Opinion
3:19-cv-01397-AC
08-04-2021
OREGON CATHOLIC PRESS, Plaintiff, v. VINCENT A. AMBROSETTI, individually and as trustee of the King's Minstrels Charitable Trust aka International Liturgy Publications, Defendant.
FINDINGS AND RECOMMENDATION
JOHN V. ACOSTA, United States Magistrate Judge.
Plaintiff Oregon Catholic Press (“OCP”) brings this declaratory judgment lawsuit against Defendant Vincent A. Ambrosetti (“Ambrosetti”) pursuant to 28 U.S.C. § 2201, seeking a declaration of non-infringement of copyrights associated with a collection of music. Presently before the court are OCP's Motion to Amend the Complaint (ECF No. 40), OCP's Motion to Consolidate (ECF No. 41), and Ambrosetti's Motion to Dismiss (ECF No. 33). For the following reasons, Ambrosetti's Motion to Dismiss should be denied, and OCP's motions to amend and consolidate should be granted.
Background
On August 27, 2019, Ambrosetti filed a complaint for copyright infringement against OCP and composer Bernadette Farrell (“Farrell”) in U.S. District Court for the Northern District of Indiana, Ambrosetti v. Oregon Catholic Press, et al, Indiana Case No. 3:19-cv-00682-JD-MGG (“First Indiana Copyright Infringement Action”). (Compl. ¶ 7, ECF No. 1.) In the First Indiana Copyright Infringement Action, Ambrosetti alleges he is the legal and beneficial owner of the copyright to the musical composition entitled “Emmanuel, ” and that OCP and Farrell infringed that work by marketing, selling, distributing, and licensing Farrell's song entitled “Christ Be Our Light.” (Id. ¶ 9.) Ambrosetti alleges that his ownership in “Emmanuel” as an individual work stems from a copyright registration for a collection of songs. (Id. ¶ 8.) Two weeks prior to filing the First Indiana Copyright Infringement Action, Ambrosetti applied for copyright registration for “Emmanuel” as an individual work. (Id.)
On September 3, 2019, OCP filed the instant action (“Oregon Declaratory Judgment Action”) alleging (1) OCP was the first to file because Ambrosetti does not own a registered copyright for “Emmanuel, ” and (2) “Christ Be Our Light” is not substantially similar to “Emmanuel” and seeking a declaration of non-infringement. (Compl., ECF No. 1.) On November 8, 2019, this court granted the parties' stipulated motion to stay resolution of the instant action until the First Indiana Action reached final disposition. (Stipulation at 2-3, ECF No. 14.)
On May 7, 2020, the Indiana court dismissed the First Indiana Copyright Infringement Action without prejudice, because Ambrosetti had not complied with the statutory requirement that a copyright be registered with the U.S. Copyright Office before commencing an infringement action. (Transfer Order at 3, ECF No. 38, Oregon Case No. 3:21-cv-00211-AC (“Transfer Order”).) On May 8, 2020, Ambrosetti filed a new action in Indiana against OCP and Farrell based on the same copyright infringement allegations (“Second Indiana Copyright Infringement Action”). In the Second Indiana Copyright Infringement Action, Ambrosetti supported his infringement allegations with a Certificate of Copyright Registration for “Emmanuel” issued on March 4, 2020.
On July 6, 2020, this court denied OCP's motion to lift the stay in the instant Oregon Declaratory Judgment Action, finding the first-to-file rule applied, that the Indiana copyright infringement action should be resolved first, and that the principles of judicial economy, consistency, and comity did not favor lifting the stay. (Order, ECF No. 27.)
Meanwhile, the parties undertook discovery in the Second Indiana Copyright Action. (Transfer Order at 4.) OCP then moved to transfer the Second Indiana Copyright Action to the District of Oregon, asserting - for the first time - that a 2017 Settlement Agreement reached between OCP and Ambrosetti stemming from a 2016 Oregon copyright action (“2016 Copyright Action”) must be interpreted to resolve the parties' positions. In the 2016 Copyright Action, OCP asserted that Ambrosetti had not obtained licenses to publish certain songs, including Farrell's “Christ Be Our Light, ” in a songbook and hymnal. (Transfer Order at 2.) The 2016 Copyright Action was not resolved on the merits; rather, it was resolved through the 2017 Settlement Agreement. Notably, the 2017 Settlement Agreement was amended on June 30, 2018, and included mutual releases as well as a forum-selection clause designating that disputes “shall be brought in the Oregon Federal District Court.” (Id. at 2.) In moving to transfer the Second Indiana Copyright Action, OCP argued Ambrosetti released his copyright claims through the 2017 Settlement Agreement and that the case must be transferred pursuant to the forum selection clause. (Id. at 4.) The Second Indiana Copyright Action was transferred to this court on February 8, 2021, and was randomly assigned to U.S. District Judge Michael H. Simon. Upon learning that the Oregon Declaratory Judgment Action remained pending but stayed, the Second Indiana Copyright Action was reassigned to this court and is now designated as Ambrosetti v. OCP, Case No. 3:21-cv-00211-AC.
