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Latin American Music Co., Inc. v. Spanish Broadcasting System, Inc.

United States District Court, S.D. New York

May 17, 2017

LATIN AMERICA MUSIC COMPANY, INC., et al., Plaintiffs,
v.
SPANISH BROADCASTING SYSTEM, INC., Defendant.

          OPINION AND ORDER

          RICHARD J. SULLIVAN UNITED STATES DISTRICT JUDGE.

         Plaintiffs Latin American Music Company, Inc. (“LAMCO”) and Asociación de Compositores y Editores Musica Latinoamericana de Puerto Rico, Inc. (“ACEMLA”) bring this action for copyright infringement against Spanish Broadcasting System, Inc. (“SBS”). Having presided over a bench trial, the Court issues the following findings of fact and conclusions of law in accordance with Federal Rules of Civil Procedure 52(a) and (c). For the reasons set forth below and stated on the record at the April 17, 2017 trial, the Court finds that Plaintiffs have failed to meet their burden of proof with respect to all of their claims. Accordingly, the Court enters judgment for Defendant.

         I. Background and Procedural History

         The Court assumes the parties' familiarity with the facts and procedural history of this case, which are detailed in previous opinions and orders issued by this Court. (See, e.g., Doc. Nos. 44, 78, 130.) On March 7, 2013, Plaintiffs filed a complaint alleging that Defendant improperly broadcast thirteen songs on its Spanish-language radio stations without first obtaining licenses from Plaintiffs. (Doc. No. 1.) On September 23, 2015, the Court denied Defendant's motion for partial summary judgment, finding that genuine issues of material fact existed as to Defendant's contention that it had valid licenses to play certain of the songs. (Doc. No. 78.) On March 1, 2016, discovery in this matter closed. (Doc. No. 83.) Thereafter, the Court granted in part and denied in part Defendant's second motion for summary judgment, finding that material issues of fact existed with regard to Plaintiffs' allegations of infringement with regard to six songs: Aniversario, Arrecotin-Arrecotan, Chumalacantela / Maquinolandera, La Malanga a/k/a La Malanga Brava, Tora Mata, and Vaso en Colores (the “Songs”). (Doc. No. 130.) The Court noted, however, that the only evidence presented that Defendant had actually played the Songs on its radio stations was an affirmation from Luis Raul Bernard, and that “unless Bernard takes the stand and demonstrates savant-like abilities of recall, it is doubtful that a finder of fact will credit Bernard's testimony regarding when he heard the songs at issue played on Defendant's radio stations.” (Id. at 11 n.5.) As part of that order, the Court scheduled a trial to commence on April 17, 2017.

         On April 4, 2017, the day before the final pre-trial conference, Plaintiffs moved to adjourn the trial and informed the Court that, on March 24, 2017, both Plaintiffs had filed petitions for bankruptcy in the United States Bankruptcy Court for the District of Puerto Rico. (Doc. No. 141.) The Court denied the request, since the automatic stay provision of the United States Bankruptcy Code “‘is applicable only to proceedings against' a debtor.” (Doc. No. 142 (quoting Koolik v. Markowitz, 40 F.3d 567, 568 (2d Cir. 1994)).)

         A bench trial commenced on April 17, 2017, and was conducted in accordance with the Court's Individual Rules for non-jury proceedings. Specifically, the parties submitted affidavits containing the direct testimony of their respective witnesses, as well as copies of all exhibits that they intended to offer as evidence at trial. The parties were then invited to call those witnesses whom they wished to cross-examine at trial. In all, eight witnesses submitted affidavits to the Court - one for the Plaintiffs and seven for the Defendant. After Plaintiffs' sole witness, Bernard, testified and was cross-examined, Plaintiffs rested their case. Defendant then moved for a judgment on partial findings pursuant to Federal Rule of Civil Procedure 52(c), and the Court granted the motion.

         II. Legal Standard

         To prevail on their claims, Plaintiffs were required to present evidence in support of the allegations set forth in the Third Amended Complaint and prove those allegations by a preponderance of the evidence. “The burden of showing something by a preponderance of the evidence . . . simply requires the trier of fact to believe that the existence of a fact is more probable than its nonexistence.” Metro. Stevedore Co. v. Rambo, 521 U.S. 121, 137 n.9 (1997). As the finder of fact, the Court is entitled to make credibility findings about the witnesses and testimony and to draw reasonable inferences from the evidence presented. See Merck Eprova AG v. Gnosis S.p.A., 901 F.Supp.2d 436, 448 (S.D.N.Y. 2012), aff'd, 760 F.3d 247 (2d Cir. 2014).

