United States District Court, S.D. New York
PAUL SPINELLI, SCOTT BOEHM, PAUL JASIENSKI, GEORGE NEWMAN LOWRANCE, DAVID STLUKA, DAVID DRAPKIN, and THOMAS E. WITTE, Plaintiffs,
NATIONAL FOOTBALL LEAGUE, NFL PROPERTIES, LLC, NFL VENTURES, L.P., NFL PRODUCTIONS, LLC, NFL ENTERPRISES, LLC, REPLAY PHOTOS, LLC, GETTY IMAGES (U.S.), INC., ASSOCIATED PRESS, ARIZONA CARDINALS HOLDINGS, INC., ATLANTA FALCONS FOOTBALL CLUB LLC, BALTIMORE RAVENS LIMITED PARTNERSHIP, BUFFALO BILLS, INC., PANTHERS FOOTBALL LLC, CHICAGO BEARS FOOTBALL CLUB, INC., CINCINNATI BENGALS, INC., CLEVELAND BROWNS LLC, DALLAS COWBOYS FOOTBALL CLUB, DENVER BRONCOS FOOTBALL CLUB, DETROIT LIONS, INC., GREEN BAY PACKERS, INC., HOUSTON NFL HOLDINGS LP, INDIANAPOLIS COLTS, INC., JACKSONVILLE JAGUARS LTD., KANSAS CITY CHIEFS FOOTBALL CLUB, INC., MIAMI DOLPHINS, LTD., MINNESOTA VIKINGS FOOTBALL CLUB LLC, NEW ENGLAND PATRIOTS, LP, NEW ORLEANS LOUISIANA SAINTS, LLC, NEW YORK FOOTBALL GIANTS, INC., NEW YORK JETS FOOTBALL CLUB, INC., OAKLAND RAIDERS LP, PHILADELPHIA EAGLES FOOTBALL CLUB, INC., PITTBURGH STEELERS SPORTS, INC., SAN DIEGO CHARGERS FOOTBALL CO., SAN FRANCISCO FORTY NINERS LTD., FOOTBALL NORTHWEST LLC, THE RAMS FOOTBALL CO. LLC, BUCCANEERS LIMITED PARTNERSHIP, TENNESSEE FOOTBALL, INC., and WASHINGTON FOOTBALL INC., Defendants
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
For the Plaintiffs: Danial A. Nelson, Esq., Kevin Patrick McCulloch, Esq., NELSON & MCCULLOCH LLP, New York, NY.
For the Defendants: Jeffrey A. Mishkin, Esq., Anthony Joseph Dreyer, Esq., Jordan Adam Feirman, Esq., Karen Hoffman Lent, Esq., SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, Four Times Square, New York, NY; Jura Christine Zibas, Esq., Jana A. Slavina, Esq., WILSON ELSER MOSKOWITZ EDELMAN & DICKER LLP, White Plains, NY; Bruce S. Meyer, Esq., WEIL, GOTSHAL & MANGES LLP, New York, NY; Andrew Lawrence Deutsch, Esq., Marc Evan Miller, Esq., Paolo Morante, Esq., Tamar Y. Duvdevani, Esq., DLA PIPER U.S. LLP, New York, NY.
ROBERT W. SWEET, UNITED STATES DISTRICT JUDGE.
There are several motions currently pending in this action between plaintiffs Paul Spinelli, Scott Boehm, Paul Jasienski, George Newman Lowrance, David Stluka, David Drapkin, and Thomas E. Witte
(" Plaintiffs" ) and defendants National Football League (" NFL" ), NFL Properties, LLC, (" NFLP" ), NFL Ventures, L.P., NFL Productions, LLC, NFL Enterprises, LLC (together with NFL, NFLP, NFL Ventures, L.P, and NFL Productions, " NFL Entities" ), Arizona Cardinals Holdings, Inc., Atlanta Falcons Football Club LLC, Baltimore Ravens Limited Partnership, Buffalo Bills, Inc., Panthers Football LLC, Chicago Bears Football Club, Inc., Cincinnati Bengals, Inc., Cleveland Browns LLC, Dallas Cowboys Football Club, Denver Broncos Football Club, Detroit Lions, Inc., Green Bay Packers, Inc., Houston NFL Holdings LP, Indianapolis Colts, Inc., Jacksonville Jaguars Ltd., Kansas City Chiefs Football Club, Inc., Miami Dolphins, Ltd., Minnesota Vikings Football Club LLC, New England Patriots, LP, New Orleans Louisiana Saints, LLC, New York Football Giants, Inc., New York Jets Football Club, Inc., Oakland Raiders LP, Philadelphia Eagles Football Club, Inc., Pittsburgh Steelers Sports, Inc., San Diego Chargers Football Co., San Francisco Forty Niners Ltd., Football Northwest LLC, The Rams Football Co. LLC, Buccaneers Limited Partnership, Tennessee Football, Inc., and Washington Football Inc. (Arizona Cardinal Holdings, Inc. through Washington Football Inc., " NFL Clubs," and together with NFL Entities, " NFL Defendants" ), Replay Photos, LLC (" Replay" ), Getty Images (U.S.), Inc. (" Getty" ), and Associated Press (" AP," together with NFL Defendants, Replay, and Getty, " Defendants" ).
