UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY
October 8, 1998
THE NEW YORK TIMES, NEW AGE PUBLISHING, INC., T/A NEW AGE JOURNAL, AND WEEKLY READER CORP.,
The opinion of the court was delivered by: Joel A. Pisano United States Magistrate Judge
JOEL A. PISANO, UNITED STATES MAGISTRATE JUDGE
Currently before the Court is Plaintiff's motion for leave to file a second amended complaint, seeking to add four new counts as a basis for recovery. Defendants filed opposition, and the Court heard oral argument on September 28, 1998. For the following reasons, Plaintiff's motion is denied.
Sam D'Amico is a freelance photographer who began taking photographs in approximately 1992 for Defendant newspaper, The New York Times. (Pl.'s Br. Supp. Mot. at 1) Plaintiff alleges that he granted Defendant a limited "one time right to publish his photographs within the printed version" of the newspaper. (Id.) Plaintiff alleges that his photographs were (1) appearing in later editions of The New York Times, (2) sold to third parties, and (3) reappearing in other newspapers that subscribe to the New York Times News Service. (Id. at 2) Plaintiff alleges that he did not authorize Defendant to resell his photographs. (Id. at 3)
This case is less than one year old, but has an unnecessarily complex procedural history. It is necessary to set forth in detail this procedural history in order to decide Plaintiff's motion. On October 8, 1997, Plaintiff filed his first complaint, which contained nine counts. Counts one through four alleged copyright infringement and sought statutory damages for Plaintiff's photographs of Frank Sztuk, a shadow, George Jacobs, and a Hindu temple. (Pl.'s Compl. ¶¶ 6, 13, 20, 28) Plaintiff alleged that he registered each photograph with the United States Register of Copyrights on September 14, 1997. (Pl.'s Compl. ¶¶ 9, 16, 24, 33) Counts five through eight allege breach of contract, claiming that Defendant failed to return the original negatives for four separate sets of photographs. (Pl.'s Compl. ¶¶ 36, 42, 48, 54) Finally, count nine alleged tortious interference by Defendant. (Pl.'s Compl. ¶ 60)
It is significant to note, for the purpose of Plaintiff's current motion, that at the time he filed his original complaint he failed to assert a claim on three cases of alleged infringement of which he was aware as early as August 4, 1997. (Reynolds Certif. Ex. A) In this vein, Plaintiff's counsel informed the Defendant's legal department that Plaintiff would "be pursuing claims against the Times for" reprinting "WITHOUT AUTHORIZATION" photographs of Sister Fritz, Barbara Buono, and Jeff Warsh. (Reynolds Certif. Ex. A) These cases of alleged infringement were not included in Plaintiff's original complaint.
After negotiations between the parties concerning the merits of Plaintiff's claims, Plaintiff filed his first amended complaint. Plaintiff asserted the same four claims in counts one through four, but deleted the demand for statutory damages in counts one through three. (Pl.'s Amend. Compl. ¶¶ 11(c), 18(c), 26(c)) Counts five through nine were identical to the original complaint. Plaintiff again did not include any claim based on the photographs of Sister Fritz, Barbara Buono, or Jeff Warsh.
Defendants answered the first amended complaint and, on May 20, 1998, moved successfully to dismiss counts five through nine. By Order of June 22, 1998, counts five through eight were dismissed and submitted to arbitration, and count nine was dismissed for failure to state a claim upon which relief could be granted. See Judge Walls's Order of 6/22/98. Subsequently, this Court instructed Plaintiff to file a motion for leave to file a second amended complaint and granted Defendant permission to conduct a limited deposition of Plaintiff concerning the merits of the anticipated second amended complaint.
On July 14, 1998, Plaintiff moved for leave to amend the complaint, which asserted the original four counts, including statutory damage demands for each count of infringement. (Pl.'s 2d Am. Compl. ¶¶ 11(c), 18(c), 26(c), 35(c)) Counts five through seven now included, for the first time, claims of copyright infringement relating to the three photographs of Sister Fritz, Barbara Buono, and Jeff Warsh. (Pl.'s 2d Am. Compl. ¶¶ 37, 44, 51) Additionally, Plaintiff added count eight, an entirely new claim relating to the alleged copyright infringement of 125 photographs that Plaintiff alleges were sold through the New York Times News Service. (Pl.'s 2d Am. Compl. ¶¶ 57-63) Each photograph was listed in "Schedule A," which was appended to the complaint.
