12‐1883‐cv
Troma Entertainment v. Robbins, et al.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 2013
(Argued: April 29, 2013 ; Final Submission: July 25, 2013;
Decided: September 6, 2013)
Docket No. 12‐1883‐cv
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
TROMA ENTERTAINMENT, INC.,
Plaintiff‐Appellant,
‐ v ‐
CENTENNIAL PICTURES INC., PAN GLOBAL ENTERTAINMENT, LLC,
Defendants,
LANCE H. ROBBINS, KING BRETT LAUTER,
Defendants‐Appellees.
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
Before: JACOBS and SACK, Circuit Judges, and RAKOFF, District Judge.*
*
The Honorable Jed S. Rakoff, United States District Judge for the Southern
District of New York, sitting by designation.
Appeal by the plaintiff‐appellant from a judgment of the United
States District Court for the Eastern District of New York (Brian M. Cogan, Judge)
dismissing its lawsuit for lack of personal jurisdiction over defendants‐appellees
and for improper venue. We agree with the district court that the plaintiff‐
appellantʹs allegations concerning personal jurisdiction fail to establish a non‐
speculative and direct New York‐based injury that goes beyond economic losses
suffered in the state, as required by the provision of New York Stateʹs long‐arm
statute pursuant to which jurisdiction is asserted, N.Y. C.P.L.R. § 302(a)(3)(ii).
The district court was therefore correct in declining to exercise personal
jurisdiction over the defendants‐appellees, and accordingly dismissing the
lawsuit against them.
Affirmed.
STUART REISER (Manuel A. Arroyo, Rachel
Schulman, Esq., on the brief), Shapiro, Croland,
Reiser, Apfel & Di Iorio, LLP, Hackensack, NJ, for
Plaintiff‐Appellant.
Lance H. Robbins, pro se, North Hollywood, CA.
King Brett Lauter, pro se, Marina Del Rey, CA.
Brian Marc Feldman, John P. Bringewatt, Harter
Secrest & Emery LLP, Rochester, NY, pro bono
2
amicus curiae at the request of the Court in
support of the Defendants‐Appellees.*
SACK, Circuit Judge:
The subject of this appeal is the reach of New York Stateʹs long‐arm
statute in the context of alleged infringement of intellectual property. At issue is
section 302(a)(3)(ii) of the New York Civil Practice Law and Rules, and in
particular its requirement that the allegedly tortious conduct of the individual
over whom personal jurisdiction is asserted under that section ʺcaus[ed] injury to
person or property within the state.ʺ N.Y. C.P.L.R. § 302(a)(3). The district court
concluded that plaintiff‐appellant Troma Entertainment, Inc., (ʺTromaʺ) had
failed to allege such an in‐state injury, and therefore dismissed its lawsuit against
defendants‐appellees Lance H. Robbins and King Brett Lauter for want of
personal jurisdiction. We agree with the district court and therefore affirm.
*
Robbins and Lauter are proceeding pro se, as they did before the district
court. After oral argument, we appointed Brian Feldman, Esq., as pro bono amicus
curiae in support of Robbinsʹs and Lauterʹs position. The Court expresses its
thanks to Mr. Feldman and his colleagues at the law firm of Harter Secrest &
Emery LLP, for accepting the appointment and for their highly professional
assistance.
3
BACKGROUND
The following facts are drawn from the allegations in Tromaʹs
complaint, which are taken as true for purposes of resolving this appeal. See Licci
ex rel. Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50, 56 (2d Cir. 2012).
Troma is a New York‐based corporation in the business of
producing and distributing ʺcontrolled budget motion pictures.ʺ Compl. ¶ 5.
Two such motion pictures are spoof films titled ʺCitizen Toxie, Toxic Avenger
Part IV,ʺ created by Troma, and ʺPoultrygeist: Night of the Chicken Dead,ʺ to
which Troma owns distribution rights. Id.
