United States District Court, Southern District of New York
June 5, 2000
SUSAN ACKOFF-ORTEGA, CELE ACKOFF, AND JON ACKOFF, PLAINTIFFS,
WINDSWEPT PACIFIC ENTERTAINMENT CO. (INC.), SCREEN GEMS-EMI MUSIC, INC., AND RICHARD ROSENBLATT, DEFENDANTS.
The opinion of the court was delivered by: Shira A. Scheindlin, United States District Judge.
OPINION AND ORDER
Plaintiffs Susan Ackoff-Ortega, Cele Ackoff and Jon Ackoff seek
a declaratory judgment under federal copyright law against
defendants Windswept Pacific Entertainment Co. (Inc.)
("Windswept"), Screen Gems-EMI Music, Inc. ("Screen Gems"), and
assert several state law contract claims against defendant
Richard Rosenblatt. Rosenblatt now moves to dismiss or stay
plaintiffs' claims against him, because plaintiffs have asserted
those same claims as counterclaims in a state court action filed
by Rosenblatt. For the reasons set forth below, Rosenblatt's
motion is denied.
Robert Ackoff, a songwriter whose professional name was "Beau
Gentry," died intestate in 1983, unmarried and without children.
See Complaint ¶¶ 2-3.*fn1 Plaintiff Cele Ackoff is Robert
Ackoff's mother, and plaintiffs Susan Ackoff-Ortega and Jon
Ackoff are Cele Ackoff's surviving children. See id. ¶ 4.
On January 18, 1967, Robert Ackoff entered into an employment-for-hire
agreement with Patricia Music Publishing ("Patricia
Music"). See id. ¶ 14.*fn2 Sometime prior to April 4, 1968,
Robert Ackoff co-authored the song "Mony, Mony" with Tommy James,
Bobby Bloom, and defendant Richard Rosenblatt, a songwriter whose
professional name was "Ritchie Cordell." See id. ¶¶ 5-6.
Following the completion of "Mony, Mony," the story of this
case unfolds along several plot lines. The first plot line
involves Robert Ackoff's interest in "Mony, Mony," which has
changed hands a number of times in the past thirty-two years.
First, Ackoff assigned his interest in the
initial term of copyright to Patricia Music. See id. ¶ 7.
Next, on or about December 1, 1971, Ackoff further assigned all
his interest in "Mony, Mony" to Nomadam Music Corporation
("Nomadam"), which was affiliated with Patricia Music. See id.
¶ 8. Seventeen years later, on or about August 31, 1988,
the interests in "Mony, Mony" held by Patricia Music and Nomadam
were assigned, after various intermediary transfers, to Windswept,
a California corporation that does business with and maintains
an office in New York. See id. ¶ 9. Finally, on or about
July 28, 1999, Screen Gems, a Delaware corporation that does
business with and maintains an office in New York, acquired
Windswept's interest in "Mony, Mony." See id. ¶ 16. In recent
years, Robert Ackoff's interest in "Mony, Mony" has generated
total royalties of approximately $80,000 per year. See id.
The second plot line involves the copyright registration of
"Mony, Mony," which also has changed several times. On or about
April 8, 1968, Patricia Music registered "Mony, Mony" with the
United States Copyright Office (the "Copyright Office"), listing
Ackoff, Rosenblatt, Bloom and James as the authors. See id.
Twenty-eight years later, on or about February 5, 1996, Windswept
registered "Mony, Mony" with the Copyright Office for the renewal
term of copyright, again listing Ackoff, Rosenblatt, Bloom and
James as the authors. See id. ¶ 10. The important change
took place on August 20, 1997, when Windswept filed a
supplementary copyright registration with the Copyright Office.
See id. ¶ 13. In this supplementary registration, Windswept
claimed that Patricia Music, not Robert Ackoff, was an author of
"Mony, Mony," because Ackoff wrote the song as a work for hire.
See id. Eight days later, the Copyright Office issued a
supplementary registration reflecting this change. See id.
