1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 FOCAL POINT FILMS, LLC, 7 Case No. 19-cv-02898-JCS Plaintiff, 8 v. ORDER GRANTING MOTION TO 9 DISMISS ARJOT SANDHU, 10 Re: Dkt. No. 31 Defendant. 11
12 13 I. INTRODUCTION 14 Plaintiff Focal Point Films, LLC (“Focal Point”) and its sole member Bryan Gibel 15 (referred to collectively herein as “Gibel”) bring a copyright action seeking a declaratory judgment 16 that Gibel is the sole author of a documentary film called Sign My Name to Freedom (the “Film”) 17 that Defendant Arjot Sandhu also worked on. Sandhu, in turn, has asserted a counterclaim seeking 18 a declaratory judgment that she is a co-author of the Film and owns an undivided interest in the 19 copyright of the Film, as well as other related counterclaims. Presently before the Court is Gibel’s 20 Motion to Dismiss Defendant/Counter-Plaintiff’s Counterclaims in Part (“Motion”). A hearing on 21 the Motion was held on December 6, 2019. For the reasons stated below, the Motion is 22 GRANTED. 1 23 II. BACKGROUND 24 A. Complaint 25 Gibel alleges in the Complaint that he is a “director, producer, editor and cinematographer” 26 with a masters degree from the UC Berkeley Graduate School of Journalism documentary film 27 1 program. Complaint ¶ 10. He founded Focal Point in 2015. Id. According to Gibel, in 2016 he 2 met Betty Reid Soskin, “a 94-year old African American woman who entered the public spotlight 3 when she became the oldest National Park Ranger serving in the United States.” Id. ¶ 11. Gibel 4 alleges he set out to create a documentary film about Soskin with Soskin’s cooperation. Id. ¶ 12. 5 Gibel alleges that “in March 2017, “[m]ore than a year into the project,” he met Sandhu at a 6 documentary filmmaker workshop. Id. ¶ 15. When Gibel told Sandhu about the Film, she asked 7 if she could assist on set; Gibel agreed and between April 2017 and October 2017 Sandhu worked 8 “as an extra camera operator during a handful of shoots, always under Gibel’s supervision and 9 with the understanding that Sandhu would be compensated on partially deferred basis.” Id. ¶ 17. 10 According to Gibel, beginning in November 2017 Sandhu began to help with fundraising for the 11 Film. Id. Gibel alleges that he offered Sandhu an “Associate Producer” credit for this work. Id. 12 However, Gibel and Sandhu were unable to reach agreement on a written contract setting forth 13 their arrangement, with Gibel rejecting draft agreements proposed by Sandhu in November 2017 14 and August 2018 and Sandhu rejecting a draft agreement proposed by Gibel in January 2018. Id. 15 ¶¶ 18-23. 16 Gibel alleges that in November 2018 Sandhu snuck unauthorized co-director and co-editor 17 credits for herself into a “pitch deck” for the film and that even after he told Sandhu he was 18 terminating her services she continued to hold herself out as an authorized representative of the 19 Film. Id. ¶¶ 26-31. The Film has not been completed and Gibel alleges that Sandhu’s conduct is 20 “casting a cloud” over the Film and preventing him from obtaining the financing needed to 21 complete it. Id. ¶ 2. In his Complaint, Gibel seeks a declaratory judgment that “Focal Point is the 22 sole author of the Film,” and that “the Film is not a ‘joint work’ within the meaning of the 23 Copyright Act and Sandhu is not a joint author of the Film.” Id. ¶¶ 42-43. Alternatively, Gibel 24 asks that the Court rule “Sandhu’s individual contributions to the Film do not constitute a ‘work of 25 authorship’ within the meaning of the Copyright Act to which Sandhu holds any copyright 26 interest.” Id. at ¶ 44. 27 B. First Amended Answer and Countercomplaint 1 Gibel’s characterization of her role in the Film’s production and asserts that she:
2 personally engaged in various forms of creative authorship, including (among other things): conception, creative direction, content 3 selection, directing scenes, overseeing the Film’s production, supervising the work of editors, filming scenes, editing footage, 4 pitching the Film at film festivals, and collaborating on all other aspects of the Film’s creation and promotion, including the overall 5 arc and direction of the Film. 6 FACC ¶ 12. She alleges that “Gibel publicly represented that Ms. Sandhu was a coequal partner 7 in the creation of the Film in correspondence with third parties and promotional materials for the 8 Film,” until the fall of 2018, when “Gibel began to dispute Ms. Sandhu’s credits on the Film and 9 acted to exclude Ms. Sandhu from further involvement with the Film.” Id. at ¶¶ 13–14. She 10 alleges that Gibel wrongfully “blocked Ms. Sandhu’s access to the Film’s promotional material 11 and social media, and removed Ms. Sandhu’s name from those materials,” id. at ¶ 38, “removed 12 Ms. Sandhu’s access to the Google Drive location where they stored key documents for the Film,” 13 id. at ¶ 39, and “blocked Ms. Sandhu’s access to grant funds jointly raised and awarded to the 14 project,” id. at ¶ 40. According to Sandhu, Gibel brought this action after she refused to withdraw 15 the Film from consideration at Hot Docs Dealmaker Forum, a documentary event where Sandhu 16 and Gibel had been offered the opportunity to pitch the Film. Id. at ¶¶ 43-47. 17 In the FACC, Sandhu asserts the following counterclaims: 1) a claim for declaratory 18 judgment under the Copyright Act, 28 U.S.C. § 2201; 2) unjust enrichment; 3) intentional 19 interference with prospective economic advantage; 4) false advertising and unfair competition 20 under the Lanham Act, 15 U.S.C. § 1125(a)(1)(B) (“the Lanham Act counterclaim”); and 4) false 21 advertising and unfair competition under California’s Unfair Competition Law, Cal. Bus. & Prof. 22 Code § 17200 (“the UCL counterclaim”). 23 C. The Motion 24 In the Motion, Gibel asks the Court to dismiss Sandhu’s Lanham Act and UCL 25 counterclaims, as well as her counterclaim for intentional interference with prospective economic 26 advantage, arguing that these counterclaims fail to state a claim upon which relief can be granted 27 pursuant to Rule 12(b)(6). Motion at 1-2. Gibel argues that Sandhu’s Lanham Act counterclaim 1 539 U.S. 23 (2003). He also contends this claim fails because Sandhu has not alleged a required 2 element of the claim, namely, that she engaged in “commercial advertising.” Id. Nor can Sandhu 3 remedy this defect by amendment, he contends, because the Film is still in development and no 4 commercial advertising has yet occurred. Id. at 1. Gibel further asserts that because the UCL 5 claim is based on and coextensive with Sandhu’s Lanham Act counterclaim, the UCL 6 counterclaim must be dismissed for the same reasons. Id. at 2. Gibel asserts that the counterclaim 7 for intentional interference with prospective economic advantage should be dismissed because 8 Sandhu has not alleged any conduct that is independently wrongful, as is required under California 9 law. Id. Finally, Gibel contends the request for punitive damages must be dismissed because 10 Sandhu has not alleged that Gibel acted with “oppression, fraud, or malice.” Id. at 11–12.
