Case 2:14-cv-00396-SVW-CW Document 107 Filed 06/12/15 Page 1 of 11 Page ID #:2154

Case 2:14-cv-00396-SVW-CW Document 107 Filed 06/12/15 Page 2 of 11 Page ID #:2155

Contract/Theft or Conversion.

Presently before the Court is Defendants motion to dismiss Plaintiffs Breach of

Contract/Theft or Conversion claim. As set forth below, the Court GRANTS Defendants

motion and DISMISSES WITH PREJUDICE Plaintiffs Breach of Contract/Theft or

Conversion claim.

II.

BACKGROUND
The facts are well-known to the parties and are recited at length in the Courts October

15, 2014 Order. (Dkt. 86.) The Court therefore only briefly touches upon the facts as they relate

to the instant motion.

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Plaintiffs are a professional screenwriting duo. (TAC 1.) In 2006 they wrote their pilot

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script, Square One. (Id.) They subsequently expanded the pilot into a feature-length script, two

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versions of which are at issue in this action. (TAC 37, 50.)

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On February 17, 2011, Plaintiffs purportedly learned that Defendants Chicks and Dicks

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script used their Square One material. (TAC 67.) Chicks and Dicks is the pilot episode of the

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television series New Girl. (TAC 80, 88.) On September 20, 2011, New Girl premiered on

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defendant Fox Broadcasting Companys channel. (TAC 89.)

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Plaintiffs claim that they retained counsel in early 2011 and then informed Defendants

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that Defendants were infringing on Square One. (TAC 97.) Plaintiffs assert that in June 2011

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they paid their then attorneys a $10,000 retainer to pursue their case against Defendants. (TAC

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340.) According to Plaintiffs, their then attorneys, who are supposedly representing Plaintiffs

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interests, tell Plaintiffs that the law firm represented the executive producer and director of New

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Girldefendant Jacob Kasdanand his family, but that it is okay for this law firm to represent

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Plaintiffs, just so long as Plaintiffs refrain from suing Kasdan. (TAC 98.) Plaintiffs assert

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that their then attorneys told them in writing:

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Regarding the potential Jake Kasdan connection, both Jake Kasdan and his
father are long time clients of the firm. We therefore cannot take a position
that is adverse to Jake Kasdan. Due to our long-standing relationship with
the Kadan, if we were to assert allegations that implicated Jake Kasdan, we
likely could be disqualified in this action and, therefore, would be prohibited
from continuing to represent you in connection with this dispute. While we
feel that the connection to Jake Kasdan is a bit attenuated (based on the facts
set forth in your email), if this is something you would like to pursue, we
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would need to discuss our further involvement in this matter.

In mid-2011, the Fox defendants purportedly negotiated with Plaintiffs then attorneys.

(TAC 98.) In January 2012, the Fox defendants offered Plaintiffs $10,000 to settle this matter.

(TAC 103.) Plaintiffs, insulted, obviously reject Foxs settlement offer and terminate their

relationship with their then conflicted attorneys in February 2012. (TAC 104.) Plaintiffs

claim that until February 2012, they were unaware of just how tightly aligned Defendants and

their then-counsel were in the entertainment industry: The firm representing Plaintiffs also

absurdly represented the director and executive produce of New Girl, the very show Plaintiffs

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claimed took their ideas and artistic expression. (TAC 342.)

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On January 16, 2014, Plaintiffs filed this action against Defendants. (Dkt. 1.) On March

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4, 2015, this Court issued an Order granting in part Defendants motion to dismiss Plaintiffs

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Second Amended Complaint (SAC). (Dkt. 96.) In relevant part, the court dismissed without

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prejudice Plaintiffs breach of implied-in-fact contract claim because it was filed outside the

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relevant two-year limitations period and neither equitable tolling nor equitable estoppel applied.

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(Dkt 96: Order at 57.) The Court noted that because this was Plaintiffs second attempt to plead

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this claim, the next dismissal would be with prejudice. (Id.)

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III.

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ANALYSIS
Defendants move to dismiss Plaintiffs claim for Idea TheftBreach of Contract/Theft

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or Conversion. To the extent that this claim asserts the breach of an implied-in-fact contract,

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Defendants assert that it is time-barred. To the extent that this is a claim for conversion,

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Defendants assert that it is preempted.

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A.

