Martin v. New Am. Cinema Grp.

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KATRINA MARTIN, Plaintiff, v. NEW AMERICAN CINEMA GROUP, INC. and MARIE SERRA, Defendants.

No. 1:22-cv-05982 (JLR)

United States District Court, S.D. New York

February 15, 2023

OPINION & ORDER

JENNIFER L. ROCHON, United States District Judge

Plaintiff Katrina Martin (“Plaintiff”), on behalf of herself and all others similarly situated, brings this putative class action against Defendants New American Cinema Group, Inc. (“NACG,” doing business as The Film-Makers' Cooperative) and Marie Serra, or MM Serra (together with NACG, “Defendants”) alleging copyright infringement, deceptive acts and practices, trade libel, unfair competition, fraud, and breach of contract under New York law. See generally ECF No. 7 (“Compl.”). Now before the Court is Defendants' motion to dismiss the Complaint for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(1) and for failure to state a claim pursuant to Rule 12(b)(6). See ECF No 25. For the reasons described below, Defendants' motion is GRANTED in part and DENIED in part.

BACKGROUND^[1]

Defendant NACG is a New York non-profit cooperation that acts as a “custodian” to “avantgarde and experimental films” and other artistic works for the benefit of its members.

Compl. ¶¶ 2, 13. Specifically, the non-profit's “collection includes over 5,000 film titles by more than 900 filmmakers,” including at least one film created by Plaintiff entitled “Hanafuda/Jasper Johns” (the “Film”). Id. ¶¶ 4, 13. Plaintiff contends that the Film is “an original work on celluloid film,” or a “16mm film print.” Id. ¶ 15. Plaintiff also alleges that, since January 6, 1984, she possesses a federal copyright registration for the Film. Id. ¶ 4 (Registration #PA0000206560).^[2]

In October 2019, NACG created a digital version of the Film, and rented it to the Carnegie Museum of Art for its exhibit “An Art of Changes: Jasper Johns Prints, 19602018.” Compl. ¶¶ 15, 17; see also ECF No. 10 (news article reflecting museum's exhibit). Plaintiff's Film played at the museum “continuously . . . from October 20, 2019 through January 20, 2020,” and therefore was likely viewed by thousands of members of the public. Id. ¶ 17. On May 6, 2020, Plaintiff first learned that her Film was included in the exhibit when a representative from the museum told her that the museum had rented the Film from Serra and NACG. Id. ¶ 18. Plaintiff subsequently learned that “NACG charged the Carnegie Museum of Art only $200” for the rental. Id. ¶ 19. Plaintiff now contends that her usual charge for a similar showing would have been $850. Id. When Plaintiff inquired with NACG about the Film's rental to the museum and any royalties to which she was entitled, NACG informed her that she owed $1,470 in “back dues.” Id. ¶ 25. But, according to Plaintiff, she and other putative members of the class do not, and have never had, any obligation to pay the NACG fees or dues. Id. ¶¶ 21-22.

Plaintiff filed this action on July 14, 2022. See Compl. In the Complaint - which Plaintiff has styled as a class action on behalf of other artists who have their films in the NACG's possession - Plaintiff primarily alleges that Defendant NACG reproduced the Film (and other class members' films) without authorization or knowledge on the part of the copyright holder. Id. ¶ 14. Plaintiff also alleges that NACG created a “derivative work” when it produced a digital version of her Film by “remastering it from an old 16mm film print.” Id. ¶ 15. In particular, Plaintiff alleges that the rented Film was a derivative work because the digitization made the Film “by definition, less sharp than the author's film original,” and changed the colors, which are “central to the content of the Film.” Id. In support of her contention that the digitization created a derivative work, Plaintiff also alleges that “[t]here are many considerations in the film-to-digital transfer process, including protectable creative and original steps, of which color is just one.” Id.

Finally, the Complaint alleges that NACG's “policy of claiming back dues” instead of providing earned royalties is unauthorized because the arrangement is not a part of her or other putative class members' agreements with NACG. See id. ¶¶ 24-27. Plaintiff also alleges that some putative class members have no agreements with NACG, and are still being charged back dues. Id.

Together, Plaintiff alleges six claims on behalf of herself and a putative class: (1) copyright infringement under 17 U.S.C. § 504 et seq.; (2) deceptive acts and practices in violation of N.Y. G.B.L. §§ 349 and 350; (3) trade libel; (4) common law unfair competition; (5) fraud; and (6) breach of contract.^[3]Notably, the Complaint does not attach any membership agreements or other contracts.

