DM1\11864801.1 

IN THE UNITED STATES DISTRICT COURT FOR THE 

NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION 

LARRY HEARD a/k/a “Mr. Fingers” and ) 

ROBERT OWEN, ) 

) 

Plaintiffs, ) 

) Case No. 20-cv-03678 

v. ) 

) 

TRAX RECORDS, INC., PRECISION/TRAX ) Honorable Sharon J. Coleman 

RECORDS, et al., ) 

) 

Defendants. ) 

__________________________________________) 

DEFENDANTS’ REPLY MEMORANDUM OF LAW IN SUPPORT OF THEIR 

FEDERAL RULE 9(b) AND 12(b)(6) PARTIAL MOTION TO DISMISS COUNTS I 

THROUGH III AND V THROUGH VIII OF PLAINTIFFS’ AMENDED COMPLAINT

I. INTRODUCTION 

The Court should grant Defendants’ Motion and dismiss: (1) Counts I through III and V 

through VIII pursuant to Federal Rule 12(b)(6) for failure to state a cause of action; and (2) 

Counts I and VIII for the additional reason that the allegations for those counts do not satisfy the 

pleading requirements of Federal Rule 9(b). In response, the Plaintiffs fail to sufficiently counter 

Defendants’ argument to avoid dismissal. For the reasons set forth herein, Defendants request 

that the Court grant Their Motion and dismiss Counts 1-3, 5-8 with prejudice. 

II. ARGUMENT 

A. The Court Should Dismiss Count I for Alleged Fraud on the Copyright Office 

Count I of the Complaint seeks a declaratory judgment to invalidate Trax Records’ 

copyrights on the Compositions and Sound Recordings for alleged fraud on the copyright office 

by “Trax Records” when it applied for and received certificates of registration in 1986 and 1987. 

(Compl. ¶¶ 95-98.) The Court should dismiss Count I because (1) Plaintiffs have not sufficiently 

plead Count I with particularity as required by Federal Rule 9(b); and (2) Trax Records is entitled 

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to the rebuttable presumption of the validity of the copyrights identified by Plaintiffs in the 

Complaint. The facts -- accepting them as true as required on a 12(b)(6) motion -- do not 

overcome the presumption of validity because they do not identify a misrepresentation of material 

fact, but instead merely identify a legal opinion of the effect of the documents described in the 

Complaint by Plaintiffs. 

1. Count I Has Not Been Stated With Particularity Required by Rule 9(b) 

A claim for fraud on the copyright office must be stated with particularity under Federal 

Rule 9(b), which Plaintiffs have failed to do. Lerner v. Fleet Bank, N.A., 459 F.3d 273, 290 (2d 

Cir. 2006); Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir. 1993) (fraud on the 

copyright office claims must meet the pleadings requirements of Federal Rule of Civil Procedure 

9(b)). The allegations are not sufficient to meet the particularity requirements of Federal Rule 

9(b). Plaintiffs’ Amended Complaint did not cure the pleading deficiency, failing to: (a) allege 

sufficient facts to support the inclusion of Rachael Cain personally in the alleged fraud on the 

copyright office, asserting allegations regarding her alleged role in the purported fraud in the 

conjunctive with Larry Sherman or generally referring to Defendants as “Trax Records” (Lincoln 

National Bank v. Lampe, 414 F. Supp. 1270, 1279 (N.D. Ill. 1976)); and (b)alleged a 

misrepresentation of fact, resting the entire claim on legal conclusion regarding the proper 

interpretation of three of four documents identified in the Complaint but not attached (Compl. 

¶ ¶ 70-74 (culminating with the conclusion that the agreements “do not contain any grant of 

copyright ownership or any assignment or transfer of any copyright ownership interests in the 

sound recordings . . . .” ); Compl. ¶ ¶ 74 (asserting additional legal conclusions regarding the effect 

of the agreements), ¶ 71 (same), ¶ 72 (same), ¶ 74 (same). Plaintiffs’ allegations are not sufficient, 

particularly when, as in this case, the Complaint bases the fraud accusations on the legal effect of 

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a document that was admittedly entered into by Heard. (Id. ¶ ¶ 71-74 (admitting entering into four 

“documents” with Sherman and Trax).) Federal Rule 9(b) requires more. 

