Case 2:12-cv-00239-KJD -RJJ Document 20

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Lewis and Roca LLP 3993 Howard Hughes Parkway Suite 600 Las Vegas, Nevada 89169

Michael J. McCue (Nevada Bar No. 6055) MMcCue@LRLaw.com Jonathan Fountain (Nevada Bar No. 10351) JFountain@LRLaw.com Nikkya G. Williams (Nevada Bar No. (11484) NWilliams@LRLaw.com LEWIS AND ROCA LLP 3993 Howard Hughes Parkway, Suite 600 Las Vegas, Nevada 89169 Telephone: (702) 949-8200 Facsimile: (702) 949-8398 Attorneys for Defendants Caesars Entertainment Corp., Corner Investment Co., LLC, Harrahs Imperial Palace Corp., and Harrahs Las Vegas, Inc.

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA SLEP-TONE ENTERTAINMENT CORPORATION, Plaintiff, v. ELLIS ISLAND CASINO & BREWERY, et al., Defendants. Pursuant to Federal Rules of Civil Procedure 20(a)(2) and 21, Defendants Caesars Entertainment Corp. (Caesars), Corner Investment Co., LLC d/b/a Bills Gamblin Hall & Saloon (Bills), Harrahs Imperial Palace Corp. d/b/a Imperial Palace Hotel & Casino (Imperial Palace), and Harrahs Las Vegas, Inc. (improperly named Harrahs Las Vegas) (Harrahs) (collectively, the Caesars Defendants), hereby move the Court for entry of an order severing the Caesars Defendants from the other defendants in this case and dismissing the Caesars Defendants from this case without prejudice. This motion is supported by the following memorandum of points and authorities, by the papers and pleadings on file in this case, and by any oral argument the Court may require or allow. -12761989.2

Case No. 2:12-cv-00239-KJD-RJJ MOTION TO SEVER BY DEFENDANTS CAESARS ENTERTAINMENT CORP., CORNER INVESTMENT CO., LLC, HARRAHS IMPERIAL PALACE CORP., AND HARRAHS LAS VEGAS, INC.

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INTRODUCTION Plaintiff Slep-Tone Entertainment Corp. (Slep-Tone) commenced this action on February 15, 2012, by suing 99 separately named defendants for trademark infringement and unfair competition under the Lanham Act. This case is one of 56 other cookie-cutter cases filed across the country by Slep-Tone against numerous defendants.1 In each case, the defendants are alleged to have infringed upon Slep-Tones SOUND CHOICE trademarks by using illegal copies of Slep-Tones karaoke accompaniment tracks to perform karaoke shows. When the tracks are played, they display Slep-Tones trademarks to karaoke participants and audiences. As it has done in other cases around the country, possibly to avoid paying multiple filing fees, Slep-Tone has improperly joined scores of unrelated defendants in its complaint. Slep-Tones tactics have been rejected by other courts and should be rejected by this Court as well. STATEMENT OF ALLEGED FACTS Plaintiff Slep-Tone is the manufacturer and distributor of karaoke accompaniment tracks sold under the name Sound Choice. (Compl. 47.) Slep-Tone owns federal trademark

registrations for the SOUND CHOICE word mark and the SOUND CHOICE design mark (the SOUND CHOICE Marks). (Id. 95-96.) The SOUND CHOICE Marks are registered in International Class 9 for use on pre-recorded magnetic audio cassette tapes and compact discs containing musical compositions and compact discs containing video related to musical compositions. See http://tarr.uspto.gov/servlet/tarr?regser=serial&entry=74561912 (listing use of SOUND CHOICE on pre-recorded magnetic audio cassette tapes and compact discs containing musical compositions and compact discs containing video related to musical compositions); http://tarr.uspto.gov/servlet/tarr?regser=serial&entry=74627124 (listing use of SOUND CHOICE on pre-recorded magnetic audio cassette tapes and compact discs containing musical compositions and compact discs containing video related to musical compositions.) Entertainers who provide karaoke services in bars, restaurants, and other venues are known as karaoke jockeys (KJs), karaoke hosts, or karaoke operators. (Id. 63.) The services provided
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Slep-Tone has become the Righthaven of trademarks. Righthaven LLC is the entity that filed more than 275 copyright infringement actions against defendants who copied all or part of newspaper articles on their websites without permission. Righthavens business model was to extract settlement payments from each defendant using the threat of liability for statutory damages and attorneys fees.

