Pan-American Prods. & Holdings, LLC v. R.T.G. Furniture Corp., 10–cv–508.

• Decision Date: 14 November 2011
• Docket Number: No. 10–cv–508.,10–cv–508.
• Court: U.S. District Court — Middle District of North Carolina
• Parties: PAN–AMERICAN PRODUCTS & HOLDINGS, LLC, Plaintiff, v. R.T.G. FURNITURE CORP., Roomstogo.Com, Inc., Rooms To Go North Carolina Corp., Rooms To Go Tennessee Corp., R.T.G. Furniture Corp. of Georgia, Rooms To Go Louisiana Corp., RTG Furniture of Texas, L.P., Rooms To Go Mississippi Corp., Rooms To Go Alabama Corp., Retail Management Services Corp., Defendants.

2011 Copr.L.Dec. P 30,158

825 F.Supp.2d 664

PAN–AMERICAN PRODUCTS & HOLDINGS, LLC, Plaintiff,

v.R.T.G. FURNITURE CORP., Roomstogo.Com, Inc., Rooms To Go North Carolina Corp., Rooms To Go Tennessee Corp., R.T.G. Furniture Corp. of Georgia, Rooms To Go Louisiana Corp., RTG Furniture of Texas, L.P., Rooms To Go Mississippi Corp., Rooms To Go Alabama Corp., Retail Management Services Corp., Defendants.

No. 10–cv–508.

United States District Court, M.D. North Carolina.

Nov. 14, 2011.

Richard A. Coughlin, Smith Moore, L.L.P., Greensboro, NC, for Plaintiff.

Michael Lindsay Robinson, H. Stephen Robinson, Robinson & Lawing, LLP, Winston–Salem, NC, for Defendants.

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, District Judge.

This is an action alleging copyright infringement as well as breach of contract, unjust enrichment, unfair competition, and unfair and deceptive trade practices under North Carolina law. Several motions are before the court. Five Defendants—R.T.G. Furniture Corp., Rooms to Go Tennessee Corp., Rooms to Go Louisiana Corp., Rooms to Go Mississippi Corp., and Rooms to Go Alabama Corp. (“Jurisdictional Defendants”) ¹—move to dismiss the First Amended Complaint (“FAC”) for lack of personal jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(2). (Doc. 28.) Plaintiff Pan–American Products & Holdings, LLC (“Pan–American”) opposes the motion and moves in the alternative for jurisdictional discovery. (Doc. 34.) In addition, the non-Jurisdictional Defendants move to dismiss the FAC for failure to state a claim upon which relief can be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6), on the grounds that the state law claims are preempted under the Copyright Act, 17 U.S.C. § 301, and the copyright claim fails; the Jurisdictional Defendants join in that motion if the court denies their jurisdictional motion. (Doc. 30.) All motions have been fully briefed and are ready for decision. For the reasons set forth herein, Jurisdictional Defendants' motion will be granted in part and denied in part without prejudice, Pan–American's motion for jurisdictional discovery will be granted (as limited by the court), and Defendants' motion to dismiss for failure to state a claim will be granted in part and denied in part.

I. BACKGROUND

The FAC alleges the following facts.

Pan–American designs and brokers the manufacture of furniture for wholesalers and retailers. It receives a commission for such sales, “typically from the furniture manufacturers.” (Doc. 23 ¶ 21.) Although Defendants are separate corporations, the FAC refers generically to all Defendants as “Rooms to Go,” which is allegedly “one of the largest retailers of furniture in the United States,” “operat[ing] stores throughout the United States” as well as conducting sales over the Internet. ( Id. ¶ 23.)

In late 2003, Peter Aiken, an artist and professional furniture designer who later assigned his ownership rights to Pan–American, created furniture identified as the “Retro Collection.” Works of art interpreting the “Art Deco” style were incorporated into the furniture designs. Pan–American alleges that the Retro Collection reflects “creative spark” and the creator's “artistic judgment.” ( Id. ¶ 25.) As an example, Pan–American alleges “a collection of panels with alternating grains in order to create a sense of depth and visual tension” and tapered appliques which were capable of existing separate and apart from the bed's functional or useful purpose. ( Id. ¶¶ 26, 27.)

In late 2003 and into the Spring of 2004, Pan–American President Chris Anderson (“Anderson”) met with “Rooms to Go” to discuss terms and conditions under which Rooms to Go would sell furniture incorporating the Retro Collection design. ( Id. ¶ 29.) “It was discussed and agreed” that Rooms to Go would acquire no ownership interest in the designs and that it would be required to use Pan–American to broker the manufacture of furniture made pursuant to Retro Collection designs. ( Id.) As a result of such purchases, Pan–American would earn and receive a commission from the manufacturer. ( Id.) The typical commission for brokerage work was ten percent (10%) of the invoiced amount, and “Pan–American and Rooms to Go operated under such arrangements with regard to other products.” ( Id.)

