Opinion
Case No. CV 03-5834-GHK (VBKx).
April 28, 2005
PROCEEDINGS: AMENDMENT TO COURT'S ORDER
The court's order dated March 17, 2004, published at 73 U.S.P.Q. 2d 1300, 2004 U.S. Dist. LEXIS 26987, 2004 WL 3111931 (C.D. Cal. March 17, 2004), is hereby amended. The following order shall replace and supercede the court's March 17, 2004 order:
This matter is before the Court on the above-titled motion. This motion is appropriate for resolution without oral argument. Fed.R.Civ.P. 78; Local Rule 7-15. After fully considering the briefs and papers pertaining to this matter, we rule as follows:
I. Introduction.
Plaintiff Celestial Mechanix, Inc. ("Plaintiff") filed this action on August 15, 2003, against Defendants Susquehanna Radio Corporation ("Defendant") and Peter Rosler. Plaintiff asserted a federal claim for Copyright Infringement and state law claims for Breach of Oral Contract; Breach of Implied Contract; Breach of the Covenant of Good Faith and Fair Dealing; Fraud; Breach of Confidence; Interference with Contract; Interference with Prospective Business Advantage; and Unfair Competition.
Defendant Rosler filed a Notice of Joinder in this motion on March 4, 2004. However, for sake of clarity, we analyze this motion as if Defendant Susquehanna brought it alone, as this is the manner in which the parties' arguments are structured. We refer to Defendant Susquehanna as "Defendant" throughout this order. Our disposition, however, shall apply to Defendant Rosler where applicable.
On November 3, 2003, Judge Harry Hupp stayed Defendant's original Motion to Dismiss to allow Plaintiff an opportunity to demonstrate that its copyright had been registered by the United States Copyright Office, such that the court could determine whether subject matter jurisdiction existed. On January 21, 2004, Plaintiff filed a First Amended Complaint ("FAC") setting forth the registration of Plaintiff's copyright, and asserting the same claims against the same defendants as in the original complaint. Defendant subsequently filed the present motion on February 12, 2004, seeking to transfer this action to the United States District Court for the Northern District of Georgia pursuant to 28 U.S.C. § 1404(a) or, in the alternative, to dismiss Plaintiff's state law claims under Fed.R.Civ.P. 12(b)(6) on grounds that they are preempted by the federal Copyright Act, 17 U.S.C. § 301(a). Defendant also moves to dismiss Plaintiff's Fraud claim for inadequacy under Fed.R.Civ.P. 9(b).
II. Relevant Factual Background
Plaintiff is a Los Angeles-based corporation in the business of writing, producing and syndicating television advertisements for, among other things, radio stations across the county. FAC ¶ 10. After producing the advertisement, Plaintiff "syndicates" it by replacing the name and logo of the radio station for which the commercial was originally produced with the name and logo of other stations in exchange for a licensing fee. Id. Defendant is a Pennsylvania corporation in the business of radio broadcasting. Defendant owns and operates WWWQ-FM radio station which broadcasts in and around Atlanta, Georgia.
In February 2003, WWWQ-FM viewed a promotional reel containing several television advertisements that Plaintiff had produced.Id. After viewing this reel, WWWQ-FM requested Plaintiff to develop and produce a television advertisement for the WWWQ-FM morning radio show. Id. On February 26, 2003, Plaintiff sent WWWQ-FM an e-mail conveying a proposed script for a television commercial. FAC ¶ 11. WWWQ-FM responded to Plaintiff in an e-mail on February 27, 2003, stating that it was "excited" about the script and planned to use it to advertise the morning program. FAC ¶ 12. On March 3, 2003, Plaintiff provided "preliminary budgets" to WWWQ-FM. FAC ¶ 13. Following this communication, Plaintiff did not hear from WWWQ-FM for over two weeks, when WWWQ-FM contacted Plaintiff to advise Plaintiff that it "could not afford" Plaintiff's quoted price. Id.
At this point, Plaintiff alleges that WWWQ-FM "unilaterally revealed and disclosed" the script to Defendant Rosler, a California-based producer of television advertisements for radio stations who is one of Plaintiff's competitors. Id. Thereafter, Defendant Rosler allegedly produced a commercial for WWWQ-FM that utilized Plaintiff's script without authorization or compensation to Plaintiff and without preserving Plaintiff's syndication rights. Id. Plaintiff brought the present action based on this alleged unauthorized use of the script.
