WRS Group Ltd v. Snow

United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
For the Fifth Circuit July 17, 2003

No. 02-50118 Charles R. Fulbruge III
Clerk

ELAINE SNOW,

Plaintiff - Appellant,

VERSUS

WRS GROUP, INC., WRS GROUP LTD.,
D/B/A WRS GROUP INC., D/B/A CHILDBIRTH GRAPHICS,

Defendants- Appellees.

_________________________________________

consolidated with

No. 02-50812

WRS GROUP LTD.,

Plaintiff - Appellee,

VERSUS

ELAINE SNOW,

Defendant - Appellant.

1
 Appeal from the United States District Court
For the Western District of Texas

(00-CV-213 & 02-CV-17)

Before HIGGINBOTHAM, EMILIO M. GARZA, and DENNIS, Circuit Judges.

DENNIS, Circuit Judge:*

These two consolidated appeals concern the commercial use of

photographs taken of appellant Elaine Snow during the birth of her

child. The district court dismissed her copyright infringement and

state law claims and later enjoined the prosecution of her state

court actions in state court. Snow’s first appeal challenges the

district court’s dismissal of her state law claims against

defendant-appellee, WRS Group, Ltd. (“WRS”) on statute of

limitations grounds. Her second appeal contests whether her state

court suit may be enjoined under the re-litigation exception to the

Anti-Injunction Act, 28 U.S.C. § 2283. For the following reasons,

we AFFIRM IN PART, but VACATE the district court’s injunction of

Snow’s state court suit.

I. Background

On July 12, 1982, Elaine Snow and her husband William Henry

Snow III hired a photographer while living in California to take

photographs of the birth of their son. In 1983, the Snows moved to

*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

2
Oregon. While there, William, without telling Elaine, gave

permission to Candace Palmo, the mid-wife who delivered the Snow’s

child, to show the photographs to her childbirth class in

California and forwarded her the photograph negatives.

Palmo used these photographs in her childbirth class and in

1986 also began displaying the photographs in a slide show entitled

“Joyous Beginnings. Later, Elaine searched for and was unable to

locate the negatives to these photographs. At this point, William

told Elaine that he had given the negatives to Palmo to use in her

childbirth class.

In 1988, Childbirth Graphics, Ltd. purchased the marketing and

distribution rights to the “Joyous Beginnings” presentation from

Palmo. Palmo told Jamie Bolane, president of Childbirth Graphics,

that all of the individuals shown in the slide show had consented

to the use of their photographs. In 1992, WRS, a Texas entity,

purchased “Joyous Beginnings” from Childbirth Graphics. From 1992

on, WRS marketed and sold this product through various means,

including on-line.

On August 22, 1998, Snow learned that the photographs were

being used in “Joyous Beginnings” when her sister purchased the

product from WRS’s website and recognized her in the presentation.

After this discovery, Snow sent WRS a demand letter on January 5,

1999 ordering it to cease using and to return the photographs. On

August 11, 2000, Snow filed a complaint in the Western District of

3
Texas against WRS and Palmo. She also filed an amended complaint

on August 18, 2000 adding Ortega Recording Studios and John Ortega

as defendants.2 In this suit, she brought a copyright infringement

claim and state law claims for intentional infliction of emotional

distress, invasion of privacy, negligence, and conversion. She

sought damages and an injunction against the further use of the

photographs.

Snow did not immediately serve the amended complaints. On

January 11, 2001, the district court, pursuant to Rule 4(m) of the

Federal Rules of Civil Procedure (“FRCP”), ordered her to show

cause why the amended complaints should not be dismissed for want

of prosecution. Snow filed a motion to enlarge the time for

service, which the court granted, and on March 6, 2001, she served

her amended complaints on the defendants.

On August 1, 2001, WRS moved for summary judgment on Snow’s

claims. The district court granted WRS’s motion on December 26,

2001 and dismissed Snow’s claims. In dismissing these claims, the

district court held: (1) Snow did not possess a copyright in these

photographs; (2) her state law claims were barred by the Oregon

statute of limitations; and (3) WRS had not violated any duty in

displaying the photographs. Snow has only appealed the district

court’s dismissal of the state law claims.

2
The district court dismissed Palmo, Ortega, and Ortega
Recording Studios from the suit based on a lack of personal
jurisdiction. Snow has not appealed this decision and these
defendants are not parties on appeal.

