BWP Media USA Inc. v. Hollywood Fan Sites, LLC

• Decision Date: 14 November 2014
• Docket Number: No. 14–CV–121 JPO.,14–CV–121 JPO.
• Citation: 69 F.Supp.3d 342,112 U.S.P.Q.2d 1956
• Parties: BWP MEDIA USA INC. d/b/a Pacific Coast News and National Photo Group, LLC, Plaintiffs, v. HOLLYWOOD FAN SITES, LLC, Fan Sites Org., LLC, Hollywood.com Holdings, LLC, Hollywood.com, LLC, R & S Investments, LLC, Hollywood Media Corp., Fan Sites Network, LLC, Mitchell Rubenstein, and Laurie S. Silvers, Defendants.
• Court: U.S. District Court — Southern District of New York

69 F.Supp.3d 342

112 U.S.P.Q.2d 1956

BWP MEDIA USA INC. d/b/a Pacific Coast News and National Photo Group, LLC, Plaintiffs

v.HOLLYWOOD FAN SITES, LLC, Fan Sites Org., LLC, Hollywood.com Holdings, LLC, Hollywood.com, LLC, R & S Investments, LLC, Hollywood Media Corp., Fan Sites Network, LLC, Mitchell Rubenstein, and Laurie S. Silvers, Defendants.

No. 14–CV–121 JPO.

United States District Court, S.D. New York.

Signed Nov. 14, 2014.

Craig B. Sanders, Stella Beth Goldstein, Sanders Law, PLLC, David Michael Barshay, Baker Sanders, LLC, Garden City, NY, for Plaintiffs.

Jonathan Bloom, Richard L. Levine, Weil, Gotshal & Manges, LLP, New York, NY, for Defendants.

OPINION AND ORDER

J. PAUL OETKEN, District Judge.

BWP Media USA Inc. d/b/a Pacific Coast News and National Photo Group, LLC (collectively, “Plaintiffs”) have brought suit against a collection of companies and two individuals¹ (collectively, “Defendants”) who, they allege, have violated federal copyright law as well as the Racketeer Influenced and Corrupt Organizations Act (“RICO”). Now before the Court is Defendants' motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6). For the reasons that follow, the motion is granted in part and denied in part.

I. Background

According to the allegations in the complaint, which are accepted as true at this stage, Plaintiffs own the rights to numerous “photographs featuring celebrities, which they license to online and print publications.” (Dkt. No. 1 (“Compl.”) ¶ 19.) The Defendants—six companies and two individuals—collectively operate the “Fan Sites Network.” (Id. ¶ 15.) Plaintiffs say that the Fan Sites Network is composed of “more than fifteen hundred ... websites dedicated to celebrities, films, television shows, and other artists,” which “generate over six hundred million ... public page views per month.” (Id. ) As part of their business model, Defendants have engaged in widespread infringement of the copyrights to Plaintiffs' photographs: according to the complaint, Defendants' “entire business” is sustained by displaying “stolen” or improperly licensed photographs—including photographs owned by Plaintiffs—on websites controlled by Defendants.

(Id. ¶¶ 23, 27–29.) They do so by recruiting “dummy webmasters” who “agree to update and maintain the content on the website[s]” without pay, but all the while, Defendants “retain the right of full control over the content of the websites.” (Id. ¶¶ 33–35.) Defendants monitor the websites to ensure that the content is regularly updated and also “induce, cause and/or materially contribute” to the infringing activity on the Defendants' websites. (Id. ¶¶ 38, 42.) Despite their alleged actual or constructive knowledge of the improper use of Plaintiffs' photographs, Defendants have not stopped or limited the theft, although they have the right and ability to do so through the implementation of “simple measures.” (Id. ¶¶ 36, 39–41.) Defendants profit from the websites because they host paid advertisements, and all advertising revenue “is realized by Defendants alone.” (Id. ¶ 45.)

On the basis of these allegations, Plaintiffs initiated this lawsuit on January 8, 2014. (Compl.) After an extension of time agreed upon by the parties, Defendants filed the instant motion to dismiss on March 28, 2014. (Dkt. No. 18.) In June, the parties filed additional letter briefing regarding the Second Circuit's non-precedential decision in Wolk v. Photobucket.com, Inc., 569 Fed.Appx. 51 (2d Cir.2014) (summary order). (Dkt. Nos. 32, 33.)

II. Discussion

Defendants have moved to dismiss on two grounds. First, Defendants Hollywood.com Holdings, LLC; R & S Investments, LLC; Hollywood Media Corp.; and individual defendants Mitchell Rubenstein and Laurie S. Silvers (collectively, the “Foreign Defendants”) have moved to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2). Second, all Defendants have moved to dismiss the complaint for failure to state a claim pursuant to Rule 12(b)(6).