III. Motion to Transfer Venue
A. Legal Standard
Defendant moves to transfer this action to the Northern District of Georgia pursuant to 28 U.S.C. § 1404(a). Section 1404(a) provides: "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district court or division where it might have been brought." 28 U.S.C. § 1404(a).
There is no dispute that the Northern District of Georgia is a District where this action "might have been brought."
In evaluating whether transfer is appropriate under § 1404(a), a court must "balance the preference accorded to the plaintiff's choice of forum with the burden of litigating in an inconvenient forum." Gherebi v. Bush, 352 F.3d 1278, 1302 (9th Cir. 2003) (citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947), vacated on other grounds Bush v. Gherebi, ___ U.S. ___, 124 S. Ct. 2932 (2004). In conducting this inquiry, the court should consider "private and public factors" including, (1) convenience of the parties; (2) convenience of the witnesses; (3) access to proof; (4) location of underlying conduct; (5) availability of compulsory process; (6) judicial economy/relative docket congestion; and (7) jury service burden. See id. See also Schwartzer, Tashima Wagstaffe, Cal. Practice Guide: Fed. Civ. P. Before Trial § 4:731-744 (Rutter Group 2005).
"[A]s a general matter, the district court is not required to determine the best venue, and transfer under § 1404(a) should not be freely granted." Gherebi, 352 F.3d at 1303 (internal citations and quotations omitted). Moreover, § 1404(a) provides for transfer to a more convenient forum, not to a forum likely to prove equally convenient or inconvenient, and a transfer should not be granted if the effect is simply to shift the inconvenience to the party resisting the transfer. Id. Finally, "there is a strong presumption in favor of the plaintiff's choice of forum."Id. (internal quotation omitted). As such, "[t]he defendant must make a strong showing of inconvenience to warrant upsetting the plaintiff's choice of forum." See Decker Coal Co. v. Commonw. Edison Co., 805 F.2d 834, 843 (9th Cir. 1986). After considering the parties' arguments in light of this guidance, we conclude that transfer is not appropriate under § 1404(a).
B. Analysis of relevant factors
1. Convenience of the parties
As the key parties in this action (CMI and WWWQ-FM) are located in Los Angeles, California, and Atlanta, Georgia, respectively, one party will have to travel cross-country for trial regardless of whether this case is venued in the Central District of California or the Northern District of Georgia. While this factor is seemingly "neutral," the relative ability of the parties to absorb the costs associated with litigating in a distant forum is a valid consideration. See Miracle v. NYP Holdings, Inc., 87 F. Supp. 2d 1060, 1073-74 (D. Haw. 2000) (rejecting transfer where defendant was a "large corporation that could more easily travel to Hawaii to litigate than could Plaintiff travel to New York.").
Plaintiff has provided evidence showing that Defendant is the eleventh largest radio corporation in America, with revenues and operating income in the "hundreds of millions" of dollars and that it operates three radio stations in California. On the other hand, Plaintiff claims to be somewhat of a "Mom and Pop" outfit, as it repeatedly refers to its "sole owner-operator," Bob Benderson. Defendant does not contest Plaintiff's characterization of its size and finances in its Reply brief. Accordingly, it appears that considerations of the expense and difficulty of litigating in a distant forum counsel against transfer, as Defendant would be better able to absorb such costs. As such, this factor does not favor transfer.
2. Convenience of the witnesses
Defendant argues that this factor tips in its favor because all of its potential witnesses are located in Georgia, including its employees and members of "focus groups" who apparently were "involved with the [process of creating the script] and provide part of the factual background needed to understand the entire creative process undertaken by the employees of [Defendant]." Reply, p. 5. In contrast, Defendant argues that Plaintiff's primary, and perhaps sole witness, is Bob Benderson, the owner-operator of CMI.