In December 2003, Pan–American organized a visit to a Brazilian factory that had manufactured Retro Collection samples. Dan Bazarte (“Bazarte”), a buyer with Rooms to Go, and Tom Maldondo, a quality control representative for Rooms to Go, participated in the visit. ( Id. ¶ 31.) The next month, Anderson met with Bazarte, “Rooms to Go” President Jeff Seaman (“Seaman”), and others in Atlanta, Georgia. ( Id. ¶ 32.) Pan–American alleges, “upon information and belief,” that Bazarte is a buyer for all Defendants, that Seaman is an officer in all or most of the Defendants, and that both acted on behalf of all Defendants at all times in their dealings with Anderson. ( Id.) During these meetings, Rooms to Go expressed an interest in selling the Retro Collection in its stores and “confirmed its agreement that if it did so, it would use Pan–American to broker the manufacture of such furniture.” ( Id. ¶ 33.)

Based on the parties' discussions, in February 2004 Pan–American provided Rooms to Go with samples of the Retro Collection as well as copies of the designs. The designs were marked as copyrighted. ( Id. ¶ 34; Doc. 23–1, Ex. A.) In the spring of 2004, Anderson and Rooms to Go continued to discuss the sale of furniture manufactured pursuant to the Retro Collection designs, focusing primarily on pricing terms. Pan–American negotiated pricing with a Brazilian manufacturer and reached an agreement with that manufacturer under which Pan–American would receive a ten percent (10%) commission. (Doc. 23 ¶ 35.) At Rooms to Go's request, Pan–American provided Rooms to Go with a revised pricing sheet via e-mail dated April 25, 2004. ( Id. ¶ 35; Doc. 23–2, Ex. B.) Pan–American alleges its e-mail “clearly reflects the parties' agreement that the designs to the Retro Collection would remain the property of Pan–American.” (Doc. 23 ¶ 35.) The e-mail instructed Rooms to Go to submit all orders for the furniture to Pan–American. ( Id. ¶ 36.)

Rooms to Go subsequently attempted to negotiate lower pricing terms from the Brazilian manufacturer directly but, failing to reach an agreement, did not submit any orders to Pan–American for the manufacture of furniture incorporating Retro Collection designs. ( Id. ¶ 37.) Pan–American alleges that, unbeknownst to it, Rooms to Go copied and/or created derivative works based on Pan–American's Retro Collection, or instructed others to do so. ( Id. ¶ 47.)

In late 2009, Pan–American learned that Rooms to Go was selling furniture incorporating the Retro Collection design under the name “Chaplin Collection,” which included dining and living room pieces, bedroom pieces, and an entertainment piece. ( Id. ¶¶ 38, 39; Doc. 23–3, Ex. C.) Pan– American asserts that Rooms to Go's Chapin Collection contains copies or derivative works of Pan–American's Retro Collection. (Doc. 23 ¶ 48; compare Doc. 23–1, Ex. A with Doc. 23–3, Ex. C.) Rooms to Go allegedly knew its actions constituted copyright infringement and acted in reckless disregard of Pan–American's copyright rights. (Doc. 23 ¶ 49.) Rooms to Go never sought or obtained Pan–American's permission to use its Retro Collection designs and has not paid it to broker the manufacture of such furniture. ( Id. ¶¶ 40, 41.)

Pan–American contends that its Retro Collection designs contain material that is wholly original and copyrightable under the laws of the United States. ( Id. ¶ 43.) In 2009, the U.S. Copyright Office issued copyright registrations for two-dimensional designs for each piece of the Retro Collection, which identify Pan–American as the copyright claimant.² ( Id. ¶ 44; Doc. 23–4, Ex. D.) On September 17, 2010, six days before filing the FAC, Pan–American submitted an application with the U.S. Copyright Office to register three-dimensional/sculptural work embodied in the Retro Collection designs for a round mirror design, short dresser design, medium dresser design, armoire design, and nightstand design.³ (Doc. 23 ¶ 46.)

The Jurisdictional Defendants now challenge this court's exercise of jurisdiction over their persons, and all Defendants move to dismiss all claims on the ground that the state law claims are preempted under the Copyright Act and the copyright claim fails to state a claim. Because the court's jurisdiction over the Jurisdictional Defendants is a threshold issue, it will be addressed first.

II. MOTION TO DISMISS PURSUANT TO RULE 12(b)(2) AND MOTION FOR JURISDICTIONAL DISCOVERYA. Motion to Dismiss Pursuant to Rule 12(b)(2)

The FAC contains the following allegations of personal jurisdiction:

This Court has personal jurisdiction over Rooms to Go under the provisions of N.C. Gen.Stat. § 1–75.4 and consistent with the principles underlying the U.S. Constitution because Rooms to Go has committed tortious acts that were directed toward this State and have otherwise conducted business in this State such that Rooms to Go has sufficient minimum contacts with the State of North Carolina to permit the exercise of personal jurisdiction.

In particular, upon information and belief, the acts complained of below were committed by agents of and on behalf of all the Defendants such that those agents' contacts can be attributed to each of the Defendants for purposes of personal jurisdiction.

Upon information and belief, the Defendants are commonly owned, have overlapping board of director members, and are all managed by a single entity. In addition, upon information and belief, all of the Defendants operate an integrated software system and operate as a single entity with regard to decisionmaking procedures for selecting furniture to sell in the Rooms to Go retail stores and over the internet. Upon information and belief, the...