OPINION
Opinion by Justice BENAVIDES.
Appellant, Roy Pena, appeals his conviction after pleading guilty to burglary of a habitation. See TEX. PENAL CODE ANN. § 30.02(a)(1) (Vernon 2003). Pena, as a two-time repeat felony offender, was subject to punishment as a habitual felony offender and twenty-five to ninety-nine years' imprisonment. See id. § 12.42(d) (Vernon Supp. 2009). By way of a plea bargain, Pena confessed to the burglary of the home in exchange for a sentence cap on his punishment and for having his sentence enhanced by only one prior felony. Pena agreed to be charged with a first-degree felony for the burglary of a habitation and to a reduced sentence of no more than twenty-five years' imprisonment. See id. § 12.42(b). The trial court approved the plea bargain and sentenced Pena to fifteen years' confinement in the Institutional Division of the Texas Department of Criminal Justice. By a single issue, Pena argues that he received ineffective assistance of counsel. We dismiss for lack of jurisdiction.
I. BACKGROUND
On December 12, 2008, eighteen-year-old S.R. was alone at her family home in Corpus Christi, Texas. She heard the back doorknob rattling, as if someone were trying to open the door. S.R. then heard one of the rear windows open. From about ten to fifteen feet away, she saw a man's hands protrude through the blinds to grab the window frame, as though he were trying to pull himself in through the window. She saw the man's face and recognized him as her neighbor, Roy Pena. S.R. grabbed a pair of scissors for protection and yelled at Pena. Upon hearing S.R. yell, Pena jumped out of the window and fled towards his house, yelling and screaming. S.R. called the police. When the police arrived, they found smudges on the window, which were later identified as Pena's finger-prints. Neighbors told the officers that they recognized the screams as Pena's. Police subsequently went to Pena's home and arrested him. On February 20, 2009, Pena was charged with burglary of a habitation as a habitual felony offender.
Pena previously pleaded guilty to indecency with a child when he exposed himself to nine-year-old S.R.
After Pena pleaded guilty pursuant to a plea bargain with the State, the trial court sentenced him to fifteen years' imprisonment and certified Pena's right to appeal. On May 18, 2009, Pena filed a notice of appeal with the trial court. Four days later, Pena filed motions for a new trial and in arrest of judgment, which were both denied. On appeal, Pena claims that he suffers from schizophrenic-paranoia and that his trial counsel provided him with ineffective assistance.
II. JURISDICTION
Before we can discuss the merits of Pena's appeal, we must first address the State's argument that we should dismiss his appeal, The State contends that Pena does not have the right to an appeal because this is a plea bargain case and Pena's sentence did not exceed that recommended by the State. The State asserts that the trial court's certification of the appeal is defective because it indicates that Pena did not make a plea bargain and has the right to appeal, when he in fact did enter into a plea bargain.
Because this issue concerns a plea bargain, "we review the record to determine (1) our jurisdiction, and (2) whether the trial court's certification is correct." Morgan v. State, 185 S.W.3d 535, 537 (Tex. App.-Corpus Christi 2006, pet. ref d). The threshold issue is whether there was a plea bargain. Id. A plea bargain occurs when "a defendant's plea was guilty or nolo contendere and the punishment did not exceed the punishment recommended by the prosecutor and agreed to by the defendant. . . ." TEX. RAPP. P. 25.2(a)(2). There are four general elements necessary to constitute a plea bargain: "(1) that an offer be made or promised, (2) by an agent of the State in authority, (3) to promise a recommendation of sentence or some other concession such as a reduced charge in the case, (4) subject to the approval of the trial judge." Wayne v. State, 756 S.W.2d 724, 728 (Tex. Crim.App. 1988). At trial, the judge expressly notified. Pena that he was accepting a plea bargain and was unlikely to be allowed to appeal it:
[Judge:] Now, look, Mr. Pena, here's the deal: It sounds like a[n] open plea but it's really a plea agreement, okay? It's a deal that your lawyer has worked out with the State's lawyer and the deal is this, they're agreeing to drop one of the enhancements and they're agreeing to a cap. . . . [I]f I give you a sentence within that range you're not going to have a right to appeal essentially because I will have followed the deal. You understand that?
. . . .
[Defendant:] Yes, sir.
Neither party contests that this is a plea bargain case. The record demonstrates that Pena entered into a plea bargain with the State and that he knew that an appeal would be impermissible. See id. The trial court did not exceed the recommended punishment of twenty-five years. We conclude that this is a plea bargain case.
We must next determine whether Pena is entitled to appeal his conviction. "In a plea bargain case . . . a defendant may appeal only (A) those matters that were raised by written motion filed and ruled on before trial, or (B) after getting the trial court's permission to appeal." TEX.R.APP. P. 25.2(a)(2). Pena raised no written motions prior to trial, and the trial court did not affirmatively grant permission to appeal. See Morgan, 185 S.W.3d at 538 (noting that even though the trial court certified an appeal, "[t]he trial court did not affirmatively grant permission to appeal"). While the trial court certified Pena's appeal, we must decide whether, as the State argues, that certification is defective. See Dears v. State, 154 S.W.3d 610 (Tex.Crim.App. 2005). If the certification is defective, then Pena does not have the right to appeal his conviction, and we do not have jurisdiction. See TEX.R.APP. P. 25.2(a)(2); see also Morgan, 185 S.W.3d at 538.
In determining whether a certification is defective, this Court has a "duty" to examine the record. Dears, 154 S.W.3d at 614. "[A] defective certification should include a certification which is correct in form but which, when compared with the record before the court, proves to be inaccurate." Id. Pena's certification of appeal is defective because it inaccurately characterizes his conviction as not arising out of a plea bargain, when the record demonstrates there was a plea bargain. See id. Because the requisites of rule 25.2 have not been satisfied, we do not have jurisdiction over this appeal. TEX.R.APP. P. 25.2(a)(2); Morgan, 185 S.W.3d at 538.
Having determined that Pena's appeal was the result of a plea bargain and that the trial court's certification was defective, the lingering issue is whether we must order the trial court to amend the certification or whether we can dismiss the case without such a step. See Few v. State, 230 S.W.3d 184, 186-90 (Tex.Crim. App. 2007) (remanding case where appellant filed notice of a appeal under an incorrect cause number); see also Menjivar v. State, 264 S.W.3d 137, 142 (Tex.App.-Houston [1st Dist.] 2007, no pet.) (interpreting Few to require a remand to the trial court to correct a defective certification); but see Morgan, 185 S.W.3d at 538-39 (dismissing a case for lack of jurisdiction when a certification was defective). We hold that under the circumstances here, we must dismiss.
