United States District Court, M.D. North Carolina
MEMORANDUM OPINION AND ORDER
D. SCHROEDER, Chief District Judge.
David Siler and Distinctive Human Resources, Inc.
(“Distinctive HR”) bring this action against
Defendants Elga Lejarza a/k/a Elga Lejarza-Penn, Michael
Penn, Lejarza Compliance Trainings, LLC (“Compliance
Trainings”), and Lejarza HR Consulting, LLC (“HR
Consulting”) for their allegedly unlawful use of
Plaintiffs' copyrighted materials. Before the court is
Defendants' motion to dismiss, pursuant to Federal Rule
of Civil Procedure 12(b)(6). (Doc. 11.) The motion is fully
briefed (Docs. 17, 18) and is ready for decision. For the
reasons set forth below, the motion will be granted in part
and denied in part.
allegations of the complaint, along with the contents of
documents of which the court takes judicial notice,
viewed in the light most favorable to Plaintiffs, show the
is the controlling shareholder of Distinctive HR. (Doc. 1
¶ 10.) Together, they produce study courses and
materials (“Test Prep Materials”) designed to
help individuals pass a variety of human resources
certification exams: the Professional in Human Resources
(PHR) Certification Exam, the Senior Professional in Human
Resources (SPHR) Certification Exam, the Associate
Professional in Human Resources (aPHR) Certification Exam,
and the Global Professional in Human Resources (GPHR)
Certification Exam. (Id. ¶ 11.) The Test Prep
Materials consist of print, audio, video, visual, and
interactive materials, such as study guides, training games,
sample tests, and flashcards. (Id. ¶¶ 11,
16-28.) Included with the Test Prep Materials is access to
Plaintiffs' Learning Management System
(“LMS”), an online platform with test prep
content. (Id. ¶¶ 16, 18, 27-28.) Most of
the component parts of the Test Prep Materials are registered
with the United States Copyright Office. (Id.
¶ 33; Doc. 1-1.)
April of 2011, Lejarza purchased Plaintiffs' PHR/SPHR
audio CD and a one-year self-study online subscription.
(Id. ¶ 62.) In March of 2016, she purchased the
same two audio CDs and another one-year self-study online
subscription. (Id. ¶ 63.) In March of 2017, she
purchased the 2017 PHR/SPHR self-study course bundle with a
one-year self-study online subscription. (Id. ¶
64.) And despite passing her human resources Certification
exams prior to the start of 2018 (id. ¶ 67), in
March of 2018 Lejarza purchased the 2018 PHR/SPHR self-study
course with a one-year online subscription. (Id.
and Penn are business partners and owners of Defendants HR
Consulting and Compliance Trainings. (Doc. 1 ¶¶
81-82, 158-64.) Lejarza, either individually or through
Compliance Trainings, “offers training workshops,
seminars, webinars, classes, or similar training,
educational, or promotional events” to help customers
pass their human resources certification exams. (Id.
¶ 91.) These live workshops are taught by Lejarza, but
prerecorded materials are also available for purchase.
(Id. ¶ 95.)
about July 25, 2018, Distinctive HR received notice that
Defendants were using the Test Prep Materials
“word-for-word” in the slideshow presentations as
part of Defendants' workshops and were including
Plaintiffs' materials in their on-demand materials.
(Id. ¶ 108-09.) Distinctive HR's software
also recorded Lejarza accessing the self-study site thousands
of times between May 18, 2017, and August 28, 2018, often
with her actions overlapping in time. (Id.
purchase page of Plaintiffs' Test Prep Materials provides
customers this notice:
[Learning Management System] access is for a single-user and
is NOT transferable or to be shared with others. LMS access
is valid for 1 year from the date your order is processed. A
valid email address and individual's name must be
provided for each [name of product ordered] ordered. All
materials are copyrighted material and may not, in whole or
in part, be copied, shared, or reproduced by any means for
any reason without the prior written consent of Distinctive
Human Resources, Inc. Any violation of these terms and
conditions will result in immediate termination of your
access to these materials, with no refund provided.
(Id. ¶ 69.) Plaintiffs allege that Lejarza not
only reproduced their copyrighted material in her own
workshops and on-demand materials, but that she also provided
her login information to staff, volunteers, co-owners, or
agents of Compliance Trainings and/or HR Consulting.
(Id. ¶ 80.)
August 27, 2018, Plaintiffs' counsel sent a cease and
desist demand to Lejarza and Compliance Trainings, and
Lejarza's self-study subscription was terminated on
August 28, 2018, for violations of the user license
agreement. (Id. ¶¶ 66, 138.) According to
Defendants, Lejarza has continued to infringe on
Plaintiffs' copyrights following the cease and desist
letter. (Id. ¶ 139.)
