ITSI TV PRODUCTIONS v. Cal. Auth. of Racing Fairs

785 F. Supp. 854

ITSI T.V. PRODUCTIONS, INC., Plaintiff, v. CALIFORNIA AUTHORITY OF RACING FAIRS, et al., Defendants.

No. CIV. S-89-1686 LKK.

United States District Court, E.D. California.

March 3, 1992.

COPYRIGHT MATERIAL OMITTED

David W. Post, Harry E. Hull, Jr., McDonough, Holland & Allen, Sacramento, Cal., David B. Kahn, Mark E. King, David B. Kahn, Ltd., Fredrick Rothenberg, Fredrick Rothenberg, Ltd., Chicago, Ill., for plaintiff ITSI T.V. Productions, Inc.

Dan L. Carroll, Krista C. Breuer, Downey, Brand, Seymour & Rohwer, Sacramento, Cal., for defendant Hipodromo De Agua Caliente.

Harold L. Eisenberg, Deputy Atty. Gen., Sacramento, Cal., for defendants California Exposition & State Fair and related defendants.

James Kostoff, Michael Smith, Nichols, Stead, Boileau & Kostoff, Claremont, Cal., for defendants Sports Media Network and related defendants.

Nicholas J. Santoro, James J. Jimmerson, Chrispin M. Rivera, Jimmerson, Davis & Santoro, Las Vegas, Nev., for defendants Sports Form, Inc. and related defendants.

Joseph S. Genshlea, Joan A. Jernegan, Weintraub, Genshlea & Sproul (David M. Blicker, Stanley Futterman, of counsel), Blicker, Futterman & Stein, Sacramento, Cal., for defendants California Authority of Racing Fairs, and related fairs.

AMENDED ORDER

KARLTON, Chief Judge Emeritus.

Defendant Hipodromo de Agua Caliente ("Caliente") moves to dismiss plaintiff ITSI T.V. Productions, Inc.'s ("ITSI") complaint for copyright infringement. Caliente asserts that this court lacks subject matter jurisdiction over ITSI's claims, because ITSI cannot show that Caliente is liable for an act of copyright infringement committed in the United States. For the reasons I explain herein, Caliente's motion to dismiss for lack of subject matter jurisdiction is GRANTED.¹

I FACTS AND BACKGROUND²

Plaintiff ITSI T.V. Productions, Inc. is an Illinois corporation doing business in California. Second amended complaint ¶ 1 ("SAC"). Plaintiff alleges that defendant California Authority of Racing Fairs ("CARF"), a California joint powers authority, was created to serve as the agent of certain California fairs which conduct horse racing. Id. ¶ 2. CARF and these fairs are referred to in plaintiff's complaint as the "CARF group." Id. In 1983, prior to the 1984 horse racing season, ITSI contracted with CARF to provide closed-circuit television services to the tracks where horse races were being run. Id. ¶ 32.

From September 1986 to 1988, the CARF group broadcast plaintiff's television version of the horse races by satellite transmission to locations away from the track where the races were being run in order to facilitate off-track betting on the races. Id. ¶ 33. The arrangement for some of the remote locations to receive the simulcast horse races was made by brokers or "disseminators" who "sold" the shows to the remote locations. Id. ¶ 34. Defendant Video Sports America ("VSA"), a Delaware corporation doing business in California, is alleged to be a disseminator of plaintiff's shows. Id. ¶ 13. At the times relevant to this lawsuit, Edward M. Spector was president of VSA.

Defendant Hipodromo de Agua Caliente, a Mexican corporation, operated its own horse racing track and twelve (12) off-track betting sites, or "remote locations," in Mexico. Deposition of Arturo Alemany at 11, 48-49. In August 1985, Caliente contracted with VSA to receive from VSA and distribute to Caliente's gaming establishments in Mexico "certain audio-visual signals of live horse racing programs, sporting events and related services." Plaintiff's ex. 4, Caliente-VSA contract (August 19, 1985) at 2 hereinafter "Caliente-VSA contract"; Plaintiff's ex. 47, Deposition of Edward M. Spector at 65 hereinafter "Spector dep."

Under the contract, VSA provided Caliente with a coded or scrambled signal of ITSI's shows, live satellite transmission of the shows, and the means and equipment to convert the signal into useable video images for viewing at sites in Mexico. Spector dep. at 42, 44. The contract specifically disclaims any agency relationship with Caliente. Caliente-VSA contract at 4 ¶ 4. The contract was performed and remained in effect until sometime in March 1988, when it was assigned to Telecom Broadcasting, Inc. ("TBI"). See Plaintiff's ex. 6, TBI-Caliente agreement (March 18, 1988).

Apparently VSA interacted on Caliente's behalf with various governmental agencies "to make sure that they Caliente met all of the various legal requirements and all of the various efforts that were involved to make this activity take place." Spector dep. at 69:18-21. Spector testified as follows,

I think it's fair to say that VSA was responsible for providing all of the services required for a customer to place an intelligent wager in Caliente's facilities in Mexico. What that means is that we would have to provide them with all of the information, no matter what the source, so that they could function in a manner that a customer could place a wager.