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by KJs typically include providing the karaoke music and equipment for playback, entertaining the assembled crowd for warm-up purposes, and organizing the karaoke show by controlling access to the stage, setting the order of performance and operating the karaoke equipment. (Id.) A KJ will typically maintain a catalog of songs available for performance in order to aid participants in selecting a song to sing. (Id. 64.) Plaintiff alleges that [m]any KJs, such as some of the present Defendants, obtain, copy, share, distribute and/or sell media-shifted copies of the accompaniment tracks via pre-loaded hard drives, USB drives, CD-Rs, or the Internet. (Id. 66.) (Emphasis added.) Media shifting occurs when KJs copy the accompaniment tracks from CDs to computer hard drives or other media. (Id. 67.) Format shifting occurs when compact disc files are converted from one format to another, such as from CD+G to MP3G. (Id. 68.) Slep-Tone alleges, in conclusory fashion, that [e]ach of the Defendants has used mediashifted and/or format-shifted karaoke accompaniment tracks marked with the [sic] Slep-Tones registered trademarks for commercial purposes. (Id. 74.) Slep-Tone further alleges that venues such as those operated by the Defendants can enjoy significant savings by turning a blind eye to the actions of the illegitimate KJs they hire. (Id. 93.) Slep-Tone alleges that [t]hese venues benefit from piracy because unfair competition from pirate KJs pressures legitimate KJs to accept lower compensation from the venues to obtain new business or retain old business. By decreasing the fixed cost of entertainment, the Defendants operations become more profitable. (Id. 94.) With respect to Caesars, Bills, Imperial Palace, and Harrahs, Slep-Tone alleges that they operate a karaoke system to produce a karaoke show at their eating and drinking establishments in which counterfeit copies of Slep-Tones accompaniment tracks were observed being used. (Id. 120, 123, 228.) Slep-Tone further alleges that Bills and Imperial Palace have advertised or otherwise indicated that they are in possession of a library containing more than 200,000 tracks stored on their karaoke systems, and that Caesars, Bills, Imperial Palace, and Harrahs have repeatedly displayed the SOUND CHOICE Marks without right or license. (Id. 121-122, 124125, 229.) /// /// -32761989.2

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ARGUMENT Federal Rule of Civil Procedure 20(a)(2) governs the permissive joinder of defendants. It provides, in most relevant part, that: [p]ersons . . . may be joined in one action as defendants if: (A) any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence or series of transactions or occurrences; and (B) any question of law or fact common to all defendants will arise in the action. Fed. R. Civ. P. 20(a)(2). (Emphasis added.) For joinder to be proper under Rule 20, both requirements of the rule must be satisfied. See Waterfall Homeowners Assn v. Viega, Inc., No. 2:11-cv-01498-JCM-GWF, 2012 U.S. Dist. LEXIS 10315, at *10 (D. Nev. Jan. 30, 2012). Rule 21 further provides that [m]isjoinder of parties is not a ground for dismissing an action. On motion or on its own, the court may at any time, on just terms, add or drop a party. The court may also sever any claim against a party. Fed. R. Civ. P. 21. Federal courts have broad discretion to sever under Rule 21. See Coleman v. Quaker Oats Co., 232 F.3d 1271, 1297 (9th Cir. 2000). An accepted practice under Rule 21 is to dismiss all defendants except for the first defendant named in the complaint. Dropping a defendant for improper joinder operates as a dismissal without prejudice. See Innovus Prime, LLC v. LG Electronics, Inc., No C 11-04223 JW, 2012 U.S. Dist. LEXIS 6990, at *6 (N.D. Cal. Jan. 18, 2012) (internal citations omitted). A. Defendants Alleged Conduct Does Not Arise Out Of the Same Transaction.