4
 Five days after the district court’s decision, Snow filed suit

in Texas state court bringing claims against WRS for invasion of

privacy, intentional infliction of emotional distress, negligence,

conversion, and civil conspiracy based on WRS’s continued use of

her photographs after Snow had terminated any previously given

consent. On January 15, 2002, WRS filed suit in the Western

District of Texas to enjoin the state court suit. WRS moved for

summary judgment, which the district court granted on June 25,

2002. The court enjoined Snow from litigating any of her claims in

the state court suit based on the re-litigation exception to the

Anti-Injunction Act. Snow timely appealed, and on January 23,

2003, this court consolidated the two appeals.

II. Analysis

Snow challenges both the dismissal of her state law claims on

statute of limitation grounds and the injunction preventing her

from litigating her claims in state court. Because both decisions

were granted on summary judgment, we review them de novo, applying

the same standards used by the district court. See Walker v.

Thompson, 214 F.3d 615, 624 (5th Cir. 2000).

A. Statute of Limitations

Snow contends that her state law claims were timely filed and

thus should not have been dismissed by the district court. First,

she argues that the district court erred by applying Oregon, rather

than Texas or California, law to her claims. Second, she maintains

5
that even if Oregon law does apply, her claims were timely because

her claims are continuing torts. Therefore, she argued the statute

of limitations period did not begin to run until WRS stopped using

the photographs. Finally, she argues that even if her claims are

not continuing torts, the district court tolled the statute of

limitations period when it granted an enlargement of time to serve

her complaints. Because these arguments are ultimately without

merit, we affirm the district court’s decision to dismiss these

claims.

(1) Choice of Law

Initially, Snow contends that Oregon law should not apply to

her state law claims because Texas and California have more

significant contacts with the litigation than Oregon. She argues

that it is more significant to the choice-of-law analysis that the

photographs were taken in California, were given to a California

resident, and then marketed in Texas by a Texas corporation than

the fact that she was injured in Oregon, established her

relationship with WRS in Oregon, and was domiciled in Oregon. We

disagree.

When a federal court is presented with state law claims

pursuant to its diversity jurisdiction, the court will follow the

conflict of law rules of the forum state. See Klaxon v. Stentor

Electric Manufacturing Co., 313 U.S. 487, 496 (1941). This rule

also applies to state law claims that, as here, are before the

6
federal court based on supplemental jurisdiction. See Baltimore

Orioles, Inc. v. Major League Baseball Players Ass’n, 805 F.2d 663,

681 (7th Cir. 1986). Because suit was filed in a Texas federal

court, the Texas conflict of law rules will apply to Snow’s state

law claims.

Texas uses the “most significant relationship” test of the

Restatement (Second) of Conflict of Laws. See Gutierrez v.

Collins, 583 S.W.2d 312, 318 (Tex. 1979); RESTATEMENT (SECOND) OF

CONFLICTS §§ 6, 145 (1969). Under the “most significant

relationship” test, the “rights and liabilities of the parties with

respect to an issue in tort are determined by the local law of the

state which, with respect to that issue, has the most significant

relationship to the occurrence and the parties.” RESTATEMENT (SECOND)

OF CONFLICTS § 145(1). Under this test, the contacts to be taken

into account include: (1) the place where the injury occurred; (2)

the place where the conduct causing the injury occurred; (3) the

domicile and residence of the parties; and (4) the place where the

relationship between the parties is centered. Id. § 145(2). But

“[i]n situations involving the multistate publication of matter

that ... invades [a] right of privacy, ... the place of the

plaintiff’s domicil[e]... is the single most important contact for

determining the state of the applicable law.” Id. § 145, cmt. f;

see also Wood v. Hustler Magazine, 736 F.2d 1084, 1087 (5th Cir.

1984).

7
 Our situation is similar to that in Wood v. Hustler Magazine,

in which we applied the Texas conflicts rules to an invasion of

privacy tort claim based on the unauthorized publication of

explicit photographs. 736 F.2d at 1087. In Wood, the plaintiff,

a Texas resident, had a number of private photographs that were

stolen by a third party and published in the defendant’s magazine,

which was based in California. Id. at 1085-86. The court found

that Texas law applied because the plaintiff resided in Texas, the

injury occurred in Texas, and the relationship of the parties was

centered in Texas, although the defendant, a California

corporation, marketed the photographs from California. Id. at

1087.

Similar facts are present in this case. First, Snow has been

an Oregon resident since 1983. Second, Snow’s injury took place in

Oregon because this is where she allegedly suffered emotional

distress upon learning that WRS was marketing her photographs.

