Termination Rights Class Action Against Sony Music Entertainment to Proceed

Johansen v. Sony Music Entertainment Inc., No. 19-cv-1094-ER, 2020 WL 1529442 (S.D.N.Y March 31, 2020).

On February 5, 2019, musicians David Johansen, John Lyon, and Paul Collins (collectively, “Plaintiffs”) filed a copyright infringement and declaratory judgment class action against Sony Music Entertainment based on Sony’s continued exploitation of the Plaintiffs’ copyrighted sound recordings despite being served with termination notices.  On June 11, 2019, Sony filed a motion to dismiss the action for failure to state a claim because the Plaintiffs’ termination notices are untimely, deficiently identify the grants being terminated, deficiently identify the dates of execution of the grants, and that these errors are not harmless so the notices are invalid. Addressing Sony’s assertions, the court determined based on the record before it that it is entirely plausible that Johansen’s and Lyon’s notices were timely, and that Collins’ untimeliness was due to a “scrivener’s error,” which would make it harmless error, so dismissing the suit without more information would be inappropriate.  Moreover, the court determined that the Plaintiffs provided sufficient information about the sound recordings in issue to overcome omissions of details about the grants being terminated, so “the general harmless error rule may apply.” As a result, the court denied Sony’s motion to dismiss. 

Paul McCartney and Sony Settle Copyright Termination of Transfer Litigation

McCartney v. Sony/ATV Music Publishing LLC, et al., No. 17-cv-363 (ER) (S.D.N.Y. Document 41 Filed 06/29/17).

The parties resolved their litigation involving Paul McCartney's termination notices by entering into a confidential settlement agreement and jointly requested that the Court enter a proposed order dismissing the action without prejudice.

Elvis Denied US Discovery of Sony Music For Litigation in Germany Adverse To Arista Music

In re  Elvis Presley Enters. LLC, No. 15-mc-386 (S.D.N.Y. Mar. 1, 2016).

Elvis Presley Enterprises LLC is party to a litigation in Germany against Arista Music, and sought to serve a subpoena in the USA on Arista's affialiate, Sony Music, to obtain documents that it claims are relevant to the proceedings in Germany.  The Court exercised its discretion and denied the application pursuant to 28 USC 1782.  Weighing in favor of Sony's opposition to the discovery were: Arista is a wholly-owend subsidiary and thus has access to the documents and information held by Sony, the procedural posture of the case in Germany (it was on appeal), the timing of the section 1782 application, and the discovery requests were burdensome.

Magistrate Recommends Sony's Motion To Dismiss Royalty Case Should Be Denied

Mahoney v. Sony Music Entertainment, No. 1:12-cv-05045 (S.D.N.Y. filed 02/11/13) [Doc. 39].

Plaintiff Edward Mahoney brought this breach of contract action against Sony Music Entertainment for damages arising from a dispute over the amount of royalties owed under the parties' contract.  The parties' relationship is governed by a 1985 Agreement and 1991 amendment (collectively, the "Contract").  The Contract requires Sony to pay royalties to Mahoney in exchange for certain uses of Mahoney's musical recordings. Sony moved to dismiss Mahoney's third amended complaint, other than a digital downloads claim, alleging that Mahoney failed to comply with the Contract's notice-and-cure provision, a condition precedent to bringing a breach of contract claim.

The Magistrate Judge first discussed the standard on a Fed. R. Civ. P. 12(b)(6) motion to dismiss.  Then, the Magistrate Judge discussed the proper circumstances to consider documents beyond those attached to the Complaint, and found that the Contract and the notice letters referred to in the third amended complaint and attached to the parties' motion papers may be considered on the motion to dismiss.

Turning to the merits, the Magistrate Judge found that plaintiff's breach of contract claims should not be dismissed for alleged noncompliance with the Contract's notice requirement.  The Court found that Mahoney's third amended complaint expressly alleged compliance with the Contract's notice requirement. Further, the parties did not dispute that Mahoney sent and Sony received the letters, i.e., the two writings Mahoney proffered as notice letters.  Rather, Sony's challenged the adequacy of the purported notice, i.e., whether Mahoney's letters identified the nature of Mahoney's objections to the royalty statements with sufficient specificity.

