Robinson v. HSBC Bank U.S.

732 F.Supp.2d 976

Douglass ROBINSON and David Lau Yin Loong, Plaintiffs,

v.HSBC BANK USA, Defendant.

No. C 10-01494 SI.

United States District Court, N.D. California.

Aug. 9, 2010.

Cary S. Kletter, Chloe Isabelle Quail, Julieanna Igor Vinogradsky, Kletter Law Firm, San Francisco, CA, for Plaintiffs.

Duane Clark Musfelt, Jason Shelton Lohr, Lewis Brisbois Bisgaard Smith LLP, San Francisco, CA, for Defendant.

ORDER GRANTING MOTION TO DISMISS

SUSAN ILLSTON, District Judge.

Currently before the Court is defendant's motion to dismiss. The mattercame before the Court for hearing on July 30, 2010. Having considered the papers and arguments made, for the reasons set forth below, the Court GRANTS the motion to dismiss with prejudice.

BACKGROUND

Plaintiffs allege that on or about October 21, 2009, defendant HSBC Bank USA ("HSBC"), circulated a full-page, double-sided print advertisement ("Ad") inserted into the San Francisco Chronicle which prominently features a photograph of the "street-facing side" of plaintiffs' house ("the Property"). First Amended Complaint ("FAC") ¶ 19. On the first page of the Ad, there is a photograph showing the second and third stories of two Victorian homes. FAC, Exhibit A. Tagged onto the photograph are the words "A Mortgage To Match Your Ambitions. Wherever The World Takes You." FAC ¶ 20 & Ex. A. On the back of the Ad, HSBC advertises its "Premier Mortgage," giving details of the offer and HSBC's contact information. FAC ¶ 20. The back contains more advertising copy that reads, "Around the block or halfway around the globe, a Premier mortgage opens up a world of possibilities. Your ambitions are not limited by your latitude. No matter where you chose to call home, you need a mortgage that lets you take advantage of all the world has to offer. When you're ready to settle down, consider an HSBC Premier Mortgage." FAC, Ex. A at 2. The Ad "identifies the precise longitudinal plane on which" plaintiffs' Property is situated. FAC ¶ 20. The back of the Ad contains another, smaller, cropped picture of the top floor and roof-line of three houses, including plaintiffs' Property. See FAC, Ex. A.

Plaintiffs' Property is a "picturesque 'Victorian-style' home in the Haight neighborhood" where Plaintiffs have lived for over a decade. FAC ¶ 14. The building "has a distinctive bright yellow and green exterior, with two sets of ornate green molding above two levels of bay windows, yellow and green ionic columns dividing each window pane of the bay windows and a series of yellow doric columns creating the molding in between the two main levels of the subject property." Id. ¶ 15. Plaintiffs allege that the mortgage on the Property was paid off "long ago," and that Plaintiff Robinson owns the home outright, free and clear of any mortgages or liens. Id. ¶ 16. Plaintiffs assert that they are not and never have been customers of HSBC, HSBC did not contact Plaintiffs or get their permission before publication of the Ad, and plaintiffs do not endorse or approve of HSBC's products or services. Id. ¶¶ 17, 22-23, 27-28.

After the Ad was distributed, plaintiffs began to get inquiries from neighbors, local business owners, unknown realtors, as well as tenants who live in the Property, as to their financial condition and their willingness to sell the Property. Id. ¶ 24. Plaintiffs allege that HSBC's conduct is highly offensive as it falsely implies that Plaintiffs obtained a mortgage from HSBC, are customers of HSBC, and endorse/approve of HSBC's products, services or mortgages. Id. ¶ 26. Plaintiffs explain that HSBC's conduct is particularly offensive in the "current economic climate where thousands of individuals nationwide are losing value in their homes, in part due to precisely the type of loan advertised in the HSBC flyer (Adjustable Rate Mortgage loans), when in fact Plaintiff Robinson owns the Property free of encumbrances." Id. ¶ 29.

