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LA2058506.2
214183-10001
MEMORANDUM OF POINTS AND AUTHORITIES
IN SUPPORT OF MOTION TO DISMISS
LOEB & LOEB LLP
MICHAEL ANDERSON (State Bar No. 143168)
manderson@loeb.com
DONALD A. MILLER (State Bar No. 228753)
dmiller@loeb.com
LOEB & LOEB LLP
10100 Santa Monica Boulevard, Suite 2200
Los Angeles, California 90067-4120
Telephone: 310-282-2000
Facsimile: 310-282-2200
Attorneys for Defendant
WILLIAM PAUL YOUNG
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
WAYNE JACOBSEN, an individual;
BRAD CUMMINGS, an individual,
Plaintiffs,
v.
WILLIAM PAUL YOUNG, an
individual; and DOES 1-10, inclusive
Defendants.
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Case No. CV 10-3246 JFW (JCx)
Assigned to the Hon. John F. Walter
MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT OF
DEFENDANT YOUNG’S MOTION
TO DISMISS PLAINTIFFS’ FIRST
CLAIM FOR RELEIF FOR
DECLARATORY RELIEF AND
DISMISS OR STAY THE SECOND
CLAIM FOR RELIEF FOR
BREACH OF CONTRACT
[Notice of Motion and Motion; Request
for Judicial Notice; Declaration of
Michael T. Anderson]
Date: August 9, 2010
Time: 1:30 p.m.
Courtroom: 16
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TABLE OF CONTENTS
Page
LA2058506.2
214183-10001 i
I. INTRODUCTION ..........................................................................................1
II. FACTUAL AND PROCEDURAL BACKGROUND....................................4
A. In the Publishing Contract Between Windblown and
Young, Plaintiffs Admit Young is the Author and
Copyright Owner of the Book. .............................................................4
B. In the Copyright Registration Filed by Plaintiff Brad
Cummings on Behalf of Windblown, Plaintiffs Admit
Young is the Author and Copyright Owner of the Book. .....................5
C. In the Letter of Understanding, Plaintiffs Admit Young is
the Author and Copyright Owner of the Book. ....................................6
D. In the Co-Venture Agreement with Hachette, Plaintiffs
Admit Young is the Author and Copyright Owner of the
Book......................................................................................................6
E. Young Files the State Court Action......................................................7
F. Defendants in the State Court Action Unsuccessfully
Demur and Move to Strike Mr. Young’s Complaint. ...........................7
G. Windblown Files Its Cross-Complaint in the State Court
Action. ..................................................................................................8
H. Plaintiffs File the Federal Court Action Containing the
Same Allegations as Those in the Cross-Complaint.............................8
III. DISCUSSION ...............................................................................................10
A. Because Plaintiffs Agreed Mr. Young is the Author of the
Book, Plaintiffs’ First Claim Fails to State a Claim as a
Matter of Law. ....................................................................................10
B. The Court Should Dismiss or Stay the Second State Law
Claim Because it is Duplicative of Issues Currently
Pending in the State Court Action ......................................................13
1. The Court Should Stay the Second Claim Pursuant
to the Younger Abstention Doctrine.........................................14
2. The Court Should Stay the Second Claim Pursuant
to the Colorado River Doctrine ................................................16
IV. CONCLUSION.............................................................................................19
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TABLE OF AUTHORITIES
Page(s)
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CASES
Aalmuhammed v. Lee,
202 F.3d 1227 (9th Cir. 2000)..................................................................1, 10, 13
American Int’l Underwriters (Phillipines), Inc. v. Continental Ins. Co.,
843 F.2d 1253 (9th Cir.1988).............................................................................17
American Title Ins. Co. v. Lacelaw Corp.,
861 F.2d 224 (9th Cir.1988)...............................................................................10
Childress v. Taylor,
945 F.2d 500 (2d Cir. 1991)...............................................................................10
Colorado River Water Conservation Dist. v. United States,
424 U.S. 800 (1976) ................................................................................... Passim
Delta Dental Plan of California v. Mendoza,
139 F.3d 1289 (9th Cir. 1998)............................................................................16
Durning v. First Boston Corp.,
815 F.2d 1265 (9th Cir.1987).............................................................................11
Eisenman Chemical Co. v. NL Industries, Inc.,
595 F.Supp. 141 (D.C. Nev. 1984) ....................................................................13
Fireman’s Fund Ins. Co. v. Quackenbush,
87 F.3d 290 (9th Cir. 1996)................................................................................17
Gilbertson v. Albright,
381 F.3d 965 (9th Cir. 2004)..............................................................................15
Green v. City of Tucson,
255 F.3d 1086 (9th Cir. 2001)............................................................................16
Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc.,
896 F.2d 1542 (9th Cir.1990).............................................................................10
Juidice v. Vail
430 U.S. 327 (1977) ...........................................................................................15
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Luna v. Kemira Specialty, Inc.,
575 F.Supp.2d 1166 (C.D. Cal. 2008)................................................................11
Middlesex County Ethics Committee v. Garden State Bar Ass’n,
457 U.S. 423 (1982) ................................................................................. 3, 14-15
Mission Oaks Mobile Home Park v. City of Hollister,
989 F.2d 359 (9th Cir. 1993)..............................................................................15
Moses H. Cone Mem. Hosp. v. Mercury Const. Corp.,
460 U.S. 1 (1983) ......................................................................................... 16-18
Nakash v. Marciano,
882 F.2d 1411 (9th Cir. 1989)............................................................................17
New Orleans Public Service, Inc. v. Council of New Orleans,