Thus, the Magistrate Judge considered the standards for evaluating the sufficiency of the notice.  Applying those standards to the case, the Magistrate Judge found that the Contract's notice provision called for written notice of any alleged royalty deficiencies, but did not state what information must be contained in the notice.  "The Court will not allow the Contract's notice provisions to require, in essence, an audit before suit when the Contract did not directly require an audit."  Continuing, "this is not a case where the objecting party sent a vague notice and the allegedly breaching party (here, Sony) was precluded from curing because it could not obtain additional information; rather, Mahoney and Sony engaged in ongoing discussions of Mahoney's claims, during which they discussed the bases for Mahoney's objections and the potential for litigation in the absence of a resolution, and Sony had control of all of the royalty-related information."  Thus, in this context, the Magistrate Judge found that Mahoney's notice was sufficient to serve the general purpose of the contractual royalty notice requirement.  For these reasons, the Magistrate Judge recommended that Sony's motion to dismiss in part Mahoney's third amended complaint should be DENIED.

Toto's Royalty Suit Against Sony Limited By Magistrate

Toto, Inc. v. Sony Music Entertainment, No. 12-cv-1434-LAK-AJP (SDNY report and recommendation Dec. 11, 2012).

Plaintiff Toto brought the action against Sony Music based on a dispute over the amount of royalties owed under the parties' recording contract.  Sony moved to dismiss, and the motion was granted in part and denied in part. The primary issue in the case ise the royalty rate for music distributed through download and mastertone providers (e.g., iTunes, eMusic, Amazon.com and Verizon Wireless).

The magistrate judge found that Toto's first claim based on royalty accountings for the audit period should be dismissed as contractually time barred.  The parties agreement had a 3 year limitation period (i.e., claims had to be brought within 3 years from the royalty report).  Toto's argument that August 2010 and December 2011 documentation restarted the time limitation was unavailing.  However, the magistrate judge found that the portion of Toto's first claim based on royalty accountings for the post-audit period should not be dismissed with respect to the digital download issue.  In other words, Toto stated a claim for breach of the recording contract for the period within the contractually agreed to 3 year limitation period.

The magistrate judge also found that Toto failed to plead the elements of equitable estoppel.  The Court held that purposefully delaying an audit was not a ground for invoking equitable estoppel.  Also, participation in settlement negotiations was not a ground for invoking equitable estoppel.

The magistrate judge also found that Toto's claim for breach of the implied covenant of good faith and fair dealing should be dismissed.  The claim did not state a distinct cause of action based on a separate set of facts and was not independent of the breach of contract claim.  The good faith and fair dealing claim was duplicative of the breach of contract claim.

Settlement Reached In Class Action Over Digital Royalties

Shropshire v. Sony Music, 1:07-cv-02394 (S.D.N.Y. filed 03/07/12) [Doc. 120].

Record label Sony Music agreed to pay nearly $8 million to settle a proposed class action brought by Elmo & Patsy and members of The Youngbloods in which Plaintiffs alleged that the label failed to pay artists proper royalties on sales of digital recordings.

Music Photos Suit

Lawrence Martin Temme v. Sony Music Entertainment, Index No. 11-650342 (Sup. Ct., N.Y. Co. filed 2/8/2011).

Complaint for negligence and conversion. Plaintiff, a freelance music photographer, alleges that over the course of his 20 years in the music industry, he has photographed some of the biggest names in popular music. Plaintiff alleges that the defendant has lost or converted thousands of valuable photographic images belonging to the Plaintiff. Plaintiff seeks $500,000 in damages based on the defendant's alleged breach of bailment, its negligence, and its conversion of the plaintiff's property.

Sony Loses Employment Suit Against EMI and Top Executive

Sony Music Entertainment, Inc. v. Werre, No. 601441/09 (Sup. Ct., N.Y. Co. Mar. 19, 2010)

Sony sued a top EMI executive for alleged breach of contract, and EMI for tortious interference with that contract. The Court granted Defendants' motion to dismiss for failure to state a claim. (CPLR 3211(a)(7)). The Court found that the letter agreement at issue was not a binding, enforceable contract because a contingency, namely the executive's availability for employment on April 1, 2010, did not occur. Nor did the "prevention doctrine" apply because there was not binding contract in effect that contained the condition precedent in question; the contract was not binding on the parties until the condition precedent occurred such that the prevention doctrine did not apply. Similarly, since there was no valid contract, the tortious interference claim against EMI failed. Lastly, the fraud and breach of covenant of good faith and fair dealing claims against the executive were dismissed as duplicative of the (failed) breach of contract claim.

Sony v Werre (NYS)