Unjust Enrichment Claims Against Publishers Partially Preempted by the Copyright Act

Berrios-Nieves v. Fines-Nevarez, No. 18-cv-1164-JAG, 2020 WL 981671 (D.P.R. Feb. 28, 2020)

The U.S. District Court for the District of Puerto Rico partially dismissed Plaintiff Luis Berrios-Nieves’ complaint for unjust enrichment and collection of money against Defendants Warner Chappell Music and Sony/ATV. The court found that Plaintiff’s claims for unjust enrichment were preempted by the federal Copyright Act because it was based on the “Defendants’ misattribution of ownership over the musical, which was “equivalent in substance to a copyright infringement claim.” Similarly, the court held that Plaintiffs claims for collection were preempted by the Copyright Act to the extent that they were not based on a contract with co-defendants, which would require application of state contract law and avoid preemption. The court reasoned that such claims were preempted because they are the equivalent of a claim for accounting or compensation based on the Plaintiff’s status as a co-owner of a copyright under the Copyright Act. Additionally, the court granted Defendants’ motion to dismiss all of Plaintiff’s copyright claims relating to Plaintiff’s albums finished before March 25, 2015 because they were barred by the Copyright Act’s three-year statute of limitations.

Pre-72 Class Actions Stayed In Light Of Turtles' Appeals

Sheridan v. iHeartMedia, 15-cv-7574; Sheridan v. Sirius XM, 15-cv-7576 (D.N.J. Mar. 16, 2016).

In a putative class action, the owners of sound recordings made before 1972 brought copyright infringement and unjust enrichment claims under New Jersey law against defendants for broadcasting their recordings without receiving authorization or compensation.  Defendants moved to stay the case pending the resolution of three similar actions currently before the U.S. Courts of Appeals for the 2nd, 9th and 11th Circuits.  The court granted the stay.  "Most importantly, the Court finds that staying this case until the Second, Ninth, and Eleventh Circuits have ruled on related cases will more likely than not simplify the issues presented here and promote judicial economy."

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.

Common-Law Copyright Claim Time Barred; No Breach or Unjust Enrichment

Goeke v. Naxos of America, Inc., 650606/09, NYLJ 1202541596753, at *1 (Sup., NY, dec. Jan. 27, 2012) (Fried, J).

Plaintiff, a world-renowned lyric tenor, alleged that Defendants have been engaged in the unauthorized distribution and sale of five audio and audiovisual recordings of live opera and choral performances, in which plaintiff appeared as a featured artist. Plaintiff's cause of action for breach of contract against the defendant record distributor was dismissed because the label was not party to any contract with plaintiff. Plaintiff's causes of action for unjust enrichment against the defendant record distributor also was dismissed because there was no connection or relationship between the parties. Plaintiff's cause of action for common-law copyright infringement under New York law was dismissed because " the only judicially recognized relief in New York for the violation of such right are the protections afforded against the commercial misappropriation of a person's name, picture, or voice that are provided by Civil Rights Law §§50 and 51." This claim was dismissed under the applicable one-year limitations period. Additionally, Plaintiff's common law claim for unjust enrichment, based on the unauthorized appropriation of a name, picture, or voice, was subsumed under the time-barred Civil Rights Law §§50 and 51 claims.

Label Fails To State Copyright Claim; Leave To Amend Granted

Tufamerica, Inc. v. The Orchard Enterprises, Inc., No. 1:11-cv-01816 (S.D.N.Y. filed Oct. 18, 2011) [Doc. 16].

Plaintiff is the owner of the record label Tuff City Music Group and owns the rights to thousands of musical recordings and compositions. In September 2006, TufAmerica licensed defendant's predecssor the right to market a large number of musical tracks by way of digital downloads (the “License”). The License obligated defendant's predecessor to pay TufAmerica various types of payments in exchange for digital distribution rights to hundreds of songs. In late 2007, defendant assumed its predecessor's obligations under the License. While TufAmerica received various payments from Digital and Orchard, it never received any payment of mechanical royalties.

Defendant argued that the License preempted plaintiff's copyright case. The Court agreed:

TufAmerica fails to state a facially plausible claim under the Copyright Act because it concedes that its copyright claim is governed by the License, not the Copyright Act. While TufAmerica subsequently argues that the License does not govern mechanical royalties, a “claim for relief ‘may not be amended by the briefs in opposition to a motion to dismiss.’” As a result, Orchard’s motion to dismiss is granted.

Because TufAmerica’s claim under the Copyright Act was dismissed, the court lacked pendent jurisdiction over the New York State common law claim of unjust enrichment.

However, because the License did not unambiguously preempt a claim under the Copyright Act's compulsory license provision, leave to amend the Complaint was granted.