In October 2009, Troma authorized one Lance Robbins to represent it
in negotiations concerning the licensing of distribution rights to Citizen Toxie
and Poultrygeist to a German distributor. Such authorization was supposed to
lapse after thirty days if no agreement was reached. Thirty days passed with
Robbins apparently unable to negotiate a deal with a German distributor. At
least that was what Tromaʹs officers thought.
As it turned out, Robbins, in cahoots with codefendant King Brett
Lauter, had, a week prior to receiving authorization, entered into a distribution
license in Germany with an outfit called Intravest Beteiligungs GMBH
(ʺIntravestʺ). Troma alleges that Robbins and Lauter falsely assured Intravest
4
that they owned the rights to the films; purchased, as any retail customer might,
German‐language DVD copies of the films from Amazon.comʹs German website;
delivered those DVDs to Intravest; and pocketed the proceeds of the agreement,
without ever notifying Troma that the agreement even existed. None of these
actions is alleged to have taken place in New York.
Troma learned in August 2010 that Intravest, ʺvia pay‐per‐channel
distribution on Silverline AGʹs Movie Channels,ʺ id. ¶ 18, had been broadcasting
Citizen Toxie and Poultrygeist in Germany. Troma filed suit on March 7, 2011,
against Robbins, Lauter, and two entities that are no longer parties to this
litigation, in the United States District Court for the Eastern District of New York.
Its complaint alleges copyright infringement under federal law, and state law
claims of common law fraud and tortious interference with prospective economic
advantage.
In March 2012, Robbins and Lauter, both proceeding pro se, filed
motions to dismiss for want of personal jurisdiction. In a memorandum decision
and order filed April 10, 2012, the district court (Brian M. Cogan, Judge)
concluded that New York Stateʹs long‐arm statute did not permit it to exercise
personal jurisdiction over Robbins and Lauter in the Eastern District of New
York. Troma Entertainment, Inc. v. Centennial Pictures Inc., 853 F. Supp. 2d 326,
5
327‐30 (E.D.N.Y. 2012). It concluded that the allegations in Tromaʹs complaint,
taken as true, did not make out a prima facie showing that Robbinsʹs and Lauterʹs
conduct ʺcaus[ed] injury within [New York],ʺ N.Y. C.P.L.R. § 302(a)(3)(ii), as
required by the provision of New York Stateʹs long‐arm statute pursuant to
which Troma asserted personal jurisdiction. Troma, 853 F. Supp. 2d at 329‐30.
On April 18, 2012, after Troma advised the district court that it did
not wish to pursue a transfer of the action to the Central District of California ‐‐
where personal jurisdiction over the defendants could be exercised ‐‐ the court
entered judgment dismissing Tromaʹs lawsuit for lack of jurisdiction and
improper venue.
Troma appeals.
DISCUSSION
The only issue before us is whether the district court erred in
determining that it lacked personal jurisdiction over Robbins and Lauter under
New York Stateʹs long‐arm statute. ʺA plaintiff bears the burden of
demonstrating personal jurisdiction over a person or entity against whom it
seeks to bring suit.ʺ Penguin Group (USA) Inc. v. American Buddha (ʺPenguin Iʺ),
609 F.3d 30, 34 (2d Cir. 2010). At this stage of the proceedings, a plaintiff need
only make a ʺprima facie showing that jurisdiction exists.ʺ Id. at 34‐35. In other
6
words, a complaint will survive a motion to dismiss for want of personal
jurisdiction so long as its allegations, taken as true, are ʺlegally sufficient
allegations of jurisdiction.ʺ Id. at 35 (internal quotation marks omitted). ʺWe
review a district courtʹs legal conclusions concerning its exercise of jurisdiction de
novo, and its underlying factual findings for clear error.ʺ Marvel Characters, Inc. v.
Kirby, ‐‐‐ F.3d ‐‐‐, 2013 WL 4016875, *5, 2013 U.S. App. LEXIS 16396, *13 (2d Cir.
