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Life After Hate, Inc. v. Free Radicals Project, Inc.

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

June 27, 2019

LIFE AFTER HATE, INC., a/k/a EXIT USA, Plaintiff/Counter-Defendant,
v.
FREE RADICALS PROJECT, INC., and CHRISTIAN PICCIOLINI, Defendants/Counter-Plaintiffs. CHRISTIAN PICCIOLINI, Third-Party Plaintiff,
v.
TONY MCALEER, SAMMY RANGEL, ANGELA KING and FRANK MEEINK, Third-Party Defendants.

          MEMORANDUM OPINION AND ORDER

          HON, VIRGINIA M. KENDALL UNITED STATES DISTRICT JUDGE.

         Plaintiff Life After Hate, Inc. (“LAH”) initiated this suit against Defendants Christian Pic-ciolini and Free Radicals Project, Inc. (“FRP”). LAH claims in its amended complaint that Picci-olini, one of LAH's co-founders, left LAH and started Free Radicals Project, a competing organization, and began infringing LAH's registered trademarks. (Dkt. 23.) LAH brings claims against Picciolini and FRP for trademark infringement and counterfeiting, tortious interference with a business expectancy, deceptive trade and business practices, cybersquatting, conversion, unjust enrichment, and breach of fiduciary duty. (Id.) LAH moved for a preliminary injunction to prevent Picciolini and FRP from using LAH's trademarks, which remains under advisement. (Dkt. 7.) Picciolini and FRP answered LAH's complaint and brought counterclaims against LAH for copyright infringement, violation of right of publicity, unfair competition, unjust enrichment, conversion, and deceptive trade practices. (Dkt. 35.) Picciolini and FRP also brought claims against LAH and four individual third-party defendants, Tony McAleer, Sammy Rangel, Angela King, and Frank Meeink, each of whom is affiliated with LAH, for tortious interference with a business expectancy, conspiracy, breach of fiduciary duty, and defamation and disparagement. (Id.)

         LAH and the third-party defendants (which the Court will jointly refer to here as “LAH”) now move to dismiss Picciolini and FRP's claims in their entirety, arguing that all claims fail to state a claim for relief under Federal Rules of Civil Procedure 12(b)(6) and 9(b), and that some claims are preempted by the Copyright Act. (Dkt. 92.) For the reasons stated here, the motion to dismiss [Dkt. 92] is granted in part and denied in part. Counts Two, Three, Four, Six, Seven, Eight, and Ten are dismissed without prejudice. Count Five is dismissed with prejudice. Count Nine is dismissed without prejudice as to third-party defendant McAleer only. The motion is denied as to Count One and the remainder of Count Nine.

         BACKGROUND

         On a motion to dismiss under Rule 12(b)(6), the Court accepts the complaint's well-pleaded factual allegations, with all reasonable inferences drawn in the non-moving party's favor, but not its legal conclusions. See Smoke Shop, LLC v. United States, 761 F.3d 779, 785 (7th Cir. 2014). The facts below are drawn from Picciolini and FRP's Counter-Complaint and Third-Party Complaint (Dkt. 35) (the “Complaint”) and are accepted as true for purposes of reviewing this motion. See Vinson v. Vermillion Cty., Ill., 776 F.3d 924, 925 (7th Cir. 2015).

         Picciolini is a former white supremacist. (Dkt. 35 ¶ 12.) He was recruited to join the Chicago Area Skinheads in 1987, when he was 14 years old, and later became the group's leader. (Id. ¶ 13.) In 1996, Picciolini extricated himself from white-supremacist groups and renounced his ties to extremist groups and racism. (Id. ¶ 14.) Since then, Picciolini has devoted his efforts to helping other individuals disengage from extremist movements. (Id. ¶ 15.) To do so, Picciolini relies on his 20-plus years of experience and consultations with psychologists, social workers, life coaches, mental health professionals, and law enforcement. (Id.)

         In 2009, Picciolini co-created and co-founded LAH with Arno Michaelis. (Id. ¶ 17.) At that time, he began using “Life After Hate” as a name for a platform and his services advocating against hate and extremist groups, in the hopes that members of those groups would renounce their ties as Picciolini and Michaelis had. (Id.) In January 2010, Picciolini and Michaelis launched the websites lifeafterhate.org and kindnessnotweakness.org to support LAH. (Id. ¶ 19.) In 2011, Pic-ciolini and Michaelis invited the four individual third-party defendants to join LAH as volunteers. (Id. ¶ 22.) Three of the individuals later became members of LAH's Board. (Id.) In August 2012, Picciolini stepped down from his position as LAH Board Chair but remained a member of the Board. (Id. ¶ 23.)

