Opinion
ORDER DENYING DEFENDANT'S MOTION TO STRIKE PARAGRAPH 29 OF PLAINTIFF'S FIRST AMENDED COMPLAINT
MARGARET MORROW, District Judge.
This action concerns plaintiff Sofia Stewart's claim that defendants willfully infringed her copyrighted literary works. Stewart alleges, inter alia, that defendants have willfully infringed two copyrighted works, both titled "The Third Eye, " "and used [them] as their own property in the making of the motion pictures The Matrix I, II, and III, and The Terminator I, II, and III." Defendants have moved to strike paragraph 29 of plaintiff's First Amended Complaint under Rule 12(f) of the Federal Rules of Civil Procedure, asserting that it refers to purported settlement negotiations that are inadmissible under Rule 408 of the Federal Rules of Evidence.
First Amended Complaint, ¶ 44.
The parties dispute whether plaintiff complied with the meet and confer requirements set forth in Local Rule 7-3. (See Plaintiff's Response To Motion To Strike Paragraph 29 Of First Amended Complaint ("Pl.'s Response") at 2; Defendants' Reply Brief In Support Of Their Motion To Strike Paragraph 29 Of Plaintiff's First Amended Complaint ("Defs.' Reply") at 1-2.) Because it appears there was some attempt to comply with the meet and confer requirement, the court declines plaintiff's request that it deny defendants' motion for failure to satisfy Local Rule 7-3. It further declines plaintiff's request that it entertain a motion for attorneys' fees and sanctions. The court cautions counsel, however, that it expects compliance with the letter and spirit of the Local Rules, and that it will enforce those rules in the future.
I. FACTUAL BACKGROUND
Plaintiff Sophia Stewart is a screenwriter, composer and editor who works under the pseudonym, Zenia Kavala. On or about May 1, 1981, Stewart created a six-page screen treatment titled "The Third Eye, " which was a "scientific account of futuristic life." On or about November 1, 1983, she created a 45-page manuscript titled "The Third Eye." Stewart registered a copyright in the six-page treatment on February 2, 1983. She registered a copyright in the 45-page manuscript on February 6, 1984.
Id., ¶ 2.
Id., ¶ 15.
Id., ¶ 16.
Id., ¶ 2, Exhs. 1, 3.
In the summer of 1986, Stewart sent her six-page treatment and 45-page manuscript to Andy and Larry Wachowski in response to an advertisement in a national magazine seeking science fiction works. The Wachowskis did not respond to Stewart's submission, and did not return the copyrighted works.
Id., ¶¶ 23-24.
Id., ¶ 25.
Stewart alleges that, in March and April 1999, she discovered that the Wachowskis had produced a comic book series and a film titled "The Matrix." She concluded that the comic book series and "The Matrix, " which had been produced and distributed by Warner Brothers, infringed her copyright in both the treatment and the manuscript. As a result, she communicated with Warner Brothers, asserting that it had infringed her copyrighted works, and demanding that it cease its infringing activities. Stewart continued to correspond with Warner Brothers about her claim through February 2001.
Id., ¶¶ 25, 26.
Id., ¶ 38.
Id., ¶ 26.
Id., ¶¶ 28, 39-42.
Id., ¶¶ 40-42, 47.
Stewart also alleges that the films "Terminator I, " "Terminator II, " and "Terminator III, " infringe her copyrighted works. She contends that James Cameron, Gale Ann Hurd, Joel Silver and the Wachowskis misappropriated or acquired her works and used them to create "Terminator II." She further contends that Warner Brothers and Sony Pictures Entertainment Corporation funded the production and/or distribution of "Terminator III."
Id., ¶¶ 44, 54.
Stewart alleges that Hemdale Film Corporation (a purported RICO enterprise) is a corporation that was used by Cameron and Hurd "to effect transfers of monies and/or properties received from the commercial exploitation of intellectual property rights." ( Id., ¶ 52.) Hemdale filed a bankruptcy petition in 1992, which Stewart alleges was "motivated in bad faith for purposes of discharing any and/or all claims of creditors." ( Id., ¶ 53.)
Id., ¶ 54.
Paragraphs 28 and 29 of plaintiff's First Amended Complaint state:
"28. In April, 1999, after plaintiff submitted written notification to immediately cease and desist from further infringing activities and a demand for compensation arising from such infringing activities, Warner Brothers' general counsel, John Schulman, telephoned plaintiff and told plaintiff that Warner Brothers wanted to resolve this matter in a discrete, confidential manner, including remunerating plaintiff. Schulman further told plaintiff that Warner Brothers would refer plaintiff to counsel for purposes of facilitating and furthering the resolution of this matter. Schulman told plaintiff that attorney Judy Neulak, in house counsel at Warner Brothers, would work with plaintiff in this regard.
