121883cv TromaEntertainmentv.Robbins,etal.

UNITEDSTATESCOURTOFAPPEALS FORTHESECONDCIRCUIT AugustTerm,2013 (Argued:April29,2013;FinalSubmission:July25,2013; Decided:September6,2013) DocketNo.121883cv TROMAENTERTAINMENT,INC., PlaintiffAppellant, v CENTENNIALPICTURESINC.,PANGLOBALENTERTAINMENT,LLC, Defendants, LANCEH.ROBBINS,KINGBRETTLAUTER, DefendantsAppellees. Before: JACOBSandSACK,CircuitJudges,andRAKOFF,DistrictJudge.*

TheHonorableJedS.Rakoff,UnitedStatesDistrictJudgefortheSouthern DistrictofNewYork,sittingbydesignation.

AppealbytheplaintiffappellantfromajudgmentoftheUnited StatesDistrictCourtfortheEasternDistrictofNewYork(BrianM.Cogan,Judge) dismissingitslawsuitforlackofpersonaljurisdictionoverdefendantsappellees andforimpropervenue.Weagreewiththedistrictcourtthattheplaintiff appellantsallegationsconcerningpersonaljurisdictionfailtoestablishanon speculativeanddirectNewYorkbasedinjurythatgoesbeyondeconomiclosses sufferedinthestate,asrequiredbytheprovisionofNewYorkStateslongarm statutepursuanttowhichjurisdictionisasserted,N.Y.C.P.L.R.302(a)(3)(ii). Thedistrictcourtwasthereforecorrectindecliningtoexercisepersonal jurisdictionoverthedefendantsappellees,andaccordinglydismissingthe lawsuitagainstthem. Affirmed. STUARTREISER(ManuelA.Arroyo,Rachel Schulman,Esq.,onthebrief),Shapiro,Croland, Reiser,Apfel&DiIorio,LLP,Hackensack,NJ,for PlaintiffAppellant. LanceH.Robbins,prose,NorthHollywood,CA. KingBrettLauter,prose,MarinaDelRey,CA. BrianMarcFeldman,JohnP.Bringewatt,Harter Secrest&EmeryLLP,Rochester,NY,probono

amicuscuriaeattherequestoftheCourtin supportoftheDefendantsAppellees.* SACK,CircuitJudge: ThesubjectofthisappealisthereachofNewYorkStateslongarm statuteinthecontextofallegedinfringementofintellectualproperty.Atissueis section302(a)(3)(ii)oftheNewYorkCivilPracticeLawandRules,andin particularitsrequirementthattheallegedlytortiousconductoftheindividual overwhompersonaljurisdictionisassertedunderthatsectioncaus[ed]injuryto personorpropertywithinthestate.N.Y.C.P.L.R.302(a)(3).Thedistrictcourt concludedthatplaintiffappellantTromaEntertainment,Inc.,(Troma)had failedtoallegesuchaninstateinjury,andthereforedismisseditslawsuitagainst defendantsappelleesLanceH.RobbinsandKingBrettLauterforwantof personaljurisdiction.Weagreewiththedistrictcourtandthereforeaffirm.

RobbinsandLauterareproceedingprose,astheydidbeforethedistrict court.Afteroralargument,weappointedBrianFeldman,Esq.,asprobonoamicus curiaeinsupportofRobbinssandLautersposition.TheCourtexpressesits thankstoMr.FeldmanandhiscolleaguesatthelawfirmofHarterSecrest& EmeryLLP,foracceptingtheappointmentandfortheirhighlyprofessional assistance. 3

