Krist v. Scholastic, Inc.

253 F.Supp.3d 804

Bob KRIST, Plaintiff,

v.SCHOLASTIC, INC., Defendant.

CIVIL ACTION NO. 16-6251.

United States District Court, E.D. Pennsylvania.

Filed May 30, 2017

Maurice Harmon Harmon & Seidman LLC New Hope, PA for Plaintiff.

Edward H. Rosenthal, Nicole Bergstrom, Frankfurt Kurnit Klein & Selz PC, New York, NY, Stephen J. Shapiro, Schnader Harrison Segal & Lewis, Philadelphia, PA for Defendant.

MEMORANDUM OPINION

Rufe, District Judge.

Before the Court is Defendant Scholastic, Inc.'s Motion to Dismiss Plaintiff's Complaint or, in the Alternative, to Transfer Venue. For the reasons that follow, the motion will be denied.

I. BACKGROUND

Plaintiff Bob Krist is a professional photographer who seeks to hold Defendant, the world's largest publisher and distributor of children's books, liable for infringements of copyrights on forty-five of his photographs, all of which have been registered with the United States Copyright Office.¹ Plaintiff alleges he entered-into a licensing agreement with Corbis Corporation, a "stock photo agency," that granted Corbis limited rights to sublicense the photographs to third parties in exchange for a percentage of the fees Corbis received.² Corbis licensed Plaintiff's photographs to Defendant under Preferred Pricing Agreements ("PPAs") that limited Scholastic's use by setting limits on the "number of copies, distribution area, image size, language, duration and/or media (print or electronic)."³

Plaintiff alleges Defendant infringed his copyrights by: (1) "printing or distributing more copies of the Photographs than authorized"; (2) "distributing publications containing the Photographs outside the authorized distribution area"; (3) "publishing the Photographs in electronic, ancillary, or derivative publications without permission"; (4) "publishing the Photographs in international editions and foreign publications without permission"; and (5) "publishing the Photographs beyond the specified time limits."⁴ Plaintiff also alleges Defendant has been sued at least ten times by other plaintiffs for similar alleged copyright infringements.⁵

Defendant has moved to dismiss, arguing that Plaintiff has failed to plead the elements of infringement. In the alternative, Defendant seeks to transfer this case to the Southern District of New York. Defendant also argues that if this case proceeds, discovery should be limited to whether Plaintiff's complaint is barred by the statute of limitations.

II. LEGAL STANDARD

Dismissal for failure to state a claim is appropriate if the complaint fails to allege facts sufficient to establish a plausible entitlement to relief.⁶ In evaluating Defendant's motion, the Court "take[s] as true all the factual allegations of the [complaint] and the reasonable inferences that can be drawn from them," but "disregard[s] legal conclusions and recitals of the elements of a cause of action, supported by mere conclusory statements."⁷ Instead, to prevent dismissal, complaints must "set out sufficient factual matter to show that the claim is facially plausible."⁸ "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."⁹

III. ANALYSIS

A. Motion to Dismiss for Failure to State a Claim

To state a claim for copyright infringement, Plaintiff must allege: "(1) ownership of a valid copyright; and (2) unauthorized copying of original elements of the plaintiff's work."¹⁰ Defendant argues the second element is lacking because Plaintiff has not alleged "by what acts and during what time" infringement occurred.¹¹ However, Plaintiff alleges Defendant infringed his copyrights in five ways shortly after Defendant licensed his works, which is sufficient to state a claim.¹² Courts routinely deny motions to dismiss similar copyright claims, and the same result obtains here.¹³

Defendant also argues that Plaintiff fails to plead adequately the time period of infringement. But Plaintiff alleges infringement occurred "shortly after" Defendant licensed Plaintiff's works, which other courts have found sufficient at the pleading stage.¹⁴ That makes sense in copyright cases such as this, where the Plaintiff alleges that specific facts regarding infringement are uniquely within Defendant's control and cannot be pleaded with specificity prior to discovery.¹⁵ Defendant's motion to dismiss will be denied.