In Few, the Texas Court of Criminal Appeals addressed the dismissal of a case due to an incorrect cause number in Few's notice of appeal. 230 S.W.3d at 186. Dismissal for an incorrect cause number, unlike a defective certification where there is no underlying right of appeal, bars an appeal based on a purely procedural error, rather than a substantive restriction. See id. at 189 ("[O]ur appellate rules . . . disfavor() disposing of appeals based upon harmless procedural defects."). In Few, the court noted that "[t]he Texas Rules of Appellate Procedure were amended in 2002 to prevent trivial, repairable mistakes or defects from divesting appellate courts of the jurisdiction to consider the merits of both State and defense appeals in criminal cases." Id. at 187. Here, a substantive rule, not the defect, prevents us from hearing Pena's appeal. See TEX.R.APP. P. 25.2(a)(2); see also Greenwell v. Thirteenth Court of Appeals, 159 S.W.3d 645, 649 (Tex.Crim.App. 2005).
An appellate court can use its discretion to determine when it is appropriate to require a new certification under rule of appellate procedure 37.1. SeeDears, 154 S.W.3d at 614 (concluding "that an appellate court has the ability . . . to use Rules 37.1 and 34.5(c) to obtain another certification, whenever appropriate"); See also TEX.R.APP.P. 34.5(C), 37.1. It is appropriate to order a trial judge to amend a certification of appeal when a procedural error "abridge[s]" a defendant's right to appeal. See Dears, 154 S.W.3d at 614. (noting that appellate rule 37.1 is the vehicle for amending defective certifications where a correctable error impedes a defendant's right to appeal). Here, the trial court's defective certification enlarges Pena's rights by stating that he has a right to appeal when he does not. Pena's appeal is easily distinguishable from Few's appeal: Few had the right to appeal, but made a trivial procedural mistake; Pena had no right to appeal in the first place.
Unlike Few, Pena has no right to appeal this case because he confessed in exchange for a plea bargain. TEX.R.APP. P. 25.2(a)(2); Wayne, 756 S.W.2d at 728; see Few, 230 S.W.3d at 186. As such, rule 25(a)(2) does not authorize Pena's appeal. See Morgan, 185 S.W.3d at 538. "We resolve the deficiency in the trial court's certification against a finding of jurisdiction." Id. at 538. "A court of appeals, while haying jurisdiction to ascertain whether an appellant who plea bargained is permitted to appeal by rule 25(a)(2), must dismiss a prohibited appeal without further-action, regardless of the basis for the appeal." Chavez v. State, 183 S.W.3d 675. 680 (Tex.Crim.App. 2006) (en banc). While the trial judge erred in certifying Pena's case for appeal, the fact remains that Rule 25(a)(2) does not grant us jurisdiction to heat' this appeal. Morgan, 185 S.W.3d at 538. See Greenwell, 159 S.W.3d at 649. Even if we were to order the trial court to amend its certification, Pena would still be unable to appeal his conviction. See TEX.R.APP. P. 25.2(a)(2); see also Morgan, 185 S.W.3d at 538; Greenwell, 159 S.W.3d at 649. We conclude that we do not need to order the trial court to correct the certification because the record affirmatively demonstrates that Pena does not have the right to appeal.
III. CONCLUSION
For the foregoing reasons, we dismiss Pena's appeal for lack of jurisdiction.
sonable grounds to know, that it will induce, enable, facilitate, or conceal an infringement of any right under this title.
17 U.S.C. § 1202(b). Copyright management information ("CMI") includes, inter alia, the title or identifying information of the work, author or copyright owner, the terms and conditions of use of the work, and identifying numbers or symbols referring to such information.
See id. § 1202(c)(1)-(3), (6)-(7). Courts have applied this statute in a straightforward manner such that
Plaintiffs here need only allege (1) the existence of CMI on the BanxQuote Indices; (2) removal and/or alteration of that information; and (3) that the removal and/or alteration was done intentionally.
See Associated Press v. All Headline News Corp., 608 F. Supp. 2d 454, 461 (S.D.N.Y. 2009) (noting that the DMCA is violated by "removing and/or altering copyright-management information," and denying a motion to dismiss when plaintiff alleged that its articles identified it as the owner and author and that the defendants intentionally altered or removed that information);
accord Fox v. Hildebrand, No. 09-CV-2085,
2009 WL 1977996, at *2-3 (C.D. Cal. July 1, 2009) (denying a motion to dismiss when the evidence demonstrated that defendants removed plaintiff's hand-written copyright notice from certain drawings);
Thomas M. Gilbert Architects, P.C. v. Accent Builders Developers, LLC, 629 F. Supp. 2d 526, 537 (E.D. Va. 2008) (noting that removal of copyright notice from plaintiff's plans was sufficient to satisfy one element of a DMCA claim),
aff'd on other grounds, No. 08-2103,
2010 WL 1804135 (4th Cir. May 6, 2010). Here, Plaintiffs allege that "Defendants, without authority of Plaintiffs or the law, have intentionally altered the copyright management information by displaying . . . altered reference line[s] in
connection with Plaintiffs' BanxQuote Ind[ices]," and that "Defendants' removal of copyright management information from Plaintiffs' BanxQuote Ind[ices] . . . and subsequent distribution of the BanxQuote Ind[ices] . . . was executed with full knowledge of Plaintiffs' rights under copyright law, and in disregard of Plaintiffs' rights." (SAC ¶¶ 129, 131.)
