United States District Court, Southern District of New York
October 2, 2002
TVT RECORDS AND TVT MUSIC, INC., PLAINTIFFS,
THE ISLAND DEF JAM MUSIC GROUP AND LYOR COHEN, DEFENDANTS.
The opinion of the court was delivered by: VICTOR Marrero, United States District Judge
DECISION AND ORDER
Plaintiff's TVT Records and TVT Music, Inc. ("TVT") filed a motion for
a preliminary injunction on August 28, 2002 seeking to bar defendants The
Island Def Jam Music Group ("IDJ") and its principal, Lyor Cohen
("Cohen"), from frustrating the scheduled release of one of TVT's albums
(the "CMC Album"); from conduct that would interfere with the contract
between TVT and the artists supplying the content of the CMC Album; and
from continuing to utilize some of TVT's copyrighted material on an IDJ
video disc entitled, "Irv Gotti Presents: The Inc." An evidentiary
hearing was held before the Court on September 23-24, 2002. For the
reasons stated in the Court's statement on the record at the proceeding
on September 30, 2002, a copy of which is attached and incorporated
hereto, it is hereby
ORDERED that the portion of TVT's motion for a preliminary injunction
seeking to bar IDJ and Cohen from interfering with the scheduled public
release of the CMC Album in November 2002 is denied; and it is further
ORDERED that, pending final resolution of this dispute at trial, IDJ be
enjoined from releasing a recording entitled "The Last Temptation",
featuring the artist known as Ja Rule, in any form incorporating any of
the CMC recordings, both old and new, at issue in this action; and it is
ORDERED that, pending the final resolution of this dispute at trial,
IDJ be further enjoined from interfering with TVT's efforts to obtain
possession of the contents of the CMC Album from the artists, agents or
third parties, as well as from improperly acquiring and releasing the
recordings identified as the contents of the CMC Album, provided that TVT
itself shall not release the CMC Album pending the determination of its
rights thereto at the trial of this matter; and it is hereby finally
ORDERED that, on IDJ's representations that upon TVT's request, it will
production and distribution of certain CMC material owned by TVT in
a video recording entitled, "Irv Gotti Presents: The Inc.," the portion
of TVT's motion seeking to enjoin IDJ from continuing to use such
material is denied.
TVT Records v. The Island Def Jam Music Group
No. 02 Civ. 6644
Statement by the Court Regarding Plaintiffs' Motion
For A Preliminary Injunction
September 30, 2002
This dispute began with a proposed collaboration to produce a music
album — referred to as the "CMC Album" — between plaintiffs
TVT Records and TVT Music, Inc. ("TVT") and two artists, Jeffrey Atkins,
p/k/a Ja Rule ("Ja Rule"), and Irv GOtti ("GOtti"), who were under
exclusive contract with defendant The Island Def Jam Music Group
("IDJ"). TVT seeks to enjoin IDJ and its principal, Lyor Cohen
("Cohen"), from (1) any conduct frustrating TVT's release of the CMC
Album with Gotti and Ja Rule by November 5, 2002; and (2) interfering
with TVT's contractual relationships with these artists who are obligated
to complete and deliver the CMC Album to the TVT pursuant to a contract
dated July 2, 2001.
The governing law in this matter is clear. In order to prevail on a
motion for a preliminary injunction, a party must establish irreparable
harm and either (1) a likelihood of success on the merits or (2)
sufficiently serious questions going to the merits and a balance of
hardships tipping decidedly in its favor. See Kamerling v. Massanari,
295 F.3d 206, 214 (2nd Cir. 2002).
Turning to the facts of the present dispute, the Court begins with
TVT's breach of contract and fraud claims. On the issue of whether a
licensing contract between TVT and IDJ was formed, as a side agreement
(the "Side Agreement") to the CMC Album collaboration, under which IDJ
consented to the collaboration between TVT and Gotti and Ja Rule,
evidence has been presented as to a variety of written and oral
communications, to which the parties ascribe differing interpretations.
In reviewing the likelihood of success on the merits prong of the
preliminary injunction standard, the Court notes the following items in
evidence, among others:
1. Various conversations occurred in mid-to-late 2001 between William
Leibowitz ("Leibowitz") on TVT's part and Jeffrey Kempler ("Kempler")
and Jonathan Lieberman ("Lieberman") on IDJ's part, during which the
terms of the Side Agreement in dispute were addressed and
negotiated, and in which the parties disputed whether the
representatives of IDJ expressly agreed to the Side Agreement.
