- In an action against VH1 for producing a show allegedly similar to plaintiffs’ treatment, the court refused to consider an unexecuted Release form at the motion to dismiss stage for plaintiffs’ contract and negligent misrepresentation claims. However, the court dismissed plaintiffs’ fraud and conversion claims because the fraud claim was not alleged with sufficient particularity and the conversion claim was preempted by copyright law.
In January 2009, plaintiffs filed a complaint against Viacom and certain production companies in Pennsylvania state court alleging (1) breach of contract; (2) breach of implied contract; (3) fraud; (4) negligent misrepresentation; and (5) theft by conversion. In August, 2009, Viacom removed the state action to federal court and subsequently filed a motion to dismiss plaintiffs’ claims in their entirety.
As an initial matter, Viacom argued that the Release barred plaintiffs’ claims as it required that all controversies arising out of the Release be brought within six months “after the date on which [plaintiffs] first learned (or reasonably should have been aware) of [VH1] use or intended use of any portion of the [Treatment].” Viacom argued that because plaintiffs were aware of “Charm School” by at least May 21, 2007, their complaint, filed January 23, 2009, was untimely. The court, however, refused to dismiss the claims as untimely for this reason. First, it noted that because neither party was able to provide an executed Release, the court would rely solely only on the amended complaint’s description of the Release. Because plaintiffs did not allege that they were subject to a six month window to file suit, the court declined to dismiss the claims.
The court also relied on the fact that no executed Release had been proffered by Viacom to deny its motion to dismiss the breach of contract and the breach of implied contract claims. Looking solely at the language of the amended complaint, the court found sufficient facts were alleged to support both contractual claims.
Viacom next argued that plaintiffs failed to plead their fraud and negligent misrepresentation claims with sufficient particularity. Although the court agreed with Viacom as to the fraud claim, dismissing it for lack of requisite particularity, the court held that negligent misrepresentation claims are not held to a higher standard of pleading and only require that the pleading state sufficient factual matter to make it plausible that their claim is true. The court also refused to state at this stage whether New York or Pennsylvania law applied, as the court found plaintiffs’ negligent misrepresentation claim would survive a motion to dismiss under either state’s standard.
Finally, Viacom argued that plaintiffs’ theft by conversion claim should be dismissed because it is preempted by the Copyright Act, 17 U.S.C. 101 et seq. Federal copyright law preempts any state law claims that (1) fall within the subject matter of the copyright and (2) create rights that are the equivalent of the exclusive rights created by copyright law. See 17 U.S.C. 301(a). However, if a state law requires an extra element such that the state claim is qualitatively different from a copyright infringement claim, then federal law will not preempt the state action.
Here, the court found that the subject matter of plaintiff’s conversion claim – whether considered a literary work or audiovisual work – fell within the subject matter of the Copyright Act. The court further found that the rights at issue were equivalent to the exclusive rights under the Copyright Act. Regarding an “extra element,” the court rejected plaintiffs’ argument that the theft at issue was a misappropriation of a trade secret based on Viacom’s disclosure of confidentiality. The court noted that although claims of misappropriation of trade secret did involve an “extra element,” plaintiffs did not plead a misappropriation of trade secret but rather filed a theft by conversion claim – a claim that Third Circuit courts have previously considered to be preempted by the Copyright Act. Accordingly, the Court dismissed plaintiffs’ theft by conversion claim.