Plaintiffs filed this action on February 19, 2010 in San Francisco County Superior Court. Defendant removed the case to this Court on April 8, 2010, on the basis of diversity jurisdiction. Plaintiffs subsequently filed a First Amended Complaint on May 17, 2010 alleging the following causes of action against HSBC: (1) violationof right of publicity under California Civil Code section 3344, or alternatively common law claim of appropriation; (2) trade libel in violation of California Civil Code section 45; (3) unjust enrichment; (4) false and misleading advertisement in violation of California Business and Professions Code section 17500 et seq. ("FAL"); (5) violation of the California Consumers Legal Remedies Act ("CLRA"), California Civil Code section 1750 et seq.; and (6) violation of California's Unfair Competition Law ("UCL"), California Business and Professions Code section 17200 et seq. Defendant now moves to dismiss the FAC on the grounds that plaintiffs fail to state a claim as a matter of law.

LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). This "facial plausibility" standard requires the plaintiff to allege facts that add up to "more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, --- U.S. ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). While courts do not require "heightened fact pleading of specifics," a plaintiff must allege facts sufficient to "raise a right to relief above the speculative level." Twombly, 550 U.S. at 544, 555, 127 S.Ct. 1955.

In deciding whether the plaintiff has stated a claim upon which relief can be granted, the Court must assume that the plaintiff's allegations are true and must draw all reasonable inferences in the plaintiff's favor. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir.1987). However, the court is not required to accept as true "allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir.2008).

If the Court dismisses the complaint, it must then decide whether to grant leave to amend. The Ninth Circuit has "repeatedly held that a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir.2000) (citations and internal quotation marks omitted).

DISCUSSION

1. Plaintiffs' Claims are Not Preempted by the Copyright Act

Defendant first argues that plaintiffs fail to state a claim as a matter of law because each of plaintiffs' claims is preempted by the Copyright Act. According to HSBC, plaintiffs are seeking to enforce a property interest in depictions of their house and any state or common law claims regarding the depiction of their house are encompassed within the scope of the Copyright Act and preempted. Generally, "[a] state law cause of action is preempted by the Copyright Act if two elements are present. First, the rights that a plaintiff asserts under state law must be 'rights that are equivalent' to those protected by the Copyright Act.... Second, the work involved must fall within the 'subject matter' of the Copyright Act as set forth in 17 U.S.C. §§ 102 and 103." Kodadek v. MTV Networks, 152 F.3d 1209, 1212 (9th Cir.1998) (internal citations omitted).

To support its argument, HSBC relies on two cases, Leicester v. Warner Bros., 232 F.3d 1212, 1216 (9th Cir.2000) andLandrau v. Betancourt, 554 F.Supp.2d 102 (D.P.R.2007) for the proposition that the right to depict a building through photography is "clearly within the scope of the Copyright Act." Motion at 4. Those cases, however, do not support HSBC.

In Leicester v. Warner Bros., 232 F.3d 1212, 1216 (9th Cir.2000), the Ninth Circuit explained that in passing the Architectural Works Copyright Protection Act of 1990 (AWCPA), Congress extended copyright protection for the first time to the actual structures built from architectural plans. Id. at 1216-17 (noting that prior to AWCPA, buildings had been considered to be "useful articles" not protected by the Copyright Act). However, as the Ninth Circuit also noted, in passing the AWCPA Congress specifically exempted from copyright infringement photographs of buildings taken from a public place. Id. at 1217.¹ As such, the Ninth Circuit concluded that the use of a well-known building in downtown Los Angeles in the film Batman Forever did not constitute copyright infringement. Id. at 1219-20. HSBC's only other case, Landrau, 554 F.Supp.2d 102, held that there is no copyright protection for owners or architects of buildings against those who take photographs of architectural works from a public place. Id. at 113.

Here, plaintiffs could not assert a copyright infringement claim with respect to photographs of their Property taken from a public place. Accordingly, the interests they seek to protect do not fall within the subject matter of the Copyright Act, defeating the first prong of the copyright preemption test set out in Kodadek. Nor can defendant meet the second prong of Kodadek, since the rights that plaintiffs assert under state law are not "rights that are equivalent" to those protected by the Copyright Act.

In undertaking the equivalency analysis, courts have held that statutory and common law misappropriation of likeness claims are not preempted by the Copyright Act. See, e.g., Downing v. Abercrombie & Fitch, 265 F.3d 994, 1004 (9th Cir.2001) ("The subject matter of Appellants' statutory and common law right of publicity claims is their names and likenesses.... A person's name or likeness is not a work of authorship within the meaning of 17 U.S.C. § 102. This is...