Defendants argue that these allegations fail because they are conclusory and implausible. (Defs.' Mem. 9.) What Defendants do not acknowledge, however, are the other allegations contained in the SAC, which include an example of an ad Defendants allegedly ran which includes the following CMI: "National Average of [Annual Percentage Yields] for money market accounts as published by BanxQuote.com as of 5/22/07." (SAC ¶ 74 Fig. 1.) This differs from the CMI that Plaintiffs allege was associated with the BanxQuote Indices: "© [year of publication] BanxCorp. All Rights Reserved." ( Id. ¶ 127.) Providing an actual example of the allegedly infringing ad is obviously more than a conclusory allegation. Defendants counter that the License Agreement includes "BanxQuote.com National Averages" as an acceptable means of identifying the BanxQuote Indices. (Defs.' Mem. 10.) However, Plaintiffs allege that the altered CMI was distributed to a third party, Costco, in violation of the License Agreement and subsequently published by all Defendants in the altered form. (SAC ¶ 93.) Defendants cannot assert the protection of the License Agreement for conduct that allegedly breached the License Agreement. Finally, Defendants argue that Plaintiffs have failed to allege sufficient facts to establish a reasonable inference that Defendants knew they were infringing Plaintiffs' DMCA rights. (Defs.' Mem. 11.) However, Plaintiffs allege intentional breach of the License Agreement, and continued breach after Defendants were confronted with evidence of their allegedly infringing conduct. (SAC ¶¶ 93-98.) In addition, as noted above, Plaintiffs allege that Defendants used (slightly) different CMI than that laid out in the License Agreement. Taken together, these allegations are sufficient to give rise to a plausible inference that Defendants were aware of the appropriate uses of Plaintiffs' CMI and chose to alter the information regardless. Cf. Meijer, Inc. v. Ferring B.V. ( In re DDAVP Direct Purchaser Antitrust Litig.), 585 F.3d 677, 692-93 (2d Cir. 2009) (reversing the district court's grant of a motion to dismiss because "scienter issues . . . are appropriate for resolution by the trier of fact" when omissions had occurred "over a period of years," despite applying the heightened pleading standard of Fed.R.Civ.P. 9(b) (internal quotation marks omitted)).
Defendants attempt to rebut this conclusion by relying on Schiffer Publishing, Ltd v. Chronicle Books, LLC, No. 03-CV-4962, 2004 WL 2583817 (E.D. Pa. Nov. 12, 2004), and Kelly v. Arriba Soft Corp., 77 F. Supp. 2d 1116 (C.D. Cal. 1999), rev'd in part on other grounds, 336 F.3d 811 (9th Cir. 2003). In Schiffer, the court held that CMI would not be considered "removed" from images contained in a book that only contained CMI on the inside cover. 2004 WL 2583817, at *14. Schiffer is, therefore, distinguishable because the CMI on the inside cover of a book suggested copyright in the book itself, and not in particular images inside the book. Here, the CMI was on each of the websites allegedly used by Defendants. (SAC ¶ 127.)
Kelly is similarly unhelpful. In Kelly, the court held that CMI was not removed from a picture on a website when the only CMI available appeared on the website but not on the images themselves. 77 F. Supp. 2d at 1122. Kelly, however, dealt with images, and not with the information contained on a webpage to which Plaintiffs had attached their CMI.
At summary judgment, Defendants will have an opportunity to present evidence that the placement of the CMI either indicated that it did not refer to the BanxQuote Indices, or was sufficiently removed to demonstrate that Defendants lacked the intent required to show a violation of the DMCA. However, the Court declines to hold that, as a matter of law, CMI must be placed on the actual information on a website in order to state a claim under the DMCA. Defendants' Motion to Dismiss Count Three is, therefore, denied. C. Pre-emption of State Law Causes of Action
Defendants also argue that Plaintiffs fail to adequately allege that Defendants "distribute[d]" the altered CMI as prohibited by 17 U.S.C. § 1202(b)(3). However, Plaintiffs allege distribution of the BanxQuote Indices in "direct mail, print advertisements, newspaper advertisements, websites, and marketing presentations" (SAC ¶ 95), and while Plaintiffs do not explicitly state which of these methods of publication contained the altered CMI, this allegation combined with the allegation that the altered CMI was contained on Defendants' "website and [in] various other media" ( id. ¶ 130), is sufficient to "nudge[] [Plaintiffs'] claim[] across the line from conceivable to plausible." Twombly, 550 U.S. at 570.
Defendants argue that Counts Two (hot news misappropriation), Five (breach of contract), Six (unfair competition), and Seven (unjust enrichment), are preempted. (Defs.' Mem. 11.) As no party disputes,
[t]he Copyright Act exclusively governs a claim when: (1) the particular work to which the claim is being applied falls within the type of works protected by the Copyright Act under
17 U.S.C. §§ 102 and
103, and (2) the claim seeks to vindicate legal or equitable rights that are equivalent to one of the bundle[s] of exclusive rights already protected by copyright law under
17 U.S.C. § 106. The
first prong of this test is called the "subject matter requirement," and the second prong is called the "general scope requirement."
Briarpatch Ltd. v. Phoenix Pictures, Inc., 373 F.3d 296, 305 (2d Cir. 2004) (citing
17 U.S.C. § 301(a) and
Nat'l Basketball Ass'n v. Motorola, Inc. ("
NBA"),
105 F.3d 841, 848 (2d Cir. 1997));
see also Porto, 659 F. Supp. 2d at 616 (outlining the two part test);
Myrieckes v. Woods, No. 08-CV-4297,
2009 WL 884561, at *4 (S.D.N.Y. Mar. 31, 2009) (same). Plaintiffs, because they seek the protection of the Copyright Act, acknowledge that the subject matter requirement is met, but argue that each of their state-law causes of action fails the general scope requirement and, hence, is not preempted.
(Pls.' Mem. 12.)
The Court notes that even if the Banxquote Indices were not protectable under the Copyright Act, the subject matter requirement is broad enough to encompass them. See NBA, 105 F.3d at 848 ("The subject matter requirement is met when the work of authorship being copied or misappropriated falls within the ambit of copyright protection." (internal quotation marks and brackets omitted)).
"In order for a state cause of action to survive preemption, it must have an `extra element' beyond reproduction, preparation of derivative works, distribution, performance or display, which `changes the nature of the action so that it is qualitatively different from a copyright infringement claim.'" Gusler v. Fischer, 580 F. Supp. 2d 309, 316 (S.D.N.Y. 2008) (quoting Computer Assocs. Int'l, Inc. v. Altai, Inc., 982 F.2d 693, 716 (2d Cir. 1992)); see also Medtech Prods. Inc. v. Ranir, LLC, 596 F. Supp. 2d 778, 817 (S.D.N.Y. 2008) ("A state law claim is not preempted if the extra element required by the state law claim changes the nature of the action so that it is qualitatively different from a copyright or patent infringement claim." (internal quotation marks and brackets omitted) (emphasis in original)); Atrium Group De Ediciones Y Publicaciones, S.L. v. Harry N. Abrams, Inc., 565 F. Supp. 2d 505, 509-10 (S.D.N.Y. 2008) ("[T]he only `extra element' that avoids preemption for a state-created cause of
action is something that is `required instead of or in addition to the acts of reproduction, performance, distribution or display.'" (quoting Computer Assocs., 982 F.2d at 716)). "An action `will not be saved from preemption by elements such as awareness or intent, which alter the action's scope but not its nature.'" Gusler, 580 F. Supp. 2d at 316 (quoting Computer Assocs., 982 F.2d at 717); see also Am. Movie Classics Co. v. Turner Entm't Co., 922 F. Supp. 926, 931 (S.D.N.Y. 1996) (same).
