1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

__________________________________ ) ROGER NICHOLS, et al ., ) ) Plaintiffs, ) ) v. ) Civil Action N o. 16-220 (RMC) ) CLUB FOR GROWTH ACTION, ) ) Defendant. )

_________________________________ ) MEMORANDUM OPINION Roger Nichols, an individual, and Three Eagles Music, said to b e a division of Roger Nichols Music, Inc., sue d Club for Growth Action, allegin g that the Club’s advertisement violated copyrights held by Thr ee Eagles Music and Mr. Nichols’ personal rights under trademark law. The Court grante d in part and denied in part Cl ub for Growth Action’s Motion to Dismiss and dismissed Mr. Nichols’ trademark claim. Before com pleting discovery, Club for Growth Action chose to move for summary judgment arguing that T hree Eagles Music does not own the copyright at issue. Pla intiffs responded by requesting leave to file a second amended complaint to clarify the owner ship of the relevant copyright. The motion for summary judgment will be denied and the motion for leave to amend will be grante d. I. FACTS Mr. Nichols composed both the lyrics and music of the song Times of Your Life

. Times of Your Life was first recorded in 1975 by Paul Anka. The Complaint allege s that Three Eagles Music (TEM) is a division of Roger Nichols Music, Inc. ( RNMI) and the owner of the copyrights to both the musical composition and lyrics of Times of Your Life . The registration numbers of the two copyr ights are EU529514 and EU599114.2 Club for Growth Action (Club for G rowth) is a conservative poli tical action organization that raises funds and creates advertisements to pr omote candidates for public office. In 2015, Club for Growth created two 30-second commercials focu sed on challenging former Wisconsin Senator Russ Feingold’ s attempt to regain his Senate seat. One commercial featured Times of Your Life (the Ad). The Ad altered a maj ority of the lyrics, but did no t alter any of the musical composition for the porti on of the song used in the com mercial. The commercial was available on the Internet and air ed on television in Wisconsin. “At no time has the Club obtained, or attempted to obtai n, a license, authorization, or other permission from Three Eagles Music to use or exploit Times of Your Life . . . . Nor did [Mr.] Nichols consent to allow it to capitalize on his reputation as a songwriter for the purpose of promoting its political agenda.” First Am. Compl. (FAC) [Dkt. 9] ¶ 22. Plaintiffs first file d suit in federal cou rt in California. Be cause Plaintiffs are Oregon residents, Club for Grow th resides in Washington, D.C., and the Ad was aimed at a Wisconsin political campaign, Cl ub for Growth moved to dismiss for lack of personal jurisdiction and other pleadi ng failures. Plaintiffs took a vo luntary dismissal of their California complaint and filed a similar comp laint in the Dis trict Court f or the District of Columbia. See Compl. [Dkt. 1]. Club for Gro wth moved to dismiss and Plaintif fs filed an Amended Complaint on April 29, 2016. See FAC. Club for Growth again moved to dism iss for failure to state a c laim and because Plaintiffs’ First Amended Complaint alleged facts demonstrating that the Ad was fair use. See Mot. to Dismiss [Dkt. 10]. The C ourt granted the motion in part, dismissing the trademark claim. See Mem. Op. [Dkt. 23]; Order [Dkt . 24]. Thereafter, the parties entered discovery and almost immediately Club for Gro wth filed its motion for summarydismissal arguing that the3 infringement claim by TEM should be dismissed because TEM lacks standing to sue. See Mot. for Summ. Dismissal of CopyrightClaim and Entry of Final J. Ag ainst Pls. (Mot.) [Dkt. 33]. 1
Club for Growth had researched the corporate structure of RNMI and TEM and discovered that TEM is not an incorporated divisi on of RNMI as described by the Plaintiffs in all previous versions of the Complaint. See FAC ¶ 7. Plaintiffs responded with a joi nt opposition and motion for lea ve to file a second amended complaint, which would oste nsibly correct the facts abo ut TEM’s ability to sue. Pls.’ Opp’n to Def.’s Mot. for Summ. D ismissal of Pls.’ Copyright Cla im and Entry of Final J. Against Pls., or in the Alt., for Leave to Amend the First Am. Compl. (Opp’n) [Dkt. 35]. On June 27, 2017, before this filing, P laintiffs updated the State of Oregon corporation information for RNMI, indicating that TEM is an assumed business name for R NMI. See Declaration of Roger Nichols (Nichols Decl.) , Ex. B [Dkt. 35-3]. Club for Gro wth filed a joint reply and opposition to the motion to amend. Consol. Reply to Opp’n to S umm. Dismissal and Opp’n to Cross Mot. to Amend (Club Reply) [Dkt. 38]; see also Declaration of Lincoln D. Bandlow, Ex. C, Second Amended Complaint (SA C) [Dkt. 35-2]. Plaintiffs file d a reply in support of the motion to amend. Pls.’ Reply Bri ef in Supp. of Their Cross-Mot . for Leave to Amend the First Am. Compl. (Pls.’ Reply) [Dkt . 40]. The motions are ripe. II. LEGAL STANDARD A. Leave to Amend a Complaint – Fed. R. Civ. P. 15 Rule 15 of the Federal Rules of Civ il Procedure governs the fil ing of amended pleadings, such as a complaint , after a responsive pleading has been filed. See Answer [Dkt. 25].

