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Archer v. Holmes

United States District Court, N.D. Georgia, Atlanta Division

January 23, 2018

LONDON HOLMES p/k/a We Got London on da Track, et al., Defendants.


          THOMAS W. THRASH, JR. United States District Judge.

         This is a copyright infringement case. It is before the Court on the Defendant London Holmes' Motion to Dismiss [Doc. 20], and the Defendant Songs of YSL Music Publishing's Motion to Dismiss [Doc. 24], to which other Corporate Defendants have joined [Docs. 58, 65].[1] For the following reasons, Holmes' Motion to Dismiss [20] is GRANTED in part and DENIED in part, and the Corporate Defendants' Motions to Dismiss [Docs. 24, 58, 65] are GRANTED.

         I. Background

         This dispute stems from the Defendant Holmes' alleged refusal to give credit to or share profits with the Plaintiff stemming from the Plaintiff's alleged co-authorship or sole-authorship of twenty-nine different sound recordings.[2]According to the Complaint, the Plaintiff, Arsenio Archer, and Holmes began a professional relationship in June of 2014 as music producers, the goal of which was to co-author and co-produce songs for music artists.[3] Archer agreed to the relationship in reliance on Holmes' representation that he would receive an equal share of any income generated from sound recordings which he helped to produce.[4] During the course of their working relationship, Archer exercised “complete creative freedom” to alter the sound recordings and produced “essential elements to complete each project.”[5]

         At some point, Holmes began to claim sole production credits for both the works he created jointly with Archer and the works Archer claims he authored himself.[6] Holmes also began to make various licensing agreements with publishers, distributors, and record labels without obtaining Archer's consent to do so.[7] Meanwhile, Archer claims he has not been compensated or credited as an author or producer of the recordings.[8]

         Archer filed this action on June 5, 2017, against Holmes and the Corporate Defendants. In his original Complaint, Archer alleged eight counts in all. In Count I, he sought a declaratory judgment against all Defendants establishing his ownership rights in the sound recordings. In Count II, he sought an accounting of all income generated from the sound recordings. In Counts III and IV, Archer claimed copyright infringement against Holmes and the Corporate Defendants, respectively. In Count V, Archer claimed vicarious copyright infringement against the Corporate Defendants. In Count VI, he alleged violations of the Lanham Act. Lastly, Archer included a claim for fraud against Holmes in Count VII, and claims for unjust enrichment against all of the Defendants in Count VIII.

         Since filing the Complaint, Archer has voluntarily dismissed Counts IV-VI against all Defendants, and partially dismissed Count III against Holmes. All that remains, therefore, are claims for declaratory judgment and accounting against all Defendants (Counts I-II), a claim for copyright infringement against Holmes for the two songs Archer claims he solely authored (Count III), one claim for fraud against Holmes (Count VII), and claims for unjust enrichment against all Defendants (Count VIII). Holmes now moves to dismiss the fraud and unjust enrichment claims against him. The Corporate Defendants, [9] meanwhile, move to dismiss Archer's unjust enrichment claims. The Court will address the claims against Holmes and the Corporate Defendants separately.

         II. Legal Standard

         A complaint should be dismissed under Rule 12(b)(6) only where it appears that the facts alleged fail to state a “plausible” claim for relief.[10] A complaint may survive a motion to dismiss for failure to state a claim, however, even if it is “improbable” that a plaintiff would be able to prove those facts; even if the possibility of recovery is extremely “remote and unlikely.”[11] In ruling on a motion to dismiss, the court must accept the facts pleaded in the complaint as true and construe them in the light most favorable to the plaintiff.[12] Generally, notice pleading is all that is required for a valid complaint.[13] Under notice pleading, the plaintiff need only give the defendant fair notice of the plaintiff's claim and the grounds upon which it rests.[14]

         III. Discussion

         A. Claims against Holmes

         Section 301(a) of the Copyright Act expressly preempts all legal or equitable rights that “are equivalent to any of the exclusive rights within the scope of copyright . . . .”[15] The parties agree that the sound recordings at issue are governed by the Copyright Act. The only question is whether Archer's claims for fraud and unjust enrichment are “equivalent to” Archer's potential copyright claims.