1. Count Two: Hot News Misappropriation
The Parties are in agreement on the legal standard governing Plaintiffs' hot news claim. Plaintiffs rely on Associated Press, which states that "[a] cause of action for misappropriation of hot news remains viable under New York law, and the Second Circuit has unambiguously held that it is not preempted by federal law." Id. at 461 (citing NBA, 105 F.3d at 845, and Fin. Info., Inc. v. Moody's Investors Serv., Inc., 808 F.2d 204, 209 (2d Cir. 1986)). Defendants rely on NBA, in which the Second Circuit stated that "only a narrow `hot-news' misappropriation claim survives preemption. . . ." NBA, 105 F.3d at 852. The NBA court went on to say that "the extra elements . . . that allow a `hotnews' claim to survive preemption are: (i) the time-sensitive value of factual information, (ii) the free-riding by a defendant, and (iii) the threat to the very existence of the product or service provided by the plaintiff." Id. at 853. This is consistent with Associated Press, which held that
The Court follows the Parties' lead in analyzing this claim under preemption rather than failure to state a claim, but notes that the two arguments are, in this case, so similar as to be almost indistinguishable.
under New York Law, a valid, non-preempted claim for misappropriation arises when: "(i) a plaintiff generates or gathers information at a cost; (ii) the information is time-sensitive; (iii) a defendant's use of the information constitutes free riding on the plaintiff's efforts; (iv) the defendant is in direct competition
with a product or service offered by the plaintiffs; and (v) the ability of other parties to free-ride on the efforts of the plaintiff or others would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened."
Assoc. Press, 608 F. Supp. 2d at 461 (quoting
NBA, 105 F.3d at 845). Indeed, the Parties essentially acknowledge as such. (Defs.' Mem. 14; Pls.' Mem. 13.) Defendants focus on the second, third, and fourth elements in their efforts to dismiss this cause of action. (Defs.' Mem. 15-17.)
To satisfy the second element, Plaintiffs must allege not only that the news was time-sensitive when it was gathered, but that it was time-sensitive when it was misappropriated. See NBA, 105 F.3d at 853 (noting that a hot-news claim "is about the protection of property rights in time-sensitive information"); Fin. Info., 808 F.2d at 209 (requiring "immediacy of distribution . . . to sustain a `hot' news claim," and finding that this requirement was not met when "the information [defendant] published would have been at least ten days old"). Plaintiffs sufficiently allege that the BanxQuote Indices contained time-sensitive information, by claiming that they required "real time database input" (SAC ¶ 25), that creating the BanxQuote Indices required the use of "highly time-sensitive bank rate databases and ind[ices]" ( id. ¶¶ 33, 55, 110), that BanxQuote "provide[s] dynamic real-time quotes online, allowing banks to remotely update their rates 24x7" ( id. ¶ 51), that BanxQuote "compil[es] thousands of constantly changing interest rates and banking information" ( id. ¶ 118), and that the BanxQuote Indices "are highly time sensitive and subject to change by Plaintiffs at any time, since they are intricately intertwined with, and based on thousands of variable interest rates subject to change at any time," ( id. ¶ 119).
It is less clear that Plaintiffs allege that the information was appropriated while it was still hot. To support this claim, Plaintiffs allege that "Defendants managed to steal 100% of the 2004-2008 database series of BanxQuote Ind[ices]" ( id. ¶ 22), that "Defendants were responsible for the illegal publication and distribution of the BanxQuote Ind[ices] online on their co-branded website . . . for a period of approximately 1,800 consecutive days around the clock" ( id. ¶ 72), that Defendants' "infringement include[d] the unlawful reproduction, distribution and public display [of] the BanxQuote Ind[ices] on Defendants' co-branded products and marketing channels" ( id. ¶ 112), and that Defendants engaged in "constant and continuous unauthorized daily reproduction and multimedia redistribution," ( id. ¶ 120 (emphasis added)). Nowhere do Plaintiffs explicitly allege that the "daily reproduction" of the BanxQuote Indices was of hot information. However, one of the two examples Plaintiffs provide of Defendants' alleged misappropriation of the BanxQuote Indices is an instance of "approximately 146 million or more [] media impressions . . . [distributed] by mail and in print[] through the publication of the BanxQuote Indi[ces] in The Costco Connection." (SAC ¶¶ 73-74 (emphasis in original).) This publication dates the BanxQuote Indices data as "as of 5/22/07," and dates the publication itself as "5/07." ( Id. Fig. 1.) Though the other example provided by Plaintiffs suggests a delay of approximately a month ( id. Fig. 4), Plaintiffs need only show that they have a plausible claim for hot news misappropriation, not that every misappropriation gave rise to a hot news claim. Moreover, it is plausible to infer that the purpose of "daily reproduction" was to misappropriate daily — i.e. hot — information. On a motion to dismiss the Court must "draw all reasonable inferences in [Plaintiffs'] favor." Gonzalez, 572 F. Supp. 2d at 466. Applying this standard, it is plausible to infer that the alleged misappropriation was of the allegedly continuously updating information, and Plaintiffs have provided an example that appears to be misappropriation of information that was "hot." Therefore, Plaintiffs have pled the second element of their hot news claim, though it is certainly conceivable that this issue will be revisited at summary judgment.
Defendants argue that Plaintiffs have not pled the third element of their claim because "Defendant Capital One paid Plaintiffs to use the [BanxQuote Indices] during the term of the License Agreement. Additionally, the SAC is devoid of plausible allegations of free-riding by Costco." (Reply Mem. of Law in Supp. of Defs.' Mot. to Dismiss ("Reply Mem.") 6.) This argument is unpersuasive as Plaintiffs allege use of the BanxQuote Indices over and above, and in breach of, the License Agreement as part of providing a co-branded service with the knowledge of all Defendants. (SAC ¶¶ 19, 27, 69-71, 86-96.) Plaintiffs have, therefore, adequately pled the third element of their claim.