Aug. 8, 2013).
In order to exercise personal jurisdiction over a defendant, a district
court must possess a statutory basis for doing so. Id., 2013 U.S. App. LEXIS 16396
at *13. With few exceptions not applicable to the case at bar, the existence of such
a statutory basis ʺis determined by the law of the state in which the court is
located,ʺ Spiegel v. Schulmann, 604 F.3d 72, 76 (2d Cir. 2010) ‐‐ here, New York.
Troma asserts that personal jurisdiction may be exercised in the
Eastern District over Robbins and Lauter through section 302(a)(3)(ii) of New
Yorkʹs long‐arm statute. See N.Y. C.P.L.R. § 302(a)(3)(ii). That provision confers
personal jurisdiction over an individual who ʺcommits a tortious act without the
state causing injury to person or property within the state . . . if he . . . expects or
should reasonably expect the act to have consequences in the state and derives
substantial revenue from interstate or international commerce.ʺ Id.; see Penguin I,
7
609 F.3d at 35 (discussing the requirements for establishing jurisdiction under
section 302(a)(3)(ii)). At issue here is the requirement that the alleged tortious
conduct ʺcaus[ed] injury within [New York].ʺ Id. Troma argues that Robbins and
Lauterʹs alleged infringement caused such injury in the state because it resulted
in ʺa loss of sale and a generalized harm . . . to [Tromaʹs] exclusive distribution
rightʺ over Citizen Toxie and Poultrygeist. Appellantʹs Br. at 9.
It is well‐settled that ʺresidence or domicile of the injured party
within [New York] is not a sufficient predicate for jurisdictionʺ under section
302(a)(3). Fantis Foods, Inc. v. Standard Importing Co., 49 N.Y.2d 317, 326, 402
N.E.2d 122, 126, 425 N.Y.S.2d 783, 787 (1980). Honoring this principle, we have
rejected as insufficient to support the exercise of jurisdiction over a defendant
allegations of ʺremote or consequential injuries such as lost commercial profits
which occur in New York only because the plaintiff is domiciled or doing
business here.ʺ Lehigh Valley Indus. v. Birenbaum, 527 F.2d 87, 94 (2d Cir. 1975); see
also American Eutectic Welding Alloys Sales Co. v. Dytron Alloys Corp., 439 F.2d 428,
433 (2d Cir. 1971) (rejecting as insufficient ʺharm in New York in the sense that
any sale lost anywhere in the United States affects [the plaintiffʹs] profitsʺ). In
sum, ʺ[T]he suffering of economic damages in New York is insufficient, alone, to
8
establish a direct injury in New York for N.Y. C.P.L.R. § 302(a)(3) purposes.ʺ
Penguin I, 609 F.3d at 38 (internal quotation marks omitted).
Troma maintains that its allegations amount to more than the
assertion of mere economic injury within the state. It relies principally on the
New York Court of Appealsʹ decision in Penguin Group (USA), Inc. v. American
Buddha (ʺPenguin IIʺ), 16 N.Y.3d 295, 964 N.E.2d 159, 921 N.Y.S.2d 171 (2011), in
which the Court answered a question we had certified to it. The plaintiff in that
case, Penguin Group, alleged that defendant American Buddha had infringed its
copyrights over four books by uploading copies of the books to its Internet
website and ʺmaking them available free of charge to its 50,000 members and
anyone with an Internet connection.ʺ Id. at 300, 964 N.E.2d at 160, 921 N.Y.S.2d at
172. Penguin Group brought suit in the United States District Court for the
Southern District of New York, asserting personal jurisdiction within the state
pursuant to section 302(a)(3)(ii). Penguin I, 609 F.3d at 31.