On February 22, 2021, Ambrosetti filed a Motion to Dismiss the Oregon Declaratory Judgment Action (Mot. Dismiss, ECF No. 33). On March 10, 2021, OCP filed a Motion for Leave to File an Amended Complaint (Mot. for Leave to Amend., ECF No. 40), and a Motion to Consolidate the Oregon Declaratory Action with Ambrosetti v. OCP (Mot. Consol., ECF No. 41.) In this Finding and Recommendation, the court addresses each of the three pending motions.
Discussion
I. Ambrosetti's Motion to Dismiss
Ambrosetti requests that the court dismiss the instant action pursuant to Rules 12(b) and 41(b), and the Declaratory Judgment Act, contending that it is entirely duplicative of Ambrosetti v. OCP. Ambrosetti argues the court should decline to exercise its jurisdiction, citing Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 494 (1942), and Gov't Emps. Ins. Co. v. Dizol, 133 F.3d 1220, 1225 (9th Cir. 1998) (en banc). OCP responds that dismissal is unwarranted because there is a concern that Ambrosetti could dismiss the copyright action, depriving it of an opportunity to clear its reputation with a declaration of non-infringement.
The court observes that Ambrosetti identifies Rules 12(b) and 41(b) as bases for the motion to dismiss, but he does not articulate specific reasons for dismissal under those rules.
A. Legal Standards
The Declaratory Judgment Act, 28 U.S.C. § 2201(a), is an enabling act, which confers on federal courts “unique and substantial discretion in deciding whether to declare the rights of litigants.” Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995); see also R.R. Street & Co. Inc. v. Transport Ins. Co., 656 F.3d 966, 975 (9th Cir. 2011) (same). Under § 2201(a) “[i]n a case of actual controversy within its jurisdiction” district courts “may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). Thus, the exercise of jurisdiction is at the discretion of the district court and not an absolute right of a litigant. Wilton, 515 U.S. at 287; see also Dizol, 133 F.3d at 1223; Winstead v. State Farm Mut. Auto. Ins. Co., 669 Fed.Appx. 910, 910 (9th Cir. 2016) (same). “Even if the district court has subject matter jurisdiction, it is not required to exercise its authority to hear the case.” Huth v. Hartford Ins. Co. of the Midwest, 298 F.3d 800, 802 (9th Cir. 2002). “[A] District Court[, however, ] cannot decline to entertain such an action as a matter of whim or personal disinclination.” Id. at 803. When determining whether to retain jurisdiction in a properly filed declaratory judgment action, the court “must make a sufficient record of its reasoning to enable appropriate appellate review.” Id. Brillhart and its progeny set out three primary considerations when determining whether to exercise jurisdiction over a declaratory-judgment action: (1) avoiding needless determinations of state-law issues, (2) discouraging forum shopping, and (3) avoiding duplicative litigation. See Dizol, 133 F.3d at 1225 (discussing Brillhart factors); Varcak v. Envoy Mortg. LTD, 3:19-cv-00954-AC, 2019 WL 6887192, at *7 (D. Or. Nov. 22, 2019) (same), adopted 2019 WL 6883789 (Dec. 17, 2019). The Ninth Circuit also considers whether the action would: “(1) involve the needless determination of state law issues; (2) encourage the filing of declaratory actions as a means of forum shopping; (3) risk duplicative litigation; (4) resolve all aspects of the controversy in a single proceeding; (5) serve a useful purpose in clarifying the legal relations at issue; (6) permit one party to obtain an unjust res judicata advantage; (7) risk entangling federal and state court systems; or (8) jeopardize the convenience of the parties.” Allstate Ins. Co. v. Herron, 634 F.3d 1101, 1107 (9th Cir. 2011).
B. Analysis
Ambrosetti argues that this court should decline to exercise jurisdiction over OCP's declaratory judgment action. Ambrosetti contends dismissal is appropriate for three reasons: (1) the declaratory judgment action is entirely duplicative because the copyright action will necessarily address whether the “Emmanuel” and “Christ Be Our Light” are substantially similar and whether his lawsuit is barred by a release of claims; (2) the declaratory judgment action consists solely of anticipatory defenses; and (3) OCP's action constitutes “gamesmanship” and a tactical maneuver that should be dismissed.