29. Plaintiff spoke with Neulak in April, 1999, by telephone to discuss the matter. Neulak specifically told plaintiff not to negotiate a settlement because Neulak told plaintiff that she, Neulak, knew for a fact that Warner Brothers, by and through their employees and representatives, had copied plaintiff's protected literary works, including the fact that Neulak personally witnessed the infringing activities herself at Warner Brothers. Neulak asked plaintiff if she had any copies of her book left, and plaintiff affirmed that she did. Neulak then specifically told plaintiff to retain plaintiff's protected literary works as evidence, which plaintiff reasonably interpreted and construed... to mean the protected literary works would be necessary for purposes of any prospective copyright infringement litigation plaintiff would initiate against Warner Brothers, and others."
Id., ¶¶28-29. The court quotes paragraph 28 to provide context for the communications recited in paragraph 29. Defendants do not seek to strike paragraph 28.
Defendants seek to strike paragraph 29 on the grounds that Neulak's purported statements were made in the course of settlement negotiations, and are therefore inadmissible under Rule 408 of the Federal Rules of Evidence.
Although other paragraphs in the complaint appear to detail pre-suit communications regarding plaintiff's claim against Warner Brothers (see, e.g., id., ¶¶39, 40, 41, 42), defendants have not moved to strike these paragraphs.
II. DISCUSSION
A. Legal Standard Governing Motions To Strike
Rule 12(f) provides that a court "may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." FED.R.CIV.PROC. 12(f). Motions to strike are generally regarded with disfavor because of the limited importance of pleading in federal practice, and because they are often used as a delaying tactic. See Lazar v. Trans Union LLC, 195 F.R.D. 665, 669 (C.D. Cal. 2000); Bureerong v. Uvawas, 922 F.Supp. 1450, 1478 (C.D. Cal. 1996); Colaprico v. Sun Microsystems, Inc., 758 F.Supp. 1335, 1339 (N.D. Cal.1991). Given their disfavored status, courts often require "a showing of prejudice by the moving party" before granting the requested relief. Securities and Exchange Commission v. Sands, 902 F.Supp. 1149, 1166 (C.D. Cal. 1995) (citations omitted). The possibility that issues will be unnecessarily complicated or that superfluous pleadings will cause the trier of fact to draw "unwarranted" inferences at trial is the type of prejudice that will support the granting of a motion to strike. See Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1528 (9th Cir. 1993) (holding that the district court properly struck lengthy, stale and previously litigated factual allegations to streamline the action), rev'd. on other grounds, Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994).
Courts have used Rule 12(f) to strike allegations from complaints that detail settlement negotiations within the ambit of Rule 408. See, e.g., Philadelphia's Church of Our Savior v. Concord Township, No. Civ.A. 03-1766, 2004 WL 1824356, *2 (E.D. Pa. July 27, 2004) ("While Rule 408 does not apply to pleadings directly, repeated decisions from this Court have held that allegations in a complaint may be stricken, under Rule 12(f), as violative of these policies"); United States ex rel. Alasker v. CentraCare Health Systems, Inc., Civ. A. No. 99-106, 2002 WL 1285089, *2 (D. Minn. June 5, 2002) ("Under Rule 408, evidence of conduct or statements made in compromise negotiations is inadmissible to prove liability....Although this is a rule of evidence, courts have routinely granted motions to strike allegations in pleadings that fall within the scope of Rule 408"); Kelly v. L.L. Cool J., 145 F.R.D. 32, 40 (S.D.N.Y. 1992) (granting defendant's motion to strike portions of a complaint that referenced settlement discussions under Rule 408 as immaterial and potentially prejudicial); Agnew v. Avdin Corp., Civ. A. No. 88-3436, 1988 WL 92872, *4 (E.D. Pa. Sept. 6, 1988) (striking parts of a complaint pursuant to Rule 408 because they referenced settlement negotiations for the purpose of showing liability).
B. Whether Paragraph 29 Should Be Stricken
Defendants also request that the court strike equivalent paragraphs in plaintiff's RICO case statement. As the court has stricken the case statement in its entirety, it need not consider this aspect of the motion.
Rule 408 of the Federal Rules of Evidence states:
"Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations is likewise not admissible. This rule does not require the exclusion of any evidence otherwise discoverable merely because it is presented in the course of compromise negotiations. This rule also does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness, negativing a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution." FED. R. EVID. 408.