Defendants deposed Plaintiff on August 18, 1998, in order to help them respond to Plaintiff's motion for leave to amend the complaint. Significantly, Defendant devoted much of the questioning to the existence of a factual basis underlying Plaintiff's allegations contained in count eight of the second amended complaint. On August 19, 1998, the very next day, Plaintiff filed an amended second amended complaint (hereinafter, for the sake of clarity, "third amended complaint") that, according to Plaintiff's counsel, contained "no substantive differences, only minor typo-graphical errors and omissions." (Letter from Marcolini to Hon. Joel A. Pisano of 8/19/98, at 1) The third amended complaint stated that count eight was now based "[u]pon information and belief." (Pl's 3d Am. Compl. ¶¶ 60, 61)
Defendants filed their opposition to the motion for leave to amend on August 28, 1998. Plaintiff filed on September 8, 1998, a reply brief in support of his motion for leave to amend. The Court heard oral argument on September 28, 1998, and reserved judgment on Plaintiff's motion.
Federal Rule of Civil Procedure 15 governs the amendment of pleadings. Rule 15(a) provides that once a response to a party's pleading is served that pleading may be amended "only by leave of court or by written consent of the adverse party," and states further that "leave shall be freely given when justice so requires." A general presumption exists that favors permitting a party to amend his pleadings. See Boileau v. Bethlehem Steel Corp., 730 F.2d 929, 938 (3d Cir. 1984). Leave to amend a complaint should be granted freely absent undue delay or bad faith on the movant's part, or if the opposing party would not suffer undue prejudice. See Foman v. Davis, 371 U.S. 178, 182 (1962); Adams v. Gould, Inc., 739 F.2d 858, 864 (3d Cir. 1984).
It is proper to deny a motion for leave to amend, however, when the amendment would be frivolous, futile, or unduly prejudicial; when it would cause undue delay; or when there is a finding of bad faith. See Foman, 371 U.S. at 182. A trial court "may properly deny leave to amend where the amendment would not withstand a motion to dismiss." Massarsky v. General Motors Corp., 706 F.2d 111, 125 (3d Cir. 1983). The court has discretion whether or not to grant the motion for leave to amend, but denial of the motion without any legal reasoning is an abuse of discretion that is not in the spirit of the Federal Rules of Civil Procedure. See Foman, 371 U.S. at 182.
I. UNDUE DELAY
If a plaintiff has had sufficient opportunity to assert claims, but fails to do so, leave to amend may quite properly be denied. See 6 Charles Alan Wright et al., Federal Practice and Procedure § 1487 (2d ed. 1990). Court have repeatedly visited this issue, and the determination is highly fact sensitive. See id.
In Sauer v. Xerox Corp., 173 F.R.D. 78, 79 (W.D.N.Y. 1997), plaintiff filed a complaint asserting thirteen rights of action. See id. The court dismissed ten of those claims, and plaintiff subsequently moved for leave to file a second amended complaint that reasserted the three surviving rights of action and also alleged six additional claims. See id. After the court granted leave to amend all plaintiff's rights of action but one, and after defendant filed its answer and counterclaim, plaintiff moved for leave to file a third amended complaint. See id. This newest complaint asserted, in addition to the previously asserted claims, an entirely new contract claim. See id. Later, plaintiff yet again sought leave to file a "revised" third amended complaint. See id.
After setting forth the familiar black-letter law regarding leave to file an amended complaint, the court concluded that plaintiff had failed to take advantage of numerous opportunities to assert his claims. See id. at 80. The court opined that at some point during litigation a party must stand by his factual allegations. See id. Summarizing, the court stated that "failure to adequately plead . . . despite sufficient opportunity to do so is, by itself, a sufficient basis for denying leave to amend." Id.