The final plot line involves the relationship between the
Ackoffs and Richard Rosenblatt. In October 1988, Rosenblatt
approached Cele Ackoff about recovering Robert Ackoff's share of
the renewal copyright in "Mony, Mony" and twenty other songs in
exchange for a portion of the royalties. See id. ¶ 19.
Nearly a year later, on or about September 25, 1989, Cele and Jon
Ackoff entered into a contract with Rosenblatt, in which
Rosenblatt undertook to recover Ackoff's share of the renewal
copyrights. See id. ¶¶ 19-21. In exchange, Cele and Jon
Ackoff assigned those renewal copyrights to Rosenblatt, who was
required to pay Jon 50 percent of any royalties that he
recovered, except for royalties on public performances. See id.
Plaintiffs allege that, when Cele and Jon Ackoff signed the
contract, they were not represented by legal counsel, not
knowledgeable about the music business, and incapable of
understanding the contract. See id. ¶ 21.
Although Rosenblatt subsequently filed a number of lawsuits
against Windswept, plaintiffs allege that Rosenblatt's efforts
hindered rather than helped their claim to the renewal copyright
in "Mony, Mony" and the other songs. See id. ¶ 26. In 1993,
Rosenblatt sued Windswept and several other parties in federal
court to recover his own interest in 59 songs. See id.
That lawsuit, which did not involve Robert Ackoff's interest,
was dismissed for lack of subject matter jurisdiction. See id. In
December 1994, Rosenblatt brought the same claims against the
same defendants in state court. See id. Again, Robert Ackoff's
interests were not part of that lawsuit. See id.
In January 1995, however, Rosenblatt's agent, Richard Roemer,
informed Windswept that Rosenblatt was claiming Robert Ackoff's
share in the renewal copyrights of ten songs, including "Mony,
Mony." See id. In April 1995, Windswept informed Rosenblatt that
it owned the renewal copyrights by virtue of the employment-for-hire
agreement signed by Robert Ackoff on January 18, 1967. See
id. In December 1995, during a deposition of Rosenblatt by
Windswept's attorney pursuant to the state court action,
Rosenblatt stipulated to
exchange general releases with Windswept and to dismiss the state
court action with prejudice. See id. In February 1997, Rosenblatt
delivered to Windswept a general release of all claims against
Windswept which Rosenblatt had or might ever have arising out
of any events on or before September 13, 1995.*fn3 See id.
Plaintiffs allege that they did not learn of Rosenblatt's
release until April 20, 1998. See id. ¶ 27. On that day,
Rosenblatt sued Windswept, Cele Ackoff and Susan Ackoff-Ortega
(as well as two other parties not relevant to this case) in this
Court, claiming that he alone owned Ackoff's share of the renewal
copyrights in "Mony, Mony" and two other songs. See id.
Rosenblatt subsequently dismissed that action with prejudice as
to Windswept and without prejudice as to Cele Ackoff and Susan
Ackoff-Ortega. See id.
B. Procedural History
On December 1, 1999, plaintiffs Susan Ackoff-Ortega, Cele
Ackoff and Jon Ackoff sued defendants Windswept, Screen Gems and
Rosenblatt in this Court. In their Complaint, plaintiffs first
seek a declaratory judgment stating that, because "Mony, Mony"
was not a work-for-hire under the Copyright Act, they are
entitled to Ackoff's share of the renewal copyright. In addition,
plaintiffs ask that defendants be required to account for and pay
over royalties and other monies received by or credited to them
because of the renewal copyright. Second, plaintiffs seek a
declaratory judgment stating that their contract with Rosenblatt
is unenforceable on the basis of unconscionability, lack of
consideration, and fraudulent inducement. Finally, plaintiffs
allege that Rosenblatt breached their contract with him by
granting Windswept a general release.
Plaintiffs seek damages of at least $1,000,000 on their breach
of contract claim.
