against Digerati Holdings, LLC; QD3 Entertainment, Inc.; and Quincy Delight Jones III for breach of contract and other claims related to the release and distribution of The Carter. (RJN Ex. A (the "State Complaint").) At issue in this action was an agreement Digerati entered into with Carter and Young Money, whereby (among other things) Carter would provide various services, photos, and videos for use in connection with The Carter. (Id. ¶ 18.) Under this agreement, Carter held the right to object to and give final approval for any content or scenes that depicted activities that are criminal in nature. (Id. ¶ 21.)

The State Complaint alleged that before the film was released, Carter exercised his right under the agreement to object to selected content that portrayed him in a negative light. (Id. ¶¶ 23--24.) The complaint also set forth specific dates and locations where the film was shown in early 2009 without Carter's final approval. (Id. ¶ 27.) Judgment on a jury verdict in Defendants' favor was entered in this action on November 8, 2012.

On April 28, 2010, Lavell Crump, Darius Harrison, and the Royalty Network sued QD3 Entertainment and Virgil Films and Entertainment, LLC in the Southern District of New York for using three of the copyrighted musical compositions in Tha Carter III at issue here: "Pussy Monster," "La La," and "Lollipop." (RJN Ex. B.) On February 8, 2011, the District Court for the Southern District of New York held on summary judgment that Carter (not a party to the action, but nevertheless a co-owner of the copyrighted works), had granted the Crump defendants a valid, non-exclusive license to use the musical compositions in the film, and thus the co-owner plaintiffs in the action were barred from suing for infringement. Crump v. QD3 Entm't, Inc., No. 10 civ. 3564, 2011 WL 446296, at *5 (S.D.N.Y. Feb 8., 2011).

On September 6, 2012, Young Money and Carter filed a copyright-infringement action before this Court against Digerati Holdings, QD3 Entertainment, Quincy Delight Jones III, Joshua A. Krause, and Jared Freedman. (ECF No. 1.) On October 16, Carter filed a First Amended Complaint, adding Young Money Publishing, Inc., as a party. (ECF No. 27.) Krause now moves to dismiss the First Amended Complaint.*fn1

III.LEGAL STANDARD

Dismissal under Rule 12(b)(6) can be based on "the lack of a cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). A complaint need only satisfy the minimal notice pleading requirements of Rule 8(a)(2)-a short and plain statement-to survive a motion to dismiss for failure to state a claim under Rule 12(b)(6). Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003); Fed. R. Civ. P. 8(a)(2). For a complaint to sufficiently state a claim, its "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While specific facts are not necessary so long as the complaint gives the defendant fair notice of the claim and the grounds upon which the claim rests, a complaint must nevertheless "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Iqbal's plausibility standard "asks for more than a sheer possibility that a defendant has acted unlawfully," but does not go so far as to impose a "probability requirement." Id. Rule 8 demands more than a complaint that is merely consistent with a defendant's liability-labels and conclusions, or formulaic recitals of the elements of a cause of action do not suffice. Id. Instead, the complaint must allege sufficient underlying facts to provide fair notice and enable the defendant to defend itself effectively. Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The determination whether a complaint satisfies the plausibility standard is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 566 U.S. at 679.

When considering a Rule 12(b)(6) motion, a court is generally limited to the pleadings and must construe "[a]ll factual allegations set forth in the complaint . . . as true and . . . in the light most favorable to [the plaintiff]." Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir. 2001). Conclusory allegations, unwarranted deductions of fact, and unreasonable inferences need not be blindly accepted as true by the court. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Yet, a complaint should be dismissed only if "it appears beyond doubt that the plaintiff can prove no set of facts" supporting plaintiff's claim for relief. Morley v. Walker, 175 F.3d 756, 759 (9th Cir. 1999).

As a general rule, leave to amend a complaint that has been dismissed should be freely granted. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when "the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency." Schreiber Distrib. Co. v. Serv-Well Furniture Co., ...


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