The Third Circuit recognizes unexplained delay as a basis for denial of leave to amend. See Lorenz v. CSX Corp., 1 F.3d 1406, 1414 (3d Cir. 1993). In Lorenz, plaintiff filed a complaint, filed amended complaints in May and August 1987, and proposed later in the litigation to file yet another amended complaint. See id. Although the facts of Lorenz differ somewhat from the case at bar in that the proposed amendment in that case was requested three years after the action was filed, the Third Circuit determined that most of the facts alleged in the proposed amended pleading were available to plaintiff long before she filed the original complaint. See id. The court observed that plaintiff had numerous opportunities to correct her claim, but did not do so. See id. As such, the court concluded, "[h]er delay was unreasonable." Id.
A. Counts 1-4 of Plaintiff's Third Amended Complaint
As at least one court has noted, there comes a time in litigation when a party "must be required to stand upon the allegations he is asserting." Sauer v. Xerox Corp., 173 F.R.D. 78, 80 (W.D.N.Y. 1997). Plaintiff originally included in counts one through three claims for statutory damages, later deleted them, and now seeks to reassert those claims in the third amended complaint.
Counsel to the parties met and corresponded in late 1997 after Plaintiff filed his original complaint. Defendants followed up that meeting with a letter outlining why they believed that counts one through four of the original complaint did not provide a basis for statutory damages. See Letter from Reynolds to Marcolini of 12/18/97, at 2. The import of the letter is that the parties had some informal discussions about Plaintiff dropping his claim for statutory damages as to counts one through three. Defendants' counsel asserted that Plaintiff could not receive damages under the copyright statute because Plaintiff failed to register the photographs prior to the alleged unauthorized reprinting. See id. The Reynolds letter of December 12, 1997, also states that there was a continuing disagreement as to the viability of statutory damages for count four of the complaint.
That same day, Defendant's counsel replied to Reynolds's letter with a letter of her own, stating that Plaintiff intended to amend the complaint and drop the claim for statutory damages for counts one through three. See Letter from Marcolini to Reynolds of 12/18/98, at 1. The disputed claims for relief were dropped in the amended complaint, but Plaintiff still sought statutory damages for count four. Now, after Judge Walls has dismissed counts five through nine of the first amended complaint, Plaintiff makes a renewed assertion that he is entitled to statutory damages for counts one through three, which are the same actions complained of in counts one through three of the original complaint and that had been abandoned by Plaintiff.
The litigation cannot continue in this fashion. Plaintiff either has a claim to statutory damages or he does not. The record shows to a reasonable degree of certainty--after reading the original complaint, Reynolds's letter, Marcolini's response letter, and the first amended complaint--that Plaintiff abandoned his claim to statutory damages for counts one through three. This is a logical conclusion based on the record. Plaintiff's motion is denied as to counts one through three of the proposed amended complaint.
B. Counts 5-7 of Plaintiff's Third Amended Complaint
It appears based on the rules announced in Part I of the Discussion that Plaintiff's claims of infringement in counts five through seven cannot be included in his third amended complaint. On August 4, 1997, Plaintiff's counsel alerted the New York Times that Plaintiff was concerned about and would soon file suit over the alleged reprinting of the Sister Fritz, Barbara Buono, and Jeff Warsh photographs. In October 1997, Plaintiff filed his first complaint and it failed to assert any claim that the New York Times infringed D'Amico's copyright on the Fritz, Buono, or Warsh photographs. In addition, the first amended complaint did not reference these photographs.
Since before litigation began, though, Plaintiff disputed the propriety of Defendant's alleged reprinting of the Fritz, Buono, and Warsh photographs. "[S]ome courts have held that leave may be withheld if the moving party knew the facts on which the claim or defense sought to be added were based at the time the original pleading was filed and there is no excuse for his failure to plead them." 6 Charles Alan Wright et al., Federal Practice and Procedure § 1487 (2d ed. 1990). Plaintiff has offered the Court no adequate explanation for his sudden assertion of copyright infringement in counts five through seven. Indeed, Plaintiff's brief in support of his most recent motion for leave to amend devotes but one three-sentence paragraph explaining the addition of counts five through seven of the complaint.