2. The Court Should Dismiss Count I-III For Failure to State a Claim 

Under Rule 12(b)(6) 

Plaintiffs’ claim in Count I has failed to overcome the presumption of copyright invalidity, 

alleging nothing more than an alleged misunderstanding of the legal effect of the documents 

described in the Complaint, as opposed to stating a material misrepresentation of fact as required 

to state a claim. The Copyright Act provides that a certificate of a registration “shall constitute 

prima facie evidence of the validity of the copyright and of the facts stated in the certificate.” 17 

U.S.C. §410(c); Carol Barnhart Inc. v. Econ. Cover Corp., 773 F.2d 411, 414 (2d Cir. 1985) 

(quoting H.REP. NO. 1476, 94th Cong., 2d Sess. 157). To overcome that presumption, Plaintiffs 

allege that Trax Records falsely informed the copyright office that it owned the copyright pursuant 

to written agreement in when it completed the Trax Applications and Trax Applications SR for: 

Washing Machine, Can You Feel It, and Beyond the Clouds. (Compl. ¶ 78- 82.); Whimsicality, 

Inc. v. Rubie's Costume Co., 891 F.2d 452, 455 (2d Cir. 1989) (“Possession of a registration 

certificate creates a rebuttable presumption that the work in question is copyrightable. 17 U.S.C. 

§ 410(c) (1982).”). Plaintiffs must (but have failed) to sufficiently allege that Trax Records 

“knowingly misrepresented or omitted material facts on the registration application which might 

have occasioned a rejection of the application.” Beloit Corp. v. C3 Datatec, Case No. 93-C-447, 

1995 U.S. Dist. LEXIS 16685, at *27 (E.D. Wis. Aug. 23, 1995) (emphasis added). A claim 

alleging fraud on the Copyright Office is only available where the registrant is alleged to have 

made false representations of fact with the requisite intend to defraud. Id. 

Here, the Plaintiffs admit entering into written agreements with Trax Records that 

transferred or assigned specific rights to the Sound Recordings and Compositions. Whether the 

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agreements assign or transfer rights in the Sound Recordings to Trax – which representations forms 

the basis of this claim -- constitutes an alleged misstatement of law, not of statement of material 

fact, which is required to state a claim for fraud on the copyright office. G&G Closed Circuit 

Events, LLC v. Castillo, 327 F. Supp. 3d 1119, 1136 (N.D. Ill. 2018) (“It is well established ... that 

misrepresentations of the law are not actionable as fraud, including under the mail and wire fraud 

statutes, because statements of the law are considered merely opinions and may not be relied upon 

absent special circumstances.” (quoting Sosa v. DIRECTV, Inc., 437 F.3d 923, 940 (9th Cir. 

2006)); Vickers v. Henry County Savings & Loan Asso., 827 F.2d 228, 232 (7th Cir. 1987) 

(dismissing fraud claim because representations of the legal effect of a written agreement not 

actionable). 

In response, the Plaintiffs cite to Niccum v. Meyer (In re Mwyer), Case No. 97-2318, 1998 

U.S. App. LEXIS 20886 (7th Circ. Aug. 21, 1998), for the proposition that “ownership is a pure 

question of fact” in support of the concept that Defendants’ alleged statements were actionable 

statements of fact. (Resp. p. 8.) Not so. Plaintiffs’ reliance on Niccum is seriously misleading. 

Niccum does not concern a claim for fraud on the Copyright Office claim. It does not concern 

copyright. It does not concern whether a statement is a legal or factual concept. The Court’s 

reference to “ownership” being a pure question of fact in Niccum is entirely inapposite to any issue 

in this case. That case is not relevant. And it ignores the clear holding in Vickers that the 

representations regarding the legal effect of a document are misstatement of law (not fact) that are 

not actionable (Vickers, 827 F.2d at 232 (dismissing fraud claim because representations of the 

legal effect of a written agreement are not actionable), and the holding in Castillo that statements 

of law are merely opinions that are (again) not actionable as fraud (Castillo, 327 F. Supp. 3d 1119, 

1136). Counts I through III must be dismissed for this reason alone. 

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B. The Court Should Dismiss Plaintiffs’ Breach of the Warranty of Good Faith 

and Fair Dealing Claim (Count V) 

According to their Response, the Plaintiffs’ claim for beach of the duty of good faith and 

fair dealing rests on the concept that the written agreements at issue do not identify the time within 

which royalties are required to be paid and therefore an implied obligation (i.e. “reasonable time” 

to pay royalties) is inferred under the subject agreements. In turn, that implied agreement must be 

exercised in good faith. In other words, Plaintiffs’ claim seeks to hold Defendants liable for 

allegedly failing to carry out an implied obligation thereby breaching an implied term of the 

agreement to pay Plaintiffs their allegedly owed royalties. (Resp. p. 13-14.) Plaintiffs’ argument 

misses the mark. Plaintiffs do not claim the Defendants had the “discretion” to pay or not pay 

thereby possibly triggering the duty of good faith; the timing of Defendants’ payment obligations 

(whether a date certain or within a reasonable time) does not raise the duty of good faith. The case 

law cited by Plaintiffs does not provide otherwise. Moreover, and no matter how creative the 

argument, this Count is no different than Plaintiffs’ breach of contract claim in Count IV. The 

Court should dismiss Count V. 

