United States District Court, District of Columbia
L. FRIEDRICH, UNITED STATES DISTRICT JUDGE
Roy Feinson and two partnerships sue defendant Ross Lee Tabak
for, among other things, interfering with the advertising
revenue of three websites. See Compl., Dkt. 1.
Before the Court is Tabak's Motion to Dismiss, Dkt. 12,
for lack of jurisdiction and for failure to state a claim for
relief. For the reasons that follow, the Court will grant the
motion in part, deny it in part, and stay all surviving
claims pending arbitration.
Tabak provides his own version of the facts, Def.'s Mot.
at 3-6, the Court must accept as true all material
allegations in the complaint at this stage of the litigation,
see Banneker Ventures, LLC v. Graham, 798 F.3d 1119,
1129 (D.C. Cir. 2015). According to the plaintiffs, the
dispute arises from several failed business relationships
between Feinson and Tabak. The complaint alleges a number of
grievances against Tabak, but the Court considers only those
relevant to Tabak's motion to dismiss.
late 1990s and early 2000s, Feinson published two books
titled The Animal in You (AIY) and The Secret
Universe of Names (SUN), and he created
“Animalinyou.com, ” a website associated with the
book of the same name. Compl. ¶¶ 26, 30. Feinson
holds the copyright for both books. Id. ¶ 30.
first began to work with Tabak in 2009, when he employed
Tabak to upgrade the AIY website, which was created using
Feinson's copyrighted content. Id. ¶¶
31, 33. Although Feinson and Tabak never committed their
agreement to writing, Tabak agreed to receive 50% of all
online advertising revenue exceeding $600 per month in
exchange for his technical expertise. Id.
¶¶ 32, 33.
Feinson and Tabak formed two partnerships. In 2015, they
formed the SUN partnership. Id. ¶ 34. Under
this partnership agreement, Feinson received 60% of the
revenue and provided the copyrighted site content, while
Tabak received 40% of the revenue for “constructing the
website, writing the code, engaging in marketing, and
[performing] site management.” Id. ¶ 36;
see also Def.'s Mot. Ex. 1, Dkt. 12-1. In 2016,
Feinson and Tabak formed another partnership to create free,
web-based personality and other quizzes on a variety of
websites, including Quizinsight.com (QZI). Compl.
¶¶ 41-42. Under the QZI partnership agreement,
Feinson and Tabak retained equal rights in the management of
the partnership and shared profits and losses equally.
Id. ¶¶ 45, 51; Def.'s Mot. Ex. 2,
¶¶ 5, 7-8, Dkt. 12-2. They also agreed that
“[a]ny dispute or controversy herein shall be settled
by arbitration in accordance with the Arbitration Act.”
Def.'s Mot. Ex. 2, ¶ 15.
lawsuit arises from Tabak's actions over the course of
several weeks in May and June 2018. In mid-May 2018, Tabak
sought sole ownership of Quizoneer.com, one
of the websites subject to the QZI partnership agreement.
Compl. ¶¶ 59-60; see also Id. ¶ 63.
When Feinson refused to permit the ownership transfer, Tabak
removed advertising from the SUN and QZI websites, and on May
20, he reinstated the advertising but diverted incoming funds
to a bank account fully under his control. Id.
¶¶ 65-66. Following an acrimonious email exchange
with Feinson, Tabak disconnected all of the websites except
the Quizoneer.com site from the internet, and he allegedly
took a series of other actions to harm Feinson's
financial interests. Id. ¶ 71. According to the
plaintiffs, Tabak diverted approximately $2, 000 to his
personal use between the time he began diverting funds and
the time he disconnected the websites from the internet.
Id. ¶ 72. The plaintiffs also allege, “on
information and belief, ” that Tabak
“revived” a dormant Facebook account on May 30
and June 6 and “attempted to initiate advertising for
then-nonexistent websites . . . to divert money from . . .
Feinson's Ally Bank account to Facebook.”
Id. ¶ 74; see also Id. ¶¶
August 9, 2018, Feinson, the QZI partnership, and the SUN
partnership sued Tabak, alleging nine counts. See
Compl. They allege that when Tabak interfered with the
operations of the AIY, SUN, and QZI websites in May and June
2018, he violated the Racketeer Influenced and Corrupt
Organizations (RICO) Act by committing extortion, wire fraud,
bank fraud, and trade secrets theft, as well as by
transporting stolen property across state lines. Id.
¶ 109. They further allege that he breached an oral
contract for the AIY website and the SUN and QZI partnership
agreements, id. ¶ 119, and that he breached his
fiduciary duties under the SUN and QZI agreements,
id. ¶ 125. They also allege that he infringed
the AIY and SUN copyrights, id. ¶¶ 129,
136, fraudulently induced Feinson to enter into the SUN and
QZI partnerships, id. ¶ 141, tortiously
interfered with the operations of all three websites,
id. ¶ 147, and converted Feinson's AIY
property and the property of the SUN and QZI partnerships,
id. ¶¶ 150, 152. They allege that Tabak
either wrongfully dissociated from the SUN and QZI
partnerships, or, if not, that they are entitled to an order
judicially expelling him from those partnerships.
Id. ¶ 162. And the plaintiffs allege that they
are entitled to an accounting of the QZI and SUN
partnerships' assets. Id. ¶ 168.
general, the Federal Rules of Civil Procedure do not require
“detailed factual allegations, ” Banneker
Ventures, 798 F.3d at 1129 (internal quotation marks
omitted), but instead a “short and plain statement of
the claim showing that the pleader is entitled to relief,
” Fed.R.Civ.P. 8(a)(2). At this stage, the court must
“accept all the well-pleaded factual allegations of the
complaint as true and draw all reasonable inferences from
those allegations in the plaintiff's favor.”
