Court Opinion

ID: 3017183
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:16:45.26278+00
Date Added: 2024-06-11T11:47:03.683017
License: Public Domain

___________

                                 No. 94-2867
                                 No. 94-2917
                                 ___________

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
                                 ___________

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."
     Certain Arkansas inmates commenced this class action against Films
and Swank seeking a declaratory judgment under the Copyright Act that in-
prison 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 court1 initially dismissed the complaint for failure to
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

     1
      The HONORABLE GARNETT THOMAS EISELE, United States District
Judge for the Eastern District of Arkansas.

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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

                                      -3-
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).

                                         -4-
        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

                                        -5-
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

                                        -6-
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.

                                     -7-
     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.

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