2. Conversations between Leibowitz and Steve Shapiro ("Shapiro"), the
artists' lawyer, in which the latter expressed concern over potential
liability on the part of Ja Rule and Gotti both to TVT under the
so-called "Heads of Agreement" obligations to produce the CMC Album
and to IDJ under their respective exclusive employment contracts, in
the absence of IDJ's assent to the CMC Album collaboration.
3. Kempler's notes taken during a telephone conversation with Shapiro in
which the profit sharing terms of the alleged Side Agreement were
discussed and where it appears Shapiro told Kempler that Cohen knew
and consented to the Side Agreement and that Gotti and Ja Rule wanted
to make the CMC Album so as not to hold back the careers of the other
two members of CMC.
4. A September 25, 2001 letter from Lieberman to Leibowitz in which
Lieberman's handwritten edits to a Side Agreement draft were
enclosed. The Court notes that Lieberman asked for execution copies
from Leibowitz in this letter (the "Side Letter") and, in
particular, that IDJ's principals were copied on this mailing.
5. A letter dated August 1, 2001 arranging for part of Gotti's payment,
pursuant to the CMC Album contract with TVT, to be paid to IDJ. The
Court notes that the evidence indicates that this redirection of
payment was actually arranged by IDJ or with its participation.
6. A November 15, 2001 letter from Leibowitz to Kempler and Lieberman
stating that Leibowitz had received assurances from Lieberman that
IDJ consented to the CMC Album collaboration but had not yet received
written execution copies to that effect. In particular, the Court
notes that IDJ made no effort to correct TVT's apparent and stated
reliance on these mentioned assurances.
IDJ's position is that all these communications were just part of the
negotiations in the event it ultimately would decide to enter into the
Side Agreement and grant TVT, Ja Rule, and Gotti permission to produce
the CMC Album. TVT's claim is that the communications indicate that IDJ
in fact had agreed to give consent and thus constitute a consummated
contract or evidence of a binding oral agreement.
In resolving these differing interpretations, the Court notes that IDJ
admits that it was placed in a difficult situation by TVT's offer to
market a CMC Album with Gotti and Ja Rule. The difficulty arose in that
Gotti's contract with IDJ was set to expire in February of 2002 and IDJ
wanted to renew its contract with him. Therefore, IDJ did not want to
risk upsetting Gotti or Ja Rule by refusing to consent to their project
with TVT. At the same time, however, IDJ did not want to grant a
competing label access to these two popular and lucrative artists.
Here, the record points to evidence that Ja Rule and Gotti desired to
help further the careers of the other two CMC members. On this point, the
Court notes little, if any, compelling evidence of "threats" by TVT to
embarrass Ja Rule with old song releases reflecting an outdated image,
nor is the Court persuaded that Gotti and Ja Rule went along with TVT
only reluctantly, as IDJ claims. In particular, the Court notes that in
an email to Shapiro sent on August 3, 2001 at 3:49 PM, Lieberman stated
that he was "pushing very hard to get Lyor and Kempler to focus on
closing the TVT deal quickly because that is what Irv wants". It seems
inconsistent to characterize Gotti's attitude regarding the CMC project
as "reluctant," or TVT's inducements as "threats," when one of IDJ's own
senior attorneys negotiating the Side Agreement understood that Gotti
wanted the CMC Album project to proceed "quickly."
TVT asserts that an oral agreement was reached between it and IDJ. On
this issue, the Court notes that Lieberman initialed the Side Letter for
Kempler's signature and that Kempler himself executed a copy, one that
was never delivered to TVT in the end. This initialing and signing
indicates that IDJ, at least through Lieberman, and perhaps, Kempler,
understood that an agreement had been reached, at least for a time.
Furthermore, Defendants' Exhibit 52, an internal IDJ approval memorandum
regarding an amendment to its recording contract with Ja Rule, states at
¶ B(4), regarding TVT's anticipated release of the CMC Album, that IDJ
prefer that TVT not do so." This statement begs the
obvious question: If as, IDJ maintains, it never consented to the CMC
Album collaboration, such consent being necessary to that project given
Gotti and Ja Rule's exclusive employment contracts with IDJ, why would
IDJ be in a position to "strongly prefer that TVT not do so"? This
statement, then, could be construed as persuasive evidence that as late
as mid-August 2002, IDJ may have understood and accepted, though perhaps
begrudgingly, that TVT had authority to proceed with the CMC recording.