Plaintiff has given the court neither a reason for his delay nor any legal justification for granting leave yet again to amend the complaint. Therefore, Plaintiff's motion is denied as to counts five through seven of the proposed third amended complaint.
C. Count 8 of Plaintiff's Third Amended Complaint
Plaintiff knew about the existence of the New York Times News Service for some time. Indeed, he testified in his deposition that shortly before October 6, 1995, he learned of the existence of the New York Times News Service from Barbara Mancuso of the New York Times. See D'Amico Dep. at 136:13--137:23.
This lawsuit was filed in October 1997. The complaint was amended in January 1998. After Judge Walls dismissed five of the nine counts of the first amended complaint, it was again amended in July 1998 to include the allegations contained in count eight of the second amended complaint. Finally, arguably minor details of the complaint were yet again amended in August 1998.
There is simply no adequate explanation in Plaintiff's briefs to the Court for his failure to include in the October or January complaints claims of which Plaintiff knew as early as October 1995. Plaintiff's motion for leave to amend the complaint to include count eight is denied.
Courts have recognized that futility is an appropriate, independent ground for denying leave to amend the complaint. See Allied Erecting & Dismantling Co. v. United States Steel Corp., 786 F. Supp. 1223, 1227 (W.D. Pa. 1992). An amendment to a complaint is futile if "the claim . . . is not accompanied by a showing of plausibility sufficient to present a triable issue." Harrison Beverage Co. v. Dribeck Importers, Inc., 133 F.R.D. 463, 468 (D.N.J. 1990).
A finding of futility requires an analysis under Federal Rule of Civil Procedure 12(b)(6). See Massarsky v. General Motors Corp., 706 F.2d 111, 125 (3d Cir. 1983). When considering a motion to dismiss under Rule 12(b)(6), a court must view all allegations in a light most favorable to the plaintiff. See Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir. 1990). Furthermore, the court must (1) accept as true the facts pleaded in the complaint and (2) accept any and all reasonable inferences derived from those facts. See Unger v. National Residents Matching Program, 928 F.2d 1392, 1400 (3d Cir. 1991). Although this determination does not require the parties to engage in formal motion practice upon the amended claim, it does require that the proposed assertion be "well-grounded in fact or law that it is not a frivolous pursuit." Harrison Beverage, 133 F.R.D. at 469.
Under the Copyright Act, specifically 17 U.S.C. § 504, an infringer is liable for the copyright owner's actual or statutory damages. Section 504(c) of Title 17 provides that the copyright owner may elect to recover statutory damages of "not less than $500 or more than $20,000 as the court considers just." Willful infringement allows the court, in its discretion, to "increase the award of statutory damages to a sum of not more than $100,000." 17 U.S.C. § 504(c)(2) (West 1996).
17 U.S.C. § 412 provides, however, that copyright registration is a prerequisite to the recovery of statutory damages. See RPM Management v. Apple, 943 F. Supp. 837, 840 (S.D. Ohio 1996). Statutory damages are not available for infringement of "unpublished work not yet the subject of copyright registration." See id. As explained in RPM Management, Congress foresaw the situation where a work is infringed as soon as it is produced. See id. Thus, Congress enacted 17 U.S.C. § 412(2), which permits the award of statutory damages to a copyright holder who registers his copyright within three months of publication.
A. Counts 1-4 of Plaintiff's Third Amended Complaint
Counts one through four allege that Defendants infringed Plaintiff's copyright in photographs of Frank Sztuk, a shadow, George Jacobs, and a Hindu temple. After reading the entire transcript of Plaintiff's deposition, it appears to the Court that as early as October 6, 1995, Plaintiff knew about possible reprinting of the Sztuk, shadow, and Jacobs photographs. Furthermore, Plaintiff's counsel had by her own admission drafted a complaint on or before August 4, 1997. That complaint presumably included counts one through three because they appeared in the original complaint. Finally, Plaintiff alleges that on September 14, 1997, he registered with the Register of Copyrights the Sztuk, shadow, and Jacobs photographs.