Id. at 67:18-24.

In May 1988, Caliente began its efforts to contract directly with some California race tracks for the receipt of audio-visual signals. See, e.g., Plaintiff's ex. 8, Letter from Alemany "to whom it may concern," (May 19, 1988); Plaintiff's ex. 9, Letter from Alemany to Ralph Hynes, Los Angeles County Fair General Manager (May 23, 1988); Plaintiff's ex. 10, Letter from Alemany to Chris Korby, CARF (May 23, 1988). Defendant Los Angeles County Fair (LACF) executed contracts with Caliente on July 25, 1988, and August 16, 1989. Plaintiff's ex. 22 & 37. CARF executed contracts with Caliente on June 22, 1988, and May 26, 1989. Plaintiff's exh. 20 & 33. Each contract allows Caliente to "acquire the exclusive right to use, transmit, receive, and to provide for the dissemination of ... audio-visual signals." Plaintiff's ex. 20, 22, 33 & 37. Plaintiff alleges that CARF, various county and local fairs and tracks at which races were run, certain brokers or disseminators of the signal, and entities operating off-track betting locations infringed plaintiff's copyright in its "shows" of horse races by simultaneously broadcasting the shows to off-track betting locations without ITSI's authorization.

II STANDARDS ON A MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION

The party seeking to invoke the jurisdiction of the federal court has the burden of establishing that jurisdiction exists. KVOS, Inc. v. Associated Press, 299 U.S. 269, 278, 57 S.Ct. 197, 201, 81 L.Ed. 183 (1936); Scott v. Breeland, 792 F.2d 925, 927 (9th Cir.1986). On a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1), the standards that must be applied vary according to the nature of the jurisdictional challenge.

If the challenge to jurisdiction is a facial attack, i.e., the defendant contends that the allegations of jurisdiction contained in the complaint are insufficient on their face to demonstrate the existence of jurisdiction, the plaintiff is entitled to safeguards similar to those application when a Rule 12(b)(6) motion is made. The factual allegations of the complaint are presumed to be true, and the motion is granted only if the plaintiff fails to allege an element necessary for subject matter jurisdiction. See 2A J. Moore, J. Lucas & G. Grotheer, Moore's Federal Practice ¶ 12.072.-1, at 12-46 to 12-47 (2d ed. 1987); see also Eaton v. Dorchester Dev., Inc., 692 F.2d 727, 731 (11th Cir.1982); Williamson v. Tucker, 645 F.2d 404, 412 (5th Cir.), cert. denied, 454 U.S. 897, 102 S.Ct. 396, 70 L.Ed.2d 212 (1981); Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). A complaint will be dismissed for lack of subject matter jurisdiction if (1) the cause does not "arise under" any federal law or the United States Constitution, (2) there is no case or controversy within the meaning of that constitutional term, or (3) if the cause is not one described by any jurisdictional statute. Baker v. Carr, 369 U.S. 186, 198, 82 S.Ct. 691, 700, 7 L.Ed.2d 663 (1962).

If the challenge to jurisdiction is made as a "speaking motion," attacking the truth of the jurisdictional facts alleged by the plaintiff, a different set of standards must be applied. Thornhill Publishing Co. v. General Tel. & Elec. Corp., 594 F.2d 730, 733 (9th Cir.1979). Where the jurisdictional issue is separable from the merits of the case, the district court may, under certain circumstances, hear evidence regarding jurisdiction and rule on that issue prior to trial, resolving factual disputes where necessary. Land v. Dollar, 330 U.S. 731, 735 n. 4, 67 S.Ct. 1009, 1011 n. 4, 91 L.Ed. 1209 (1947); Sun Valley Gasoline v. Ernst Enters., Inc., 711 F.2d 138, 139 (9th Cir. 1983); Augustine v. United States, 704 F.2d 1074, 1077 (9th Cir.1983); Thornhill, 594 F.2d at 733.

However, where the jurisdictional issue and substantive issues are so intertwined that the question of jurisdiction is dependent on the resolution of factual issues going to the merits, the jurisdictional determination should await a determination of the relevant facts on either a motion going to the merits or at trial.

Augustine, 704 F.2d at 1077 (citing Thornhill, 594 F.2d at 733-35); 5 C. Wright & A. Miller, Federal Practice & Procedure § 1350, at 558 (Supp.1987). Where the jurisdictional issue and the merits are intertwined, the court must employ the standard applicable to a motion for summary judgment in disposing of the motion to dismiss for lack of subject matter jurisdiction. Trentacosta v. Frontier Pac. Aircraft Indus., 813 F.2d 1553, 1558 (9th Cir.1987).

Defendant's motion to dismiss for lack of subject matter jurisdiction brought pursuant to Rule 12(b)(1) goes beyond the pleadings and thus is a "speaking motion." The jurisdictional and substantive issues — whether plaintiff can hold Caliente liable for acts of copyright infringement which occurred outside the United States — are so intertwined "that the question of jurisdiction is dependent on the resolution of factual...