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JACOBS v. FELIX BLOCH ERBEN VERLAG FUR BUHNE FILM

September 10, 2001

JIM JACOBS AND THE ESTATE OF WARREN CASEY, PLAINTIFFS,
v.
FELIX BLOCH ERBEN VERLAG FUR BUHNE FILM UND FUNK KG, GREASE PROMOTION GMBH, THEATER DES WESTENS GEMEINNUTZLGE BETRIEBS GMBH, BRENNER HOLDING GMBH, THOMAS KRAUTH, AND MICHAEL BRENNER, DEFENDANTS.



The opinion of the court was delivered by: Sand, District Judge.

  OPINION

On September 18, 1998, the Plaintiffs filed this action alleging that Felix Bloch breached the licensing agreement and that all of the Defendants infringed the Plaintiffs' copyright because the play continued to be performed after August 11, 1998, when Plaintiffs allege that the licensing agreement with Felix Bloch was terminated. (Compl. ¶¶ 59-72.) On June 18, 1999, the GREASE Defendants*fn1 moved for dismissal for lack of personal jurisdiction and on forum non conveniens grounds. (6/18/1999 Mot.) Following the submission of an amended complaint and the completion of briefing, the Court heard oral argument on January 27, 2000. At that time, the Court ordered jurisdictional discovery (limited to document discovery and the depositions of Defendants Brenner and Krauth) and deferred decision on the motion to dismiss until the completion of such discovery.*fn2 (Tr. at 30.) On February 15, 2001, after the Plaintiffs completed jurisdictional discovery, the Defendants renewed their motion to dismiss on the grounds that, under Rule 12(b)(2) of the Federal Rules of Civil Procedure, the Court lacks personal jurisdiction over them and, alternatively, that the doctrine of forum non conveniens justifies dismissal. (Mot.)*fn3 In a declaration filed on March 13, 2001, Felix Bloch joined the GREASE Defendants' motion to dismiss on the grounds of forum non conveniens. (Satnick Decl.) On April 20, 2001, the Plaintiffs moved for leave to amend their complaint to add Sundance Productions, Inc. ("Sundance") as a defendant in the action. (Notice of Cross Mot.) These are the motions presently before the Court.*fn4

I. FACTS

A. Background

Plaintiff Jim Jacobs is a resident of California. (Am.Compl. ¶ 4.) The Estate of Warren Casey is administered by the Harris Trust & Savings Bank, of Chicago, Illinois. (Id. ¶ 5.) Felix Bloch, GREASE GmbH and Brenner Holding are corporate societies organized under German law and with their principal places of business in Germany. (Id. ¶¶ 6-9; Brenner Decl. ¶ 2.) Messrs. Michael Brenner and Thomas Krauth are German residents. (Am. Compl. ¶¶ 10-11.)

The initial licensing agreement between the Plaintiffs and Felix Bloch was executed in New York and contains a choice of law clause, providing for the application of New York State laws. (Id. ¶ 16.) The sublicensing agreements, between Felix Bloch and Brenner Holding and between Brenner Holding and GREASE GmbH, were negotiated and executed in Germany. (Brenner Decl. 6/15/1999 ¶ 2.) To be clear, none of the GREASE Defendants has entered into any direct contractual relationship with the Plaintiffs. (Mot. at 3.)

The relationship among the various entities known as the GREASE Defendants and between the GREASE Defendants and two other non-party companies, Sundance and BB Promotion, is at the center of the jurisdictional inquiry. As of September 1998, at the commencement of this action, Defendant Michael Brenner owned 26% of the shares of Brenner Holding and BB Promotion and his wife held the other 74% of those companies.*fn5 (Dietmann 6/1/2001 Decl. ¶ 8.) Brenner is also the sole shareholder of Sundance, a New York corporation. (Brenner 6/15/1999 Decl. ¶ 6.). Although he does not have a direct ownership interest in GREASE GmbH, which is jointly owned by Krauth and Brenner Holding,*fn6 Brenner does serve as the Executive Secretary and Creative Director for GREASE GmbH. (Brenner 10/15/1999 Decl. ¶ 3.)

Defendant Thomas Krauth does not have any ownership interest in Brenner Holding, Sundance or BB Promotion and has never been an employee of those companies. (Krauth 6/1/2001 Decl. ¶ 2; Dietmann 6/1/2001 Decl. ¶¶ 6-7.) During the period between 1992 and 1995, Krauth did, however, perform consulting services for Brenner Holding and BB Promotion. (Id.) Krauth is a shareholder of GREASE GmbH and acts as the company's General Manager. (Krauth 6/15/1999 Decl. ¶ 1; Dietmann 6/1/2001 Decl. ¶ 7.) Like Krauth, GREASE GmbH and Brenner Holding do not own any interest in Sundance or BB Promotion. (Dietmann 6/1/2001 Decl. ¶ 6.) Finally, with respect to the relationship between Brenner and Krauth, while Krauth admits that on occasion he has used the term "partner" to let people know that he and Brenner have teamed up on certain projects, he claims that he has never entered into a legal partnership "pursuant to which profits and losses of a business were shared by us individually." (Krauth 6/1/2001 Decl. ¶ 3.)

