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Allen v. Cooper

United States District Court, E.D. North Carolina, Western Division

March 23, 2017

FREDERICK L. ALLEN and NAUTILUS PRODUCTIONS, LLC, Plaintiffs,
v.
ROY A. COOPER, et al., [1] Defendants.

          ORDER

          TERRENCE W. BOYLE UNITED STATES DISTRICT JUDGE

         This cause conies before the Court on a motion to dismiss filed by State defendants [DE 49] and a motion to dismiss filed by defendant Friends of the Queen Anne's Revenge. [DE 47]. The appropriate responses and replies have been filed and a hearing was held before the undersigned on November 2, 2016, in Edenton, North Carolina. For the reasons discussed below, the motions to dismiss are denied in part and granted in part.

         BACKGROUND

         Plaintiffs, Frederick Allen and his production company Nautilus Productions, have been the substantially exclusive underwater photographers of the shipwreck Queen Anne's Revenge ("QAR"), the ship of the pirate commonly known as Blackbeard.[2] The shipwreck was discovered near the Beaufort inlet off the North Carolina coast in 1996. Allen's work documenting the shipwreck through video and still images began in 1998. Allen has registered copyrights in the works created in relation to his documenting of the QAR, and such works are licensed to and commercialized by Nautilus.

         Plaintiffs allege that prior to October 2013, the State of North Carolina and its Department of Natural and Cultural Resources ("DNCR") infringed, contributed to infringement, and induced infringement of Allen's registered copyrights by uploading Allen's video-footage to the internet without consent. On October 15, 2013, plaintiff, the State, and DNCR entered into a written settlement agreement which provided for payment to plaintiffs from the DNCR of $15, 000 for any copyrights it had infringed prior to that date. The agreement referred to some specific instances of infringement, including the Friends of the Maritime Museum display photograph of the pile (the central portion of the shipwreck), DNCR's Flickr account showing an anchor on the pile, and the Friends of the QAR website showing mapping dividers. The State and DNCR paid plaintiffs the $15, 000 provided by the settlement agreement on February 3, 2014.

         Plaintiffs allege that after entry of the settlement agreement the State and DNCR resumed infringing on plaintiffs' copyrights. Plaintiffs allege that the State and DNCR have published, performed, and/or displayed plaintiffs' video footage as well as still images in print materials. Plaintiffs further allege that in an effort to convert plaintiffs' copyright assets to State property without payment to plaintiff, defendants collectively wrote and obtained passage of an amendment to an existing North Carolina statute, the effect of which is to convert copyrighted works of plaintiffs and others into public record, upon which under state law there is no limitation on use. N.C. Gen. Stat. § 121-25(b). The full text of the amended statute at the time of the filing of the complaint read as follows:

(b) All photographs, video recordings, or other documentary materials of a derelict vessel or shipwreck or its contents, relics, artifacts, or historic materials in the custody of any agency of North Carolina government or its subdivisions shall be a public record pursuant to G.S. 132-1. There shall be no limitation on the use of or no requirement to alter any such photograph, video recordings, or other documentary material, and any such provision in any agreement, permit, or license shall be void and unenforceable as a matter of public policy.

         Effective July 1, 2016, Session law 2016-94, s. 162, amended subsection (b) to read as follows:

All photographs, video recordings, or other documentary materials of a derelict vessel or shipwreck or its contents, relics, artifacts, or historic materials in the custody of any agency of North Carolina government or its subdivisions shall be a public record pursuant to Chapter 132 of the General Statutes.

          N.C. Gen. Stat. § 121-25(b).

         Plaintiffs seek a declaratory judgment that § 121-25(b) as amended is void and unenforceable as it is preempted by the Copyright Act, 17 U.S.C §§ 101 et seq., and violates the Takings and Due Process Clause of the United States Constitution. U.S. Const. Amends. V and XIV. Plaintiffs further allege claims for copyright infringement, for unconstitutional taking pursuant to § 1983, as well as state law claims for unfair and deceptive trade practices and civil conspiracy.

         The State defendants have moved to dismiss plaintiffs' amended complaint, arguing that it is barred by the Eleventh Amendment, that the individual defendants sued in their individual capacities are protected by qualified immunity and legislative immunity, that the complaint fails to state a plausible claim for relief, that plaintiffs lack standing to challenge § 121-25(b) as amended, and that this Court should abstain from issuing an opinion of first impression regarding North Carolina's public record statute. Fed.R.Civ.P. 12(b)(1), (2), (6). Defendant Friends of Queen Anne's Revenge move to dismiss plaintiffs' complaint for failure to state a plausible claim for relief. Fed.R.Civ.P. 12(b)(6).