To establish the fourth element of their claim, Plaintiffs allege that "Defendants were in direct competition with services offered by Plaintiffs. BanxQuote not only licensed its BanxQuote Ind[ices] to select third parties, but it also used its BanxQuote Ind[ices] . . . as a performance benchmark to facilitate the marketing of High Yield Savings Accounts and CDs offered by BanxQuote on behalf of other banks such as Defendant Capital One. . . ." ( Id. ¶ 121.) Defendants argue that this claim is "conclusory and implausible." (Defs.' Mem. 16.) The statement that the Parties are in direct competition is, indeed, a conclusion, but it is not conclusory because it is supported by the factual allegation that Plaintiffs market HYSAs and CDs that compete with Defendants' co-branded savings accounts. Thus, Plaintiffs have alleged a non-preempted hot news claim, and, therefore, Defendants' Motion to Dismiss Count Two is denied. 2. Count Five: Breach of Contract
Plaintiffs allege breach of contract (against Capital One only) on the basis of Capital One's alleged distribution and use of the BanxQuote Indices beyond that allowed by the License Agreement, and in violation of promises not to distribute contained within the License Agreement. (SAC ¶¶ 146, 150.) Defendants argue that Plaintiffs' claim of breach of contract is preempted. (Defs.' Mem. 17.)
The only "extra element" that Plaintiffs identify is the promise inherent in the License Agreement itself. (Pls.' Mem. 16.) Defendants acknowledge the existence of the promise, but argue that there is conflicting case law within the Second Circuit as to whether the promise inherent in a contract is sufficient to defeat preemption and, of course, argue that the Court should follow the cases which hold that the promise does not defeat preemption. (Defs.' Mem. 18.) There is, indeed, an intra-district split that the Second Circuit has not yet resolved. Compare Am. Movie Classics Co., 922 F. Supp. at 931 (holding that "a breach of contract claim is preempted if it is merely based on allegations that the defendant did something that the copyright laws reserve exclusively to the plaintiff") with Architectronics, Inc. v. Control Sys., Inc., 935 F. Supp. 425, 439 (S.D.N.Y. 1996) (declining "to follow the formulation applied in American Movie," and holding that "the extra element that saves a contract claim from preemption is the promise itself" (internal quotation marks omitted)). Thus, precedent would seem to endorse two contradictory hard-line rules. One, from American Movie Classics, holding that a breach of contract claim is always preempted if the promise that the plaintiff seeks to enforce is a right guaranteed by the Copyright Act, and one, from Architectronics, stating that breach of contract claims need not be preempted.
Courts in this district have continued to disagree as to how to analyze preemption of breach of contract claims. See, e.g., Broadvision, Inc. v. Gen. Elec. Co., No. 08-CV-1489, 2008 WL 4684114, at *4 (S.D.N.Y. Oct. 15, 2008) (holding that a breach of contract action was preempted when the plaintiff alleged that the defendant had used plaintiff's software in ways not permitted by the license agreement); Gusler, 580 F. Supp. 2d at 319 (holding that "alleged breach of [defendant's] duties under [a non-disclosure agreement] . . . [was] premised on the existence of [] allegations beyond mere reproduction" and, hence, not preempted); Price v. Fox Entm't Group, Inc., 473 F. Supp. 2d 446, 451, 460-61 (S.D.N.Y. 2007) (holding that a breach of contract claim seeking to enforce an "alleged failure to treat [intervening plaintiff] as a co-author and to account to him for profits" was preempted); eScholar, LLC v. Otis Educ. Sys., Inc., 387 F. Supp. 2d 329, 332-33 (S.D.N.Y. 2005) (agreeing with Architectronics, but holding that a breach of contract claim was preempted to the extent that it "seeks to enforce [p]laintiff's exclusive right to reproduce and distribute its work," and not preempted "to the extent it seeks to enforce contractually guaranteed rights to audit books and receive royalty fees"); Sharp v. Patterson, No. 03-CV-8772, 2004 WL 2480426, at *7-8 (S.D.N.Y. Nov. 3, 2004) (citing the American Movie Classics test, and holding that a breach of contract claim was not preempted when it sought to enforce contractual rights to a share in the proceeds of a work in which the plaintiff also claimed a partial copyright); Logicom Inclusive, Inc. v. W.P. Stewart Co., No. 04-CV-604, 2004 WL 1781009, at *18 (S.D.N.Y. Aug. 10, 2004) (citing both American Movie Classics and Architectronics in holding that a breach of contract claim was not preempted); Torah Soft Ltd. v. Drosnin, 224 F. Supp. 2d 704, 717 (S.D.N.Y. 2002) (applying the Architectronics rule to an explicit contractual promise to refrain from doing something that would otherwise be prohibited under the Copyright Act); Grauer v. Deutsch, No. 01-CV-8672, 2002 WL 31288937, at *2
(S.D.N.Y. Oct. 11, 2002) (holding that a breach of contract action based on an alleged promise to acknowledge plaintiff as co-author was not preempted, but that the rest of the contract claim, which sought a share of the proceeds based on the contract, was preempted); Cooper v. Sony Records Int'l, No. 00-CV-233, 2001 WL 1223492, at *5 n. 9 (S.D.N.Y. Oct. 15, 2001) (citing American Movie Classics, while acknowledging the disagreement of other courts in this district, and applying it to a case in which the plaintiff alleged that the defendant used the plaintiff's recordings in a way not permitted by the license agreement).
Of particular note for this case, are the results in the license and non-disclosure cases. In Broadvision, eScholar, and Cooper, courts were confronted either with license agreements or similar distribution agreements and held that the breach of contract claims were preempted. See Broadvision, 2008 WL 4684114, at *1 (involving a "non-exclusive" license agreement); eScholar, 387 F. Supp. 2d at 331 (involving a distribution license agreement); Cooper, 2001 WL 1223492, at *1-2 (involving a distribution agreement). In Gusler, Torah Soft, and Architectronics, courts were confronted with explicit contractual promises of non-disclosure or exclusivity and held that the breach of contract claims were not preempted. See Gusler, 580 F. Supp. 2d at 312 (involving a non-disclosure agreement); Torah Soft, 224 F. Supp. 2d at 707 (involving a promise of exclusive use); Architectronics, 935 F. Supp. at 428-29 (involving confidentiality agreements and an exclusive license agreement). These cases cannot be reconciled, and the Court must choose which rule to follow.