The Court concludes that on balance this evidence supports a conclusion
of a likelihood that TVT will succeed in establishing one or more of its
contract claims. At a minimum, the Court recognizes that IDJ admits that
it went along with what it terms "negotiations" in a manner that would
not dissatisfy Gotti and Ja Rule given their interest in making the CMC
Album. IDJ admits, in other words, that it did not expressly withhold its
consent to the CMC Album project in light of its desire to renew Gotti's
contract, which would expire in February 2002. But in conducting
themselves in a manner that would have suggested to Gotti and Ja Rule
acquiescence to the TVT venture, it is reasonable to conclude that, in
the process, that same impression was conveyed to and formed by TVT,
and, further, that TVT's reliance thereon could have been reasonable.
On a related point, the Court notes that IDJ characterizes TVT's
negotiations with its two exclusive artists as improper meddling in its
business affairs. The Court is not persuaded that it is reasonable to
characterize these actions by TVT, which was offering its services as a
competitor in the marketplace, as "meddling," despite IDJ's exclusivity
contracts with Ja Rule and Gotti, because the evidence indicates that TVT
recognized from the start that IDJ's permission would be needed for the
project to proceed, secured either by them or the artists.
The Court turns to the second prerequisite for preliminary injunctive
relief: irreparable harm. In this regard, despite the meritorious aspects
of TVT's presentation, the Court is not persuaded that TVT has
established adequate irreparable harm to merit a preliminary injunction
that would, in essence, enforce the purported Side Agreement between TVT
and IDJ to the CMC Album project. The Court so finds because the evidence
indicates that any harm from a delay in the release date of this album
pending resolution at trial would not be irreparable. The Court notes the
following items in evidence, among others, supporting this conclusion:
1. TVT has advertized various release dates for its CMC Album: "early
2002," "late 2002," November 26, 2002, and November 5, 2002. These
changes suggest that one more adjustment to the release date would
not be as harmful as TVT fears.
2. Bryan Leach ("Leach"), TVT's own employee, testified that release
dates are missed "often," which leads the Court to the same
3. TVT recently missed an advertised release date for an album by
another of its artists, Naughty By Nature, and Leach characterized
that release as successful nonetheless. Leach also testified that TVT
received no complaints from Naughty By Nature or from retailers as a
result of its having missed the target date.
For these reasons, despite TVT's persuasive presentation regarding its
prospects for success on the merits, TVT has not convinced the Court that
the harm it would suffer from having to adjust its CMC Album release date
a trial is irreparable. For these reasons the Court will
order that the portion of TVT's motion for a preliminary injunction
seeking to bar IDJ and Cohen from interfering with the scheduled delivery
of the anticipated content of the CMC Album is denied.
Turning to TVT's allegations of tortious interference with a contract,
TVT asks this Court to enjoin IDJ from releasing its "The Last
Temptation" solo Ja Rule album pending resolution of the instant dispute
at trial. In considering this portion of TVT's motion, the Court notes,
in particular, the following:
1. The evidence indicates that IDJ was interested in acquiring the
original CMC songs recorded in and around 1994 and that it recruited
Gotti in this endeavor. Defendants' Exhibit 52 — the internal
IDJ approval memo for the 2002 amendment to Ja Rule's recording
contract — states as much at ¶ B(4). Plaintiffs' Exhibit 64
— the actual August 16, 2002 amendment to Ja Rule's recording
contract — reiterates at § 5(a) IDJ's interest in past CMC
2. Indeed, Plaintiff's Exhibit 64 references, at § 5(a), not only
these 1994 CMC tracks but also those recorded pursuant to the 2001
collaboration agreement between TVT and Ja Rule and Gotti: "At
various times [Irv Gotti] recorded and delivered to TVT records
master recordings embodying the performances of [Ja Rule] . . . ."
(emphasis added). And, Kempler testified that delivery of these
2001-2002 CMC recordings, free of copyright interest by TVT, would
satisfy part of Ja Rule's contractual obligations to IDJ.
3. There also has been testimony, in particular by Cohen and Gottlieb,
that IDJ's release date for Ja Rule's "The Last Temptation" album was
moved from early 2003 to November of 2002, which would place it in
direct competition with the CMC Album's planned release.
