Collegesource, Inc. v. Academyone, Inc.

• Decision Date: 05 February 2015
• Docket Number: No. 12-4167,12-4167
• Parties: COLLEGESOURCE, INC., A California Corporation, Appellant v. ACADEMYONE, INC., A Pennsylvania Corporation; DAVID K. MOLDOFF, An Individual
• Court: U.S. Court of Appeals — Third Circuit

COLLEGESOURCE, INC., A California Corporation, Appellant v. ACADEMYONE, INC., A Pennsylvania Corporation; DAVID K. MOLDOFF, An Individual

No. 12-4167

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Submitted: December 8, 2014

February 5, 2015

NOT PRECEDENTIAL

On Appeal from the United States District Court for the Eastern District of Pennsylvania

(D.C. Civil No. 2-10-cv-03542)

District Judge: Honorable Mary A. McLaughlin

Submitted Under Third Circuit L.A.R. 34.1(a)

December 8, 2014

Before: VANASKIE, COWEN, and VAN ANTWERPEN, Circuit Judges

OPINION^*

VANASKIE, Circuit Judge Appellant CollegeSource (CS), a California corporation, and Appellee AcademyOne (A1), a Pennsylvania corporation, are competitors in the market for college credit-transfer information. CS alleges that A1 misappropriated the contents of CS's database in an effort to stock its own fledgling database. The District Court granted summary judgment on all claims in favor of A1. CS now challenges several of the District Court's rulings, including (1) the denial of its motion to transfer this case to California; (2) the exclusion of certain evidence; (3) the dismissal of its claims under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(c), without leave to amend; and (4) the grant of summary judgment in favor of A1. We will affirm.

I.

CS touts itself as "the pioneer of the digital college course catalog and college transfer credit industry." Appellant's Br. at 11. CS's main product is the "CollegeSource Online" database, which allows paying subscribers and trial users to search and inspect over 50,000 digital course catalogs and related documents culled by CS from the offerings of colleges across the country. CS has long undertaken efforts to prevent, or enable the detection of, duplication or use of its materials by potential competitors. For instance, throughout the period at issue here, CS embedded in its catalog files an unavoidable "splash page" alerting the user that the catalog originated from CS, (see, e.g., App. 2607), and a full-page "Copyright and Disclaimer," which states that "CollegeSource digital catalogs are derivative works owned and copyrighted by CollegeSource, Inc. . . . . Catalog content is owned and copyrighted by the appropriateschool," (see, e.g., App. 2608). The notice also declares that distribution and noncommercial use are prohibited. (Id.)

Users of CollegeSource Online must check a box that states, "By signing in above, I agree to be bound by the terms of the . . . Subscription Agreement." (See, e.g., App. 2535.) The hyperlinked Subscription Agreement states: "This Subscriber Agreement and Terms of Use govern your use of CollegeSource Online, TES, and, unless other terms and conditions expressly govern, any other electronic services from CollegeSource, Inc. that may be made available from time to time . . . ." (App. 2773.) The agreement also states that commercial use of the data is prohibited. (Id.)

Along with CollegeSource Online, CS offers a service known as "CataLink," which allows colleges to store their catalog information on CS's servers and link to that information from their websites, rather than hosting the information themselves. Since CataLink's inception, 110 schools have paid to use that service. (App. 2602-06.) Course catalogs accessed via CataLink, like those accessed via CollegeSource Online, contain the aforementioned Copyright and Disclaimer.

A1 was founded by Appellee David Moldoff in 2005 as a free online alternative to CS. In 2006, Moldoff approached CS to inquire whether A1 could purchase or license the contents of CS's database, but he was rebuffed. A1 then hired Beijing Zhongtian-Noah Sports Science Co., Ltd. (Noah), an independent Chinese subcontractor, to obtain course catalogs by downloading them directly from individual schools' websites. A1 also pursued an in-house effort to obtain course catalogs in the same way. By the time itsdatabase launched in early 2007, A1 had amassed course catalogs from roughly 4,000 schools, most of which originated from Noah's collection efforts.

A week after the debut of A1's database, CS sent a cease-and-desist letter to A1 alleging over 700 instances of copyright infringement and directing A1 to remove the infringing materials from its website. (App. 1370-74.) After a brief review, A1 discovered that CS's allegations were largely correct. In an email to CS's president, Moldoff explained that A1 had "removed ALL course catalog PDF files as of this afternoon and are working to determine actually how many catalogs are in question have [sic] your copyright statement." (App. 3004.) Moldoff also wrote that A1 would "honor [CS's] request and remove the content." (Id.) A1 immediately disabled public access to the database and made efforts to remove materials that had originated with CS. This task proved technically challenging, and the record reflects that as late as 2010, A1 discovered additional documents on its servers that contained CS's Copyright and Disclaimer.

