December 12, 2002
This matter comes before the Court on a variety of motions. First, plaintiff seeks to dismiss Counts I and II of defendants' Counterclaim for failure to state a claim upon which relief may be granted. (Docket No. 9) The basis for this motion, according to plaintiff, is that Counts I and II of the Counterclaim are based on hearsay, without a factual basis or evidentiary support. The counterclaims in question are based on alleged copyright infringement pursuant to 17 U.S.C. § 501, and unfair trade practices in violation of N.C. Gen. Stat. § 75-1.1, et seq. In the counterclaims, it is alleged that in 1994, Dean Jones hired a Henry J. Lindley to assist in the writing of a screen play entitled "Dead Inn." Mr. Jones apparently was granted a Certificate of Registration for the work which identified Henry Lindley as an employee for hire. The counterclaims further allege that defendant Rock Creek Films, Inc. now owns all rights and title to the work entitled "Dead Inn." Defendants contend that plaintiff has used the name Rock Creek Films, which is deceptively similar to defendant's name, and created confusion, and that plaintiff attempted to interfere with the copyright to the film Dead Inn." Count I alleges copyright infringement and Count II alleges unfair trade practices. Defendants oppose the motion to dismiss.
In order to be successful in a Rule 12(b)(6) motion to dismiss a complaint, the Court must find that a party can prove no set of facts which would entitle it to relief. The Court must construe the claims in a light most favorable to that party. Martin Marietta Corp. v. International Telecommunications Satellite Organization, 978 F.2d 140 (4th Cir. 1992), republished as amended, 991 F.2d 94 (4th Cir. 1992).
With respect to the copyright claim, defendants submit copies of their uncontested copyright registration. Thus, the claim has a basis in fact. Defendants also contend plaintiff has interfered with their copyright. Because the Federal Rules of Civil Procedure require "notice" pleading, this statement of "fact" is sufficient. A party need not submit proof at the pleading stage. Even though plaintiff may also have asserted some ownership rights to the work and may contend he has not violated any copyright, that merely creates a disputed set of facts. The Court may not dismiss the claims merely because there are disputed facts. Rather, when there are disputed facts, a trial must be held.
The elements necessary to prove an unfair trade practice claim are as follows:
(1) that the defendant engaged in conduct that was in or affecting commerce, (2) that the conduct was unfair or "had the capacity or tendency to deceive," and (3) "that the plaintiff suffered actual injury as a proximate result of defendant's deceptive statement or misrepresentation." Pearce v. American Defender Life Ins. Co., 316 N.C. 461, 343 S.E.2d 174, 179-80 (1986). Occurrence of the alleged conduct, damages, and proximate cause are fact questions for the jury, but whether the conduct was unfair or deceptive is a legal issue for the court. Hardy v. Toler, 288 N.C. 303, 218 S.E.2d 342, 346-47 (1975); accord United Laboratories, Inc. v. Kuykendall, 322 N.C. 643, 370 S.E.2d 375, 389 (1988) ("[I]t is a question of law for the court as to whether these proven facts constitute an unfair or deceptive trade practice."); see also James McGee Phillips, Jr., Note, Consumer Protection — Hardy v. Toler: Applying the North Carolina Deceptive Trade Practices Legislation — What Role for the Jury?, 54 N.C. L. Rev. 963, passim (1976) (discussing Hardy's resolution of the issue).Gilbane Bldg. Co. v. Federal Reserve Bank of Richmond, Charlotte Branch, 80 F.3d 895, 902 (4th Cir. 1996). On the other hand, violation of the federal copyright act does not constitute an unfair trade practice.Nintendo of America, Inc. v. Aeropower Co., Ltd., 34 F.3d 246, 251 (4th Cir. 1994). However, defendants do not appear to rely exclusively, if at all, on the alleged copyright violation to sustain the unfair trade practice claim. In Count II of the Counterclaim, defendants allege plaintiff interfered with defendants' trademark or similar rights by misusing the Rock Creek Film name and creating confusion in that regard, and in regard to the true ownership of the work "Dead Inn." This could be an unfair trade practice. At this stage, defendants need not prove facts showing a violation. They need only allege facts which, if proved, could constitute a violation. It should be noted that defendants request injunctive relief which could be granted if defendants are correct that plaintiff has caused unlawful confusion.
As noted above, the standard for granting a motion to dismiss is a high one. In the instant case, it cannot be said that defendants could prove no set of facts which would entitle them to relief, even if that relief were only declaratory and/or injunctive relief. They have alleged ownership of the work "Dead Inn," and have also alleged that plaintiff has interfered with their right to said work. They have alleged that plaintiff had deceptively used the "Rock Creek Film" name. That is all that is necessary at this stage. A party need not submit proof of the factual allegations. Therefore, plaintiff's motion to dismiss (docket no. 9) shall be denied.
Next, plaintiff has filed a motion to strike defendants' Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, and Ninth defenses, claiming they are insufficient. (Docket No. 10) Again, plaintiff's only basis for filing this motion is that the defenses allegedly contain hearsay information. That, however, is not a ground for striking defenses. Defendants oppose plaintiff's motion. They show these defenses allege as follows:
Second Defense: Plaintiff has no registered copyright.
Third Defense: One or more defendants own all registered copyrights at issue.
Fourth Defense: Statute of limitations.
Fifth Defense: Rule 12(b)(6) Failure to state claim against Starr Jones.
Sixth Defense: Rule 12(b)(6) Failure to state claim against Rock Creek Films.