4. And, the IDJ approval memo for the 2002 amendment to its recording
contract with Ja Rule indicates, at ¶ B(5), that Cohen and IDJ
intended to "aggressively" re-release Ja Rule's previous three hit
albums also in the fourth quarter of 2002.
To the Court, the significance of this and related evidence is as
If IDJ were to succeed in improperly acquiring the original CMC
recordings, that would prevent TVT from ever releasing the CMC
Album because this album is intended as a compilation of old and new CMC
songs. The same result would follow if IDJ improperly acquired the songs
recorded pursuant to the 2001 agreement between TVT and Gotti and Ja
Rule. The aggressive marketing of the next Ja Rule release and of his
past three hit albums concurrently with the anticipated release of the CMC
Album by TVT could have the effect of so stifling TVT's CMC Album
prospects as to deter TVT from releasing its album at that time or,
indeed, ever, given the market saturation by the actions of IDJ.
It is undisputed that "The Last Temptation" is being distributed by IDJ
pursuant to a contract the validity of which is not at issue in the
present dispute. It is also clear that scheduling the release and
availability of products in the marketplace is a legitimate aspect of
free enterprise competition. But the issue here is tortious interference
with a contract. The Court finds that the evidence, particularly that
recounted above, presents a "serious question of fact" as to whether IDJ
engaged in these activities not merely to overshadow and defeat TVT's
album release in the
marketplace, but also for the ultimate purpose of
acquiring the new CMC songs recorded in 2001-2002, and releasing them
under its own label either separately or as a component of "The Last
Temptation," thereby frustrating TVT's ability ever to issue its new CMC
This risk — that IDJ would effectively bar TVT from ever release
its CMC Album — presents a harm that has the sort of permanence
that is appropriately considered irreparable. See Otis Elevator Co. v.
Local 1, Intn'l Union of Elev. Const., 684 F.2d 80, 83 (2nd Cir. 1988)
(prospect of permanent loss of business due to work stoppages constitutes
This harm would also be difficult to quantify. If IDJ were to
improperly acquire and preemptively release part or all of the
anticipated content of the CMC Album, the recording's combination of
songs could differ from the overall composition of the CMC Album TVT
envisioned given TVT's ownership of the 1994 CMC songs intended to
compose part of the CMC Album and given that "The Last Temptation" is
contemplated as a solo Ja Rule album. This difference in composition
would result in differing degrees of appeal to purchasers, meaning that a
direct transfer of profits from any infringing album release by IDJ to
TVT — assuming that such infringement actually occurs and that TVT
could prove it at trial — would not be available as a measure of
damages, leaving the Court to speculate as to album sales and profit
Alternatively, if IDJ were to improperly acquire part or all of the
anticipated content of the CMC Album, including the original CMC songs
which IDJ claims are outdated and embarrassing to Ja Rule, and then
locked them away forever, then, assuming again TVT were to prevail at
trial, delineating damages relating to lost sales of these songs would be
just as or even more speculative.
The Court finds these considerations relevant because both the Second
Circuit and this District have held that losses that are difficult to
quantify constitute irreparable harm. See Gerard et al. v. Almouli, et
al., 746 F.2d 936, 939 (2nd Cir. 1984) ("The likelihood of irreparable
harm was demonstrated since appellees' damages may not be quantified.");
Alcatel Space, S.A. v. Loral Space v. Communications Ltd.,
154 F. Supp.2d 570, 584 (S.D.N.Y. 2001); Muse, Inc. v.
Digital-On-Demand, Inc., 123 F. Supp.2d 118, 132 (S.D.N.Y. 2000).
Additionally, TVT's never releasing the CMC Album would have collateral
consequences to its business in light of the nature of the music industry
and TVT's place in it. The evidence, and in particular the Court credits
the testimony of Leach and Gottlieb, indicates that as a record label,
TVT's success is dependent on its relationships with an array of content
suppliers — the artists, producers, editors, studios, etc. —
and retailers — vendors, radio stations, MTV, etc. These
relationships are affected by TVT's continuing ability to supply albums
for distribution. And, as an independent label, TVT's business, while
certainly not a pittance, is smaller than that of the major labels.
Accordingly, it is reasonable to conclude that TVT carries less clout in
the industry and that its presence can withstand less interruption.