The first prong of the Rule 20 analysis, the same transaction requirement, refers to whether claims share the same factual background. It requires a degree of factual commonality underlying the claims, which typically means that a plaintiff must assert rights that arise from related activities. See Innovus Prime, 2012 U.S. Dist. LEXIS 6990, at *8. In contrast, [w]here a plaintiff sues unrelated and competing defendants for their own independent acts of . . . infringement, and alleges that those defendants were acting separately, such conduct cannot involve or arise out of the same transaction, occurrence or series of transactions or occurrences pursuant to Fed. R. Civ. P 20(a)(2). Id. (Emphasis in original.) In this case, Slep-Tone has alleged that 99 separate defendants have, presumably at separate times and in separate places, infringed its SOUND CHOICE Marks. There is no -42761989.2

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allegation that any of the defendants acted in concert. Rather, it appears that the only connection between any defendant and any other defendant is that Slep-Tone has accused each defendant of infringing the same trademark. This is insufficient. See, e.g., Interval Licensing LLC v. AOL, Inc., No. C10-1385 MJP, 2011 WL 1655713 (W.D. Wash. Apr. 29, 2011) (finding joinder was improper where the only connection between defendants was that they were accused of infringing the same patent); WiAV Networks, LLC v. 3Com Corp., No. C10-03448 WHA, 2010 WL 3895047, at *1, 3 (N.D. Cal. Oct. 1, 2010) (finding severance proper in a patent infringement suit brought against 40 unrelated defendants with unrelated products); Golden Scorpio Corp. v. Steel Horse Bar & Grill, 596 F. Supp. 2d 1282, 1283 (D. Ariz. 2009) (finding misjoinder where multiple defendants were sued for infringement of the same trademark but there were no allegations that the defendants acted together to infringe the mark). Nor can Slep-Tones allegation that the counterfeit karaoke tracks obtained or made by Defendants all originated, directly or indirectly in an unbroken sequence, from the same ultimate source, (Compl. 234), create the requisite series of transactions and occurrences. The Western District of North Carolina rejected precisely this argument in Slep-Tone Entertainment Corporation. v. Mainville, No. 3:11-cv-00122, 2011 U.S. Dist. LEXIS 116111 (W.D.N.C. Oct. 6, 2011). In Mainville, Slep-Tone also joined multiple defendants and alleged that each had

committed trademark infringement. The court noted that [o]bviously, the infringement of any trademark . . . originates from a common ultimate source, that being the trademark . . . itself. Here, Defendants may have committed the same type of violation in the same way, but, again, that does not link defendants together for purposes of joinder. Id. at *12-13. The court went on to note that there was no allegation that the defendants had acted in concert; rather, each defendant allegedly infringed separately, at different places and at different times, with no knowledge that the other defendants were engaged in alleged infringements of their own. Id. Under those circumstances, the court held that joinder of multiple defendants was improper. Id. It severed all of the defendants, except the first-named defendant, and required Slep-Tone to file separate actions against the remaining defendants. In doing so, the court noted that it appears that these cases are really separate lawsuits combined together for no apparent reason except to avoid paying -52761989.2

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filing fees. Id. Slep-Tone has done the same thing in this case. There is no allegation in the Complaint that all of the defendants were working in concert or that the alleged infringements were taking place with the knowledge of the other defendants. Quite the opposite is true. The Complaint contains dozens of paragraphs alleging that the 99 defendants in this case committed infringements at a multitude of different locations. (Compl. 99-229.) To the extent Slep-Tone alleges that each of the defendants has generally offered karaoke services (Compl. 98, 230, 233, 238), the only plausible inference that can be raised from Slep-Tones conclusory allegations is that these services were offered in different locations and at different times. The Complaint alleges no connection between the defendants other than the common allegation that they have each infringed Slep-Tones SOUND CHOICE Marks. That does not establish infringement

arising out of the same transaction or occurrence. Rather, the Complaint alleges dozens, if not hundreds, of separate acts of infringement occurring at different places and times. Because Slep-Tone has failed to establish the first requirement for permissive joinder, and because both requirements must be satisfied to join all of the defendants in this case, the Court should enter an order severing the Caesars Defendants from this case. B. There Is No Common Question of Fact or Law.

