Joe Hand Promotions, Inc. v. Jacobson

• Decision Date: 08 June 2012
• Docket Number: No. 03:11–cv–00065–HU.,03:11–cv–00065–HU.
• Parties: JOE HAND PROMOTIONS, INC., a Pennsylvania corporation, Plaintiff, v. Randy JACOBSON, individually, and as the alter ego of Par III, Inc., dba The Porterhouse Restaurant; and Par III, Inc., an Oregon domestic corporation, dba The Porterhouse, Defendants.
• Court: U.S. District Court — District of Oregon

874 F.Supp.2d 1010

JOE HAND PROMOTIONS, INC., a Pennsylvania corporation, Plaintiff,

v.Randy JACOBSON, individually, and as the alter ego of Par III, Inc., dba The Porterhouse Restaurant; and Par III, Inc., an Oregon domestic corporation, dba The Porterhouse, Defendants.

No. 03:11–cv–00065–HU.

United States District Court, D. Oregon.

June 8, 2012.

Samuel C. Justice, Attorney at Law, Portland, OR, for Plaintiff.

Terrence J. Slominski, David W. Venables, Slominski & Associates, Tigard, OR, for Defendants.

MEMORANDUM OPINION AND ORDER ON MOTION FOR SUMMARY JUDGMENT

HUBEL, United States Magistrate Judge:

The plaintiff Joe Hand Promotions, Inc. (“Joe Hand”) brings this action under the Federal Communications Act of 1934, 47 U.S.C. §§ 553¹ and 605² (the “FCA”), alleging the defendants Randy Jacobson (“Jacobson”) and Par III, Inc. (“Par III”), doing business as the Porterhouse Restaurant (the “Restaurant”), unlawfully exhibited the “Ultimate Fighting Championship 93: Franklin v. Henderson Program” (the “Program”) at the Restaurant on January 17, 2009. Joe Hand claims it paid for and received exclusive nationwide television distribution rights for the Program, and it entered into sublicensing agreements to show the Program with various commercial enterprises throughout North America. Joe Hand claims the defendants unlawfully intercepted, published, exhibited, and divulged the Program for private financial gain without obtaining a sublicense to do so from Joe Hand, in violation of the FCA. Joe Hand also asserts a common-law claim for conversion of the Program. Joe Hand seeks statutory damages up to $100,000 for the defendants' violation of 47 U.S.C. § 605; statutory damages up to $50,000 for the defendants' violation of 47 U.S.C. § 553; compensatory damages to be proved at trial for conversion; and its attorney's fees and costs. Dkt. # 1.

The matter is before the court on the defendants' motion for summary judgment. The defendants move for summary judgment on three grounds, each of which is discussed below.

Standards

Summary judgment “should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c)(2). In considering a motion for summary judgment, the court “must not weigh the evidence or determine the truth of the matter but only determine whether there is a genuine issue for trial.” Playboy Enters., Inc. v. Welles, 279 F.3d 796, 800 (9th Cir.2002) (citing Abdul–Jabbar v. General Motors Corp., 85 F.3d 407, 410 (9th Cir.1996)).

The Ninth Circuit Court of Appeals has described “the shifting burden of proof governing motions for summary judgment” as follows:

The moving party initially bears the burden of proving the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the non-moving party bears the burden of proof at trial, the moving party need only prove that there is an absence of evidence to support the non-moving party's case. Id. at 325, 106 S.Ct. 2548. Where the moving party meets that burden, the burden then shifts to the non-moving party to designate specific facts demonstrating the existence of genuine issues for trial. Id. at 324, 106 S.Ct. 2548. This burden is not a light one. The non-moving party must show more than the mere existence of a scintilla of evidence. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The non-moving party must do more than show there is some “metaphysical doubt” as to the material facts at issue. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In fact, the non-moving party must come forth with evidence from which a jury could reasonably render a verdict in the non-moving party's favor. Anderson, 477 U.S. at 252, 106 S.Ct. 2505. In determining whether a jury could reasonably render a verdict in the non-moving party's favor, all justifiable inferences are to be drawn in its favor. Id. at 255, 106 S.Ct. 2505.

In re Oracle Corp. Securities Litigation, 627 F.3d 376, 387 (9th Cir.2010).

