A New York federal court rejected a class certification motion recently in a suit over Scholastic Corp.’s alleged use of photographs in publications for one of its reading skills programs. See Palmer Kane LLC v. Scholastic Corp., No.1:11-cv-07456 (S.D.N.Y. 7/16/12).

It’s a copyright case, which is not one of our typical areas of focus, but the class issues are illustrative more broadly.  As an aside, your humble blogger recalls fondly when, as a wee lad, the monthly Scholastic flyer was distributed in grade school, and there was an opportunity to pick out a new book to read. Defendant Scholastic has, since its founding in 1920, been a designer and developer of educational publications and services.

Plaintiff brought this purported class action alleging that Scholastic committed copyright infringement on images it allegedly used in certain of its books by printing more copies of the books than was allowed under the licenses it held, or by publishing the books prior to obtaining a license. The “READ 180” program at issue had multiple components geared toward students, teachers and school administrators: printed workbooks, instructional software, electronic books, paperback books and videos. The printed components of the materials that made up the READ 180 program contained thousands of illustrations and photographs.

Plaintiffs sought certification of a class allegedly impacted by excessive or unauthorized uses of the images. In response, defendant offered evidence of Scholastic’s complex process for obtaining licenses for images used in READ 180.

In evaluating a motion for class certification, the district court is required to make a definitive assessment of Rule 23 requirements, notwithstanding their overlap with merits issues, and must resolve material factual disputes relevant to each Rule 23 requirement.  What matters to class certification is not the raising of common questions–even in droves–but, rather the capacity of a class-wide proceeding to generate common answers apt to drive the resolution of the litigation. Dissimilarities within the proposed class are what have the real potential to impede the generation of common answers. E.g., Salon FAD v. L’Oreal USA, Inc., No. 10 Civ. 5063, 2011 WL 4089902, at *5 (S.D.N.Y. Sept. 14, 2011).

Here, plaintiff could not show that a class can be certified under the predominance requirement of Rule 23(b) (3). The court determined that the core of plaintiff’s allegations was that Scholastic exceeded the scope of licenses that it negotiated with agents of rights holders or rights holders themselves. Because in order to answer whether Scholastic in fact held a license to use those images would necessarily involve, and depend upon, inquiries into a multitude of individual  relationships and interactions (between Scholastic and the rights owner; between Scholastic and the licensing agent; between the rights owner and the licensing agent), common questions of law or fact did not predominate over individual questions and a class action would not fairly and efficiently adjudicate these issues.

For example, as to some images, defendant entered into what Scholastic called “Preferred Vendor Agreements” that set out terms of the two parties’ licensing arrangement with respect to future images.  But these agreements were far from uniform, differing as to usage rights, print run limitations, invoicing practices and the reuse of images —  all key issues.  Moreover, the Preferred Vendor Agreements were a product of negotiations between different personnel at Scholastic and the photo houses. Any inquiry into their terms would a review of representations that were individualized and could vary case by case.

Other agreements, not covered by a PVA, also raised individual issues. Each license obtained by Scholastic may have had different limitations placed on it by its rights holder and/or licensing agent–making an inquiry into the nature of the alleged infringements difficult (and maybe impossible) to resolve on a class-wide basis. The individualized inquiries necessary to determine the breadth of the licenses granted by each individual rights holder, often as a product of individual negotiation processes, was yet another factor militating against granting class certification.

Thus, plaintiff failed to demonstrate by a preponderance of the evidence that it could prove its claims on a class-wide scale, by referring to generalized proof. Accordingly, its motion to certify a class was denied.

The key here for our readers is when the facts involving plaintiffs’ interactions with defendant appear complicated, use that complexity to full advantage on the issues of commonality and predominance.