Defendants contend that the allegations set forth in paragraph 29 are untrue, and that, even if true, the paragraph describes statements made during the course of a settlement negotiation. "The purpose behind Rule 408 is the promotion of nonlitigious solutions to disputes.'" Catullo v. Metzner, 834 F.2d 1075, 1078-79 (1st Cir. 1987) (quoting Reichenbach v. Smith, 528 F.2d 1072, 1074 (5th Cir. 1976)). "The rule protects parties to a settlement negotiation from adverse consequences when the negotiations fail; admissions made during the course of the negotiations may not be introduced as evidence of liability on the underlying claim - such admissions may, however, be introduced for other purposes." Id; see also Brocklesby v. United States, 767 F.2d 1288, 1292 (9th Cir. 1985). The parties here dispute whether the statements alleged in paragraph 29 were made during the course of settlement negotiations. They also dispute whether the statements will be offered as evidence of liability.
Defendants' Memorandum Of Points And Authorities In Support Of Defendants' Motion To Strike Paragraph 20 Of Plaintiff's First Amended Complaint And All Equivalent Paragraphs In The RICO Case Statement ("Defs.' Mem.") at 4.
Id.
Defendants contend that Neulak's purported statements fall within Rule 408 because they are "statements made in compromise negotiations." FED. R. EVID. 408. "[C]ompromise negotiations' do not always have a recognizable beginning and end like a trial, a deposition, or other litigious activities." 23 Charles A. Wright & Kenneth W. Graham, FEDERAL PRACTICE AND PROCEDURE: EVIDENCE, § 5307, at p. 228 (1980). Courts have devised two means of determining whether a statement was made "in" compromise negotiations:
"One interpretation is that the word is purely temporal, i. e., the only question is when the statement was made. This reading is likely to be coupled with an interpretation of compromise negotiations' as referring to an event; that is, the court first determines if any compromise negotiations took place, then decides if the statement was made in the course of the negotiations. But in' can also be interpreted in a functional sense; i.e., was the purpose of the statement to further a compromise? The functional view is likely to be used by courts that have interpreted compromise negotiations' to refer to a state of mind rather than an event. Such courts will ask if the speaker was seeking to reach a compromise, then exclude the statement if it was germane to that purpose." Id. at 233.
Compare General Leaseways v. National Truck Leasing Association, 830 F.2d 716, 724, n. 12 (7th Cir. 1987) (affirming the district court's conclusion that evidence of a telephone conversation that led to a written offer of settlement was not barred by Rule 408 even though settlement was mentioned during the call because "the suggestions made by Mr. Ehlers in the telephone call were not made in the context of a settlement of this lawsuit, even though the subsequent settlement letter' did refer back to the call") with Raybestos Products Co. v. Younger, 54 F.3d 1234, 1241 (7th Cir. 1995) ("To determine whether Younger sent his letter as an attempt to compromise a claim, or rather to intimidate the plaintiff, this court must look at the totality of the circumstances, carefully reviewing the contents of the letter and the timing of its delivery. Upon review of the record and the atmosphere in which this letter was sent, we conclude that Younger volunteered this letter and that no settlement arrangements or discussion had been initiated by Raybestos against whom Younger was then making various defamation claims").
If the "functional view" of "in compromise negotiations" is used, it would appear that Neulak's comments were not made "in compromise negotiations." As alleged by plaintiff, Neulak's remarks were not designed to foster settlement. Rather, they were directed at preventing compromise of the claim. The "functional view" considers the state of mind of the speaker to determine whether he or she was seeking to reach a compromise. It is difficult to envision any circumstance in which a person would tell another "not to negotiate a settlement" with the intention of facilitating a settlement. See Ullmann v. Olwine, Connelly, Chase, O'Donnell & Weyher, 123 F.R.D. 237 (S.D. Ohio 1987) ("For Rule 408 to be applicable, the Court must first determine that compromise negotiations were in fact happening. But no such thing was occurring here. Mr. Taylor never responded to the letters or treated them as offers to settle. In large part the letters consist of Ms. Ullmann's demands upon Taylor and threats of litigation. The purpose of Rule 408 is to encourage dispute resolution, not to encourage threatening litigation by protecting admissions made in such threats.... Considering the correspondence as a whole, the Court finds that the purpose of Rule 408 would not be served by excluding those portions of the correspondence relied upon in this opinion").
If the court were to adopt the "temporal view" of "in compromise negotiations, " however, it would more likely find, based on the allegations contained in the complaint, that Neulak's remarks were made during one of a series of communications directed at resolving Stewart's disputed claim that Warner Brothers had infringed her copyrighted works. Stewart alleges that Warner Brothers' General Counsel, John Schulman, directed her to speak with Neulak "for the purpose[] of facilitating and furthering the resolution of this matter, " and that her conversation with Neulak occurred shortly thereafter.
First Amended Complaint, ¶ 28.
