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Heritage Capital Corporation v. Christie's, Inc.

United States District Court, N.D. Texas, Dallas Division

May 1, 2017

HERITAGE CAPITAL CORPORATION, et al. Plaintiffs,
v.
CHRISTIE'S, INC., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          SIDNEY A. FITZWATER, UNITED STATES DISTRICT JUDGE

         In this action asserting claims related to an alleged misappropriation of copyrighted material from www.HA.com (“HA.com”), defendants Christie's, Inc. and Collectrium, Inc. (“Collectrium”) (collectively, “Christie's, ” unless otherwise indicated) move to dismiss and compel arbitration. Plaintiffs Heritage Capital Corporation, Heritage Auctioneers & Galleries, Inc., Heritage Numismatic Auctioneers, Inc., Heritage Auctions, Inc., Heritage Vintage Sports Auctions, Inc., Currency Auctions of America, Inc., and Heritage Collectibles, Inc. (collectively, “Heritage”) oppose the motion and move for a preliminary injunction. Concluding that all of Heritage's claims are arbitrable under the HA.com Website Use Agreement, the court grants Christie's' motion to dismiss and compel arbitration, denies Heritage's motion for a preliminary injunction as moot, as dismisses this action with prejudice by judgment filed today.

         I

         Heritage operates HA.com, which hosts sales and auctions of collectibles. Images of the items and detailed descriptions accompany each sale or auction listing, each of which is copyrighted. Heritage maintains previously sold listings on the website, and, as of the filing of its complaint, HA.com hosted more than 8 million original images related to its listings. Those who visit and use HA.com for any reason assent to the Website Use Agreement, which prescribes rules and regulations for use and contains an arbitration clause that governs potential disputes.

         Heritage alleges that Christie's downloaded some or all of HA.com's listings using an advanced computer code. Heritage traced this activity to Christie's, and it discovered that some of the listings downloaded from HA.com appeared on the Collectrium website.[1]Heritage estimates that approximately 2.7 million of the approximately 11 million listings on the Collectrium website came from HA.com.

         Christie's does not deny that Collectrium posted Heritage listing images and descriptions on its website. Instead, Christie's contends that its use does not violate Heritage's copyright for various reasons, including fair use.

         Heritage filed the instant lawsuit alleging seven federal and state claims: copyright infringement, under 17 U.S.C. §§ 106 and 501; violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, et seq.; violations of the Digital Millennium Copyright Act, 17 U.S.C. § 1201, et seq.; harmful access by computer, under Tex. Civ. Prac. & Rem. Code Ann. §§ 143.001 and 143.002; trespass; unfair competition; civil conspiracy; and breach of contract.[2]

         Christie's moves to dismiss and compel arbitration based on the arbitration clause in the HA.com Website Use Agreement. Heritage opposes the motion and moves for a preliminary injunction enjoining Christie's, inter alia, from posting the allegedly infringing materials.[3]

         II

         The court first considers the motion of Christie's to dismiss and compel arbitration of all of Heritage's claims.

         Section 2 of the Federal Arbitration Act (“FAA”) provides that written agreements to arbitrate controversies arising out of an existing contract “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The FAA “leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (citing 9 U.S.C. §§ 3-4) (emphasis in original). When considering a motion to compel arbitration, the court engages in a two-step process. First, the court determines “whether the parties agreed to arbitrate the dispute.” Webb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir. 1996) (per curiam) (citation omitted). “This determination involves two considerations: (1) whether there is a valid agreement to arbitrate between the parties; and (2) whether the dispute in question falls within the scope of that arbitration agreement.” Id. (citations omitted). Second, the court decides “‘whether legal constraints external to the parties' agreement foreclosed the arbitration of those claims.'” Id. (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985)). “If there is a valid agreement to arbitrate, and there are no legal constraints that foreclose arbitration, the court must order the parties to arbitrate their dispute.” Celaya v. Am. Pinnacle Mgmt. Servs., LLC, 2013 WL 4603165, at *2 (N.D. Tex. Aug. 29, 2013) (Fitzwater, C.J.). Because of the strong presumption in favor of arbitration, the party opposing a motion to compel arbitration bears the burden of proving that the agreement is invalid or that the claims are outside the scope of the agreement. Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294, 297 (5th Cir. 2004).

         III

         The court first considers whether there is a valid agreement between the parties to arbitrate.

         The Website Use Agreement contains the following provision:

Choice of Law and Venue for Dispute Resolution
By Your use of the website you agree that any claim, dispute, or controversy in connection with Heritage and its affiliates shall:
a. if presented by a consumer, be exclusively heard by, and the parties consent to, exclusive in personam jurisdiction in the State District Courts of Dallas County, Texas. THE PARTIES EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY. Any appeals shall be ...

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