On October 31, 2022, Defendants moved to dismiss the Complaint on two separate grounds: first, on the basis that Plaintiff is not alleging a copyright claim but instead a breach of contract claim, and therefore the Court lacks subject matter jurisdiction; and second, on the basis that Plaintiff has failed to state a claim on any of the causes of action alleged in the Complaint. ECF No. 26 (“Br.”). In support of their motion, Defendants attach NACG's current membership agreement (ECF No. 26-2 (“Current Agreement”)), pages from the document that it contends members agreed to in the 1980s (ECF No. 26-3 (“1980s Agreement”)), and pages that appear to show Plaintiff's film's undated information sheet (ECF No. 26-4 (“Film Info Sheet”)). Plaintiff filed her opposition to Defendants' motion on November 14, 2022. See ECF No. 28 (“Opp.”). Defendants filed their reply brief on November 21, 2022. See ECF No. 29 (“Reply”).

LEGAL STANDARD

“A district court properly dismisses an action under [Rule] 12(b)(1) for lack of subject matter jurisdiction if the court ‘lacks the statutory or constitutional power to adjudicate it ....'” Cortlandt St. Recovery Corp. v. Hellas Telecomms., 790 F.3d 411, 416-17 (2d Cir. 2015) (quoting Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)). “A Rule 12(b)(1) motion challenging subject matter jurisdiction may be either facial or factbased.” Carter v. HealthPort Techs., LLC, 822 F.3d 47, 56 (2d Cir. 2016). A motion “based solely on the allegations of the complaint or the complaint and exhibits attached to it” is a facial challenge. Id. On a facial challenge, the court must accept as true all material allegations in the complaint and draw all reasonable inferences in favor of the plaintiff. Id. at 56-57.

“Alternatively, a defendant is permitted to make a fact-based Rule 12(b)(1) motion, proffering evidence beyond the [p]leading.” Id. at 57; see Bank of Am. Corp. v. Lemgruber, 385 F.Supp.2d 200, 213 (S.D.N.Y. 2005) (“[W]hen resolving issues surrounding its subject matter jurisdiction, a district court is not confined to the Complaint and may refer to evidence outside the pleadings, such as affidavits.” (citing Makarova, 201 F.3d at 113)). “In opposition to such a motion, plaintiffs must ‘come forward with evidence of their own to controvert that presented by the defendant,' or may instead ‘rely on the allegations in their pleading if the evidence proffered by the defendant is immaterial because it does not contradict plausible allegations that are themselves sufficient to show [subject matter jurisdiction].'” Katz v. Donna Karan Co. Store, L.L.C., 872 F.3d 114, 119 (2d Cir. 2017) (quoting Carter, 822 F.3d at 57) (internal brackets omitted). “[D]istrict courts have broad discretion when determining how to consider challenges to subject matter jurisdiction.” Harty v. W. Point Realty, Inc., 28 F.4th 435, 441 (2d Cir. 2022). But “[w]here a party offers extrinsic evidence that contradicts the material allegations of the complaint, . . . it would be error for the district court to disregard that extrinsic evidence.” Id. at 442.

To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). That is, the facts must be sufficient to “allow[ ] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678. On a Rule 12(b)(6) motion, the court must “accept all factual allegations as true, and draw all reasonable inferences in the plaintiff's favor.” DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 110-11 (2d Cir. 2010) (quoting Shomo v. City of New York, 579 F.3d 176, 183 (2d Cir. 2009)) (internal brackets omitted). The court shall not “accept as true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555).

DISCUSSION

I. Motion to Dismiss for Lack of Subject Matter Jurisdiction

Defendants' primary argument for dismissal is that the Court lacks subject matter jurisdiction because Plaintiff's federal copyright claim is just a contract claim, and since the parties are not diverse, there is no basis for federal jurisdiction. Br. at 5, 7. Specifically, Defendants assert that Plaintiff, by submitting the Film to NACG and agreeing to its terms of membership, gave NACG a non-exclusive license to distribute the Film. Id. at 7. In support of their argument, Defendants rely on Plaintiff's undated Film Info Sheet and the Film Makers' Cooperative Catalogue No. 3, which Defendants assert includes the terms of membership at the time Plaintiff submitted the Film to the non-profit. See Br. at 10 (citing Film Info Sheet 1980s Agreement at 5-6). They also appear to contend that Plaintiff has agreed to terms in the Current Agreement, which is a document “made available to the public . . . and all of its...