1 Although Club for Growth’s motion i s titled a Motion for Summary Dismissal, the motion itself and all related briefing discusse s summary judgment. Therefore , the Court will treat it as a motion for summary judgment.4 As relevant here, it specifies that “a party may amend its plea ding only with the opposing party’s written consent or the court’s l eave. The court should freely give leave when justice so requires.” Fed. R. Civ. P. 15(a)(2 ). The grant or denial of l eave lies in the sound discretion of the district court. See Firestone v. Firestone , 76 F.3d 1205, 1208 (D.C. Cir. 1996). A court may deny leave to amend with suffici ent reason, such as futility of amendment, undue delay, bad faith, dilatory motive, undue prej udice, or repeat ed failure to cure deficiencies by previous amendments. See Foman v. Davis , 371 U.S. 178, 182 (1962).
B. Motion for Summary Judg ment – Fed. R. Civ. P. 56 Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment shall be granted “if the movant shows that there is no genuine disput e as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Ci v. P. 56(a); accord Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247 (1986). Moreover, s ummary judgment is prop erly granted against a party who, “af ter adequate time for discoveryand upon motion, . . . fails to make a showing sufficient to est ablish the existence of an elem ent essential to that party’s case, and on which that party will be ar the burden of proof at trial. ” Celotex Corp. v. Catrett , 477 U.S. 317, 322 (1986). In ruling on a motion for summary judgment, the court must draw all justifiable inferences in th e nonmoving party’s favor and accep t the nonmoving party’s evidence