NFL Defendants, Replay and AP have moved to dismiss the amended complaint (the " AC" ). Getty has moved to dismiss the AC and compel arbitration, or stay the action as to Getty.
For the reasons set forth below, NFL Defendants', Replays', and AP's motions to dismiss, and Getty's motion to compel arbitration, are granted.
Plaintiffs filed their initial complaint (" Complaint" ) against the NFL Entities, Replay, Getty, and AP on October 21, 2013. On December 16, 2013, Getty moved to dismiss or, in the alternative, to stay the action as against it based on arbitration clauses contained within contracts at issue in this dispute. (See Dkt. Nos. 21, 22, 24.) At the same time, Getty filed a demand for arbitration with the American Arbitration Association (" AAA" ). (See Bloom Decl. Ex. A.) On December 18, 2013, AP and the NFL Entities, and on December 26, 2013, Replay filed motions to dismiss the complaint.
On February 12, 2014, in lieu of opposing Defendants' motions to dismiss, Plaintiffs filed the AC against all currently named Defendants. (See Dkt. No. 42.) On March 31, 2014, Defendants renewed their motions to dismiss. (Dkt. No. 51.) Getty and Plaintiffs have agreed to hold the arbitration proceeding in abeyance pending resolution of Getty's motion to compel arbitration. (See Bloom Decl. Ex. B.)
The instant motions were heard and marked fully submitted on October 1, 2014. Subsequently, and while the motions to dismiss have been pending, motions to stay discovery were filed by Defendants and granted by the Court. (See Dkt. Nos. 99, 100.)
The following facts are taken from the Plaintiffs AC, which are taken to be true for the purposes of disposing of the instant motions, and the terms of certain agreements either directly referenced by Plaintiffs or integral to the AC.
Plaintiffs are seven " professional photographers who make their living taking and licensing sports-related photographs, including but not limited to content related to [NFL] practices, games, functions, and other events." (AC ¶ 1.)
Plaintiffs, collectively, have photographed " hundreds, if not thousands" of NFL and NFL Club games, practices and events, and have taken " literally hundreds of thousands of NFL-related photographs." (AC ¶ 31.) Among these photographs, Plaintiffs allege there are " tens of thousands of photos . . . that do not include any marks, logos, or other intellectual property owned by the NFL Entities."  (AC ¶ ¶ 34-35.)
The NFL has collectively licensed and protected NFL and NFL Club trademarks, including names, nicknames, logos, colors, designs, slogans, symbols, and other identifying indicia for decades. (See AC ¶ ¶ 44-45; NFL Def.'s Mot. 7)
[_____________] NFL and NFL Clubs, [_____________] provided NFL with exclusive
licensing rights for certain business operations [_____________]
Prior to 2004, NFL maintained an in-house department that directly licensed the rights to NFL-related photographs. (AC ¶ ¶ 44-46.) For many years, Plaintiffs obtained media credentials - either through their agents, Getty and AP, or directly from the NFL Clubs via the NFL's in-house department, NFL Photos, to photograph events for the NFL and individual NFL Clubs. (AC ¶ 30.)
