Case 2:14-cv-07832-RGK-AGR Document 98 Filed 04/20/15 Page 1 of 5 Page ID #:1389

JS-6

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 14-07832-RGK (AGRx)

Title

MATHEW v. THE WALT DISNEY COMPANY, et al

Present: The
Honorable

Date

April 20, 2015

R. GARY KLAUSNER, U.S. DISTRICT JUDGE

Sharon L. Williams (Not Present)

Not Reported

N/A

Deputy Clerk

Court Reporter / Recorder

Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:

I.

(IN CHAMBERS) Order Re: Defendants Motion to Dismiss Second

Amended Complaint (DE 92); Motion to Stay Discovery (DE 87)

INTRODUCTION

On November 19, 2013, Royce Mathew (Plaintiff) filed an Amended Complaint against The
Walt Disney Company, et al. (Defendants), alleging the following claims: (1) Federal Copyright
Infringement from June 10, 2010 until the present, (2) Federal Copyright Infringement from July 1,
2007 until June 9, 2010, (3) Rescission of Fraudulently Procured Release Agreement, and (4) Federal
Copyright Infringement from July 2003 through June 2007. On February 11, 2015, the Court granted
Defendants Motion for Judgment on the Pleadings dismissing the First, Second, and Fourth claims, and
dismissing the Third claim for rescission with leave to amend.
On February 18, 2015, Plaintiff filed a Second Amended Complaint (SAC) alleging the
following claims: (1) Rescission of the Fraudulently Procured Release; (2) Federal Copyright
Infringement from May 28, 2010 until the present; and (3) Federal Copyright Infringement from July
2003 until the present.
On February 25, 2015, Defendants filed their Motion to Stay Discovery. On February 27, 2015,
Defendants filed their Motion to Dismiss pursuant to Federal Rule of Civil Procedure (Rule) 12(b)(6).
For the following reasons, the Court GRANTS without leave to amend Defendants Motion to Dismiss
and DENIES as moot Defendants Motion to Stay.
II.

FACTUAL BACKGROUND
Plaintiff alleges the following:

In the 1980s and continuing in the 1990s, Plaintiff authored and created an array of original
supernatural stories and other original works. Among these works were a Supernatural Pirate Story
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(1993), a Supernatural Pirate Movie (1993), and a Supernatural Pirate Story within a Supernatural
Interactive Video Computer Game (1994). As part of these works, Plaintiff authored and created an
array of fictional characters, supernatural elements, storylines, plots, themes, sequence structures,
screenplay elements, and other original works. These works are collectively referred to as Pirates of the
Carribean Works (POC Works). Plaintiff registered his POC Works with the United States Copyright
Office.
While Plaintiff was developing and completing the POC Works from 1991 through 1995,
Plaintiff also directly provided Defendants with several copies of copyrighted creations from the POC
Works. In 2003, Defendants released the first Pirates of the Carribean (POC) movie in the Movie
Franchise. Plaintiff alleges that Defendants development and creation of the Movie Franchise infringed
upon his POC Works. Defendants also publicly credited others, not Plaintiff, for the creation of the
Movie Franchise.
The Movie Franchise has since generated billions of dollars in revenue through the unauthorized
use and exploitation of the POC Works. Because of Plaintiffs ownership rights in the POC Works,
Plaintiff is entitled to the billions of dollars that Defendants have generated, or have allowed others to
generate through the Movie Franchise.
In 2005, Plaintiff commenced a pro se copyright infringement lawsuit against Defendants in
Florida, but filed a voluntary dismissal, without prejudice. On July 7, 2006, Plaintiff filed another
copyright infringement lawsuit against Defendants, this time, in the Central District of California (Prior
Case). Defendants affirmatively represented to the court and Plaintiff that they had independently
created all of the copyrightable elements in the Movie Franchise. Defendants also represented that an
artist had created an unpublished (at the time) theme park artwork based on a cursed pirate (Theme
Park Art) and that artwork had been independently created prior to the time Plaintiff created his POC
Works.
The Theme Park Art was published by Disney around November 2006 in a book titled, Pirates
of the Caribbean: From the Magic Kingdom to the Movie (Disney Book). The Disney Book, along
with testimony from various Disney writers, was the primary evidence to support Defendants
representation that Disney had independently created the supernatural elements in the Movie Franchise.
In reliance upon these representations, and while the Prior Case was still pending, Plaintiff executed a
release agreement (the Release) in May-June 2007. The Prior Case was then dismissed with prejudice.
Around May 2009, Disney published another book that Plaintiff became aware of on June 1,
2009. In that book, Disney attributed the artwork to a different artist named Collin Campbell
(Campbell Artwork). The artwork included a modified version of the Theme Park Art. Plaintiff
contends that this inconsistent crediting of the artwork to different artists shows that Defendants made
fraudulent misrepresentations about the origins of the Theme Park Art in the Prior Case.
On June 1, 2009, Plaintiff sent a letter to Defendants informing them of his discovery of the
Campbell Artwork (the 2009 Letter). In the 2009 Letter, Plaintiff stated that Defendants had
fraudulently concealed the Campbell Artwork from him. Thereafter, Plaintiff continued to inform
Defendants about their alleged fraud through Disneys alert program (Alert Line). According to
Plaintiff, to date, Defendants have done nothing to correct and rectify the fraud. Plaintiff alleges that but
for the fraud and his reliance on the false representations, Plaintiff would not have executed the Release
and would have continued to pursue his copyright claims against Defendants in the Prior Case.
As a result, Plaintiff filed suit in the Middle District of Florida on May 28, 2013. The Florida
court sua sponte dismissed the suit with leave to amend no later than June 21, 2013. Instead of filing an
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amended complaint with that court, Plaintiff filed the current action on June 10, 2013 in the Southern
District of New York. The action was subsequently transferred to this Court on May 5, 2014.
III.

JUDICIAL STANDARD

A party may move under Federal Rule of Civil Procedure (Rule) 12(b)(6) to dismiss for failure
to state a claim upon which relief can be granted. In deciding a Rule 12(b)(6) motion, the court must
assume that the allegations in the challenged complaint are true and construe the complaint in the light
most favorable to the non-moving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 33738 (9th Cir.
1996). However, the court need not accept as true conclusory legal allegations; threadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not suffice. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). Dismissal is appropriate where the complaint lacks a cognizable legal
theory or sufficient facts to support a cognizable legal theory. Mendiondo v. Centinela Hosp. Med. Ctr.,
521 F.3d 1097, 1104 (9th Cir. 2008).
To withstand a motion to dismiss, a pleading must contain sufficient facts that, accepted as true,
state a claim that is plausible on its face. Iqbal, 556 U.S. at 678. A claim is facially plausible when there
are sufficient factual allegations to draw a reasonable inference that the defendant is liable for the
alleged misconduct. Id. A complaint does not need detailed factual allegations, but a plaintiffs
obligation to provide the grounds of his entitlement to relief requires that he plead more than labels and
conclusions. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
IV.

DISCUSSION

Defendants argue that Plaintiffs Rescission claim should be dismissed because he fails to
properly allege notice of rescission in his SAC. Defendants further argue that Plaintiffs Second and
Third claims fail in light of the Courts February 11 Order and Plaintiffs inability to properly plead
rescission. The Court addresses each argument in turn.
A.

