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No. 94-2867

No. 94-2917

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Diagnostic Unit Inmate Council; *

John Merrick; Eugene Issac *

Pitts; Jerry McFarland; Terry *

Tolliver; Solomon Eskew; *

Earl Thompson, *

*

Plaintiffs - Appellants, * 

*

Arkansas Department of * Appeals from the United States

Correction, * District Court for the

* Eastern District of Arkansas.

Involuntary Plaintiff, *

*

v. *

*

Films Incorporated; Swank *

Motion Pictures, Inc., *

*

Defendants - Appellees. *

___________

 Submitted: September 13, 1995

 Filed: July 8, 1996

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Before BOWMAN, JOHN R. GIBSON, and LOKEN, Circuit Judges.

___________

LOKEN, Circuit Judge.

The Arkansas Department of Corrections ("ADC") shows videotaped

movies to inmates in the common areas of its prisons. In 1985, an attorney

representing motion picture copyright owners wrote ADC, warning that it

would infringe owner copyrights to use videotapes licensed for home use

only at these public performances. ADC has since contracted with appellees

Films Inc. ("Films") and Swank Motion Pictures, Inc. ("Swank"), to provide

videotaped movies that come with "public performance distribution rights."
 The HONORABLE GARNETT THOMAS EISELE, United States District

1

Judge for the Eastern District of Arkansas.

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Certain Arkansas inmates commenced this class action against Films

and Swank seeking a declaratory judgment under the Copyright Act that inprison showings of "home use only" rented movies do not infringe the

owners' copyrights, either because prison showings are not "public

performances" within the meaning of 17 U.S.C. §§ 101 and 106(4), or because

such showings are "fair use" within the meaning of 17 U.S.C. § 107. The

inmates believe that ADC could obtain a more desirable selection of movies

at less cost by renting from local video stores. For example, the 1994

contract between ADC and Swank provided that Swank would supply 121

videotapes for a total annual cost of $9,600, whereas the parties have

stipulated that ADC could rent a comparable number of "home use only"

videotapes for an annual cost of about $2,200. 

The district court initially dismissed the complaint for failure to 1

state a legally cognizable claim, but we remanded with directions to

consider whether ADC should be joined. Diagnostic Unit Inmate Council v.

Motion Picture Ass'n of America, Inc., 953 F.2d 376, 379 (8th Cir. 1992).

On remand, ADC was joined as an involuntary plaintiff under Fed. R. Civ.

P. 19(a). However, when ADC declined to take a position in the lawsuit,

the district court again dismissed on the ground that there is no actual

controversy. The inmates appeal. Counsel for ADC has advised this court

that ADC "did not join with the Inmate Council in appealing the judgment

of the district court and is, therefore, not an appellant in this case."

Agreeing with the district court that ADC's refusal to participate means

there is no actual controversy, we affirm.

1. The Declaratory Judgment Act authorizes federal courts to declare

the rights of interested parties "[i]n a case of actual controversy." 28

U.S.C. § 2201. The requirement of an "actual controversy" is imposed by

Article III of the Constitution. See
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Steffel v. Thompson, 415 U.S. 452, 458 (1974). In general, an actual

controversy is "a substantial controversy, between parties having adverse

legal interests, of sufficient immediacy and reality to warrant the

issuance of a declaratory judgment." Maryland Cas. Co. v. Pacific Coal &

Oil Co., 312 U.S. 270, 273 (1941). 

In patent and copyright cases, there is an actual controversy if

"defendant in the declaratory judgment lawsuit has either expressly or

impliedly charged the plaintiff with infringement." Sherwood Medical

Indus., Inc. v. Deknatel, Inc., 512 F.2d 724, 727 (8th Cir. 1975). The

defendant copyright owner must have evidenced its intent to enforce a

copyright, usually by a charge or threatened charge of infringement, such

as the 1985 attorney letter to ADC. And the declaratory judgment plaintiff

must have engaged in "present activity which could constitute infringement

or concrete steps taken with the intent to conduct such activity." BP

Chemicals Ltd. v. Union Carbide Corp., 4 F.3d 975, 978 (Fed. Cir. 1993).