491 U.S. 350, 370 (1989) ...................................................................................15
Northern Indiana Gun & Outdoor Shows, Inc. v. City of South Bend,
163 F.3d 449 (7th Cir.1998)...............................................................................11
Novelty Textile Mills, Inc. v. Joan Fabrics Corp.,
558 F.2d 1090 (2nd Cir. 1977)...........................................................................13
Ohio Civil Rights Comm’n v. Dayton Christian Schools, Inc. v. Nelson,
477 U.S. 619 (1986) ..................................................................................... 14-15
Pennzoil Co. v. Texaco, Inc.,
481 U.S. 1 (1987) ...............................................................................................15
Richlin v. Metro-Goldwyn Mayer Pictures, Inc.,
531 F.3d 962 (9th Cir. 2008)..........................................................................1, 10
Romine v. Compuserve Corporation,
160 F.3d 337 (6th Cir.1998)...............................................................................18
Saunders v. Knight,
CV 04-5924 REC LJO, 2006 WL 224426 (E.D.Cal. Jan. 25, 2006) ........... 11-12
Thompson v. Illinois Dep't of Professional Regulation,
300 F.3d 750 (7th Cir. 2002)....................................................................2, 11, 13
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Woods v. Asset Resources,
CV 06-398 SMS, 2006 WL 3782704 (E.D.Cal. Dec. 21, 2006)........................11
Younger v. Harris,
401 U.S. 37 (1971) ................................................................................... 3, 13-15
STATUTES
17 U.S.C. § 106(2) ..................................................................................................12
17 U.S.C. § 410(c)...............................................................................................2, 12
17 U.S.C. § 506(e)....................................................................................... 6-7, 9, 12
17 U.S.C. § 506(e):................................................................................................ 5-6
OTHER AUTHORITIES
Fed. R. Civ. Proc. 10(c)...........................................................................................10
Federal Rules of Civil Procedure Rule 12(b)(6) .....................................................13
William W. Schwarzer, et al., Cal. Practice Guide: Fed. Civ. Pro. Before Trial
§ 2:1291.1a (The Rutter Group 2009)................................................................14
William W. Schwarzer, et al., Cal. Practice Guide: Fed. Civ. Pro. Before Trial
§ 2:687.1 (The Rutter Group 2009)....................................................................16
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LA2058506.2
214183-10001 1
MEMORANDUM OF POINTS AND AUTHORITIES
IN SUPPORT OF MOTION TO DISMISS
MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
Defendant William Paul Young is the author of The New York Times
bestselling Christian novel The Shack. In November 2009, Mr. Young filed a
Complaint in California state court (the “State Court Action”) against its publishers
Windblown Media, Inc. (“Windblown”) and Hachette Book Group, Inc.
(“Hachette”) for failing to properly account and pay to him his contractual royalty
and share of net profits for the novel. After losing three related motions in the State
Court Action, Windblown filed a Cross-Complaint against Mr. Young alleging that
he has refused to dispose of the motion picture rights in the work pursuant to a May
1, 2008 Letter of Understanding.
Now, Windblown’s principals, Plaintiffs Brad Cummings and Wayne
Jacobsen (“Plaintiffs”), have filed this federal court action alleging two claims
against Mr. Young: (1) a declaratory relief claim in which Plaintiffs belatedly seek
co-authorship credit for The Shack (the “Book”), despite signing at least three
agreements (attached to Plaintiffs’ first amended complaint) that recognize Mr.
Young as the sole author of the Book, registering the Book with the Copyright
office in Mr. Young’s name alone, and publishing the Book in Mr. Young’s name
for over three years; and (2) a claim for breach of the Letter of Understanding,
which is nearly identical to the claim alleged by Windblown in the State Court
Action. Neither claim belongs in federal court and both should be dismissed.
First, Plaintiffs’ first cause of action for declaratory relief under the Copyright
Act, seeking a declaration that they are the co-authors of the Book, fails to state a
claim upon which relief can be granted. In determining a claim of joint authorship
in a work under the Copyright Act, “[a] contract evidencing intent to be or not to be
coauthors is dispositive.” Richlin v. Metro-Goldwyn Mayer Pictures, Inc., 531 F.3d
962, 969 (9th Cir. 2008); Aalmuhammed v. Lee, 202 F.3d 1227, 1233, 1235 (9th
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2 MEMORANDUM OF POINTS AND AUTHORITIES
IN SUPPORT OF MOTION TO DISMISS OPP. TO MOTION TO CONTINUE TRIAL
Cir. 2000) (“the best objective manifestation of a shared intent, of course, is a
contract saying that the parties intend to be or not to be co-authors”).
Plaintiffs’ inconsistent allegations in their first amended complaint (“FAC”)
notwithstanding,1 Plaintiffs repeatedly agreed – in the three different contracts
attached to the FAC – that Mr. Young is the sole author of the Book:
• Plaintiffs admit in the May 10, 2008 Publishing Contract that Mr.
Young is the sole author. FAC, Ex. A at Recital (“William P. Young, 1857
SW 35th Street, Gresham Oregon 97080 (the “Author”)), ¶ 10 (“The Publisher
agrees to submit an application for registration of the copyright in the Work in
the name of the Author . . . William P. Young”), p.*11 (signature line:
“Author: William Paul Young”).
• Plaintiffs admit in the May 1, 2008 Letter of Understanding that
Mr. Young is the author. FAC, Ex. B (“This letter is to memorialize our
understanding . . . with regards to the motion picture rights to the literary
work entitled THE SHACK . . . written by William P. Young.”).
• Plaintiffs admit in the May 13, 2008 Publishing Co-Venture
Agreement that Mr. Young is the sole author. FAC, Ex. C at p.*1
(“WHEREAS, WINDBLOWN has published an important literary work
entitled The Shack by William P. Young”).
Additionally, Plaintiffs admit they themselves filed a Copyright Registration
(“CR”) (also attached to the FAC) listing Mr. Young as the sole author of the Book.
FAC ¶ 16 (Plaintiff “Cummings submitted a copyright registration . . . which
identified Young as the author of the book.”); see also FAC, Ex. D at pp.*3-4.