Ambrosetti's reliance Brillhart is misplaced. The court finds that Brillhart abstention doctrine is inapplicable here because there is no parallel state court proceeding. See U.S. Specialty Ins. Co. v. Elcon Assocs., Inc., 3:17-cv-01658-BR, 2018 WL 2418546, at *5-6 (D. Or. May 29, 2018) (holding Brillhart did not apply to two parallel federal proceedings, noting Brillhart inapplicable absent pending state court proceedings); see also Scotts Co. LLC v. Seeds, Inc., 688 F.3d 1154, 1158 (9th Cir. 2012) (noting that a court may in its discretion, stay or dismiss a federal case in favor of related state proceedings when the action seeks only declaratory relief, citing Brillhart); Dizol, 133 F.3d at 1225 (recognizing that when other claims are joined with an action for declaratory relief, the district court should not decline to hear a claim for declaratory relief).
Moreover, even if the Brillhart-Allstate factors are applicable, nearly every factor weighs in favor of exercising jurisdiction here. The first factor is not applicable because the claims involve resolution of copyright issues, matters of federal law, and there will be no needless determination of state law issues. The second factor weighs heavily in favor of exercising jurisdiction because it does not appear that OCP was forum-shopping. The Indiana court transferred the copyright infringement action to this court based on the 2017 Settlement Agreement's forum selection clause which designated this court as the appropriate forum. On balance, OCP appears to be pursuing its action in the forum the parties previously designated as appropriate when it filed its action here, albeit somewhat belatedly asserted. Factors three, four, five, and six weigh in favor of exercising jurisdiction. As discussed in greater detail below, because the declaratory and copyright actions will be consolidated, there is no risk of duplicative litigation or one party gaining an unjust res judicata advantage, and all aspects of the controversy will be resolved by this court. Factor seven is not at issue because there is no pending state court action, eliminating any risk of entangling state and federal court systems. Factor eight is neutral here, as both cases are now assigned to this court. Thus, the court should exercise discretion and adjudicate the declaratory judgment action.
Ambrosetti contends that OCP's defenses of non-infringement and release are simply anticipatory defenses to his copyright infringement action, and that the court should not permit the declaratory judgment action to proceed. The court disagrees. Even if OCP now could allege its existing and proposed claims in the copyright infringement action as defenses or counterclaims, OCP raises legitimate concerns that Ambrosetti could dismiss the copyright action before it obtains full relief in the form of a declaration of non-infringement. Thus, the court finds that permitting these mirror actions to proceed on a consolidated basis will most fully serve the needs and convenience of the parties and provide a comprehensive solution of their conflicting claims. See Seattle Pac. Indus. Inc. v. Levi Strauss & Co., Case No. C97-1282D, 1997 WL 876921, at *2-3 (W.D. Wash. Dec. 12, 1997) (denying motion to dismiss declaratory judgment action in trademark case).
Concerning Ambrosetti's allegations of “gamesmanship” and “procedural fencing, ” the court notes that he initially stipulated to a stay in this case awaiting resolution of the First Indiana Copyright Action. And, Ambrosetti filed the First Indiana Copyright Action before obtaining the necessary copyright. The court further observes that neither party brought to this court's attention the potential relevancy of the 2017 Settlement Agreement, including its forum selection clause, when the motion to lift the stay was pending before this court from May to July 2020. And, as the Indiana Court observed, Ambrosetti did not mention the 2017 Settlement Agreement or its June 30, 2018 amendment in his copyright infringement complaint. (Transfer Order at 8.) Thus, the court finds Ambrosetti's allegations of gamesmanship are not well-taken.
To the extent Ambrosetti asserts that his copyright action is first-filed and that OCP's declaratory judgment action should be dismissed on that basis, that assertion is unpersuasive. Under the “first-to-file” rule, when cases involving the same parties and issues have been filed in two different districts, the second district court has discretion to transfer, stay, or dismiss the second case in the interest of efficiency and judicial economy. See Cedars-Sinai Med. Ctr. v. Shalala, 125 F.3d 765, 769 (9th Cir.1997). As the Ninth Circuit has explained, “[t]he first-to-file rule was developed to “serve[ ] the purpose of promoting efficiency well and should not be disregarded lightly.” Alltrade, Inc. v. Uniweld Prods., Inc., 946 F.2d 622, 625 (9th Cir. 1991). “While no precise rule has evolved, the general principle is to avoid duplicative litigation, and to promote judicial efficiency.” Barapind v. Reno, 225 F.3d 1100, 1109 (9th Cir. 2000) (internal quotations and citations omitted). Application of the first-to-file rule turns on three factors: (1) chronology of the two actions; (2) similarity of the parties; and (3) similarity of the issues. See Alltrade, 946 F.2d at 625; Herer v. Ah Ha Pub., LLC, 927 F.Supp.2d 1080, 1088 (D. Or. 2013).