First Claim for Rescission

Defendants argue that Plaintiffs 2009 Letter and all subsequent communications with
Defendants via Alert Line do not constitute notice, as required by California Civil Code
1691. See Cal. Civ. Code 1691(a).
Pursuant to California Civil Code 1691, to effect a rescission a party to the contract must,
promptly upon discovering the facts which entitle him to rescind . . . (a) Give notice of rescission to the
party as to whom he rescinds . . . . Civ. Code 1691. While [i]t is not necessary that the notice to
rescind shall be formal and explicit . . . notice shall be given to the other party which clearly shows the
intention of the person rescinding to consider the contract at an end. Wilson v. Lewis, 106 Cal. App. 3d
802, 809 (1980) (quoting Hull v. Ray, 211 Cal. 164, 167 (1930)) (internal quotations omitted); see Zeller
v. Milligan, 71 Cal. App. 617, 625 (1925) (The general rule is that the act of rescission by one party to
the agreement implies some notice to the other party thereto of an intention and determination to
extinguish the contract.).
In the 2009 Letter attached to the SAC, Plaintiff states that Defendants have committed fraud,
and that the 2009 Letter is notification of the advancement of the process of filing formal complaints
and charges of conspiracy, fraud, corruption, obstruction of justice, evidence tampering and such against
[Defendants] hiding behind the corporate Mickey Mouse logo. (SAC, Ex. 3.) The 2009 Letter further
states that it is pointless to ever seek accountability by way of any logical resolution, fair mediation or
by way of the court. (Id.) Plaintiff concludes the 2009 Letter by stating that he await[s] a prompt reply
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on [Defendants] plan to proceed forward and its manner with which to continue on with the process of
filing complaints and charges. (Id.) In subsequent communications, Plaintiff contacts Defendants
reporting service, Alert Line. None of the communications contain any information separate from what
Plaintiff sets forth in the 2009 Letter. (See Reynolds Decl., ECF No. 92-2, Exs. A-F.)
For the following reasons, the Court finds that Plaintiffs 2009 Letter and subsequent
communications with Alert Line do not constitute notice of rescission under section 1691.
First, Plaintiff argues that notification of the advancement of the process of filing formal
complaints constitutes explicit notice of rescission.1 (See Oppn, 6:5-19.) The Court finds this
conclusion untenable. The 2009 Letter states that Plaintiff will file formal complaints. There is no
indication in the 2009 Letter that filing formal complaints meant that Plaintiff considered the Release
rescinded, or even that Plaintiff intended to seek such relief by filing suit against Defendants. In fact,
Plaintiff indicates the exact opposite when he states that it is pointless to ever seek accountability . . .
by way of the court. (SAC, Ex. 3.) Further, upon sending the 2009 Letter, Plaintiff immediately began
contacting Alert Line to lodge complaints, further indicating that Plaintiffs formal complaints would
be in the form of internal complaints through Alert Line. (See Reynolds Decl., ECF No. 92-2, Exs. A-F.)
Moreover, after the first three Alert Line complaints, Plaintiff waited almost three years to lodge his
next complaint with Alert Line. (Id.) During this time, Plaintiff took no other action against Defendants.
Plaintiff finally filed the present action almost four years after he sent the 2009 Letter. In light of the
foregoing, there is no reasonable inference that Plaintiff provided notice of rescission when stating he
would file formal complaints. Thus, while Plaintiff identified that Defendants had allegedly wronged
him in some way, the 2009 Letter does not clearly show[] the intention of the person rescinding to
consider the contract at an end. Wilson, 106 Cal. App. 3d at 809 (quoting Hull v. Ray, 211 Cal. 164,
167 (1930)) (internal quotations omitted) (emphasis added). Indeed, the 2009 Letter did not refer to the
Release, or any copyright infringement even once. Therefore, the Court finds that the 2009 Letter failed
to serve as notice of rescission.
Second, Plaintiff argues that the words rescind and sue are synonymous given the nature of
the Release, and that by threatening to sue for fraud, Plaintiff was also notifying Defendants of his intent
to rescind the Release. Again, Plaintiffs argument is unconvincing. Section 1691 requires notice of
rescission to the party as to whom he rescinds. See Civ. Code 1691(a) (emphasis added). Plaintiff
cannot now attempt to rewrite the plain language of the 2009 Letter by alleging that notification of the
advancement of the process of filing formal complaints and charges of . . . fraud is actually notice of
rescission. See Larson v. Warner Bros. Entmt Inc., No. 04-cv-08400-ODW, 2013 WL 1164434, at *6
(C.D. Cal. March 20, 2013) (finding that certain letters failed to satisfy section 1691 because they did
not clearly and objectively convey the intent to rescind an existing contract).
Third, Plaintiff argues that subsequent communications with Alert Line,2 which include six
phone calls and a few letters3 starting on June 23, 2009, and continuing periodically until August 2012,
constitute notice under section 1691. Again, Plaintiffs argument fails. Upon a review of the phone call