Under the Copyright Act, the CR “constitutes prima facie evidence of the validity of
the copyright and of the facts stated in the certificate.” 17 U.S.C. § 410(c)
1 Thompson v. Illinois Dept. of Prof. Reg., 300 F.3d 750, 754 (7th Cir. 2002)
(“when a written instrument contradicts allegations in a complaint to which it is
attached, the exhibit trumps the allegations.”) (emphasis original).
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3 MEMORANDUM OF POINTS AND AUTHORITIES
IN SUPPORT OF MOTION TO DISMISS OPP. TO MOTION TO CONTINUE TRIAL
(emphasis added). Because Plaintiffs admit throughout the FAC that they agreed
Mr. Young is the sole author of the Book, their claim for a declaration that they are
now co-authors fails to state a claim and should be dismissed with prejudice.2
Second, the Court should dismiss or stay the second claim for relief –
pursuant to the Younger abstention doctrine or the Colorado River doctrine –
because Plaintiffs’ breach of contract claim is identical to and duplicative of
Windblown’s breach of contract action in the State Court Action. Most of the
language in Windblown’s Cross-Complaint in the State Court Action is identical to
that in the FAC in the instant case. Most significantly, the agreement that Plaintiffs
allege in the FAC that Young supposedly breached – the so-called Letter of
Understanding (see FAC ¶ 47) – is already in issue in the State Court Action.
Anderson Decl., ¶ 4, Ex. 3 [Cross-Compl. ¶ 21(d)]; FAC ¶ 28(d). Plaintiffs allege –
in both the State Court Action and in this case – that Young breached the Letter of
Understanding. Cross-Compl. ¶ 30; FAC ¶ 37. Not surprisingly, Plaintiffs’ claim
for damages in the instant case and in the State Court Action in connection with
Young’s alleged breach of the Letter of Understanding is exactly the same. Cross-
Compl. ¶ 39; FAC ¶ 49.
The Court should stay the breach of contract claim pursuant to the Younger
abstention doctrine, because the State Court Action (1) was already pending for
months before Plaintiffs filed the Complaint; (2) provides Plaintiffs an adequate
opportunity to raise any claims; and (3) serves an important state interest, namely,
the ability of a state court to adjudicate claims without federal court interference.
Middlesex County Ethics Committee v. Garden State Bar Ass’n, 457 U.S. 423, 431
2 Plaintiffs’ apparent claim is that because Mr. Young allegedly breached his
agreement to dispose of the motion picture rights to the work pursuant to the
partially executed May 1, 2008, Letter of Understanding, they now want to tear up
their agreements regarding authorship and rewrite three years of publishing history.
FAC ¶¶ 37, 40.
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4 MEMORANDUM OF POINTS AND AUTHORITIES
IN SUPPORT OF MOTION TO DISMISS OPP. TO MOTION TO CONTINUE TRIAL
(1982). Similarly, and alternatively, pursuant to the Colorado River doctrine, the
Court, in an exercise of “wise judicial administration,” should stay the second claim
for relief since it is substantially similar to the claims in the State Court Action and
would lead to inconsistent, piecemeal litigation in two forums. Colorado River
Water Conservation Dist. v. United States, 424 U.S. 800, 815 (1976).
For all of these reasons, Plaintiffs’ Complaint should be dismissed.
II. FACTUAL AND PROCEDURAL BACKGROUND.
Mr. Young is the author of The New York Times bestseller The Shack, a
Christian novel which explores a father’s coming to terms with the murder of his
daughter and his reawakened relationship with God. Plaintiffs Brad Cummings and
Wayne Jacobsen reside in Ventura County and are the sole owners of Windblown.
FAC ¶ 2-3; ¶ 24 (“Windblown’s principals, Jacobsen and Cummings”). “[I]n 2007,
Cummings and Jacobsen formed [Windblown], a small Christian publishing house,
for the purpose of publishing the Book and new works they intended to pursue.” Id.
¶ 13. Until May 2008, Windblown published and distributed the Book pursuant to
an oral agreement with Young. Id. ¶ 14.
A. In the Publishing Contract Between Windblown and Young,
Plaintiffs Admit Young is the Author and Copyright Owner of the
Book.
In May 2008, Plaintiffs (through Windblown) and Young memorialized their
oral publishing agreement in a written “Publishing Contract with Windblown
Media” (the “Publishing Contract”). FAC ¶ 24, Ex. A. The Publishing Contract
unambiguously provides throughout that Young is the sole author of the Book. See
e.g., Ex. A at Recital (“William P. Young . . . (the ‘Author’)”); p.*11 (signature line:
“Author: William Paul Young”).
In addition, the Publishing Contract provided that the copyright would be
registered solely in the name of William P. Young. Id. at ¶ 10(a) (Windblown
“agrees to submit an application for registration of the copyright in the Work in the
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214183-10001
5 MEMORANDUM OF POINTS AND AUTHORITIES
IN SUPPORT OF MOTION TO DISMISS OPP. TO MOTION TO CONTINUE TRIAL
name of the Author . . . William P. Young”; Windblown “shall include the following
copyright notice in each of its editions of the Work: Copyright © [year] by William
P. Young”).
The Publishing Contract also sets forth Young’s share of revenues from the
distribution of the Book. For example, it provides that for copies sold in the United
States, Young is to receive “a fixed rate of $0.50 (fifty cents) per book sold for
paperback books and $1.00 for hardback books, plus one-third of the net profits of
all activity generated by The Shack for Windblown Media.” Publishing Contract
¶ 3(a). Moreover, pursuant to the Publishing Contract, Young “specifically retains
the motion picture and theatrical rights and agrees to act in concern [sic] with
Windblown Media in the disposition of those rights. Revenue generated by their
sale will be split 60% to Author [Young], 20% to Brad Cummings, and 20% to
Wayne Jacobsen.” Publishing Contract ¶ 5(b); see FAC ¶ 28(d).