The Court agrees with the cases that hold that "the extra element that saves a contract claim from preemption is the promise itself." Architectronics, 935 F. Supp. at 439 (internal quotation marks omitted). First, the emerging consensus among the Circuit courts is that the rule adopted in Architectronics is the correct one. See Utopia Provider Sys., Inc. v. Pro-Med Clinical Sys., L.L.C., 596 F.3d 1313, 1327 n. 26 (11th Cir. 2010) (holding that "a valid license agreement . . . constitutes an `extra element'" in part because "[p]arties may enter a license agreement to avoid the cost of having to litigate the validity of a copyright"); Bowers v. Baystate Techs., Inc., 320 F.3d 1317, 1324 (Fed. Cir. 2003) (holding that the First Circuit was likely to adopt the rule that contracts were not preempted, and agreeing with the Seventh Circuit (see below)); Lipscher v. LRP Publ'ns, Inc., 266 F.3d 1305, 1318 (11th Cir. 2001) (agreeing with the Seventh Circuit (see below) that "claims involving two-party contracts are not preempted because contracts do not create exclusive rights, but rather affect only their parties"); ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1455 (7th Cir. 1996) ("[A] simple two-party contract is not `equivalent to any of the exclusive rights within the general scope of copyright' and therefore may be enforced."); Nat'l Car Rental Sys., Inc. v. Computer Assocs. Int'l, Inc., 991 F.2d 426, 431 (8th Cir. 1993) ("We conclude that the alleged contractual restriction on [defendant's] use of the [copyrighted property] constitutes an extra element. . . ."); Taquino v. Teledyne Monarch Rubber, 893 F.2d 1488, 1501 (5th Cir. 1990) ("This action for breach of contract involves an element in addition to mere reproduction, distribution or display: the contract promise . . ., therefore, it is not preempted."); see also Acorn Structures, Inc. v Swantz, 846 F.2d 923, 926 (4th Cir. 1988) (holding that a breach of contract action fails the subject matter prong of the preemption test and, hence, is not preempted). But see Wrench LLC v. Taco Bell Corp., 256 F.3d 446, 456-57 (6th Cir. 2001) (stating both that "[i]f the promise amounts only to a promise to refrain from reproducing, performing, distributing or displaying the work, then the contract claim is preempted," and that "[t]he extra element is the promise to pay," and "[t]he qualitative difference includes the requirement of proof of an enforceable promise and a breach thereof
which requires, inter alia, proof of mutual assent and consideration, as well as proof of the value of the work and [defendant's] use thereof").
Second, though the Second Circuit has not directly addressed this issue, the Court notes that in NBA, the Second Circuit quoted at length from Judge Easterbrook's decision in ProCD on the issue of partial preemption under the Copyright Act, and adopted his reasoning. NBA, 105 F.3d at 849-50. While, of course, it is possible for the Second Circuit to endorse Judge Easterbrook's reasoning from a portion of the ProCD opinion and not from the rest of it, if NBA sends any signals at all about the Second Circuit's reasoning on the issue of breach of contract preemption, it signals agreement with ProCD.
Third, the Court is persuaded by the reasoning in ProCD. In that case, Judge Easterbrook observed that rights equivalent to copyright are rights "established by law," and "copyright is a right against the world" whereas "[c]ontracts, by contrast, generally affect only their parties." ProCD, 86 F.3d at 1454 (emphasis in original). Judge Easterbrook also noted that a contrary view would require that trade secrets and other information not protected by copyright could not be distributed to third parties based on contractual limitations on use — it would, for example, be impossible to enforce a contract that said, "I have done a lot of work to create an asset that is not copyrightable and I will let you use the asset for $X, but you have to promise not to show the asset to anyone else because I want to sell licenses to others too" — which is not only an odd result, but contrary to Supreme Court precedent that holds that contracts protecting trade secrets may be enforced. Id. The contrary view would also prevent private parties from contracting for specific remedies for breach of rights protected by the Copyright Act, thereby increasing the uncertainty and, hence, cost involved in protecting a copyright.
See Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974) (holding that Ohio's law protecting trade secrets was not preempted by federal patent law).
Finally, the Court agrees with Judge Easterbrook's view that permitting state law contract claims would not harm the federal copyright scheme. Id. at 1454-55. Preemption protects federal law by making sure that the rights granted by federal law are not removed or altered by state law, and by ensuring that the states do not create rights that federal law does not recognize. While a contract may create or remove rights it does so only against individuals who consent and receive consideration for their consent, and does not change the default rules that apply to the general public. Id.
Therefore, the Court adopts the rule of Architectronics and ProCD, and holds that, as a general matter, a breach of contract action is not preempted by the Copyright Act. In doing so, the Court follows Judge Easterbrook's lead in emphasizing substance over form and "refrain[s] from adopting a rule that anything with the label `contract' is necessarily outside the preemption clause" of the Copyright Act, 86 F.3d at 1455, but holds that license agreements such as the one at issue in this case are not preempted. Defendants' Motion to Dismiss Count Five is, therefore, denied.
3. Count Six: Unfair Competition
To state a claim for unfair competition, Plaintiffs must allege "that the [D]efendants misappropriated the [P]laintiffs' labors, skills, expenditures, or good will and displayed some element of bad faith in doing so." Abe's Rooms, Inc. v. Space Hunters, Inc., 833 N.Y.S.2d 138, 140 (App. Div. 2007). To this end, Plaintiffs allege misappropriation of the BanxQuote Indices, which required labor, skill, and expense to create and maintain, and bad faith both in inducing Plaintiffs to enter the License Agreement with Capital One, and in conspiring to willfully violate the License Agreement. (SAC ¶¶ 25, 135, 153.) Defendants argue that this cause of action is preempted. (Defs.' Mem. 20.)
"[U]nfair competition and misappropriation claims grounded solely in the copying of a plaintiff's protected expression are preempted by [ 17 U.S.C. § 301]." Computer Assocs., 982 F.2d at 717; see also Medtech Prods., 596 F. Supp. 2d at 817 (Unjust enrichment claims "are preempted . . . when the rights to be protected by the state law claim would infringe one of the exclusive rights provided by federal copyright . . . law" (internal quotation marks omitted)). However, "unfair competition claims based upon breaches of confidential relationships, breaches of fiduciary duties and trade secrets" are not preempted. Computer Assocs., 982 F.2d at 717. The Second Circuit has made it clear that when the acts that allegedly satisfy the elements of unjust enrichment "would, in and of [themselves], infringe the" rights protected by the Copyright Act, the cause of action is preempted. Briarpatch, 373 F.3d at 306 (finding a claim of unjust enrichment preempted for this reason); see also Myrieckes, 2009 WL 884561, at *5 (applying the Briarpatch rule to an unfair competition claim).