GREASE GmbH, Brenner Holding, BB Promotion and Sundance are corporations that were separately formed and separately capitalized. (Dietmann 6/1/2001 Decl. ¶ 4; Brenner 6/1/2001 Decl. ¶ 3.) The German corporations, GREASE GmbH, Brenner Holding and BB Promotion were registered as independent corporate societies in the Handelsregister, a German corporate registry. (Dietmann 6/1/2001 Decl. ¶ 4.) GREASE GmbH, Brenner Holding, BB Promotion and Sundance maintain their own books and records, manage their own separate bank accounts and do their own hiring. (Brenner 6/1/2001 Decl. ¶ 4.) Brenner claims that he "always observed corporate formalities with respect to each of the these entities, never loaned any of these entities any funds, never interfered with their day-to-day operations, and never entered into a business transaction with any of these entities on [his] own behalf." (Id.)

The Plaintiffs challenge the assertion by Brenner that the corporations were strictly separate. In their response, they point out that some of these corporations share German addresses with other Brenner or Krauth affiliated corporations, although they do not appear to use the same phone number. (Schwartz Cert.App. K.) In addition, BB Promotion and GREASE GmbH share at least one management level employee. (Resp. at 14.) Finally, the Plaintiffs highlight numerous charges on receipts from the GREASE GmbH credit card which contain notations signaling that some of the charges on the card were Brenner's private charges or charges for BB Promotion. (See Schwartz Cert. Apps. C, D, E.) The Defendants argue that these notations — which read "privat" (private) or "weiter an BB" (pass on to BB) — were made so that inadvertent charges could be passed on to the appropriate entity. (Brenner 6/1/2001 Decl. ¶ 7.) According to Brenner, these charges were generally reimbursed "within a month of the inadvertent charge." (Id.)

The Defendants characterize the primary business of GREASE GmbH and Brenner Holding as "the production of plays in Germany and other countries in Europe." (Brenner 10/15/1999 Decl. ¶ 12.) In the case of "GREASE", however, Brenner Holding was not involved with the actual production of the musical and, instead, sublicensed its rights to GREASE GmbH, which produced the Musical in Germany and Switzerland. (Id. ¶ 3.) BB Promotion has promoted a wide range of different shows in Europe and characterizes itself as a "leading theatrical organizer." (Brenner Dep. at 29-30.) Despite Plaintiffs' claims to the contrary, BB Promotion is not dependent on Brenner Holding for the rights to the shows it promotes. From 1994 to 1999, for only four of the 32 productions to which BB Promotion obtained the rights were the rights obtained from Brenner Holding. (Brenner 6/1/2001 Decl. ¶ 5.) Sundance, the New York corporation, works primarily with BB Promotion to secure talent for the Harlem Gospel Singers. (Id. at 9.)

B. The GREASE Defendants' Contacts with New York — Generally

Brenner Holding owns the rights to "The Harlem Gospel Singers," which has never been produced or performed in New York. (Brenner 2/14/2001 Decl. ¶ 5.) In January 1995, Brenner Holding hired Roseanne Kirk, a New York resident, to act as a consultant for "The Harlem Gospel Singers." (Id.) Kirk's contract provided that she was "to perform all duties of consultancy, organization and representation of producer's activities in New York City for the U.S.A. and to maintain a telephone and fax connection for the convenience of the parties." (Schwartz Cert. App. M.) According to Michael Brenner, Kirk, as the "supervising producer," was responsible for the "artistic production" of the show which included research, choosing titles, obtaining the rights to music, and auditioning and choosing talent for the show. (Brenner Dep. at 17, 37-39.) The Defendants contend that Ms. Kirk was hired pursuant to an "arms-length transaction" (Brenner Decl. June 1, 2001, ¶ 8) and emphasize that she "was not authorized to enter into contracts on Brenner Holding's behalf" (Brenner 2/14/2001 Decl. ¶ 5).

It is not disputed that Defendant Michael Brenner travels to New York an average of four to five times per year. (Mot. at 4.) Brenner claims that most of these trips are on behalf of BB Promotion, including his annual December trip to the Alvin Ailey Gala. (Brenner 10/15/1999 Decl. ¶ 13; Brenner Dep. at 65.) Generally, when he is in New York, Brenner has access to the Sundance offices, but he does not maintain a permanent office there. (Brenner 6/15/1999 Decl. ¶ 6.) Defendant Thomas Krauth has traveled to New York much less frequently than Brenner, averaging approximately one or two trips per year. (Krauth Dep.)

C. New York Contacts for "GREASE"

On three or four occasions in 1996 and 1997 and on three more occasions in 1998, Brenner viewed auditions for "GREASE" in New York. (Brenner 10/15/1999 Decl. ¶ 4.) Defendants Brenner Holding and Thomas Krauth were not at all involved in these auditions and, in general, did not participate in the selection of actors for the Musical. (Id.) Other employees of GREASE GmbH were, however, involved in the auditions. (Brenner Dep. at 43.) GREASE GmbH retained Sundance to organize the auditions, including renting the audition studio and making other arrangements. (Id. at 42.) Sundance was not, however, involved in any of the artistic decisions relating to the auditions (id.) and had no authority to make contracts on behalf of GREASE GmbH (Brenner 6/1/2001 Decl. ¶ 8). Brenner characterized this transaction between Sundance and GREASE GmbH as an "arms length deal" (Brenner Dep. at 43) for which Sundance was reimbursed and was paid a fee (see Schwartz Cert.App. G at GR 0528).