Banneker Ventures, 798 F.3d at 1129.
Federal Rule of Civil Procedure 12(b)(1)
motion to dismiss under Rule 12(b)(1) “presents a
threshold challenge to the court's jurisdiction.”
Haase v. Sessions, 835 F.2d 902, 906 (D.C. Cir.
1987). Federal district courts are courts of limited
jurisdiction, and it is “presumed that a cause lies
outside this limited jurisdiction.” Kokkonen v.
Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). Thus,
the plaintiff bears the burden of establishing jurisdiction.
See Spokeo v. Robins, 136 S.Ct. 1540, 1547 (2016).
If, at any point, the court determines that it lacks
jurisdiction, the court must dismiss the claim or action,
whether on the defendant's motion or sua sponte.
Fed.R.Civ.P. 12(b)(1), 12(h)(3).
Federal Rule of Civil Procedure 12(b)(6)
Federal Rule of Civil Procedure 12(b)(6), a defendant may
seek dismissal on the ground that the plaintiff has failed
“to state a claim upon which relief can be
granted.” To survive such a motion to dismiss, the
plaintiff need only “alleg[e] facts sufficient to state
a claim that is plausible on its face.” Abbas v.
Foreign Policy Grp., LLC, 783 F.3d 1328, 1334 (D.C. Cir.
2015). “A well-pleaded complaint may proceed even if it
strikes a savvy judge that actual proof of the facts alleged
is improbable.” Id. (internal quotation marks
raises both jurisdictional and merits challenges to the
plaintiffs' claims. For the reasons that follow, the
Court rejects Tabak's jurisdictional argument and
concludes that the arbitration clause in the QZI partnership
agreement requires arbitration of all claims involving the
QZI partnership. The Court will also dismiss the RICO and
fraud-in-the-inducement claims relating to the AIY contract
and the SUN partnership, and it will stay the remaining
claims until the parties have arbitrated the claims involving
the QZI partnership.
The Jurisdictional Challenge
argues that the Court must dismiss “all” of the
plaintiffs' claims because they failed to sufficiently
allege that the amount in controversy exceeds $75, 000.
Def.'s Mot. at 11. The Court disagrees.
28 U.S.C. § 1332(a), federal courts have diversity
jurisdiction over certain state claims where “the
matter in controversy exceeds the sum or value of $75,
000.” The amount-in-controversy requirement applies
only when a plaintiff seeks to invoke diversity jurisdiction.
Under 28 U.S.C. § 1331, federal courts have
federal-question jurisdiction over “all civil actions
arising under the Constitution, laws, or treaties of the
United States.” Congress also has provided that federal
courts have exclusive jurisdiction over “any civil
action arising under any Act of Congress relating to . . .
copyrights, ” 28 U.S.C. § 1338(a), and
“supplemental jurisdiction over all . . . claims that
are so related to claims in the action within [a court's]
original jurisdiction that they form part of the same case or
controversy, ” id. § 1367(a).
assuming that the amount in controversy does not satisfy the
requirements for the Court's exercise of diversity
jurisdiction under § 1332, the Court has
federal-question jurisdiction over the copyright infringement
claim. That claim arises under the Copyright Act,
which is an “Act of Congress relating to . . .
copyrights, ” 28 U.S.C. § 1338(a), and the
plaintiffs seek statutory damages and other “remed[ies]
expressly granted by the [Copyright] Act, ”
Scandinavian Satellite Sys., AS v. Prime TV Ltd.,
291 F.3d 839, 844 (D.C. Cir. 2002) (internal quotation marks
omitted); see also Compl. ¶ 169 (citing 17
U.S.C. §§ 502, 504-05).
remaining state claims, the Court has supplemental
jurisdiction because those claims “form part of the
same case or controversy.” 28 U.S.C. § 1367(a).
“A federal claim and a state law claim form part of the
same Article III case or controversy if the two claims derive
from a common nucleus of operative fact such that the
relationship between the federal claim and the state claim
permits the conclusion that the entire action before the
court comprises but one constitutional case.”
Lindsay v. Gov't Employees Ins. Co., 448 F.3d
416, 423-24 (D.C. Cir. 2006) (alteration adopted and internal
quotation marks omitted).
the facts the plaintiffs allege to establish copyright
infringement overlap substantially those alleged to establish
their state-law claims. Indeed, the same acts taken in May
2018 that allegedly infringed Feinson's AIY and SUN
copyrights also gave rise to the breach of contract, breach
of fiduciary duty, tortious interference, and conversion
claims, among others. Where “the same acts violate
parallel federal and state laws, the common nucleus of
operative facts is obvious.” Id. at 424
(quoting Lyon v. Whisman, 45 F.3d 758, 761 (3d Cir.
Tabak has not argued that the Court should decline to
exercise supplemental jurisdiction based on one or more of
the statutory factors delineated in 28 U.S.C. § 1367(c),
and the Court is independently satisfied that it is
appropriate to exercise supplemental jurisdiction here. In
addition, even if it were inappropriate to exercise
supplemental jurisdiction, the plaintiffs appear to have
established diversity jurisdiction. See, e.g.,
Pls.' Opp'n at 4 & nn. 3, 4, Dkt. 13-1; see
also Pietrangelo v. Refresh Club, Inc., No. 18-cv-1943,
2019 WL 2357379, at *6 (D.D.C. June 4, 2019) (“It must
appear to a legal certainty that the claim is really for less
than the jurisdictional amount to justify dismissal. The
inability of plaintiff to recover an amount adequate to give
the court jurisdiction does not show his bad faith or oust
the jurisdiction.” (quoting St. Paul Mercury
Indemnity Co. v. Red Cab Co., 303 U.S. 283, 289
(1938))). For all these reasons, the Court has jurisdiction
to reach the merits of this case.