The Ninth Circuit explained in Gherebi that "[t]he party seeking the transfer must clearly specify the essential witnesses to be called and must make a general statement of what their testimony will cover. In determining the convenience of the witnesses, the court must examine the materiality and importance of the anticipated witnesses' testimony and then determine their accessibility and convenience in the forum." Gherebi, 352 F.3d at 1304 n. 33. See In re Volkswagen AG, 371 F.3d 201, 205 (5th Cir. 2004) (discussing "relevance and materiality of the testimony from numerous non-party fact witnesses"); Brandon Apparel Group, Inc. v. Quitman Mfg. Co., 42 F. Supp. 2d 821, 834 (N.D. Ill. 1999) ("The determination of whether a particular venue is more convenient for the witnesses should not turn on which party produces a longer witness list. Rather, the court must look to the nature and quality of the witnesses' testimony with respect to the issues of the case.") (internal citation omitted). See also Schwartzer et al., Fed. Civ. P. Before Trial § 4:733.
Defendant has failed to meet its burden of providing specific information about the identity of its witnesses or the nature and materiality of their testimony. While we can speculate about the content and materiality of the testimony of the employee and focus group witnesses, Defendant has not set forth this information in any detail. See Gherebi, 352 F.3d at 1303-04 ("In any event, the government has not . . . put forth the appropriate evidence to support its case" with respect to convenience of the witnesses). Accordingly, we conclude that Defendant has failed to show that considerations of convenience of the witnesses favor transfer.
3. Access to proof
Defendant argues that "[a]ll of the documentation related to the creation of the commercial [by WWWQ-FM personnel] is located at the WWWQ-FM offices in Atlanta. Motion, p. 7. However, Defendant makes no showing why production of these documents in California would be burdensome, or that the documentation is so voluminous that transporting it would be difficult. Moreover, while Defendant argues that "electronic discovery is going to be necessary," it fails to elaborate on the nature of this "electronic discovery" or explain why it would be burdensome. In addition, Plaintiff's computers would likely be subject to the same discovery as would Defendant's, such that transferring venue would do no more than shift the burden, if such burden exists, from Defendant to Plaintiff. As such, this factor does not favor transfer.
4. Location of underlying conduct
Defendant contends that although there was no written agreement between the parties, preliminary negotiations "were directed to WWWQ-FM at its Atlanta offices by CMI, generally through" e-mail. Motion, p. 9. Although the communications may have been directedto Atlanta, they came from Los Angeles. Moreover, Plaintiff alleges that WWWQ-FM sent communications to it (presumably at its Los Angeles office) at least twice, and that the script that is the subject of this litigation was created in Los Angeles. We therefore conclude that the relevant underlying conduct occurred in both Atlanta and Los Angeles, such that this factor does not favor transfer.
5. Availability of compulsory process
Defendant asserts that the Northern District of Georgia is the more appropriate forum because under Fed.R.Civ.P. 45, Defendant could subpoena members of the "focus groups" to testify at trial if necessary, while it would be unable to do so if the trial were conducted in the Central District of California. See Fed.R.Civ.P. 45(b)(2) ("a subpoena may be served at any place within the district of the court by which it is issued, or at any place without the district that is within 100 miles of the place of the . . . trial"). However, Defendant has again failed to provide specific information about the identity of these focus group witnesses or the nature and materiality of their testimony. Thus, although the fact that compulsory process is unavailable to Defendant in California serves to favor transfer, we conclude that this factor is of marginal significance in light of Defendant's failure to provide specific information about the identity of these witnesses or their testimony.
We note that Defendant's purported "key" witnesses, four employees of WWWQ-FM, are not a consideration in this factor, as "a defendant's motion to transfer under section 1404(a) may be denied when the witnesses are employees of the defendant and their presence may be obtained by the party." See Ashmore v. N.E. Petroleum Div. of Cargill, Inc., 925 F. Supp. 36, 38 (D. Me. 1996).
6. Judicial economy/relative docket congestion
While considerations of judicial economy include whether transfer will avoid duplicative litigation and prevent waste of time and money, Defendant limits its arguments to the relative "court congestion" in the Central District of California compared to the Northern District of Georgia. Defendant relies on statistics from 2002 showing that this District had 13,230 case filings while the Northern District of Georgia had only 3,808 case filings. While we are sympathetic to Defendant's arguments, the evidence on which it relies does not present a fair picture. Defendant fails to mention that there are currently 28 active District Judges in this District, with 20 Magistrate Judges, but only 11 active District Judges in the Northern District of Georgia, and 9 Magistrate Judges. As such, the raw number of case filings in each District does not present an accurate assessment of the level of "congestion."