as true. Anderson , 477 U.S. at 255. A nonmoving party, however, must establish more than “[t]he mere existence of a sci ntilla of evidence” in support of its position. Id. at 252. In addition, the nonmoving party may not rely solely on allegation s or conclusory statements. Greene v. Dalton , 164 F.3d 671, 675 (D.C. Cir. 1999). Rather, the nonmoving party must present specific facts that woul d enable a reasonable jury to f ind in its favor. Id . If the evidence “is merely colorable, or is not s ignificantly probative, summar y judgment may be granted.” Anderson , 477 U.S. at 249-50 (citations om itted). On summary judgment, the district judge must5 decide “whether the evidence pres ents a sufficient disagreement to require submission to a jury or whether it is so one-sided tha t one party must prevail as a matter of law.” Id . at 251-52. III. ANALYSIS A. Motion to Amend Plaintiffs move for leave to file a Second Amended Complaint wh ich states that TEM is the assumed business name of RNMI and, therefore, proper ly owns the copyrights for the lyrics and musical composition of Times of Your Life and has the capacity to sue for copyright infringement. Plainti ffs argue that they honestly be lieved TEM was an incorporated division of RNMI and that Club f or Growth is not prejudiced by the amendment. Opp’n at 7-8. Club for Growth argues that Pla intiffs should not be granted le ave to further amend the complaint because this amendment would be its fourth opportunity to draft an adequate complaint and there is no good-faith reason why Mr. Ni chols, co-Plaintiff and sole owner of TEM, did not know its inc orporated status. Because Pl aintiffs failed to make a reasonable inquiry into the cor porate status of TEM before fili ng any of the previous three complaints, Club for Growth argues they should not be permitted to make a fourth attempt. Club Reply at 2. Leave to amend should be freely gi ven when justice so requires “[i]n the absence of any apparent or declared reason ” not to, which might include “undue delay, bad faith . . . , repeated failure to cure deficien cies by amendments previously allowed, undue prejudice to the opposing party . . . , [or] futility of amendment.” Foman , 371 U.S. at 182. A district court has broad discretion in interp reting and applying the Foman standard. While plaintiffs are not allotted unlimited attempts to plead a claim for which relief m ay be granted, where the defendant is not prejudiced courts fr eely grant leave to amend. See, e.g. , Walsh v. Ford Motor Co. , No. 81- 1998, 1983 WL 1894, at *4-5 (D.D.C. Oct. 28, 1983) (denying leave to amend for a third time6 because it would unduly prejudice the defendant). Although Pla intiffs were the party most likely to know the facts and realize the error in their pleadings and should have investigated the corporate structure of TEM and R NMI when drafting the initial c omplaint, Club for Growth is not prejudiced by the amendment. D iscovery has just begun and the clarification of the legal structure of TEM and RNMI does no t alter the underlying claims. Club for Growth also argues that an amendment is f utile and wil l not cure the defect in the pleading because TEM was not the legal owner of the copyright at the time of the alleged infringement. A court may deny a motion to amend based on futility “where the proposed pleading would not survive a motion to dismiss.” In re Interbank Funding Corp. Sec. Litig. , 629 F.3d 213, 215 (D.C. Cir. 2010). A review for futility is “identical to review of a Rule 12(b)(6) dismissal based on the a llegations in the amended comp laint.” Id . at 215-16. “To survive a motion to dismiss, a com plaint must contain sufficien t factual matter, accepted as true, to ‘state a claim to relief th at is plausible on its face.’” Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that all ows the court to draw the reasonable inference that the defendant i s liable for the misconduct alleg ed.” Id . at 678. Though “detailed factual allegations” are not required, the complaint must conta in “more than labels and conclusions, [or] a formulaic r ecitation of the e lements of a c ause of action.” Twombly , 550 U.S.
at 555. “A plaintiff seeking to establis h copyright infringement must p rove ‘(1) ownership of a valid copyright , and (2) copying of constituent elements of the work that are original.’” Stenograph LLC v. Bossard Assoc., Inc. , 144 F.3d 96, 99 (D.C. Cir. 1998) (quoting Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc. , 499 U.S. 340, 361 (1991)). Club for Growth7 argues that the proposed Second A mended Complaint does not alle ge sufficient facts to show ownership. The Court disagrees . Plaintiffs First Amended Comp laint and the proposed Second Amended Complaint both contain su fficient factual information t o allege ownership of a valid copyright. Both include regis tration numbers for the two copyr ights at issue and indicate that TEM is the registered owner or w as assigned the ownership at a later date. See FAC ¶ 12; SAC ¶ 12. Club for Growth’s citation to the Federal Circuit’s decision in Lans v. Digital Equip. Corp. , 252 F.3d 1320, 1328 (Fed. Cir. 2001) does not change this ana lysis. Mr. Lans brought a patent infringement lawsu it against Digital Equipment Corp., arguing that despite being notified of a valid patent in accord with 35 U.S.C. § 287 (a), the defendant continued to infringe. The notifications r equired by § 287(a) were made by Mr. Lans personally and indicated that he was the patent holder; however, Mr. Lans had previouslyassigned the patent to his corporation, Uniboard. The Fede ral Circuit found that amending the complaint to indicate that Uniboard was the actual owner of the patent failed to cure the pleading defects because the notices required under § 287(a) wer e still insufficient “becaus e they did not come from the patentee.” Id . at 1326. The case at hand is dist inguishable. The First Ame nded Complaint and proposed Second Amended Complaint each provides sufficient alle gations about the ownership of the copyright. There is no addi tional requirement, as with the statutory notices in Lans , that Plaintiffs have failed to allege. Although the allegations in the com plaint are sufficient to withstand a motion to dismiss and permit a motion to amend, a number of legal questio ns remain to be addressed at summary judgment. These questions include, but are not limited to: (1) whether the transfer of the copyrights to TEM was legally sound because TEM was not an incorporate d division of8 RNMI; (2) whether TEM has alwa ys been the assumed business name of RNMI; (3) how an assumed business name is determined; and (4) whether a corporat ion can sue under an assumed business name. While Plaintiffs may not ultimatel y survive sum mary judgment because of these and other legal questions, the proposed Second Amended Complain t is not itself futile and the Court will grant leave to amend.
B. Summary Judgment Club for Growth moves for summar y dismissal, or summary judgmen t, of the remaining claim because the undisputed facts show that TEM is an unincorporated division of RNMI and unincorporated division s cannot own their own assets a nd lack the capacity to sue or be sued. Mot. at 2; see also Smartdoor Holdings, Inc. v. Edmit Indus., Inc. , 78 F. Supp. 3d 275, 277 (D.D.C. 2015); EEOC v. St. Francis Xavier Parochial Sch. , 77 F. Supp. 2d 71, 73 (D.D.C. 1999) (noting that “defendants are not proper parties to the lawsuit because case law reflects that unincorporated divisions of a co rporation lack the capacity to sue or be sued”). Club for Growth stresses that the First Amende d Complaint brings the infringeme nt claim on behalf of TEM and the Trademark Claim on behalf of R oger Nichols. Therefore, if TEM lacks the capacity to own assets, such as a copyright, or t o sue, the copyright infringem ent claim must fail. See St. Francis , 77 F. Supp. 2d at 77 (an unincorporat ed “division does not inde pendently own any assets”). Plaintiffs respond that the fact s surrounding TEM’s corporate s tatus and ability to own the copyrights are disputed and, therefore, summary judgmen t is inappropriate. See Opp’n at 4. Plaintiffs argue that because TEM is the assumed busines s name of RNMI, it owns the copyright and can sue for copyr ight infringement. Plaintiffs a lso argue that Roger Nichols himself has standing to sue for copyright infringement as the b eneficial owner of the musical9 composition and lyrics, and therefore, even if the transfers of the copyrights to TEM were invalid, Mr. Nichols’ individual ability to sue is still intact