April 15, 2019, Plaintiffs filed this lawsuit pursuant to 18
U.S.C. §§ 1331 and 1338(a), under the Copyright
Act. (Doc. 1.) Based on Defendants' alleged misconduct,
Plaintiffs bring five causes of action. Against each
Defendant, Plaintiffs claim copyright infringement under the
Copyright Act, 17 U.S.C. §§ 106, 501; unfair
competition under the Lanham Act, 15 U.S.C. § 1125; and
common law copyright infringement and unfair and deceptive
trade practices under the North Carolina Unfair and Deceptive
Trade Practices Act (“UDTPA”), N.C. Gen. Stat.
§§ 75-1.1 et seq. (Id. at 22-24,
26-27, 28-32.) Against Lejarza individually, Plaintiffs
allege breach of contract. (Id. at 24-25.) In lieu
of answering, Defendants filed the present motion to dismiss,
which is fully briefed and ready for decision.
assert, and the parties do not dispute, that the court has
subject matter jurisdiction under 28 U.S.C. §§ 1331
and 1338(a), under the Copyright Act. (Doc. 1 ¶ 7.) The
court also has original jurisdiction over Plaintiffs'
claim of unfair competition that is “joined with a
substantial and related claim under the copyright . . .
laws.” 28 U.S.C. § 1338(b). The court exercises
supplemental jurisdiction over all other claims that are
“so related to claims in the action within such
original jurisdiction that they form part of the same case or
controversy.” 28 U.S.C. § 1367.
Standard of Review
move to dismiss Plaintiffs' claims under Rule 12(b)(6),
arguing that Plaintiffs have failed to state a claim upon
which relief can be granted. (Doc. 11.) They assert that
Plaintiffs' state law claims for breach of contract,
unfair and deceptive trade practices, and common law
copyright infringement are preempted by section 301 of the
Copyright Act. 17 U.S.C. § 301. (Doc. 13.) They also
move to dismiss Plaintiffs' unfair competition claim as
duplicative of their copyright infringement claim.
(Id.) Defendants Lejarza and Penn also assert that
Plaintiffs' copyright infringement claim is not
cognizable as to them individually because Plaintiffs have
not alleged sufficient facts to pierce the corporate veil.
motion to dismiss under Rule 12(b)(6) is meant to
“test the sufficiency of a complaint” and not
to “resolve contests surrounding the facts, the merits
of a claim, or the applicability of defenses.”
Republican Party of N.C. v. Martin, 980 F.2d 943,
952 (4th Cir. 1992). To survive such a motion, “a
complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on
its face.'” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)). In considering the motion, a court
“must accept as true all of the factual allegations
contained in the complaint, ” Erickson v.
Pardus, 551 U.S. 89, 94 (2007) (per curiam), and all
reasonable inferences must be drawn in the plaintiff's
favor, Ibarra v. United States, 120 F.3d 472, 474
(4th Cir. 1997). “Rule 12(b)(6) protects against
meritless litigation by requiring sufficient factual
allegations ‘to raise a right to relief above the
speculative level' so as to ‘nudge the claims
across the line from conceivable to plausible.'”
Sauers v. Winston-Salem/Forsyth Cty. Bd. of Educ.,
179 F.Supp.3d 544, 550 (M.D. N.C. 2016) (alterations in
original) (quoting Twombly, 550 U.S. at 555). Mere
legal conclusions are not accepted as true, and
“[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not
suffice.” Iqbal, 556 U.S. at 678.
their first cause of action, Plaintiffs assert that they own
the copyrights for their Test Prep Materials, which are
registered with the United States Copyright Office. (Doc. 1
at 22.) Attached to their complaint are the certificates of
registration from the Copyright Office. (Doc. 1-1.)
Plaintiffs allege that Defendants, without permission or
authorization, copied Plaintiffs' Test Prep Materials in
a “willful, intentional, and purposeful [way], in
disregard of and with indifference to Plaintiffs'
rights.” (Doc. 1 at 22-23.) Defendants do not contest
that Plaintiffs have sufficiently pleaded a copyright
infringement claim but instead move to dismiss the claims
against Lejarza and Penn in their individual capacities,
claiming that “the dispute is really between the
Plaintiffs and the corporate Defendants.” (Doc. 13 at
13.) Defendants argue that the factual allegations do not
support piercing the corporate veil as to Compliance
Trainings and HR Consulting. (Doc. 18 at 4-5.) Plaintiffs
respond that “[p]iercing the LLC or Corporate Veil is
not the only way an individual can be liable in a
lawsuit” and further argue that they have “made
numerous claims” against both Lejarza and Penn
individually. (Doc. 17 at 10.)
establish a claim for copyright infringement under the
Copyright Act of 1976, 17 U.S.C. § 101 et seq.,
a plaintiff must prove that it possesses a valid copyright
and that the defendant copied elements of its work that are
original and protectable.” Copeland v. Bieber,
789 F.3d 484, 488 (4th Cir. 2015). A defendant may infringe a
copyright either directly, contributorily, or vicariously.
Live Face on Web, LLC v. Absonutrix, LLC, No.
1:17cv937, 2018 WL 2121627, at *2 (M.D. N.C. May 8, 2018).
“Direct infringement of a copyright ‘requires
conduct by a person who causes in some meaningful
way an infringement.'” Id. ...