However, the first-to-file rule “is not a rigid or inflexible rule to be mechanically applied, but rather is to be applied with a view to the dictates of sound judicial administration.” Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F.2d 93, 95 (9th Cir.1982); see also Alltrade, 946 F.2d at 627-28. A court “can, in the exercise of [its] discretion, dispense with the first-filed principle for reasons of equity.” See Alltrade, 946 F.2d at 628. “The circumstances under which an exception to the first-to-file rule typically will be made include bad faith, anticipatory suit, and forum shopping.” Id. (internal citations omitted).
Even if Ambrosetti's copyright infringement action is first-filed, as discussed above, Ambrosetti's allegations that OCP simply has been engaged in forum-shopping and gamesmanship by filing its declaratory judgment action are not well-taken. OCP's filing of the declaratory judgment action here and desire to gain certainty makes sense in these circumstances. See Seattle Pac. Indus., 1997 WL 876921, at *3 (denying motion to dismiss competing declaratory judgment action in light of trademark infringement action where parties previously entered settlement agreement, finding first-to-file inapplicable); see also Rhoades v. Avon Prods., Inc., 504 F.3d 1151, 1157 (9th Cir. 2007) (finding an action for declaration of non-infringement may be brought “if the plaintiff has a real and reasonable apprehension that he will be subject to liability if he continues to manufacture his product”); Google, Inc. v. Affinity Engines, Inc., Case No. C 05-0598 JW, 2005 WL 2007888, at *6-7 (N.D. Cal. Aug. 12, 2005), overruled on other grounds by Lacey v. Maricopa Cnty., 693 F.3d 896, 925 (9th Cir. 2012) (declining to dismiss declaratory judgment claim of non- infringement where the claim it was not burdensome and plaintiff wanted security against threatened future suit).
For all these reasons, the court should exercise its discretion and entertain this matter. Accordingly, Ambrosetti's motion to dismiss should be denied.
II. OCP's Motion to Amend the Complaint
A. Legal Standard
“[A] party may amend its pleading only with the opposing party's written consent or the court's leave.” Fed.R.Civ.P. 15(a)(2). Under Rule 15(a), “[t]he court should freely give leave when justice so requires.” Id. “Requests for leave to amend should be granted with ‘extreme liberality.'” Brown v. Stored Value Cards, Inc., 953 F.3d 567, 574 (9th Cir. 2020) (citing Moss v. U.S. Secret Serv., 572 F.3d 962, 972 (9th Cir. 2009)). “When considering whether to grant leave to amend, a district court should consider several factors including undue delay, the movant's bad faith or dilatory motive, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party, and futility.” Id. (citing Foman v. Davis, 371 U.S. 178, 182 (1962)); Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 986 (9th Cir. 1999). Of these factors, “prejudice to the opposing party carries the most weight.” Brown, 953 F.3d at 574 (citing Eminence Cap., LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003)). “Rule 15(a) is designed ‘to facilitate decision on the merits, rather than on the pleadings or technicalities.'” Chudacoff v. Univ. Med. Ctr. of S. Nev., 649 F.3d 1143, 1152 (9th Cir. 2011) (quoting U.S. v. Webb, 655 F.2d 977, 979 (9th Cir. 1981)). Generally, absent prejudice or a strong showing on the remaining factors, there is presumption in favor of granting a motion to amend. Smith v. City of Dalles, Case No. 6:16-cv-1171-SI, 2021 WL 1040380, at *2 (D. Or. Mar. 17, 2021).
B. Analysis
OCP moves to amend its complaint to make two primary substantive changes: (1) to add Farrell as a co-plaintiff; and (2) to add claim seeking declaratory relief that the 2017 Settlement Agreement released any claim that “Christ Be Our Light” infringes the song “Emmanuel.” (Mot. Am. Compl. Ex. 1, ECF No. 40-1.) OCP argues that it is acting in good faith following the transfer of the copyright infringement action from Indiana. OCP highlights that this case has been stayed, and that it promptly moved to amend following a lift of the stay on March 9, 2021. OCP also argues that there will be no undue prejudice to Ambrosetti because the proposed amendments do not stray from the operative facts in the original complaint. Additionally, OCP argues that this case is in its early stages, discovery remains open, and that the issues presented in the claims have been discussed with Ambrosetti's counsel.