Plaintiff does not point to any other language in the 2009 Letter that would suggest notice of rescission.
Plaintiff does mention the subsequent communications with Alert Line, and concludes that those communications
further constitute notice.
2

While not attached to the SAC, the Court takes notice of the communications because Plaintiff references
them in his SAC, they are central to Plaintiffs Rescission claim, and no party questions the authenticity of the
communications. See United States v. Corinthian Colls., 655 F.3d 984, 999 (9th Cir. 2011).
3

The letters were in conjunction with some of the phone calls made to Alert Line.

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records and the letters, the Court finds that the Alert Line letters conveyed the same message as the 2009
Letterno notice of rescission, and that the phone calls were even more deficient. As such, Plaintiffs
subsequent communications to Alert Line do not constitute notice of rescission as required by section
1691.
Finally, Plaintiff argues that even if his 2009 Letter and subsequent communications do not
constitute notice of rescission, the Supreme Courts decision in Petrella v. Metro-Goldwyn-Mayer, Inc.,
134 S. Ct. 1962 (2014) exempts him from the section 1691 requirement. The Court disagrees. In
Petrella, the plaintiff, consistent with the three-year statute of limitations, sued MGM only for copyright
infringement that occurred from 2006 to 2009, despite having a claim against MGM since 1991.
Petrella, 134 S. Ct. at 1970-72. Because the plaintiff had owned the rights to the infringed work since
1991, MGM argued that the doctrine of laches barred the plaintiffs claim. Id. at 1971-72. The Court
held that laches could not be invoked as a complete bar to federal copyright infringement claims. See id.
at 1973. This holding does not apply to the facts of the present action. Defendants have never
maintained that laches is a complete bar to Plaintiffs copyright infringement claims. Defendants argue,
and continue to argue that the Release bars Plaintiffs claims, and that if Plaintiff wants to pursue his
copyright claims, he must first properly allege a rescission claim. Further, the Court fails to see how
Petrellas holding invalidates section 1691 of the California Civil Code. Section 1691 applies to claims
for rescission and has no bearing on allegations of copyright infringement. Therefore, the Court finds
that section 1691s notice requirement applies to Plaintiff.
Based on the discussion above, the Court finds that Plaintiff has not adequately pled a
claim for rescission. The facts alleged indicate that Plaintiff cannot plausibly cure this defect. Therefore,
the Court dismisses Plaintiffs First claim without leave to amend.
B.

Plaintiffs Second and Third Claims

As discussed in the Courts February 11 Order, a viable claim for rescission would have revived
Plaintiffs copyright infringement claims from May 28, 2010 until the present.4 (See February 11, 2015
Order, ECF No. 85, p. 8.) However, because the Court finds that dismissal of Plaintiffs Rescission
claim is warranted, the Court declines to address Plaintiffs Second and Third claims in light of the
Courts February 11, 2015 Order and the present Order. Plaintiffs Second and Third claims are moot.
V.

CONCLUSION

For the foregoing reasons, the Court GRANTS without leave to amend Defendants Motion to
Dismiss, as amendment would be futile. In light of this ruling, Defendants Motion to Stay Discovery is
DENIED as moot.
IT IS SO ORDERED.
:
Initials of Preparer

Plaintiffs Third claim would still be barred by res judicata even if the Rescission claim were to survive.
(See February 11, 2015 Order, ECF No. 85, p. 4.)