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Carter v. Pallante

United States District Court, N.D. Illinois, Eastern Division

June 9, 2017



          John Z. Lee United States District Judge.

         Plaintiff Tollie Carter has sued Maria A. Pallante in her capacity as the Register of Copyrights, [1] as well as ARC/Conrad Music, LLC (“ARC”), Fuji Music Group, Inc. (“Fuji”), and BMG Rights Management (US) LLC (“BMG”). He challenges certain actions of the Register of Copyrights, which are not at issue for purposes of the present motion, and charges that ARC, Fuji, and BMG (hereafter “the Publisher Defendants”) infringed his copyrights in certain songs by selling unauthorized licenses to third parties, who in turn publicly performed the songs. The Publisher Defendants have moved to dismiss Carter's claims against them under Federal Rules of Civil Procedure 12(b)(1), 12(b)(2), and 12(b)(6). For the reasons that follow, the motion [43] is granted in part and denied in part.


         Plaintiff Tollie Carter's father, Calvin Carter, and his uncle, James Bracken, were songwriters. Verified 1st Am. Compl. ¶¶ 16, 21-22, ECF No. 34. They wrote and published a number of songs in the 1950s, 1960s, and 1970s. Id. Calvin Carter's works included the song, “Goodnight Sweetheart Goodnight, ” “a big hit during the mid-1950's and decades thereafter.” Id. ¶ 19.

         Calvin Carter and James Bracken are now deceased. Id. ¶ 17, 23. Plaintiff Tollie Carter (hereafter “Carter”) is the sole heir to each of their estates, including rights in many of their copyrighted works. Id. ¶¶ 19, 23. Prior to their deaths, each assigned rights in many of their songs to ARC. Id. ¶¶ 16, 64. Carter, however, has regained rights to many of these songs. First, in the late 1980s and early 1990s, Carter utilized a procedure under the version of the Copyright Act then in effect to exercise “renewal rights” in certain songs, thereby reacquiring them from ARC. See Id. ¶¶ 81-83, 89-91. Then, in 2012, Carter required the rights to still more songs by utilizing a procedure under the current version of the Copyright Act to terminate ARC's rights in them. See Id. ¶¶ 55-63. These terminations had an effective date of December 31, 2014. Id. ¶ 65.[2]

         Despite his regaining rights to the songs, Carter claims that ARC, along with the other Publisher Defendants (ARC is owned by Fuji and administered by BMG, id. ¶¶ 3, 64), have infringed his copyrights in the songs and taken other unlawful actions in relation to his songs. Specifically, Carter alleges that the Publisher Defendants, “without [Carter's] authorization or consent, represented to numerous third parties it could license-and did license to those third parties-the performance rights and other rights to [Carter's songs].” Id. ¶ 69; accord Id. ¶¶ 75, 78, 86, 94. These third parties in turn publicly performed and otherwise exercised Carter's exclusive rights in the songs, and the Publisher Defendants thereby financially benefited from their conduct by collecting royalties. Id. ¶¶ 70-71, 76, 79-80, 87-88, 95-96. Carter maintains that the Publisher Defendants have failed to pay royalties owed to him. Id. ¶¶ 98-99.

         In his Verified First Amended Complaint, Carter includes the following counts: Count II, “Federal Copyright Infringement”; Count III, “Contributory Copyright Infringement”; Count IV, “Vicarious Copyright Infringement”; Count V, Falsification of Copyright Management Information”; Count VI, “Unjust Enrichment”; Count VII, “Deceptive Trade Practices”; and Count VIII, “Tortious Interference with Prospective Business Interests.”


         The Publisher Defendants have moved to dismiss Carter's claims for lack of subject matter jurisdiction under Federal Rule of Civil Procedure (“Rule”) 12(b)(1), for want of personal jurisdiction under Rule 12(b)(2), and for failure to state a claim under Rule 12(b)(6). The Court will address each of these in turn.

         I. Subject Matter Jurisdiction: Rule 12(b)(1)

         First, with respect to subject matter jurisdiction, Carter's claims arise in large part under federal copyright law, and therefore invoke the Court's federal question jurisdiction under 28 U.S.C. § 1331. Carter's state law claims, in turn, arise from the same case or controversy, and the Court may therefore exercise supplemental jurisdiction over them under 28 U.S.C. § 1367. The Publisher Defendants do not dispute these elemental principles, but instead argue that because Carter's copyright infringement allegations fail to state a claim, the Court lacks subject matter jurisdiction over Carter's claims. Def.'s Mot. Dismiss 3-5, ECF No. 43. This argument, however, conflates the bases of Rule 12(b)(1) and 12(b)(6) motions. Bell v. Hood, 327 U.S. 678, 682 (1946) (“[I]t is well settled that the failure to state a proper cause of action calls for a judgment on the merits and not for a dismissal for want of jurisdiction.”). While there is an exception to this rule where a federal claim “clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such a claim is wholly insubstantial and frivolous, ” id. at 682-83, that exception does not apply here (nor do the Publisher Defendants argue that it should). In any case, as we will see, Carter's copyright allegations do not fail to state a claim. The Publisher Defendants' motion under Rule 12(b)(1) is therefore denied.