. 2 Id . at 5-7. To grant summary judgment, the C ourt must find that there is no dispute of material fact. See Anderson , 477 U.S. at 247. While Club for Growth may ultimately succee d at summary judgment if TEM is not the legal owne r of either relevant copyright, the record is not clear or complete at this stage . Both parties attempt to make complicated arguments about the legal status of Roger Nichols’ corporation, but at this early s tage in discovery, factual gaps still exist and it is not possible to de cide. The undisputed record indicates that TEM was never a separate incorporated division of RNMI. It also contains signe d certificates of assignment indicating that the copyrights fo r the lyrics and musical compo sition of Times of Your Life were transferred to TEM. See Declaration of Roger Nichols, E xs. E & G [Dkt. 35-3]. Plainti ffs argue that the undisputed facts also s how that TEM is the assumed bus iness name of RNMI and official notice of that fact was file d in July 2017. Club for Growth ar gues that the undisputed facts show that TEM is, and was at the time the copyrights were assigned, an unincorporated division of RNMI and, therefore, the assignmen ts were not proper, TEM does not own the copyrights, and TEM lacks capacity to sue for inf ringement. More than the curr ent record is needed.

2 Club for Growth argues that Mr . Nichols himself has no standin g to sue on behalf of TEM or RNMI because “absent a direct ind ividual injury, the president and principal shar eholder of a corporation lacks standing to sue for an injury to the corporat ion.” Meade v. Kiddie Acad. Domestic Franchising, LLC , 501 F. App’x 106, 108 (3d Cir. 2012); see also Jones v. Niagara Frontier Transp. Auth. , 836 F.2d 731, 736 (2d Cir. 1987) (explai ning that, even thoug h the plaintiff shareholder may have faced the risk of financial loss as a result of injuries to the corporation, “[a] shareholder—ev en the sole shareholder—does no t have standing to assert claims alleging wrongs to the cor poration”). The Court agrees that each version of the complaint clearly separated the causes of action: copyright infringement brought by TEM and trademark infringement brought by Mr. Nic hols. The Court will not now in terpret the copyright claim as a joint claim.10 Courts are “hesitant to allow an outside infringer to challenge the timing or technicalities of the copyright t ransfer,” when an adequate wri ting cures an earlier insufficient transfer. Lyrick Studios, Inc. v. Big Idea Prods., Inc. , 420 F.3d 388, 392 (5th Cir. 2005). Such might be the case here if the orig inal transfer to TEM were ins ufficient because it was an unincorporated division of RNM I and could not hold its own asse ts, but a later writing, such as the notice of assumed business na me, could cure an insufficient transfer. Because the record is insufficient to reach or decide t his combined factual and legal question, Club for Growth’s motion for summary judgment w ill be denied without prejudice. IV. CONCLUSION For the reasons discussed above, D efendant’s Motion for SummaryDismissal, Dkt. 33, will be denied without prejudice and Plaintiffs’ Motio n for Leave to Amend the Complaint, Dkt. 36, will be grante d. A memorializing order acc ompanies this opinion.

Date: October 25, 2017 /s/ ROSEMARY M. COLLYER United States District Judge