In July 2004, NFL -- through NFLP -- entered into a five-year licensing agreement with Getty (" Getty Agreement" ), whereby Getty acquired rights to license
photographs of NFL content to: (i) NFL business partners (including sponsors and licensees of the NFL, and other NFL-approved companies) for commercial uses; and (ii) media organizations for editorial uses. (Getty Agreement
[_____________]; see also AC ¶ 46.) The rights granted under the Getty Agreement covered a " worldwide" territory (Getty Agreement
[_____________]), and became exclusive in 2007 when Getty acquired WireImage, another stock photography agency. (AC ¶ 46.)
Among the images covered by the Getty Agreement were photographs in which Getty owned the copyrights (Getty Agreement
[_____________]), and photographs from independent contributors such as Plaintiffs (" Contributor Photographs" ),
[_____________] (Getty Agreement [_____________]), [_____________], Getty had entered into agreements with each of the Plaintiffs (" Getty Contributor Agreements" ), pursuant to which Plaintiffs became contributing photographers for Getty, and Getty received the right to license Plaintiffs' works, including NFL photographs. (AC 1 47.)
The Getty Agreement authorized " NFL Entities" -- defined to include the NFL (and its affiliates, subsidiaries, and successors in interest), and NFL Clubs (Getty Agreement
[_____________]) -- to make royalty-free use of photographs owned by Getty for a wide variety of uses, including:
(Id.) The right of NFL Entities to make such uses extended to Photographs,
[_____________] (Getty Agreement [_____________]) Plaintiffs each submitted images to Getty of NFL games and other NFL-related matters pursuant to the Getty Contributor Agreements. (AC ¶ 47.)
Plaintiffs allege that " [d]espite the fundamental obligations to license Plaintiffs' works . . . Getty . . . granted the NFL nearly unfettered access to Plaintiffs' photo collections and, either expressly or by inaction, allowed the NFL to make free or 'complimentary' use of Plaintiffs' copyrights photos." (AC ¶ 72.) Plaintiffs further allege that Getty " lacked authority to grant such unfettered usage rights or complimentary and indefinite use licenses to the NFL without obtaining separate and express permission from Plaintiffs for each such 'complimentary' license or use," (AC ¶ 77) and that the Getty Contributor Agreements " precluded Getty . . . from granting usage rights at no cost and Getty['s] . . . own standard terms and conditions for usage licenses pertaining to its Rights Managed collections photos prohibited such use." (AC ¶ 78.)]
The Getty Agreement expired on March 31, 2009. (Getty Agreement
In 2009, " [NFLP] entertained bids for exclusive commercial licensing rights for NFL and NFL Club photos and eventually selected AP to be the sole commercial licensor [of] such photographs." (AC ¶ ¶ 26, 54.) Under the resulting agreement (the " First AP Agreement" ), AP became the NFLP's exclusive agent and distributor for licensing commercial uses of images of NFL content to NFL business partners, and a non-exclusive agent for licensing editorial uses of those images. (First AP Agreement
[_____________].) As a direct consequence of the switch to AP, Plaintiffs allege they lost their ability to sell higher-value commercial licenses (as opposed to editorial licenses) through Getty and thus were forced to transition their entire NFL collections to AP if they wished to continue offering commercial licenses for their NFL content. (AC ¶ 55.)
Plaintiffs also allege that because they owned the copyrights and licenses for other non-NFL sports-related content, and Getty had exclusive licensing deals and/or significant licensing partnerships with other sports entities, such as Major League Baseball and National Collegiate Athletic Association, they were presented with an
" impossible choice." (AC ¶ ¶ 56, 58.) Getty, Plaintiffs allege, threatened to remove Plaintiffs' other sports content from its distribution networks and/or terminate its relationship with Plaintiffs entirely if they did not agree to continue licensing their NFL content through Getty even after its commercial licensing deal with the NFL expired, and made it clear that it would not " welcome back" any contributors who moved their NFL content to AP should Getty ever regain the rights to license NFL content in the future. (AC ¶ 57.) Because certain Plaintiffs had significant non-NFL content at Getty, Getty's position forced Plaintiffs to choose between losing commercial licensing opportunities for their NFL content by not going to AP or giving up commercial licensing opportunities for their non-NFL content by leaving Getty. (AC ¶ 58.)
