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Yngwie J. Malmsteen v. Universal Music Group

June 14, 2012

YNGWIE J. MALMSTEEN,
PLAINTIFF,
v.
UNIVERSAL MUSIC GROUP, INC., UMG RECORDINGS, INC.,
UNIVERSAL MUSIC CANADA, INC., AND
UNIVERSAL MUSIC GROUP INTERNATIONAL LTD.
DEFENDANTS.



The opinion of the court was delivered by: Paul A. Engelmayer, District Judge:

OPINION & ORDER

In this diversity action, plaintiff Yngwie Malmsteen ("Malmsteen") brings breach of contract claims against four defendants associated with Universal Music Group: Universal Music Group Inc. ("UMG"); UMG Recordings Inc. ("UMG Recordings"); Universal Music Canada Inc. ("UM Canada"); and Universal Music Group International Ltd. ("International") (collectively, "Defendants"). Malmsteen alleges that three defendants-UMG, UMG Recordings, and UM Canada-failed to properly account to him for royalties stemming from a 1985 contract. The contract was originally signed by Polygram Records Inc. ("Polygram"), which Defendants represent was the predecessor to UMG Recordings. Malmsteen further alleges that International breached a separate 2006 oral agreement forbidding the commercial use of certain video footage.

Defendants filed a partial motion to dismiss on two grounds. First, Defendants argue that the Court lacks personal jurisdiction over UM Canada or International.*fn1 Second, Defendants claim that their liability on the first claim is limited by one or more limitations provisions in the parties' contract, and seek to exclude any claim barred thereunder. For the reasons that follow, the Court grants the motion to dismiss for lack of personal jurisdiction, and bars certain claims as untimely based on contractual limitations periods.

I.Background*fn2

A.Malmsteen's Contract with UMG Recordings

Malmsteen is a professional recording artist based in Florida who is known for his technical ability as a guitarist. Compl. ¶¶ 1, 9. In November 1985, Malmsteen, through his loan-out company, entered into a written contract with Polygram based on his personal services as a musician and a composer (the "Contract"). Id. ¶ 12. On or about April 3, 1989, the parties amended that Contract.*fn3 Id. ¶ 13. Under the Contract, Malmsteen was to deliver two full-length albums; the Contract also provided Malmsteen with three options to extend or renew, each of which required him to deliver two additional full-length albums. Id. ¶¶ 15--16. Malmsteen also claims that he authorized UMG Recordings to exploit a long-form audio-visual recording of a 1989 concert he had performed in the Soviet Union. Id. ¶ 18.The Contract limited Polygram to releasing no more than three "best of" compilations of Malmsteen's music without his approval. Id. ¶ 19. The Contract also prevented each party, without the prior consent of the other, from releasing for distribution and sale any audio-visual recording of Malmsteen that was taped or recorded at a single event or setting with a duration of 30 minutes or more. Id. ¶ 41. Malmsteen claims that he has delivered to UMG Recordings a total of six albums and that he has fulfilled his obligations under the Contract and two renewals. Id.

For albums sold through normal retail channels in the United States, the Contract set royalty rates under which the percentage that Malmsteen received on each album grew as it crossed certain sales milestones. Malmsteen's royalty percentage varied from 11--14%. Id. ¶¶ 21--24. Similarly, it provided for a graduated scale of royalty percentages for distributions outside the U.S., with the particular percentage differing by country of sale. Id. ¶¶ 25--28. The Contract authorized Polygram to charge a limited and defined set of costs (associated either with the albums or with certain video production costs) against Malmsteen's royalty account. Id. ¶¶ 31--35. Finally, the Contract contained a forum selection clause. It provided that "any action, suit or proceeding based upon any matter, claim or controversy arising [under the Contract] or relating [to the Contract] shall be brought solely in the state courts of or the federal court in the state and county of New York . . . ." (Dkt. 45, Ex. 8 § 14.07.)

Malmsteen alleges that representatives of International contacted him in 2006-after the exclusive term of the Contract had expired-to request an interview in his Miami, Florida, rehearsal studio. The interview was to be used only to promote sales of albums under the Contract. Compl.¶¶ 38--39. Malmsteen claims that he assented to the interview and entered into an agreement (the "Agreement") with International at that time which precluded commercial use of the interview footage with respect to any work not covered by the Contract. Id. ¶ 40. Malmsteen claims that, in breach of the Agreement, all four defendants subsequently began to sell a commercial DVD titled "Far Beyond the Sun," which included both interview footage and a single music performance in excess of 30 minutes. Id. ¶ 42.

On December 29, 2008, Malmsteen sent a letter to UMG Recordings stating that he had not "received complete statements or payments from [UMG Recordings or its] related affiliates" for his works under the Contract. Dalley 2d Decl. Ex. 10.

B.The Complaint

The Complaint was filed on May 12, 2010; an Amended Complaint was filed January 6, 2012. It contains two causes of action, both sounding in breach of contract. First, it alleges that UMG, UMG Recordings, and UM Canada, all of which Malmsteen alleges were successors-in-interest to Polygram, owe Malmsteen for royalties that have not been paid to him on the Contract. It also seeks damages under the Contract for sales of the unauthorized DVD. Id. ¶¶ 44--50. Second, it alleges, International breached the Agreement by selling the unauthorized DVD without Malmsteen's knowledge and consent, and by exploiting footage of his 2006 interview. Id. ¶¶ 51--54. He seeks damages on each claim of more than $250,000. Id. ¶¶ 50, 54.

On April 11, 2012, Defendants filed a motion to dismiss the Complaint as to UM Canada and International for lack of personal jurisdiction, and to limit the scope of Malmsteen's royalty claims, based on limitations periods in the Contract. Oral argument was held on May 23, 2012.

II.Personal Jurisdiction

A.Applicable Legal Standard for Rule ...


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