OPINION AND ORDER
SHIRAA. SCHEINDLIN, District Judge.
Kenneth R. Stadt brings this action against Fox News Network (“Fox”) claiming (1) copyright infringement, (2) breach of contract, (3) conversion, (4) breach of fiduciary duty and an accounting, (5) deceptive trade practices in violation of section 349 of the New York General Business Law, (6) unjust enrichment, and (7) unfair competition. Fox now moves to dismiss all but Stadt’s copyright claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure, asserting that the claims are preempted by section 301 of Title 17 of the United States Code (the Copyright Act), fail to state a claim as a matter of law, or both. For the reasons discussed below, Fox’s motion is granted in part and denied in part.
1. BACKGROUND
A. Facts
Stadt is “the sole and exclusive owner” of a video of Barnard Madoff and his wife (‘Video’’).
The Video, which Stadt registered with the United States Copyright
Office,
contains footage of the couple on a yacht in Saint Tropez in 2003.
On January 8, 2009, Stadt and Fox entered into a written License Agreement granting Fox an exclusive license to air the Video on the Fox News Channel and Fox Business Network between January 8 and February 22, 2009.
Fox paid Stadt ten thousand dollars for the initial license.
Stadt alleges that Fox also promised to stop using the Video upon expiration of the License Agreement,
and that in consideration of this promise and Fox’s payment, Stadt allowed Fox to show the Video with a “Fox Business Exclusive” credit on the screen.
Indeed, paragraph thirteen of the License Agreement states, “On all showings of the [Video] or its contents, Fox News shall place an on screen credit that shall read ‘Fox Business Exclusive’.”
On March 16, 2009, after the expiration of the License Agreement, Stadt realized that Fox was continuing to use the Video.
After Stadt forwarded a cease and desist letter, Stadt claims that Fox acknowledged its ongoing use of the Video in violation of the License Agreement and requested a new agreement to extend the license.
On March 24, 2009, the parties entered into a license extension agreement (“Extension Agreement”) that extended Fox’s license through April 30, 2009.
The Extension Agreement’s terms were identical to those of the License Agreement, and Fox paid Stadt fifty thousand dollars for the extension.
Stadt alleges that following expiration of the Extension Agreement Fox continued to use the Video.
Stadt forwarded a second cease and desist letter on May 18, 2009,
and although the Complaint does not allege that Fox continued to use the Video after that point, Stadt claims that Fox has “refused to provide information relative to its illegal and improper use of the [Video].”
Specifically, Fox has refused to inform Stadt as to the number of times the Video was downloaded from the Fox Business website and has not revealed how much revenue it received from advertisements shown in connection with the Video on that site.
On September 15, 2009, Stadt sued Fox, alleging copyright infringement and breach of contract.
On December 7, 2009, Stadt filed an Amended Complaint that added claims for conversion, breach of fiduciary duty and an accounting, “unfair and deceptive trade practices in violation of section 349 of the New York General business law,”
unjust enrichment, and common law unfair competition.
II. LEGAL STANDARD
A. Motion to Dismiss
In deciding a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, the court must “accept as true all of the factual allegations contained in the complaint”
and “draw all reasonable inferences in plaintiffs favor.”
However, the court need not accord “[l]egal conclusions, deductions or opinions couched as factual allegations ... a presumption of truthfulness.”
To survive a 12(b)(6) motion to dismiss, the allegations in the complaint must meet a standard of “plausibility.”
A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Plausibility “is not akin to a probability requirement,” rather, plausibility requires “more than a sheer possibility that a defendant has acted unlawfully.”
When deciding a motion to dismiss under Rule 12(b)(6), the court is normally required to consider only the allegations on the face of the complaint. Even so, “[d]ocuments that are attached to the [complaint] or incorporated in it by reference are deemed part of the pleading and may be considered.”
The court is only allowed to consider documents outside the [complaint] if the documents are integral to the pleading or subject to judicial notice.
B. Preemption
The Copyright Act expressly provides for preemption of state law.
