Fahey v. Breakthrough Films & Television Inc.

Background

Sean P. Fahey and Dieterich Gray, proceeding without lawyers, alleged that they owned copyrights in proposed television series materials concerning Bishop Fulton J. Sheen and Cardinal Francis Spellman. They alleged that they entered a one-year pitch option agreement with Breakthrough Entertainment in 2016. Breakthrough Films & Television Inc., Breakthrough Entertainment, Ira Levy, and Lauren Leinburd moved to dismiss the amended complaint for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), or alternatively for failure to state a claim under Rule 12(b)(6).

The amended complaint asserted eight claims: copyright infringement, misrepresentation in commercial advertising, defamation, breach of contract, several forms of tortious interference, and common-law unfair competition. The plaintiffs relied primarily on the agreement’s connection to a New York lawyer and on a 2020 letter that Breakthrough Films allegedly sent to the Sheen Center for Thought and Culture in New York. The plaintiffs alternatively requested jurisdictional discovery or transfer to the Southern District of California.

Personal Jurisdiction

The court reviewed the magistrate judge’s Report and Recommendation. Because the plaintiffs made specific objections, the court independently reviewed the challenged portions. It reviewed other portions for clear error.

The court held that the plaintiffs had not established personal jurisdiction under New York’s long-arm statute. For jurisdiction based on a defendant’s transaction of business in New York, the defendant must have purposefully conducted business in the state and the claim must arise from that business activity. The court found that the plaintiffs—not the defendants—had chosen the New York lawyer. The pleadings indicated that the defendants negotiated and executed the agreement from Canada, the agreement had no New York forum provision, and its choice-of-law provision selected California law. Sending the agreement to the plaintiffs through their New York lawyer was not enough by itself.

The court also held that the letter sent to the Sheen Center did not establish jurisdiction. The letter supported the defamation claim but had no connection to the copyright claim, and the plaintiffs did not identify a related business transaction in New York. The court further held that New York’s long-arm statute expressly excludes defamation claims based on tortious acts committed outside New York. Recasting claims arising from the letter as other torts did not avoid that exclusion.

Jurisdictional Discovery

The court denied the request for jurisdictional discovery. The plaintiffs had not alleged facts showing that the defendants’ New York office participated in forming or performing the agreement or otherwise dealt with the plaintiffs. The court also reasoned that even proof of some New York involvement would not establish the required connection between those contacts and the plaintiffs’ claims, which generally concerned alleged misconduct after the agreement expired. The court described the proposed discovery as an unsupported search for jurisdictional facts.

Transfer and Rule 12(b)(6)

The court denied the request to transfer the case to the Southern District of California. It noted that the Report had identified substantial pleading and timeliness problems with most of the claims and that transfer would not cure a possible statute-of-limitations problem with the copyright claim. The court did not decide the defendants’ alternative Rule 12(b)(6) motion, although it considered the Report’s analysis when evaluating transfer.

Disposition

Judge Paul A. Engelmayer adopted the Report and Recommendation insofar as it found no personal jurisdiction, granted the defendants’ motion to dismiss under Rule 12(b)(2), and dismissed the case without prejudice. The court denied the plaintiffs’ requests for jurisdictional discovery and transfer, directed the Clerk to close the case, and stated that the dismissal did not prevent the plaintiffs from bringing a viable and timely claim in a forum with personal jurisdiction over the defendants.