C. The Court Should Dismiss Count VIII For Alleged Violation of the Illinois 

Consumer Fraud and Deceptive Business Practices Act 

1. Count VIII Does Not Satisfy Federal Rule 9(b) Pleadings Requirements 

Count VIII does not satisfy the requirements of Rule 9(b). Claims under the Illinois 

Consumer Fraud Act (“Act”) must be plead in accordance with the heightened pleading 

requirements of Rule 9(b). See Fed R. Civ. P. 9(b); U.S. v. All Meat & Poultry Products Stored at 

Lagrou Cold Storage, 470 F. Supp. 2d 823, 830 (N.D. Ill. 2007) (internal citations omitted). A 

“plaintiff bringing an Illinois consumer fraud claim must allege: (1) a deceptive act or practice by 

defendant; (2) the defendant’s intent that the plaintiff rely on the deception; and (3) that the 

deception occurred in the course of conduct involving trade and commerce. . . . In order to 

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adequately allege a deceptive act or practice, the plaintiff ‘must allege who, what, when, where 

and how’ the alleged fraud occurred.” All Meat & Poultry Products, 470 F. Supp. 2d at 830 

(internal citations omitted); McKee v. Pope Ballard Shepard & Fowle, Ltd., 604 F. Supp. 927, 930 

(N.D. Ill. 1985) (“Dozens of courts have attempted to prescribe the more detailed pleading 

requirements of Rule 9(b), but all have agreed that at the least, a plaintiff pleading fraud must 

“specify the time, place and contents of any alleged false representations, and the full nature of the 

transaction.”), quoting Lincoln National Bank v. Lampe, 414 F. Supp. 1270, 1279 (N.D. Ill. 1976)). 

Here, Count VIII of the Complaint consists almost entirely of legal conclusions, failing to 

identify the who, what, where, where and how that forms the basis of their claim. Indeed, Plaintiffs 

allege in a conclusory manner that “Defendants have committed deceptive acts or practices 

including . . .selling and distributing to the public . . . physical records and digital distribution. . . 

.” (Compl. ¶ 139.) These allegations provide none of the required detail to state a claim for fraud, 

such as identifying specifically who engaged in the what specific distribution, the manner of the 

distribution, when, where, to whom and through what methods. McKee, 604 F. Supp. at 930. 

Plaintiffs’ Response does not sufficiently counter this argument, and for all practical purposes 

admits they failed to do so and never squarely addressing Defendants’ argument. (Resp. 9-12.) 

For this reason alone, the Court should dismiss Count VIII. 

2. Count VIII Does Not State a Claim Under the Act 

The Court should also dismiss Count VIII for failure to state a claim. To state a cause of 

action for violation of the Act, Plaintiffs must allege: 

(1) a deceptive act or practice by the defendant; (2) the defendant’s intent that the 

plaintiff rely on the deception; (3) that the deception occurred in the course of 

conduct involving trade or commerce; and (4) actual damage to the plaintiff (5) 

proximately caused by the deception. It is thus apparent that the elements of a fraud 

claim under the Consumer Fraud Act are the same as common law fraud, except 

that a plaintiff is not required to plead reliance. 

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Kalpake v. Regas, 2018 IL App (1st) 17-1282-U, ¶ 41 (citations omitted); accord, e.g., Sheffler v. 

Commonwealth Edison Co., 2011 IL 110166, ¶ 62; See Cozzi Iron & Metal, Inc. v. U.S. Office 

Equip., 250 F.3d 570, 575-76 (7th Cir. 2001). 

First, a claim under the Act must assert “(1) a deceptive act or practice by the defendant; 

(2) the defendant’s intent that the plaintiff rely on the deception. . . . and (4) actual damage to the 

plaintiff. . . .” Id. (emphasis added). Here, Plaintiffs’ claim must be dismissed because it is based 

on alleged representations to the public at large, and purports to address alleged harm to the public 

in general. Plaintiffs have not alleged any deceptive or false representations by Defendants that 

were directed at Plaintiffs. Nor have Plaintiffs alleged that they suffered harm or damage because 

of Defendants’ allegedly deceptive representations to unknown third parties who make up the 

general population. 