A. Motion to Dismiss for Lack of Personal Jurisdiction

On a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of establishing personal jurisdiction. MacDermid, Inc. v. Deiter, 702 F.3d 725, 727 (2d Cir.2012). “[W]here, as here, a court relies on pleadings and affidavits, the complaint need only allege facts constituting a prima facie showing of personal jurisdiction.” Bidonthecity.com LLC v. Halverston Holdings Ltd., No. 12 Civ. 9258(ALC), 2014 WL 1331046, at *2 (S.D.N.Y. Mar. 31, 2014) (citation and internal quotation marks omitted); accord Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A., 722 F.3d 81, 84–85 (2d Cir.2013) (per curiam). All jurisdictional allegations “are construed in the light most favorable to the plaintiff and doubts are resolved in the plaintiff's favor ....” A.I. Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 79–80 (2d Cir.1993). However, the Court will not “draw argumentative inferences in the plaintiff's favor, nor accept as true a legal conclusion couched as a factual allegation.” Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50, 59 (2d Cir.2012) (citation and internal quotation marks omitted).

District courts deciding a motion to dismiss for lack of personal jurisdiction engage in a two-part analysis, first determining whether there is “a statutory basis for exercising personal jurisdiction,” Marvel Characters, Inc. v. Kirby, 726 F.3d 119, 128 (2d Cir.2013), and second deciding whether the exercise of jurisdiction comports with due process, Sonera Holding B.V. v. Çukurova Holding A.S., 750 F.3d 221, 224 (2d Cir.) (per curiam), cert. denied, – –– U.S. ––––, 134 S.Ct. 2888, 189 L.Ed.2d 837 (2014). In the statutory portion of the analysis, the court in a federal question case “applies the forum state's personal jurisdiction rules,” unless a federal statute “specifically provide[s] for national service of process.” PDK Labs, Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d Cir.1997) (internal quotation marks omitted). Thus, New York's statutory law applies in this case unless there is a federal statutory basis for jurisdiction.

Defendants assert that the exercise of personal jurisdiction is improper as to the Foreign Defendants. (Dkt. No. 19 (“Defs.' Br.”) at 6.)

1. General Jurisdiction

Plaintiffs contend that they can bring Foreign Defendant Hollywood Media Corp. (“HMC”) into this forum in the exercise of general jurisdiction. (Dkt. No. 27 (“Ptfs.' Br.”) at 6.) New York's case law interpreting Rule 301 of the Civil Procedure Law and Rules historically permitted the exercise of personal jurisdiction, for purposes of New York statutory law, “over a foreign corporation that is engaged in such a continuous and systematic course of ‘doing business' in New York as to warrant a finding of its ‘presence’ in the state, even if the cause of action is unrelated to the defendant's New York activities.” Jazini v. Nissan Motor Co., 148 F.3d 181, 184 (2d Cir.1998) (brackets, citation, and internal quotation marks omitted). However, both parties have failed to raise the question whether general jurisdiction over HMC would comport with the Due Process Clause following the Supreme Court's recent decision in Daimler AG v. Bauman, ––– U.S. ––––, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014), which was decided before the motion to dismiss and subsequent briefing were filed.²

General jurisdiction over HMC is inconsistent with due process in this case. “[G]eneral jurisdiction exists only when a corporation's contacts with a state are so ‘continuous and systematic’ as to render it essentially at home in the forum State.” Sonera Holding B.V., 750 F.3d at 225 (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, ––– U.S. ––––, 131 S.Ct. 2846, 2851, 180 L.Ed.2d 796 (2011) ) (emphasis added; brackets and internal quotation marks omitted). The Supreme Court clarified in Daimler that the “paradigm bases” for determining the place where a corporation is “at home” are “the place of incorporation and the principal place of business.” Id. (citing Daimler, 134 S.Ct. at 760 ). “Only on truly ‘exceptional’ occasions may general jurisdiction extend over individuals who are ‘at home’ in a state that is not otherwise their domicile.” Reich v. Lopez, No. 13 Civ. 5307(JPO), 38 F.Supp.3d 436, 455, 2014 WL 4067179, at *12 (S.D.N.Y. Aug. 18, 2014).

Plaintiffs originally asserted in their complaint that HMC's principal place of business is in New York City. (Compl. ¶ 11.) This bare allegation, however, is insufficient; further, it is countered by the affidavit of Mitchell Rubenstein, the CEO of HMC, who asserts that HMC is a Florida corporation with its principal place of business in Florida. (Dkt. No. 22 (“Rubenstein Decl.”) ¶ 10.) In their opposition to the motion to dismiss, Plaintiffs abandon their prior allegation that HMC has a New York principal place of business and do not make any effort to show that HMC is “at home” in New York.³ Rather, they set forth a number of claims regarding HMC's “repeated business transactions ... that occurred in New York, were entered into with New York-based companies, and/or produced substantial revenue from goods used in New York” (Dkt. No. 28 (“Goldstein Decl.”) ¶ 3), all of which are unrelated to the matter at hand. Even assuming the truth of these purported facts—and the Court notes that many of them are contested by Defendants—Plaintiffs leave unanswered the essential question under governing law: whether New York is HMC's “home.” “[E]ven a company's engagement in a substantial, continuous, and systematic course of business is alone insufficient to render it at home in a forum.” Sonera Holding B.V., 750 F.3d at 226 (quoting Daimler, 134 S.Ct. at 761 ) (brackets and internal quotation marks omitted).

While Plaintiffs also claim that HMC has an office on Broadway in New York City (Compl. ¶ 6), this, too, fails to answer the question of where HMC is at home—assuming there is such an office, which the defendants dispute.⁴ Even...