BACKGROUND ThefollowingfactsaredrawnfromtheallegationsinTromas complaint,whicharetakenastrueforpurposesofresolvingthisappeal.SeeLicci exrel.Licciv.LebaneseCanadianBank,SAL,673F.3d50,56(2dCir.2012). TromaisaNewYorkbasedcorporationinthebusinessof producinganddistributingcontrolledbudgetmotionpictures.Compl.5. TwosuchmotionpicturesarespooffilmstitledCitizenToxie,ToxicAvenger PartIV,createdbyTroma,andPoultrygeist:NightoftheChickenDead,to whichTromaownsdistributionrights.Id. InOctober2009,TromaauthorizedoneLanceRobbinstorepresentit innegotiationsconcerningthelicensingofdistributionrightstoCitizenToxie andPoultrygeisttoaGermandistributor.Suchauthorizationwassupposedto lapseafterthirtydaysifnoagreementwasreached.Thirtydayspassedwith RobbinsapparentlyunabletonegotiateadealwithaGermandistributor.At leastthatwaswhatTromasofficersthought. Asitturnedout,Robbins,incahootswithcodefendantKingBrett Lauter,had,aweekpriortoreceivingauthorization,enteredintoadistribution licenseinGermanywithanoutfitcalledIntravestBeteiligungsGMBH (Intravest).TromaallegesthatRobbinsandLauterfalselyassuredIntravest 4

thattheyownedtherightstothefilms;purchased,asanyretailcustomermight, GermanlanguageDVDcopiesofthefilmsfromAmazon.comsGermanwebsite; deliveredthoseDVDstoIntravest;andpocketedtheproceedsoftheagreement, withoutevernotifyingTromathattheagreementevenexisted.Noneofthese actionsisallegedtohavetakenplaceinNewYork. TromalearnedinAugust2010thatIntravest,viapayperchannel distributiononSilverlineAGsMovieChannels,id.18,hadbeenbroadcasting CitizenToxieandPoultrygeistinGermany.TromafiledsuitonMarch7,2011, againstRobbins,Lauter,andtwoentitiesthatarenolongerpartiestothis litigation,intheUnitedStatesDistrictCourtfortheEasternDistrictofNewYork. Itscomplaintallegescopyrightinfringementunderfederallaw,andstatelaw claimsofcommonlawfraudandtortiousinterferencewithprospectiveeconomic advantage. InMarch2012,RobbinsandLauter,bothproceedingprose,filed motionstodismissforwantofpersonaljurisdiction.Inamemorandumdecision andorderfiledApril10,2012,thedistrictcourt(BrianM.Cogan,Judge) concludedthatNewYorkStateslongarmstatutedidnotpermitittoexercise personaljurisdictionoverRobbinsandLauterintheEasternDistrictofNew York.TromaEntertainment,Inc.v.CentennialPicturesInc.,853F.Supp.2d326, 5

32730(E.D.N.Y.2012).ItconcludedthattheallegationsinTromascomplaint, takenastrue,didnotmakeoutaprimafacieshowingthatRobbinssandLauters conductcaus[ed]injurywithin[NewYork],N.Y.C.P.L.R.302(a)(3)(ii),as requiredbytheprovisionofNewYorkStateslongarmstatutepursuantto whichTromaassertedpersonaljurisdiction.Troma,853F.Supp.2dat32930. OnApril18,2012,afterTromaadvisedthedistrictcourtthatitdid notwishtopursueatransferoftheactiontotheCentralDistrictofCalifornia wherepersonaljurisdictionoverthedefendantscouldbeexercisedthecourt enteredjudgmentdismissingTromaslawsuitforlackofjurisdictionand impropervenue. Tromaappeals. DISCUSSION Theonlyissuebeforeusiswhetherthedistrictcourterredin determiningthatitlackedpersonaljurisdictionoverRobbinsandLauterunder NewYorkStateslongarmstatute.Aplaintiffbearstheburdenof demonstratingpersonaljurisdictionoverapersonorentityagainstwhomit seekstobringsuit.PenguinGroup(USA)Inc.v.AmericanBuddha(PenguinI), 609F.3d30,34(2dCir.2010).Atthisstageoftheproceedings,aplaintiffneed onlymakeaprimafacieshowingthatjurisdictionexists.Id.at3435.Inother 6