In
Briar-patch Ltd. v. Phoenix Pictures, Inc.,
the Second Circuit held;
The Copyright Act
exclusively
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OPINION AND ORDER
SHIRAA. SCHEINDLIN, District Judge.
Kenneth R. Stadt brings this action against Fox News Network (“Fox”) claiming (1) copyright infringement, (2) breach of contract, (3) conversion, (4) breach of fiduciary duty and an accounting, (5) deceptive trade practices in violation of section 349 of the New York General Business Law, (6) unjust enrichment, and (7) unfair competition. Fox now moves to dismiss all but Stadt’s copyright claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure, asserting that the claims are preempted by section 301 of Title 17 of the United States Code (the Copyright Act), fail to state a claim as a matter of law, or both. For the reasons discussed below, Fox’s motion is granted in part and denied in part.
1. BACKGROUND
A. Facts
Stadt is “the sole and exclusive owner” of a video of Barnard Madoff and his wife (‘Video’’).
The Video, which Stadt registered with the United States Copyright
Office,
contains footage of the couple on a yacht in Saint Tropez in 2003.
On January 8, 2009, Stadt and Fox entered into a written License Agreement granting Fox an exclusive license to air the Video on the Fox News Channel and Fox Business Network between January 8 and February 22, 2009.
Fox paid Stadt ten thousand dollars for the initial license.
Stadt alleges that Fox also promised to stop using the Video upon expiration of the License Agreement,
and that in consideration of this promise and Fox’s payment, Stadt allowed Fox to show the Video with a “Fox Business Exclusive” credit on the screen.
Indeed, paragraph thirteen of the License Agreement states, “On all showings of the [Video] or its contents, Fox News shall place an on screen credit that shall read ‘Fox Business Exclusive’.”
On March 16, 2009, after the expiration of the License Agreement, Stadt realized that Fox was continuing to use the Video.
After Stadt forwarded a cease and desist letter, Stadt claims that Fox acknowledged its ongoing use of the Video in violation of the License Agreement and requested a new agreement to extend the license.
On March 24, 2009, the parties entered into a license extension agreement (“Extension Agreement”) that extended Fox’s license through April 30, 2009.
The Extension Agreement’s terms were identical to those of the License Agreement, and Fox paid Stadt fifty thousand dollars for the extension.
Stadt alleges that following expiration of the Extension Agreement Fox continued to use the Video.
Stadt forwarded a second cease and desist letter on May 18, 2009,
and although the Complaint does not allege that Fox continued to use the Video after that point, Stadt claims that Fox has “refused to provide information relative to its illegal and improper use of the [Video].”
Specifically, Fox has refused to inform Stadt as to the number of times the Video was downloaded from the Fox Business website and has not revealed how much revenue it received from advertisements shown in connection with the Video on that site.
On September 15, 2009, Stadt sued Fox, alleging copyright infringement and breach of contract.
On December 7, 2009, Stadt filed an Amended Complaint that added claims for conversion, breach of fiduciary duty and an accounting, “unfair and deceptive trade practices in violation of section 349 of the New York General business law,”
unjust enrichment, and common law unfair competition.
II. LEGAL STANDARD
A. Motion to Dismiss
In deciding a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, the court must “accept as true all of the factual allegations contained in the complaint”
and “draw all reasonable inferences in plaintiffs favor.”
However, the court need not accord “[l]egal conclusions, deductions or opinions couched as factual allegations ... a presumption of truthfulness.”
To survive a 12(b)(6) motion to dismiss, the allegations in the complaint must meet a standard of “plausibility.”
A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Plausibility “is not akin to a probability requirement,” rather, plausibility requires “more than a sheer possibility that a defendant has acted unlawfully.”
When deciding a motion to dismiss under Rule 12(b)(6), the court is normally required to consider only the allegations on the face of the complaint. Even so, “[d]ocuments that are attached to the [complaint] or incorporated in it by reference are deemed part of the pleading and may be considered.”
The court is only allowed to consider documents outside the [complaint] if the documents are integral to the pleading or subject to judicial notice.
B. Preemption
The Copyright Act expressly provides for preemption of state law.