B. In the Copyright Registration Filed by Plaintiff Brad Cummings
on Behalf of Windblown, Plaintiffs Admit Young is the Author and
Copyright Owner of the Book.
Plaintiff Brad Cummings completed a Copyright Registration (“CR”) listing
the “copyright claimant” and the “name of author” as “William P. Young.” FAC,
Ex. D at p.*3. Cummings then signed the CR on behalf of Windblown and filed it
with the U.S. Copyright Office. FAC ¶ 20 (“Cummings submitted a copyright
registration to the United States Copyright Office, Copyright No. TX0006578498,
which identified Young as the author of the Book.”). By signing the CR, Cummings
stated, “I certify that the statements made by me in this application are correct to the
best of my knowledge.*” See FAC, Ex. D at p.*3. The asterisk (*) in the previous
sentence is original; the certification statement is footnoted with the following
warning: “17 U.S.C. § 506(e): Any person who knowingly makes a false
representation of a material fact in the application for copyright registration
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6 MEMORANDUM OF POINTS AND AUTHORITIES
IN SUPPORT OF MOTION TO DISMISS OPP. TO MOTION TO CONTINUE TRIAL
provided for by section 409, or in any written statement filed in connection with the
application, shall be fined not more than $2,500.” Id; see also 17 U.S.C. § 506(e).
C. In the Letter of Understanding, Plaintiffs Admit Young is the
Author and Copyright Owner of the Book.
Plaintiffs allege that “[a]t the same time Young, Jacobsen and Cummings
drafted and negotiated the Windblown-Young Agreement, they also entered into a
written Letter of Understanding, pursuant to which they agreed that the motion
picture rights to the Book would be assigned to a limited liability company to be
formed by Young, Jacobsen, Cummings and [non-party] Downes for the purpose of
producing a motion picture based on the Book.” FAC ¶ 25. In the Letter of
Understanding, Plaintiffs Jacobsen and Cummings once again agree that Young is
the author of the Book. FAC, Ex. B (“This letter is to memorialize our
understanding . . . with regards to the motion picture rights to the literary work
entitled THE SHACK . . . written by William P. Young.” (emphasis added)).
Moreover, Plaintiffs recognize that because Mr. Young is the sole owner of the
copyright in the Book, only he could assign the rights to create a derivative work
based on the Book. Compare FAC, Ex. A., ¶ 5(b) (“The Author specifically retains
the motion picture and theatrical rights and agrees to act in concern [sic] with
Windblown Media in the distribution of those right.”) with FAC, Ex. B (“The
motion picture rights will be held by William P. Young until an LLC is formed by
the undersigned to produce the movie.”).
D. In the Co-Venture Agreement with Hachette, Plaintiffs Admit
Young is the Author and Copyright Owner of the Book.
The Book “became an instant hit,” and “[a]s sales of the Book approached
one million copies, Windblown struggled to keep up with the demand.” FAC ¶ 23.
In response, Windblown entered into a partnership and joint venture agreement (the
“Co-Venture Agreement”) with non-party Hachette Book Group, Inc. (“Hachette”),
whereby Windblown transferred all of its titles, including the Book, to Hachette for
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IN SUPPORT OF MOTION TO DISMISS OPP. TO MOTION TO CONTINUE TRIAL
distribution worldwide. FAC ¶ 33; Co-Venture Agreement [FAC, Ex. C] ¶¶ 1(a),
1(c). In the Co-Venture Agreement, signed by Plaintiff Brad Cummings on behalf
of Windblown, Plaintiffs, again, recognize Young as the sole author of the Book.
Co-Venture Agreement at p.*1 (“WHEREAS, WINDBLOWN has published an
important literary work entitled The Shack by William P. Young”). Thereafter, “the
Book made it to The New York Times bestseller list, where it has remained for
almost 100 consecutive weeks.” FAC ¶ 34.
E. Young Files the State Court Action
In November 2009, Mr. Young filed a complaint against Windblown and
Hachette in California Superior Court, Ventura County, Case No. 56-2009-
00362329 (the “Young Complaint”). Request for Judicial Notice (“RJN”) ¶ 1, Ex.
1; see also, Declaration of Michael T. Anderson (“Anderson Decl.”) ¶ 2, Ex. 1. In
the Young Complaint, Mr. Young alleged that Defendants had engaged in a variety
of improper accounting practices designed to reduce his per-book royalty and share
of net profits, including, but not limited to: (i) excluding nearly 40% of all sales
from the calculation of Mr. Young’s share of profits and per book royalty by
designating the sales “high discount sales;” (ii) paying themselves a 10%
distribution fee nowhere authorized by the Publishing Contract, (iii) refusing to pay
Mr. Young a share of profits earned by Hachette, (iv) deducting an inflated return
reserve of $4.2 million despite the work’s low 1.2% return history, and (v)
deducting the per book royalty paid by Mr. Young before calculating net profits.
Young Complaint ¶¶ 16-20. Mr. Young claimed that defendants’ accounting
improprieties have deprived him of over $8 million through December 2008 alone.
Id. ¶ 2.
F. Defendants in the State Court Action Unsuccessfully Demur and
Move to Strike Mr. Young’s Complaint.
Both Windblown and Hachette each filed a demurrer and motion to strike the
Young Complaint. The Court, noting that “Publishers Windblown/Hachette,
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8 MEMORANDUM OF POINTS AND AUTHORITIES
IN SUPPORT OF MOTION TO DISMISS OPP. TO MOTION TO CONTINUE TRIAL
melodramatically arguing on demurrer and MTS that the author’s complaint seeking
only compensatory damages and an accounting is ‘a shocking display of greed,
overreaching and ingratitude,’” analogized Defendants’ accounting practices to
“Hollywood bookkeeping,” found that the Complaint “was very specifically
pleaded,” and denied all of the Defendants’ Motions. RJN ¶ 2, Ex. 2, Ruling; see
also Anderson Decl. ¶ 3 Ex. 2.