         Courts in this Circuit have said that state laws are not preempted if they require plaintiffs to prove additional elements over and above those necessary for copyright claims.[16] As the Eleventh Circuit has made clear, however, not just any extra element will do. Rather, only that extra element which “changes the nature of the action so that it is qualitatively different from a copyright infringement claim” will serve to prevent preemption.[17] Put another way, state law claims are equivalent to, and thus preempted by, copyright infringement claims unless they are substantively different from one another.

         Turning to the case at hand, though the fraud and copyright claims are based on similar facts - Holmes' licensing of the recordings without Archer's permission - the fraud claim requires proof that Holmes intentionally misled Archer via a false representation.[18] This false representation, similar to breach of duty in trade secrets cases, is an essential element of a fraud claim that is not present in a copyright claim.[19] Because the false representation of a material fact is not only a required element, but in truth the “gravamen” of a fraud claim, it adds the extra element that qualitatively distinguishes Archer's fraud claim from copyright infringement.[20] The fraud claim, therefore, is not preempted by the Copyright Act.

         But the same cannot be said for Archer's unjust enrichment claim. Under Georgia law, unjust enrichment applies where “there is no legal contract and when there has been a benefit conferred which would result in an unjust enrichment unless compensated.”[21] These claims are generally regarded as equivalent to copyright claims and, therefore, preempted.[22] This is because, “under these quasi-contractual theories, the plaintiff need only prove that the defendant was unjustly enriched through the use of her idea or work.”[23] The heart and soul of such a claim is the violation of the copyright.

         Using the facts of this case as an example, the gist of Archer's claim for unjust enrichment is that Holmes failed to pay him money he was owed as a co-owner in the works, and that Holmes should not be allowed to be unjustly enriched by his unauthorized use of the sound recordings. No. other elements - like a breach of fiduciary duty, a false representation, or a breach of a promise in a contract - need to be proven other than Holmes' violation of Archer's rights as the owner of the copyright. This is no different from a copyright claim.

         The Plaintiff counters that while quasi-contract claims (e.g., unjust enrichment) may be preempted, contracts implied-in-fact are not necessarily preempted. Because he alleged Holmes promised to pay him for his work in one paragraph of the Complaint, [24] the Plaintiff contends that Holmes breached a contractual promise and that because this is an element not present in a copyright claim, his claim should survive as a result. The Plaintiff is correct that there is a crucial distinction between quasi-contract claims and implied-in-fact contract claims. Whereas a quasi-contract is a “fictitious contract” created by courts to prevent injustice, a contract implied-in-fact is “a true contract that arises from the tacit agreement of the parties.”[25] Claims based on quasi-contract are equitable claims, while claims based on contracts implied-in-fact are regular breach of contract claims. As discussed in the previous paragraph, quasi-contract claims - like unjust enrichment - are almost always preempted. Breach of contract claims, on the other hand, are not necessarily so if a plaintiff can show that rights separate from those he held as a copyright owner were violated.[26]

         But while the Plaintiff certainly deserves credit for articulating this somewhat knotty distinction, the Court does not see how it is relevant here as the Plaintiff's Complaint never asserts a claim for breach of contract. The Plaintiff may not successfully argue in a response brief to a motion to dismiss that one throwaway allegation buried deep in the Complaint suddenly serves as the basis for an entirely new cause of action. But even if he could, this novel contract claim would still fail. While courts have found promises to pay contained in implied contracts sufficient to overcome preemption, [27] contract claims “which seek[ ] to enforce only rights that copyright law itself accords plaintiff” are preempted because a promise to do that which copyright law already requires does not contain the “extra element” required to prevent preemption.[28]

         In this case, Holmes allegedly promised to “split the income generated from the sound recordings . . . .”[29] He did not promise to pay Archer for his labor, to give Archer an interest in some unrelated asset, or to assign credit in any particular way. The only promise Holmes made was to pay Archer a co-owner's share of any income generated from works of which he was to be a co-owner. This “promise” is merely an acknowledgment of that which Archer would already enjoy as a co-owner or sole owner of the copyrights.[30] Any breach of this “promise” would also be a violation of the copyright, and vice-versa. The two claims are ...

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