In
Briar-patch Ltd. v. Phoenix Pictures, Inc.,
the Second Circuit held;
The Copyright Act
exclusively
governs a claim when: (1) the particular work to which the claim is being applied falls within the type of works protected by the Copyright Act ..., and (2) the claim seeks to vindicate legal or equitable rights that are equivalent to one of the bundle of exclusive rights already protected by copyright law.... The first prong of this test is called the “subject matter requirement,” and the second prong is called the “general scope requirement.” ... The general scope requirement is satisfied only when the state-created right may be abridged by an act that would, by itself, infringe one of the exclusive rights provided by federal copyright law.... [T]he state law claim must not include any extra elements that make it qualitatively different from a copyright infringement claim.... To determine whether a claim is qualitatively different, we look at “what [the] plaintiff seeks to protect, the
theories in which the matter is thought to be protected and the rights sought to be enforced.”
The court takes a “restrictive view” of what qualifies as an extra element sufficient to shield the claim from copyright preemption.
Nevertheless, “a state law claim is qualitatively different if it requires such elements as breach of fiduciary duty, or possession and control of chattels.”
C. State Law Claims
1.Breach of Contract
To establish breach of contract under New York law, a plaintiff must show “(1) the existence of an agreement, (2) adequate performance of the contract by the [claimant], (3) breach of contract by the [accused], and (4) damages.”
The claimant must allege the specific provisions of the contract upon which the breach of contract claim is based.
A claim for breach of contract cannot be sustained simply by a conclusory statement that the accused breached a contract.
2.Conversion
“ ‘Conversion is any unauthorized exercise of dominion or control over property by one who is not the owner of the property that interferes with and is in defiance of a superior possessory right of another in the property.’ ”
When the original possession is lawful, “ ‘conversion does not occur until the defendant refuses to return the property after demand or until he sooner disposes of the property.’ ”
To maintain a claim for conversion, “a plaintiff must show: (1) ‘legal ownership or an immediate superior right of possession to a specific identifiable thing’ and (2) that the defendant ‘exercised an unauthorized dominion over the thing in question, to the alteration of its condition or to the exclusion of the plaintiffs rights.’ ”
A conversion claim may only succeed if the party alleges a wrong that is distinct from any contractual obligations.
3.Breach of Fiduciary Duty and an Accounting
“A fiduciary relationship exists under New York law when one person is under a duty to act for or to give advice for the benefit of another upon matters
within the scope of the relation.”
“While ‘it is not entirely clear when fiduciary duties arise out of a contractual relationship,’ it is well-settled law that, ‘a conventional business relationship does not create a fiduciary relationship in the absence of additional factors.’ ”
“With respect to a fiduciary duty arising from a contractual agreement, ‘being a party to a contract does not itself impose a fiduciary duty. Rather, this duty must arise from ‘a position of trust or special confidence ... that impose[s] obligations beyond the express agreements’ between the parties.’ ”
To state a claim for an accounting under New York law, a plaintiff must show “(1) relations of a mutual and confidential nature; (2) money or property entrusted to the defendant imposing upon him a burden of accounting; (3) that there is no adequate legal remedy; and (4) in some cases, a demand for an accounting and a refusal.”
4.Section 349 of the General Business Law
Section 349 of the New York General Business Law (“GBL”) is a consumer protection statute. It creates a private right of action that protects consumers from “[deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state....”
To state a claim under section 349, plaintiff must allege that “(1) the defendant’s deceptive acts were directed at consumers, (2) the acts are misleading in a material way, and (3) the plaintiff has been injured as a result.”
“ ‘[Corporate competitors ... have standing to bring a claim under [section 349] so long as some harm to the public at large is at issue.’ ”
However, “ ‘the gravamen of the complaint must be consumer injury or harm to the public interest.’ The critical question, then, is whether the matter affects the public interest in New York, not whether the suit is brought by a consumer or a competitor.”
5. Unjust Enrichment
To prevail on an unjust enrichment claim, “plaintiff must establish (1) that the defendant benefitted; (2) at the plaintiffs expense; and (3) that equity and good conscience require restitution.”