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A motion to dismiss under Rule 12(b)(6) challenges the legal sufficiency of the claims

Legal Standard for Motion to Dismiss Under Rule 12(b)(6)

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stated in the complaint. Fed. R. Civ. Proc. 12(b)(6). To survive a motion to dismiss, a complaint

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must contain sufficient factual matter, accepted as true, to state a claim to relief that is

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plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp.

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v. Twombly, 550 U.S. 544, 570 (2007)). A claim has facial plausibility when the plaintiff
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pleads factual content that allows the court to draw the reasonable inference that the defendant is

liable for the misconduct alleged. Id. A complaint that offers mere labels and conclusions or

a formulaic recitation of the elements of a cause of action will not do. Id. (quoting Twombly,

550 U.S. at 555) (internal quotation marks omitted). Allegations in the complaint, together with

reasonable inferences therefrom, are assumed to be true for purposes of the motion. Odom v.

Microsoft Corp, 486 F.3d 541, 545 (9th Cir. 2007). However, a Court need not accept legal

conclusions as true. Iqbal, 556 U.S. at 678.

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If a court dismisses the complaint, it will freely grant leave to amend. DeSoto., 957 F.2d
at 658. In deciding whether to dismiss with prejudice, courts consider the following factors
articulated by the Supreme Court in Foman v. Davis, 371 U.S. 178 (1962):
undue delay, bad faith or dilatory motive on the part of the movant, repeated
failure to cure deficiencies by amendments previously allowed, undue
prejudice to the opposing party by virtue of allowance of the amendment,
futility of amendment, etc.
Id. at 182; see also Sharkey v. O'Neal, 778 F.3d 767, 774 (9th Cir. 2015).
B.

Breach of Implied in Fact Contract

Legal Standard

California law recognizes that an implied-in-fact contract arises when the writer submits
material to a producer with the understanding that the writer expects to be paid if the producer
uses his concept. Desny v. Wilder, 46 Cal.2d 715, 299 P.2d 257 (1956). Such claims are subject
to a two-year limitations period. Benay v. Warner Bros. Entm't, 607 F.3d 620, 632-33 (9th Cir.
2010) (citing Blaustein v. Burton, 9 Cal. App. 3d 161, 185 (Cal. Ct. App. 1970)). California
courts generally assume that a breach of implied-in-fact contract claim accrues on the date on
which the work is released to the general public. Id. at 633 (citing 4 Nimmer 19D.07[D];
Thompson v. Cal. Brewing Co., 191 Cal. App. 2d 506, 510 (Cal. Ct. App. 1961)).
Equitable tolling suspends the statute of limitations as necessary to ensure fundamental
practicality and fairness. Lantzy v. Centex Homes, 31 Cal. 4th 363, 370 (2003). This doctrine
requires a balancing of the injustice to the plaintiff if his claim is time-barred against the effect
on the public policy furthered by the statute of limitations. Id. The doctrine focuses primarily
on the plaintiff's excusable ignorance of the limitations period. . . . [It] is not available to avoid
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the consequences of ones own negligence. Sagehorn v. Engle, 141 Cal. App. 4th 452, 460

(Cal. Ct. App. 2006) (quoting Lehman v. U.S. 154 F.3d 1010, 1016 (9th Cir.1998)) (internal

quotation marks omitted).

To establish that equitable tolling applies, a plaintiff must show: (1) timely notice and a

lack of prejudice to defendants, and (2) that she acted reasonably and in good faith. Addison v.

State of California, 21 Cal. 3d 313, 319 (1978). Equitable tolling of the statute of limitations

has been recognized in California only when: (1) a plaintiff is pursuing an alternative remedy in

another forum; (2) when a lawsuit is erroneously dismissed and the plaintiff filed an untimely

second action; (3) where a defendant fraudulently conceals the cause of action; and (4) in certain

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actions against an insurer. Justice William F. Rylaarsdam and Justice Paul Turner, Cal. Prac.

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Guide Civ. Pro. Before Tr. Stat. of Limitations, 6.5 (The Rutter Group 2015).

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Equitable estoppel prevents a defendant from asserting the statute of limitations as a

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defense where his conduct has induced another into forbearing suit within the applicable

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limitations period. See Lantzy, 31 Cal. 4th at 384. For a defendant to be equitably estopped:

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(1) [t]he party to be estopped must know the facts; (2) he must intend that his conduct shall be

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acted upon, or must so act that the party asserting the estoppel had the right to believe that it was

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so intended; (3) the party asserting the estopped must be ignorant of the true state of facts; and,

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(4) he must rely upon the conduct to his injury. Ashou v. Liberty Mut. Fire Ins. Co., 138 Cal.