Sometime during 1998, Rosenblatt sued the Ackoffs in state
court. The counterclaims filed by the Ackoffs in that suit mirror
their claims against Rosenblatt in this case. On February 23,
2000, Justice Alice Schlesinger dismissed the breach of contract
counterclaim without prejudice, primarily because of this
lawsuit. See Reply Brief of Defendant Rosenblatt in Support of
his Dismissal Motion ("Reply Br."), Ex. 1 (Transcript of February
23, 2000 Conference). That same day, Justice Schlesinger denied
Rosenblatt's motion to dismiss the unconscionability and failure
of consideration counterclaims. See id. Finally, the Ackoffs
agreed to withdraw their fraud counterclaim with prejudice. See
Rosenblatt now moves to dismiss the Complaint and all causes of
action against him pursuant to Federal Rules of Civil Procedure
12(b)(1), 12(b)(3) and 12(h)(3) or, alternatively, to stay this
action pending resolution of the state court action.
Rosenblatt argues that this Court lacks subject matter
jurisdiction over the claims against him, because those claims
have nothing to do with federal copyright law and simply arise
out of his contract with the Ackoffs.
"Once subject matter jurisdiction is challenged under Rule
12(b)(1), the burden of establishing jurisdiction rests with the
party asserting that it exists." Daniels v. Doe, No. 99 Civ.
2192, 1999 WL 1211824, at *1 (S.D.N.Y. Dec. 17, 1999). As noted
above, the court must accept as true all material factual
allegations in the Complaint. Nevertheless, "argumentative
inferences favorable to the party asserting jurisdiction should
not be drawn." Atlantic Mutual Insurance Co. v. Balfour Maclaine
International Ltd., 968 F.2d 196, 198 (2d Cir. 1992).
Rosenblatt does not argue that this Court lacks subject matter
over plaintiffs' first cause of action, which seeks a declaratory
judgment stating that "Mony, Mony" was not a work-for-hire
and therefore that plaintiffs are entitled to Ackoff's
share of the renewal copyright. Nevertheless, this Court has an
independent obligation to ensure the existence of subject matter
jurisdiction. See E.R. Squibb & Sons, Inc. v. Accident & Casualty
Ins. Co., 160 F.3d 925, 929 (2d Cir. 1998) ("[N]o amount of
agreement by the parties can create jurisdiction where none
exists."). "In cases involving works protected by statutory
copyright, the division between jurisdiction in the federal
courts, on the one hand, and jurisdiction in the courts of the
various states, on the other, poses among the knottiest
procedural problems in copyright jurisprudence." 3 Melville B.
Nimmer & David Nimmer, Nimmer on Copyright § 12.01[A], at 12-4
(May 1999). The Second Circuit recently reaffirmed the
applicable test, first laid out by Judge Henry Friendly in 1964:
Synthesizing the Supreme Court authorities, Judge
Friendly concluded that a suit `arises under' the
Copyright Act if:
(1) `[T]he complaint is for a remedy expressly granted by
the Act, e.g., a suit for infringement or for the
statutory royalties for record reproduction . . .;' or,
(2) `[T]he complaint . . . asserts a claim requiring
construction of the Act. . . .'
Bassett v. Mashantucket Pequot Tribe, 204 F.3d 343, 349 (2d Cir.
2000) (quoting T.B. Harms Co. v. Eliscu, 339 F.2d 823, 828 (2d
Thankfully, application of that test to the facts of this case
does not present a knotty procedural problem. The essential
question presented by plaintiffs' claim for a declaratory
judgment is whether "Mony, Mony" is a work for hire.
The Copyright Act defines a "work made for hire" in relevant
part as "a work prepared by an employee within the scope of his
or her employment." 17 U.S.C. § 101. The Act then provides:
In the case of a work made for hire, the employer or
other person for whom the work was prepared is considered
the author for purposes of this title, and, unless the
parties have expressly agreed otherwise in a written
instrument signed by them, owns all of the rights
comprised in the copyright.
17 U.S.C. § 201(b). Determining whether "Mony, Mony" is a
work for hire requires construction of these provisions of the
Copyright Act. See Merchant v. Levy, 92 F.3d 51, 55-56 (2d Cir.