In addition to finding talent in New York, GREASE GmbH also ordered supplies for use in its performances from stores in New York. (Mot. at 5.) According to the Plaintiffs, GREASE GmbH "did at least $32,000 worth of business reflecting at least thirty-three (33) separate business transactions [mostly purchases of costumes, wigs makeup and props] with New York theatrical supply stores." (Resp. at 4; Schwartz Cert.App. N.)

The Plaintiffs do not allege that any of the decisions regarding the translations to be used, adjustments to the text of the musical or the language in which songs should be sung were made in New York. The Defendants assert that all such decisions were made in Germany and "had nothing whatsoever to do with any activity in New York." (Brenner 6/1/2001 Decl. ¶ 9.)

D. The "Chicago" Negotiations

On at least two occasions, Brenner and Krauth attended meetings in New York, attempting to acquire the rights to produce the musical "Chicago" in Germany. (Mot. at 5.) Certain of the expenses associated with these visits and meetings were paid by GREASE GmbH. (Id.) Defendants indicate that it was their intention to reimburse GREASE GmbH, after forming a new company, Chicago Deutschland GmbH, "which would hold the rights to "Chicago", produce and perform the Play in Germany and pay all expenses associated therewith." (Krauth 6/1/2001 Decl. ¶ 5.) Several letters regarding the "Chicago" negotiation were sent on GREASE GmbH letterhead and two facsimiles were sent by Michael Brenner on BB Promotion letterhead. (Schwartz Cert. Apps. H, J, R.) At that time, the Defendants' efforts to acquire "Chicago" were unsuccessful. (Krauth 6/1/2001 Decl. ¶ 5.) Earlier this year, however, another Brenner/Krauth company, Capitol Event GmbH, acquired the rights to "Chicago" and the 1997-98 expenditures relating to the negotiations for "Chicago" have since been reimbursed by Capitol Event GmbH to GREASE GmbH. (Id.)

Sundance also played a role in the 1997-98 efforts to acquire "Chicago" by retaining a New York attorney to assist GREASE GmbH during the negotiations. (Brenner Dep. at 54-55; Schwartz Cert. App. J.) However, Sundance's expenditure for the attorney in question were "immediately reimbursed" by GREASE GmbH. (Krauth 6/1/2001 Decl. ¶ 4.)

E. Brenner and Krauth's Meeting with Attorney Ronald Taft

In May 1998, Messrs. Brenner and Krauth met with Mr. Ronald Taft, an attorney who represents the Plaintiffs and their copyright interests in "GREASE." (Taft Decl. ¶¶ 1, 4.) According to Taft, at that meeting, "all aspects of defendants' production of the Play" were discussed, "including the terms of their sub-license." (Id. ¶¶ 4, 6.) Taft asserts that it was at this meeting with Brenner and Krauth that he first learned that a second translation of the play had been commissioned by the two producers and that they had modified the original text of the play. (Id. ¶ 5.) Mr. Brenner contradicts this account of the meeting claiming that there was no discussion of "any creative aspects of the production of the musical in Germany." (Brenner 12/12/1999 Decl. ¶ 4.) It is undisputed that, at the meeting, Brenner and Krauth inquired about the possibility of directly licensing the rights to the musical from the Plaintiffs, as opposed to continuing to sub-license the copyright through Felix Bloch. (Id. ¶¶ 3-4; Taft Decl. ¶ 5.) Brenner claims that he and Mr. Krauth visited Mr. Taft on behalf of GREASE GmbH because they had recently learned from a representative that Felix, Bloch's rights to the musical would expire at the end of 1998. (Brenner 12/12/1999 Decl. ¶ 3.) Taft claims that Brenner and Krauth told him, "[i]n an attempt to sell themselves . . . as seasoned producers, . . . that they regularly visit New York for the purpose of both viewing plays in New York, and negotiating the rights to plays that they are interested in producing in Europe." (Taft Decl. ¶ 8.) Brenner disputes Taft's characterization of his comments as any sort of sales pitch. (Brenner 10/15/1999 Decl. ¶ 9.)

Following the meeting, Taft wrote to Brenner and Krauth, apparently confirming what he had told them at the meeting: that "the license to Felix Bloch Erben expires December 31, 1998." (Taft Decl. App. M.) From June 5, 1998 through July 1, 1998, in six separate letters to Taft, Brenner and Krauth made increasingly detailed written offers for an agreement whereby they could, beginning in January 1999, directly license the rights to "GREASE" in German-speaking Europe. (Id. ¶ 5, Apps. B — G (letters); Brenner 10/15/1999 Decl. ¶ 11.) ...


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