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App. 4th 748, 766-67 (Cal. Ct. App. 2006) (quoting Spray, Gould & Bowers v. Associated

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Internat. Ins. Co., 71 Cal. App. 4th 1260, 1268 (1991)).

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2.

Application

Plaintiffs admit that they filed their case outside of the two-year statutory period for

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filing a claim for breach of implied-in-fact contract. (TAC 333.) Nevertheless, they assert

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that either equitable tolling or equitable estoppel prevents their claim from being time-barred.

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(TAC 331358.)

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Plaintiffs assert that the statute of limitations should be equitably tolled because there is

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no prejudice to Defendants and because after learning of Defendants infringement they

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immediately retained counsel and notified Defendants. Plaintiffs further claim that equitable
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tolling applies because of their prior counsels potential conflict of interest and because

Defendants engaged in settlement negotiations with their prior counsel while knowing of

counsels conflict of interest. Plaintiffs base this argument on precedent holding that equitable

tolling applied during the time when the plaintiffs attorney, a sole practitioner, was

incapacitated due to a severe car accident. Lewis v. Superior Court, 175 Cal. App. 3d 366,

37080.

This Court has twice rejected Plaintiffs nearly identical argument regarding equitable

tolling. For the third time, Plaintiffs argument is inapt. Plaintiffs admit that their prior counsel

informed them of the potential conflict of interest, to which Plaintiffs apparently consented.

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Plaintiffs also admit that their former counsel engaged in settlement negotiations on their behalf

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for roughly six months, and successfully obtained a settlement offer from defendants. Though

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Plaintiffs may have found the $10,000 settlement offer insulting, this Court does not believe that

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counsels failure to elicit a larger sum indicates that they were incapacitated by their conflict

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of interest. Nor does the Court believe that this amount indicates that either Plaintiffs prior

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counsel or Defendants acted in bad faith. Regardless of Plaintiffs valuation of their case, this

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amount is substantially higher than the $750 statutory damages minimum provided by the

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Copyright Act for each infringed work. 17 U.S.C. 504(c).1 Moreover, though Plaintiffs

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insinuate that prior counsel wouldnt vigorously prosecute their claim, they plead no facts

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indicating that prior counsel improperly refused to file suit or prevented Plaintiffs from filing

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suit. The Court is similarly unconvinced by Plaintiffs argument that after terminating their

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relationship with their prior counsel in February 2012, they could not retain counsel willing to

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file the instant suit until they retained their currently counsel in early 2013.2 Moreover, at the

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hearing held on June 9, 2015, Plaintiffs admitted that they were represented by a different

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attorney in early 2012though they allege that the representation was very brief, undertaken

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gratuitously, and undertaken with the understanding that the attorney in question would not

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The Court further notes that this is one third of the maximum allowable statutory damages
amount for nonwillful infringement of a copyrighted work. 17 U.S.C. 504(c).

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The Court addresses the veracity and propriety of Plaintiffs attorneys declaration in greater
detail below.
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actually file a lawsuit. Plaintiffs fail to show any compelling reason for the alleged year-long

delay between dismissing their first lawyers and hiring their current representation. In sum,

Plaintiffs fail to show that their case fits within any of the limited scenarios in which California

courts recognize that equitable tolling applies.

Similarly unavailing is Plaintiffs argument that equitable estoppel applies. Even

assuming that Defendants knew that Plaintiffs prior counsel had a conflict of interest, Plaintiffs

have not pled facts (as opposed to conclusory argument) showing that Defendants engaged in

unserious or bad faith settlement negotiations by dealing with Plaintiffs prior counsel.

Instead, Plaintiffs readily admit that Defendants offered to pay them $10,000 to settle the case.

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For the aforementioned reasons, the Court GRANTS IN PART Defendants motion to

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dismiss Plaintiffs Idea TheftBreach of Contract/Theft or Conversion claim, to the extent

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that it asserts a claim for breach of implied-in-fact contract. This is the third time Plaintiffs have

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attempted to plead this claim, and the Court previously warned Plaintiffs that the next dismissal

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of the claim would be with prejudice. Plaintiffs third failure to plead this claim indicates that

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amendment would be futile. The Court therefore DISMISSES WITH PREJUDICE Plaintiffs

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Idea TheftBreach of Contract/Theft or Conversion claim to the extent it asserts a claim for

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breach of implied-in-fact contract.