1996) (claim required construction of Copyright Act in part
because defendants were relying on work for hire doctrine);
Lombardi v. Suares, 923 F. Supp. 51, 53-54 (S.D.N.Y. 1996)
(same); see also Royal v. Leading Edge Products, Inc.,
833 F.2d 1
, 3 (1st Cir. 1987) (claim did not require construction of
Copyright Act because the work for hire doctrine was "at best,
only tangentially implicated").
Because the Court has subject matter jurisdiction over
plaintiffs' first claim, the next question is whether to exercise
supplemental jurisdiction over the remaining claims. "[T]he
federal courts' original jurisdiction over federal questions
carries with it jurisdiction over state law claims that `derive
from a common nucleus of operative fact,' such that `the
relationship between [the federal] claim and the state claim
permits the conclusion that the entire action before the court
comprises but one constitutional case.'" City of Chicago v.
International College of Surgeons, 522 U.S. 156, 164-65 (1997)
(quoting United Mine Workers v. Gibbs, 383 U.S. 715, 725 (1966)).
Congress has codified these principles in the supplemental
jurisdiction statute, which states in relevant part:
[I]n any civil action of which the district courts have
original jurisdiction, the district courts shall have
supplemental jurisdiction over all other claims that are
so related to claims in the action within such original
jurisdiction that they form
part of the same case or controversy under Article III
of the United States Constitution.
28 U.S.C. § 1367(a). Section 1367 also allows a court to
exercise supplemental jurisdiction over claims against other
parties. See id. ("Such supplemental jurisdiction shall include
claims that involve the joinder or intervention of additional
parties."); see also Mizuna, Ltd. v. Crossland Federal Savings
Bank, 90 F.3d 650, 657 (2d Cir. 1996) ("Once the district court
exercised original jurisdiction over Mizuna's claim against the
Bank . . ., it also had supplemental jurisdiction over Mizuna's
claim against Royal because the two claims are clearly `so
related' as to be part of the same controversy.").
Supplemental jurisdiction is proper in this case because
plaintiffs' state law claims form part of the same case or
controversy as plaintiffs' federal claim. For example, one of
Windswept's defenses to plaintiffs' federal claim is that the
release signed by Rosenblatt on behalf of the Ackoffs released
Windswept from any claim by the Ackoffs to the renewal copyright.
Thus, in order to decide plaintiffs' federal claim, this Court
will have to determine whether the contract between Rosenblatt
and the Ackoffs gave Rosenblatt the authority to release the
Ackoffs' claim. See Lyndonville Savings Bank & Trust Co. v.
Lussier, No. 98 Civ. 7079, 2000 WL 530328, at *7 (2d Cir. May 3,
2000) (noting that supplemental jurisdiction was proper "where
presentation of the federal claim necessarily brought the facts
underlying the state claim before the court"). In addition,
plaintiffs' state law claim for breach of contract alleges that
Rosenblatt breached his contract with the Ackoffs by signing the
release. Determining whether Rosenblatt breached the contract
and, if so, what damages are proper, necessarily involves an
examination of the Ackoffs' federal copyright claim. See id.
(supplemental jurisdiction also was proper "where the facts
underlying the federal and state claims substantially
Nevertheless, Rosenblatt urges this Court to decline to
exercise supplemental jurisdiction over plaintiffs' state law
claims for a number of reasons. First, the supplemental
jurisdiction statute provides that a district court "may decline
to exercise supplemental jurisdiction" if the claim "raises a
novel or complex issue of State law" or "substantially
predominates over the claim or claims over which the district
court has original jurisdiction." 28 U.S.C. § 1367(c)(1),
Rosenblatt argues that both of these exceptions apply, but
neither are availing. Although Rosenblatt contends that the state
claims involve complex statute of limitations issues, he fails to
describe those issues in any detail. In addition, it is hard to
imagine that the statute of limitations questions are so novel
and complex or substantially predominate over the federal claim.
Indeed, the state and federal claims here are interrelated.
Second, Rosenblatt contends that the Ackoffs argued in state
court that their claims should remain in that court. To support
this argument, Rosenblatt provides an excerpt of the Ackoffs'
brief in response to his motion to dismiss their counterclaims.
