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Kwan v. Schlein

October 23, 2007


The opinion of the court was delivered by: James C. Francis IV United States Magistrate Judge


This action arises out of the publication of "Find It Online," a how-to book intended to provide tips for conducting internet searches. The plaintiff, Shirley Y. Kwan, contends that she was deprived of her rights to authorship credit and to royalties by her co-author, defendant Alan M. Schlein, and by the publisher, defendant Business Resource Bureau, Inc. ("BRB").*fn1 Ms. Kwan now moves pursuant to Rule 15(a)(2) of the Federal Rules of Civil Procedure to file a Second Amended Complaint. Each defendant has opposed the plaintiff's motion and has cross-moved to dismiss certain of the plaintiff's claims to the extent amendment is permitted. BRB also seeks an order revoking Ms. Kwan's in forma pauperis status. For the reasons set forth below, the plaintiff's motion to amend is granted in part and denied in part and the defendants' cross-motions are denied.


The underlying facts are set forth in detail in the Court's decision on the defendants' initial motions to dismiss, Kwan v. Schlein, 441 F. Supp. 2d 491 (S.D.N.Y. 2006), and will be repeated here only to the extent necessary to understand the pending motions. In August 1998, Ms. Kwan entered into a contract with BRB to edit "Find It Online," which was to be written principally by Mr. Schlein. In return, Ms. Kwan was to receive $2,000 together with 20 percent of any royalties. However, the plaintiff's role allegedly expanded, and BRB's President, Michael Sankey, purportedly promised to identify her as a co-author on the cover of the book. This agreement was never reduced to writing. When the book was published in February 1999, Mr. Schlein was listed as the only author, and Ms. Kwan was identified as one of three editors. In addition, a month prior to publication, BRB and Mr. Schlein filed copyright registrations listing themselves as joint authors.

Several revisions of "Find It Online" followed. The Second Edition was published in 2002 and again identified Ms. Kwan as an editor. The Third and Fourth editions were published in 2003 and 2004, respectively, and did not credit the plaintiff at all. According to the plaintiff, a Revised Fourth Edition was issued in 2006 or 2007. In February 2005, Ms. Kwan submitted an application for copyright registration identifying herself as a co-author of "Find It Online" and indicating that the work was completed in 1998. (Application for Registration of Copyright Claim dated Feb. 24, 2005 ("2/24/05 Copyright App."), attached as part of Exh. G to Affirmation of Mathew P. Barry dated Sept. 7, 2007 ("Barry Aff.")).

Meanwhile, on December 13, 2004, the plaintiff, proceeding pro se, submitted the initial Complaint in this action. Former Chief Judge Michael B. Mukasey determined that it did not meet the minimal pleading requirements of Rule 8 of the Federal Rules of Civil Procedure and directed Ms. Kwan to file an Amended Complaint. (Order dated Jan. 14, 2005). She did so on March 9, 2005. The Amended Complaint included a wide variety of assertions, including claims of copyright infringement, breach of contract, unfair competition, fraudulent notice of copyright, false representations, sexual harassment, conspiracy, fraud, deceit and misrepresentation, debt, defamation, tortious interference with precontractual relations, race discrimination, and gender discrimination. The defendants moved to dismiss pursuant to Rule 12(b)(5) for failure to make proper service and pursuant to Rule 12(b)(6) because some of the allegations did not articulate cognizable claims and because some claims were barred by the statute of limitations.

In an Opinion and Order dated July 14, 2006, the Honorable Sidney H. Stein, U.S.D.J., dismissed the Amended Complaint without prejudice as to all defendants except Mr. Schlein for failure to effect proper service. Kwan, 441 F. Supp. 2d at 496-98. Judge Stein further determined that Ms. Kwan's claim of copyright infringement against Mr. Schlein failed because she had asserted that he was a co-author of the book, and one joint author may not sue another for infringement. Id. at 498. Nevertheless, Judge Stein liberally construed the Amended Complaint as asserting a claim for a declaration of co-authorship rights. However, any such claim was untimely since it had accrued when "Find It Online" was first published in 1999, and the three-year statute of limitations under the Copyright Act had lapsed by the time Ms. Kwan initiated this litigation. Id. at 499. Judge Stein also found that the plaintiff's fraud claim against Mr. Schlein was barred by New York's six-year statute of limitations because none of the allegedly false statements was made after 1998. Id. at 503-04. Finally, Judge Stein dismissed the remaining claims against Mr. Schlein except for the claims of racial discrimination and unfair competition. Id. at 499-506.

A new flurry of motions followed. Ms. Kwan and Mr. Schlein each moved for reconsideration of the Court's July 14, 2006 Opinion and Order, and Mr. Schlein also moved to dismiss the unfair competition claim. BRB again moved to dismiss the Amended Complaint for lack of proper service and for failure to state a claim. Judge Stein set forth his determinations on the record on March 23, 2007, and memorialized them in an Order of the same date (the "3/23/07 Order"). He denied both Ms. Kwan's and Mr. Schlein's motions for reconsideration, but he granted Mr. Schlein's motion to dismiss the plaintiff's claim of unfair competition. (3/23/07 Order, ¶¶ 1, 3, 4). Judge Stein denied BRB's motion to dismiss for failure to make proper service, but he dismissed each of the claims against BRB on substantive grounds except those for copyright infringement and racial discrimination. (3/23/07 Order, ¶ 2). With respect to the fraud claim, Judge Stein found that it was time-barred as to BRB just as it was as to Mr. Schlein. (Tr. at 18-19). However, he declined to dismiss the copyright claim because, unlike Mr. Schlein, BRB was not a co-author with Ms. Kwan, and so her infringement claim was not automatically precluded. (Tr. at 19-20).

Having represented herself up to that point, Ms. Kwan then engaged counsel, who filed the instant motion to amend and submitted a proposed Second Amended Complaint (the "SAC"), asserting four causes of action. Count One alleges that all defendants have infringed the plaintiff's copyright in the First Edition of "Find It Online" by creating the Second, Third, and Fourth Editions and a Revised Fourth Edition, in violation of the Copyright Act, 17 U.S.C. § 504(b). (SAC, ¶¶ 24-29). In the Second Count, Ms. Kwan alleges that she is entitled to an accounting of profits for each of the editions after the Second Edition. (SAC, ¶¶ 30-34). The Third Count claims that each defendant engaged in racial discrimination in violation of 42 U.S.C. § 1981(b). Finally, the Fourth Count alleges common law fraud against BRB in connection with purportedly false statements contained in a letter to Ms. Kwan dated May 23, 2002, in which BRB stated that the Third Edition was "completely rewritten" from the Second Edition. (SAC, ¶¶ 15, 38-41).


A. Standard for Amendment

A motion to amend is governed by Rule 15(a) of the Federal Rules of Civil Procedure, which states that leave to amend "shall be freely given when justice so requires." Fed. R. Civ. P. 15(a). Notwithstanding the liberality of the general rule, "it is within the sound discretion of the court whether to grant leave to amend." John Hancock Mutual Life Insurance Co. V. Amerford International Corp., 22 F.3d 458, 462 (2d Cir. 1994); accord Krumme v. WestPoint Stevens Inc., 143 F.3d 71, 88 (2d Cir. 1998). In discussing the use of this discretion, the Supreme Court has stated:

In the absence of any apparent or declared reason --- such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, ...

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