6. Unfair Competition
“The essence of unfair competition under New York common law is ‘the bad
faith misappropriation of the labors and expenditures of another, likely to cause confusion or to deceive purchasers as to the origin of the goods.’ ”
“In a common law unfair competition claim under New York law, the plaintiff must show either actual confusion in an action for damages or a likelihood of confusion in an action for equitable relief.”
A claim of unfair competition also requires evidence of defendant’s bad faith.
D. Amendments to Pleadings
“Rule 15(a) provides that, other than amendments as a matter of course, a party may amend the party’s pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires.”
“[Wjhether to permit a plaintiff to amend its pleadings is a matter committed to the Court’s sound discretion.”
However, the Supreme Court has explained that
[i]f the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits. In the absence of 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. — the leave sought should, as the rules require, be “freely given.”
Accordingly, “ ‘[i]t is the usual practice upon granting a motion to dismiss to allow leave to replead.’ ”
III. DISCUSSION
A. Stadt’s Breach of Contract Claim Is Not Preempted
Fox argues that Stadt’s breach of contract claim is preempted under the Copyright Act.
The subject matter requirement for preemption is clearly met, as the License Agreement concerns a type of work, an original video, protected by the Copyright Act. As to the general scope requirement, Stadt asserts that Fox’s continued use of the “Fox Business Exclusive” credit following expiration of the Extension Agreement constitutes an additional, independent breach of the Agreement and thus provides an extra element that renders his breach of contract claim qualitatively different from a claim for copyright
infringement.
Fox contends that this extra element must fail because Fox could not possibly have breached either agreement through its use of the credit, and that Stadt can only allege breach based on Fox’s unauthorized use of the Video after the Extension Agreement expired.
Because this latter breach is essentially an allegation of copyright infringement, Fox asserts that Stadt’s contract claim is preempted.
Although Fox correctly asserts that preemption would bar a breach of contract claim in which the sole allegation of breach was that defendant used plaintiffs copyrighted work without authorization,
Stadt has alleged breach based on more than unauthorized use. The Complaint states that Fox breached by using the “Fox Business Exclusive” credit on the Video in violation of the parties’ agreement,
and the use of such credits is not expressly governed by the Copyright Act. Thus, because Stadt has adequately pleaded breach of contract based on this provision, Stadt has pleaded an extra element sufficient to survive preemption.
Stadt states a valid claim for breach of contract based on use of the credit. Accepting as true the allegation that Stadt granted Fox the right to use the credit in consideration of Fox’s payment and promise to stop using the Video upon expiration of the License Agreement,
the Complaint plausibly alleges that Fox’s continued use of the credit was a material breach of the parties’ agreement.
B. Stadt’s Unjust Enrichment and Unfair Competition Claims Are Preempted
1. Unjust Enrichment
In alleging that Fox was unjustly enriched through its unauthorized use of the Video, Stadt seeks to vindicate a right clearly within the general scope of the Copyright Act — namely, the exclusive right to reproduce the Video. Although a claim for unjust enrichment additionally requires that the defendant be enriched, the Second Circuit and courts in this district have consistently held that this enrichment element does not suffice to shield an unjust enrichment claim from preemption when the claim arises from unautho
rized use of a copyrighted work.
Stadt’s unjust enrichment claim is therefore preempted under section 301 of the Copyright Act.
2. Unfair Competition
Stadt’s unfair competition claim appears to center on the allegation that when using the Video after the expiration of the License Agreement, Fox falsely presented-the Video as its own by using the “Fox Business Exclusive” credit.
This is essentially a claim of “reverse passing off’ — that is, a claim that the defendant misrepresented the plaintiffs work as its own.
However, reverse passing off does not constitute an extra element for preemption purposes because it is essentially a claim for unauthorized use of eopyrightable material.
Stadt’s unfair competition claim is therefore preempted under section 301.
C. Stadt’s Remaining State Law Causes of Action Fail to State a Claim
1. Conversion
Stadt’s conversion claim stems from Fox’s alleged failure to return the physical “Original Master DVD Tapes” containing the Video.
