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CAFFERTY v. SCOTTI BROS. RECORDS

June 27, 1997

JOHN A. CAFFERTY, JR., individually and d/b/a JOHN CAFFERTY MUSIC and p/k/a JOHN CAFFERTY and THE BEAVER BROWN BAND, Plaintiff, against SCOTTI BROTHERS RECORDS, INC., et al., Defendants.


The opinion of the court was delivered by: CHIN

 CHIN, D.J.

 In 1983, the movie "Eddie and the Cruisers" was released. It told the story of a fictitious struggling rock and roll band. The songs performed by the band in the movie were dubbed by a real-life band, John Cafferty and the Beaver Brown Band. Cafferty also wrote most of the songs and scoring music for the film. A soundtrack album was produced and released.

 The record company that produced the soundtrack album signed Cafferty and the Beaver Brown Band to a contract for the creation of records in their own name. Two such albums were released. In real life, however, the fictitious band fared better than the real one. Sales of the Eddie and the Cruisers soundtrack soared, while sales of the Cafferty and Beaver Brown Band albums met with limited success. A second soundtrack album based on a sequel to "Eddie and the Cruisers" was also released.

 The record company failed to pay certain royalties to Cafferty. In addition, in an effort to recoup its investments and to capitalize on the success of Eddie and the Cruisers, the record company released previously unreleased Cafferty music and re-released Cafferty's two albums -- packaged and marketed as the music of Eddie and the Cruisers. Unfortunately, however, they did so without Cafferty's complete consent.

 In this case, Cafferty sues the companies involved in the making and distribution of the movies and albums in question for copyright infringement, false advertising, unfair competition, breach of contract, breach of fiduciary duty, and other violations of state law. Before the Court are the cross-motions of defendants and plaintiff for partial summary judgment.

 For the reasons that follow, defendants' motions are granted in part and denied in part and plaintiff's cross-motion is granted in part and denied in part.

 Statement of the Case

 A. The Facts

 Cafferty is a professional recording artist, musician, and songwriter. He has been performing and recording his own as well as other compositions with his band, "John Cafferty and the Beaver Brown Band" (the "Band"), since 1972.

 In the early 1980's, Cafferty and the Band performed a number of songs as well as scoring music for the soundtrack to "Eddie and the Cruisers" ("Cruiser I"), a movie about a rock and roll band called "Eddie and the Cruisers." The band's leader, Eddie, was played by the actor Michael Pare. Cafferty's songs, as performed by the Band, were dubbed into the movie as the musical performances of the fictitious Cruisers band.

 Cafferty provided the music pursuant to a contract dated August 31, 1982, subsequently amended, entered into with the predecessor to defendant Aurora Film Partners ("Aurora"), a film production company (the "Cafferty-Aurora Contract") (DX 3). Two of the songs in the movie ("Wild Summer Nights" and "Tender Years") had previously been written by Cafferty. The other songs and music were written by Cafferty specifically for the movie.

 Aurora entered into an agreement with a record company, Scotti, *fn1" dated June 5, 1983, subsequently amended, whereby Scotti was given a license to produce and manufacture an album based on the soundtrack for Cruisers I (the "Scotti-Aurora Contract") (DX 4). The soundtrack album was released in 1983 (the "Cruisers I Album"), initially with moderate success. After Cruisers I aired on cable television in 1984, however, sales of the Cruisers I Album took off, as more than two million copies were eventually sold domestically.

 After the release of the Cruisers I Album, Cafferty entered into a recording contract with Scotti dated October 17, 1983 (the "Cafferty-Scotti Recording Contract") (DX 5), pursuant to which Cafferty and the Band were to create and perform songs under their own names. Records produced under the Cafferty-Scotti Recording Contract were not intended to have any connection to Eddie and the Cruisers or any Cruisers movie or album. Two albums were released under this agreement: "Tough All Over" in 1985 and "Roadhouse" in 1989. These albums, however, did not sell well.

