The opinion of the court was delivered by: David N. Hurd United States District Judge
MEMORANDUM--DECISION and ORDER
Elliot Landy ("Landy") and his company, Landyvision, Inc. ("Landyvision") (collectively "defendants" or "counter-claimants") assert seven counterclaims against Barry Z. Levine ("plaintiff" or "Levine"), Linanne G. Sackett ("Sackett"), and The Brunswick Institute LLC ("Brunswick") (collectively "counter-defendants"). Currently pending is counter-defendants' motion to dismiss certain counterclaims pursuant to Federal Rule of Civil Procedure 12(b)(6) ("Rule ___").
Plaintiff's complaint asserts twenty-one causes of action against defendants, including copyright infringement, unjust enrichment, conversion, unfair competition, and that an accounting is due. Defendants moved to dismiss certain claims pursuant to Rule 12(b)(6). Plaintiff opposed and defendants replied. A Memorandum--Decision and Order was issued on December 30, 2011, granting in part and denying in part defendants' motion to dismiss. See Levine v. Landy, --- F. Supp. 2d ----, 2011 WL 6845886 (N.D.N.Y. Dec. 30, 2011) (Hurd, J.). The Memorandum--Decision and Order directed defendants to answer the following remaining claims: Counts 1-17, Copyright Infringement; Count 18, Unjust Enrichment with respect to Group B photographs;*fn1 Count 19, Conversion; Count 20, Lanham Act; and Count 21, Accounting with respect to Group B photographs.
Defendants answered the complaint and asserted seven counterclaims against plaintiff Levine, Sackett (Levine's wife), and Brunswick, an educational organization of which Sackett is the owner and president. The answer contained the following counterclaims: Count I, Copyright Infringement (against Levine, Sackett, and Brunswick); Count II, Contributory Copyright Infringement (against Levine, Sackett, and Brunswick); Count III, Declaratory Judgment (against Levine); Count IV, Tortious Interference with Business Relationships (against Levine and Sackett); Count V, Tortious Interference with Contract (against Levine and Sackett); Count VI, Fraudulent Inducement (against Levine and Sackett); and Count VII, Relief Under the All Writs Act (against Levine).
Although Landy and Landyvision styled their claims against Sackett and Brunswick as "third-party claims," and refer to the two as "third-party defendants," it should be noted that this is not a case of true third-party practice. Federal Rule of Civil Procedure 14 governs third-party practice. Rule 14(a) dictates when a defending party, such as Landy and Landyvision, may bring in a third party. That rule provides in part: "A defending party may, as third-party plaintiff, serve a summons and complaint on a nonparty who is or may be liable to it for all or part of the claim against it." Fed. R. Civ. P. 14(a)(1). That is not the case here. Defendants Landy and Landyvision did not bring in Sackett and Brunswick because Sackett and Brunswick are, or may be, liable to them for all or part of the claims asserted against them by Levine. Thus, third-party practice is not appropriate here and Sackett and Brunswick are not "third-party defendants."
Instead, the assertion of claims against Sackett and Brunswick are most appropriately covered by Rule 13, entitled Counterclaim and Cross-claim. Rule 13 governs the filing of permissive and compulsory counterclaims and further provides for the joinder of additional parties needed to fully adjudicate a counterclaim against a plaintiff, subject to the provisions of Rules 19 and 20. Fed. R. Civ. P. 13(h). Rule 13(h) was redrafted in 1966, to "mak[e] it clear that if a counterclaim or cross-claim has been properly asserted, then any person whose joinder in the original action would have been possible under Rule 20, which deals with permissive joinder, may be added as a party to the counterclaim or cross-claim." 6 Charles Alan Wright et al., Federal Practice and Procedure § 1434 (3d ed. 2012). Courts typically construe Rule 13(h) liberally "in an effort to avoid multiplicity of litigation, minimize the circuitry of actions, and foster judicial economy." Id. As Landy and Landyvision properly assert counterclaims against Levine, the propriety of adding Sackett and Brunswick as parties must be examined under Rule 20.