The Second Circuit and this District have recognized that harm is
irreparable when "substantial losses of sales beyond those of the
terminated product . . . have been threatened." Tom Doherty Assocs. Inc.
v. Saban Entertainment, Inc., 60 F.3d 27, 38 (2nd Cir. 1995) (citations
omitted). And, this Court recently made it clear in Alcatel Space, 154
F. Supp.2d at 584, that an alleged lost opportunity need not destroy the
plaintiff's business when similar opportunities are limited in their
availability. Id. ("Although the loss of these
contracts may not destroy
Alcatel's business, the limited number of satellite opportunities
available warrants a finding of irreparable harm.").
Beyond losses, the Second Circuit regards damage to business
relationships significant. In Reuters Ltd. v. United Press Int'l, Inc.,
903 F.2d 904, 907-909 (2nd Cir. 1990), the Circuit Court found
irreparable harm where a news wire service's ability to continually
provide news photographs was disrupted, on the theory that "terminating
the delivery of a unique product to a distributor whose customers expect
and rely on the distributor for a continuous supply of that product
almost inevitably creates irreparable damage to the good will of the
distributor." See also AIM Intn'l Trading, LLC. v. Valcucine S.p.A., No.
02-CV-1363, 2002 WL 1285557 (S.D.N.Y. June 11, 2002) ("If the plaintiffs'
application for a preliminary injunction is not granted, [its] network of
relationships may be destroyed, and plaintiffs themselves will have no
products to sell.").
Ja Rule is a multi-platinum recording artist, and, as IDJ admits, his
sort of success is very rare. It follows that releasing an album
featuring an artist with multi-platinum success is a rare opportunity.
Furthermore, because Ja Rule is featured on the CMC Album, the Court
concludes that this album is very unique. The Court also finds
considerable risk that TVT's business relationships, specifically, its
ability to attract future artists and maintain the trust of retailers,
will be irreparably harmed if TVT is improperly prevented from ever
bringing this unique product to market. For these reasons, as well as the
permanence of this risk, together with the fact that quantifying its value
in monetary terms would be highly speculative, a finding of irreparable
harm on this point is warranted.
Finally, the Court finds that the balance of hardships tips decidedly
in TVT's favor. TVT assumed the risk of marketing the CMC Album, planning
and coordinating this project over the last 15 months and investing
significant resources totaling, by TVT's estimates, over one million
dollars. This risk and investment would never be recovered if IDJ
improperly acquires the content of the CMC Album, which would represent a
windfall at TVT's expense, as IDJ invested and risked nothing in this
album's preparation. By granting TVT's request to restrain IDJ pending
trial from releasing "The Last Temptation," but only to the extent that
that album may be used as a vehicle for IDJ to improperly obtain and
release TVT's CMC recordings, the only hardship IDJ may suffer is that
associated with rescheduling, once again, its release date for an album.
For the reasons already stated when the Court addressed TVT's assertions
of harm at having to delay its own release of the CMC Album, a reasonable
delay in an album's release date is not "irreparable" in the Court's
view, nor does it compare to the risk potentially facing TVT that IDJ
will manage to improperly acquire or use the content of the CMC Album,
thereby preempting or preventing the CMC Album's release altogether.
Because the Court finds the timing and potential content of "The Last
Temptation" album release to be the single greatest threat to the CMC
Album's release, and in an effort to tailor effective relief as narrowly
as possible, the Court restricts its remedial focus to this album.
Accordingly, for the reasons stated, the Court will order that pending
final resolution of this dispute at trial, IDJ be enjoined from releasing
the so-called "The Last Temptation" Ja Rule album in any form
incorporating any of the CMC songs, both old and new, at issue in this
dispute. The Court points out that the combined effect of the two rulings
announced thus far — the former denying TVT's request to enjoin IDJ
from interfering with the scheduled release of the CMC Album, and the
latter enjoining IDJ from releasing "The Last Temptation" album in a form
that will interfere with TVT's rights in the CMC songs in question
— is that neither side may release a noncomplying album pending
ultimate resolution of this case, either through trial or otherwise.
Finally, TVT also seeks to enjoin IDJ from continuing to use certain
CMC material owned by TVT in a DVD video entitled "Irv Gotti Presents:
The Inc." on the grounds that IDJ's license from TVT to use these
materials was fraudulently and deceptively obtained. Because IDJ has
offered to cease production and distribution of this video in the course
of these proceedings, the Court will order that this portion of TVT's
motion be denied.
© 1992-2003 VersusLaw Inc.