11 III. ANALYSIS 12 A. Legal Standard Under Rule 12(b)(6) 13 A complaint may be dismissed under Rule 12(b)(6) of the Federal Rules of Civil Procedure 14 for failure to state a claim on which relief can be granted. “The purpose of a motion to dismiss 15 under Rule 12(b)(6) is to test the legal sufficiency of the complaint.” N. Star Int’l v. Ariz. Corp. 16 Comm’n, 720 F.2d 578, 581 (9th Cir. 1983). Generally, a plaintiff’s burden at the pleading stage 17 is relatively light. Rule 8(a) of the Federal Rules of Civil Procedure states that a “pleading which 18 sets forth a claim for relief . . . shall contain . . . a short and plain statement of the claim showing 19 that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a). 20 In ruling on a motion to dismiss under Rule 12(b)(6), the court analyzes the complaint and 21 takes “all allegations of material fact as true and construe[s] them in the light most favorable to the 22 non-moving party.” Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). 23 Dismissal may be based on a lack of a cognizable legal theory or on the absence of facts that 24 would support a valid theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 25 1990). A complaint must “contain either direct or inferential allegations respecting all the material 26 elements necessary to sustain recovery under some viable legal theory.” Bell Atl. Corp. v. 27 Twombly, 550 U.S. 544, 562 (2007) (citing Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1 of the elements of a cause of action will not do.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) 2 (quoting Twombly, 550 U.S. at 555). “[C]ourts ‘are not bound to accept as true a legal conclusion 3 couched as a factual allegation.’” Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 4 265, 286 (1986)). “Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of 5 ‘further factual enhancement.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557) 6 (alteration in original). Rather, the claim must be “‘plausible on its face,’” meaning that the 7 plaintiff must plead sufficient factual allegations to “allow[] the court to draw the reasonable 8 inference that the defendant is liable for the misconduct alleged.” Id. (quoting Twombly, 550 U.S. 9 at 570). 10 B. The Lanham Act, Dastar and Sybersound 11 The purpose of the trademark protections set forth in the Lanham Act is to “avoid 12 confusion in the marketplace by allowing a trademark owner to prevent[ ] others from duping 13 consumers into buying a product they mistakenly believe is sponsored by the trademark owner.” 14 Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792, 806 (9th Cir. 2003) (internal quotations 15 and citation omitted). The Lanham Act achieves this objective by prohibiting false designation of 16 a good’s origin under § 43(a)(1)(A) and false or misleading commercial advertising about a good 17 under § 43(a)(1)(B). Specifically, § 43(a)(1) provides as follows: 18 1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, 19 symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false 20 or misleading representation of fact, which-- (A) is likely to cause confusion, or to cause mistake, or to 21 deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or 22 approval of his or her goods, services, or commercial activities by another person, or 23 (B) in commercial advertising or promotion, misrepresents the 24 nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial 25 activities,
26 shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act. 27 1 In Dastar, the Supreme Court addressed the meaning of the term “origin of goods” under § 2 43(a)(1)(A) of the Lanham Act. There, an affiliate of plaintiff Twentieth Century Fox Film 3 acquired the exclusive television rights to Dwight Eisenhower’s account of the Allied campaign in 4 Europe, “Crusade in Europe,” and produced a television series by the same name. 539 U.S. at 25- 5 26. The television series entered the public domain in 1977 when Fox failed to renew the 6 copyright on the television series. Id. at 26. However, Fox reacquired the television rights – 7 including the exclusive right to distribute the Crusade television series – in 1988. Id. Fox’s 8 affiliate then restored the negatives from the original series, repackaged and distributed them. Id. 9 Subsequently, in 1995, defendant Dastar copied the original version of the Crusade television 10 series (rather than the restored series), made some changes to the series, then sold the video set as 11 its own, making no reference to the Crusade television series. Fox and its affiliate sued Dastar, 12 alleging that Dastar’s failure to give proper credit to the Crusade television series amounted to a 13 false designation of origin in violation of § 43(a)(1)(A) of the Lanham Act. 14 The Court in Dastar rejected the plaintiff’s argument, holding that the phrase “origin of 15 goods” “refers to the producer of the tangible goods that are offered for sale, and not to the author 16 of any idea, concept or communication embodied in those goods.” Id. at 37. The Court explained: 17 We think the most natural understanding of the “origin” of “goods”– the source of wares – is the producer of the tangible product sold in 18 the marketplace, in this case the physical Campaigns videotape sold by Dastar. The concept might be stretched (as it was under the original 19 version of § 43(a)) to include not only the actual producer, but also the trademark owner who commissioned or assumed responsibility 20 for (“stood behind”) production of the physical product. But as used in the Lanham Act, the phrase “origin of goods” is in our view 21 incapable of connoting the person or entity that originated the ideas or communications that “goods” embody or contain. Such an 22 extension would not only stretch the text, but it would be out of accord with the history and purpose of the Lanham Act and inconsistent with 23 precedent. 