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43 North Broadway LLC v. Essential Media Group LLC

United States District Court, S.D. Florida

June 11, 2018

43 NORTH BROADWAY LLC, Plaintiff,
v.
ESSENTIAL MEDIA GROUP LLC, Defendant.

          AMENDED ORDER ON PLAINTIFF'S MOTION FOR LEAVE TO FILE AMENDED COMPLAINT

          EDWIN G. TORRES, United States Magistrate Judge

         This matter is before the Court on Plaintiff's Motion for Leave to File an Amended Complaint and Add Parties, filed on March 13, 2018. [D.E. 34]. Defendant filed a response in opposition to the Motion on March 14, 2018, and the Reply followed on March 21. [D.E. 35, 36]. After a review of the Motion, Defendant's Response, and upon Plaintiff's Motion for Reconsideration [D.E. 40], we hold that Plaintiff's Motion should be GRANTED in part and DENIED in part.

         I. FACTUAL BACKGROUND

         Plaintiff initially filed suit in the District Court for the Central District of California. [D.E. 1]. The Complaint names as the defendant ESSENTIAL MEDIA GROUP, LLC (“Defendant, ” “Essential Media, ” or “EMG”), a limited liability company organized and operating in the State of Florida. Id., ¶ 2. Plaintiff 43 NORTH BROADWAY, LLC (“Plaintiff”), a New York corporation, brought suit under the provisions of the Copyright Act of 1976, 17 U.S.C. §§ 101 et seq., claiming that Defendant unlawfully and without Plaintiff's permission used and claimed ownership of the copyrighted song “Baby, I'm Gonna Love You.” Id. ¶¶ 1, 7. The Complaint asserts a single cause of action, seeking damages from Essential Media for direct infringement of the copyrighted work. [D.E. 1, p. 3].

         Based on the parties' stipulation, the Central District of California transferred the case to this Court on December 14, 2017. [D.E. 15]. Defendant answered the Complaint on January 8, 2018. [D.E. 25]. On March 13, 2018, Plaintiff sought to amend its Complaint and add certain parties to the lawsuit, and that matter is now before this Court. [D.E. 34]. Plaintiff seeks to add Paul Klein, Rama Barwick, and Sharon Klein, individuals allegedly managing Defendant's operation at the time the infringing conduct took place. Id., ¶ 4-5. According to the Motion, the individuals to be added had knowledge, profited, and internally induced EMG's direct infringement. Id. Plaintiff therefore also asks that a second cause of action for secondary copyright infringement against those same individuals be added to the Complaint. Id.

         Defendant opposes the Motion, arguing that amendment would be futile because the Amended Complaint fails to plead the necessary elements of a secondary liability claim under the Copyright Act - namely, that the individual officers not only profited from the alleged infringement, but also had the right to and ability to supervise the direct infringer. Id., p. 2. For the reasons stated below, we will allow Plaintiff to amend the Complaint to add the individuals to Count I, but deny the request to add a second count to the Complaint.

         II. ANALYSIS

         Unless otherwise specified, a party may amend its pleading “only with the opposing party's written consent or the court's leave.” Fed.R.Civ.P. 15(a)(2).[1" name="FN1" id= "FN1">1] The Rule goes on to state that “[t]he court should freely give leave when justice so requires.” Id.; Patel v. Georgia Dept. BHDD, 485 Fed.Appx. 982 (11th Cir. 2012). Despite this, a court may deny leave to amend on numerous grounds, including the futility of the amendment. Maynard v. Bd. of Regents of Div. of Univ. of Florida Dept. of Educ. ex rel. Univ. of S. Florida, 1281');">342 F.3d 1281, 1287 (11th Cir. 2003). Futility justifies the denial of leave to amend where the complaint, as amended, would still be subject to dismissal. Burger King Corp. v. Weaver, 169 F.3d 1310, 1320 (11th Cir. 1990) (citations omitted).

         A. Count I - Direct Infringement

         Plaintiff is correct that corporate officers can be held liable for a corporation's infringing activity. See Southern Bell Tel. and Tel. Co. v. Associated Tel. Directory Publishers, 1');">756 F.2d 801, 811 (11th Cir. 1985). This would be applicable to claims of direct infringement, which Plaintiff alleges took place in Count I. For this reason, the Motion to Amend the Complaint as to this Count will be GRANTED. See id.

         B. Count II - Secondary Infringement

         Plaintiff's arguments about asserting a claim for secondary infringement, however, remain meritless, and so we will deny the request to amend the Complaint to add a second count against the Defendants. There are two types of copyright infringement: direct and secondary. Direct copyright infringement requires proof that the plaintiff: (1) owns a valid copyright; and (2) the defendant copied protected elements of that work that are original. Disney Enterprises, Inc. v. Hotfile Corp., 1303');">798 F.Supp.2d 1303, 1307 (S.D. Fla. 2011) (citing Saragama India Ltd. v. Mosley, 1284');">635 F.3d 1284, 1290 (11th Cir. 2011)). “Copying” includes infringing on any of the exclusive rights set forth in 17 U.S.C. § 106 - the right to reproduce, distribute, publicly display, perform, or create derivative works of the copyrighted materials. 17 U.S.C. § 106(1) - (6).

         Secondary liability applies when a defendant is held responsible for a third party's acts of infringement, even though the defendant did not engage in direct infringement themselves. See Sony Corp. of Am. v. Universal City Studios, Inc., 17');">464 U.S. 417, 435 (1984). There are two types of secondary infringing activity: contributory and vicarious. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 13');">545 U.S. 913, 930 (2005). Contributory copyright infringement occurs where a defendant “intentionally induc[es] or encourage[es] direct infringement.” Id. Vicarious infringement occurs when a defendant “profits directly from the infringement and has a right and ability to supervise the direct infringer, even if the defendant initially lacks knowledge of the infringement. Id. at 931 n.9.

         Plaintiff now seeks to amend its Complaint based on Groskter and its progeny. It claims that certain individuals involved in the management of Essential Media “intentionally induced, encouraged or materially contributed to [EMG's] direct infringement.” [D.E. 34-1, ¶19]. But the Motion must be denied because Plaintiff's ...


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