Third, the relationship between Snow and WRS is centered in Oregon

because Snow’s only contact with WRS came from its marketing of her

photographs on-line, which she discovered while in Oregon.

Although the photographs were taken in California, were given to

Palmo, a California resident, and were marketed in Texas by WRS, a

Texas corporation, Oregon still has the most significant contacts

with this litigation. Therefore, the district court properly

applied Oregon law to Snow’s state law claims.

(2) Continuing Torts
8
 Snow next contends that even if Oregon law applies, her state

law claims were timely filed because these claims were continuing

torts. She maintains that as continuing torts, the statute of

limitations period did not commence until WRS’s tortious conduct

ceased, which is when it stopped marketing her photographs. She

argues that because WRS continued to market her photographs within

two years of her commencing suit, her claims were timely. This

argument is not persuasive.

Because Snow’s state law claims are based on Oregon law,

Oregon law will determine the applicable statute of limitations and

whether the limitations period has been tolled. Vaught v. Showa

Denko K.K., 107 F.3d 1137, 1145-46 (5th Cir. 1997). Oregon has a

two-year statute of limitations period for tort claims. OR. R.S.

§ 12.110. Under Oregon law, there are both filing and service

requirements for commencing an action. Id. § 12.020. If the

complaint is served within 60 days of suit being filed, then the

action is considered commenced on the date of filing. Id. §

12.020(1). But if the complaint is served more than 60 days after

filing, then the action is considered commenced on the date service

is effected. Id. § 12.020(2).

Under Oregon law, the statute of limitations period begins to

run when the cause of action accrues. Duyck v. Tualatin Valley

Irrigation District, 742 P.2d 1176, 1181-82 (Or. 1987). A cause of

action accrues when the plaintiff is able to sue upon the tort.

9
Id. at 1181. However, if the plaintiff is unaware that she has a

cause of action, then the statute of limitations will not run until

she knew or should have known of the injury. Id. at 1181-82.

The statute of limitations period for continuing torts also

commences upon accrual. A continuing tort is a tort that requires

the cumulative effect of the defendant’s activities to give rise to

a claim. See Davis v. Bostick, 580 P.2d 544, 547 (Or. 1978)

(holding that recovery for a continuing tort “is for the cumulative

effect of wrongful behavior, not for discrete elements of that

conduct.”). Therefore, a plaintiff, who would otherwise not have

a valid claim if the defendant’s separate acts are considered in

isolation, can bring suit if those acts are considered together.

Because all of the defendant’s acts are necessary to constitute the

tort, the statute of limitations period does not commence until the

last act is completed because this is the first time the plaintiff

is able to bring a claim and thus when the claim accrues.

But that is not the case here. Snow cannot rely upon a

continuing tort theory because no further acts were needed for the

accrual of her action after she discovered that WRS was marketing

her photographs on August 22, 1998. No others acts were necessary

for her to bring invasion of privacy, negligence, and conversion

claims once she learned that WRS had obtained and marketed her

photographs. She was also able to sue upon her intentional

infliction of emotional distress claim when she learned of WRS’s

10
activities because that claim is based on her realization that the

photographs were available to the general public. Therefore, the

statute of limitations period for all of Snow’s claims commenced no

later than August 22, 1998.

Snow failed to serve either her original or amended complaint

within 60 days of filing suit. Consequently, her action did not

commence until March 6, 2001, when she served WRS with her suit.

Because this was more than two years after Snow’s claims had

accrued, her claims are barred under the Oregon statute of

limitations.

(3) Grant of Enlargement of Time

Snow next argues that even if the statute of limitations

period commenced when she discovered WRS’s activities, the district

court tolled this period when it granted her an enlargement of time

to serve her complaint. On January 23, 2001, the district court

granted Snow’s motion for enlargement of time to effectuate service

based on FRCP Rule 4(m). Under this rule, if the complaint is not

served within 120 days, the district court may either dismiss the

complaint or order that service be effectuated by a certain date.

FED. R. CIV. P. 4(m). Here, after Snow failed to serve either her

complaint or amended complaint within 120 days of filing, the

district court granted her an enlargement of time to serve the

defendants and she complied. Snow maintains that the additional

time the district court granted to serve her complaint extended the

11
60-day period in which to serve her claims under the Oregon

statute.

