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Andrews v. Sony/ATV Music Publishing, LLC

United States District Court, S.D. New York

February 23, 2017

Mark Andrews p/k/a Sisqo et al. Plaintiffs,
v.
Sony/ATV Music Publishing, LLC et al, Defendants.

          MEMORANDUM & ORDER

          ALISON J. NATHAN, UNITED STATES DISTRICT JUDGE

         This diversity action arises from disputes concerning agreements relating to the publishing and administration of popular music compositions and the collection and distribution of royalties flowing from their exploitation. Before the Court is a motion by Defendants Sony/ATV Music Publishing LLC ("Sony"), EMI April Music, Inc., and EMI Blackwood Music, Inc. (together with EMI April Music, Inc., "EMI") to dismiss implied contract and declaratory judgment claims asserted against them in Plaintiffs' Second Amended Complaint, Dkt. No. 50 ("SAC"). For the reasons set forth below, that motion is GRANTED in full.

         I. Background

         A. Factual Background

         Plaintiffs in this case are the well-known recording artists and songwriters Mark Andrews, professionally known as "Sisqo"; James Green, professionally known as "Woody"; and Larry Anthony, Jr., professionally known as "Jazz." SAC ¶¶ 3-6. In 1996, Plaintiffs, then-members of the popular recording group known as "Dru Hill, " entered into individual music publishing and administration agreements with non-party Art of War Music Publishing, Inc. ("Art of War"). Id. ¶ 20. In approximately 2002, Art of War entered into an exclusive administration agreement with EMI (the "EMI Administration Agreement" or "Agreement"). Id. ¶ 21. The EMI Administration Agreement provided, among other things, that EMI would pay royalties to artists under contract with Art of War - including Plaintiffs - directly to the artists on Art of War's behalf.[1] ¶ 21.

         In 2005, Plaintiff Andrews contracted with Defendants 27 Red Music Publishing, LLC (or its predecessor entity) ("27 Red") and 27 Red's sole owner, the now-deceased Rhondo Robinson, to collect from EMI certain allegedly unpaid royalties covering the period from 1996 to 2005 (the "Collection Agreement"). Id. ¶¶ 7, 24-25. Notwithstanding the limited temporal scope of the royalties to be collected under the Collection Agreement, EMI, Plaintiffs allege, paid royalties due to Andrews for the years 2005 to 2015 to 27 Red, Robinson, and/or other "John Doe" and "ABC Company" Defendants purportedly affiliated with Robinson. Id. ¶¶ 17-18, 26. Andrews never received those royalties. Id. ¶27. EMI also paid royalties due to Plaintiffs Anthony and Green to 27 Red, Robinson, and/or the unidentified Defendants, despite the lack of contractual authority to do so. Id. ¶ 28.

         B. Procedural History

         Plaintiffs initiated this action on September 23, 2015, naming as Defendants Sony, 27 Red's predecessor entity, Robinson's estate, and Robinson's unidentified affiliates, and asserting claims for breach of contract, breach of fiduciary duty, and conversion. See generally Complaint, Dkt. No.l ("Complaint" or "Compl."). As relevant here, the original Complaint alleged that Plaintiffs were "intended beneficiaries" under the EMI Administration Agreement and asserted a single breach of contract claim against Sony, averring that its payment to 27 Red, Robinson, and Robinson's unidentified affiliates of post-2005 royalties due to Andrews, as well as any royalties due to Green and Anthony, violated that Agreement. Comp. ¶¶ 31-35. In February 2016, Plaintiffs filed an amended complaint, Dkt. No. 18 ("FAC"), continuing to maintain breach of the EMI Administration Agreement as their sole theory of liability as against Sony and/or EMI. FAC ¶¶51-56.

         Sony and EMI moved to dismiss the FAC.[2] Dkt. Nos. 36-38. They argued primarily that Plaintiffs' contract claim was foreclosed by the plain language of the EMI Administration Agreement, which ran between EMI and Art of War and specifically recited that Plaintiffs would not be third-party beneficiaries of the Agreement or enjoy any rights thereunder against EMI. See Dkt. No. 37 at 3-4, 6-8.

