Troma Entertainment, Inc. v. Centennial Pictures Inc.

853 F. Supp. 2d 326, 2012 U.S. Dist. LEXIS 50430, 2012 WL 1178998
CourtDistrict Court, E.D. New York
DecidedApril 9, 2012
DocketNo. 11 Civ. 1137(BMC)
StatusPublished
Cited by5 cases

This text of 853 F. Supp. 2d 326 (Troma Entertainment, Inc. v. Centennial Pictures Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Troma Entertainment, Inc. v. Centennial Pictures Inc., 853 F. Supp. 2d 326, 2012 U.S. Dist. LEXIS 50430, 2012 WL 1178998 (E.D.N.Y. 2012).

Opinion

MEMORANDUM DECISION AND ORDER

COGAN, District Judge.

Defendants pro se have moved to dismiss this copyright infringement action on numerous grounds, principally lack of personal jurisdiction or improper venue. For the reasons set forth below, the motions are granted in part.

BACKGROUND

Viewing the facts in the light most favorable to plaintiff, see Thomas v. Ashcroft, 470 F.3d 491, 495 (2d Cir.2006); A.I. Trade Finance, Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir.1993); Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 57 (2d Cir.1985), defendants engaged in a rather brazen theft of plaintiffs intellectual property.

Plaintiff, a New York corporation, is the author or exclusive distributor of two popular, cult, “spoof’ films called “Citizen Toxie, Toxic Avenger IV,” and “Poultrygeist, Night of the Chicken Dead” (together, the “Films”). Plaintiff has contacts all [327]*327over the world with film distributors, including, as most relevant to this action, Germany, and has entered into periodic license agreements for the Films in various geographic markets.

In September of 2009, defendant Lauter, a California resident, who operates through a d/b/a called “Pan Global Entertainment,” represented to a German company called Intravest Beitelgungs GMBH (“Silverline”) that he had the German distribution rights for the Films. In fact, he had no such rights at all. There was not even a colorable basis for him to claim that he did. But Silverline entered into a contract with him, taking an assignment of his German distribution rights, based on Lauter’s representations of rights ownership in the agreement. To get Silverline the Films, Lauter simply went to Amazon.com’s German website, Amazon.de, bought the films for a nominal sum like any consumer would, and provided them to Silverline, which ultimately broadcasted them in Germany.

Contemporaneously with Lauter’s execution of the agreement with Silverline, Lauter’s partner-in-crime, the defendant Robbins, also a California resident, approached plaintiff by email from Los Angeles in an effort to acquire the rights. Robbins did not tell plaintiff that Lauter had conveyed or was about to convey rights that he did not possess. He merely represented that he and his partner had a contact with a German company that might be willing to buy a license for the German exhibition of the Films. After much back and forth, plaintiff sent Robbins an email authorizing him not to enter into a deal with the unnamed German company, but to hold himself out as agent for plaintiff so that he could obtain a bid for the Films and present the bid to plaintiff for its approval. The email provided that if plaintiff accepted whatever deal Robbins might present, Robbins would get a percentage of the licensing fee. At no time did Troma either ratify the deal that Lauter had made— indeed, it did not even know of that deal— nor did it grant Robbins any discretion in finalizing terms for such a deal.

Robbins and Lauter attempted to portray this limited authority to Silverline as an absolute right to grant it a license to exhibit the Films in Germany, but Silver-line became increasingly suspicious and began demanding unqualified proof of their authority, in the form of a communication from plaintiff, which plaintiff had not given. Nevertheless, Silverline had exhibited the Films in Germany and ended up paying some or all of the consideration on which it had agreed with Lauter to him or Robbins.

Plaintiff did not learn that the Films had been fraudulently licensed and exhibited in Germany until nearly a year later. It then brought this action against Lauter and Robbins for copyright infringement.

DISCUSSION

Robbins and Lauter are neither present nor doing business in New York. Plaintiff therefore predicates personal jurisdiction on the long-arm provision of N.Y. C.P.L.R. § S02(a)(3)(ii). That statute allows a court in New York to exercise personal jurisdiction over an out-of-state defendant when the nondomiciliary “commits a tortious act without the state causing injury to person or property within the state ... if he ... expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.” Id.

For our purposes, the present case turns on whether defendants caused plaintiffs injury “within the state.” In the context of commercial torts, the New York courts have made it clear that the mere [328]*328presence of the plaintiff in New York (generally, a New York resident or a business headquartered in New York), is not sufficient, by itself, to deem the injury to have occurred in New York. The bank accounts of the plaintiff may be in New York, and they may ultimately have a smaller balance as a result of the nondomiciliary’s tort, but that does not mean that the injury occurred “within the state.” See Fantis Foods v. Standard Importing Co., 49 N.Y.2d 317, 326, 425 N.Y.S.2d 783, 786-87, 402 N.E.2d 122 (1980) (“It has ... long been held that the residence or domicile of the injured party within a State is not a sufficient predicate for jurisdiction, which must be based upon a more direct injury within the State and a closer expectation of consequences within the State than the indirect financial loss resulting from the fact that the injured person resides or is domiciled there.”). To suffer an injury in New York, there thus must be something more than mere presence — some form of “plus factor.” This plus factor may be that the defendant has stolen employees who were working for the plaintiff in New York and possessed trade secrets, see Sybron Corp. v. Wetzel, 46 N.Y.2d 197, 413 N.Y.S.2d 127, 385 N.E.2d 1055 (1978), or, more commonly, that sales that the plaintiff might have made to New York-based customers have been diverted to the non-domiciliary, see American Eutectic Welding Alloys Sales Co. v. Dytron Alloys Corp., 439 F.2d 428 (2d Cir.1971) (no “injury within the state” where lost sales were to customers in Kentucky and Pennsylvania). But there must be something beyond the plaintiffs New York location.

At first blush, this case would appear to fall squarely within the rule that mere New York residence is not enough to find an injury within the state. Lauter and Robbins did nothing in New York nor did they steal any New York sales, whether actual or potential. They stole a sale to a potential German customer, just as the defendants in American Eutectic stole sales to out-of-state customers. Plaintiff has not and cannot point to any contacts concerning the sale to Silverline between defendants and New York other than plaintiffs location.

Plaintiff, however, contends that the New York Court of Appeals’ recent decision in Penguin Group (USA), Inc. v. American Buddha,

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853 F. Supp. 2d 326, 2012 U.S. Dist. LEXIS 50430, 2012 WL 1178998, Counsel Stack Legal Research, https://law.counselstack.com/opinion/troma-entertainment-inc-v-centennial-pictures-inc-nyed-2012.