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Stay Frosty Enterprises, LLC v. Amazon.Com, Inc.

United States District Court, D. Oregon

June 6, 2019

STAY FROSTY ENTERPRISES, LLC, Plaintiff,
v.
AMAZON.COM, INC., et al., Defendants.

          FINDINGS AND RECOMMENDATION

          STACIE F. BECKERMAN UNITED STATES MAGISTRATE JUDGE

         This matter comes before the Court on Teespring, Inc.'s (“Teespring”) motion to: (1) sever Stay Frosty Enterprises, LLC's (“Stay Frosty”) claims against Teespring, pursuant to Fed.R.Civ.P. 21; and (2) dismiss or transfer the severed claims against Teespring to the Northern District of California, pursuant to 28 U.S.C. §§ 1404 and 1406.[1] The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331 and 1338. For the reasons discussed below, the Court recommends that the district judge grant Teespring's motions to sever and transfer. (ECF No. 94.)

         BACKGROUND

         Stay Frosty is an Oregon limited liability company that designs “original works of art put onto apparel, specialty ‘challenge' coins, posters, and other items that are primarily marketed via the internet to individuals in the military, law enforcement, public safety communities, enthusiasts, collectors and others.” (Compl. ¶ 1.) Derek Frost (“Frost”), a resident of California and co-owner of Stay Frosty, created and registered the “works of visual art” at issue in this case. (Compl. ¶ 18, Ex. B, at 1, Ex. C, at 3.) Frost “assigned his rights, titles, and interest in all of the works of art” to Stay Frosty on January 16, 2018. (Compl. ¶ 20, Ex. C, at 3.)

         Teespring is a Delaware corporation headquartered in San Francisco, California. (Weibell Decl. Supp. Def.'s Mot. Sever & Dismiss or Transfer (“Weibell Decl.”) ¶ 3.) Teespring operates a website that allows users to submit designs that can be applied to apparel and sold on Teespring's website. (Compl. ¶¶ 3, 66-89.) Teespring and its users profit from the sales. (Compl. ¶ 67.) Stay Frosty identified several t-shirts for sale on Teespring's website that bear designs that are “strikingly similar” to the designs that Frost copyrighted. (See Compl. ¶¶ 68-86.) Stay Frosty filed this copyright case against Teespring on February 14, 2018.

         ANALYSIS

         I. WAIVER

         Stay Frosty asserts that Teespring waived its venue challenge by filing a responsive pleading. (See Pl.'s Resp. Def.'s Mot. Sever & Dismiss or Transfer (“Pl.'s Resp.”) at 2, 4.) The Court disagrees.

         “A defendant must object to venue by motion or in his answer to the complaint or else his objection is waived.” Costlow v. Weeks, 790 F.2d 1486, 1488 (9th Cir. 1986) (citations omitted). Teespring filed an answer on April 17, 2018, and included improper venue as an affirmative defense. (See Def.'s Answer ¶¶ 7, 65.) Although the case has now progressed to discovery, the Court finds that Stay Frosty did not waive its improper venue defense because it pled improper venue as an affirmative defense. See Meras Eng'g, Inc. v. CH2O, Inc., No. 11-0389, 2013 WL 146341, at *9 (N.D. Cal. Jan. 14, 2013) (noting that the defendant participated in mediation, agreed to a discovery schedule, and provided initial disclosures, but nevertheless concluding that the defendant did not waive an improper venue defense because the defendant asserted an improper venue defense in its answer and continued to raise the issue of venue during the course of the litigation).

         II. TEESPRING'S MOTION TO SEVER

         Teespring moves to sever Stay Frosty's claims against Teespring from Stay Frosty's claims against Milcoins.com, LLC, pursuant to Fed.R.Civ.P. 21. (Def.'s Mot. Sever & Dismiss or Transfer (“Def.'s Mot.”) at 2, 5-6.) Stay Frosty acknowledges that its claims against Teespring were improperly joined, and does not oppose severance. (Pl.'s Resp. at 1, 5.) However, if the Court severs the claims, Stay Frosty asks to maintain the current case schedule to avoid having to refile its complaint and start “back at square one.” (Pl.'s Resp. at 1, 6.) Teespring responds that the Court should order Stay Frosty “to file a new complaint specific to Teespring in the new severed civil action because the current complaint is laden with non-specific allegations made against all thirteen defendants jointly.” (Def.'s Reply at 3; see also Def.'s Mot. at 3.)

         The Court finds that Stay Frosty improperly joined multiple unrelated defendants in the same copyright action, and recommends that the district judge grant Teespring's motion to sever. Consistent with the Court's recommendation below, the district judge should transfer Stay Frosty's severed case against Teespring to the Northern District of California, which will preserve the forward progress of the case to date. Stay Frosty and Teespring may resolve the issue of filing an amended complaint in the transferee court. Stay Frosty's remaining (defaulted) claims against Milcoins.com LLC shall proceed under the current case number in this court.

         III. VENUE

         Teespring moves to dismiss or transfer the severed claims to the Northern District of California pursuant to 28 U.S.C. § 1406(a), based on improper venue. In the alternative, Teespring requests transfer for convenience under 28 U.S.C. § 1404(a). (Def.'s Mot. at 2-3, 6, 10.) The Court agrees that the district judge should ...


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