Second, even if the allegations somehow support a facially plausible claim under the Act 

(which they do not), they show that Plaintiffs do not have standing to assert the claim as alleged. 

See, e.g., Pritikin v. Liberation Publications, Inc., 83 F. Supp. 2d 920, 924 (N.D. Ill. 1999). To 

have standing, a plaintiff must meet the constitutional requirements: “(1) the party must have 

personally suffered an actual or threatened injury caused by the defendant’s illegal conduct; (2) 

the injury must be fairly traceable to the challenged conduct; and (3) the injury must be one that is 

likely to be redressed by a favorable decision.” Pritkin, 83 F. Supp. 2d at 924. 

Third, private plaintiffs’ claims under the Act “must show that the consumer fraud 

proximately caused plaintiff[s’] injury.” E.g., Connick v. Suzuki Motor Co., 174 Ill. 2d 482, 501 

(1996) (citations omitted). Plaintiffs must therefore allege that they suffered damages “as a result” 

of Defendants’ allegedly deceptive conduct, which requires plaintiffs to allege that they were 

“actually deceived.” See, e.g., De Bouse v. Bayer, 235 Ill. 2d 544, 550, 559 (2009); Avery v. State 

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Farm Mut. Ins. Co., 216 Ill. 2d 100, 199-200 (2005). Importantly, “those who ‘knew the truth’ do 

not have valid ICFA claims because they cannot claim to have been deceived.” Oshana v. CocaCola Co., 472 F.3d 506, 514 (7th Cir. 2006) (citation omitted); Oliveira v. Amoco Oil Co., 201 Ill. 

2d 134, 155 (Ill. 2002). Here, Plaintiffs allege that they knew they did not transfer the rights that 

are subject to Trax Records’ copyright; if true, they have no claim. 

Finally, even if Plaintiff had standing, the Plaintiffs’ purported claim for an alleged 

violation of the Act is nothing more than a repackaged claim for breach of contract that forms the 

basis of Count IV of the Complaint thereby requiring its dismissal. “A claim under Illinois’ 

consumer fraud act must be based on more than an allegation that a defendant failed to fulfill terms 

of a contract.” See Avery, 216 Ill. 2d at 199-200 (stating that claims under the Illinois consumer 

fraud act must consist of something more than a breach of contract claim); see also Petri v. Gatlin, 

997 F. Supp. 956, 968 (N.D. Ill. 1997) (distinguishing between a claim under the Illinois consumer 

fraud act and a claim for breach of contract). In addition, there are no allegations that Defendants 

distributed any of the Recordings along with an alleged representation to consumers of their 

ownership or control. Plaintiffs merely allege that Defendants sold and distributed the Recordings 

without the legal right to do so. Even if they true – as alleged and accepted as true solely for the 

purposes of hits Motion – that sale or distribution is nothing more than a claim for an alleged 

breach of contract. It is not actionable. 

Plaintiffs’ Response does not address these arguments, confusing the requirement s of 

direct harm with reputation and in appropriately directing the Court to meaningless allegations 

regarding the alleged popularity of Plaintiffs’ music and quality of sound recordings. (Resp. 11-

12.) That is not sufficient. The Court should dismiss Count VIII. 

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III. CONCLUSION 

For the foregoing reasons, the Court should dismiss Count I through III and V through VIII 

and grant any additional relief the Court deems just. 

DATED: March 12, 2021 

RACHAEL CAIN, PRECISION/TRAX AND 

TRAX RECORDS INC. 

BY: _____________________________ 

 One of their Attorneys 

Richard P. Darke 

Duane Morris LLP 

190 S. LaSalle Street, Suite 3700 

Chicago, IL 60601 

(312) 499-6700 

rpdarke@duanemorris.com

 

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CERTIFICATE OF SERVICE 

The undersigned hereby certifies that on March 12, 2021, a copy of the foregoing was filed 

electronically. Notice of this filing will be sent by operation of the Court’s electronic filing system 

to all parties indicated on the electronic filing receipt. 

/s/ Richard P. Darke 

Robert S. Meloni (pro hac vice forthcoming) 

Thomas P. McCaffrey (pro hac vice forthcoming) 

MELONI & McCAFFREY, a Professional Corporation 

3 Columbus Circle – 15th Floor 

New York, New York 10019 

Tel: (212) 520-6090 

rmeloni@m2lawgroup.com 

Christopher M Heintskill (ARDC No. 6272391) 

LEVENFELD PEARLSTEIN, LLC 

2 North LaSalle, 13th Floor 

Chicago, IL 60602 

Tel: (312) 346-8380 

cheintskill@lplegal.com 

Appearing as Local Counsel for Plaintiffs 

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