In any event, Defendant has made no showing that due to the purported congestion in this District, resolution of this action would be less efficient or more expensive than in the Northern District of Georgia. Accordingly, Defendant has failed to show that this factor favors transfer.
7. Jury service burden
Finally, Defendant argues that trying this case in California would impose an undue burden on jurors from this District who have "no connection to the events giving rise to the cause of action, which all occurred nearly 3,000 miles away in Atlanta." Motion, p. 11. We have already rejected Defendant's premise that "all" of the events giving rise to this action occurred in Atlanta. Moreover, we find no reason to conclude that local jurors have less interest in judging the facts of this case, which involves a Los Angeles-based Plaintiff suing an Atlanta-based Defendant, than do jurors in Georgia. This factor does not favor transfer.
C. Motion for Change of Venue Summary
Based on the foregoing, we conclude that Defendant has failed to make a sufficient showing of inconvenience to upset the "strong presumption" in favor of Plaintiff's forum choice. Defendant's Motion for a Change of Venue is therefore denied.
IV. Motion to Dismiss Plaintiff's State Law Claims
Defendant moves to dismiss Plaintiff's state law claims under Fed.R.Civ.P. 12(b)(6) on grounds that they are preempted by the Copyright Act, 17 U.S.C. § 301(a). In the alternative, Defendant moves to dismiss Plaintiff's claim for Fraud on the ground that it was not pleaded with particularity as required by Fed.R.Civ.P. 9(b).
Section 301(a) provides: "On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State. 17 U.S.C. § 301(a)."
A. Rule 12(b)(6) Legal Standard
A Rule 12(b) (6) motion tests the legal sufficiency of the claims asserted in the complaint. Fed.R.Civ.P. 12(b)(6). A court may not dismiss a complaint for failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Moore v. City of Costa Mesa, 886 F.2d 260, 262 (9th Cir. 1989). In other words, a Rule 12(b) (6) dismissal is proper only where there is either a "lack of cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory."Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988).
In deciding a motion to dismiss for failure to state a claim, the court's review is limited to the contents of the complaint.Campanelli v. Bockrath, 100 F.3d 1476, 1479 (9th Cir. 1996). The court must accept all factual allegations pleaded in the complaint as true, and must construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). It need not, however, accept as true unreasonable inferences or conclusory legal allegations cast in the form of factual allegations. W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981).
B. Preemption Analysis
The Ninth Circuit employs a two-part test to determine whether the Copyright Act preempts a particular state law claim. Preemption occurs when (1) the work at issue comes within the subject matter of the copyright; and (2) the rights granted under state law are equivalent to those protected by the Act. See Del Madera Props. v. Rhodes Gardner, Inc., 820 F.2d 973, 976 (9th Cir. 1987), overruling on other grounds recognized byDowning v. Abercrombie Fitch, 265 F.3d 994, 1003 (9th Cir. 2001).
1. Subject matter of copyright
The first prong of the preemption test is satisfied where the works at issue come within the "subject matter of copyright" as defined by 17 U.S.C. § 102. The scope of the Copyright Act's "subject matter," and thus the scope of preemption, is broader than the scope of the Act's protections. See Firoozye v. Earthlink Network, 153 F. Supp. 2d 1115, 1124 (N.D. Cal. 2001) (the work at issue "does not necessarily have to be actually protected by a specific copyright or even itself copyrightable; it just has to be `within the subject matter' of the Act".).
Section 102 defines the "subject matter" of copyright to include "original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device." 17 U.S.C. § 102(a).
The "subject matter" of Plaintiff's state law claims are the "ideas and concepts" contained in the script. Although "ideas" are excluded from coverage of the Copyright Act, they nevertheless fall within the Act's "subject matter." See U.S. ex rel. Berge v. Bd. of Trs. of the Univ. of Ala., 104 F.3d 1453, 1463 (4th Cir. 1997) ("ideas" that formed basis of Plaintiff's dissertation fall within subject matter of copyright law). Moreover, Plaintiff is the owner of a registered copyright in the script, demonstrating that the ideas and concepts contained therein as fixed in a tangible medium of expression are within the subject matter of copyright. See FAC Exh. A. Accordingly, we conclude that the work at issue in this case falls within the "subject matter of copyright," and the first prong of the preemption test is satisfied.