         In November 2012, Michaelis left LAH. (Id. ¶ 24.) Michaelis and Picciolini had personal control over LAH's assets, including its intellectual property, and Michaelis transferred all such assets, including LAH's website, digital assets, and domain names, to Picciolini when he left. (Id. ¶ 25.) Picciolini became the interim executive director of LAH at this time and stepped down from his Board member role. (Id.) After Michaelis's departure, Picciolini decided to restructure and rebrand LAH as a service provider of intervention and prevention services for extremists. (Id. ¶ 26.) Under Picciolini's guidance, LAH began engaging in “exit” programming to help extremists disengage from violence-based extremist groups. (Id.) Picciolini solely developed and operated the LAH exit program, which eventually became known as “ExitUSA.” (Id.) Picciolini has helped more than 250 individuals disengage from violent extremism and hateful ideologies. (Id.)

         In 2014, Picciolini created, established, and used the “ExitUSA” trademark as part of the exit program he developed and operated through LAH. (Id. ¶ 30.) In June 2014, he launched “ExitUSA” on various social media platforms. (Id. ¶ 31.) As part of his efforts to develop the program, Picciolini sought to personally purchase the domain name ExitUSA.org. (Id. ¶ 32.) In January 2015, Picciolini learned that someone else already owned the domain name, and he negotiated the purchase of the domain name from the original owner. (Id. ¶ 33.) In March 2015, Picciolini personally redesigned LAH's website, logo, marketing materials, videos, and website content, which LAH continues to use. (Id. ¶ 35.) In 2017, Picciolini redeveloped, redesigned, and relaunched the “ExitUSA” website. (Id. ¶ 42.)

         In April 2017, LAH members decided to separate the operations and programs of ExitUSA from LAH. (Id. ¶ 65.) They agreed to establish ExitUSA as a subsidiary corporation of LAH to be operated by Picciolini, who was already overseeing and providing LAH's counseling services and programs. (Id.) Picciolini agreed to step down from LAH's Board at this time. (Id.) Later that month, following a dispute between Picciolini and the four individual third-party defendants, three of the individuals removed Picciolini's access to LAH databases, online forums, bank accounts, and other assets. (Id. ¶ 67.) The same three individuals fabricated a story that Picciolini posted on social media about a rape victim he was working with. (Id.) LAH eventually forced Picciolini to disassociate with LAH. (Id. ¶ 70.)

         In January 2018, LAH, Rangel, King, and McAleer attended an anti-hate conference in Portland. (Id. ¶ 114.) At the conference, Rangel told a group of people including former extremists counseled by Picciolini, anti-hate and anti-extremist professionals, and a journalist that Picciolini had caused LAH to lose a $400, 000 grant because Picciolini had threatened the President of the United States. (Id. ¶¶ 115-16.) Rangel also told the group that Picciolini was a liar, that his memoir was a lie, and that Rangel was going to “kick Picciolini's ass.” (Id. ¶¶ 117, 120.) McAleer told the group that Picciolini stole anti-hate stories and narratives from him and passed them off as Picciolini's own and “stole ‘Life After Hate' from him.” (Id. ¶ 118-19.) Meeink told the group that Picciolini was a liar and had never performed an intervention before. (Id. ¶ 121.)

         Picciolini created numerous works of authorship using his personal resources while he was associated with LAH. (Id. ¶ 50.) Five of those works are federally registered copyrighted works, with the following titles: Oak Creek Video, There is life after hate Video, the Formers Video (together, the “Picciolini Videos”), Life After Hate Website, and Life After Hate logo (together, the “Picciolini Copyrights”).[1] (Id. ¶ 52.) LAH did not employ Picciolini to create the Picciolini Copyrights. (Id. ¶ 53.) Picciolini allowed LAH to use his copyrights while he was associated with LAH, but since his disassociation, LAH has not had authorization to use or publish the Picciolini Copyrights. (Id. ¶¶ 55-56.) LAH has continued to use and publish the Picciolini Copyrights, including the Picciolini Videos, since Picciolini's disassociation from LAH. (Id. ¶ 57.) The Pic-ciolini Videos include Picciolini's likeness or voice. (Id. ¶ 58.) LAH is not authorized by Piccio-lini to use his likeness or voice to raise funds, conduct business, or for any other reason. (Id. ¶ 60.)