B. Motion to Transfer Venue

Alternatively, Defendant seeks to transfer this case to the Southern District of New York. Defendant argues primarily that transfer is warranted because the PPAs between Corbis and Defendant (to which Plaintiff is not a party) contain forum-selection clauses designating the Southern District of New York as the venue for disputes regarding those agreements. Defendant also argues that, independent of the forum-selection clauses, transfer is warranted under 28 U.S.C. § 1404(a).¹⁶

1. The Forum–Selection Clauses in the PPAs Do Not Mandate Transfer

Defendant argues that forum-selection clauses in the PPAs mandate transfer. In general, "a plaintiff's choice of forum should rarely be disturbed" and a plaintiff's choice of his home forum, in particular, is "entitled to greater deference."¹⁷ But "[w]hen the parties have agreed to a valid forum-selection clause, a district court should ordinarily transfer the case to the forum specified in that clause," barring exceptional circumstances.¹⁸

Forum-selection clauses identical to those at issue here have engendered considerable litigation, and courts in this district are split regarding whether the clauses apply to copyright claims by non-parties such as Plaintiff.¹⁹ However, in two recent cases— Steinmetz v. McGraw–Hill and Krist v. Pearson (another lawsuit brought by Plaintiff)—courts have rejected arguments similar to those raised by Defendant and held that the forum-selection clauses do not govern copyright claims asserted by non-parties.²⁰ As explained below, the Court agrees with the reasoning in Steinmetz and Pearson and concludes that the forum-selection clauses do not apply to Plaintiff's claim for two reasons: (1) the clauses do not govern Plaintiff's copyright claim because it is not a dispute regarding the PPAs; and (2) Plaintiff is not a party to the PPAs and so cannot be bound by their terms.

a. The Forum–Selection Clauses Do Not Govern Plaintiff's Copyright Claim

First, the forum-selection clauses do not apply to Plaintiff's claim because they govern only "dispute[s] regarding this agreement " meaning disputes regarding the PPAs.²¹ As the court explained in Steinmetz , copyright claims are not disputes "regarding" the PPAs because they seek to enforce rights under the Copyright Act, not contractual rights under the PPAs.²²

Defendant argues that Plaintiff's claim necessarily depends on the PPAs because the complaint alleges that Defendant exceeded licenses for the use of Plaintiff's photographs contained in the PPAs.²³ This argument conflates the issue of whether the PPAs provide a defense to Plaintiff's copyright claim with the issue of whether the PPAs give rise to Plaintiff's claim in the first instance, which they plainly do not. As the court held in Steinmetz , "Plaintiff's ownership of his photographs is premised not upon any contract, but rather upon his status as creator of the photographs."²⁴ Although the PPAs "may provide a defense to Plaintiff's complaint of unauthorized copying," they do "not give rise to an action under the Copyright Act."²⁵ Thus, because Plaintiff's claim does not depend on or arise under the PPAs, it is not subject to their forum-selection clauses.

b. The Forum–Selection Clauses Do Not Bind Non–Parties Such as Plaintiff

Second, the forum-selection clauses do not bind non-parties such as Plaintiff, as the court held in Pearson , which concerned a similar copyright claim.²⁶ As the court in Pearson explained, the forum-selection clauses are prefaced by the phrase "the parties agree" and thus by their plain terms have no bearing on copyright claims brought by non-parties.²⁷ Defendant nevertheless argues that Plaintiff should be bound by the forum-selection clauses because: (1) Corbis was acting as Plaintiff's agent when it entered into the PPAs; and (2) Plaintiff was a beneficiary of the PPAs. Both of these arguments were rejected in Pearson and they are unavailing here as well.

Plaintiff cannot be bound to the PPAs under the theory that Corbis was his agent because Plaintiff "did not retain" the requisite "continued control or direction over Corbis" to create a principal-agent relationship.²⁸ Plaintiff's agreement with Corbis gave Corbis "sole discretion" to determine the terms and conditions of any licenses to use Plaintiff's work, making clear that Plaintiff had no direct control over Corbis's licensing practices.²⁹ Plaintiff's agreement with Corbis also expressly allowed Corbis to act as Plaintiff's agent only for the "purpose of making [certain] settlements and collections," suggesting that Corbis was not otherwise Plaintiff's agent.³⁰ Plaintiff thus cannot be held to the forum-selection clauses under an agency theory.

Nor was Plaintiff a beneficiary of, or closely related to, the PPAs such that he can be held to their terms. In rare circumstances, forum-selection clauses are enforceable against non-parties, but "only if the [non-]party is a third-party beneficiary to the contract or it is ‘foreseeable’ that it will be," meaning the non-party "is closely related to the contractual relationship."³¹ That is not the case here. The PPAs were not entered into for Plaintiff's benefit, Plaintiff does not assert rights based on their terms, and Plaintiff has not attempted to interfere with the PPAs such that it would be reasonable to force him to litigate under their terms.³² That distinguishes this case from those in which courts have found forum-selection clauses enforceable against a non-signatory.³³ As in Pearson , the Court concludes that Plaintiff cannot be bound to forum-selection...