My Boyfriend's Back

Sirico v. F.G.G. Prods., Inc., 2010 NY Slip Op 01733 (1st Dep't Mar. 4, 2010).

Singers of the 1960s hit "My Boyfriend's Back" sues producer of the recording concerning royalties. On appeal of denial of motion for renewal, the Appellate Division addresses plaintiff's New York breach of contract, breach of implied contract, unjust enrichment, accounting, rescission, and right of privacy statutory claims. Specifically at issue is whether summary judgment was appropriate based on limited discovery and problematic affidavits. The court also addresses laches, statute of limitations, limitation on equitable claims.

Sirico v F

EMI Sues Video Sharing Website

EMI has filed two related complaints, one by its labels and the other by its publishing units, against the video-sharing website Vimeo .

Capitol Records, LLC v. Vimeo, LLC, No. 09 CV 10101-DAB (S.D.N.Y. complaint filed Dec. 10, 2009); and, EMI Blackwood Music, Inc. v. Vimeo, LLC, No. 09 CV 10105 (S.D.N.Y. complaint filed December 10, 2009).

Both complaints claim direct, contributory and vicarious copyright infringement, and inducement to infringe. The Capitol complaint includes misappropriation and unjust enrichment claims.

NY Statute of Frauds Bars Claims in Warner Acquisition

Snyder v. Bronfman, __ N.Y.3d __, 2009 NY Slip Op 08667 (N.Y. Nov. 23, 2009), holding that quantum meruit and unjust enrichment claims brought to recover the value of plaintiff's services in helping to achieve a corporate acquisition are barred by the statute of frauds contained in General Obligations Law § 5-701 (a) (10).

The deal? Defendant and a group of other investors agreed to acquire Warner Music from Time Warner for approximately $2.6 billion in cash. According to the complaint, Plaintiff was a major contributor to this success: he identified the opportunity, persuaded defendant of its merits, helped to get debt financing and obtained financial information from the target company.

New York's highest court, the Court of Appeals, found: "The essence of plaintiff's claim is that he devoted years of work to finding a business to acquire and causing an acquisition to take place — efforts that ultimately led to defendant's acquisition of his interest in Warner Music. In seeking reasonable compensation for his services, plaintiff obviously seeks to be compensated for finding and negotiating the Warner Music transaction. His claim is of precisely the kind the statute of frauds describes."

Quantum Meruit AND Contract Claims Survive in Action Against Label

Gromley v. Atlantic Recording Corp., No. 101041/08, 1/30/09 N.Y.L.J. Decision of Interest (Sup.Ct., N.Y. Co. Jan. 2, 2009)

Defendant record company ("Atlantic") moved to dismiss plaintiff's claims for quantum meruit. Plaintiff alleged defendant owed her the reasonable value of her services regarding the introduction of artists to defendant and overseeing production of records. Atlantic argued for dismissal arguing plaintiff's employment contract, which expired, covered the subject of royalties and contained a merger clause, and precluded the payment of royalties after expiration of the contract.

The court stated it was reasonable to infer the parties did not intend for plaintiff to continue working without expectation of payment even after expiration of the contract. Thus, the claims for unjust enrichment and quantum meruit stated a claim under quasi contract for payment for the period of time after expiration of the employment contract. However, plaintiff's claim seeking compensation under an implied contract for royalties for international sales for the period the contract existed was not actionable.

NY State Action Against Labels

In New York Supreme Court, New York County, Plaintiff filed summons with notice for breach of contract and unjust enrichment against two major labels, his former band ("Dr. Hook") and a band-mate. Alleged damages: $500,000.

Plaintiff's autobiography, including statements concerning his relationship with the band, appear on his website.

George Cummings Jr. v. EMI Music Inc.; Sony BMG Music Entertainment; Dr. Hook of Tennessee Inc.; Dennis Locorriere. No. 08-603856; filed 12/30/2008.

Antitrust Claims Against Majors Dismissed

In re Digital Music Antitrust Litigation, No. 06 MDL 1780, 10/17/08 N.Y.L.J. "Decision of Interest" (S.D.N.Y. decided Oct. 9, 2008) (Preska, J.)

Plaintiffs sought to represent a nation-wide class of buyers of "digital music" on claims that defendant recording companies conspired to artificially fix prices on digital music (both CDs and Internet music). Defendants, the major record labels (EMI, SonyBMG, UMG, anmd Warner) allegedly fixed a high price for, and restrained availability of Internet music - by imposing the same price and use restrictions (i.e., DRM) on their sale thereof - which "buoyed" the price of CDs.

