LAURA TAYLOR SWAIN, District Judge.
In this action arising from the creation and alleged diversion of an Internet-based style and dating advice business, Plaintiff Intrepidus, LLC ("Intrepidus" or "Plaintiff"), suing as a member and on behalf of Seductive Approach LLC, asserts the following causes of action against Defendant Glenn J. Bivins ("Bivins")
Plaintiff moves, pursuant to Federal Rule of Civil Procedure 55(b)(2), for a default judgment against Bivins and Monse ("Defendants"). Plaintiff seeks a judgment on the merits against Defendants as to each of its causes of action. Defendants have not opposed the instant motion.
The Court has reviewed Plaintiff's submissions carefully and, for the following reasons, the motion for default judgment is granted in part and denied in part.
This case arises from a business transaction between Bivins and Intrepidus for the joint creation of Seductive Approach, LLC ("Seductive Approach"). Seductive Approach "is a company that specializes in personal lifestyle development and enhancement with an emphasis on confidence, fashion and personal development, and a strong emphasis on dating techniques." (Am. Compl. ¶¶40-41; Seductive Approach Operating Agreement, Plaintiff's Brief Exhibit ("Pl. Ex.") E § 3.1 ("Operating Agreement").) Bivins, a "PUA (pick up artist)", presented Brian Engelbert with a business proposal in early 2012, and Engelbert agreed to be the financial backer for the proposal through, Intrepidus, a newly created company. (Am. Compl. ¶¶42-43.) Intrepidus provided $68,000, or 100% of the financial investment, and Bivins' contribution was to consist of his coaching expertise, ideas, intellectual property, and services. Bivins became the managing member and sole employee of the company and received an 85% ownership stake in Seductive Approach while Intrepidus received a 15% ownership stake. (Am. Compl. ¶¶44-47.)
Seductive Approach holds United States copyright registrations for the literary content of the Seductive Approach website, and for the literary works titled "Same Day Lays by Glenn Pearce," "Banter Lines by Glenn Pearce," and "Six Biggest Fails by Glenn Pearce." The United States Copyright Office granted the copyright registrations in February and March of 2015. (Am. Compl. ¶¶129-32; Docket Entry No. 33, Seductive Approach Copyright Registrations, Pl. Ex. N ("Copyright Registrations").)
In or about April 2013, Engelbert approached Bivins with numerous concerns about his management of the company. (Am. Compl. ¶69.) Bivins then began creating a rival company, Attractive Approach, and converted Seductive Approach's property for use by the new company. (Am. Compl. ¶¶77-128.) Bivins converted the Seductive Approach website into the Attractive Approach website, using Seductive Approach funds for the change and costs of the new site. (Am. Compl. ¶¶94-99.) Bivins also used Seductive Approach assets to make payments for services rendered to Attractive Approach, his unrelated Glenn Jason Hair Design Business, his unincorporated business run through
The Attractive Approach website mirrored the Seductive Approach website and business plan in its offerings and Bivins promoted his new coaching service on websites run by Defendant Monse. (Am. Compl. ¶¶ 86-96, 123.) Bivins earned revenue from his coaching services that were promoted on the Attractive Approach website and from the sale of Seductive Approach products on Attractive Approach's website, as well as other websites. (Am. Compl. ¶¶117-28.)
Plaintiff alleges that Bivins knowingly and intentionally made false representations during the initial negotiations for the creation of Seductive Approach. Specifically, Intrepidus alleges that Bivins falsely claimed "he would transfer the intellectual property he had previously created for the PUA industry to Seductive Approach, would implement the copyright registrations for such works listing Seductive Approach as the rightful owner, and that Bivins' previously created intellectual property, as well as the intellectual property he created while working for . . . Seductive Approach would be the sole and exclusive property of Seductive Approach." (Am. Compl. ¶164.) Plaintiff also alleges that, without these inducements, "there would be no reason for Engelbert to invest his monies through Intrepidus." (Am. Compl. ¶¶ 36-38.) Plaintiff further alleges that Bivins intended that Plaintiff would rely on these false statements when entering into the Operating Agreement and that Plaintiff did rely on such statements, resulting in harm and damages to Plaintiff. (Am. Compl. ¶¶164-69, 171-77.)
Plaintiff commenced this action by the filing of a complaint on Seductive Approach's behalf against Defendants Phillip Salsbury Schloss ("Schloss"), Bivins, The Salsbury Fortress, LLC ("Salsbury Fortress"), and Monse. On December 12, 2015, Plaintiff filed an Amended Complaint. (
On August 16, 2016, the Court terminated Defendants' motion to dismiss as abandoned, directed the Clerk of Court to issue a certificate of default, and authorized Plaintiff to make a motion for default judgment. (Docket Entry No. 65.) The Clerk of Court issued a certificate of default on August 17, 2016 (Docket Entry No. 66), and on August 30, 2016, Plaintiff filed this motion for default judgment. (Docket Entry No. 69.)