G. Windblown Files Its Cross-Complaint in the State Court Action.
In March 2010, Defendant Windblown then filed its Cross-Complaint in the
State Court Action against Mr. Young. Windblown alleged that Mr. Young has
breached its obligation to it by “failing to act in concert with Windblown in
connection with the disposition of the motion picture rights to the Book,” refusing
“to assign the motion picture rights to the Book to The Shack Movie, LLC,” and
requested damages “in excess of Five Million Dollars.” RJN ¶ 3, Ex. 3, Cross-
Compl. ¶¶ 37, 39; see also, Anderson Decl. ¶ 4, Ex. 3, ¶¶ 37, 39.
Defendants Windblown and Hachette have also served substantial discovery
on Mr. Young, requiring him to respond to numerous interrogatories and to produce
over 1,800 pages of documents, and noticed his deposition on several occasions.
Mr. Young, in turn, is actively involved in document discovery now with
Windblown and Hachette. Anderson Decl. ¶ 5.
H. Plaintiffs File the Federal Court Action Containing the Same
Allegations as Those in the Cross-Complaint
A month after filing the Cross-Complaint, Plaintiffs, on April 29, 2010, filed
the Complaint in this Court, and, after Mr. Young filed a motion to dismiss the
original complaint, Plaintiffs filed the FAC on or about June 23, 2010.3 The
allegations in the Cross-Complaint and the FAC are virtually identical. In the
Cross-Compliant, as in the FAC, Windblown alleged that in December 2005, Young
3 Plaintiffs served the FAC by mail.
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sent Plaintiff Jacobsen a copy of an “Unpublished Manuscript” of what ultimately
became the Book. Cross-Compl. ¶¶ 8-13 and FAC ¶¶ 7-12. According to Plaintiffs,
a few months later, in March 2006, Plaintiffs and Young (along with non-party
Bobby Downes) met at Jacobsen’s home to discuss the Book. Cross-Compl. ¶ 10
and FAC ¶ 9. “At that meeting,” Plaintiffs allege, “Jacobsen and Cummings agreed
to collaborate with Young and work with him to rewrite the Unpublished
Manuscript. Jacobsen, Cummings, Young and Downes further agreed that once
rewritten, the four of them would collaborate to produce a motion picture based on
the rewritten manuscript.” Id.
Plaintiffs claim that Young and Plaintiffs “entered into a written Letter of
Understanding, pursuant to which they agreed that Young would assign the motion
picture rights to the Book to a limited liability company to be formed by Young,
Jacobsen, Cumming and Downes for the purpose of producing a motion picture
based on the Book.” FAC ¶ 25 (emphasis added). Thereafter, according to
Plaintiffs, the parties formed The Shack Movie, LLC pursuant to the Letter of
Understanding for the propose of producing a motion picture based on the Book.
FAC ¶ 27; see also Cross-Compl. ¶ 21(d).
According to Plaintiffs, in both the FAC and Cross-Complaint, Young
breached the Letter of Understanding. FAC ¶ 37 (“Young subsequently refused to
execute a literary option and purchase agreement with The Shack Movie, LLC for
the motion picture rights in the Book.”); see Cross-Compl. ¶ 30 (same).4
4 The Letter of Understanding, dated May 1, 2008, is in conflict with and, indeed,
appears to have been superseded by the Publishing Contract, which is dated May 10,
2008. For example, pursuant to the Letter of Understanding, “if the motion picture
rights are sold prior to the LLC being formed . . . the receipts from that sale will be
split evenly amongst the four – i.e., Young, Jacobsen, Cummings, and Downes.
Letter of Understanding (emphasis added). However, in the later-dated Publishing
Contract, “[r]evenue generated by the[] sale [of the motion picture and theatrical
rights] will be split 60% to Author, 20% to Brad Cummings, and 20% to Wayne
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IN SUPPORT OF MOTION TO DISMISS OPP. TO MOTION TO CONTINUE TRIAL
III. DISCUSSION
A. Because Plaintiffs Agreed Mr. Young is the Author of the Book,
Plaintiffs’ First Claim Fails to State a Claim as a Matter of Law.
In their first claim for relief, Plaintiffs claim the Book is a “joint work” and
they are co-authors of the work (i.e., the Book). FAC ¶ 43. Pursuant to Ninth
Circuit authority, “several factors suggest themselves as among the criteria for joint
authorship, in the absence of contract.” Aalmuhammed v. Lee, 202 F. 3d 1227,
1234 (9th Cir. 2000) (emphasis added). Among the several factors is whether
“putative coauthors make objective manifestations of a shared intent to be
coauthors, as by denoting the authorship of The Pirates of Penzance as ‘Gilbert and
Sullivan.’” Id. “The best objective manifestation of a shared intent, of course, is a
contract saying that the parties intend to be or not to be co-authors. In the absence
of a contract, the inquiry must of necessity focus on the facts.” Id. at 1235
(emphasis added). See also Childress v. Taylor, 945 F.2d 500, 508 (2d Cir. 1991)
(“In many instances, a useful test will be whether, in the absence of contractual
agreements concerning listed authorship, each participant intended that all would be
identified as co-authors.”) Where a contract exists, the inquiry ends – “[a] contract
evidencing intent to be or no to be coauthors is dispositive.” Richlin v. Metro-
Goldwyn Mayer Pictures, Inc., 531 F.3d 962, 969 (9th Cir. 2008); Aalmuhammed,
202 F.3d at 1235 (“The best objective manifestation of a shared intend, of course, is
a contract saying that the parties intend to be or not to be co-authors. In the absence
of a contract, the inquiry must of necessity focus on the facts.”).