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C.

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In the alternative, Plaintiffs attempt to plead their idea theft claim as a claim for

Conversion

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conversion (which carries a three year statute of limitations). Defendants assert that this claim is

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preempted by federal copyright law.

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1.

Legal Standard

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The Copyright Act preempts all legal or equitable rights that are equivalent to any of

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the exclusive rights within the general scope of copyright as specified by section 106 . . . and

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[that] come within the subject matter of copyright as specified by sections 102 and 103[.] 17

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U.S.C. 301(a). In the Ninth Circuit, state law claims are preempted by the Act if (1) the work

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at issue comes within the subject matter of copyright and (2) the rights granted under state law

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are equivalent to any of the exclusive rights within the general scope of copyright set forth in the
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Act. Selby v. New Line Cinema Corp., 96 F. Supp. 2d 1053, 1057 (C.D. Cal. 2000) (internal

quotation marks omitted) (quoting Del Madera Properties v. Rhodes and Gardner, Inc., 820

F.2d 973, 976 (9th Cir.1987)). A state law claim is not equivalent to the exclusive rights

conferred by the Copyright Act if it has an extra element which makes the action qualitatively

different from one to protect copyright rights. Id. (quoting Del Madera Properties, 820 F.2d at

977).

To state a conversion claim under California law, a plaintiff must establish: (1) her

ownership or right to possession of a certain piece of property; (2) the defendants conversion of

the property by a wrongful act or disposition of property rights; and (3) damages. Firoozye v.

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Earthlink Network, 153 F. Supp. 2d 1115, 1129 (N.D. Cal. 2001); Burlesci v. Petersen, 68 Cal.

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App. 4th 1062, 1066 (Cal. Ct. App. 1998). Thus, a conversion claim for tangible property may

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contain an extra element beyond unauthorized copyright because it requires the plaintiff to

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prove that the defendant wrongfully obtained possession over a specific piece of property.

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Firoozye, 153 F. Supp. 2d at 1130. Where a plaintiff seeks only damages from a defendants

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reproduction of a work, rather than the actual return of a physical piece of property, the

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conversion claim is preempted. Id.

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2.

Application

Plaintiffs do not assert that Defendants stole a tangible copy of their work, nor do they

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seek such tangible propertys return. Instead, Plaintiffs admit that they gave defendants a copy

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of their work and assert that Defendants improperly appropriated their intangible ideas.

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Plaintiffs seek damages for Defendants use of these ideasi.e. for Defendants alleged

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reproduction of these ideas in Chicks and Dicks and New Girl. Accordingly, Plaintiffs claim

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for conversion is preempted by the Copyright Act. See Firoozye, 153 F. Supp. 2d at 1130

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(finding conversion claim preempted where the plaintiff sent a copy of his work to the

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defendants, was not seeking the return of tangible property, and instead alleged that the

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defendants wrongfully reproduced his work). Plaintiffs reliance on Dunlap v. G&L Holding

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Grp., Inc., 381 F.3d 1285, 1295-96 (11th Cir. 2004) is misplaced. Plaintiffs rely on Dunlap for

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the proposition that ideas are not within the subject matter of copyright because they are
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expressly excluded from the Copyright Acts protection. While the Ninth Circuit has not

expressly addressed this argument, the majority of circuits that have addressed it hold that the

subject matter of copyright for preemption purposes is broader than copyright protection[.]

Firoozye, 153 F. Supp. 2d at 1125; Meridian Project Sys., Inc. v. Hardin Const. Co., LLC, No.

S-04-2728 FCD DAD, 2006 WL 1062070, at *3 (E.D. Cal. Apr. 21, 2006) (citing Wrench LLC

v. Taco Bell Corp., 256 F.3d 446, 455 (6th Cir.2001); Nat'l Basketball Assn. v. Motorola Inc.,

105 F.3d 841, 849-50 (2d Cir.1997); United States v. Berge, 104 F.3d 1453, 1463 (4th

Cir.1997); ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1452-53 (7th Cir.1996)).

Additionally, California courts have held that the tort of conversion does not apply to

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ideas. See Melchior v. New Line Prods., Inc., 106 Cal. App. 4th 779, 793 (Cal. Ct. App. 2003);

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see also Italiani v. Metro-Goldwyn-Mayer Corp., 45 Cal. App. 2d 464, 466-67 (Cal. Ct. App.