2. Equivalent rights
The second prong of the preemption test is satisfied where the rights protected by state law are "equivalent" to those protected by the Copyright Act. In order to avoid preemption, "the state cause of action must protect rights which are qualitatively different from the copyright rights." Del Madera, 820 F.2d at 977. The critical inquiry is whether the state law claim contains an "extra element" that changes the nature of the action. See Selby v. New Line Cinema Corp., 96 F. Supp. 2d 1053, 1059 (C.D. Cal. 2000). In conducting this evaluation, "the court should engage in a fact-specific inquiry into the actual allegations underlying the claims at issue in the case, so as to determine whether the `gravamen' of the state law claim asserted is the same as the rights protected by the Copyright Act." Idema v. Dreamworks, Inc., 162 F. Supp. 2d 1129, 1190 (C.D. Cal. 2001), aff'd 90 Fed. Appx. 496 (2003).
a. Breach of contract claims
Plaintiff asserts three claims based on breach of contract: Breach of Implied-in-Fact Contract; Breach of Oral Contract; and Breach of the Covenant of Good Faith and Fair Dealing. Following are the "common factual allegations" that are relevant to these three claims:
(1) In February 2003, Defendant viewed a promotional reel containing several television advertisements Plaintiff had conceived and produced. After viewing the reel, Defendant contacted Plaintiff and requested Plaintiff to develop and produce a television advertisement for Defendant's morning radio show.
(2) Later in February 2003, Plaintiff sent Defendant an e-mail conveying a script for the television commercial.
(3) Following receipt of the script, Defendant e-mailed Plaintiff a message stating that it was "excited" about the script and planned to use it to advertise its morning show.
(4) On March 3, 2003, Plaintiff provided Defendant with "preliminary budgets." Plaintiff did not hear from Defendant for over two weeks.
(5) On March 18, 2003, Plaintiff contacted Defendant again. Defendant stated that it could not afford Plaintiff's quoted price. Thereafter, Defendant unilaterally revealed and disclosed Plaintiff's script to Defendant Rosler in order to produce a commercial utilizing Defendant's ideas without authorization from or compensation to Plaintiff. See FAC ¶¶ 10-13.
i. Breach of implied-in-fact contract
In addition to incorporating the common factual allegations into this claim, Plaintiff alleges that, at Defendant's request, it submitted the script to Defendant with the expectation, of which Defendant was aware, that it would be compensated and attributed credit and would retain all syndication rights. FAC ¶ 29. Based on these allegations, Plaintiff argues that it has pled a claim for breach of "implied-in-fact" contract, and that such claim contains the "extra element" of Defendant's implied promise to compensate Plaintiff for the use of the script or the ideas contained therein. See Firoozye, 153 F. Supp. 2d at 1127 ("A promise to pay for work constitutes an extra element such that a breach of contract claim is not preempted by [the Copyright Act].").
For purposes of preemption analysis, there is a "crucial difference" between a claim based on a contract implied-in-fact and a contract implied-in-law (or "quasi contract"). Id. While an implied-in-fact contract contains the "extra element" of a promise to pay, an implied-in-law contract requires no extra element in addition to an act of reproduction, performance, distribution or display. See id. ("[A] plaintiff seeking to establish that a defendant breached an implied-in-fact contract [has to] prove elements beyond unauthorized use, including that the defendant made an enforceable promise to pay and breached that promise."). See also Hercules, Inc. v. United States, 516 U.S. 417, 423-24 (1996) (explaining that an agreement implied in fact is founded upon a meeting of the minds as inferred from conduct of the parties showing a tacit understanding; by contrast, an agreement implied in law is a "fiction of law" where a promise is imputed to perform a legal duty) (citations omitted); Maglica v. Maglica, 66 Cal. App. 4th 442, 456 (1998) (noting that quasi-contractual "quantum meruit" theory implies a "promise to pay for services as a matter of law for reasons of justice while implied-in-fact contracts are predicated on actual agreements, albeit not ones expressed in words. . . .") (emphasis in original).
