Dismissal Of Bay City Rollers' Royalties Suit Upheld By 2nd Circuit

Mitchell v. Faulkner, No. 13-576-cv (2d Cir. filed 8/29/2013).

The Second Circuit affirmed the lower court's Rule 12(b)(6) dismissal of plaintiffs' (Bay City Rollers) claims for unpaid royalties based in the alternative on breach of contract and unjust enrichment.  The contract claim failed because it was barred by the statute of frauds, in that any agreement to pay royalties extending beyond one year must be in writing to satisfy the statute of frauds.  The unjust enrichment claim failed because it was barred by the statute of limitations.  As stated by the Second Circuit

A claim for unjust enrichment must be based on the value of plaintiffs’ contribution to the joint effort of the band at the time it made the relevant records, not on the income stream resulting from a revival over thirty years later. That contribution and the failure of the defendants to pay for the value of the effort occurred well over six years ago and is barred by the statute of limitations.  N.Y.C.P.L.R. § 213.

Bay City Rollers' Royalty Suit Not Time-Barred

Faulkner v. Arista Records LLC, 07 Civ. 2318 (LAP), NYLJ 1202495926616, at *1 (SDNY, Decided May 23, 2011).

Plaintiffs, all former members of 1970s-era musical group the Bay City Rollers, brought this action alleging that they were owed tens of millions of dollars in unpaid royalties from their record company, Defendant Arista Records, LLC ("Arista"). Plaintiffs claim these royalties pursuant to a 1981 agreement; accordingly, Arista argues that even if it owes Plaintiffs accrued royalties from the time period prior to 2001, the statute of limitations bars Plaintiffs' claim. Plaintiffs counter that Arista acknowledged its debt in a writing, thereby satisfying Section 17-101 of New York's General Obligations Law, which restarts the statute of limitations to revive the debt.

Section 17-101 of New York's General Obligations Law ("Section 17-101") codifies and restricts the common-law rule that an acknowledgement of a debt is sufficient to refresh the obligation, thereby restarting the running of the statute of limitations. To restart the running of the statute of limitations under Section 17-101, an acknowledgment or promise must be in writing, be signed by the debtor party, recognize an existing debt and contain nothing inconsistent with an intention on the part of the debtor to pay it.

Plaintiffs and Arista have each moved for partial summary judgment on Arista's affirmative defense that the statute of limitations bars Plaintiffs' claim. The Court granted Plaintiffs' motion for partial summary judgment, and denied Defendant's motion for partial summary judgment.