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1941) (finding that conversion only applies to tangible property). Thus Plaintiffs may not assert

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their idea theft claim under a conversion theory.

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For the aforementioned reasons, the Court GRANTS Defendants motion to dismiss this

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claim to the extent it is premised on a theory of conversion. Moreover, because this idea

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theft/conversion claim is essentially the same as the idea theft claims that this Court has

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previously dismissed the Court finds that amendment would be futile. Accordingly, the Court

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DISMISSES WITH PREJUDICE Plaintiffs Idea TheftBreach of Contract/Theft or

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Conversion claim, to the extent premised on conversion.

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D.

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Alongside Plaintiffs Opposition to Defendants motion to dismiss, their counsel, Francis

Attorney Malofiys Declaration and Plaintiffs Request to File A Sur-Reply

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Malofiy (Malofiy), submitted a declaration in which he asserts that Plaintiffs First Amended

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Complaint was mistaken in representing that Plaintiffs retained new counsel in February 2012.3

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At the June 9 hearing, Plaintiffs clarified that they did not expressly allege that they retained
new counsel in February 2012. Instead, they acknowledged that this was an implication of the
facts pled in their First Amended Complaint (FAC). Additionally, Malofiy asserted that he
assumed that the FAC alleed that Plaintiffs obtained new counsel in February 2012 because of a
statement in this Courts October 15, 2014 Order. In the October 15, 2014 Order, the Court stated
that Plaintiffs apparently contend that the limitations period should be tolled until they retained
new counsel in February of 2012. (Dkt. 86: Order at 9.) The Court also noted that Plaintiffs
retained new counsel in February 2012well within the two year statutory limitations period.
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(Malofiy Decl. 2.) Instead, Malofiy asserts that new counsel was obtained by Plaintiffs in

Early 2013[.] (Id.) Notably, Malofiy did not bring this purported error to the Courts attention

when Plaintiffs filed their SAC, when opposing Defendants motion to dismiss the SAC, or

when Plaintiffs filed their TAC. Instead, he did not correct this purported error until faced with

Defendants motion to dismiss Plaintiffs TAC and the Courts prior threat that any further

dismissals would be with prejudice.

In response to this declaration, Defendants submit evidence showing that on March 14,

2012, an attorney (not Malofiy) sent a letter to Defendants identifying himself as Plaintiffs

recently retained counsel. This illustrates that Plaintiffs did have representation at least as of

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March 2012.
On June 2, 2015, Plaintiffs requested leave to file a surreply. In the proposed surreply,

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Plaintiffs assert that Malofiys statement in his declaration referring to new counsel was

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meant to refer exclusively to Plaintiffs current counselwho was the only attorney who

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ultimately and actually agreed to file a lawsuit on Plaintiffs behalf. (Pls. Proposed Sur-Reply,

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2.) Notwithstanding Malofiys apparent belief that he is the only attorney who counts,

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Plaintiffs argument regarding his statements meaning is belied by a commonsense reading of

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the phrase. There is nothing in the phrase new counsel was obtained which limits itself to

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new counsel actually willing to file a lawsuit. In light of the foregoing, the Courtfinds Malofiys

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declaration and Plaintiffs subsequently proposed surreply disingenuous. Nevertheless, there is

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no direct evidence that Malofiy or Plaintiffs lied or acted in bad faith.

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(Id.) To the extent that the Courts prior Order was ambiguous, the Court now clarifies that it did
not find that Plaintiffs expressly asserted that they retained new counsel in February 2012.
Moreover, the Courts conclusion in the October 15 Order that Plaintiffs failed to show that
equitable tolling or estoppel applied to their contract claim was not based on either of these two
statements regarding when Plaintiffs obtained new counsel. Thus the Courts conclusion would
stand regardless of whether Plaintiffs obtained new counsel in 2012 or 2013.
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IV.

ORDER
For the aforementioned reasons, the Court GRANTS Defendants motion to dismiss

Plaintiffs Idea TheftBreach of Contract/Theft or Conversion claim. Because the Court finds

that leave to amend would be futile, the Court DISMISSES WITH PREJUDICE Plaintiffs Idea

TheftBreach of Contract/Theft or Conversion claim.

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IT IS SO ORDERED.

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Dated: June 12, 2015

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STEPHEN V. WILSON
United States District Judge

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