Here, despite Plaintiff's characterization of the facts as showing a contract implied-in-fact, the facts as alleged fail to show the "extra element" of an actual promise to pay. Rather, the facts explicitly show that the parties did not reach an agreement with respect to payment, and that there was no meeting of the minds or tacit understanding in this respect. With no actual agreement to pay, Plaintiff has failed to plead a claim for breach of implied-in-fact contract. To the extent that Plaintiff has pled any claim for breach of contract, such claim is for implied-in-law contract, and recovery is based on the theory of quantum meruit. As a claim based on implied-in-law contract includes no "extra element" in addition to the defendant's unauthorized use of the work, it is equivalent to the rights protected by the Copyright Act. See Melville B. Nimmer David Nimmer, 1 Nimmer on Copyright (2002) § 1.01 [B] [1] [g], p. 1-41 ("[A] state law cause of action for . . . quasi contract should be regarded as an `equivalent right' and hence, pre-empted insofar as it applies to copyright subject matter."). Accordingly, we conclude that Plaintiff's claim for breach of implied contract is preempted.
ii. Breach of oral contract
In this claim, Plaintiff incorporates the common factual allegations and alleges, additionally, that Plaintiff and Defendant "entered into an oral contract pursuant to which" Defendant requested, and Plaintiff agreed, to convey to Defendant the script "in exchange for compensation, credits and syndication rights, among other things." FAC ¶ 24. Plaintiff further alleges that Defendant breached this contract by failing to compensate and attribute credit to it and by depriving it of syndication rights. FAC ¶ 26. Plaintiff argues that this claim adequately alleges the "extra element" of a promise to pay, such that it is qualitatively different from a copyright claim.
As discussed above, we reject Plaintiff's attempt to characterize the facts that he has alleged as showing a "promise to pay." To the contrary, the facts as alleged show that Defendant expressly denied that it would pay Plaintiff for the script, because it "could not afford CMI's quoted price." FAC ¶ 13. With no actual agreement to pay, Plaintiff has failed to allege an essential element of its purported oral contract with Defendant. See Nimmer et al., 4 Nimmer on Copyright § 16.04 p. 16-17 ("Under the prevailing view, an enforceable express contract arises if the person to whom an idea is submitted has expressly promised to pay for it in the event of its use."). At best, Plaintiff has alleged nothing more than an implied-in-law agreement to not unfairly benefit from Plaintiff's ideas. Such allegation does not include the "extra element" of an agreement to pay, and is therefore not qualitatively different from a copyright infringement claim. Thus, Plaintiff's breach of oral contract claim is inadequate and/or preempted by § 301(a).
iii. Breach of implied covenant of good-faith and fair dealing
In addition to incorporating the common factual allegations, Plaintiff alleges that "the oral contract described above . . . includes an implied covenant of good faith and fair dealing" pursuant to which "the parties mutually agreed not to do anything that would deprive the other party of the benefits of the contract, to deal with each other fairly and in good faith, and to do everything the contract presupposes a party will do to accomplish the purpose of the contract." FAC ¶ 34. Plaintiff alleges that Defendant breached this implied covenant by revealing the script to Defendant Rosler and thereafter "engaging and allowing" Defendant Rosler to produce the commercial based on the script without compensation or attribution of credit to Plaintiff. FAC ¶ 35.
A claim for breach of the implied covenant of good faith and fair dealing is an outgrowth of alleged improper conduct by a defendant under a contract between the parties, and is designed to prevent a party from acting in bad faith to frustrate the contract's actual benefits. See Guz v. Bechtel Nat'l Inc., 24 Cal. 4th 317, 349 (2000). We conclude that Plaintiff has failed to state a claim for breach of the implied covenant for two reasons. First, as the same factual allegations form the basis of this claim and Plaintiff's claims for breach of contract, Plaintiff has failed to state an additional claim for breach of the implied covenant. See Careau Co. v. Sec. Pac. Bus. Credit, Inc., 222 Cal. App. 3d 1371, 1395 (1990) ("If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated.").