See Reply Br., Ex. 3 (Defendants' Brief in Opposition to
Plaintiff's Motion to Dismiss Counterclaims). A review of that
brief, however, indicates that the Ackoffs simply argued that
their counterclaims were not preempted by federal copyright law.
In fact, the brief demonstrates that Rosenblatt has made
contradictory arguments, because it is clear that the Ackoffs
were responding to Rosenblatt's assertion that their
counterclaims only could be brought in federal court. The fact
that, at best, both parties have made contradictory arguments
does not support the conclusion that the exercise of supplemental
jurisdiction is unwarranted.
Third, Rosenblatt correctly notes that this Court might resolve
the federal claim on summary judgment, which counsels against
exercising supplemental jurisdiction over related state law
Carnegie-Mellon University v. Cohill, 484 U.S. 343, 350 n. 7
(1988) ("[I]n the usual case in which all federal-law claims are
eliminated before trial, the balance of factors to be considered
under the pendent jurisdiction doctrine — judicial economy,
convenience, fairness, and comity — will point toward declining
to exercise jurisdiction over the remaining state-law claims.");
In re Merrill Lynch Limited Partnerships Litigation, 154 F.3d 56,
61 (2d Cir. 1998) (noting that Carnegie-Mellon "is not a mandatory
rule"). At this stage of the proceedings, however, it is not clear
whether the federal claim will be resolved at the summary judgment
stage. Although Windswept is briefing a motion for summary judgment,
the outcome of that motion is not a foregone conclusion. Nevertheless,
if the Court does grant summary judgment on the federal claim, it will
reconsider its decision to exercise supplemental jurisdiction
over the state law claims.
Fourth, Rosenblatt argues that because the parallel state court
action is more advanced than this case, this Court should either
decline supplemental jurisdiction over the state law claims or
stay this action until those claims are resolved in state court.
Essentially, Rosenblatt asks this Court to abstain pursuant to
Colorado River Water Conservation District v. United States,
424 U.S. 800 (1976). The Second Circuit recently summarized the
Abstention is an extraordinary and narrow exception to a
federal court's duty to exercise its jurisdiction. The
Supreme Court has recognized that courts should abstain
from the exercise of jurisdiction only in the exceptional
circumstances where the order to the parties to repair to
the state court would clearly serve an important
countervailing interest. The test for determining
whether abstention is appropriate, first articulated in
Colorado River, now requires examination of six factors:
(1) assumption of jurisdiction over a res; (2)
inconvenience of the forum; (3) avoidance of piecemeal
litigation; (4) order in which the actions were filed;
(5) the law that provides the rule of decision; and (6)
protection of the federal plaintiff's rights. The test
does not rest on a mechanical checklist, but on a careful
balancing of the important factors as they apply in a
given case, with the balance heavily weighted in favor of
Federal Deposit Insurance Corp. v. Four Star Holding Co.,
178 F.3d 97
, 101 (2d Cir. 1999) (quotation marks and citations
omitted). The first two factors are irrelevant, because this case
does not involve a res and implicates equally convenient forums.
The fifth factor helps neither side because, depending on the
claim, both state and federal law provide the rule of decision.
See De Cisneros v. Younger, 871 F.2d 305
, 308 (2d Cir. 1989)
("When the applicable substantive law is federal, abstention is
disfavored, though the inverse proposition will not alone support
a surrender of federal jurisdiction.").
Turning to the remaining factors, plaintiffs have strong
federal rights that must be protected by this Court. As discussed
above, plaintiffs' federal copyright claim provides an
independent jurisdictional basis for this Court because that
claim requires this Court to construe the Copyright Act. See
Richard Feiner & Co., Inc. v. Polygram Corp., 610 F. Supp. 250,
252 (S.D.N.Y. 1985) (noting that state court was an inadequate
forum in which to litigate copyright claim); see also Colorado
River, 424 U.S. at 815 n. 21 ("[T]he presence of a federal basis
for jurisdiction may raise the level of justification needed for
abstention"). This Court is the proper forum for resolving the
copyright claims and, because the state law claims are
intertwined with the copyright claim, this factor argues strongly
in favor of exercising supplemental jurisdiction and refusing to
On the other hand, the state court action was filed first and
is more advanced. Justice Schlesinger already has dismissed one
of the Ackoffs' counterclaims without prejudice (breach of
contract), denied Rosenblatt's motion to dismiss two others
(unconscionability and lack of consideration), and oversaw the
withdrawal with prejudice of the fourth (fraud). But those
decisions came at a relatively early stage in the litigation.