Plaintiffs' second consolidated amended complaint dismissed under the pleading standards of Bell Atlantic v. Twombly. Plaintiffs' first claim was for violation of section 1 of the Sherman Antitrust Act. The court concluded it was unreasonable to infer that defendants' adoption of DRM and parallel price arose from their membership in joint ventures that were created to distribute Internet Music. Other circumstantial evidence also did not justify an inference that defendants' parallel conduct resulted from an illegal agreement under the Sherman Act. For example, the court found there was no "antitrust record" based on investigation by government agencies, including the NY Attorney General. Nor would"mere participation in an industry trade association" yield an inference of improper inter-firm communication.

Similarly dismissed as predicated on the same allegations were state antitrust claims, consumer protection claims, and the unjust enrichment count.

50 Cent's Girlfriend - Not Evicted (Yet)

Rapper 50-Cent's Girlfriend Granted Interim Stay of Eviction From Home

Tompkins v. Jackson, No. 102255-2006, 6/11/08 N.Y.L.J. "Decision of Interest" (Sup.Ct., N.Y. Co. decided May 14, 2008):

This court adopts the view that unmarried cohabitants may lawfully contract concerning their financial and other matters relevant to their relationship, subject to the rules of contract law, except where sexual services constitute the only consideration for the agreement [cit. om.]. Therefore, the complaint alleges sufficient services rendered by the plaintiff, which are non-sexual in nature and separable from the parties' relationship, such that a breach of contract claim in this regard supports plaintiff's request for an interim stay.

The court also found that the imposition of a constructive trust concerning the parties house in Dix Hills (NY), a partition of same, an accounting, quantum meruit for services performed, and damages for unjust enrichment were sufficiently plead in Plaintiff's complaint to warrant preliminary injunctive relief.

'Warner' Oral Joint Venture Claims Dismissed

In Snyder v. Bronfman, No. 105454/07, 5/06/08 N.Y.L.J. "Decision of Interest" (Sup.Ct., N.Y. Co. April 24, 2008), the New York Supreme Court, New York County, dismissed former Simon & Schuster CEO, Richard E. Snyder's claims against Edgar M. Bronfman -- Chairman and CEO of Warner Music -- relating to an alleged oral joint venture between the two.

Plaintiff sued for over $100 mil. based on six counts: breach of joint venture agreement, breach of fiduciary duty, joint venture accounting, unjust enrichment, promissory estoppel, and quantum meruit. Defendant moved to dismiss pursuant to CPLR 3211(a)(5) ("...the cause of action may not be maintained because of ... statute of frauds ..."), contending that New York's General Obligations Law prohibits a plaintiff from recovering a finder's fee or other compensation based on services rendered in connection with a corporate acquisition in the absence of a written agreement. (G.O.L. sec. 5-701(a)(10).)

The court disagreed, finding that the statute of frauds provision (id.) does not apply to an oral joint venture agreement "which involves two or more individuals pooling their respective efforts to create and/or operate a business venture as opposed to one person assisting or facilitating another to do so." (See Freedman v. Chemical Const. Corp., 43 N.Y.2d 260 (1977) and other cases cited herein.) Here, plaintiff was not a mere finder or intermediary -- "plaintiff functioned as more than just a broker assisting defendant in a limited and transitory manner".

Nonetheless, plaintiff's claims relating to the joint venture were dismissed because the alleged oral joint venture was too vague to support a joint venture agreement. Though plaintiff alleged that the parties had agreed he would receive a "fair and equitable" share of an amount of money from the alleged oral joint venture, the court found it too uncertain. (Citing Varney v. Ditmars, 217 N.Y. 223 (1916), and Freedman v. Pearlman, 271 A.D.2d 301 (1st Dep't 2000).) "The alleged contract in question is affected by too many facts that are in themselves indefinite and uncertain such that the intention of the parties is pure conjecture." Thus, after finding that the action was "ripe for dismissal" at the pleadings stage, the joint venture claims (and the promissory estoppel claim) were dismissed for vagueness. **

However, the unjust enrichment and quantum meruit claims survived. Based on a legal presumption of a promise to pay a "reasonable value", the court found that whether plaintiff can establish some value for any services actually rendered "must await discovery." Therefore, plaintiff had 20 days to file an answer to the unjust enrichment and quantum meruit claims.

** The court did not clarify under which provision of the CPLR it was granting dismissal of the joint venture and promissory estoppel claims. Although the portions of the decision relating to the statute of frauds clearly relate to defendant's motion under CPLR 3211(a)(5), it appears that dismissal of these counts was based on plaintiff's failure to state a cause of action. Can the court convert a 3211(a)(5) motion into a 3211(a)(7) motion sua sponte, assuming defendant's motion papers were brought only under 3211(a)(5)?

Oh, Nelly!

Juan Antonio Castro Rios p/k/a/ Tony Tun Tun v. Coalition Music, LLC et. al, No. 1:08-cv-20922-AJ (S.D.Fla filed Apr. 4, 2008).