Here, the inquiry stops at the facts alleged in the FAC and incorporated by
reference from the documents attached to the FAC. American Title Ins. Co. v.
Lacelaw Corp., 861 F.2d 224, 226 (9th Cir.1988) (allegations in a complaint are
Jacobsen.” Publishing Contract ¶ 5(b) (emphasis added). There is no mention of
Downes in the Publishing Contract.
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considered judicial admissions); Fed. R. Civ. Proc. 10(c) (“A copy of a written
instrument that is an exhibit to a pleading is a part of the pleading for all
purposes.”); Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542,
1555 n. 19 (9th Cir.1990). "[W]here a plaintiff attaches documents and relies upon
the documents to form the basis for a claim or part of a claim, dismissal is
appropriate if the document negates the claim." Thompson v. Illinois Dep't of
Professional Regulation, 300 F.3d 750, 754 (7th Cir. 2002) (applying the "well-
settled rule that when a written instrument contradicts allegations in a complaint to
which it is attached, the exhibit trumps the allegation” (citing Northern Indiana Gun
& Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449, 454 (7th Cir.1998);
Woods v. Asset Resources, CV 06-398 SMS, 2006 WL 3782704, *2 (E.D.Cal. Dec.
21, 2006) ("When a written instrument or subject of judicial notice contradicts
allegations in a complaint to which it is attached, the Court need not accept the
allegations of the complaint as true") (citing Durning v. First Boston Corp., 815 F.2d
1265, 1267 (9th Cir.1987)); Saunders v. Knight, CV 04-5924 REC LJO, 2006 WL
224426, *3 (E.D.Cal. Jan. 25, 2006) (citing Thompson); Luna v. Kemira Specialty,
Inc., 575 F.Supp.2d 1166, 1175-76 (C.D. Cal. 2008) (same).
While Plaintiffs allege that Mr. Young agreed that Plaintiffs were co-authors
of the Book, the written instruments attached to the FAC contradict and therefore
trump Plaintiffs’ inconsistent allegations. Thompson, 300 F.3d at 754 (“when a
written instrument contradicts allegations in a complaint to which it is attached, the
exhibit trumps the allegations.”) (emphasis original)); Saunders, 2006 WL 224426
at p.*3 (“Where a plaintiff attaches documents and relies on their contents to form
the basis of a claim, dismissal is appropriate if the document negates the claim.”).
Indeed, all four exhibits attached to the FAC evidence Plaintiffs’ agreement
that Mr. Young is the sole author of the Book and the only copyright owner of the
Book. First, in the Windblown-Young Agreement (FAC, Ex. A), Plaintiffs agreed
Mr. Young is the sole author. Id. at Recital (“William P. Young, 1857 SW 35th
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Street, Gresham Oregon 97080 (the “Author”) (emphasis added); ¶ 10 (“The
Publisher agrees to submit an application for registration of the copyright in the
Work in the name of the Author”); p.*11 (signature line: “Author: William Paul
Young”).
Second, in the Letter of Understanding (FAC, Ex. B), Plaintiffs agree that the
Book was “written by William P. Young.” Id. (“This letter is to memorialize our
understanding . . . with regards to the motion picture rights to the literary work
entitled THE SHACK . . . written by William P. Young.”). In addition, as implied
in the document and admitted in the FAC, Plaintiffs recognize that only Mr. Young
has the rights as copyright owner of the Book to assign the rights to create a
derivative work – a motion picture based on the Book. 17 U.S.C. § 106(2) (“the
owner of copyright under this title has the exclusive rights to do and to authorize
any of the following: . . . to prepare derivative works based upon the copyrighted
work”); FAC ¶ 25.
Third, in Co-Venture Agreement (FAC, Ex. C), Plaintiffs agreed that Mr.
Young is the sole author of the Book. Id. at p.*1 (“WHEREAS, WINDBLOWN has
published an important literary work entitled The Shack by William P. Young”).
Fourth, in the CR – completed, signed and filed by Plaintiff Cummings (FAC,
Ex. D) – Plaintiffs admit that Mr. Young is the sole author of the Book and the sole
owner of the Copyright. Id. at pp.*3-4; FAC ¶ 16 (Plaintiff “Cummings submitted a
copyright registration . . . which identified Young as the author of the book.”). By
signing the CR, Cummings “certified that the statements made by [him] in th[e]
application [were] correct to the best of [his] knowledge.*” See FAC, Ex. D at p.*3.
Moreover, on the copyright application, Cummings was reminded of the law: “Any
person who knowingly makes a false representation of a material fact in the
application for copyright registration provided for by section 409, or in any written
statement filed in connection with the application, shall be fined not more than
$2,500.” Id.; 17 U.S.C. § 506(e).
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IN SUPPORT OF MOTION TO DISMISS OPP. TO MOTION TO CONTINUE TRIAL
Under the Copyright Act, the CR “constitutes prima facie evidence of the
validity of the copyright and of the facts stated in the certificate.” 17 U.S.C. §
410(c) (emphasis added); Eisenman Chemical Co. v. NL Industries, Inc., 595
F.Supp. 141, 145 (D.C. Nev. 1984) (citing Novelty Textile Mills, Inc. v. Joan
Fabrics Corp., 558 F.2d 1090, 1092 n. 1 (2nd Cir. 1977). Here, the very person now
disputing “the facts stated in the certificate” – Plaintiff Cummings – is the same
person who provided them, and did so under the threat of criminal penalties. Not
only are Plaintiffs’ allegations not credible, they are inconsistent with documents
attached to their FAC.
Thus, the existence of the agreements alleged by Plaintiffs and the CR
completed, signed, and filed by Plaintiffs, ends the inquiry as to the authorship of
the Book. In all of the documents attached to the FAC, Plaintiffs admit that Mr.