         From 2009 to 2017, LAH's programs were funded primarily through donations from Pic-ciolini and other donors. (Id. ¶ 62.) Picciolini was the sole catalyst driving LAH's donor support, and he facilitated significant donations and government grants. (Id.) Since Picciolini left LAH, several members of the public have contacted him and informed him that they donated to LAH based on confusion caused by LAH refusing to publicly disclose Picciolini's disassociation from LAH, and the donors' mistaken belief that Picciolini was still part of the organization. (Id. ¶ 72.)

         After renouncing his ties to extremism and in the course of founding and developing LAH, Picciolini became a well-known and internationally recognized subject-matter expert in peace advocacy and violent extremist intervention work. (Id. ¶ 18.) In 2008, Picciolini self-published a memoir about his experience disengaging from a hate group and becoming an anti-hate advocate. (Id. ¶ 16.) The memoir was republished by Hachette Books in 2017 under the title “White American Youth: My Descent into America's Most Violent Hate Movement-and How I Got Out.” (Id.) Picciolini has contributed to and been featured in hundreds of national and international publications, has appeared in numerous media outlets, including network and cable broadcast news programs and radio, to discuss issues related to violent extremism and white-supremacist movements, and has been featured in his own documentary series on MSNBC called “Breaking Hate” and been profiled on CBS's “60 Minutes” and in publications like the Washington Post and New York Times. (Id. ¶¶ 18, 45-46.)

         LEGAL STANDARD

         On a motion to dismiss under Rule 12(b)(6), the Court construes the complaint in the light most favorable to the plaintiff, accepts the factual allegations as true, and draws all reasonable inferences in the plaintiff's favor. Reynolds v. CB Sports Bar, Inc., 623 F.3d 1143, 1146 (7th Cir. 2010). A complaint need contain only a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). That statement must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face, Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), and raise a right to relief above the speculative level. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). However, a plaintiff's claim need only be plausible, not probable. Indep. Trust Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 935 (7th Cir. 2012). Evaluating whether a plaintiff's claim is sufficiently plausible to survive a motion to dismiss is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011) (citing Iqbal, 556 U.S. at 678).

         DISCUSSION

         LAH first argues that some of Picciolini and FRP's claims are preempted by the Copyright Act. They also argue that all claims otherwise fail to state a claim for relief under Federal Rules of Civil Procedure 12(b)(6) and 9(b).

         I. Copyright Act Preemption

         Count I alleges that LAH infringed Picciolini's copyrights in violation of Sections 106 and 501 of the Copyright Act, 17 U.S.C. §§ 106 and 501. (Dkt. 35 ¶¶ 73-79.) LAH argues that the Copyright Act claim preempts four other claims: unjust enrichment (Count IV), conversion (Count V), tortious interference (Count VI), and deceptive trade practices (Count X).

         The Copyright Act preempts state law claims if two elements are met: (1) “the work in which the right is asserted must be fixed in tangible form and come within the subject matter of the copyright as specified in § 102, ” and (2) the rights in the state-law claims “must be equivalent to the exclusive rights under the Copyright Act.” Seng-Tiong Ho v. Taflove, 648 F.3d 489, 500-01 (7th Cir. 2011) (citing 17 U.S.C. § 301a). “To avoid preemption, a state law must regulate conduct that is qualitatively distinguishable from that governed by federal copyright law-i.e., conduct other than reproduction, adaptation, publication, performance, and display.” Id. at 501 (quoting Toney v. L'Oreal USA, Inc., 406 F.3d 905, 910 (7th Cir. 2011)). A state-law right is equivalent even if it requires additional elements to make out a cause of action, if those “additional elements do not differ in kind from those necessary for copyright infringement.” Carter v. Pallante, 256 F.Supp.2d 791, 803 (N.D. Ill. 2017) (quoting Balt. Orioles, Inc. v. Major League Baseball Players Ass'n, 805 F.2d 663, 677 n.26 (7th Cir. 1986).

         Picciolini and FRP do not dispute that the first element is met here. They argue, however, that the second element is not met as to each claim at issue because each claim “contain[s] at least one ‘extra element' distinguishing [it] from a claim for copyright infringement.” (Dkt. 107 at 3.) The Court will consider whether each state ...


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