Allegations:

Plaintiff wrote a song ("Hagamos el Amor"), brought the song to Nelly, and the two worked together to edit the musical arrangement of the original composition. English lyrics were written to a portion of the composition, and plaintiff recorded and produced the vocals.

Nelly retained copies of the recordings, and the composition appeared on "The Perfect Melody", performed by the artist Zion and produced by Nelly. Neither Zion or Nelly (or any other party) obtained licenses or consent for use of the composition.

The liner notes to "The Perfect Melody" falsely state that Zion is the sole songwriter of the composition, though it is noted that plaintiff is featured in the performance.

Therefore, plaintiff seeks declaratory relief as to the various parties' ownership percentage in the composition. Also, plaintiff alleges fraud by Nelly, unjust enrichment against all defendants, and seeks an accounting.

Interestingly, plaintiff's last count is for copyright infringement -- defendant's composition "is an unauthorized and illegal derivative work of the original composition".

[Request copy of the complaint]

Online Common Law Copyright Infringement (P2P)

In UMG Recordings, Inc. v. Veoh Networks, Inc., No. 08-600558 (Sup.Ct., N.Y. Co. complaint filed Feb. 25, 2008), major label UMG sued on-line company Veoh for common-law copyright infringement under New York law for alleged infringement of Pre-1972 recordings. "The need for New York to protect UMG's property rights in the Pre-1972 Recordings is particularly urgent because UMG's property is being taken and virallly distributed over the Internet by [Veoh]." (Compl. at 4.) Is this the first case in New York state to describe certain on-line distribution patterns as viral?

As plaintiff notes, pre-1972 sound recordings are subject to protection under New York State law. Capitol Records, Inc. v. Naxos of American, Inc., 4 N.Y.3d 540, 830 N.E.2d 250 (2005). But given that the complaint lacks any claims for copyright infringement of plaintiff's interests in post-1972 sound recordings under the federal Copyright Act, is this a test-case? Presumably, post-1972 recordings are available (e.g., synched to videos) on Veoh.

Let's examine the allegations:

Veoh's use of the Pre-1972 Recordings in violation of UMG's rights under New York law is part of Veoh's strategy to become one of the Internet's most popular and valuable 'video sharing' websites, and to thereby attract advertising dollars and tens of millions of dollars of venture capital investment and increase the value of its services...the harm that Veoh causes to UMG, including in the new, developing, and crucial Internet market, is enormous.

Veoh's website is later described as "where thousands of audiovisual works copied by Veoh are available for immediate viewing, downloading, and other forms of so called 'sharing.'"

Many of the audiovisual works on Veoh's website embody the Pre-1972 Recordings...that are synchronized with commercial works such as television programs, documentaries, and other expensive, professionally-made videos. The Pre-1072 Recordings that are embodied in the audiovisual works on Veoh's website are integral to those audiovisual works and to their appeal and popularity.

...

Veoh refuses to employ simple safeguards available to it and used by various of its competitors to avoid unlawful copying and distribution of works owned by others...

So, in sum: the alleged infringement arises out of Pre-1972 recordings synced to videos (whether such synchronization was authorized is not alleged), and Veoh is doing nothing to stop it. As the complaint alleges, "Defendants' conduct is...a classic attempt to 'reap where they have not sown'..."

In fact, the complaint uses such buzz words as "encourage, induce, and enable members" -- indicating a contributory infringement theory under state law. Thus, it appears that plaintiff is positioning this case to be the State's parallel to federal jurisprudence on P2P contributory infringement. (Grokster.) However, without 17 USC 101 et seq., Plaintiff is relying on common law copyright infringement and misappropriation, and unjust enrichment.

And being outside the scope of the federal Copyright Law, they may have valid claims for punitive/exemplary damages, in addition to profits and injunctive relief.

But, it is curious that Plaintiff's make allegations regarding Veoh's failure to apply safe-guards. Whereas defendants might have refuge in the Copyright Act's "safe-harbor" provisions (DMCA), is the same protection available under state copyright law? And if not, what leverage does that provide digital content producers in their claims against ISPs, at least with respect to pre-1972 recordings?

[Request a copy of the complaint.]

A'ccounting On You

Two corresponding cases, filed by the same attorney in New York Supreme Court (NY Co./Manhattan), are complaints for alleged breach of contract for failure to provide accountings detailing the labels' exploitation of plaintiffs' sound recordings. One complaint also alleges unjust enrichment.

[Shannon Brenda Greene pka Shannon v. Emergency Records and Filmworks Inc.; Unidisc Music Inc.; filed 12/12/2007; case no. 07-604067 ]
[Leah Lorien Alomar pka Lea Lorien v. DMI Records Inc.; David Morales; filed 12/12/2007; case no. 07-604068]