When the issue reached us on appeal, we noted that ʺ[n]either the
New York Court of Appeals nor this Court has decided what the situs of injury is
in an intellectual property case.ʺ Id. at 36. We recognized also that ʺthe fact that
the alleged infringement . . . was conducted by means of the Internet and online
libraries . . . may affect the [jurisdictional] analysis.ʺ Id. at 34. Finding ourselves
9
unable to predict how the New York Court of Appeals would resolve the
jurisdiction issue in that case, we certified to it the question: ʺIn copyright
infringement cases, is the situs of injury for purposes of determining long‐arm
jurisdiction under N.Y. C.P.L.R. § 302(a)(3)(ii) the location of the infringing action
or the residence or location of the principal place of business of the copyright
holder?ʺ Id.
The Court of Appeals accepted our certification, but narrowed our
question to address only the situation presented to it in that matter: ʺcopyright
infringement cases involving the uploading of a copyrighted printed literary
work onto the Internet.ʺ Penguin II, 16 N.Y.2d at 301, 964 N.E.2d at 161, 921
N.Y.S.2d at 173. The Court concluded that, under the circumstances presented,
the situs of the injury was the location of the copyright owner ‐‐ New York.
The Court of Appeals rested this conclusion on ʺthe convergence of
two factors.ʺ Id. at 304, 964 N.E.2d at 163, 921 N.Y.S.2d at 175. The first was the
nature of the alleged infringement, viz., the uploading and making available of
Penguin Groupʹs copyrighted works by means of the Internet. ʺThe crux of
Penguinʹs copyright infringement claim,ʺ the Court reasoned, ʺis not merely the
unlawful electronic copying or uploading of the four copyrighted books.ʺ Id. at
304, 964 N.E.2d at 163, 921 N.Y.S.2d at 175. ʺRather, it is the intended
10
consequences of those activities ‐‐ the instantaneous availability of those
copyrighted works . . . for anyone, in New York or elsewhere, with an Internet
connection to read and download the books free of charge.ʺ Id. at 304‐05, 964
N.E.2d at 163‐64, 921 N.Y.S.2d at 175‐76. Because, the Court concluded, the
injury occasioned by uploading is so widely dispersed, and the place of
uploading largely ʺinconsequential,ʺ ʺthe out‐of‐state location of the infringing
conductʺ ‐‐ the other possible situs of injury ‐‐ ʺcarries less weight in the
jurisdictional inquiry.ʺ Id. at 305, 964 N.E.2d at 164, 921 N.Y.S.2d at 176.
The second factor upon which the Court of Appeals rested its
decision was ʺthe unique bundle of rights granted to copyright owners.ʺ Id. at
305, 964 N.E.2d at 164, 921 N.Y.S.2d at 176. Infringement of intellectual property,
the Court reasoned, could not only cause ʺindirect financial loss,ʺ but could also
ʺdiminish[] the incentive to publish or write,ʺ or engender ʺmarket confusion,ʺ
presumably leading to the diminution of the value of the rights themselves. Id. at
306, 964 N.E.2d at 164, 921 N.Y.S.2d at 176 (quotation marks omitted). Such
injury to intellectual property rights held by New York copyright owners goes
beyond mere economic loss suffered in New York. The Court concluded that this
was enough to establish the situs of injury as the location of the copyright owner,
at least in a case in which, as the Court had already explained, the ʺnature and
11
function of the Internetʺ render the location of the infringing conduct of
diminished relevance.
The Court carefully cabined its holding. First, as noted above, it
modified the question we certified so as to address only copyright infringement
accomplished by uploading to the Internet. And it explicitly declined ʺto address
whether a New York copyright holder sustains an in‐state injury pursuant to
N.Y. C.P.L.R. 302(a)(3)(ii) in a copyright infringement case that does not allege
digital piracy,ʺ citing, without endorsing either, two federal district court cases
from our Circuit reaching opposing conclusions on the question. Id. at 307 n.5,
964 N.E.2d at 165 n.5, 921 N.Y.S.2d at 177 n.5 (citing McGraw Hill Companies, Inc.
v. Ingenium Technologies Corp., 375 F. Supp. 2d 252 (S.D.N.Y. 2005), and Freeplay
Music, Inc. v. Cox Radio, Inc., 04 civ. 5238, 2005 WL 1500896, 2005 U.S. Dist. LEXIS
12397 (S.D.N.Y. June 23, 2005)).