Five of the Plaintiffs, Jasienski, Stluka, Spinelli, Witte, and Drapkin, ended their relationships with Getty (AC ¶ 62), entered into license agreements with AP (" AP Contributor Agreements" ), and transferred their existing images of NFL content from Getty to the AP photo library. (AC ¶ 59.) Subsequently, Plaintiffs Lowrance and Boehm entered into license agreements with AP and moved their NFL images from Getty to AP. (AC ¶ 62.) As a result of terminating their relationships with Getty, Plaintiffs allege that they have lost significant revenue due to the loss of licensing opportunities for their non-NFL content. (AC ¶ 63.)
The First AP Agreement encompassed the use and licensing of images in which AP owned copyrights (First AP Agreement
[_____________]), as well as Contributor Photographs [_____________] (First AP Agreement
[_____________]). The First AP Agreement covered a " worldwide" territory (First AP Agreement
[_____________]), and authorized the NFL (and its affiliates, subsidiaries, and successors) and NFL Clubs to make a wide range of editorial, charitable, and marketing uses of photographs owned by AP on a royalty-free basis. (First AP Agreement
When the First AP Agreement expired, " [NFLP] again entertained bids for the exclusive commercial licensing rights for NFL and NFL Club photos and eventually renewed its agreement with AP." (AC ¶ 27.) AP and the NFL thus entered into a new license agreement, with a term from April 1, 2012 through March 31, 2015 (the " Second AP Agreement" ). (Second AP Agreement
[_____________]) The Second AP Agreement, while not identical to the First AP Agreement, states that AP is: (i) the " exclusive" and " worldwide agent and distributor" for licensing commercial uses of NFL photographs to NFL business partners (Second AP Agreement
[_____________]); and (ii) a non-exclusive worldwide agent and distributor for licensing editorial uses. (Second AP Agreement
The Second AP Agreement permits " NFL Entities," i.e., NFL (and its affiliates, subsidiaries, and successors) and the NFL Clubs, to make royalty-free use of AP-owned and Contributor Photographs for a wide range of editorial, charitable, and marketing uses, including:
(Second AP Agreement [_____________].) The Second AP Agreement expressly authorizes the foregoing uses of photographs by the NFL and NFL Clubs from April 1, 2009 through the end of the agreement's term. (Id.)
Plaintiffs allege that at one time they contacted the NFL to " demand that it cease and desist using their copyrighted works without permission and without paying the requisite licensing fees." (AC ¶ 83.) The NFL responded that the First AP Agreement included an express license that allowed complimentary use of any NFL-related photos licensed by AP. (Id.)
Plaintiffs then contacted AP regarding the NFL's response and contend that AP denied the NFL's claim and " assured Plaintiffs that not only did the [First AP Agreement] . . . not include such a license, but the AP was currently renegotiating its agreement with the NFL to address the widespread misuse of photos by the NFL." (AC ¶ 84.) Subsequently, AP granted NFL a license that was " Royalty Free" and " retroactive" to 2009, which Plaintiffs contend was granted due to " threats and coercive pressure by the NFL, including the threat of moving its exclusive license back to Getty . .., which also had submitted a bid to reacquire the NFL's business." (AC ¶ 86.)
Plaintiffs allege that despite repeated cease and desist demands, the NFL Defendants continue to use thousands of Plaintiffs' photographic works to promote the NFL's brand, sell-NFL related products, and " enhance the NFL's image" in order to generate revenue both as an independent entity and on behalf of the NFL Clubs. (AC ¶ 98.) To that end, Plaintiffs allege that NFL permits visitors to NFL.com to access large resolution copies of Plaintiffs' photos " without appropriate copyright management information or protection against illegal copying," as well as " encourage visitor to 'tweet' on Twitter.com or 'share' on Facebook.com copies of Plaintiffs' works." (AC ¶ 111.)
Plaintiffs allege that if it were not for " the NFL's illegal efforts to control the commercial licensing market for NFL-related stock photos, Plaintiffs' licensing agents would not have been forced to purportedly grant the NFL 'complimentary' usage of Plaintiffs' photos . . . [and], [i]nstead . .., Plaintiffs' agents could have negotiated licensing agreements with individual NFL [Clubs] on better terms and/or Plaintiffs could have negotiated agreements with other licensing agents that precluded such unfair and inequitable terms." (AC ¶ 148.)