In a copyright case, "plaintiff must show that it has actually published

or is preparing to publish the material that is subject to the defendant's

copyright [in a manner that] places the parties in a legally adverse

position." Texas v. West Pub. Co., 882 F.2d 171, 175 (5th Cir. 1989),

cert. denied, 493 U.S. 1058 (1990); see also Wembley, Inc. v. Superba

Cravats, Inc., 315 F.2d 87, 90 (2d Cir. 1963) ("where there is no actual

manufacture, use or sale, and no immediate intention and ability to

practice the invention, there is no justiciable [patent] controversy").

The inmates as declaratory judgment plaintiffs cannot satisfy this

standard. True, the inmates have an indirect financial stake in the issue

because ADC pays for movie rentals from an Inmate Welfare Fund generated

by profits from commissaries sales to inmates and prison employees.

However, while that Fund must be spent "for the general benefit of the

inmates," Ark. Code Ann. § 12-29-107, ADC has total authority over all Fund

expenditures and, more importantly, ADC has complete control over the

renting and
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showing of videotaped movies at its prisons. Inmates may request certain

movies, but they cannot rent movie videotapes for prison showings. The

inmates do not, and cannot, engage in the activity that prompted the

copyright owners' 1985 charge of infringement. Thus, there is no actual

controversy between the inmates and defendants Films and Swank that would

support Declaratory Judgment Act jurisdiction.

2. On remand, we directed the district court to "consider, after

obtaining the views of the Attorney General of Arkansas, whether [ADC]

should be joined." 953 F.2d at 379. ADC received the 1985 infringement

letter, and it continues to rent and show videotaped movies in its prisons.

If ADC credibly asserted a present intent to use home-use-only movies for

these showings, it would have standing to seek a declaratory judgment that

such activity would not infringe the owners' copyrights. However, though

invited to join and later involuntarily joined in the action, ADC has

steadfastly refused to take a position on these copyright issues. There

is no other evidence in the record that Films, Swank, or any copyright

owner objects to the way in which ADC is now obtaining and showing

videotaped movies. Accordingly, there is no party plaintiff whose present

activity, or intended present activity, could constitute infringement. 

The inmates nonetheless suggest that ADC's joinder as an involuntary

plaintiff, without more, created an actual controversy. We disagree. Rule

19(a), which authorizes joinder of unwilling plaintiffs, "makes no

provision for a plaintiff to require another person to maintain an action

vested solely in such other person, even though its maintenance might

result in benefit to the plaintiff." Coast v. Hunt Oil Co., 195 F.2d 870,

872 (5th Cir.), cert. denied, 344 U.S. 836 (1952). See also Rhode Island

Comm. on Energy v. General Servs. Admin., 561 F.2d 397, 402-03 (1st Cir.

1977); In re Interstate Motor Freight System IMFS, Inc., 71 B.R. 741, 746

(Bankr. W.D. Mich. 1987). 
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A narrow exception to this general rule originated with Independent

Wireless Tel. Co v. Radio Corp. of Amer., 269 U.S. 459 (1926), a case in

which the holder of an exclusive patent license sought to sue for

infringement of the patent. The exception is that an involuntary plaintiff

may be joined to cure the original plaintiff's inability to press a claim

if the original plaintiff and the involuntary plaintiff have "such a

relationship that the absent party must allow the use of his name as

plaintiff." 3A James W. Moore et al., Moore's Federal Practice ¶ 19.06 at

84 (2d ed. 1995). But the inmates and ADC have no such relationship here.

ADC has no obligation, contractual or otherwise, to allow the inmates to

use its name to secure declaratory judgment relief that only ADC may seek.

3. After concluding that this case presents no actual controversy,

the district court went on to consider the merits of the inmates' copyright

claims because that would achieve judicial economy in the event this court

held, in light of ADC's "somewhat ambiguous position," that there is

declaratory judgment jurisdiction. The district court ruled in favor of

the copyright owners, concluding that prison showings are public

performances and are not fair use. 

We do not criticize the district court for provisionally considering

these issues. However, one of the problems with advisory opinions is that

they are made on advisory records. Because ADC elected not to intervene

to aggressively challenge the copyright owners' position, we do not know

the factual details surrounding the showing of videotaped movies in ADC

prisons, nor do we know the purposes served by this aspect of ADC's penal

program. These kinds of facts seem essential to apply both the fair use

and the public performance statutes. See Sony Corp. v. Universal City

Studios, Inc., 464 U.S. 417 (1984) (fair use); On Command Video Corp. v.