 In 1985, Scotti produced a soundtrack album based on the movie "Rocky IV." That album featured a song written by Cafferty and performed by the Band: "Heart's on Fire." In 1986, Scotti released a soundtrack album based on the movie "Cobra." That album also featured a Cafferty song, "Voice of America's Sons," which was originally composed for and recorded on the "Tough All Over" album.

 In 1989, a sequel to the Cruisers I movie was released, entitled "Eddie and the Cruisers II -- Eddie Lives!" ("Cruisers II"). Pursuant to an agreement between Cafferty and Scotti dated January 31, 1989 (the "Cruisers II Contract") (DX 6), Cafferty wrote and the Band performed the soundtrack for Cruisers II. Scotti eventually released an album, entitled "Eddie and the Cruisers II -- Eddie Lives!" (the "Cruisers II Album"), based on the soundtrack for Cruisers II. Scotti advanced some $ 600,000 to Cafferty for the project. Although the Cruisers II Album sold better than Cafferty's two albums, it did not sell as well as the parties had expected.

 In 1991, Scotti produced and released an album entitled "Eddie and the Cruisers -- the Unreleased Tapes" (the "Unreleased Tapes Album"). The Unreleased Tapes Album featured Cafferty's music and songs (including outtakes, scoring cues, and demo recordings). Scotti had not, however, obtained Cafferty's approval prior to its release. The cover of the album states, in small print: "Original Songs Written And Performed By JOHN CAFFERTY And THE BEAVER BROWN BAND." (PX 6).

 In 1992, Scotti produced and released an album entitled "Eddie and the Cruisers -- Live and in Concert" (the "Cruisers Live Album"). Again, although the Cruisers Live Album features Cafferty's music and performances, Scotti did not obtain his approval prior to producing and releasing it. While the music had been performed (live) by Cafferty and the Band in their own names, the Cruisers Live Album was packaged and sold as the music of Eddie and the Cruisers. Indeed, Cafferty's name is nowhere mentioned on the cover of the album. (PX 7).

 In 1992, Scotti and Cafferty entered into 21 "Mechanical License" agreements, covering each of Cafferty's 21 copyrighted songs appearing on the Cruisers I, Cruisers II, and Unreleased Tapes Albums. (DX 12, 14, 15). Cafferty signed mechanical licenses for his songs on the Unreleased Tapes Album even though he had not been consulted prior to the album's release. Cafferty was also asked to sign mechanical licenses for his songs on the Cruisers Live Album, but he refused.

 In April 1993, Scotti produced and released an album entitled "The Voice of Eddie and the Cruisers -- 'tough all over'" (the "Eddie Tough All Over Album"). The Eddie Tough All Over Album was a re-release of Cafferty's 1985 Tough All Over album, which had not been connected in any way to Eddie and the Cruisers. Cafferty and the Band are listed on the cover, which features a likeness of the actor who played the Eddie character.

 In August 1993, Scotti produced and released an album entitled "The Voice of Eddie and the Cruisers -- Roadhouse" (the "Eddie Roadhouse Album"). The Eddie Roadhouse Album was a re-release of Cafferty's 1989 Roadhouse album, which had not been connected in any way to Eddie and the Cruisers. Cafferty and the Band are listed on the album cover, which features a likeness of the actor who played the Eddie character.

 Cafferty was entitled to two types of royalties: "mechanical" royalties for the use of his songs on sound recordings, and "artist" royalties for the use of his performances on sound recordings. It is undisputed that Scotti failed to account for and pay royalties to Cafferty for a number of years. Indeed, Scotti concedes that it failed to pay Cafferty both mechanical and artist royalties.