words,acomplaintwillsurviveamotiontodismissforwantofpersonal jurisdictionsolongasitsallegations,takenastrue,arelegallysufficient allegationsofjurisdiction.Id.at35(internalquotationmarksomitted).We reviewadistrictcourtslegalconclusionsconcerningitsexerciseofjurisdictionde novo,anditsunderlyingfactualfindingsforclearerror.MarvelCharacters,Inc.v. Kirby,F.3d,2013WL4016875,*5,2013U.S.App.LEXIS16396,*13(2dCir. Aug.8,2013). Inordertoexercisepersonaljurisdictionoveradefendant,adistrict courtmustpossessastatutorybasisfordoingso.Id.,2013U.S.App.LEXIS16396 at*13.Withfewexceptionsnotapplicabletothecaseatbar,theexistenceofsuch astatutorybasisisdeterminedbythelawofthestateinwhichthecourtis located,Spiegelv.Schulmann,604F.3d72,76(2dCir.2010)here,NewYork. Tromaassertsthatpersonaljurisdictionmaybeexercisedinthe EasternDistrictoverRobbinsandLauterthroughsection302(a)(3)(ii)ofNew Yorkslongarmstatute.SeeN.Y.C.P.L.R.302(a)(3)(ii).Thatprovisionconfers personaljurisdictionoveranindividualwhocommitsatortiousactwithoutthe statecausinginjurytopersonorpropertywithinthestate...ifhe...expectsor shouldreasonablyexpecttheacttohaveconsequencesinthestateandderives substantialrevenuefrominterstateorinternationalcommerce.Id.;seePenguinI, 7

609F.3dat35(discussingtherequirementsforestablishingjurisdictionunder section302(a)(3)(ii)).Atissuehereistherequirementthattheallegedtortious conductcaus[ed]injurywithin[NewYork].Id.TromaarguesthatRobbinsand Lautersallegedinfringementcausedsuchinjuryinthestatebecauseitresulted inalossofsaleandageneralizedharm...to[Tromas]exclusivedistribution rightoverCitizenToxieandPoultrygeist.AppellantsBr.at9. Itiswellsettledthatresidenceordomicileoftheinjuredparty within[NewYork]isnotasufficientpredicateforjurisdictionundersection 302(a)(3).FantisFoods,Inc.v.StandardImportingCo.,49N.Y.2d317,326,402 N.E.2d122,126,425N.Y.S.2d783,787(1980).Honoringthisprinciple,wehave rejectedasinsufficienttosupporttheexerciseofjurisdictionoveradefendant allegationsofremoteorconsequentialinjuriessuchaslostcommercialprofits whichoccurinNewYorkonlybecausetheplaintiffisdomiciledordoing businesshere.LehighValleyIndus.v.Birenbaum,527F.2d87,94(2dCir.1975);see alsoAmericanEutecticWeldingAlloysSalesCo.v.DytronAlloysCorp.,439F.2d428, 433(2dCir.1971)(rejectingasinsufficientharminNewYorkinthesensethat anysalelostanywhereintheUnitedStatesaffects[theplaintiffs]profits).In sum,[T]hesufferingofeconomicdamagesinNewYorkisinsufficient,alone,to

establishadirectinjuryinNewYorkforN.Y.C.P.L.R.302(a)(3)purposes. PenguinI,609F.3dat38(internalquotationmarksomitted). Tromamaintainsthatitsallegationsamounttomorethanthe assertionofmereeconomicinjurywithinthestate.Itreliesprincipallyonthe NewYorkCourtofAppealsdecisioninPenguinGroup(USA),Inc.v.American Buddha(PenguinII),16N.Y.3d295,964N.E.2d159,921N.Y.S.2d171(2011),in whichtheCourtansweredaquestionwehadcertifiedtoit.Theplaintiffinthat case,PenguinGroup,allegedthatdefendantAmericanBuddhahadinfringedits copyrightsoverfourbooksbyuploadingcopiesofthebookstoitsInternet websiteandmakingthemavailablefreeofchargetoits50,000membersand anyonewithanInternetconnection.Id.at300,964N.E.2dat160,921N.Y.S.2dat 172.PenguinGroupbroughtsuitintheUnitedStatesDistrictCourtforthe SouthernDistrictofNewYork,assertingpersonaljurisdictionwithinthestate pursuanttosection302(a)(3)(ii).PenguinI,609F.3dat31. Whentheissuereachedusonappeal,wenotedthat[n]eitherthe NewYorkCourtofAppealsnorthisCourthasdecidedwhatthesitusofinjuryis inanintellectualpropertycase.Id.at36.Werecognizedalsothatthefactthat theallegedinfringement...wasconductedbymeansoftheInternetandonline libraries...mayaffectthe[jurisdictional]analysis.Id.at34.Findingourselves 9