In determining whether to grant a motion for default judgment, courts within this district first consider three factors: "(1) whether the defendant's default was willful; (2) whether defendant has a meritorious defense to plaintiff's claims; and (3) the level of prejudice the nondefaulting party would suffer as a result of the denial of the motion for default judgment."
Defendants' failure to make an appearance after their previous counsel withdrew and their failure to respond to Intrepidus' Motion for Default Judgment are indicative of willful conduct. See
Once the court finds that these factors favor the plaintiff, it must determine whether the plaintiff has pleaded facts supported by evidence sufficient to establish the defendant's liability with respect to each cause of action.
Intrepidus, suing on behalf of Seductive Approach, asserts a claim for copyright infringement of Seductive Approach's website and products. Plaintiff alleges that Bivins stole the Seductive Approach website, "Same Day Lays by Glenn Pearce," "Banter Lines by Glenn Pearce," and "Six Biggest Fails by Glenn Pearce," and used them for the benefit of his new company, Attractive Approach. (Am. Compl. ¶¶ 129-32.) Plaintiff further alleges that Monse aided in the theft of Seductive Approach's intellectual property by advertising promotional material, which was comprised of Seductive Approach's intellectual property, on his website, while knowing that Bivins was stealing from Seductive Approach and Intrepidus. (Am. Compl. ¶¶113-14.) Intrepidus provides copyright registrations as evidence in support of its claim. (Am. Compl. ¶¶129-32; Docket Entry No. 33, Copyright Registrations.) Plaintiff seeks statutory damages and attorneys' fees under 17 U.S.C. § 504(c) of the Copyright Act and a permanent injunction under 17 U.S.C. § 502(a) of the Copyright Act in connection with these four alleged infringements.
"[I]n order to obtain statutory damages and attorney's fees, a plaintiff must have registered its copyright prior to the alleged infringement."
Plaintiff seeks a permanent injunction pursuant to 17 U.S.C. § 502(a) of the Copyright Act. Section 412 of Title 17 of the United States Code restricts a plaintiff's ability to recover statutory damages and attorneys' fees pursuant to sections 17 U.S.C. §§ 504 and 505, but it does not prohibit a plaintiff from seeking injunctive relief for copyright infringement under section 502, even if the plaintiff did not register the work within the requisite period of time to recover statutory damages and attorneys' fees.
A demonstration of copyright infringement requires proof of two elements: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.
To obtain an injunction, a plaintiff must show liability and the threat of continuing violation.
Accordingly, Plaintiff's motion for a default judgment is granted with respect to the first cause of action insofar as it seeks permanent injunctive relief.
Intrepidus asserts a claim against Bivins for misappropriation. "An unfair competition claim involving misappropriation usually concerns the taking and use of the plaintiff's property to compete against the plaintiff's own use of the same property."
Plaintiff has alleged and demonstrated through supplementary evidentiary proffers that Bivins exploited his position as managing and majority member, as well as employee, of Seductive Approach by misappropriating the company's capital, confidential information, coaching services, trade secrets, logo, copyrighted material, and other property. (Am. Compl. ¶¶ 86-96.) Plaintiff further alleges and demonstrates that Bivins did so for the benefit of his new company, Attractive Approach, a competitor of Seductive Approach. (
Plaintiff has pleaded sufficient facts, supported by evidence tendered in support of its motion for default judgment, to establish Bivins' liability with respect to Plaintiff's claim for misappropriation.
Plaintiff also asserts a cause of action against Bivins for conversion. "Conversion occurs when a defendant exercises unauthorized dominion over personal property in interference with a plaintiff's legal title or superior right of possession."
Plaintiff alleges that Bivins took Seductive Approach's property, including website content, designs, logos, and other intellectual property, when he transferred the contents of the Seductive Approach website to the Attractive Approach website. (
Plaintiff's uncontroverted allegations and evidence demonstrate that Seductive Approach had legal title or superior right of possession over the Seductive Approach website, bank account and financial assets, design, logos, and other intellectual property. Bivins' use of these assets for his personal benefit and the benefit of entities other than Seductive Approach is an exercise of control "in a manner inconsistent with the rights of" Seductive Approach.
Plaintiff has pleaded sufficient facts, supported by evidence, to establish Bivins' liability for conversion. The Court therefore grants Plaintiff's motion for default judgment with respect to the third cause of action.