24 Id. In support of this conclusion, the Court reasoned that a broader definition of the “origin” of a 25 good would run the risk of conflicting with the law of copyright, creating “a species of mutant 26 copyright law that limits the public’s ‘federal right to “copy and to use”’ expired copyrights.’” Id. 27 at 34 (citation omitted). 1 behind the Campaigns videos . . . without protection.” Id. at 37. In particular, the original film 2 footage could have been copyrighted, or the plaintiff could have renewed the copyright it had held 3 in the television series. Id. It went on to suggest, in dicta, that there would also be a remedy under 4 the Lanham Act if:
5 the producer of a video that substantially copied the Crusade series were, in advertising or promotion, to give purchasers the impression 6 that the video was quite different from that series, then one or more of the respondents might have a cause of action—not for reverse 7 passing off under the “confusion . . . as to the origin” provision of § 43(a)(1)(A), but for misrepresentation under the “misrepresents the 8 nature, characteristics [or] qualities” provision of § 43(a)(1)(B). 9 Id. at 38.2 Likewise, the Dastar Court noted (also in dicta) that the plaintiff’s Lanham Act claim 10 “would undoubtedly be sustained if Dastar had bought some of New Line’s Crusade videotapes 11 and merely repackaged them as its own.” Id. at 31. 12 In Sybersound Records, Inc. v. UAV Corp., 517 F.3d 1137, 1143 (9th Cir. 2008), the Ninth 13 Circuit addressed the implications of Dastar for a claim brought under § 43(a)(1)(B) of the 14 Lanham Act based on alleged misrepresentation of the “nature, characteristics, [and] qualities” of 15 the product in that case. There, the defendants were producers of karaoke records who allegedly 16 misrepresented to their customers that they had obtained synchronization licenses from all of the 17 copyright holders with interests in the songs on the karaoke records. Id. The court considered 18 whether misrepresentations about the licensing status of the records could be considered 19 misrepresentations of the “nature, characteristics, [and] qualities” of the records for the purposes 20 of § 43(a)(1)(B) and concluded they could not, looking to the reasoning in Dastar. Id. at 1144. 21 The court explained:
22 the nature, characteristics, and qualities of karaoke recordings under the Lanham Act are more properly construed to mean characteristics 23 of the good itself, such as the original song and artist of the karaoke recording, and the quality of its audio and visual effects. Construing 24 the Lanham Act to cover misrepresentations about copyright licensing status as Sybersound urges would allow competitors 25 engaged in the distribution of copyrightable materials to litigate the underlying copyright infringement. 26
27 2 “Reverse passing off” occurs where “[t]he producer misrepresents someone else’s goods or 1 Id. 2 C. The Lanham Act Counterclaims 3 1. Contentions of the Parties 4 Gibel argues in the Motion that Sandhu’s Lanham Act counterclaim is a reverse passing 5 off claim under § 43(a)(1)(A) disguised as a claim for false advertising under § 43(a)(1)(B). 6 Motion at 6. The reverse passing off claim is directly precluded by Dastar, he asserts, and the 7 false advertising claim fails under Sybersound. Id. at 5-8. Gibel argues that numerous courts have 8 relied on Sybersound to conclude that misrepresentations concerning authorship do not fall within 9 the ambit of § 43(a)(1)(B) and those cases are on point here. 10 In her Opposition, Sandhu argues that Dastar does not bar her Lanham Act counterclaim 11 because that case addressed only § 43(a)(1)(A) whereas she asserts her Lanham Act counterclaim 12 is a claim for false advertising under § 43(a)(1)(B). Opposition at 7. She cites the dicta in 13 Dastar, quoted above, suggesting that a claim for false advertising would be allowable under the 14 Lanham Act where the defendant has simply taken someone else’s product and repacked it as their 15 own, arguing that this is what she has alleged here. Id. at 9 (citing Dastar, 539 U.S. at 31). 16 Sandhu acknowledges that some courts have extended Dastar to find that it bars false advertising 17 claims under § 43(a)(1)(B) but contends that they have done so only where there was a “clear 18 showing” that the claims were “merely attempts to circumvent Dastar and in essence were claims 19 for failure to provide credit on underlying creative content.” Id. at 9. That is not the case here, 20 Sandhu argues, where Sandhu’s ownership in the Film by virtue of her “sweat equity” is a 21 characteristic of the Film itself. Id. at 10-11. As a consequence, she contends, misrepresentations 22 that the Film is only Gibel’s are not simply misrepresentations about authorship but rather, relate 23 to the “nature, characteristics [or] qualities” of the Film and therefore within the ambit of § 24 43(a)(1)(B). Id. Similarly, Sandhu argues Sybersound is distinguishable because that case 25 involved misrepresentations only as to the franchise status of the product and not about a 26 characteristic of the good itself. Id. at 10. 