Reinicke v. Creative Empire LLC

38 F. Supp. 3d 1192, 2014 WL 3867489, 2014 U.S. Dist. LEXIS 108743
CourtDistrict Court, S.D. California
DecidedAugust 6, 2014
DocketCase No. 12cv1405-GPC(KSC)
StatusPublished
Cited by2 cases

This text of 38 F. Supp. 3d 1192 (Reinicke v. Creative Empire LLC) is published on Counsel Stack Legal Research, covering District Court, S.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Reinicke v. Creative Empire LLC, 38 F. Supp. 3d 1192, 2014 WL 3867489, 2014 U.S. Dist. LEXIS 108743 (S.D. Cal. 2014).

Opinion

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

GONZALO P. CURIEL, District Judge.

Before the Court is Defendant Creative Empire, LLC’s motion for summary judgment. (Dkt. No. 41.) Plaintiff filed an opposition, (Dkt. No. 44), and Defendant replied. (Dkt. No. 46.) A hearing was held on August 1, 2014. (Dkt. No. 47.) James Crosby, Esq. and Jamie Riderbeck, Esq. appeared on behalf of Plaintiff and Minh Zhen Kuo, Esq. and Elliot Gipson, Esq. appeared on behalf of Defendant. Based on the arguments, briefs, supporting documentation, and the applicable law, the Court GRANTS Defendant’s motion for summary judgment.

Procedural Background

On June 11, 2012, Plaintiff Almut Reinicke (“Plaintiff’ or “Reinieke”) filed a complaint against Defendant Creative Empire LLC d/b/a Mangolanguges.com (“Defendant” or “Mango”) alleging causes of action for copyright infringement, conversion and quantum meruit as to the Work incorporated into Mango 2.0. (Dkt. No. 1.) On October 23, 2012, the case was transferred to the undersigned judge. (Dkt. No. 10.) On January 24, 2013, 2013 WL 275900, the Court granted in part and denied in part Defendant’s motion to dismiss for failure to state a claim and granted in part and denied in part Defendant’s motion for a more definite statement. (Dkt. No. 15.) On February 21, 2013, Plaintiff filed a first amended complaint alleging causes of action for copyright infringement and quantum meruit. (Dkt. No. 16.) .

' On May 9, 2014, Defendant filed a motion for summary judgment. (Dkt. No. 41.) Plaintiff filed an opposition on June 13, 2014. (Dkt. No. 44.) Defendant filed a reply on June 27, 2014. (Dkt. No. 46.)

Factual Background

Mango provides online language learning services through the Internet. Mango began as Creative Empire, LLC which was formed in 2004 as an e-commerce company selling niche products over the internet. The company relaunched in 2007 as Mangolanguages.com, its focus being the development of an internet-based language learning system. Mango began development of its first online language learning product, Mango 1.0, in 2006/2007.

Mike Goulas (“Goulas”), Mango’s Director of Product Development, was in charge of managing the development of Mango 1.0 and recruiting foreign language developers to create the language content that would be incorporated into Mango’s software. Goulas used a website such as translatorcafe.com and pros.com to recruit Mango 1.0 language developers which included Plaintiff. After working on a small translation project for Mango, Goulas retained Plaintiff to develop the German language course for Mango 1.0. Because [1195]*1195Mango had not yet generated any revenues, there was very little money available to compensate the language developers, so Mango offered to compensate in the form of a royalty based on the “net sale of all Source Language to Target Language courses.” (Dkt. No. 41-4, Goulas Dec!., Ex. A ¶ 8.)

On February 5, 2007, the parties executed a Commission Agreement (“Agreement”) governing Plaintiffs work on. Mango 1.0. (Dkt. No. 41-4, Goulas Deck, Ex. A.) Under the Agreement, Plaintiff developed 100 German lessons for Mango 1.0. Mango 1.0 launched on September 1, 2007 with 100 lessons in 12 different languages.