Effective as of April 1, 2012, AP entered into an " NFL Photo Store Services and License Agreement" with Replay (" Replay Agreement" ), under which Replay agreed to operate the " NFL Photo Store" for AP and fulfill customer orders. (Replay Agreement; AC ¶ 114 (" AP and Replay . . . also sell copies of photographs directly to consumers through the NFL Photo Store." ).) Plaintiffs allege that Replay is an online retailer that specializes in selling sports-related photographs, and that owns and operates the website located at www.replayphotos.com. (AC ¶ 19.) Plaintiffs contend that Replay " infringed Plaintiffs' copyrights by copying, publishing, displaying, exporting, and otherwise using and exploiting photographic works to which Plaintiffs own all copyrights without a valid license." (AC ¶ 166.) Plaintiffs further allege that AP requested that Plaintiffs agree to amendments in their contributor agreements to allow such sales and Plaintiffs expressly rejected AP's request. (AC ¶ 116.)
The AC sets forth seven counts: Count I alleges violations of the Sherman Act against NFL Defendants, Getty, and AP for conspiring to " restrain trade" through exclusive licensing agreements (AC ¶ ¶ 122-59); Count II alleges copyright infringement against all Defendants (AC ¶ ¶ 160-200); Counts III through VI allege vicarious copyright infringement, contributory copyright infringement, breach of contract, and breach of fiduciary duties against Getty and AP (AC ¶ ¶ 201-46); and Count VII alleges unjust enrichment against all Defendants (AC ¶ ¶ 247-55).
The Contributor Agreements
Central to the success of Plaintiffs' claims are the Getty Contributor Agreements and the AP Contributor Agreements.
As such, the relevant terms of each will be briefly outlined below.
1. The Getty Contributor Agreements
Each of the Getty Contributor Agreements requires arbitration of any disputes arising in connection with the agreements. Specifically, Section 9.5 of the Lowrance Agreement provides that " [a]ny dispute arising out of or in connection with the Agreement shall be finally settled under the Commercial Rules of the [AAA] or International Chamber of Commerce ('ICC') . . . ." (Lowrance Getty Contributor Agreement § 9.5.) In virtually identical language, Section 11.8 of the Getty Images Standard Terms and Conditions, which is incorporated into the remaining six Getty Contributor Agreements, provides that " [a]ny dispute arising out of or in connection with the Brand Agreement shall be finally settled under the Commercial Rules of the [AAA] or [ICC] . . . ." (See Lindquist Decl. Exs. B-G.)
2. The AP Contributor Agreements
a. The Relationship Between the Parties
The AP Contributor Agreements are all governed by New York law. (AP Contributor Agreements § 10.) Each of the Plaintiffs agrees to " provide contributing photography services to AP." (Id. § 1 or § 1.1.) AP agrees to use commercially reasonable efforts to assign each Plaintiff to cover NFL events and to obtain NFL credentials for that photographer to permit him to take photographs at the NFL events. (Id., § § 2 or 2.2-2.3). Each Plaintiff agrees to make a selection of photos from the event available to AP, and AP agrees to review these photos and reasonably limit the rejection of tendered photos. (Id., § § 3 or 3.1-3.4).
While each Plaintiff retains copyright in his photos, he provides a broad copyright license to AP in all of his photos that are not rejected by AP. (AP Contributor Agreements, § 4 or § 4.2). In exchange for the license, AP agrees to pay royalties to each Plaintiff for certain sublicenses that AP grants to third parties. (Id., § § 5.1-5.2). Either AP or the Plaintiff is entitled to terminate an AP Contributor Agreement, with or without cause, upon thirty days written notice. (Id., § § 7 or 7.1). Obligations under the license section of the AP Contributor Agreements survive termination. (Id.)
In the AP Contributor Agreements, each Plaintiff agrees that he is an independent contractor to AP and that he has no agency relationship with AP:
Photographer shall be acting as an independent contractor and shall not represent himself or herself as an employee of AP, but only as an independent contractor. . . . Neither the making of this Agreement nor the performance of its provisions shall be construed to constitute either Party an agent, partner, joint venture, employee or legal representative of the other Party.
