Design Basics v. R.J. Moreau Communities

2016 DNH 069

• Court: District Court, D. New Hampshire
• Decided: March 29, 2016
• Docket: 15-cv-309-LM
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Design Basics, LLC

v. Civil No. 15-cv-309-LM Opinion No. 2016 DNH 069 R.J. Moreau Communities, LLC

O R D E R

Design Basics, LLC brings a copyright infringement claim

against R.J. Moreau Communities, LLC (“R.J. Moreau”), alleging

that R.J. Moreau used its copyrighted designs to market, sell,

and build residential homes. Currently before the court is

Design Basics’s motion to amend its complaint (doc. no. 16) to

add Reginald Moreau and Jon Lariviere as defendants and to add

allegations concerning additional infringements. R.J. Moreau

objects (doc. no. 17).

Legal Standard

Under Federal Rule of Civil Procedure 15(a), a plaintiff

can amend its complaint “once as a matter of course” up to 21

days after a motion to dismiss or answer has been served. See

Fed. R. Civ. P. 15(a)(1). When a plaintiff seeks to amend its

complaint after that time, as Design Basics does here, it may do

so “only with the opposing party’s written consent or the

court’s leave.” Fed. R. Civ. P. 15(a)(2). “The court should freely give leave when justice so requires.” Id. “A proposed

amendment seeking to add new parties ‘is technically governed by

[Federal Rule of Civil Procedure] 21,’ but the ‘same standard of

liberality’ applies under either rule.” Podkulski v. Doe, No.

11-CV-102-JL, 2014 WL 5662780, at *1 (D.N.H. Nov. 3, 2014)

(quoting Garcia v. Pancho Villa's of Huntington Vill., Inc., 268

F.R.D. 160, 165 (E.D.N.Y. 2010)).

If, however, the deadline for amending pleadings contained

in a scheduling order has lapsed, a motion to amend a pleading

is assessed under Federal Rule of Civil Procedure 16, which

governs the modification of scheduling orders. U.S. ex rel.

D'Agostino v. EV3, Inc., 802 F.3d 188, 192 (1st Cir. 2015); see

also Fed. R. Civ. P. 16(b)(4). Under Rule 16, a party must show

“good cause” to amend its pleading after the deadline for doing

so has lapsed. Fed. R. Civ. P. 16(b)(4). The parties dispute

whether the motion to amend complies with the deadline in the

relevant scheduling order, and therefore the applicable legal

standard is in dispute.

Background

Design Basics brought a copyright infringement claim

against R.J. Moreau on August 4, 2015 under 17 U.S.C. §§ 101, et

seq. (the “Copyright Act”). The complaint alleges that R.J.

Moreau infringed Design Basics’s copyrights in its architectural

2 designs and technical drawings by using those works to market,

sell, and build residential homes for consumers. R.J. Moreau

answered Design Basics’s complaint on September 8, 2015. See

Answer (doc. no. 6). Pursuant to Federal Rule of Civil

Procedure 26(f), the parties submitted a proposed joint

discovery plan on October 16, 2015. See Prop. Disc. Plan (doc.

no. 14); see also Fed. R. Civ. P. 26(f)(2)&(3). Under that

plan, Design Basics was required to “join any additional parties

on or before January 21, 2016.” Prop. Disc. Plan (doc. no. 14)

¶ 21(A). The plan also provides that Design Basics must “file

amendments to pleadings on or before February 25, 2016.” Id. ¶

23(A).

Three days after the parties filed the discovery plan, the

magistrate judge issued an endorsed order on the docket

approving the plan as a pretrial scheduling order subject to

certain modifications. That order provided, in pertinent part,

that the “[p]roposed discovery plan . . . [was] [a]pproved and

adopted as a pretrial scheduling order with the following

modification[]: The deadline for disclosure of claims against

unnamed parties is set for December 22, 2015.” See Order, Oct.

19, 2015.

On January 21, 2016, Design Basics moved to amend its

complaint. The proposed amended complaint, which is attached to

the motion as an exhibit, see Mot. Amend Compl., Ex. A (doc. no.

3 16-2), adds new claims against Moreau and Lariviere, who are

alleged to be managing members of R.J. Moreau, for copyright

infringement based on the doctrine of vicarious liability. The

proposed amended complaint also adds an allegation concerning

additional acts of infringement by R.J. Moreau. R.J. Moreau

objects.