The Commission Agreement provided a commission structure based on the “net sale of all Source Language to Target Language courses during the period from Commission Start Date to Commission End Date. (Dkt. No. 41-4, Goulas Deck, Ex. A ¶ 8.) In exchange, the Language Developers waived the $18,000 fee for service. (Id. ¶ 7.) The commission percentage was as follows: 10% for the first year, 7% for the second year, and 5% for the third year. (Id. ¶ 2.) The Termination Fee was set at $56,000 which meant that at any time prior to the Commission End date, Mango had the right to terminate its obligation to pay further commission to the Developers by paying the termination fee. (Id. ¶ 10.) In the agreement, the developers assigned full copyright ownership over all content to Mango. (Id. ¶ 5.)

In the fall of 2008, Mango began developing a variety of ideas and products. Plaintiff was interested in creating a higher quality product and negotiations regarding compensation for Mango 2.0 began. Plaintiff wanted more favorable terms than her original Commission Agreement. (Dkt. No. 41-4, Goulas Deck ¶ 9; Dkt. No. 44-1, Reinicke Deck ¶¶ 14, 15.) During discussions, Mango was amenable to Plaintiffs demand for the proposed commission of 10% and term length of five years, but they disagreed over one item, the amount of the buyout payment. (Dkt. No. 41-4, Goulas Deck ¶ 10; Dkt. No. 44-1, Reinicke Deck ¶ 15.) Plaintiff sought a buyout amount of $93,333 over five years.1 Mango was willing to pay $75,000 for a buyout provision for Mango 2.0. No contract was ever executed or signed and discussions regarding commissions ended in early 2009.

From January to May 2009, while Plaintiff sent emails to Goulas to inquire about resuming negotiations about the buyout provision, no negotiations regarding the buyout provision were held. (Dkt. No. 44-1, Reinicke Deck 19-24; Exs. B-E.) During this time, Plaintiff began work on Mango 2.0. (Id. ¶ 18.)

On June 10, 2009, Goulas called and informed Plaintiff that Mango no longer agreed to the new five year contract for Mango 2.0. (Dkt. No. 41-4, Goulas Deck ¶¶ 28, 29; Dkt. No. 44-1, Reinicke Deck ¶¶ 25, 26.) Instead, Goulas said that Mango would pay $25 per hour for a total of four hours for each lesson. (Id.) She declined to accept the offer and that she would rely solely on her Mango 1.0 commission and not work on Mango 2.0 anymore. (Dkt. No. 41-4, Goulas ¶ 30; Dkt. No. 44-1, Reinicke ¶ 26.) Later, the same day, she wrote an email where she said she thought “long and hard about this.” (Dkt. No. 44-1, Reinicke Deck, Ex. H.) She wrote “[e]ven though we were under the impression for months we’d be getting 10% [1196]*1196for 5 years. Oh well, okay, you changed my mind.” (Id.) Her reasoning is that whatever work she puts into Mango 2.0 would help her own commission on Mango 1.0. (Id.) Since she was still promised commission on Mango 1.0 for an additional two years plus compensation for her hourly work on Mango 2.0, any improvement to Mango’s product slate would drive overall sales of Mango 1.0. (Dkt. No. 44-1, Reinicke Decl. ¶ 27.) In June 2009, she agreed to a rate of $25 per hour for five hours per chapter. (Dkt. No. 45-3, Perakis Decl. ¶ 4; Dkt. No. 41-5, Kuo Decl., Ex. A, Almut Depo. at 89:23-90:8.)

In early August 2009, Mango halted production of the originally conceived Mango 2.0 project. The foreign language developers were instructed to abandon their current lessons and create brand new chapters according to a set of guidelines entitled “Traveling Tom.” The teachers were given a 10 chapter’unit outlines for Traveling Tom to govern the development of the chapters. Mango 2.0 would break down into about 10 chapters. Steven Perakis took over.as Project Manager during the summer of 2009. (Dkt. No. 45-3, Perakis Decl. ¶ 2.)

Plaintiff submitted her first Traveling Tom lesson for Mango 2.0 in mid-late September 2009. During this time, she repeatedly emailed Mango throughout August and September to express her frustration over the failed commission negotiations and to ask for compensation for the time spent in fall 2008 on the discarded projects.

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38 F. Supp. 3d 1192, 2014 WL 3867489, 2014 U.S. Dist. LEXIS 108743, Counsel Stack Legal Research, https://law.counselstack.com/opinion/reinicke-v-creative-empire-llc-casd-2014.