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The Edge In College Preparation, LLC v. Peterson's Nelnet, LLC

United States District Court, D. Nebraska

June 5, 2017

THE EDGE IN COLLEGE PREPARATION, LLC, a New York limited liability company, Plaintiff,
v.
PETERSON'S NELNET, LLC, a Nebraska limited liability company, Defendant.

          MEMORANDUM AND ORDER

          John M. Gerrard United States District Judge.

         This matter is before the Court on the defendant's motion to dismiss (filing 12) two of the plaintiff's claims for relief. That motion will be granted.

         BACKGROUND

         The plaintiff, The Edge in College Preparation (ECP), specializes in helping high school students prepare for college entrance examinations. Filing 1 at 2. Peterson's is an educational services company. Filing 1 at 2. The parties entered into a publishing contract in 2015. Filing 1-1. ECP agreed to prepare a manuscript to be published by Peterson's as "Peterson's ACT 2016, " in exchange for $180, 000. Filing 1 at 1; filing 1-1 at 1, 4.

         ECP completed the initial portions of the manuscript and submitted them to Peterson's, which accepted them with minor revisions. Filing 1 at 3. But Part III of the manuscript was, according to ECP, deficient. Filing 1 at 3. Peterson's proposed amending the publishing contract so that ECP would author a different publication, and Peterson's would retain the rights to use ECP's work on the ACT publication. Filing 1 at 3. ECP refused, and Peterson's terminated the contract. Filing 1 at 3-4. A balance of $120, 000 remained due at the time of the termination. Filing 1 at 4.

         ECP alleges that Peterson's subsequently published two ACT preparation books: "Peterson's ACT Prep Guide" and "Peterson's ACT Prep Guide Plus." Filing 1 at 4. According to ECP, the publications are substantially similar to the work ECP performed for Peterson's, and ECP alleges that "[g]iven the substantial similarity between the two works, it is inconceivable that Peterson's prepared the Infringing Publications without referring to the Work, for which ECP retained the intellectual property rights." Filing 1 at 5. ECP alleges that Peterson's referred to ECP's work and copied parts of it. Filing 1 at 5.

         ECP sued Peterson's, asserting four claims for relief: breach of contract, copyright infringement, unfair competition, and violation of the Nebraska Uniform Deceptive Trade Practices Act (UDTPA), Neb. Rev. Stat. § 87-301 et seq. Filing 1 at 5-7. Peterson's moves to dismiss two of those claims. Filing 12.

         STANDARD OF REVIEW

         To survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. While the Court must accept as true all facts pleaded by the nonmoving party and grant all reasonable inferences from the pleadings in favor of the nonmoving party, Gallagher v. City of Clayton, 699 F.3d 1013, 1016 (8th Cir. 2012), a pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Iqbal, 556 U.S. at 678. Determining whether a complaint states a plausible claim for relief will require the reviewing court to draw on its judicial experience and common sense. Id. at 679.

         DISCUSSION

         Peterson's moves to dismiss ECP's unfair competition and UDTPA claims. Filing 12.

         Unfair Competition

         Peterson's contends that ECP's unfair competition claim is preempted by the federal Copyright Act, 17 U.S.C. § 101 et seq. ECP grounds its claim in both Nebraska common law and the Nebraska Consumer Protection Act, Neb. Rev. Stat. § 59-1602 et seq. Filing 19 at 5, 10. The Court will begin with the common-law claim.

         Pursuant to § 301(a) of the Copyright Act, federal copyright law preempts "all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright . . . in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright." SeeDryer v. Nat'l Football League, 814 F.3d 938, 942 (8th Cir. 2016). In determining whether federal copyright law preempts a cause of action under state law, the Court asks (1) whether the work at issue is within the subject matter of copyright and (2) whether the state law created right is equivalent to any of the exclusive rights within the general scope of copyright as specified in § 106. Dryer, 814 F.3d at 942. If a plaintiff's state-law claim meets both of ...


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