Defendants argue that Plaintiffs' unfair competition claim is preempted because it does not sufficiently allege breach of a fiduciary, or similar, duty. (Defs.' Mem. 20-21.) Plaintiffs rely primarily on Defendants' bad faith to establish an "extra element." (Pls.' Mem. 17-18.) However, as Defendants point out (Reply Mem. 7), bad faith is, like other scienter requirements, insufficient to establish an "extra element." See Gusler, 580 F. Supp. 2d at 316 ("An action `will not be saved from preemption by elements such as awareness or intent, which alter the action's scope but not its nature.'" (quoting Computer Assocs., 982 F.2d at 717)). Furthermore, the acts underlying Defendants' alleged wrongdoing are dissemination and use of allegedly copyrighted materials — i.e. they are rights protected by the Copyright Act.
Finally, Plaintiffs assert that Capital One owed Plaintiffs fiduciary duties. (Pls.' Mem. 18.) Plaintiffs cite no law for the proposition that a bank owes a corporation it enters into a licensing agreement with a fiduciary duty. Nor do Plaintiffs' citations to the SAC establish a fiduciary relationship, as all Plaintiffs have alleged is that BanxCorp entrusted its most valuable asset to Capital One, that BanxCorp expected "the highest standard of care and undivided loyalty," and that Capital One acted in bad faith. (SAC ¶¶ 91-96.) These allegations, which amount to no more than bad faith (discussed above), only establish the existence of a business relationship, and are insufficient to plead a fiduciary relationship. See Abercrombie v. Andrew Coll., 438 F. Supp. 2d 243, 274 (S.D.N.Y. 2006) (noting that under New York law, a fiduciary relationship exists where "one person has reposed trust or confidence in the integrity and fidelity of another who thereby gains a resulting superiority or influence over the first," and requiring a showing of a duty to act "primarily for the benefit of another," or "control and responsibility over another" (internal quotation marks omitted)); Rosenblatt v. Christie, Manson Woods Ltd., No. 04-CV-4205, 2005 WL 2649027, at *9 (S.D.N.Y. Oct. 14, 2005) ("`Entering into a conventional business relationship generally does not create a fiduciary relationship.'" (quoting Maalouf v. Salomon Smith Barney, Inc., No. 02-CV-4770, 2003 WL 1858153, at *5 (S.D.N.Y. Apr. 10, 2003))). Therefore, Defendants' Motion to Dismiss Count Six is granted as preempted by the Copyright Act.
4. Count Seven: Unjust Enrichment
"To prevail on a claim of unjust enrichment, [] [P]laintiff[s] must show that 1) [D]efendant[s] w[ere] enriched; 2) at [P]laintiff[s'] expense; and 3) it is against equity and good conscience to permit [D]efendant[s] to retain what is sought to be recovered." Am. Med. Life Ins. Co. v. Crossummit Enters., Inc., 27 Misc. 3d 1210(A), at *5 (N.Y. Sup. Ct. 2010); see also Estate of Goth v. Tremble, 873 N.Y.S.2d 364, 367 (App. Div. 2009) (requiring the same three elements). Plaintiffs rely on the same allegations to sustain this cause of action as to sustain their claim of unfair competition. (SAC ¶¶ 158-61.) Defendants argue that this cause of action is preempted. (Defs.' Mem. 21.)
The preemption analysis governing unjust enrichment claims is substantially similar to that governing unfair competition. See Briarpatch, 373 F.3d at 306 (holding that an unjust enrichment claim is preempted when premised on the rights protected by the Copyright Act); Myrieckes, 2009 WL 884561, at *5 (using the same analysis for unjust enrichment and unfair competition claims and holding that an unjust enrichment claim premised on unlawful reproduction of protected work is preempted); Gusler, 580 F. Supp. 2d at 316 (holding that where "the alleged acts giving rise to the unjust enrichment claim [] are identical to those underlying the federal copyright claim," the unjust enrichment claim was preempted). Plaintiffs' attempts to find "extra elements" in Plaintiffs' creation of time-sensitive copyrighted material, and the work required to create the BanxQuote Indices (Pls.' Mem. 19), do not defeat the ultimate point: Plaintiffs seek to protect their copyrighted products from allegedly illegal distribution and publication, which is the purpose of the Copyright Act. Defendants' Motion to Dismiss Count Seven is, therefore, granted as preempted by the Copyright Act.
The Parties' dispute about whether the conduct underlying this claim is covered by the License Agreement does not affect this determination as it is irrelevant to the question of whether a well-pled claim of unjust enrichment is preempted by the Copyright Act. (Pls.' Mem. 20.)
D. Count Four: Fraud
Plaintiffs allege fraud based on their claims concerning Defendants' alleged joint scheme to induce BanxCorp to enter the License Agreement. (SAC ¶¶ 135-36.) To sufficiently allege fraud, Plaintiffs must allege "(1) a misrepresentation or a material omission of fact which was false and known to be false by [Defendants], (2) [that] the misrepresentation was made for the purpose of inducing the [P]laintiff[s] to rely upon it, (3) justifiable reliance . . ., and (4) injury." JAF Partners, Inc. v. Rondout Sav. Bank, 898 N.Y.S.2d 496, 497 (App. Div. 2010) (internal quotation marks omitted). Defendants argue that Count Four is duplicative of Plaintiffs' contract claims, that Plaintiffs fail to satisfy the heightened pleading standard contained in Fed.R.Civ.P. 9(b), and that Plaintiffs fail to plead the elements of fraud with regard to Costco. (Defs.' Mem. 22-24.) As the Court holds that Plaintiffs' fraud claim is duplicative of their contract claim, the Court does not address the other issues.
Under New York law, the exact contours of what constitutes a duplicative fraud claim require careful parsing. One New York court has suggested that fraud and breach of contract causes of action can co-exist when there is fraud in the inducement:
A cause of action alleging fraud does not lie where the only fraud claim relates to a breach of contract. A present intent to deceive must be alleged and a mere misrepresentation of an intention to perform under the contract is insufficient to allege fraud. Conversely, a misrepresentation of material fact, which is collateral to the contract and serves as an inducement for the contract, is sufficient to sustain a cause of action alleging fraud.
WIT Holding Corp. v. Klein, 724 N.Y.S.2d 66, 67-68 (App. Div. 2001) (internal citations omitted). The rule that emerges from the case law is that a fraud claim cannot be maintained based on misrepresentations as to acts or intentions that formed the content of the contract unless a separate legal duty existed.