unabletopredicthowtheNewYorkCourtofAppealswouldresolvethe jurisdictionissueinthatcase,wecertifiedtoitthequestion:Incopyright infringementcases,isthesitusofinjuryforpurposesofdetermininglongarm jurisdictionunderN.Y.C.P.L.R.302(a)(3)(ii)thelocationoftheinfringingaction ortheresidenceorlocationoftheprincipalplaceofbusinessofthecopyright holder?Id. TheCourtofAppealsacceptedourcertification,butnarrowedour questiontoaddressonlythesituationpresentedtoitinthatmatter:copyright infringementcasesinvolvingtheuploadingofacopyrightedprintedliterary workontotheInternet.PenguinII,16N.Y.2dat301,964N.E.2dat161,921 N.Y.S.2dat173.TheCourtconcludedthat,underthecircumstancespresented, thesitusoftheinjurywasthelocationofthecopyrightownerNewYork. TheCourtofAppealsrestedthisconclusionontheconvergenceof twofactors.Id.at304,964N.E.2dat163,921N.Y.S.2dat175.Thefirstwasthe natureoftheallegedinfringement,viz.,theuploadingandmakingavailableof PenguinGroupscopyrightedworksbymeansoftheInternet.Thecruxof Penguinscopyrightinfringementclaim,theCourtreasoned,isnotmerelythe unlawfulelectroniccopyingoruploadingofthefourcopyrightedbooks.Id.at 304,964N.E.2dat163,921N.Y.S.2dat175.Rather,itistheintended 10

consequencesofthoseactivitiestheinstantaneousavailabilityofthose copyrightedworks...foranyone,inNewYorkorelsewhere,withanInternet connectiontoreadanddownloadthebooksfreeofcharge.Id.at30405,964 N.E.2dat16364,921N.Y.S.2dat17576.Because,theCourtconcluded,the injuryoccasionedbyuploadingissowidelydispersed,andtheplaceof uploadinglargelyinconsequential,theoutofstatelocationoftheinfringing conducttheotherpossiblesitusofinjurycarrieslessweightinthe jurisdictionalinquiry.Id.at305,964N.E.2dat164,921N.Y.S.2dat176. ThesecondfactoruponwhichtheCourtofAppealsrestedits decisionwastheuniquebundleofrightsgrantedtocopyrightowners.Id.at 305,964N.E.2dat164,921N.Y.S.2dat176.Infringementofintellectualproperty, theCourtreasoned,couldnotonlycauseindirectfinancialloss,butcouldalso diminish[]theincentivetopublishorwrite,orengendermarketconfusion, presumablyleadingtothediminutionofthevalueoftherightsthemselves.Id.at 306,964N.E.2dat164,921N.Y.S.2dat176(quotationmarksomitted).Such injurytointellectualpropertyrightsheldbyNewYorkcopyrightownersgoes beyondmereeconomiclosssufferedinNewYork.TheCourtconcludedthatthis wasenoughtoestablishthesitusofinjuryasthelocationofthecopyrightowner, atleastinacaseinwhich,astheCourthadalreadyexplained,thenatureand 11

functionoftheInternetrenderthelocationoftheinfringingconductof diminishedrelevance. TheCourtcarefullycabineditsholding.First,asnotedabove,it modifiedthequestionwecertifiedsoastoaddressonlycopyrightinfringement accomplishedbyuploadingtotheInternet.Anditexplicitlydeclinedtoaddress whetheraNewYorkcopyrightholdersustainsaninstateinjurypursuantto N.Y.C.P.L.R.302(a)(3)(ii)inacopyrightinfringementcasethatdoesnotallege digitalpiracy,citing,withoutendorsingeither,twofederaldistrictcourtcases fromourCircuitreachingopposingconclusionsonthequestion.Id.at307n.5, 964N.E.2dat165n.5,921N.Y.S.2dat177n.5(citingMcGrawHillCompanies,Inc. v.IngeniumTechnologiesCorp.,375F.Supp.2d252(S.D.N.Y.2005),andFreeplay Music,Inc.v.CoxRadio,Inc.,04civ.5238,2005WL1500896,2005U.S.Dist.LEXIS 12397(S.D.N.Y.June23,2005)). AsTromaappearstoacknowledge,theCourtofAppealsdecisionin PenguinIIistoonarrowtocontrolthiscase.TheplaintiffinPenguinlevied allegationsofaformofinfringementthatworksaninjurythatisvirtually impossibletolocalizetheuploadingandmakingavailableofcopyrighted materials,freeofcharge,toanyonewithanInternetconnection.Tromahas allegednosuchinjury.NowhereinTromascomplaintcanonefindanallegation 12