         Shortly after Sony and EMI moved, the Court issued an Order requiring Plaintiffs to give notice as to whether they would file another amended pleading or rely on the FAC, and advising Plaintiffs that failure to timely amend could constitute a waiver of their amendment rights moving forward. Dkt. No. 39.

         In response, Plaintiffs submitted a letter representing that they would file another amended complaint that would add both new claims and new parties, including Art of War among others. Dkt. No. 43. Plaintiffs subsequently filed the operative SAC. In contrast to its predecessor complaints, the SAC alleges "upon information and belief that the EMI Administration Agreement - which Plaintiffs originally sued to enforce - in fact automatically terminated after three years but that EMI has nevertheless "continued to administer the Art of War catalog, " including Plaintiffs' compositions. SAC ¶¶ 22-23. Accordingly, rather than assert, as before, a claim for breach of the express EMI Administration Agreement, the SAC alleges that an "implied contract was created between [EMI] and [Sony] and Plaintiffs after the term of the EMI Administration Agreement ended, " and that Sony and EMI breached that implied contract by failing to pay certain royalties directly to Plaintiffs (instead paying them, purportedly, to 27 Red, Robinson, and/or the unidentified Defendants). SAC ¶¶ 52-60. The SAC also includes what appears to be a declaratory judgment claim, seeking "a declaration .. . that the EMI Administration Agreement is terminated and that [EMI and Sony] no longer have the right to administer the Dru Hill musical compositions." SAC ¶¶ 61-62. The SAC does not name Art of War as a party, notwithstanding Plaintiffs' suggestion that they anticipated adding it.

         Sony and EMI moved to dismiss the SAC. Dkt. Nos. 53-55. Five days after Defendants' motion was fully submitted, Art of War, now represented by the same counsel as Plaintiffs, moved to intervene in this action pursuant to Federal Rule of Civil Procedure 24. Dkt. Nos. 62-63. At Sony and EMI's request, the Court stayed further briefing on Art of War's motion pending resolution of the motion to dismiss. Dkt. No. 65.

         II. Discussion

         A. Legal Standard

         To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a plaintiff is required to plead "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, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads sufficient factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "The plausibility standard is not akin to a 'probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief" Id. (quoting Twombly, 550 U.S. at 557) (additional internal quotation marks omitted).

         In deciding a motion to dismiss, a court is required to "accept[] the complaint's factual allegations as true and draw[] all reasonable inferences in the plaintiffs favor." Steginsky v. Xcelera Inc. 741 F.3d 365, 368 (2d Cir. 2014). Still, it need not give "effect to legal conclusions couched as factual allegations." Port Dock & Stone Corp. v. Oldcastle Northeast, Inc., 507 F.3d 117, 121 (2d Cir. 2007). Generally, a court "must limit its analysis to the four corners of the complaint." Vassilatos v. Ceram Tech. Int'l Ltd., 92-cv-4574, 1993 WL 177780, at *5 (S.D.N.Y. May 19, 1993) (citing Kopec v. Coughlin, 922 F.2d 152, 154-55 (2d Cir. 1991)). It may, however, "consider 'documents attached to the complaint as an exhibit or incorporated in it by reference, matters of which judicial notice may be taken, or documents either in plaintiffs' possession or of which plaintiffs had knowledge and relied on in bringing suit.'" Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002) (internal alterations omitted) (quoting Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993)).

         B. The SAC Fails to Plausibly Allege an Enforceable Implied Contract

         The parties devote much of their briefing on Plaintiffs' implied contract claim to disputing whether the EMI Administration Agreement remains in force (and thus governs the subject matter of this lawsuit), and, relatedly, whether Plaintiffs have effectively pled themselves out of court by making inconsistent allegations on that point across their serial pleadings. In the Court's view, it is unnecessary to resolve these questions because the operative implied contract claim fails for a more fundamental reason, also invoked by Defendants: even taking all allegations in the ...


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