As the complaint provides no further information concerning Neulak's conversation with Stewart, however, it is not possible to determine, on the face of the pleading, which view of "in compromise negotiations" would best further the policy rationale of Rule 408, and which should be adopted by the court. Because the issue has been raised in a motion to strike, the court must view the pleadings in the light most favorable to the non-moving party. As a consequence, it concludes that plaintiff may be able to prove a set of facts that would support admission of Neulak's statements at trial because they were not made "in compromise negotiations" as that term is used in Rule 408.
Even if Neulak's comments are found to have been made "in compromise negotiations, " moreover, plaintiff contends that they are admissible not to "prove liability for or invalidity of the claim, " but "for another purpose." FED. R. EVID. 408. Specifically, she contends that Neulak's comments are admissible to prove Warner Brothers' knowledge and state of mind. See Bankcard America, Inc. v. Universal Bankcard Systems, Inc., 203 F.3d 477, 484 (7th Cir. 2000) ("Courts have admitted evidence of offers or agreements to compromise... to show the defendant's knowledge and intent"); Thompson v. Safeway, Inc., No. 01 C 3260, 2002 WL 500547, *2 (N.D. Ill. Apr. 2, 2002) ("Courts have routinely admitted evidence of offers or agreements to compromise for purposes of rebuttal, for purposes of impeachment, or to show the defendant's knowledge and intent").
At least one court has have held, however, that this exception applies only to settlement agreements or the occurrence of settlement negotiations, not to communications that take place during those negotiations. See Goodyear Tire & Rubber Co. v. Chiles Power Supply, Inc., 332 F.3d 976, 981 (6th Cir. 2003) ("Julian has not presented evidence of any case where the Rule 408 exceptions have been used to allow settlement communications into evidence for any purpose. Rather, the exceptions have been used only to admit the occurrence of settlement talks or the settlement agreement itself for another purpose'").
Certainly, Warner Brothers' knowledge that its production infringed plaintiff's works is relevant to proof of willful copyright infringement. See Danjaq v. Sony Corp., 263 F.3d 942, 957 (9th Cir. 2001) ("the term willful' refers to conduct that occurs with knowledge that the defendant's conduct constitutes copyright infringement'"). Nonetheless, plaintiff's argument that the statements are relevant to prove knowledge is too vague to permit the court to determine their admissibility at this time. See United States v. Cooper, 283 F.Supp.2d 1215, 1228 (D. Kan. 2003) ("The government does argue generally that the admissions are relevant in proving knowledge and intent, but it does not articulate with enough specificity for this court to conclude that the evidence is being properly offered for another purpose").
Whether to grant a motion to strike is within the sound discretion of the district court. Fantasy, supra, 984 F.2d at 1528. In exercising its discretion, the court views the pleadings in the light most favorable to the non-moving party (see In re 2TheMart.com Securities Litigation, 114 F.Supp.2d 955, 965 (C.D. Cal. 2000)), and resolves any doubt as to the relevance of the challenged allegations in favor of plaintiff. Wailua Assocs. v. Aetna Casualty and Surety Co., 183 F.R.D. 550, 553-54 (D. Haw. 1998) ("Matter will not be stricken from a pleading unless it is clear that it can have no possible bearing upon the subject matter of the litigation; if there is any doubt as to whether under any contingency the matter may raise an issue, the motion may be denied..."); see also Dah Chong Hong, Ltd. v. Silk Greenhouse, Inc., 719 F.Supp. 1072, 1073 (M.D. Fla. 1989) ("Motions to strike on the grounds of insufficiency, immateriality, irrelevancy, and redundancy are not favored, often being considered time wasters, ' and will usually be denied unless the allegations have no possible relation to the controversy and may cause prejudice to one of the parties").
Given the uncertainties that exist regarding the admissibility of Neulak's statements, the disfavored status of motions to strike, and the absence of any allegations by defendants that they are prejudiced by the presence of these statements in the complaint, the court declines to strike paragraph 29 at this time. Rather, defendants may move to exclude evidence of the conversation, if appropriate, at a later stage of the litigation. See Yankelevitz v. Cornell University, No. 95 CIV. 4593 PKL, 1997 WL 115651 (S.D.N.Y. Mar. 14, 1997) (declining to find that an amendment that purportedly concerned settlement negotiations was futile because "it [was] not clear that the amendments could properly be stricken as relating to settlement negotiations, especially given the general disfavor with which motions to strike are generally viewed"); Eskofot A/S v. E.I. Du Pont De Nemours & Co., 872 F.Supp. 81, 94 (S.D.N.Y. 1995) (declining to strike allegations, despite strong reservations regarding plaintiff's contention that the allegations did not relate to settlement negotiations, because it was unclear whether or not the discussions referenced constituted negotiations).
IV. CONCLUSION
For the foregoing reasons, defendant's motion to strike paragraph 29 of plaintiff's first amended complaint is denied without prejudice to their right to seek exclusion of any evidence probative of the allegations as appropriate in any subsequent proceeding.