 By letter dated October 15, 1992 (DX 16), counsel for Cafferty wrote to Scotti confirming termination of the Cafferty-Scotti Recording Contract, as Scotti and Cafferty had agreed that they would not be making any new records together. The letter also referred to Scotti's failure to pay certain royalties and demanded royalty statements and payments. Some six weeks later, when Scotti still had not submitted statements or payments, Cafferty's counsel sent another letter to Scotti, dated December 3, 1992 (DX 17), purporting to terminate the mechanical licenses pursuant to paragraph 2(d) thereof. The letter stated:

 
You are hereby advised that all of the Licenses have automatically terminated, and all recordings made and/or distributed embodying the aforementioned compositions constitute infringement of my client's copyrights in the compositions pursuant to the United States Copyright Act.

 Notwithstanding this notice, Scotti continued to market and distribute the albums in question.

 B. Prior Proceedings

 Claims I, II, III, and IV of the complaint allege copyright infringement based on the Cruisers I Album, the Cruisers II Album, the Unreleased Tapes Album, and the Cruisers Live Album, respectively. Claims V and VI assert false designation or unfair competition claims under the Lanham Act. Claims VII, VIII, and X allege deceptive acts and practices and false advertising claims under the New York State General Business Law. Claim IX charges certain defendants with engaging in the common law tort of unfair competition. Claims XI through XVII allege breach of contract claims. Claim XVIII is a breach of fiduciary duty claim. Finally, Claim XIX alleges violations of Cafferty's rights of privacy and publicity under sections 50 and 51 of the New York State Civil Rights Law.

 After the parties conducted discovery, defendants Scotti and Famous moved for partial summary judgment dismissing most of Cafferty's claims. BMG also moved for summary judgment relying on Scotti's papers. Cafferty cross-moved for partial summary judgment, seeking summary judgment in his favor on liability with respect to all 19 claims.

 DISCUSSION

 The nineteen claims fall into five categories: (a) copyright infringement (Claims I-IV), (b) unfair competition (Claims V-X), (c) breach of contract (Claims XI-XVII), (d) breach of fiduciary duty (Claim XVIII), and (e) the Civil Rights Law (Claim XIX). I will discuss each category in turn.

 A. The Copyright Claims

 1. Claim I

 Claim I is based on Cafferty's original two songs, "Wild Summer Nights" and "Tender Years," reproduced on the Cruisers I Album. Scotti was initially given a license to use the songs, but when Scotti admittedly failed to provide royalty statements and pay royalties, Cafferty sought to invoke paragraph 2(d) of the mechanical licenses. Paragraph 2(d) provides:

 
In the event you fail to account to us and pay royalties as herein provided for, we or our representatives may give written notice to you that, unless the default is remedied within thirty (30) days from the date of the notice, this compulsory license will be automatically terminated. Such termination shall render the making or the distribution, or both, of all phonorecords for which royalties have not been paid, actionable as acts of infringement under, and fully subject to the remedies provided by, the Copyright Act . . . .

 (DX 12). Because defendants continued to distribute the Cruisers I Album after the purported termination of Scotti's rights, Cafferty contends, they violated his copyrights.

 Cafferty's arguments are rejected, for they ignore the clear language of the relevant contracts. In the Cafferty-Aurora Contract, Cafferty "irrevocably" granted to Aurora and its "licensees" and "assignees" "the universewide, perpetual right, without any additional fee of any kind, to synchronize, record, perform and otherwise exploit the Pre-existing Songs . . . ." (DX 3, § 3). In the Scotti-Aurora Contract, Aurora granted an exclusive license to Scotti to manufacture, distribute, and sell records from the soundtrack. (DX 4, §§ 3.01, 11.01(d)). Hence, as the exclusive licensee, Scotti stands in Aurora's shoes in this respect and cannot be sued for infringement. United States Naval Institute v. Charter Communications, Inc., 936 F.2d 692, 695 (2d Cir. 1991).

 Cafferty's reliance on paragraph 2(d) of the mechanical licenses is misplaced. Paragraph 2(c) specifically provided that "this compulsory license does not supersede nor in any away [sic] affect any prior agreements now in effect respecting phonorecords of said copyrighted work." Two such "prior agreements," of course, were the Cafferty-Aurora Contract and the Scotti-Aurora Contract. The ...


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