(AP Contributor Agreements, § 1 or § 1.3.)
b. The License Provisions
Section 4 of each AP Contributor Agreement, with slight variation, contains a broad license to AP of the photographer's rights in his photos, which grants AP the right to copy, disseminate and otherwise use those photos, and permits AP to transfer and sublicense all these rights to " other entities" :
Photographer hereby provides to AP a perpetual, irrevocable, transferable, worldwide, right and license to reproduce, edit, translate the caption of, prepare derivative works of, publicly perform, publicly display, load into computer memory, cache, store and otherwise use the Event Photos and to transfer or sublicense these rights to other entities. With respect to NFL Event Photos taken at NFL Events for which AP directly or indirectly arranges for Photographer to obtain a credential, the foregoing rights shall be exclusive for so long as the NFL (or one of its affiliates) confers to AP (or one of its affiliates) the exclusive rights to operate as an NFL commercial use licensing agent, and non-exclusive thereafter. With respect to all other Event Photos, the foregoing rights shall be non-exclusive. AP shall present the Event Photos through AP's image database
currently known as " AP Images" and other image databases at AP's discretion.
(Boehm and Drapkin AP Contributor Agreements § 4.2.)
Subject to Section 7.1, Photographer hereby provides to AP a perpetual, irrevocable, transferable, worldwide, right and license to reproduce, edit, translate the caption of, prepare derivative works of, publicly perform, publicly display, load into computer memory, cache, store and otherwise use the Final Photos and to transfer or sublicense these rights to other entities. With respect to NFL Event Photos taken at NFL Events for which AP directly or indirectly arranges for Photographer to obtain a credential, the foregoing rights shall be exclusive for so long as the NFL (or one of its affiliates) confers to AP (or one of its affiliates) the exclusive rights to operate as an NFL commercial use licensing agent, and non-exclusive thereafter. With respect to all other Event Photos and the Archival Event Photos, the foregoing rights shall be non-exclusive. AP shall present the Final Photos through AP's image database currently known as " AP Images" (the " AP Images Platform" ) and other image databases at AP's discretion.
(Spinelli, Stluka, Witte and Jasienski AP Contributor Agreements § 4.2.)
Photographer hereby provides to AP a non-exclusive, transferable, perpetual, irrevocable, worldwide right and license to reproduce, edit, translate the caption of, prepare derivative works of, publicly perform, publicly display, load into computer memory, cache, store and otherwise use the Event Photos and to transfer or sublicense these rights to other entities. AP shall present the Final Photos through AP's image database currently known as " AP Images" and other image databases at AP's discretion.
(Lowrance AP Contributor Agreement § 4.2)
In all but Lowrance's AP Contributor Agreement, the photographer has granted AP an exclusive license for NFL Event Photos taken by him at an NFL event where AP directly or indirectly arranges for the photographer to be credentialed for the event. The license is to be exclusive for the period of time that AP remains the NFL's exclusive licensing agent, and is non-exclusive thereafter. The Lowrance AP Contributor Agreement grants AP the same broad rights as the other AP Contributor Agreements, but on a non-exclusive basis. As with the other AP Contributor Agreements, the Lowrance Contributor Agreement expressly authorizes AP to transfer and sublicense to other entities to the full extent of AP's own license rights.
c. The Royalty Provisions
Each of the AP Contributor Agreements sets forth AP's agreement to pay royalties to the contributor, " [i]n exchange for the license granted in Section 4." The Boehm, Drapkin, and Lowrance Agreements require AP to pay the photographer a royalty equal to a defined percentage of " Net Revenue" on " qualifying Event Photo Sales." " Event Photo Sales" are defined as " mean[ing] only the a la carte sale of licenses for Event Photos through AP's online database service, currently known as 'AP Images.'" " A la carte sales" are further defined as " the sale of licenses for individual photos for which a per-image price is established." " Net Revenue" is defined as " all cash actually collected by AP from the sale of copies of a particular Event Photo, less sales commission." The AP Contributor Agreements also recognize that AP may offer the Event Photos for a la carte sale at a " bulk rate" which may include the photographs of photographers other than the contributor. In such a case, to determine royalties, AP is to apportion the cash received on an equal pro-rata basis across all photos included in the a la carte bulk rate. (AP Contributor Agreements § 5.1).
Section 5.1 of the Jasienski, Spinelli, Stluka and Witte AP Contributor Agreements provide that upon a " qualifying Event Photo Sale," AP will provide the contributor with the greater of royalties calculated on the revenue-share basis described in the above paragraph, and " a royalty equal [to] twenty-five dollars ($25.00) per Final Photo." However, these AP Contributor Agreements also provide that these minimum royalties are only due on " qualifying Event Photo Sales," which means " the a la carte sale of licenses for Event Photos." (Id.)