Discussion

A. Corporate Veil

The defendants argue Joe Hand has not shown Jacobson had any involvement in the alleged showing of the Program, and in any event, he cannot be held individually liable for Par III's actions solely on the basis that he is president of the corporation. Joe Hand responds that Jacobson is listed on records of the Oregon Secretary of State as the registered agent, president, and secretary of Par III, Inc., with no other individual being listed as an officer or shareholder of the corporation. Joe Hand asserts Jacobson is solely responsible for the day-to-day operations of the corporation (and, therefore, the Restaurant), giving rise to “an inference that the corporation is his alter ego[.]” Dkt. # 26 (Pl's Memorandum), p. 3 (citing Jacobson's Declaration, Dkt. # 24); see Dkt. # 24, Jacobson's Declaration, ¶ 2 & attachment). Joe Hand claims, therefore, that issues of fact exist regarding Jacobson's involvement in showing the Program, precluding summary judgment. Id.

The defendants rely on State ex rel. Neidig v. Superior National Insurance Co., 343 Or. 434, 173 P.3d 123 (2007), in which the Oregon Supreme Court discussed in detail the elements required to pierce the corporate veil. The analysis begins with the Oregon Supreme Court's decision in Amfac Foods v. International Systems, 294 Or. 94, 108–09, 654 P.2d 1092, 1101–02 (1982), where the court explained an “exception to the rule of shareholder immunity”:

“We state the exception to the rule as follows: When a plaintiff seeks to collect a corporate debt from a shareholder by virtue of the shareholder's control over the debtor corporation rather than on some other theory, the plaintiff must allege and prove not only that the debtor corporation was under the actual control of the shareholder but also that the plaintiff's inability to collect from the corporation resulted from some form of improper conduct on the part of the shareholder. This causation requirement has two implications. The shareholder's alleged control over the corporation must not be only potential but must actually have been exercised in a manner either causing the plaintiff to enter the transaction with the corporation or causing the corporation's default on the transaction or a resulting obligation. Likewise, the shareholder's conduct must have been improper either in relation to the plaintiff's entering the transaction or in preventing or interfering with the corporation's performance or ability to perform its obligations toward the plaintiff.”

Neidig, 343 Or. at 454, 173 P.3d at 135 (emphasis added; quoting Amfac, supra ).

The Neidig court noted the Amfac test, “although easily stated, may not be easily applied .... Indeed, each part of the test—control, wrongful conduct, and causation—can present close legal and factual questions that must be considered in reaching the ultimate equitable determination as to whether the corporate veil can be pierced.” Id., 343 Or. at 455, 173 P.3d at 136 (citations omitted). The court quoted with approval from Fletcher Cyclopedia of the Law of Corporations § 41.10, 143–47 (2006 rev.), noting Fletcher “derives from the cases a three-part inquiry that is consistent with Amfac,” to-wit:

“While the factors that will justify piercing the corporate veil vary from jurisdiction to jurisdiction, a number of courts will disregard the existence of a corporate entity when the plaintiff shows: (1) control, not merely majority or complete stock control, but complete domination, not only of the finances, but of policy and business practice in respect to the transaction so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; (2) that such control was used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or to commit a dishonest and unjust act in contravention of the plaintiff's legal rights; and (3) that the aforesaid control and breach of duty proximately caused the injury or unjust loss.”

Neidig, 343 Or. at 455 n. 16, 173 P.3d at 136 n. 16 (quoting Fletcher, supra ).

Stated another way:

To pierce the corporate veil, ... plaintiff must make a prima facie showing that the individual defendants controlled the corporations, that they engaged in improper conduct in their exercise of control, and that their improper conduct caused plaintiff's inability to obtain an adequate remedy from the corporation.

Aero Planning Int'l, Inc. v. Air Assoc., Inc., 94 Or.App. 143, 145, 764 P.2d 610, 612 (1988) (citing Rice v. Oriental Fireworks Co., 75 Or.App. 627, 633, 707 P.2d 1250, 1255 (1985)). In Aero Planning, the plaintiff alleged the individual defendants improperly commingled the accounts and affairs of the corporate defendants, “undercapitalizing them and ‘milking’ their assets,” apparently to the point that the corporations could not respond to a judgment. Aero Planning, 94 Or.App. at 146, 764 P.2d at 612. The court found, however, the plaintiff had failed to establish that, “as between the shareholders and the defendant corporations, the shareholders disregarded the corporate entities.” Id.

In the present case, Jacobson has submitted a Declaration in which he states he “had no involvement in any alleged showing of a UFC event on January 17, 2009, at the Porterhouse Restaurant.” Dkt. # 24, ¶ 4. Joe Hand has offered no contrary evidence. Likewise, it has offered no evidence that raises an issue of fact regarding Jacobson's personal involvement in causing Joe Hand to be unable to collect a judgment against the corporation. Joe Hand has failed to meet its burden to “designate specific facts demonstrating the existence of genuine issues for trial.” In...