As argued above, the circumstances surrounding each individual defendants alleged infringement are different. There are no allegations that the alleged infringements took place at the same time, in the same place, or in the same manner. Simply put, there are no common questions of fact. And, even assuming there were, [e]ach case of trademark infringement must be analyzed based on its own facts. J.B. Williams Co., Inc. v. Le Conte Cosmetics, Inc., 523 F.2d 187, 191 (9th Cir. 1975). Moreover, although Slep-Tones claims against all of the defendants arise under the Lanham Act, [t]he mere fact that all claims arise under the same general law does not necessarily establish a common question of law or fact. Coughlin v. Rogers, 130 F.3d 1348, 1351 (9th Cir. 1997). Indeed, of the 99 defendants Slep-Tone has joined in this case, some appear to be the KJs themselves, while some appear to be the owners of hotels, casinos, restaurants, and bars where the KJs allegedly performed their services. As argued more fully in the Caesars -62761989.2

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Defendants accompanying motion to dismiss, the elements of, and the proofs required to establish, direct, contributory, and/or vicarious infringement are different. Thus, for each of the 99 defendants in this case, Slep-Tone will have to present evidence of the defendants alleged infringement. The jury will have to apply a different set of facts -- one specific to each of the 99 defendants in this case -- to different laws depending upon whether the facts specific to that defendant show or tend to show that the claimed infringement was direct, contributory, or vicarious. Because the facts relating to each defendants alleged infringement are different, there is no question of law common to each of the 99 defendants in this case. Slep-Tone has not shown, and likely cannot show, that the infringements allegedly committed by each of the 99 defendants in this case arose out of the same transaction or occurrence, or series of transactions or occurrences. Nor can it establish that there are common questions of law or fact amongst all of the defendants in this case. Because Slep-Tone has failed to establish either of the requirements for permissive joinder under Rule 20, the Court should enter an order severing the Caesars Defendants from this case. CONCLUSION For the foregoing reasons, the Caesars Defendants respectfully request that the Court grant their motion and enter an order severing the claims alleged against them and dismissing them from this case without prejudice. Dated: this 21st day of March, 2012. LEWIS AND ROCA LLP By: /s/ Jonathan W. Fountain

Michael J. McCue (Nevada Bar #6055) Jonathan W. Fountain (Nevada Bar #10351) Nikkya G. Williams (Nevada Bar #11484) 3993 Howard Hughes Parkway, Suite 600 Las Vegas, NV 89169 Tel: (702) 949-8200 Fax: (702) 949-8398 Attorneys for Defendants Caesars Entertainment Corp., Corner Investment Co., LLC, Harrahs Imperial Palace Corp., and Harrahs Las Vegas, Inc. -72761989.2

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CERTIFICATE OF SERVICE I hereby certify that on March 21, 2012, I filed the foregoing document entitled MOTION TO SEVER BY DEFENDANTS CAESARS ENTERTAINMENT CORP., CORNER

INVESTMENT CO., LLC, HARRAHS IMPERIAL PALACE CORP., AND HARRAHS LAS VEGAS, INC., with the Clerk of the Court via the Courts CM/ECF system, which sent electronic notice to the following: Kerry P. Faughnan kerry.faughnan@gmail.com P.O. Box 335361 North Las Vegas, NV 89033 Lauri S. Thompson thompsonl@gtlaw.com Greenberg Traurig, LLP 3773 Howard Hughes Pkwy., Suite 500 North Las Vegas, NV 89169 Laura Bielinski lbielinski@bhfs.com Brownstein Hyatt Farber Schreck 100 City Parkway Las Vegas, NV 89106

Robert Beyer rbeyer@siegelcompanies.com 3790 Paradise Road, Suite 250 Las Vegas, NV 89169 I hereby further certify that on March 21, 2012, I caused paper copies of the same to be served by first-class, United States, mail upon the following non-CM/ECF participants: Donna Boris Boris & Associates 9107 Wilshire Blvd., Suite 450 Beverly Hills, CA 90210 KJs Bar & Grill c/o Loretta Bond 1645 N. Lamb Las Vegas, NV 89115 Johnny Valenti 2082 East Camero Las Vegas, NV 89123

Dated: this 21st day of March, 2012. /s/ Jonathan W. Fountain An employee of Lewis and Roca LLP

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