Columbia Pictures Indus., 777 F. Supp. 787, 789-90 (N.D. Cal. 1991) (public

performance). Accordingly, the district court's
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discussion of the merits of these copyright issues should be considered

vacated as moot. 

The judgment of the district court is affirmed. We thank appointed

counsel for his excellent representation of the inmates.

JOHN R. GIBSON, Circuit Judge, dissenting.

I respectfully dissent. While ADC has been joined as a party

primarily for the purpose of representing the interests of the inmates, it

has declined to take a position in the lawsuit resulting in its dismissal,

and its counsel advises this court that it did not join with the Inmate

Council in appealing the judgment. The court's decision today comes down

to the simple statement that "ADC's refusal to participate means there is

no actual controversy, we affirm." In essence, we have allowed an

involuntary plaintiff to simply abandon the interests which it was

appointed to represent. 

This runs counter to the principle of providing for involuntary

plaintiff status. An involuntary plaintiff's failure to act or appeal

should not imply the absence of a real controversy. The involuntary nature

of the status would not make it unsurprising that the involuntary plaintiff

would fail to act. Should this be the case, as it is here, the actual

plaintiffs should be allowed to proceed in the name of the involuntary

plaintiff. 

The court's opinion acknowledges the inmate's financial stake in the

issue, because ADC pays for movie rentals from an inmate welfare fund

generated by profits from commissary sales to inmates and prison employees.

The opinion goes on to state that by statute ADC has total authority over

all fund expenditures, as well as complete control over the renting and

showing of videotaped movies at its prisons. In my view, the district

court's joinder of the
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ADC should be viewed as a recognition of a fiduciary duty by ADC toward the

inmates/Diagnostic Unit Inmate Council. The concept of an involuntary

plaintiff arises from equity. In some situations there is recognition that

the party sought to be joined [as an involuntary plaintiff] has a duty to

allow the named plaintiff to use its name in the action. 7 Charles A.

Wright et al., Federal Practice and Procedure § 1606, at 76 (1986). The

duty to allow a plaintiff to use its name implies that if there is an

opposing interest between the involuntary plaintiff and the defendant, then

that controversy is imputed to the plaintiff that brought the action. The

involuntary plaintiff is sometimes referred to as "the nominal plaintiff."

Thus, it follows that the inmates should be allowed to pursue declaratory

judgment "in the name of" the ADC.

The matter of who is named as a party plaintiff is important, because

the federal procedural system is premised upon the assumption that those

named as parties have rights and duties in the conduct of the litigation.

June F. Entman, Compulsory Joinder of Compensating Insurers; Federal Rule

of Civil Procedure 19 and the Role of Substantive Law, 45 Case W. Res. L.

Rev. 1, 19 (1994). Nevertheless, in the above-cited article discussing the

compulsory joinder of compensating insurers, the author makes reference to

situations where when the insured otherwise has control of the claim, but

fails or refuses to assert it, some states then permit the insurer to bring

the claim, citing as an example, City of New York Ins. Co. v. Tice, 152

P.2d 836, 842 (Kan. 1944) (insured should sue for itself and as trustee for

the insurer, but if the insured refuses to sue, "justice requires that the

insurer be permitted to bring action"). Again, in the insurance context,

when the insurer, because of conflict of interest, is not likely to protect

the insured's interest, a court may permit the insured to bring and control

his own suit. Entman at 25. 
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ADC, as an involuntary plaintiff, should not be allowed to eliminate

the "controversy" through its inaction. This, however, is the net result

of the court's opinion today. 

Rule 17, in providing that an action shall be prosecuted in the name

of the real party in interest, and specifying "bailee, trustee of an

express trust, a party with whom or in whose name a contract has been made

for the benefit of another" contains descriptions that can well be applied

to ADC. When this is read with Rule 19A with the provision allowing

joinder of a party as an involuntary plaintiff, we should make sure that

those provisions of the rule are effectuated. Here ADC is in essence a

bailee of funds that have come from the inmates, possibly a trustee, and

with respect to the movie rentals, a party with whom or in whose name a

contract has been made for the benefit of the inmates. When the

involuntary plaintiff refuses to act, as it has here, we should not allow

that refusal to frustrate the intent of the rules, i.e., that the interest

of the party be represented. We should allow counsel to be appointed to

act for the inmates as actual plaintiffs, in the name of the involuntary,

but passive and resistant, plaintiff.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.