Taking as true all of Plaintiff's allegations, it is obvious that Plaintiff cannot recover statutory damages because he had not registered his copyright in 1995, the time at which Defendant allegedly resold the photographs to third parties. Plaintiff also cannot take advantage of the three month grace period for registration after infringement, because registration was in September 1997, almost two years after Plaintiff's initial complaint letter in October 1995. Plaintiff is ineligible, therefore, for statutory damages. Plaintiff apparently recognized this in January 1998 when he filed his first amended complaint and deleted any reference to statutory damages. It would be futile at this time to allow Plaintiff to assert a right of action in counts one through three for statutory damages, because the alleged infringement occurred prior to copyright registration. Thus, motion for leave to amend counts one through three is denied.
There appears to be a genuine issue of material fact relating to count four, however, and it might survive a motion to dismiss. Plaintiff stated at his deposition that he registered the Hindu temple photograph on February 28, 1997, because a photographer named Julio Ibarra who was related to the New York Times told Plaintiff that the newspaper might soon sell the photograph to Defendant New Age Journal. See D'Amico Dep. at 167-70. Count four has been in the complaint since the inception of litigation, and the Court's determination on counts one through three does not affect count four.
B. Counts 5-7 of the Third Amended Complaint
In an August 4, 1997, letter, Plaintiff's counsel complained to the New York Times about alleged unauthorized reprinting of Plaintiff's photographs. See Letter from Marcolini to Gardner of 8/4/97, at 1-2 (Exh. A of Reynolds's Certification). The letter references Plaintiff's own letter of October 6, 1995. See Letter from D'Amico to Mancuso of 10/6/95, at 1 (Attachment to D'Amico Certification). Most significantly, the August 1997 letter alleges that Defendant unlawfully reprinted (1) the Sister Fritz photograph on November 5, 1995, (2) the Barbara Buono photograph on November 12, 1995, and (3) the Jeff Warsh photograph on November 12, 1995. Plaintiff's third amended complaint alleges that these photographs were registered pursuant to the Copyright Act on September 14, 1997. There is simply no basis for the assertion of a right to statutory damages because plaintiff registered long after the alleged infringement. Any such amendment to the complaint would be futile. *fn1 Thus, leave to amend the complaint to add counts five through seven is denied.
C. Count Eight of the Third Amended Complaint
Count eight of the third amended complaint alleges that 125 photographs were unlawfully sold by the New York Times to third parties by using the New York Times News Service. Plaintiff seeks statutory damages for these 125 instances of alleged infringement. Unlike his assertions in counts one through seven, however, Plaintiff does not even allege that he has registered these photographs with the Register of Copyrights. It would be futile therefore to permit Plaintiff to amend his complaint to include allegations of infringement concerning these photographs.
Plaintiff may not seek statutory damages in counts one through three of the amended complaint because he unduly delayed the assertion of those claims. Further, amendment would be futile as to counts one through three because Plaintiff registered his copyrights long after Defendant allegedly resold the photographs. The Court's determination as to counts one through three does not affect the continued viability of count four.
Plaintiff may not amend the complaint to add counts five through seven because, again, he unduly delayed the assertion of these claims. Amending the complaint to add counts five through seven would also be futile because Plaintiff registered his copyrights long after Defendant allegedly reprinted the photographs.
Leave to amend count eight must also be denied. Plaintiff knew of the existence of the New York Times News Service, but did not sue on this claim in the original or first amended complaint. He has unduly delayed the assertion of count eight. In addition, granting leave to amend would be futile because Plaintiff does not allege that he registered any of the 125 photographs pursuant to the Copyright Act.
For the reasons stated above, Plaintiff's motion for leave to amend the complaint is denied. An appropriate Order follows.
cc: Hon. William H. Walls
JOEL A. PISANO, UNITED STATES MAGISTRATE JUDGE:
Currently before the Court is Plaintiff's motion for leave to file a second amended complaint, seeking to add four new counts as a basis for recovery. Defendants filed opposition, and the Court heard oral argument on September 28, 1998. For the reasons stated in the attached Opinion, Plaintiff's motion is
JOEL A. PISANO UNITED STATES MAGISTRATE JUDGE