Young is the sole author of the Book and the only owner of the copyright in the
Book. Plaintiffs’ inconsistent allegations in the FAC are irrelevant; they are
trumped by the instruments attached to the FAC. Thompson, 300 F.3d at 754. In
light of the documents attached to the FAC, Plaintiffs cannot possibly establish that
Young intended to share ownership with Jacobsen and Cummings, a prerequisite to
co-authorship. See Aalmuhammed, 202 F. 3d at 1236. Therefore, because by their
own admissions Plaintiffs cannot state a claim for co-authorship of the Book, their
claim for a declaration for co-ownership in the copyright should be dismissed
pursuant to Federal Rules of Civil Procedure Rule 12(b)(6).
B. The Court Should Dismiss or Stay the Second State Law Claim
Because it is Duplicative of Issues Currently Pending in the State
Court Action
Even if the Court does not dismiss the first claim for relief, the Court should
still dismiss or stay the second claim for relief for breach of contract pursuant to
well-established principles of abstention.
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1. The Court Should Stay the Second Claim Pursuant to the
Younger Abstention Doctrine
Younger abstention, originating from Younger v. Harris, 401 U.S. 37, 49-53
(1971), is a doctrine of equitable judicial restraint, not a jurisdictional limitation.
William W. Schwarzer, et al., Cal. Practice Guide: Fed. Civ. Pro. Before Trial
§ 2:1291.1a (The Rutter Group 2009). The court’s discretion to abstain from
hearing a claim under Younger “does not arise from lack of jurisdiction in the
District Court, but from strong policies counseling against the exercise of such
jurisdiction where particular kinds of state proceedings have already been
commenced.” Ohio Civil Rights Comm’n v. Dayton Christian Schools, Inc. v.
Nelson, 477 U.S. 619, 626 (1986).
Federal courts may abstain from hearing a claim where a state court
proceeding (1) is pending when the federal action is filed; (2) implicates important
state interests; and (3) provides adequate opportunity to raise the claims alleged.
Middlesex County Ethics Committee v. Garden State Bar Ass’n, 457 U.S. 423, 431
(1982). If these three Younger requirements are satisfied, federal court abstention is
required, absent extraordinary circumstances such as bad faith, harassment, or a
patently unconstitutional state statute. Middlesex County Ethics Comm., 457 U.S.
at 435, 437; Younger, 401 U.S. at 53-54. As to Plaintiffs’ second claim for relief for
breach of contract, each of these elements are satisfied, justifying the Court’s
exercise of abstention.
First, the State Court Action – Young v. Windblown Media, Inc., et al. – was
pending when Plaintiffs filed their federal action. Young filed his complaint in the
State Court Action on November 19, 2009. Plaintiffs, after losing their demurrer to
Young’s complaint, filed their Cross-Complaint in the State Court Action on March
22, 2010. Then, a month after filing their Cross-Complaint, Plaintiffs filed their
Complaint in the instance case. The State Court Action is still pending.
Defendants have served extensive discovery requests to Mr. Young and third party
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witnesses, Mr. Young has produced over 1,800 pages of documents in response, and
Defendants have noticed the deposition of Mr. Young.
Second, the State Court Action implicates important state interests. For
purposes of Younger abstention, a wide variety of state interests qualify as
“important.” Ohio Civil Rights Comm’n v. Dayton Christian Schools, Inc. v.
Nelson, 477 U.S. 619, 626 (1986); Mission Oaks Mobile Home Park v. City of
Hollister, 989 F.2d 359, 361 (9th Cir. 1993). For example, an important state
interest includes the ability of state courts to adjudicate and enforce their orders.
See Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 13-14 (1987) (Younger abstention
proper based on important state interest in enforcing state court orders and
judgments including orders forcing persons to transfer property). Indeed, both this
Circuit and the U.S. Supreme Court have held that the state’s interest in
administering cases brought before its courts is at the heart of the comity principle
underlying Younger abstention:
the Court distilled the comity principles that animate abstention – that
the state’s interest in administration of its judicial system is important,
that federal court interference would be an offense to the state’s
interest, and that such interference would both unduly interfere with the
legitimate activities of the state and readily be interpreted as reflecting
negatively upon the state court’s ability ….
Gilbertson v. Albright, 381 F.3d 965, 972 (9th Cir. 2004) (citing Juidice v. Vail 430
U.S. 327 (1977)); see also Gilbertson, 381 F.3d at 970 (“the Court observed that
Congress over the years has manifested an intent to permit state courts to try state
cases free of federal interference.”). Referencing Middlesex and Dayton Christian
Schools, the Supreme Court noted that “judicial proceedings or disciplinary
proceedings which are judicial in nature are the type of proceeding that does
implicate an important state interest.” Gilbertson, 381 F.3d at 977 (citing New
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Orleans Public Service, Inc. v. Council of New Orleans, 491 U.S. 350, 370 (1989);
Middlesex, 457 U.S. at 433-434; and Dayton Christian Schools, 477 U.S. at 627.
Third, the State Court Action provides an adequate opportunity for Plaintiffs
to raise their contract claims. Indeed, as detailed above, Plaintiffs have already
raised the identical claims through the Cross-Complaint in the State Court Action.
Moreover, because the party in the State Court Action is Plaintiffs’ publishing
company, Windblown Media, Plaintiffs could easily intervene personally, assuming
that would even be necessary given the fact that virtually identical issues are already
being litigated in the State Court Action. See Delta Dental Plan of California v.
Mendoza, 139 F.3d 1289, 1297 (9th Cir. 1998) (ability to intervene in state court
action sufficient); Green v. City of Tucson, 255 F.3d 1086, 1102-03 (9th Cir.