Seventh Defense: Laches.
Eighth Defense: Res judicata and collateral estoppel.
Ninth Defense: Statute of frauds and other irregularities with assignments.
(Defts' Brf. at 1-2)
Defendants first indicate that summary denial is appropriate here because plaintiff has failed to provide any legal basis for the motion to strike. The Court cannot disagree with that argument. Plaintiff did not present a legal brief. The Court also finds that the motion must be denied on the merits because the Court can find nothing improper with respect to the defenses. Whether they will be successful is not the issue at this stage of the proceedings. Consequently, plaintiff's motion to strike (docket no. 10) will be denied.
Next, plaintiff has requested entry of default with respect to a defendant named Dean Carl Jones. (Docket No. 19) He claims that this defendant was served, but has failed to file an answer. Dean Carl Jones has filed an opposition to the request for entry of default and a motion to dismiss for lack of service. (Docket No. 22) He shows that on June 24, 2002 (docket no. 11), plaintiff filed an affidavit which had a return of service on it showing that Dean Carl Jones was served when an Alamance County Deputy Sheriff delivered a copy of the summons and complaint and left it with Carla Jones at 5865 Chestnut Lane, Snow Camp, North Carolina. Mr. Jones shows, through affidavit, that he does not live at that address but that, instead, his sister and brother-in-law live at that address.
Pursuant to Fed.R.Civ.P. 4(e), service on an individual may be made by leaving a copy of the summons and complaint at an individual's dwelling house or usual place of abode. It is clear that delivery of a summons and complaint to a person's sister's house does not satisfy that requirement. Defendant cites Berner v. Farny, 11 F.R.D. 506 (D.N.J. 1951), wherein a named defendant owned a house jointly with his brother and sister-in-law and even claimed the house on his income tax return. However, he did not live in the house and it was not his "usual place of abode." Consequently, the attempted service of a summons and complaint at that house was not sufficient. In this case, the defendant's connection to the house is even less than that in Berner. Thus, the service on Dean Carl Jones was neither sufficient nor effective. In addition, defendant also shows that the service would not be proper under state law either,citing, Tinkham v. Hall, 47 N.C. App. 651, 267 S.E.2d 588 (1980) (service attempted on defendant's sister). More than 120 days have passed since the filing of the complaint, the time within which service must be made pursuant to Fed.R.Civ.P. 4(m).
Plaintiff responded by filing a motion to strike the motion to dismiss. (Docket No. 26) However, that is not a proper pleading and the motion shall be denied. In actuality, it appears that this motion to strike is really a reply to defendant's motion to dismiss. Here, plaintiff states that Dean Carl Jones is not being sued as a private individual, but rather as the Chief Executive Officer of Rock Creek Films, Inc. He claims that Mr. Jones was properly served when the summons and complaint were served on the corporation' s registered process agent pursuant to Rule 4(h)(i). That rule governs service upon corporations, not individuals.
"A motion to strike under Rule 12(f) is the appropriate remedy for the elimination of redundant, immaterial, impertinent, or scandalous matter in any pleading, and is the primary procedure for objecting to an insufficient defense." Charles Alan Wright and Arthur R. Miller, Federal Practice and Procedure § 1380, at 644 (2d ed. 1990). Those matters are not the subject of defendant's motion to dismiss for lack of service.
Rule 4(h) cannot be used to require a particular officer to appear on behalf of the corporation. In fact, pursuant to 28 U.S.C. § 1654, a corporation may only appear in court through an attorney. That means neither corporate officers nor shareholders may appear on behalf of the corporation. Eagle Associates v. Bank of Montreal, 926 F.2d 1305, 1308-09 (2d Cir. 1991); Richdel, Inc. v. Sun Spool Corp., 699 F.2d 1366 (Fed. Cir. 1983). Even sole shareholders of closely held corporations may not appear on behalf of the corporation. United States v. High Country Broadcasting Co., Inc., 3 F.3d 1244 (9th Cir. 1993), cert. denied, 513 U.S. 826, 115 S.Ct. 93, 130 L.Ed.2d 44 (1994).
Consequently, to the extent that plaintiff states that Mr. Jones is not being sued as a private individual, but as a representative of the corporation, he would not be a proper defendant in this case. It appears that the corporation has been served and entered an answer and, therefore, any service on Mr. Jones in order to have him appear on behalf of the corporation would be both superfluous as well as improper. Therefore, plaintiff's request for entry of default (docket no. 19) will be denied and Dean Carl Jones' motion to dismiss for lack of service (docket no. 22) shall be granted. Plaintiff's motion to strike (docket no. 26) defendant's motion to dismiss shall likewise be denied for being an improper pleading.
IT IS THEREFORE ORDERED that plaintiff's motion to dismiss Counts I and II of defendants' Counterclaim (docket no. 9) is denied.
IT IS FURTHER ORDERED that plaintiff's motion to strike defendants' Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, and Ninth defenses (docket no. 10) is denied.
IT IS FURTHER ORDERED that plaintiff's motion for entry of default as to defendant Dean Carl Jones (docket no. 19) is denied.
IT IS FURTHER ORDERED that defendant Dean Carl Jones' motion to dismiss for lack of service (docket no. 22) is granted, and Dean Carl Jones is hereby dismissed as a defendant from this lawsuit. The case caption and docket sheet shall be amended to reflect that this defendant has been dismissed from this action.
IT IS FURTHER ORDERED that plaintiff's motion to strike defendant Jones' motion to dismiss (docket no. 26) is denied for being an improper pleading.