Rule 20, entitled Permissive Joinder of Parties, dictates when persons may join or be joined as parties. Rule 20(a) states:
Persons . . . may be joined in one action as defendants if:
(A) any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and
(B) any question of law or fact common to all defendants will arise in the action.
Fed. R. Civ. P. 20(a). The first prong of that test is met here because counter-claimants allege counter-defendants jointly engaged in copyright infringement and that counter-claimants suffered damages for which counter-defendants are jointly and severally liable. Counter-claimants' right to relief arises out of the same series of transaction involving the allegedly fraudulent registration of copyrighted works; the unauthorized copying, sale, and/or distribution of those works; and Levine and Sackett's tortious acts with respect to Landy's business. The second prong requiring that a question of law or fact common to all defendants will arise in the action is also met here. The validity of the copyright registrations filed by both Levine and Landy will be determined as will the true authorship of the photographs at issue. Accordingly, the requirements for permissive joinder under Rule 20 are met and Sackett and Brunswick may properly be joined alongside Levine as counter-defendants.*fn2
Counter-defendants Levine, Sackett, and Brunswick jointly moved to dismiss all counterclaims except Count III, pursuant to Rule 12(b)(6) for failure to state a claim. Counter-claimants opposed and counter-defendants replied. Oral argument was heard in Utica, New York on May 15, 2012. Decision was reserved.
The following facts, taken from the answer and counterclaims, are assumed true for purposes of the motion to dismiss. This case arises from a dispute between two photographers who both attended the Woodstock Music Festival in August 1969 and captured original photographic images of performers and festival scenes. Levine had a camera at Woodstock by chance while working with a sound crew on a Woodstock documentary, while Landy was one of two official photographers at the festival.
The two became and remained friends for several decades, during which time Landy acted as an agent for the licensing of Levine's Woodstock photographs. Levine gave Landy blanket permission to license Levine's photographs to buyers who contacted Landy for his own photographs of Woodstock, and Landy orally agreed to offer some of Levine's photographs to some of Landy's clients. To facilitate the licensing, Landy maintained physical possession of Levine's original photographic slides. Pursuant to the parties' oral agreement, Landy provided some of Levine's photographs to photographic entities such as the Redferns agency and the Intercontinental Ltd. ("Intercontinental") rights agency, which later contracted with other publishers. For example, Intercontinental later made book deals with Fetjaine and Redferns. In some cases, both Landy and Levine's photographs appeared in the same books or collections.
In 1994, Landy and Landyvision produced a book entitled "Woodstock 1969--The First Festival," (the "1994 book"), published by SquareBooks. The 1994 book contained both parties' photographs. Levine accepted a $750 royalty from Landy for the use of his photographs in that book.
In late 2007 through early 2008, the parties engaged in discussions about producing and licensing books and photographs in commemoration of the upcoming fortieth anniversary of Woodstock. Levine's wife and new business partner Sackett also participated in these discussions. One opportunity included issuing an updated version of the 1994 book in the United States, and licensing rights to publish versions of the 1994 book in other countries.
To further collaboration on the reprint of the 1994 book, Landy contends he gave Levine and Sackett access to his business partners. Levine agreed to pick up copies of the 1994 book to be used for trade samples to show to potential domestic distributors and buyers (the "trade samples"), and Landy reimbursed Levine for the costs. Further, in April 2008, Sackett retrieved all of Levine's original and duplicate photographs from Landy's home so they could be digitally scanned. The vendor who completed the scanning provided Sackett a hard drive containing Levine's scanned photographs. Sackett then provided the hard drive to Landy, for the purpose of allowing him to continue his licensing agreement with Levine. Landy then made copies of Levine's photographs onto a new hard drive that he purchased.
Landy contends Levine and Sackett had agreed that foreign publishers such as French publisher Fetjaine could use Levine's photographs in an updated version of the 1994 book, as well as an additional photograph for the new cover of the book ...