In late 2008, A1 was the winning bidder for a contract with the State of South Carolina that had also been sought by CS. Shortly thereafter, CS filed a complaint against A1 in the United States District Court for the Southern District of California in which it alleged seven federal causes of action: (1) violations of the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. § 1030(g); (2) breach of contract; (3) unjust enrichment; (4) trademark infringement under the Lanham Act, 15 U.S.C. § 1114; (5) unfair competition under the Lanham Act, 15 U.S.C. § 1125(a); (6) false advertising under the Lanham Act, 15 U.S.C. § 1125(a); and (7) a declaration of trademark invalidity under 15U.S.C. § 1064. The complaint also alleged three causes of action under California law, including (1) a violation of the California Computer Crimes Act, Cal. Penal Code § 502; (2) misappropriation; and (3) unfair competition under Cal. Bus. & Prof. Code § 17200. Soon thereafter, A1 sent out several hundred letters to colleges stating that CS had filed "copyright claims . . . whereby [CS] is claiming ownership and control of your institution's digital catalog and the course descriptions contained within . . . ." (App. 565.)

A1 moved to dismiss the California action for lack of personal jurisdiction. The District Court permitted limited discovery on that issue. Moldoff filed affidavits stating that A1 transacted no business in California and had no knowledge that CS was based in California. The District Court ultimately dismissed for lack of personal jurisdiction and CS appealed. In July 2010, while the appeal was pending, CS sued A1 in federal district court in Pennsylvania, where jurisdiction was indisputably proper. That complaint contained the same federal claims raised in the California action, as well as a claim under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962(c). But it omitted the California state-law claims and added claims for breach of contract and unjust enrichment under Pennsylvania law.

In the following months, the Pennsylvania District Court dismissed the RICO claims, denied a preliminary injunction after a hearing, set a discovery schedule, and ruled on several discovery motions. In August 2011, however, the Ninth Circuit, while finding that general personal jurisdiction over A1 was lacking, concluded that A1 wassubject to specific personal jurisdiction in California and reinstated the original action. CS then moved in Pennsylvania to dismiss the second-filed action or transfer it back to California for consolidation with the original filing. The Pennsylvania District Court denied the motion, noting the progress made in the Pennsylvania case and citing an earlier representation by CS's counsel that it intended to continue litigating in Pennsylvania no matter what happened in the then-pending appeal before the Ninth Circuit. The California District Court then stayed the California action pending resolution of the case in Pennsylvania.

In February 2012, A1 moved for summary judgment. The District Court heard oral argument on June 13, 2012. Several months later, in September 2012, CS moved to supplement the record with newly discovered evidence and to reopen discovery to further explore that source of evidence. The District Court denied the motion, noting that the evidence, which for the most part was found on CS's own servers, was in CS's control throughout the lawsuit and could have been found at any point during discovery. On October 25, 2012, the District Court granted A1's motion for summary judgment and entered judgment in favor of A1 on all claims. CS filed a timely notice of appeal.

II.

The District Court had jurisdiction under 28 U.S.C. §§ 1331 and 1367. We have appellate jurisdiction under 28 U.S.C. § 1291. Our review of the District Court's order granting summary judgment is plenary. Trinity Indus., Inc. v. Chi. Bridge & Iron Co., 735 F.3d 131, 134 (3d Cir. 2013). We view the evidence "'in the light most favorable tothe nonmoving party.'" Id. at 134-35 (quoting Kurns v. A.W. Chesterton Inc., 620 F.3d 392, 395 (3d Cir. 2010)). Summary judgment is appropriate where the movant establishes "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Insofar as the District Court dismissed the RICO claims as a matter of law, our review is de novo.

We review the District Court's denial of leave to amend the complaint for abuse of discretion. Lake v. Arnold, 232 F.3d 360, 373 (3d Cir. 2000) (citations omitted). The same is true for our review of the District Court's refusal to dismiss or transfer the action, EEOC v. Univ. of Pa., 850 F.2d 969, 972 (3d Cir. 1988), as well as for our review of the District Court's decision to exclude evidence proffered after the expiration of a discovery deadline under Federal Rule of Civil Procedure 16(b), Eichorn v. AT&T Corp., 484 F.3d 644, 650 (3d Cir. 200...