This is incorrect. The district court’s grant of an

enlargement of time to serve the complaint under FRCP Rule 4(m)

does not affect the Oregon statute of limitations period. State

service requirements control unless they directly conflict with a

federal rule. Walker v. Armco Steel, 446 U.S. 740, 752-53 (1980)

(“In the absence of a federal rule directly on point, state service

requirements which are an integral part of the state statute of

limitations should control in an action based on state law which is

filed in federal court.”). Therefore, the application of the

federal procedural rule will not affect any state service

requirement unless the service requirement directly conflicts with

that rule.

But Oregon’s service requirement does not conflict with FRCP

Rule 4(m) or any other federal rule. See Torre v. Brickey, 278

F.3d 917 (9th Cir. 2001); see also Habermehl v. Potter, 153 F.3d

1137 (10th Cir. 1998). “There is no conflict between Rule 4(m) and

Oregon law because Rule 4(m) merely sets a procedural maximum time

frame for serving a complaint, whereas [the Oregon statute] is a

statement of substantive decision by that State that actual service

on, and accordingly actual notice to, the defendant is an integral

part of the several policies served by the statute of limitations.”

Torre, 278 F.3d at 919 (quoting Habermehl, 153 F.3d at 1139

12
(quotations omitted)). Therefore, the district court’s grant of

additional time under Rule 4(m) to serve her suit had no effect on

the 60-day period to effectuate service under the Oregon statute.

Accordingly, Snow’s state law claims were untimely and we affirm

the district court’s dismissal of these claims.3

B. State Court Suit Injunction

Snow also contests the district court’s decision to enjoin her

from proceeding with her state court suit because this suit raises

issues not addressed in the initial federal court litigation.

Therefore, she maintains that an injunction is not proper under the

Anti-Injunction Act. WRS counters that under the re-litigation

exception to the Anti-Injunction Act the injunction was proper

because the claims and underlying issues in Snow’s state court suit

were presented to and decided by the district court.

There are two separate issues involving WRS’s marketing of

Snow’s photographs. The first issue is whether WRS had permission

to publish Snow’s photographs. If WRS could market Snow’s

photographs, then this affirmative defense will preclude Snow’s

3
Snow also argues that because the district court found in
its December 26, 2001 order that Snow had no good cause for failing
to timely serve the complaint, it was required under FRCP Rule 4(m)
to dismiss her suit without prejudice. Therefore, the court could
not reach the merits of her claims on summary judgment. However,
even if Snow lacked good cause for the delay, it was still within
the district court’s discretion to allow the enlargement of time
instead of dismissing the complaint. See Thompson v. Brown, 91
F.3d 20, 21 (5th Cir. 1996). Thus, Snow’s argument is without
merit.

13
state law claims. This issue focuses on whether Snow’s husband,

William Henry, gave Palmo consent to use the photographs in the

“Joyous Beginnings” slide show and whether Palmo’s representation

to Childbirth Graphics that she had such consent sufficed to allow

WRS to market the photographs without seeking Snow’s express

permission.

The second issue concerns whether consent, if given, was

terminated prior to WRS’s later publication. “A person who gives

consent may terminate or revoke it at any time by communicating

this revocation to those who may act upon the consent.... [O]nce

the consent is withdrawn [the defendant] becomes liable for any act

that would be tortious without consent.” 1 DAN B. DOBBS, THE LAW OF

TORTS § 104, at 244-45 (2001); see RESTATEMENT (SECOND) OF TORTS § 892A.

This issue focuses on whether Snow terminated consent with her

January 5, 1999 letter and whether WRS continued to market these

photographs after Snow terminated consent. If so, then WRS could

still be subject to liability even if it was not liable before the

termination. Because they address different questions, emphasize

different facts, and have different bases for liability, these two

issues are clearly different.

Snow maintains that although the district court may have

decided the first issue, it did not decide the second. Because

this second issue formed the basis of her state court suit, she

asserts that the re-litigation exception to the Anti-Injunction Act

14
could not be used to enjoin this state court suit. We agree.

The Anti-Injunction Act prevents a federal court from granting

an injunction to stay a state court proceeding except under certain

limited circumstances. 28 U.S.C. § 2283. The re-litigation

exception is one of these circumstances and allows the federal

court to grant an injunction in order “to protect or effectuate its

judgments.” Id. Its purpose is to “permit a federal court to

prevent state litigation of an issue that was previously presented

to and decided by the federal court.” Chick Kam Choo v. Exxon

Corp., 486 U.S. 140, 147 (1988).