Discussion

R.J. Moreau argues that Design Basics’s motion should be

denied because it does not comply with the deadline in the

pretrial scheduling order, which, it contends, prohibits Design

Basics from adding new parties after December 22. R.J. Moreau

also contends that the court should deny Design Basics’s motion

to amend because the new proposed claims would prejudice Moreau

and Lariviere and would be futile.1 In response, Design Basics

argues that its motion to amend complies with the scheduling

order and that the claims against Moreau and Lariviere are

neither prejudicial nor futile.

1 R.J. Moreau does not challenge Design Basics’s motion to amend as it pertains to the proposed new allegation. That portion of Design Basics’s motion is presumably timely under the scheduling order, which adopted the parties’ proposed deadline of February 25 for Design Basics to amend its pleadings.

4 I. The Deadline to Join Parties

R.J. Moreau argues that the scheduling order modified the

parties’ proposed January 21, 2016 deadline for Design Basics to

join new parties by moving it to December 22, 2015. In support

of this argument, R.J. Moreau points to the provision in the

scheduling order that requires the “disclosure of claims against

unnamed parties” by December 22, 2015. Design Basics, on the

other hand, argues that the scheduling order did not alter the

discovery plan’s proposed deadline for it to add parties. It

contends that the provision in the scheduling order setting a

deadline for the “disclosure of claims against unnamed parties”

applies only to claims under state law where the defendant

contends that an unnamed party is responsible. The court

agrees.

The local rules of this district require that “[t]he

discovery plan referenced in Fed. R. Civ. P. 26(f) shall

substantially conform to Civil Form 2, Discovery Plan.” L.R.

26.1. Civil Form 2, which is a form discovery plan, contains

the following provision:

DISCLOSURE OF CLAIMS AGAINST UNNAMED PARTIES: If defendant(s) claim that unnamed parties are at fault on a state law claim (see DeBenedetto v. CLD Consulting Engineers, Inc., 153 N.H. 793 (2006)), defendant(s) shall disclose the identity of every such party and the basis of the allegation of fault no later than [no later than 30 days before the Joinder of Additional Parties deadline and 45 days before the Plaintiff’s

5 Expert Disclosure deadline]. Plaintiff shall then have 30 days from the date of disclosure to amend the complaint.

See L.R., App. Forms, Civil Form 2, at 3.

The parties’ discovery plan did not contain this deadline.

To ensure substantial compliance with Civil Form 2, as required

under L.R. 26.1, the scheduling order modified the parties’

proposed discovery plan by including a corresponding “deadline

for disclosure of claims against unnamed parties” on December

22. See Order, Oct. 19, 2015. That deadline has no bearing on

this action, as it is currently pled. As the language in Civil

Form 2 suggests, the deadline to add unnamed parties applies

only to defendants of state law claims who seek to prove that a

party not named in the action is at fault. See L.R., App.

Forms, Civil Form 2; see also DeBenedetto v. CLD Consulting

Eng’rs, Inc., 153 N.H. 793, 804 (2006).

Here, Design Basics is the plaintiff, and it brings only

federal claims. Accordingly, the scheduling order did not alter

the January 21 deadline in the parties’ discovery plan for

Design Basics to join additional parties. Because Design Basics

moved to add Moreau and Lariviere by the January 21, 2016

deadline, its motion to amend the complaint complies with the

deadlines in the scheduling order.

6 II. Leave to File an Amended Complaint

As discussed above, approval to file an amended pleading

prior to the deadline in a scheduling order is freely given

“when justice so requires.” Podkulski, 2014 WL 5662780, at *1

(internal quotations omitted). Under this standard, leave to

amend should be granted absent “any apparent or declared reason—

such as undue delay, bad faith or dilatory motive on the part of

the movant, repeated failure to cure deficiencies by amendments

previously allowed, undue prejudice to the opposing party by

virtue of allowance of the amendment, futility of amendment,

etc.” Klunder v. Brown Univ., 778 F.3d 24, 34 (1st Cir. 2015)

(quoting Foman v. Davis, 371 U.S. 178, 182 (1962)).

R.J. Moreau contends the court should not allow Design

Basics to amend its complaint because the addition of the

vicarious infringement claims would prejudice Moreau and

Lariviere and because the new claims would be futile.2 Neither

of these reasons is persuasive.

A. Prejudice

R.J. Moreau argues that Moreau and Lariviere would be

prejudiced because Design Basics is attempting to bring claims

2R.J. Moreau also argues that the court should decline to grant Design Basics leave because it “delay[ed] in moving to add claims against unnamed parties.” Obj. (doc. no. 17) 1. But, as discussed above, there was no such delay under the scheduling order.

7 “long after the alleged acts occurred.” Obj. (doc. no. 17) 1-2.