Here, Plaintiff alleges in both of his breach of contract claims and in this claim that Defendant breached its obligations by utilizing Plaintiff's ideas to create a commercial without compensating or attributing credit to Plaintiff. Accordingly, Plaintiff has failed to allege an additional claim for relief for breach of the implied covenant of good faith and fair dealing, and we dismiss this claim. See Twentieth Century Fox Film Corp. v. Marvel Enters., Inc., 155 F. Supp. 2d 1, 17 (S.D.N.Y. 2001) (applying California law to dismiss claim for breach of implied covenant of good faith and fair dealing in copyright infringement action for being merely duplicative of breach of contract claim).
Second, as Plaintiff has failed to allege any express promise to pay, an essential prerequisite to the existence of the implied covenant of good faith and fair dealing is lacking. See Racine Laramie, Ltd., Inc. v. Dep't of Parks Recreation, 11 Cal. App. 4th 1026, 1031 (1992) ("The covenant of good faith is read into contracts in order to protect the express covenants or promises of the contract, not to protect some general public policy interest not directly tied to the contract's purpose.") (quoting Foley v. Interactive Data Corp., 47 Cal. 3d 654, 690 (1988)). See also B.E. Witkin, 1 Summary of California Law § 745A (2003, Suppl.) ("The implied covenant of good faith and fair dealing is limited to assuring compliance with the express terms of the contract. . . ."). As we have concluded that Plaintiff has, at best, alleged an implied-in-law or quasi-contract with Defendant, which is not based on the Defendant's express promise to pay but is rather created by law for reasons of justice, there are no express covenants or promises that the implied covenant can serve to buttress, and Plaintiff has therefore failed to state a claim.
iv. Breach of contract summary
In sum, we conclude that Plaintiff's breach of contract claims are preempted by the Copyright Act and that Plaintiff has failed to state a claim for breach of the covenant of good faith and fair dealing. We therefore dismiss these claims under Fed.R.Civ.P. 12(b)(6). In light of the allegations contained in the FAC, we find it highly unlikely that Plaintiff can plead additional facts that would enable him to state a claim for breach of contract or breach of the implied covenant that could survive scrutiny under Rule 12(b)(6). To do so, Plaintiff must plead facts showing that the parties entered into an "actual agreement" with respect to payment. However, inasmuch as we cannot conclude that it "appears beyond doubt" that Plaintiff "can prove no set of facts" which would enable him to adequately state a claim based on breach of contract, we dismiss these claims without prejudice, and we allow Plaintiff 14 days to file a Second Amended Complaint ("SAC") that corrects the defects in these claims as pleaded in the FAC.
If counsel chooses to file a SAC, we caution him to be mindful of his obligations under Fed.R.Civ.P. 11, including its requirements that all claims be "warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law," and that "the allegations and other factual contentions have . . . or . . . are likely to have evidentiary support. . . ." Fed.R.Civ.P. 11(b).
b. Fraud
Plaintiff alleges in his Fraud claim that Defendant "represented to Plaintiff that if Plaintiff conveyed and disclosed its" script and the ideas therein, that Defendant "would compensate Plaintiff if it utilized" the script or ideas. FAC ¶ 38. However, Plaintiff alleges that Defendant made `this representation because it wanted to utilize the script to its commercial advantage without compensating or accrediting Plaintiff. See id. Although Defendant contends that this claim is preempted by the Copyright Act, we need not reach this issue inasmuch as we agree with Defendant's alternative argument that Plaintiff has failed to set forth the facts of this claim with sufficient particularity, as required by Fed.R.Civ.P. 9(b).
Rule 9(b) requires that "in all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Fed.R.Civ.P. 9(b). To avoid dismissal for inadequacy under Rule 9(b), Plaintiff's complaint must "state the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentation."Edwards v. Marin Park, Inc., 356 F.3d 1058, 1066 (9th Cir. 2004) (quoting Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388, 1393 (9th Cir. 1989)). Plaintiff has stated none of this information here. Accordingly, we dismiss Plaintiff's Fraud claim for inadequacy under Fed.R.Civ.P. 9(b). However, we allow Plaintiff 14 days leave to file a SAC that pleads a claim for fraud in accordance with the requirements of Rule 9(b). If counsel chooses to do so, we again remind him of his obligations under Fed.R.Civ.P. 11, as discussed above.