2001).5
2. The Court Should Stay the Second Claim Pursuant to the
Colorado River Doctrine
In the interest of “wise judicial administration,” federal courts may stay a case
involving a question of federal law where a concurrent state action is pending in
which the identical issues are raised. William W. Schwarzer, et al., Cal. Practice
Guide: Fed. Civ. Pro. Before Trial § 2:687.1 (The Rutter Group 2009) (citing
Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 815
5 The Court in Green criticized Mendoza in its applicability of the intervention rule
(and the Green district court for applying Mendoza), because the Mendoza Court
would have had the plaintiffs intervene in a state court action to which he was a
stranger. Green, 255 F.3d at 1102. The court in Green clarified the rule: “absent a
relationship with a party to a state proceeding . . . a federal plaintiff has no
obligation to intervene in state court litigation raising issues similar to those that the
plaintiff wishes to raise in federal court.” Id. at 1102-03. The instant case falls
squarely within the rule as clarified by Green. The party in the State Court Action –
Windblown Media – is not only the Plaintiffs’ publishing company, but as is
apparent from the Complaint, it is also bound by the same agreements to which
Plaintiffs are bound.
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(1976)). The Colorado River doctrine “give[s] regard to conservation of judicial
resources.” Colorado River, 424 U.S. at 817.
The decision to abstain rests on a “careful balancing” of several factors as
they apply in a given case. Moses H. Cone Mem. Hosp. v. Mercury Const. Corp.,
460 U.S. 1, 16 (1983). For example, in Colorado River the Court examined four
factors to determine whether staying proceedings was appropriate: (1) whether
either court has assumed jurisdiction over a res; (2) the relative convenience of the
forums; (3) the desirability of avoiding piecemeal litigation to prevent, for example,
conflicting results; and (4) the order in which the forums obtained jurisdiction. See
424 U.S. at 818. In Moses Cone, the Court articulated two more considerations;
(5) whether state or federal law controls; and (6) whether the state proceeding is
adequate to protect the parties’ rights. See 460 U.S. at 25-26, 103 S.Ct. at 941-42.
In addition, courts have recognized an additional factor: (7) whether the state and
federal suits are substantially similar. Nakash v. Marciano, 882 F.2d 1411, 1416
(9th Cir. 1989). Finally, in Fireman’s Fund Ins. Co. v. Quackenbush, 87 F.3d 290
(9th Cir. 1996), the court recognized that (8) evidence of forum-shopping can justify
Colorado River abstention. “These factors are to be applied in a pragmatic and
flexible way, as part of a balancing process rather than as a ‘mechanical checklist.’”
American Int’l Underwriters, (Phillipines), Inc. v. Continental Ins. Co., 843 F.2d
1253, 1257 (9th Cir.1988) (quoting Moses Cone, 460 U.S. at 16).
In this case, the vast majority of factors weighs in favor of abstention. First,
the state court forum obtained jurisdiction first, in November 2009, when Young
filed his complaint. Plaintiffs (through Windblown) filed their cross-complaint in
March 2010. A month later, in April 2010, Plaintiffs filed the Complaint in this
action.6
6 The existence of a res and the convenience of the forum are neutral or non-
applicable factors.
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Second, the state and federal cases are substantially similar. Plaintiffs’
federal court complaint is virtually identical to their state court cross-complaint.
Indeed, in both the federal case and state case, for example, the Letter of
Understanding and Young’s alleged obligation to assign the movie rights to the
Book to an LLC controlled by Young, Jacobsen, and Cummings, are in issue.
Third, there is a substantial risk of conflicting result if piecemeal litigation is
not avoided, the paramount concern of Colorado River abstention doctrine. See
Romine v. Compuserve Corporation, 160 F.3d 337, 341 (6th Cir.1998) (“In Moses
H. Cone, the Supreme Court noted ‘the consideration that was paramount in
Colorado River itself – the danger of piecemeal litigation.’ 460 U.S. at 19”) (federal
court security class action stayed pending resolution of parallel state class action).
The state court may find no alleged breach of any duty to transfer the motion picture
rights – the federal court may find the opposite. The state court may find that the
May 10, 2008, Publishing Contract, which states only that the parties agree “to act
in concern [concert]” and the split of revenues is to be 60%/20%/20% to Young,
Cummings and Jacobsen applies – the federal court may find that the motion picture
rights are to be disposed of pursuant to the May 1, 2008 Letter of Understanding in
which the revenues are allegedly split four ways 25% each to Young, Cummings,
Jacobsen and Downes. Compare FAC, Ex. A at ¶ 5(b) with Ex. B. The same
witnesses, facts and chronology would have to be tried in both courtrooms, perhaps
at the same time. Plaintiffs’ procedural approach to the dispute regarding the
disposition of the motion picture rights invites disaster. This Court should avoid it.
Fourth, there is evidence of forum shopping. Plaintiffs Jacobsen and
Cummings are clearly trying to restart their litigation, and avoid adverse rulings
already made by the court in the State Court Action.
Fifth, the resolution of the claim involves the application of California
contract law, not federal law. The May 10, 2008, Publishing Contract contains a
California choice of law clause. FAC, Ex. A, ¶ 23.
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Sixth, the State Court Action is adequate to protect Plaintiffs’ rights.
Plaintiffs can intervene to assert any claim for breach in connection with the
disposition of the motion picture rights in state court.
Thus, in order to avoid the consequences of duplicative litigation proceeding
in both state court and federal court on similar claims at the same time, this Court
should stay the second claim for relief for breach of contract pursuant to the
Colorado River doctrine.
IV. CONCLUSION
For all of the reasons discussed above, Plaintiffs’ first claim for relief should
be dismiss for failure to state a claim. Regardless of whether the Court dismisses
the first claim for relief, Plaintiffs’ second for relief for breach of contract should be
dismissed, or, at the very least, stayed until the California Superior Court Action is
completed.
Dated: July 9, 2010 LOEB & LOEB LLP
MICHAEL T. ANDERSON
DONALD A. MILLER
By: /s/ Michael T. Anderson
Michael T. Anderson
Attorneys for Defendant
William Paul Young
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