R.J. Moreau further argues that because some of the acts at

issue here occurred nearly a decade ago, Moreau and Lariviere

“could be deprived of evidence critical to their defense.”

Surreply (doc. no. 21) 2. “The question of [a claim’s]

timeliness is governed by the applicable statute of limitations,

subject to the relation back doctrines of Rule 15(c).” Coons v.

Indus. Knife Co., 620 F.3d 38, 43 (1st Cir. 2010). R.J. Moreau

does not contend that the claims that Design Basics seeks to add

are barred under the Copyright Act’s statute of limitations.

Therefore, R.J. Moreau has failed to show prejudice based on the

timeliness of the claims against Moreau and Lariviere.

B. Futility

R.J. Moreau also argues that the court should deny Design

Basics’s motion because the claims against Moreau and Lariviere

would be futile. “To determine whether a proposed amended

complaint would be futile, the court uses the standard for

motions to dismiss pursuant to Federal Rule of Civil Procedure

12(b)(6).” Drew v. New Hampshire, No. 14-CV-462-JD, 2015 WL

847449, at *1 (D.N.H. Feb. 26, 2015). “Under the Rule 12(b)(6)

standard, the court must take the factual allegations in the

complaint as true, with reasonable inferences in the plaintiff’s

favor, and ‘determine whether the factual allegations in the

8 plaintiff's complaint set forth a plausible claim upon which

relief may be granted.’” Id. (quoting Foley v. Wells Fargo

Bank, N.A., 772 F.3d 63, 71 (1st Cir. 2014)).

“Vicarious copyright infringement occurs when a defendant

has both the right and ability to supervise the infringing

activities and an obvious and direct financial interest in the

exploitation of copyrighted materials.” Broad. Music, Inc. v.

PJML, Inc., No. 13-cv-12212-IT, 2015 WL 5737140, at *2 (D. Mass.

Sept. 30, 2015) (internal quotation marks omitted); see also MGM

Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005)

(“One . . . infringes vicariously by profiting from direct

infringement while declining to exercise a right to stop or

limit it.”).3 Further, to plead vicarious copyright

infringement, a plaintiff must also allege direct copyright

3 R.J. Moreau relies on Dangler v. Imperial Mach. Co., 11 F.2d 945, 947 (7th Cir. 1926), which held that an officer must “act willfully and knowingly” to be liable for a corporation’s infringement. Dangler, however, is inconsistent with First Circuit precedent, which allows liability for vicarious copyright infringement even when the infringement occurs without the defendant’s knowledge. See Famous Music Corp. v. Bay State Harness Horse Racing & Breeding Ass'n, Inc., 554 F.2d 1213, 1214-15 (1st Cir. 1977). Further, Dangler is in tension with the “widely accepted” two-prong standard for vicarious copyright infringement. See White v. Marshall, 693 F. Supp. 2d 873, 887 (E.D. Wis. 2009) (reconciling Dangler with the modern standard for vicarious copyright liability). For these reasons, the court concludes that Dangler is inapplicable.

9 infringement. Int'l Diamond Importers, Inc. v. Oriental Gemco

(N.Y.), Inc., 64 F. Supp. 3d 494, 516 (S.D.N.Y. 2014).

The proposed amended complaint alleges that R.J. Moreau

infringed Design Basics’s copyrights by using its designs and

technical drawings to market, sell, and build residential homes.

It also alleges that Moreau and Lariviere were members of R.J.

Moreau and had “primary responsibility for [R.J. Moreau’s]

operation and management” during the infringing activity. Mot.

Amend Compl. (doc. no. 16-2) ¶¶ 3-4, 22. Therefore, it is

reasonable to infer that both Moreau and Lariviere had the right

and ability to supervise the alleged infringing activity.

In addition, the proposed amended complaint alleges that

Moreau and Lariviere had “an obvious and direct financial

interest” in R.J. Moreau. Id. Based on that allegation, it is

reasonable to infer that the infringing activity, which

allegedly facilitated R.J. Moreau’s sale of residential homes,

also financially benefitted Moreau and Lariviere. For these

reasons, the proposed amended complaint states a plausible claim

for vicarious infringement.

10 Conclusion

For the foregoing reasons, Design Basics’s motion to amend

the complaint (doc. no. 16) is granted.

SO ORDERED.

__________________________ Landya McCafferty United States District Judge

March 29, 2016

cc: Edric Bautista, Esq. Michael C. Harvell, Esq. Jennie C. Knapp, Esq. Michael J. Lambert, Esq. Rick I. Lambert, Esq. Scott T. Ober, Esq. John Piegore, Esq. Sean J. Taylor, Esq.