c. Breach of confidence
Plaintiff alleges that it disclosed its script to Defendant "in confidence and in the context of a confidential relationship." FAC ¶ 43. Moreover, "[t]he disclosures were made with the understanding that the [script] was being disclosed in confidence, that [it] would be kept in confidence and would not be disclosed or used beyond the limits of the confidence without [Plaintiff's] consent, the attribution of credit and compensation to Plaintiff and the preservation of Plaintiff's syndication rights." Id. Plaintiff alleges that Defendant breached this confidence by disclosing the script to Defendant Rosler. FAC ¶ 44. Plaintiff argues that this "confidential relationship" is an "extra element" beyond the rights enumerated in the Copyright Act.
We agree that this claim has an "extra element" that renders it qualitatively different from the rights protected in the Copyright Act. Indeed, the conduct of which Plaintiff complains in this claim — Defendant's disclosure of the script to Defendant Rosler — is not conduct that would infringe upon Plaintiff's copyright in the script. See Groubert v. Spyglass Entnm't Group, 2002 U.S. Dist. LEXIS 17769 at *14 (C.D. Cal. July 22, 2002) ("Were Plaintiff to demonstrate that a confidential relationship existed between the parties, then Defendants could potentially have disclosed Plaintiff's confidential idea and breached their duty without ever having published Plaintiff's work in a manner that is protected under copyright law. Thus, the rights are not necessarily equivalent."). Accordingly, this claim is not preempted.
d. Interference with contract
Plaintiff asserts this claim only against Defendant Rosler, alleging that he intentionally caused and persuaded Defendant to breach the contract by causing Defendant to disclose, reveal, transfer and utilize Plaintiff's confidential script. FAC ¶ 48. The gravamen of this claim is therefore Defendant Rosler's alleged tortious conduct in wrongfully inducing Defendant to breach the contract — and not Defendant Rosler's unauthorized use of the script and benefit therefrom. As such, this claim is qualitatively different from a copyright claim, and it is not preempted.
e. Interference with prospective business advantage
In this claim, Plaintiff alleges that when Defendant utilized the script without compensating it, it deprived "Plaintiff of the opportunity to `customize' and syndicate the resulting commercial and to derive licensing fees from other stations for use of the commercial version thereof." FAC ¶ 52. While neither party addresses this claim with any specificity, we conclude that this claim contains the "extra element" of Defendant's alleged disruption of Plaintiff's potential opportunities to exploit the script, and is therefore not preempted. See Lattie v. Murdach, 1997 U.S. Dist. LEXIS 3558 at *15-16 (C.D. Cal. January 8, 1997) (finding claim for interference with prospective business advantage to be qualitatively different from copyright, and thus not preempted, because "in order to state . . . a claim, plaintiff must show some prospective business advantage relationship and that defendants' conduct deprived him of it.").
f. Unfair competition
Plaintiff alleges that the conduct of which he complains in his previous claims "constitutes unlawful, unfair, or fraudulent business practices in violation of California Business and Professions Code sections 17200 et seq." FAC ¶ 57. We conclude that this claim is not preempted to the extent that it is based upon claims that are likewise not preempted or otherwise dismissed. Thus, to the extent that this claim is based on Plaintiff's claims for Breach of Confidence, Interference with Contract, or Interference with Prospective Business Advantage, it survives this motion to dismiss.
Inasmuch as Plaintiff's claim for Interference with Contract is asserted only against Defendant Rosler, to the extent that Plaintiff's Unfair Competition claim is based on the Interference with Contract claim, it supports liability only against Defendant Rosler.
V. Disposition
Based on the foregoing, Defendant's request for a change of venue is hereby denied. Defendant's motion to dismiss Plaintiff's state law claims is granted in part, and Plaintiff's claims for Breach of Oral Contract, Breach of Implied Contract, and Breach of the Covenant of Good Faith and Fair Dealing are hereby dismissed with leave to amend. Defendant's request to dismiss Plaintiff's Fraud claim for inadequacy under Fed.R.Civ.P. 9(b) is hereby granted with leave to amend. Defendant's motion to dismiss Plaintiff's remaining state law claims is denied.
IT IS SO ORDERED.