27 In addition, at the motion hearing, counsel for Plaintiff argued that Sandhu could state a 1 reputation resulting from Gibel’s conduct, citing Lexmark Intern., Inc. v. Static Control 2 Components, Inc., 572 U.S. 118 (2014). See FACC at ¶¶ 79-82 (alleging that statements Gibel 3 made to potential funders of the Film about Sandhu damaged her reputation in the Bay Area 4 documentary filmmaking community).3 5 2. Discussion 6 One need only look to the allegations of Sandhu’s Lanham Act Counterclaim to conclude 7 that the gravamen of that claim is Gibel’s alleged failure to give Sandhu appropriate credit as a co- 8 author in his statements made in promotional materials and on the Film website. In particular, the 9 FACC alleges in the Lanham Act Counterclaim that “Gibel and Focal [P]oint have falsely 10 represented and continue to falsely represent to public, potential funders, investors, potential 11 purchasers, and/or others that the Film is Mr. Gibel’s sole work, without crediting Ms. Sandhu as 12 his co-author.” FACC ¶ 76 (emphasis added). Although the Ninth Circuit has not directly 13 addressed whether misrepresentations regarding authorship can give rise to a false advertising 14 claim under § 43(a)(1)(B) of the Lanham Act, numerous district courts in California have 15 concluded that under the reasoning of Dastar and Sybersound they cannot. See Cannarella v. 16 Volvo Car USA LLC, No. 16 Civ. 6195, 2016 WL 9450451, at *9 (C.D. Cal. Dec. 12, 2016) 17 (citing Sybersound and applying its reasoning to dismiss 15 U.S.C. § 1125(a)(1)(B) claim based 18 on statements that allegedly misrepresented who invented technology that was being advertised); 19 Friedman v. Zimmer, No. 15 Civ. 502, 2015 WL 6164787, at *3-4 (C.D. Cal. July 10, 2015) 20 (citing Sybersound and applying its reasoning to dismiss 15 U.S.C. § 1125(a)(1)(B) claim based 21 on statements advertising a film that allegedly misrepresented the nature, characteristics, qualities, 22 or geographic origins of . . . goods, services, or commercial activities” by stating that the music in 23 the film was by Hans Zimmer rather than by the plaintiff); Grady v. Scholastic Inc., No. 12 Civ. 24 7992, 2013 WL 12132199, at *5 (C.D. Cal. Jan. 31, 2013) (citing Sybersound and applying its 25
26 3 As discussed below, the Court finds that Sandhu’s Lanham Act Counterclaim fails under Daster and Sybersound. Therefore, it does not summarize here Gibel’s argument that the counterclaim 27 fails for the independent reason that Sandhu has not alleged that any misrepresentations were 1 reasoning to dismiss 15 U.S.C. § 1125(a)(1)(B) claim based on statements advertising a book that 2 did not provide appropriate credit for the plaintiff’s creative role in writing it); Brion Jeannette 3 Architecture v. KTGY Grp. Inc., No. 07 Civ. 691, 2009 WL 10673200, at *4 n.2 (C.D. Cal. July 4 30, 2009) (citing Sybersound and applying its reasoning to reject the plaintiff’s argument that even 5 if its reverse passing off claim under § 43(a)(1)(A) failed under Dastar it had a viable false 6 advertising claim under § 43(a)(1)(B) where plaintiff alleged that the defendant used architectural 7 designs by the plaintiff to promote his services while representing that the designs were his own); 8 see also Kehoe Component Sales Inc. v. Best Lighting Prod., Inc., 796 F.3d 576, 590 (6th Cir. 9 2015) (citing Sybersound for the proposition that “[a]bsent a false statement about geographic 10 origin, a misrepresentation is actionable under § 1125(a)(1)(B) only if it misrepresents the 11 ‘characteristics of the good itself’—such as its properties or capabilities” and concluding that the 12 Lanham Act “does not encompass misrepresentations about the source of the ideas embodied in 13 the object (such as a false designation of authorship); to hold otherwise would be to project the 14 Lanham Act into the province of the Copyright and Patent Acts.”); Baden Sports, Inc. v. Molten 15 USA, Inc., 556 F.3d 1300, 1307 (Fed. Cir. 2009) (“Following Sybersound’s reasoning, we 16 conclude that authorship, like licensing status, is not a nature, characteristic, or quality, as those 17 terms are used in Section 43(a)(1)(B) of the Lanham Act.”). 18 For example, in Friedman v. Zimmer, the Central District of California dismissed a false 19 advertising claim similar to Sandhu’s Lanham Act counterclaim. There, plaintiff Richard 20 Friedman alleged that the defendants’ film Twelve Years a Slave used a musical composition in 21 the score to which he held the copyright and that the defendants violated the Lanham Act by 22 falsely advertising that the film featured “Music by Hans Zimmer” instead of stating “Music by 23 Richard Friedman.” Friedman v. Zimmer, 2015 WL 6164787, at *3. As in this case, the plaintiff 24 relied on dicta in Dastar to argue that “the Supreme Court left open the possibility of asserting a 25 Dastar-type claim under section 1125(a)(1)(B).” Id. The court in Friedman rejected that 26 argument, however, reasoning that the dicta in Dastar “states only that a Dastar-type claim might 27 be viable if the seller’s misrepresentation leads consumers to believe they were buying one 1 Inc., 556 F.3d 1300, 1307 (Fed. Cir. 2009) (“While the dictum in Dastar might suggest that the 2 Supreme Court left open the possibility of a claim arising from a misrepresentation concerning the 3 qualities of certain goods, it does not necessarily suggest that claims based on false designation of 4 authorship are actionable under Section 43(a)(1)(B).”)). 