Powers v. Caroline's Treasures Inc.

382 F. Supp. 3d 898
CourtDistrict Court, D. Arizona
DecidedApril 10, 2019
DocketNo. CV-17-03923-PHX-SMB
StatusPublished
Cited by1 cases

This text of 382 F. Supp. 3d 898 (Powers v. Caroline's Treasures Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Powers v. Caroline's Treasures Inc., 382 F. Supp. 3d 898 (D. Ariz. 2019).

Opinion

Honorable Susan M. Brnovich, United States District Judge

At issue is Defendants' Motion for Summary Judgment (Doc. 43, "Mot."). Plaintiff responded to the motion (Doc. 53, "Resp."), and Defendants replied. (Doc. 60). For the reasons that follow, Defendants' motion is denied in part and granted in part.

I. Background

Suzanne Powers ("Powers" or "Plaintiff") created 56 drawings entitled "Dogs of the West aka Dog Country" in 1997 and 1998. In 2002, Powers entered into an agreement with Caroline Treasure's, Inc. ("CTI") to license these works for use on CTI's products for two years (the "2002 License"). (Resp. at Exh. B). CTI is an Alabama Corporation that retails home items. (Doc. 31 ¶ 64). Defendants Ronald Rutherford ("Rutherford") and Walter Knight ("Knight") are officers of CTI. (Doc. 31 ¶¶ 65-66). The 2002 License included a clause that said the agreement could be renewed in one-year increments if both parties agreed. (Resp. at Exh. B). The 2002 License ended on May 29, 2004.

Nevertheless, after the license expired, the parties stayed in contact and Defendants continued to use Plaintiff's works and their business relationship continued under the same terms. (Mot. at 4; Resp. at 1). In November 2006, Powers and CTI entered into a new two-year licensing agreement (the "2006 License"). The 2006 License had a same renewal clause as the *9012002 License. (Resp. at Exh. D). When the license lapsed in November 2008, CTI continued selling licensed products. (Mot. at 5). In November 2009, Powers contacted CTI requesting a payment for royalties, which CTI paid by check. (Id. ). In the memo line for that check, it noted it was for royalties from October 2008 to October 2009.

The parties present different characterizations of their business relationship between 2002 and 2009. Defendants argue that it was established practice that they would pay Powers royalties whenever she requested. (Mot. at 3-6). Powers argues this was a constant frustration for her, and she attaches emails from 2003, 2004, and 2007 asking for payment. (Resp. at 9, Exh. E, F, G). In a May 30, 2007, email, Powers wrote, "If you are not going to send me what is owed on a timely basis without me hounding you ... I wish to terminate our relationship ...." (Resp. at Exh. F). A week later, she seems to walk back her demand in another email: "I would like to not have to ask to be paid, that's all. As far as pulling the designs, that is up to you. As long as you don't disappear into the night on me!" (Resp. at Exh. G).

Powers claims she thought the agreement lapsed November 26, 2008, and Defendants would stop selling her works at that point. (Resp. at Declaration of Suzanne Powers, "Powers Decl.," ¶ 14). She further alleges that even though the last check for her royalties went through "Oct. 2009," she thought it was just for October 2008 and November 2008, the last two months of the license agreement. (Id. ¶¶ 15-16). She alleges she only found out about the continued use of her images in June 2017 and immediately contacted CTI. (Id. ¶ 21). When she contacted CTI at that time, they sent her a check for post-October 2008 royalties. (Mot. at 8, Exh. M-1). She did not deposit the check, because she "decided to look into a lawsuit." (Id. at M-1).

Defendants argue that Powers impliedly consented to continuing the license by following the same course of conduct that followed the 2002 License's lapse. Plaintiff contends that she believed their business relationship was over once the 2006 License ended and Defendants continuing to sell past the expiration date of the 2006 License constitutes breach of contract and copyright infringement. Powers also alleges violations of the Digital Millennium Copyright Act. Pub. L. No. 105-304, 112 Stat. 2860 (1998) (codified in scattered sections of Title 17). Powers alleges she sent all 56 of the copyrighted works to Defendants digitally with her signature and the copyright symbol (©), which constitutes copyright management information ("CMI") under 17 U.S.C. § 1202. (Resp. at 5). When the images were posted online to sell the goods, the signature and copyright symbol were not shown. Defendants say they posted the images as they received them and did not remove a signature or copyright symbol, and they provide website archives from June 2002 through April 2004 and June 2004 through May 2006 that show the images without a signature or copyright symbol on their website and crediting Powers as creating the artwork. (Reply at 2; Doc. 56). Powers notes that when she saw her images replaced with a new background on various websites in June 2017, none of the sites credited her and instead had references to Caroline's Treasures. (Resp. at 6, Exh. H).

Defendants also raise a statute of limitations defense. Defendants believe Powers was on notice that they were continuing to use the images based on their previous business dealings and the royalty check noting it went through October 2009. Thus, any damages that accrued more than three years prior to filing suit are time-barred.

*902Additionally, Defendants believe Knight and Rutherford should be granted summary judgment on the breach of contract claim even if CTI is not, because only the corporate entity is liable. The Court will take each argument in turn.

II. Legal Standard

Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A material fact is any factual issue that might affect the outcome of the case under the governing substantive law. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute about a fact is "genuine" if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id. "A party asserting that a fact cannot be or is genuinely disputed must support the assertion by ... citing to particular parts of materials in the record" or by "showing that materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed. R. Civ. P. 56(c)(1)(A), (B). The court need only consider the cited materials, but it may also consider any other materials in the record. Id. 56(c)(3).

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382 F. Supp. 3d 898, Counsel Stack Legal Research, https://law.counselstack.com/opinion/powers-v-carolines-treasures-inc-azd-2019.