The AP Contributor Agreements do not require AP to license the contributors' photographs to third parties only through a " sale" that would generate revenue and therefore royalties. Nothing in the AP Contributor Agreements requires AP to issue only royalty-bearing sublicenses. Additionally there is nothing in the AP Contributor Agreements that compels AP to limit the uses that NFL (or any other sublicensed third party) makes of a sublicensed photo, or to " track and manage" such sublicensee uses. (Cf. AC ¶ ¶ 69-72).
On a motion to dismiss pursuant to Rule 12(b)(6), all factual allegations in the complaint are accepted as true, and all inferences
are drawn in favor of the pleader. Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir. 1993). However, a complaint must contain " sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 663, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).
A claim is facially plausible when " the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."
Iqbal, 556 U.S. at 663 (quoting Twombly, 550 U.S. at 556). In other words, the factual allegations must " possess enough heft to show that the pleader is entitled to relief."
Twombly, 550 U.S. at 557 (internal quotation marks omitted).
When determining whether parties have agreed to arbitrate a dispute, courts consider two questions: (1) whether a valid agreement to arbitrate under the contract in question exists and (2) whether the particular dispute in question falls within the scope of that arbitration agreement. See Hartford Accident & Indem. Co. v. Swiss Reins. Am. Corp., 246 F.3d 219, 226 (2d Cir. 2001) (quoting Nat'l Union Fire Ins. Co. v. Belco Petrol. Corp., 88 F.3d 129, 135 (2d Cir. 1996)).
I. The Motion To Compel Arbitration Of Plaintiffs' Claims Against Getty Is Granted
Arbitration is " strictly a matter of contract." Ross v. Am. Express Co., 478 F.3d 96, 99 (2d Cir. 2007) (citing Thomson-CSF, S.A. v. Am. Arbitration Ass'n, 64 F.3d 773, 779 (2d Cir. 1995)). The Federal Arbitration Act (FAA) provides that " an agreement in writing to submit to arbitration an existing controversy . . . shall be valid, irrevocable and enforceable . . . ." 9 U.S.C. § 2. The FAA " requires the federal courts to enforce arbitration agreements, reflecting Congress' recognition that arbitration is to be encouraged as a means of reducing the costs and delays associated with litigation." Vera v. Saks & Co., 335 F.3d 109, 116 (2d Cir. 2003) (citation omitted); see also Am. Express Co. v. Italian Colors Rest., 133 S.Ct. 2304, 2309, 186 L.Ed.2d 417 (2013) (noting that courts " must 'rigorously enforce' arbitration agreements according to their terms" ) (citation omitted)). The Second Circuit has " often and emphatically applied" the strong federal policy in favor of arbitration. Arciniaga v. Gen. Motors Corp., 460 F.3d 231, 234 (2d Cir. 2006).
Because of this policy favoring arbitration, " the burden of persuasion falls on the party attempting to escape an arbitration agreement, not the one attempting to enforce it."
Marubeni Am. Corp. v. M/V " OHFU" her Engines, No. 94 CIV. 6251 (SAS), 1996 WL 84485, at *2 (S.D.N.Y. Feb. 27, 1996). When the existence of an arbitration agreement is undisputed, " doubts as to whether a claim falls within the scope of that agreement should be resolved in favor of arbitrability." ACE Capital Re Overseas Ltd. v. Cent. United Life Ins. Co., 307 F.3d 24, 29 (2d Cir. 2002) (citing Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)). Courts in this Circuit have held that, where a valid arbitration clause has been found to exist, they must abstain from adjudicating plaintiffs' claims. See, e.g., Robinson Brog Leinwand Greene Genovese & Gluck P.C. v. Quinn & Assoc. LLP, 523 Fed.Appx. 761, 764 (2d Cir. 2013).
The Second Circuit has directed courts to classify arbitration clauses as either broad or narrow.
JLM Indus., Inc. v. Stolt-Nielsen SA,
387 F.3d 163
Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc.,
252 F.3d 218
Googla Home Decor LLC v. Uzkiy, No.
Collins & Aikman Prods. Co. v. Bldg. ...