Intrepidus alleges that Bivins tortiously interfered with Seductive Approach's business relationships. The Second Circuit has set forth factors a plaintiff must establish for a claim of tortious interference with a prospective economic advantage under New York law: "(1) that [he] had a business relationship with a third party; (2) the defendant knew of that relationship and intentionally interfered with it; (3) the defendant acted solely out of malice, or used dishonest, unfair, or improper means; and (4) the defendant's interference caused injury to the relationship."
Plaintiff's complaint and evidentiary proffers are insufficient to establish the first element of this cause of action. Intrepidus has not identified any relationships between Seductive Approach and any third party. Rather, Plaintiff refers generically to "relationships with third parties who intended to purchase `Same Day Lays' and other intellectual property of Seductive Approach, as well as use Seductive Approach's services." (
Intrepidus' motion for default judgment with respect to its fourth cause of action is therefore denied.
Plaintiff seeks a declaratory judgment against Defendants Bivins and Monse with respect to the copyrighted materials in dispute. Plaintiff seeks a judgment declaring that (1) Plaintiff is the rightful owner of the U.S. copyright registration nos. TX008029811, TX0008036360, TX0008036365, and TX0008036351; (2) Defendants' actions are unlawful and, specifically, that Defendants infringed and continue to infringe the Plaintiff's copyrights in violation of the Copyright Act; and (3) in accordance with such judgment, directing the United States Copyright Office to strike each one of the four copyright applications filed by Bivins on or about August 27, 2014, related to these registrations.
The Declaratory Judgment Act confers on federal courts "unique and substantial discretion in deciding whether to declare the rights of litigants."
The Court grants Plaintiff's request in part and denies it in part. For the reasons explained above with respect to the first cause of action, the Court grants Plaintiff's request for a judgment declaring that (1) Plaintiff is the rightful owner of the U.S. copyright registration nos. TX008029811, TX0008036360, TX0008036365, and TX0008036351; and (2) Defendants' actions are unlawful and, specifically, that Defendants infringed and continue to infringe the Plaintiff's copyrights in violation of the Copyright Act.
Plaintiff's conclusory request that the Court go beyond declaring Seductive Approach's rights in the intellectual property and issue an affirmative direction to the Copyright Office to strike applications that were allegedly filed by Bivins in 2014 is, however, denied. This denial of the request is without prejudice to future pursuit of such relief in an appropriate forum and upon an appropriate record.
Intrepidus asserts claims against Bivins for fraud and fraud in the inducement. To prevail on a fraud claim under New York law, "a plaintiff must show that (1) the defendant made a material false representation, (2) the defendant intended to defraud the plaintiff thereby, (3) the plaintiff reasonably relied upon the representation, and (4) the plaintiff suffered damage as a result of such reliance."
Intrepidus lacks standing to assert the fraud claim pleaded in the Amended Complaint, which relates to the original decision to create Seductive Approach. Nor does the Amended Complaint even proffer facts supporting an inference that Bivins was lying from the outset of the negotiations that resulted in the creation of Seductive Approach. Plaintiff Intrepidus brought this action on behalf of Seductive Approach, not on its own behalf. As pleaded, the fraud claim alleges that Engelbert or Intrepidus, and not Seductive Approach, was misled by Bivins during the negotiations that resulted in the creation of Seductive Approach. Seductive Approach, the entity that was created as a result of those negotiations, cannot assert fraud claims on behalf of Engelbert or Intrepidus.
Furthermore, Plaintiff's complaint and evidentiary proffers are insufficient to establish the first element of a fraud or fraud in the inducement claim. Plaintiff does not proffer facts supporting the bald assertion that Bivins was lying during those negotiations and, therefore, does not show that Bivins made a material false representation.
For the foregoing reasons, Plaintiff's motion for default judgment with respect to the sixth and seventh causes of action is denied.
Plaintiff's request for injunctive relief on its copyright infringement cause of action is granted. Bivins and Monse, and all persons and entities acting in concert with them who are given notice of this order, are hereby permanently enjoined from using the works registered under copyright registration numbers TX008029811, TX0008036360, TX0008036365, and TX0008036351 in any way.
The Court hereby declares that Seductive Approach LLC is the sole rightful owner of the works registered under U.S. copyright registrations TX008029811, TX0008036360, TX0008036365, and TX0008036351, and that Defendants' actions described in the Amended Complaint constitute the unlawful infringement of Seductive Approach's rights in those works.
Plaintiff's motion for judgment in its favor on its conversion and misappropriation causes of action is granted and the case is referred to Magistrate Judge Pitman for an inquest as to damages in connection with those causes of action. Plaintiff's counsel is directed to contact Judge Pitman's chambers to schedule proceedings.
Plaintiff's motion for judgment by default is denied, and the Amended Complaint is dismissed, in all other respects.
This Opinion and Order resolves Docket Entry No. 69.
SO ORDERED.