         DISCUSSION

         Federal Rule of Civil Procedure 12(b)(1) authorizes dismissal of a claim for lack of subject matter jurisdiction. When subject matter jurisdiction is challenged, the plaintiff has the burden of proving jurisdiction to survive the motion. Evans v. B.F. Perkins Co., 166 F.3d 642, 647-50 (4th Cir. 1999). Rule 12(b)(2) of the Federal Rules of Civil Procedure authorizes dismissal for lack of personal jurisdiction. When personal jurisdiction has been challenged on the papers alone, the plaintiff must make a prima facie case showing that personal jurisdiction exists, and a court construes all facts and inference in favor of finding jurisdiction. Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989).

         Rule 8 of the Federal Rules of Civil Procedure "requires only a short and plain statement of the claim showing that the pleader is entitled to relief and which provides "the defendant fair notice of what the claim is and the grounds upon which it rests." Erickson v. Pardus, 551 U.S. 89, 93 (2007) (internal quotations, alterations, and citations omitted). A Rule 12(b)(6) motion tests the legal sufficiency of the complaint. Papasan v. Allain, 478 U.S. 265, 283 (1986). When acting on a motion to dismiss under Rule 12(b)(6), "the court should accept as true all well-pleaded allegations and should view the complaint in a light most favorable to the plaintiff." Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993). A complaint must allege enough facts to state a claim for relief that is facially plausible. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Facial plausibility means that the facts pled "allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged, " and mere recitals of the elements of a cause of action supported by conclusory statements do not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         The Court addresses first the immunity defenses raised by the State and DNCR defendants.

         I. Eleventh Amendment Immunity

         "The Eleventh Amendment bars suit against non-consenting states by private individuals in federal court." Bd. of Trustees of the Univ. of Ala. v. Garrett, 531 U.S. 356, 363 (2001). This guarantee applies not only to suits against the state itself but also to suits where "one of [the state's] agencies or departments is named as the defendant." Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 100 (1984). State officials sued in their official capacity for damages are also protected by Eleventh Amendment immunity. Ballenger v. Owens, 352 F.3d 842, 845 (4th Cir. 2003). Eleventh Amendment immunity may be waived expressly, Edelman v. Jordan, 415 U.S. 651, 673 (1974); if the defendants removed an action from a state court with jurisdiction, Lapides v. Bd. of Regents of Univ. Sys. of Ga., 535 U.S. 613 (2002); or if Congress has exercised its authority to abrogate Eleventh Amendment immunity. Seminole Tribe v. Florida, 517 U.S. 44(1996).

         Plaintiffs argue in earnest that the State has waived its Eleventh Amendment immunity by the express language in the 2013 settlement agreement. That language reads: "In the event DCR, Intersal, or Nautilus breaches this agreement, DCR, Intersal, or Nautilus may avail themselves of all remedies provided by law or equity." [DE 1-1 ¶ 32]. "The Supreme Court repeatedly has admonished that '[t]he test for determining whether a State has waived its immunity from federal-court jurisdiction is a stringent one.'" In re Sec'y of Dep't of Crime Control & Pub. Safety, 7 F.3d 1140, 1145 (4th Cir. 1993) (quoting Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 241 (1985)). "[A] State will be deemed to have waived its immunity "only where stated by the most express language or by such overwhelming implication from the text as [will] leave no room for any other reasonable construction.'" Atascadero, 473 U.S. at 239-40 (1985) (quoting Edelman, 415 U.S. at 673).

         General consent to suit, including such consent as found in sue-and-be-sued clauses, has been found to be insufficient to waive a state's Eleventh Amendment immunity. Port Auth. Trans-Hudson Corp. v. Feeney, 495 U.S. 299, 306 (1990); Baum Research & Dev. Co. v. Univ. of Massachusetts at Lowell, 503 F.3d 1367, 1370 (Fed. Cir. 2007). Even where a state has authorized suits against it "in any court of competent jurisdiction, " Coll. Sav. Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666, 676 (1999) (quoting Kennecott Copper Corp. v. State Tax Comm 'n, 327 U.S. 573, 577-579 (1946)), courts have been reluctant to find waiver of Eleventh Amendment immunity.

         Although the State's consent to suit in this instance is broad, in the absence of any clear declaration of its intent to submit to suit in federal court, the Court is constrained to find that the State has not waived its Eleventh Amendment immunity by entering into its settlement agreement with plaintiffs. See, e.g., Maynard v. Bd. of Regents of Div. of Universities of Florida Dep't of Educ. ex rel. Univ. of S Florida, 342 F.3d 1281, 1288 (11th Cir. 2003) (state's consent to "sue and be sued in all courts of law and equity" not valid waiver of Eleventh Amendment immunity).