5 The Friedman court reasoned further that “given the Court’s concerns [in Dastar] about 6 creating overlap between the Lanham Act and other intellectual property regimes, it would have 7 made little sense for the Supreme Court to reject the Dastar plaintiff’s claim under 15 U.S.C. § 8 1125(a)(1)(A) but permit the same sort of claim to be asserted under a different prong of the same 9 statute.” Id. (citing Antidote Int’l Films, Inc. v. Bloomsbury Pub., PLC, 467 F.Supp.2d 394, 400 10 (S.D.N.Y. 2006) (“[T]he holding in Dastar that the word ‘origin’ in § 43(a)(1)(A) refers to 11 producers, rather than authors, necessarily implies that the words ‘nature, characteristics, [and] 12 qualities’ in § 43(a)(1)(B) cannot be read to refer to authorship. If authorship were a 13 ‘characteristic[ ]’ or ‘qualit[y]’ of a work, then the very claim Dastar rejected under § 43(a)(1)(A) 14 would have been available under § 43(a)(1)(B).”)). The Friedman court also found that the 15 reasoning of Sybersound supported its conclusion, reading that case to support the conclusion that 16 claims of false designations of authorship as false advertisement are not actionable under § 17 43(a)(1)(B) are not actionable in the Ninth Circuit. Id. 18 This Court, like the court in Friedman, concludes that under Dastar and Sybersound, 19 Sandhu’s Lanham Act Counterclaim under § 43(a)(1)(B) fails to state a claim because it is based 20 on misrepresentations of authorship. The Court also rejects Sandhu’s attempt to distinguish her 21 claim from the claim asserted in Sybersound on the basis that the alleged false statements here are 22 about co-ownership rather than authorship. As discussed above, although numerous courts have 23 read Sybersound to preclude false advertising claims based on misleading statements about the 24 authorship of the underlying ideas in the product, Sybersound itself did not involve false 25 designation of authorship. Rather, it involved alleged misrepresentations about the licensing 26 status of the material contained on the records. Sandhu does not explain why the distinction she 27 draws – between misrepresentation as to ownership of the Film and misrepresentation as to the 1 finds nothing in the reasoning of Sybersound that suggests that the court in that case would have 2 reached a different result if faced with the alleged facts of this case. 3 The Court also is not persuaded that Sandhu has stated a claim for false advertising based 4 on injury to reputation under Lexmark. In that case, the plaintiff (Lexmark) manufactured printers 5 and ink cartridges, while the defendant (Static Control) was a “remanufacturer” – that is, a 6 company that “acquire[d] used Lexmark toner cartridges, refurbish[ed] them, and [sold] them in 7 competition with new and refurbished cartridges sold by Lexmark.” 572 U.S. at 120. Lexmark 8 asserted copyright claims against Static Control and Static Control, in turn, asserted false 9 advertising counterclaims under the Lanham Act against Lexmark. Id. In particular, Static 10 Control alleged that Lexmark was misleading end-users of its cartridges that they were required to 11 return their used cartridges to Lexmark and advising them that it was illegal to have its cartridges 12 refurbished by Static Control. Id. at 123. Static Control alleged that Lexmark “materially 13 misrepresented ‘the nature, characteristics, and qualities’” of both its own products and Static 14 Control’s products” under § 1125(a)(1)(B) and “that Lexmark’s misrepresentations . . . had 15 substantially injured [its] business reputation by leading consumers and others in the trade to 16 believe that [Static Control] is engaged in illegal conduct.” Id. The Supreme Court granted 17 certiorari “to decide the appropriate analytical framework for determining a party’s standing to 18 maintain an action for false advertising under the Lanham Act.” Id. at 125 (internal quotation 19 marks omitted). 20 The Court articulated a two-part test for determining whether a plaintiff has standing under 21 the Lanham Act to bring a false advertising claim. Id. at 129-134. First, the plaintiff’s interests 22 must fall within the “zone of interest” that Congress meant to protect under the Lanham Act. Id. 23 at 129-132. The Court found that “to come within the zone of interests in a suit for false 24 advertising under § 1125(a), a plaintiff must allege an injury to a commercial interest in reputation 25 or sales.” Id. at 131–32. The Court explained that to satisfy this requirement it is not enough for 26 customers to allege that they have been “hoodwinked into purchasing a disappointing product” or 27 for a business to allege that it has been “misled by a supplier into purchasing an inferior product.” 1 deception wrought by the defendant’s advertising; and that occurs when deception of consumers 2 causes them to withhold trade from the plaintiff.” Id. at 133. When both prongs of the test are 3 met, a plaintiff has standing under the Lanham Act to bring an action for reputational harm based 4 on false advertising. Id. 5 In her Lanham Act counterclaim, Sandhu alleges that Gibel “irreparably harmed Ms. 6 Sandhu’s reputation and good will within the documentary filmmaking community, including 7 among the public, potential funders, investors, potential purchasers of the Film, and/or others in 8 this community.” FACC at ¶ 79. However, the specific facts she alleges to establish that she has 9 suffered reputational harm make clear that the harm she alleges is the result of representations by 10 Gibel about Sandhu’s role as a coauthor of the Film. See FAC ¶ 75 (alleging that Gibel “removed 11 Ms. Sandhu’s name from the Film’s promotional material, website, and social media),4 ¶ 76 12 (alleging that Gibel “falsely represented . . . to public, potential funders, investors, potential 13 purchasers and others that the Film is Mr. Gibel’s sole work, without crediting Ms. Sanhu as his 14 coauthor); ¶ 77 (alleging that Gibel “falsely represented . . . that Ms. Sandhu was never 15 substantively involved in the conception and creation of the film . . . and that she has claimed 16 credit that is not due her); ¶ 78 (alleging Gibel’s statements contradicted prior statements that 17 Sandhu was his “filmmaking partner”); ¶ 80 (alleging that an investor who Sandhu had 18 “cultivated” declined to fund the film after being made aware of Gibel’s claim of “sole 19 authorship” “citing confusion caused by Mr. Gibel’s claim of sole authorship”); ¶ 82 (alleging 20 that Gibel intends to continue “tarnish[ing] Ms. Sandhu’s good name and reputation in the 21 community” by “continu[ing] to promote the Film . . . as Mr. Gibel’s sole work”); ¶ 83 (alleging 22 that Gibel’s “claim that the Film is Mr. Gibel’s sole work” is discouraging some investors from 23 investing in the Film because “[a] reasonable person within the documentary filmmaking 24 community would attach importance to the identity of the authors of a film and would be induced 25 to act on the information in making decisions”); ¶ 84 (alleging that Gibel’s “omission of Ms. 26
27 4 In Paragraph 75, Sandhu also alleges that Gibel “blocked access to those promotional materials 1 Sandhu, and . . . false attribution of Mr. Gibel as the Film’s sole author, misrepresents the ‘nature, 2 characteristics [or] qualities’ of the Film and Mr. Gibel and Ms. Sandhu’s respective authorship 3 and creative contributions thereto” which is likely to mislead consumers “by creating the false 4 and misleading impression that Mr. Gibel is the source of Ms. Sandhu’s creative work, and the 5 sole author of the Film which Ms. Sandhu co-authored.”). Therefore, the Court concludes that 6 Sandhu’s Lanham Act counterclaim runs afoul of Dastar and Sybersound despite her attempt to 7 recast it as a false advertising claim based on reputational harm. While it may be possible to 8 amend this claim to allege injury to a commercial interest in reputation that is not a result of 9 representations about Sandhu’s authorship of the Film, she has not done so in the FACC. 10 Therefore, the Court dismisses this claim with leave to amend. 11 D. The UCL Counterclaim 12 1. Contentions of the Parties 13 In the Motion, Gibel argues that Sandhu’s UCL counterclaim “essentially repeats” the 14 Lanham Act counterclaim. Motion at 9. Because section 17200 is “substantially congruent”’ to 15 the Lanham Act, he contends, the UCL counterclaim should be dismissed for the same reasons the 16 Lanham Act claim must be dismissed. Id. (citing Cleary v. News Corp., 30 F.3d 1255, 1262-63 17 (9th Cir. 1994)). He points to cases in which “courts dismissing Lanham Act claims based on 18 authorship—including the Ninth Circuit in Sybersound—have dismissed Section 17200 claims on 19 the same grounds.” Id. (citing TV One LLC v. BET Networks, No. CV 11-08983 MMM (EX), 20 2012 WL 13012674, at *9 (C.D. Cal. Apr. 2, 2012); Cannarella v. Volvo Car USA LLC, No. CV 21 16-6195-RSWL-JEMX, 2016 WL 9450451, at *11 (C.D. Cal. Dec. 12, 2016)). 22 In her Opposition, Sandhu rejects Gibel’s argument that her UCL counterclaim simply 23 duplicates her Lanham Act Claim. Opposition at 11-13. According to Sandhu, “California’s 24 UCL is broader than the Lanham Act.” Id. at 14 (quoting Card Tech Int’l, LLLP v. Provenzano, 25 No. CV 11-2434 DSF (PLAx), 2012 WL 2135357, at *28 (C.D. Cal. June 7, 2012)). She further 26 notes that there are four disjunctive prongs of § 17200 that can give rise to liability, namely, 27 conduct that is: (1) unlawful, (2) unfair, (3) fraudulent, or (4) in violation of section 17500 (false 1 the “unlawful” prong and the “unfair” prong. Id. (citing Lozano v. AT & T Wireless Servs., Inc., 2 504 F.3d 718, 731 (9th Cir. 2007)). With respect to the “unlawful” prong, she claims she has 3 adequately alleged unlawful conduct based not only upon her Lanham Act Counterclaim (which 4 she contends is sufficiently pled for the reasons discussed above) but also on each of her other 5 counterclaims. Id. at 13. She also points out that in the FACC she asserted her UCL claim based 6 not only on “unlawful” conduct but also based on “unfair” conduct. Id. at 13-14. She argues that 7 she has alleged “numerous ‘unfair’ acts as a basis for her UCL claim including: ‘removing and 8 blocking Ms. Sandhu’s access to key documents, materials, and footage for the Film’ [FACC ¶ 9 91); ‘preventing [Sandhu] from promoting the Film and her work to the public’ (id.); ‘diminishing 10 [Sandhu’s] contribution’ (id. ¶ 92); ‘portraying [Ms. Sandhu] as an unwanted interloper to 11 [Gibel’s] project’ (id.); and ‘representing the Film as . . . Gibel’s sole work’ (id. ¶ 94).” Id. at 14. 