However, the Complaint does not allege that Fox refused to return the tapes upon Stadt’s demand or that Fox disposed of the tapes.
As demand for return and a refusal are required to state a claim for conversion under New York law,
Stadt fails to state a claim for conversion.
2. Breach of Fiduciary Duty and an Accounting
Stadt’s claim of breach of fiduciary duty and his request for an accounting fail because the Complaint does not allege adequate facts to suggest that the parties were in a relationship of sufficient trust and confidence to create either a fiduciary duty or a confidential relationship.
To support the contention that “Fox owed Stadt a fiduciary duty,”
the Complaint alleges that Stadt and Fox “entered [into] a confidential relationship”
and that “Fox acknowledged that Stadt was vulnerable and dependent.”
Stadt offers no support for these conclusory statements. While the allegation of a confidential relationship appears to be based on paragraph 6 of the License Agreement, in which the parties agreed not to disclose the details of their agreement to third parties,
this provision does not, by itself, suggest that the parties had “relations of a mutual and confidential nature.”
Rather, this term appears as part of, and is consistent with, a standard licensing agreement between two parties engaged in an arms length transaction.
In short, the Complaint alleges insufficient facts to establish that Stadt and Fox had a fiduciary relationship, as opposed to a typical, arms length business relationship.
Stadt thus fails to state a claim for breach of fiduciary duty and an accounting.
3. Section 349 of the General Business Law
Stadt fails to allege the elements necessary to state a claim under section 349 of the GBL. Most importantly, the Complaint fails to allege that Fox’s actions harmed consumers or the public interest in any material respect.
As “the gravamen of the [section 349 claim] must be consumer injury or harm to the public interest,”
this is fatal to Stadt’s claim.
Stadt’s sole allegation of consumer harm is that “Fox fraudulently and falsely represented to and mislead [sic] the public and others that the Video was a ‘Fox Business Exclusive.’ ”
Not only does the Complaint lack any allegations as to how consumers were harmed by Fox’s “misleading” behavior, but allegations of consumer confusion are generally not sufficient consumer harm to state a section 349 claim.
Stadt therefore fails to state a claim under section 349 of the GBL.
D. Leave to Replead
Stadt cannot restate his unjust enrichment and unfair competition claims in a manner that would save them from preemption. The underlying conduct that gives rise to each claim is identical to the conduct giving rise to Stadt’s copyright infringement claim. Neither the enrichment element of Stadt’s unjust enrichment claim nor the “reverse passing off’ element of his unfair competition claim suffices to render the claims “qualitatively different” from a claim for copyright infringement.
Because an amended complaint cannot cure these defects, Stadt may not replead his claims for unjust enrichment and unfair competition.
Nor may Stadt replead his claims for breach of fiduciary duty and an accounting and deceptive business practices in violation of section 349 of the GBL. Although Rule 15(a) sets a liberal standard for granting leave to replead, such leave should be denied if amendment would be futile.
Here, the core facts underlying the Complaint will not support these causes of action, regardless of how Stadt rephrases his allegations. Stadt’s relationship with Fox was not marked by any extraordinary characteristics that would transform their contractual relationship into a fiduciary relationship. Further, Fox’s conduct harmed Stadt alone; it has no plausible bearing on consumers or the public interest, as needed to maintain a section 349 claim. Accordingly, amendments to these claims would be futile.
Stadt cannot currently state a claim for conversion because he has yet to demand return of the physical copies of the Video and Fox has yet to refuse. However, as these events may yet occur, Stadt may be able to state a claim for conversion in the future and thus may replead his conversion claim.
IV. CONCLUSION
For the reasons set forth above, Fox’s motion to dismiss the breach of contract claim is denied. Fox’s motion to dismiss the breach of fiduciary duty and an accounting, section 349, unjust enrichment, and unfair competition claims is granted. These claims are dismissed with prejudice. Fox’s motion to dismiss the conversion claim is granted, and this claim is dismissed with leave to replead. The Clerk of the Court is directed to close this motion (Docket No. 68). A conference has been scheduled for November 15, 2010 at 4:30 pm in Courtroom 15C.
SO ORDERED.