         The Court next turns to the question of whether, in passing the Copyright Remedy Clarification Act of 1990 ("CRCA"), 17 U.S.C. § 501(a), Congress abrogated North Carolina's state sovereign immunity to be sued for copyright violations of the type alleged by plaintiffs. Two questions must be answered in the affirmative in order for Congress to have properly abrogated the states' sovereign immunity: (1) Congress must have unequivocally expressed its intent to abrogate sovereign immunity, and (2) and in so doing Congress must have acted "pursuant to a valid exercise of power." Green v. Mansour, 474 U.S. 64, 68 (1985).

         By enacting the CRCA, there can be no doubt that Congress has stated clearly its intent to abrogate sovereign immunity for copyright claims against a state, its instrumentalities, or its officers or employees in their official capacities.[3] Turning to the second question, neither the Supreme Court nor the Fourth Circuit has directly considered whether the CRCA is an attempt to abrogate sovereign immunity pursuant to a valid exercise of power. But see, e.g., Hairston v. N. Carolina Agr. & Tech. State Univ., "No. 1:04 CV 1203, 2005 WL 2136923, at *3 (M.D. N.C. Aug. 5, 2005). In Seminole Tribe and Florida Prepaid, the Supreme Court held that Congress may not rely on its Article I authority to abrogate state sovereign immunity. But see Cent. Virginia Cmty. Coll. v. Katz, 546 U.S. 356, 363 (2006) (holding that the Bankruptcy Clause of Article I "was intended not just as a grant of legislative authority to Congress, but also to authorize limited subordination of state sovereign immunity in the bankruptcy arena").

         Thus, as Congress may not rely on Article I alone to abrogate the state's sovereign immunity, remaining for consideration is whether it may do so under Section 5 of the Fourteenth Amendment. Section 5 of the Fourteenth Amendment "grants Congress the power to enforce the provisions of the Amendment by creating private remedies against the States for actual violations of those provisions." United States v. Georgia, 546 U.S. 151, 158 (2006) (internal quotation and alteration omitted). Congress may also "pass prophylactic 'legislation which deters or remedies Fourteenth Amendment violations even if in the process it prohibits conduct which is not itself unconstitutional, ' so long as 'there is a congruence and proportionality between the injury to be prevented or remedied and the means adopted to that end." Nat'l Ass 'n of Boards of Pharmacy v. Bd. of Regents of the Univ. Sys. of Georgia, 633 F.3d 1297, 1316(11th Cir. 2011) (quoting City of Boerne v. Flores, 521 U.S. 507, 518-20 (1997)) (internal alterations omitted).

         It is well-understood that the Fourteenth Amendment was "specifically designed to alter the federal-state balance." Florida Prepaid, 527 U.S. at 670. Indeed, whatever amount of sovereign immunity the states retained upon ratification of the Constitution was unmistakably reined in by the passage of the Fourteenth Amendment. See Fitzpatrick v. Bitzer, 427 U.S. 445, 456 (1976) ("the Eleventh Amendment, and the principle of state sovereignty which it embodies, see Hans v. Louisiana, 134 U.S. 1 (1890), are necessarily limited by the enforcement provisions of § 5 of the Fourteenth Amendment.").

         In Florida Prepaid, the Supreme Court considered whether the Patent Remedy Act could be viewed as "remedial or preventive legislation aimed at securing the protections of the Fourteenth Amendment" for holders of patents. 527 U.S. at 639. The Court found that Congress had not identified a pattern of infringement by the states, and had thus acted to "head off this speculative harm" of unremedied patent infringement by the states. 527 U.S. at 640-41. This Court's review of the legislative history of the CRCA leads it to conclude that Congress has acted in response to sufficient evidence of infringement of copyrights by the states. The House Report relied on testimony regarding "the extensive use of copyrighted materials by the States" which predicted that "States might ultimately come to view immunity from monetary relief as comparable to immunity from liability . . .". H.R.Rep. 101-282, pt.2, at 8 (1989); but see Chavezv. Arte Publico Press,204 F.3d 601, 606 (5th Cir. 2000) (finding that testimony presented to Congress primarily concerned threat of future abuse of immunity from damages by the States as opposed to evidence of current constitutional deprivations). Additionally, the legislative history of that Act includes many examples of copyright infringements by States. See Hearings on H.R. 1131 before the Subcommittee ...


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