Ambrosetti does not challenge proposed amended complaint on the grounds of bad faith, undue delay, prejudice, or futility. Rather, Ambrosetti asserts that the proposed amendments to the complaint should be denied because it would render the declaratory judgment action duplicative of his copyright action. Ambrosetti contends that OCP's declaratory judgment action is tactical maneuver, would serve no useful purpose, and his motion to dismiss should be granted and OCP's motion to amend should be denied as moot. (Def.'s Opp'n Mot. Amend at 3, ECF No. 44.) The court disagrees.
As discussed above with respect to the motion to dismiss, the court finds that the Ambrosetti's allegations of tactical maneuvering are not well-taken. The court finds that OCP is not acting in bad faith and there has been no undue delay in seeking amendment. As OCP highlights, there is no prejudice to Ambrosetti. In this case, amending OCP's declaratory judgment action will add no discovery burden to the parties because such issues necessarily will be addressed in the copyright infringement action. The court will necessarily determine the issues of ownership and infringement of “Emmanuel” and “Christ Be Our Light” and whether such claims were released in the 2017 Settlement Agreement when considering both actions.
Because Ambrosetti has made no showing of bad faith, undue delay, futility or undue prejudice, under the court's duty to freely provide leave to amend, OCP's motion to amend the complaint should be granted.
III. OCP's Motion to Consolidate
A. Legal Standards
Rule 42(a) authorizes the court to consolidate actions involving “common question[s] of law or fact.” Fed.R.Civ.P. 42(a)(1). The court may consolidate for hearing or trial any and all matters at issue, including the entire case. Id. “In making this determination, the court must weigh ‘the interest in judicial convenience against the potential delay, confusion and prejudice caused by consolidation.'” Evraz Inc., N.A. v. Travelers Indem. Co., Case No. 3:11-cv-00233-AC, 2013 WL 6241984, at *1 (quoting Paxonet Commc'ns, Inc. v. TranSwitch Corp., 303 F.Supp.2d 1027, 1028 (N.D. Cal. 2003)). “The purpose of Rule 42(a) is to improve trial court efficiency by avoiding unnecessary duplication of evidence and procedures and to avoid the risk of inconsistent adjudications.” Wilson v. HGC, Inc., Case No. 3:16-cv-64-SI, 2016 WL 4432690, at *1 (D. Or. Aug. 18, 2016). The district court has broad discretion to decide whether to consolidate cases. In re Adams Apple, Inc., 829 F.2d 1484, 1487 (9th Cir. 1987).
B. Analysis
OCP seeks to consolidate the declaratory judgment action with the copyright infringement action for all pretrial and trial purposes. Ambrosetti opposes consolidation for the same reasons set forth in his motion to dismiss and argues the motion to consolidate should be denied as moot.
As noted, Ambrosetti's motion to dismiss should be denied and fails to present any basis for denying consolidation. As discussed at length above, the declaratory judgment action and copyright infringement actions are nearly identical. After the proposed amended complaint is filed adding Farrell as a party and the release claim, the two actions will likely become mirror images. Thus, the common issues of law and facts weigh heavily in favor of consolidation. Moreover, the cases stem from the same set of facts - that is whether the work “Christ Be Our Light” infringes the copyright to the work “Emmanuel.” While the procedural postures of the cases are not identical, both cases are in the early phases of discovery. Both cases have been assigned to this court, promoting judicial economy and reducing the threat of inconsistent rulings. Further, consolidating these cases for trial will necessarily promote efficiencies because the same legal issues will be determined and the same witnesses likely will be utilized, thereby avoiding unnecessary costs to the parties and witnesses.
For all these reasons, OCP's motion to consolidate should be granted.
Conclusion
Based on the foregoing, Ambrosetti's Motion to Dismiss (ECF No. 33) should be DENIED, and OCP's Motion for Leave to File Amended Complaint (ECF No. 40) and Motion to Consolidate (ECF No. 41) should be GRANTED.
Scheduling Order
This Findings and Recommendation will be referred to a district judge for review. Objections, if any, are due within fourteen (14) days. If no objections are filed, then the Findings and Recommendation will go under advisement on that date.
If objections are filed, then a response is due within fourteen (14) days after being served with a copy of the objections. When the response is due or filed, whichever date is earlier, the Findings and Recommendation will go under advisement.