12 In his Reply, Gibel reiterates his argument that Sandhu’s UCL counterclaim duplicates her 13 Lanham Act counterclaim and is therefore barred for the same reasons the Lanham Act 14 counterclaim fails. Reply at 7. In particular, he argues that any UCL claim for false advertising 15 Sandhu is asserting is equivalent to a claim under 15 U.S.C. § 43(a)(1)(B) and therefore is barred 16 by Sybersound; likewise, any unfair competition claim she is asserting under the UCL is 17 equivalent to a claim under § 43(a)(1)(A) and is barred under Dastar. Id. Gibel rejects the 18 argument that Sandhu has pled violations of the UCL under the “unlawful” or “unfair prong”, 19 arguing that as pled, the only alleged violation of the UCL is that Gibel has denied she is a co- 20 author of the Film, which is identical to her Lanham Act counterclaim. Id. He also argues that 21 Sandhu’s reliance on allegations that she was denied access to documents, materials and footage 22 and prevented from promoting the Film “merely repeats her claim of joint authorship under the 23 Copyright Act, because these are rights she would only have if she establishes her claim of joint 24 authorship.” Id. at 8 n. 1. Finally, Gibel argues that to the extent that Sandhu’s UCL claim is 25 based on her “purported joint authorship or any privileges of joint authorship, that claim would 26 also be preempted by the Copyright Act.” Id. 27 2. Discussion 1 Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134, 1143 (2003). “Unlawful acts are anything 2 that can properly be called a business practice and that at the same time is forbidden by law . . . be 3 it civil, criminal, federal, state, or municipal, statutory, regulatory, or court-made, where court- 4 made law is, for example a violation of a prior court order.” Sybersound, 517 F.3d at 1151 (ellipsis 5 in original) (internal quotation marks omitted). “Unfair acts among competitors means ‘conduct 6 that threatens an incipient violation of an antitrust law, or violates the spirit or policy of those laws 7 because its effects are comparable to or the same as a violation of the law, or otherwise 8 significantly threatens or harms competition.’” Id. at 1152 (quoting Cel–Tech Commc’ns, Inc. v. 9 L.A. Cellular Tel. Co., 20 Cal.4th 163, 187 (1999)). “Finally, fraudulent acts are ones where 10 members of the public are likely to be deceived.” Id. 11 Sandhu argues that she has asserted a viable UCL claim under both the “unlawful” and 12 “unfair” prongs. The Court finds her arguments unpersuasive. 13 With respect to the “unlawful” prong, Sandhu’s UCL claim fails to the extent it is based on 14 alleged violations of the Lanham Act. The Ninth Circuit “has consistently held that state common 15 law claims of unfair competition and actions pursuant to California Business and Professions Code 16 § 17200 are ‘substantially congruent’ to claims under the Lanham Act.” Cleary v. News Corp., 30 17 F.3d 1255, 1262–63 (9th Cir. 1994) (citing Academy of Motion Picture Arts & Sciences v. 18 Creative House Promotions, Inc., 944 F.2d 1446, 1457 (9th Cir.1991)). Thus, Sandhu’s UCL 19 counterclaim fails for the same reasons her Lanham Act counterclaim fails to the extent it is based 20 on alleged violation of the Lanham Act. See Sybersound, 517 F.3d at 1153 (dismissing UCL 21 claim because the plaintiff could not state a claim under the Lanham Act). 22 The Court also rejects Sandhu’s reliance on the “unfair” prong of the UCL. Sandhu has 23 not alleged any “incipient violation of an antitrust law, or [conduct that] violates the spirit or 24 policy of those laws because its effects are comparable to or the same as a violation of the law, or 25 otherwise significantly threatens or harms competition.’” Id. at 1152 (quoting Cel–Tech 26 Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal.4th 163, 187 (1999)). Although she has alleged 27 that Gibel’s conduct has resulted in “substantial injury . . . to consumers,” FACC ¶ 95, she does 1 likely to occur. At most, she has plausibly alleged that Gibel’s conduct has “misled . . . potential 2 investors in the Film and members of the documentary filmmaking community.” Id. ¶ 94. 3 Therefore, the Court dismisses Sandhu’s UCL counterclaim with leave to amend on the 4 basis that it fails to state a claim. 5 E. The Intentional Interference with Prospective Economic Relations Counterclaim 6 3. Contentions of the Parties 7 Gibel asserts Sandhu’s counterclaim for intentional interference with prospective economic 8 relations fails to state a claim because Sandhu has not alleged an independent wrong, which is 9 required in California. Motion at 10 (citing Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 10 Cal.4th 376, 385 (1995); Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134, 1159 11 (2003); Los Angeles Land Co. v. Brunswick Corp., 6 F.3d 1422, 1429 (9th Cir. 1993) cert. denied 12 510 U.S. 1197 (1994)). Sandhu counters that she “has pled at least two such independent wrongs . 13 . . (1) Focal Point’s unjust enrichment at Ms. Sandhu’s expense, and (2) Focal Point’s 14 diminishment of Ms. Sandhu’s copyright ownership.” Opposition at 14–15 (internal citations 15 omitted). 16 4. Discussion 17 Under California law, the required elements of a claim for intentional interference with a 18 prospective economic advantage are: 19 (1) an economic relationship containing the probability of future 20 economic benefit to the plaintiff; (2) knowledge by the defendant of the existence of the relationship; (3) intentional acts on the part of the 21 defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) damages to the plaintiff proximately caused 22 by the defendant’s acts. 23 Los Angeles Land Co. v. Brunswick Corp., 6 F.3d 1422, 1429 (9th Cir. 1993) (citing Buckaloo v. 24 Johnson, 14 Cal.3d 815 (1975)). In addition, “a plaintiff seeking to recover for an alleged 25 interference with prospective contractual or economic relations must plead and prove as part of its 26 case-in-chief that the defendant not only knowingly interfered with the plaintiff’s expectancy, but 27 engaged in conduct that was wrongful by some legal measure other than the fact of interference 1 Circuit has explained that a plaintiff:
2 need not allege acts by [the defendant] different from the alleged [interference with the relationship] to allege a wrongful act giving rise 3 to a claim for interference with prospective economic advantage. [The plaintiff] merely must allege that [the defendant’s] acts were unlawful 4 for a reason other than that they interfered with [the plaintiff’s] prospective economic advantage. 5 6 CRST Van Expedited, Inc. v. Werner Enterprises, Inc., 479 F.3d 1099, 1110 (9th Cir. 2007) (citing 7 Korea Supply Co., 29 Cal.4th at 1158–59). 8 The Court finds that Sandhu has not alleged any conduct that is independently wrongful. 9 To the extent she relies on her claim for unjust enrichment, she does not cite any case in which the 10 assertion of such a claim was found to satisfy the “independent wrong” requirement. “[I]n 11 California, there is not a standalone cause of action for ‘unjust enrichment,’ which is synonymous 12 with ‘restitution.’” Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753, 762 (9th Cir. 2015) (citing 13 Durell v. Sharp Healthcare, 183 Cal.App.4th 1350 (2010); Jogani v. Superior Court, 165 14 Cal.App.4th 901, 81 Cal.Rptr.3d 503, 511 (2008)). “Common law principles of restitution require 15 a party to return a benefit when the retention of such benefit would unjustly enrich the recipient.” 16 Munoz v. MacMillan, 195 Cal. App. 4th 648, 661 (2011). Sandhu’s counterclaim for unjust 17 enrichment is based on the theory that Sandhu worked without compensation because she 18 understood that she would, as co-creator, receive a share of the profits. FACC ¶¶ 58-63. It does 19 not establish that Gibel’s conduct was independently wrongful. 20 The Court also rejects Sandhu’s argument that her declaratory judgment claim under the 21 Copyright Act meets the independent wrong requirement. While she characterizes her claim as one 22 for “diminishment of copyright interest,” it is, in fact, simply a claim seeking a declaratory 23 judgment as to her copyright interest. Sandhu has cited no authority that a claim seeking a 24 declaratory judgment regarding joint copyright ownership is sufficient to meet the independent 25 wrong requirement. Further, the Court finds that her allegation that Gibel “threatened legal action 26 unless Ms. Sandhu withdrew from the Hot Docs event,” FACC ¶ 68, does not allege an 27 independent wrong. See Arthur J. Gallagher & Co. v. Lang, No. C 14-0909 CW, 2014 WL 1 causes of action—contacting clients and filing a lawsuit—are not independently wrongful acts and 2 [the plaintiff] does not cite any legal authority upon which the Court could conclude otherwise.”). 3 Therefore, the Court finds that Sandhu has failed to state a claim as to her counterclaim for 4 intentional interference with prospective economic relations. Because she may be able to cure this 5 deficiency if she is able to amend to state a viable claim under the Lanham Act (which would 6 satisfy the independent wrong requirement as well), Sandhu will be given leave to amend this 7 claim. 8 F. Punitive Damages 9 Gibel argues that Sandhu’s request for punitive damages should be dismissed because 10 punitive damages are not available under the Lanham Act and as to her state law counterclaims, 11 Sandhu has not alleged in even a conclusory fashion that he acted with malice or fraudulent intent. 12 The Court agrees. 13 California state law controls the substantive elements that Sandhu must plead in her 14 request for punitive damages. California Spine & Neurosurgery Inst. v. Aetna Life Ins. Co., No. 15 CV 18-6829-DMG (KSX), 2019 WL 1878355, at *2 (C.D. Cal. Mar. 7, 2019). Under Cal. Civ. 16 Code § 3294, she must plead malice, fraud, or oppression to receive punitive damages. 17 However, the heightened pleading standard that applies in state court under this provision does not 18 apply in Federal court; rather, under Rules 8 and 9(b) malice, fraud and oppression may be averred 19 generally. Rees v. PNC Bank, N.A., 308 F.R.D. 266, 273 (N.D. Cal. 2015). 20 Sandhu has not included even conclusory allegations that Gibel acted with malice or 21 fraudulent intent. Though this deficiency could be easily remedied by amendment, her request for 22 punitive damages also fails to the extent that punitive damages are not available on either of her 23 remaining claims. First, punitive damages are not available under the Copyright Act. Reinicke v. 24 Creative Empire, LLC, No. 12CV1405-GPC KSC, 2013 WL 275900, at *5 (S.D. Cal. Jan. 24, 25 2013) (“The Court follows the district courts in this Circuit that hold that punitive damages are not 26 available under the Copyright Act.”). Second, Sandhu has cited no authority for the proposition 27 that punitive damages are available on a claim for unjust enrichment. Therefore, the Court 1 to cure her Lanham Act claim and thereby also state a claim for intentional interference with 2 || prospective economic relations (which does allow for an award for punitive damages), Sandhu 3 will be permitted to amend as to her request for punitive damages. See Anglo-Am. Gen. Agents v. 4 || Jackson Nat. Life Ins. Co., 83 F.R.D. 41, 45 (N.D. Cal. 1979) (“punitive damages may be awarded 5 || for the tort of intentional interference with economic relations.”). 6 || IV. CONCLUSION 7 For the reasons stated above, the Motion to Dismiss is GRANTED. The Court dismisses 8 Sandhu’s Third, Fourth and Fifth Counterclaims with leave to amend. Sandhu’s amended 9 || counterclaims shall be filed no later than January 24, 2020. 10 IT IS SO ORDERED. 11 a 12 Dated: December 20, 2019
13 OSEPH C. SPERO 14 Chief Magistrate Judge 15 16
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