         II. Personal Jurisdiction: Rule 12(b)(2)

         Similarly, with respect to personal jurisdiction, the Publisher Defendants contend that Carter's personal jurisdiction allegations are inadequate. Specifically, they assert that “[t]he Amended Complaint contains no specific factual allegations that Publisher Defendants purposely directed activities towards or had anything more than incidental contact with Illinois.” Mot. Dismiss at 7. Carter's principal basis for alleging personal jurisdiction is as follows:

This Court has specific personal jurisdiction over [the Publisher Defendants] because they have engaged in conduct, giving rise to the claims herein, that satisfies the Illinois long-arm statute . . . including the commission of tortious acts within Illinois and the commission of tortious acts outside Illinois knowing and intending that such act[s] would interfere with Illinois interests and cause injury within Illinois. Based on information and belief, [the Publisher Defendants] have licensed for profit the copyrighted music at issue to Illinois-based and non-Illinois entities and individuals to the injury of Plaintiff, an Illinois resident.

Am Compl. ¶ 8. Carter argues that this Court may exercise specific personal jurisdiction over the Publisher Defendants as to these actions. See Pl.'s Resp. 7-9, ECF No. 49.

         At the motion to dismiss stage, the plaintiff's burden to establish personal jurisdiction depends on whether material facts are in dispute, and, in turn, whether an evidentiary hearing has been held. Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). Where no material facts are in dispute, the plaintiff need only make out a prima facie case of personal jurisdiction, which the district court can resolve on the basis of written submissions, drawing all inferences and resolving all conflicts in favor of the plaintiff. Id. at 782-83. Here, personal jurisdiction is governed by the law of the forum state and the Fourteenth Amendment Due Process Clause, and because Illinois's long-arm statute permits the exercise of personal jurisdiction to the extent permitted by the federal Constitution, the state and federal law inquiries merge. Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010). “The key question is therefore whether the defendants have sufficient ‘minimum contacts' with Illinois such that the maintenance of the suit ‘does not offend traditional notions of fair play and substantial justice.'” Id. at 700-01 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

         For the court to exercise specific personal jurisdiction over a defendant, the defendant must have “purposefully directed his activities at the forum state or purposefully availed himself of the privilege of conducting business in that state” such that the defendant could reasonably anticipate being haled into court there, and “the alleged injury [must] arise[] out of the defendant's forum-related activities.” Id. at 702. “The exercise of specific personal jurisdiction must also comport with traditional notions of fair play and substantial justice as required by the Fourteenth Amendment's Due Process Clause.” Id.

         Here, Carter's suit is based on intentional actions that the Publisher Defendants allegedly took in Illinois-specifically, selling licenses to his copyrighted songs to Illinois-based entities-knowing and intending that the effect of such actions would be felt in Illinois. Am. Compl. ¶ 8. This is a sufficient basis on which to conclude at the present stage that the Publisher Defendants purposefully directed the alleged conduct at Illinois and that Carter's suit arises directly from that conduct. Tamburo, 601 F.3d at 703, 708-09. In addition, exercising jurisdiction would not offend traditional notions of fair play and substantial justice, given that Carter resides here, and it would be unreasonable to expect him to file separate suits against the Publisher Defendants in their home jurisdictions (ARC and Fuji in California, BMG in Delaware or New York). Am. Compl. ¶¶ 3-4; see Tamburo, 601 F.3d at 709-10.

         Moreover, while the Publisher Defendants deny that the licenses they sold violated the law, they have not denied that they sold licenses to Illinois-based entities. Carter has therefore satisfied his burden of establishing a prima facie case of personal jurisdiction. Purdue Research, 338 F.3d at 782-83 & nn.13-14. Nor is the Publisher Defendants' argument that Carter has failed to state a claim for copyright infringement, Defs.' Reply 5, ECF No. 50, sufficient to negate personal jurisdiction. Accordingly, the Publisher Defendants' motion to dismiss for want of personal jurisdiction is denied.

         I. Failure to State a Claim: Rule 12(b)(6)

         A motion under Rule 12(b)(6) challenges the sufficiency of the complaint. Christensen v. Cty. of Boone, 483 F.3d 454, 457 (7th Cir. 2007). Under federal notice pleading standards, “[a] plaintiff's complaint need only provide a short and plain statement of the claim showing that the pleader is entitled to relief, sufficient to provide the defendant with fair notice of the claim and its basis.” Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008) (internal quotation marks omitted); see also Fed R. Civ. P. 8(a)(2). When considering a motion to dismiss under Rule 12(b)(6), the Court must “accept[ ] as true all well-pleaded facts alleged, and draw[ ] all possible inferences in [the plaintiff's] favor.” Tamayo, 526 F.3d at 1081.

         Additionally, a complaint must allege “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)). For a claim to be facially plausible, the plaintiff must plead facts allowing the court to draw the reasonable inference that the defendant is liable for the misconduct alleged in the complaint. Id. Accordingly, “[t]hreadbare recitals of the elements of the cause of action, supported by mere conclusory statements, do not suffice.” Id. Finally, the plausibility standard is not akin to a probability requirement but, rather, asks for more than a sheer possibility that a defendant acted unlawfully. Id.

         A. Copyright Claims

         1. ...

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