suggestingthatRobbinsandLauterstortiousconductharmedTromainaway thatcannotbecircumscribedtoaparticularlocality.PenguinII,16N.Y.3dat 305,964N.E.2dat164,921N.Y.S.2dat176.Thiscaseisthereforemorelike traditionalcommercialtortcasesinwhichtheplacewhere[theplaintiffs] businessislostorthreatenedexertsasignificantgravitationalinfluenceonthe jurisdictionalanalysis.Id.WhetherthatplaceisCaliforniawhereRobbinsand LauterallegedlyhatchedtheirschemeorGermanywheretheyputitinto effectweneednotsay.ItisnotNewYork. Tromaisleft,then,torelyontheCourtofAppealsendorsementof thetheorythatoutofstateinfringementmayharmthebundleofrightsheldbya NewYorkbasedcopyrightownerinNewYork.Weacknowledgethatthisisa plausibletheoryafterPenguinIIandagreewithTromascharacterizationofthe CourtofAppealsarticulationofit.Butitisjustthat:atheoryofinjurythat certainlyincasesoftheuploadingandmakingavailableofcopyrightedworks, butalsoperhapsinisolationmaysatisfysection302(a)(3)sinjuryrequirement inaparticularcase.WefindnothingintheCourtofAppealsopinion,however, thatrelievesintellectualpropertyownersoftheobligation,ineachcase,toallege factsdemonstratinganonspeculativeanddirectNewYorkbasedinjurytoits intellectualpropertyrightsofthesortPenguinIIrecognized. 13

Tromasallegations,takenastrue,donotsatisfythisrequirement. TromaallegesthatRobbinsandLauter,inessence,usurpedtwopotential licensingagreementsinGermany,anditmaintainsthatthiscausedwhatitlabels generalizedharm(i.e.,statutorydamagesasaresultof[defendants]willful infringement)toitsexclusivedistributionright.AppellantsBr.at13.We concludethatTromasassertionofsuchaninjury,inlightoftheallegationsinits complaint,isfartoospeculativetosupportafindingthatTromasufferedinjury inNewYorkwithinthemeaningofsection302(a)(3)(ii). Infringementcomesinmanystripes.Itisnotthecasethatany infringementanywherecanbesaidtodiminishincentivestoengageinacreative enterprise,ortoharm,beyondtheimmediatelossofprofits,thecontinuingvalue ofoneormoreofacopyrightholdersbundleofrights.Certainlytheavailability ofthestatutorydamageremedyunderthecopyrightlawsdoesnotestablish automaticallythatthissortofinjuryhasoccurred.Andwethinkitentirely implausiblethattheinfringementallegedbyTromadiscrete,geographically circumscribedtheftoftheopportunitytolicensedistributionofcopyrighted workswouldcausesuchaninjury. Tromahasnotarticulatedanonspeculativeanddirectinjuryto personorpropertyinNewYorkthatgoesbeyondthesimpleeconomiclosses 14

thatitsNewYorkbasedbusinesssuffered.Itiswellsettledthatsucheconomic lossesarenotaloneasufficientbasisforpersonaljurisdictionoverthepersons whocausedthem.Tromahasthusnotmadeoutaprimafacieshowingof personaljurisdictionundersection302(a)(3)(ii).Thedistrictcourtcorrectly concludedthatitdidnothavethepowertoexercisepersonaljurisdictionover RobbinsandLauter. CONCLUSION Fortheforegoingreasons,thejudgmentofthedistrictcourtis affirmed.

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