Discovery in the state case is scheduled to be completed on
September 8, 2000, and the parties will have sixty additional
days to make any dispositive motions. See Reply Br., Ex. 2
(Preliminary Conference Order). Because the state court action is
nowhere near final adjudication, this factor provides weak
support for abstention. See Moses H. Cone Memorial Hospital v.
Mercury Construction Corp., 460 U.S. 1, 21-22 (1983) (warning
against a "mechanical" reading of this factor, which "is to be
applied in a pragmatic, flexible manner with a view to the
realities of the case at hand"); Richard Feiner & Co., 610 F.
Supp. at 252 (where state court only had denied request for
injunctive relief, "an overly mechanistic application" of this
factor was "not appropriate").
Finally, the danger of piecemeal litigation is high in this
case, because the Ackoffs have asserted the same claims against
Rosenblatt in both state and federal court. See De Cisneros, 871
F.2d at 308 ("Because the state and federal issues are
`inextricably linked,' the risk of [piecemeal] adjudication is
real in this case."); Arkwright-Boston Manufacturers Mutual
Insurance Co. v. City of New York, 762 F.2d 205, 211 (2d Cir.
1985) ("Maintaining virtually identical suits in two forums under
these circumstances would waste judicial resources and invite
duplicative effort."). Nevertheless, Justice Schlesinger
partially avoided this danger by dismissing the Ackoff's breach
of contract counterclaim without prejudice. Indeed, Justice
Schlesinger recognized that this Court likely was the proper
forum for resolving that claim:
[I]t's important to note here for the purposes of the
fourth counterclaim, which is breach of contract, that
there is a pending matter in federal court which involves
not only these two parties but also another party as well
[T]here's a great deal of dovetailing frankly between the
claim and the counterclaims from that action with this
action. To this extent only, I am being influenced by
the pendency of that case. And that is, that the
counterclaim, fourth counterclaim which asserts breach of
contract claims, since to a large extent after extensive
oral argument here, the determination of whether or not
there were one or more breaches by Rosenblatt here the
plaintiff to the detriment of the defendants, will very
likely be resolved in the disposition of that matter.
I am going to dismiss the breach of contract counterclaim
but without prejudice. And it can be reasserted at any
time for any reason, and based on the agreement here by
plaintiff's counsel, if it is asserted at a future time,
there will be no assertions by the plaintiff in
opposition to that breach of contract claim that it
violates the statute of limitations.
So I am dismissing that again without prejudice, because
again, there's an argument that the breach of contract
claim at this point is premature. I think there is
validity to that argument.
Reply Br., Ex. 1, at 5-7. This danger also has been eliminated
for the Ackoffs' fraud claim, which they withdrew with
That leaves plaintiffs' unconscionability and lack of consideration
claims pending in both state and federal court. Although there is
a real danger of piecemeal litigation of those two claims, this
nonetheless the proper forum for their resolution. Unlike the
cases cited above, this case is not particularly complex, see
Arkwright-Boston, 762 F.2d at 211 ("[T]he instant case involves
hundreds of claims and numerous parties, and implicates significant
local interests."), nor does it raise the possibility that a
decision here will produce inconsistent results, see De Cisneros,
871 F.2d at 308 (danger that certain parties in state court would
not be bound by a federal decision because they were not parties
in federal court).
This is the only forum that can fully resolve the dispute,
because Windswept is not a party to the state court action.
While the potential duplication of effort is regrettable,
dismissing plaintiffs' state law claims from this case is not the
For the foregoing reasons, Rosenblatt's motion to dismiss
plaintiffs' state law claims or stay this action pending
resolution of the parallel state court action is DENIED.