See Gutkowski v. Steinbrenner III, 680 F. Supp. 2d 602, 614 (S.D.N.Y. 2010) (noting that "`where a fraud claim arises out of the same facts as plaintiff's breach of contract claim, with the addition only of an allegation that defendant never intended to perform the precise promises spelled out in the contract . . ., the fraud claim is redundant and
plaintiff's sole remedy is for breach of contract,'" and dismissing a fraud claim that was based on allegations that the "[d]efendant had no intention of fulfilling the agreement with [the p]laintiff, as his subsequent behavior demonstrate[d] and that [d]efendant knew that his promises and assurances were false when he made them" (quoting
Telecom Int'l Am., Ltd. v. AT T Corp., 280 F.3d 175, 196 (2d Cir. 2001)) (internal quotation marks and brackets omitted from second quotation));
B M Linen, Corp. v. Kannegiesser, USA, Corp., 679 F. Supp. 2d 474, 480 (S.D.N.Y. 2010) (stating that "[t]o maintain a fraud claim alongside a breach-of-contract claim, a plaintiff must (1) `demonstrate a legal duty separate from the duty to perform under the contract;' (2) `demonstrate a fraudulent misrepresentation collateral or extraneous to the contract;' or (3) `seek special damages that are caused by the misrepresentation and unrecoverable as contract damages'" and that "[e]ven a deliberately false statement that the defendant intends to perform on a contract, when he does not, will not suffice" (quoting
Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc. 98 F.3d 13, 20 (2d Cir. 1996));
IMG Fragrance Brands, LLC v. Houbigant, Inc.,
679 F. Supp. 2d 395, 409 (S.D.N.Y. 2009) (quoting the same test from
Bridgestone/Firestone);
Marcantonio v. Picozzi III, 893 N.Y.S.2d 623, 624 (App. Div. 2010) (holding that an allegedly false representation that formed the basis for a provision in the contract gave rise to a cause of action for breach of contract, and not for fraud).
Plaintiffs do not allege the basis for a legal duty other than one rooted in the License Agreement. Plaintiffs allege misrepresentation as to Defendants' intentions when Capital One signed the License Agreement, but these allegations are simply allegations of an intention to breach the contract by using the BanxQuote Indices in ways forbidden by the License Agreement. (SAC ¶¶ 135-36.) Furthermore, Plaintiffs do not seek any form of special damages that will not be available if Plaintiffs succeed on their contract claim. ( Id. ¶ 143.) It follows that under New York law, Plaintiffs' fraud claim is duplicative of their breach of contract claim. Defendants' Motion to Dismiss Count Four, therefore, is granted.
E. Statutory and Punitive Damages
Defendants seek an order limiting the damages Plaintiffs could receive if successful on any of their claims. First, Defendants argue that Plaintiffs' demand for statutory damages should be dismissed because Plaintiffs' copyright registration, which was applied for more than three months after first publication, post-dates the allegedly infringing conduct. (Defs.' Mem. 24 (citing 17 U.S.C. § 412(2)).) Plaintiffs concede that they are not entitled to statutory damages. (Pls.' Mem. 23 n. 60.) Therefore, the Court grants Defendants' Motion to Strike Plaintiffs' demand for statutory damages. Second, Defendants argue that their alleged conduct was not egregious enough to warrant punitive damages. (Defs.' Mem. 24.) Plaintiffs seek punitive damages on "each Count." (SAC ¶ D.) Plaintiffs remaining claims are Counts One (copyright infringement), Two (hot news misappropriation), Three (DMCA violation), and Five (breach of contract).
Punitive damages are not available on Plaintiffs' federal law claims. Punitive damages cannot be recovered under the Copyright Act. See Football Ass'n Premier League Ltd. v. Youtube, Inc., 633 F. Supp. 2d 159, 167 (S.D.N.Y. 2009) ("There is no circumstance in which punitive damages are available under the Copyright Act of 1976."); Granger v. Gill Abstract Corp., 566 F. Supp. 2d 323, 330 (S.D.N.Y. 2008) ("[I]rrespective of whether a plaintiff is seeking actual or statutory damages, `punitive damages are not available under the Copyright Act of 1976.'" (quoting Oboler v. Goldin, 714 F.2d 211, 213 (2d Cir. 1983)); Viacom Int'l, Inc. v. Youtube, Inc., 540 F. Supp. 2d 461, 464 (S.D.N.Y. 2008) ("Common-law punitive damages cannot be recovered under the Copyright Act."). Punitive damages are also not available under the DMCA. See Polar Bear Prods., Inc. v. Timex Corp., 384 F.3d 700, 704-05 (9th Cir. 2004) (noting that district court ruling that dismissed plaintiff's state law claims "effectively precluded [plaintiff] from seeking punitive damages" when plaintiff made a claim under, inter alia, the DMCA); see also 17 U.S.C. § 1203 (providing for actual and statutory damages, but not punitive damages).
Finally, Plaintiffs cannot receive punitive damages on their state law claims. Under New York law, to recover punitive damages on a breach of contract claim, Plaintiffs would need to show that Defendants' "conduct is part of a pattern directed at the public generally," but Plaintiffs have not offered any allegations that suggest that the conduct at issue in this case meets that requirement. TVT Records v. Island Def Jam Music Group, 412 F.3d 82, 93 (2d Cir. 2005) (internal quotation marks omitted); see also Reads Co. v. Katz, 900 N.Y.S.2d 131, 134 (App. Div. 2010) ("Punitive damages are only recoverable . . . [for] breach of contract . . . where the conduct was aimed at the public generally." (internal quotation marks, and citations omitted)). For the same reason, Plaintiffs also cannot recover such damages for their hot news claim. See Madison Equities, LLC v. Condren ( In re Theatre Row Phase II Assocs.), 385 B.R. 511, 522 n. 19 (Bankr. S.D.N.Y. 2008) (noting that under New York law, "[t]o recover punitive damages there must be a wrong against the public interest," and that "[i]f the harm is solely against a private interest, punitive damages are not available"); Fabiano v. Philip Morris Inc., 862 N.Y.S.2d 487, 490 (App. Div. 2008) ("A claim for punitive damages may, of course, be rooted in personal injury, but for such a claim to succeed the injury must be shown to be emblematic of much more than individually sustained wrong. It must be shown to reflect pervasive and grave misconduct affecting the public generally."). Therefore, Defendants' Motion to Strike Plaintiffs' demand for punitive and statutory damages is granted as against all remaining counts. F. Standing
Defendants argue that this lawsuit can only be prosecuted by BanxCorp, and that Mehl should be dismissed from this action. (Defs.' Mem. 1 n. 1.) Plaintiffs conceded this point at oral argument. Therefore, Defendants' Motion to Dismiss Mehl for lack of standing is granted.
III. Conclusion
For the reasons stated herein, Defendants' Motion to Dismiss is granted in part and denied in part. The Clerk of the Court is respectfully requested to terminate the relevant motion (Dkt. No. 20).
SO ORDERED.