In determining whether an issue has been presented to and

decided by the district court, we apply a four-part test. The suit

may be enjoined only if: “(1) the parties in a later action must be

identical to (or at least in privity with) the parties in a prior

action; (2) the judgment in the prior action must have been

rendered by a court of competent jurisdiction; (3) the prior action

must have concluded with a final judgment on the merits; and (4)

the same claim or cause of action must be involved in both suits.”

New York Life Ins. Co. v. Gillespie, 203 F.3d 384, 387 (5th Cir.

2000). In deciding whether to enjoin the state court proceedings,

the emphasis is on the record and what the initial court stated,

not on the subsequent court’s post hoc assessment of what the

previous judgment intended to say. Chick Kam Choo, 486 U.S. at

148. In addition, the issue must actually be raised in the

15
previous litigation. Id. It is irrelevant whether this claim

merely could have been raised in the previous litigation. Finally,

any doubts about the applicability of this exception are to be

resolved in favor of allowing the state court action to proceed.

Texas Employers’ Ins. Ass’n v. Jackson, 862 F.2d 491, 501 (5th Cir.

1988).

The only dispute here is whether the second issue identified

by Snow has been presented to and decided by the district court in

the initial suit. We find that it was not. Therefore, the

district court improperly enjoined Snow’s state court suit.

First, Snow never presented the issue of terminated consent to

the district court. The term “terminated consent” or any language

that WRS was liable to Snow for failing to cease the marketing of

these photographs after receiving the demand letter is wholly

absent from the complaint. WRS argues that Snow pleaded this issue

when her first amended complaint stated: “Demand has previously

been made on the Defendants to cease publication of the

photographs, but no significant action has been taken to the best

of the Plaintiffs knowledge.” 8/18/2000 Amended Complaint, at 4.

But this factual statement, listed under the heading “Facts: Tort

Claims,” does not mean that Snow raised the issue. As Snow

contends, the purpose of that statement was not to allege a claim

for terminated consent, but to support her tort claim for

conversion, in which she alleged that WRS has refused to return the

16
photographs, and her request for injunctive relief based on her

copyright infringement claim. Therefore, this statement by itself

is not sufficient to find that Snow presented the issue of

terminated consent in the initial litigation.

This is further supported by the fact that Snow presented no

evidence on summary judgment to support this issue. As WRS

acknowledges, Snow never even introduced the January 5, 1999 demand

letter sent to WRS. Because this piece of evidence is critical to

proving that WRS continued to market her photographs after she

expressly forbade them to do so, its absence provides strong

evidence that the issue was not presented to the district court.

Second, even if Snow’s brief statement in her complaint was

sufficient to present the issue of terminated consent, this issue

was never decided by the district court. WRS contends that the

court’s decision disposed of this issue when it stated:

“Plaintiff’s state tort claims are equally without merit as she

identified no duty possessed or violated by WRS.” 12/26/01 Order,

at 9. But when the statement is considered in context, it is clear

that it only resolved the issue of whether WRS was liable for its

actions before Snow sent the January 5 letter. After stating that

Snow “identified no duty possessed,” the district court went on to

explain that WRS had no duty because Snow “has presented nothing

that would put WRS on notice that Palmo’s representation was not

true or that it needed to make further inquiry into whether those

depicted in the slide show had actually consented to have their
17
images displayed.” From this statement it is clear that the court

was only deciding whether WRS had a duty before Snow demanded that

it cease marketing her photographs because the demand letter surely

constituted such notice. Therefore, there is no evidence in the

record to indicate that the district court decided that the letter

did not terminate consent.4

Because the terminated consent issue was neither presented to

nor decided by the district court, the state court suit cannot be

enjoined under the re-litigation exception to the Anti-Injunction

Act. Accordingly, we vacate its injunction.

III. Conclusion

Because Snow’s claims brought in federal court were barred by

the Oregon statute of limitations, we AFFIRM the district court’s

grant of summary judgment as to these claims. But because the

issue of terminated consent was neither presented to nor decided by

the district court, we VACATE its injunction of the Texas state

court proceeding, thus allowing the terminated consent claim to

proceed in state court.

4
WRS also argued that because the district court decided
the duty issue, Snow’s state court action could not prevail and
thus the re-litigation exception applied because an essential
element of her claims had already been determined. See Next Level
Communications v. DSC Communications Corp., 179 F.3d 244, 256-57
(5th Cir. 1999). But because the district court only addressed the
duty issue with respect to WRS’s actions before Snow terminated
consent, this argument lacks merit.
18