As Troma appears to acknowledge, the Court of Appealsʹ decision in
Penguin II is too narrow to control this case. The plaintiff in Penguin levied
allegations of a form of infringement that works an injury that is virtually
impossible to localize ‐‐ the uploading and making available of copyrighted
materials, free of charge, to anyone with an Internet connection. Troma has
alleged no such injury. Nowhere in Tromaʹs complaint can one find an allegation
12
suggesting that Robbins and Lauterʹs tortious conduct harmed Troma in a way
that cannot be ʺcircumscribedʺ to a particular locality. Penguin II, 16 N.Y.3d at
305, 964 N.E.2d at 164, 921 N.Y.S.2d at 176. This case is therefore more like
ʺtraditional commercial tort casesʺ in which ʺthe place where [the plaintiffʹs]
business is lost or threatenedʺ exerts a significant gravitational influence on the
jurisdictional analysis. Id. Whether that place is California ‐‐ where Robbins and
Lauter allegedly hatched their scheme ‐‐ or Germany ‐‐ where they put it into
effect ‐‐ we need not say. It is not New York.
Troma is left, then, to rely on the Court of Appealsʹ endorsement of
the theory that out‐of‐state infringement may harm the bundle of rights held by a
New York‐based copyright owner in New York. We acknowledge that this is a
plausible theory after Penguin II and agree with Tromaʹs characterization of the
Court of Appealsʹ articulation of it. But it is just that: a theory of injury that ‐‐
certainly in cases of the uploading and making available of copyrighted works,
but also perhaps in isolation ‐‐ may satisfy section 302(a)(3)ʹs injury requirement
in a particular case. We find nothing in the Court of Appealsʹ opinion, however,
that relieves intellectual property owners of the obligation, in each case, to allege
facts demonstrating a non‐speculative and direct New York‐based injury to its
intellectual property rights of the sort Penguin II recognized.
13
Tromaʹs allegations, taken as true, do not satisfy this requirement.
Troma alleges that Robbins and Lauter, in essence, usurped two potential
licensing agreements in Germany, and it maintains that this caused what it labels
ʺgeneralized harm (i.e., statutory damages as a result of [defendantsʹ] willful
infringement) to its exclusive distribution right.ʺ Appellantʹs Br. at 13. We
conclude that Tromaʹs assertion of such an injury, in light of the allegations in its
complaint, is far too speculative to support a finding that Troma suffered injury
in New York within the meaning of section 302(a)(3)(ii).
Infringement comes in many stripes. It is not the case that any
infringement anywhere can be said to diminish incentives to engage in a creative
enterprise, or to harm, beyond the immediate loss of profits, the continuing value
of one or more of a copyright holderʹs bundle of rights. Certainly the availability
of the statutory damage remedy under the copyright laws does not establish
automatically that this sort of injury has occurred. And we think it entirely
implausible that the infringement alleged by Troma ‐‐ discrete, geographically
circumscribed theft of the opportunity to license distribution of copyrighted
works ‐‐ would cause such an injury.
Troma has not articulated a non‐speculative and direct injury to
person or property in New York that goes beyond the simple economic losses
14
that its New York‐based business suffered. It is well settled that such economic
losses are not alone a sufficient basis for personal jurisdiction over the persons
who caused them. Troma has thus not made out a prima facie showing of
personal jurisdiction under section 302(a)(3)(ii). The district court correctly
concluded that it did not have the power to exercise personal jurisdiction over
Robbins and Lauter.
CONCLUSION
For the foregoing reasons, the judgment of the district court is
affirmed.
15