         Under Rule 52(c), a court presiding over a bench trial may “enter judgment against the party on a claim or defense that, under the controlling law, can be maintained or defeated only with a favorable finding on that issue” if “a party has been fully heard on [that] issue.” Fed.R.Civ.P. 52(c). In other words, Rule 52(c) applies where a defendant seeks judgment in a bench trial on the ground that “upon the facts and the law the plaintiff ha[s] not shown any right to relief.” Softel, Inc. v. Dragon Med. & Sci. Commc'ns, Inc., 118 F.3d 955, 971 (2d Cir. 1997). A defendant's Rule 52(c) motion may be granted when “the plaintiff has failed to make out a prima facie case or where the plaintiff has made out a prima facie case but the court determines that a preponderance of the evidence goes against the plaintiff's claim.” Wechsler v. Hunt Health Sys., Ltd., 330 F.Supp.2d 383, 433 (S.D.N.Y. 2004) (internal quotation marks omitted). Under Rule 52(c), “‘the court does not consider the evidence in the light most favorable to the non-moving party, ' but rather weighs the evidence, resolves any conflicts and determines for itself where the preponderance of evidence lies.” Pal v. N.Y. Univ., No. 06-cv-5892 (PAC), 2013 WL 4001525, at *7 (S.D.N.Y. Aug. 6, 2013), aff'd, 583 F.App'x 7 (2d Cir. 2014) (quoting Wechsler, 330 F.Supp.2d at 433.) Here, in order to maintain an action for copyright infringement, Plaintiffs were required to show “‘(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.'” Kwan v. Schlein, 634 F.3d 224, 229 (2d Cir. 2011) (quoting Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991)).

         III. Findings of Fact[1]

         LAMCO is a music publisher incorporated in the State of New York with its principal place of business in San Juan, Puerto Rico. (Bernard Aff. ¶ 2.) ACEMLA is a music performance licensing society incorporated in Puerto Rico with its principal place of business in San Juan, Puerto Rico. (Id. ¶ 3.) ACEMLA licenses and administers the performance rights subject to the copyrights owned and registered by LAMCO. (Id. ¶ 4.) Luis Raul Bernard is the president of LAMCO and ACEMLA. (Id. at ¶ 1.) Defendant SBS is a radio broadcaster incorporated in Delaware with its principal place of business in Florida. (Salas Aff. ¶ 3.) SBS owns various radio stations in New York and Puerto Rico. (Id. ¶ 4.)

         In his affidavit submitted as direct testimony in this case, Bernard stated that LAMCO is “the owner” of the copyright registrations covering the Songs. (Bernard Aff. ¶¶ 10, 12, 14, 16, 18.) However, during Bernard's cross-examination, he acknowledged that neither LAMCO nor ACEMLA actually owns the rights to the disputed songs. First, Defendant introduced a document filed by LAMCO and ACEMLA in another case, which states that the registered works listed in the LAMCO and ACEMLA catalogue had not been “owned by LAMCO or ACEMLA since June 2003, ” and that “such non- exclusive rights are only controlled through [a] sub-publishing agreement.” (Defendant Exhibit (“DX”) 38 at 6.) Upon reviewing that document, Bernard acknowledged that Dolores Vera, his sister-in-law and a LAMCO employee, actually owns the rights to the songs, not LAMCO. (Tr. 24:17-25:16.) Second, on cross-examination, Bernard authenticated a Certificate of Recordation in the Copyright Office with two attached agreements: a Transfer and Sale of Copyright Assets and a Sub-Publishing Agreement, both bearing Mr. Bernard's signature. (DX 39; Tr. 26:14-27:4.) The transfer agreement indicates that LAMCO transferred its rights in all of the musical compositions and other copyrights that it owned to Ms. Vera on July 7, 2002. (DX 39 at 3; Tr. 24:7-10, 24:15-19.) In his testimony, Bernard again acknowledged that the document transferred all of LAMCO's interests in its copyrights to Ms. Vera. (Tr. 27:8-10.) Third, Defendant introduced filings from LAMCO's bankruptcy in the United States Bankruptcy Court for the District of Puerto Rico, which Bernard authenticated during cross-examination (Tr. 101:24) and which bear his signature, indicating that LAMCO owns no intellectual property beyond its logo, which LAMCO valued at $1.00. (DX 40 at 11.)

         On re-direct, Bernard emphasized that paragraph 8 of the Sub-Publishing Agreement grants LAMCO “the non-exclusive right to enforce and protect [Ms. Vera's] rights in the [Songs].” (DX 39 at 8; Tr. 131:17-132:3.) Bernard testified that it was his understanding that, pursuant to Paragraph 8, “after the rights were transferred to Ms. Vera, all of the rights were reassigned again to enable [LAMCO] to actually litigate” copyright claims. (Tr. 132:6-9.) However, as Defendant emphasized during cross-examination, the Sub-Publishing Agreement also provides that if LAMCO “becomes insolvent, or any insolvency, bankruptcy or composition proceeding is commenced against Publisher and not dismissed within thirty (30) days . . . this agreement shall automatically be deemed terminated by [Ms. Vera] for good cause.” (DX 39 at 11; Tr. 36:12-37:1.) Bernard testified that, when LAMCO filed for bankruptcy in March of 2014, the bankruptcy lasted for more than 30 days - “almost a year.” (Tr. 138:17-21.) The language of the sub-publishing agreement thus further demonstrates that LAMCO did not actually own the copyrights after 2014.

         With regard to the actual infringement alleged by Plaintiffs, Bernard's affidavit stated that he personally heard each of the Songs at a particular time and on a particular day on one of SBS's radio stations. (Bernard Aff. ¶¶ 19-24.) Specifically, Bernard stated that he heard the ...


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