Opinion
No. 99 Civ. 9693 (SHS).
October 16, 2000.
OPINION AND ORDER
Defendants have filed this motion to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure on the grounds that this action is barred by the applicable statute of limitations. For the reasons set forth below, that motion is granted in part and denied in part.
I. BACKGROUND
The facts set forth below are taken from the allegations in the complaint.
Plaintiff Donald Swan is the nephew of Pauline and Al Stillman. Compl. at ¶ 11. Al Stillman was a professional lyricist and songwriter who wrote the English lyrics to the song Never on Sunday (the "Song") in 1960. Id. ¶¶ 12, 21-23. After Al Stillman died in 1979 and his wife, Pauline, died in 1990, Swan inherited their interests in the musical compositions written by Al Stillman. Id. ¶¶ 14-16.
According to the complaint, defendants possess two documents purportedly dated August 1, 1960, that contain the forged signatures of Al Stillman: (1) an Agreement that purports to grant to Esteem Music Corp. and Sidmore Music, Inc. all of the "writer's interest in and to the Song, including the worldwide copyrights therein," but does not contain a grant to Esteem and Sidmore of the renewal copyrights in the Song (the "1960 Agreement"), id. ¶¶ 38-40; and (2) a one-page typewritten document that purports to confirm that the English lyrics were written as a "work for hire" and grant Esteem all renewal and extension rights (the "Work for Hire Document"), id. ¶ 41-42.
On September 15, 1960, the United States Copyright Office issued a registration (the "1960 Registration") for the English lyric version of the Song referencing Manos Hadjidakis and "Billy Towne" — a pseudonym for Al Stillman — as co-authors. Id. ¶ 26. The copyright claimants listed on the 1960 Registration were Esteem Music Corp. and Sidmore Music, Inc. Id. ¶ 29. The 1960 Registration does not contain any reference that English lyrics were written by Billy Towne as a "work made for hire," despite the purported existence of the Work for Hire Document. Id. ¶¶ 44, 53.
Approximately two months later, on November 28, 1960, an amended copyright registration application for the Song was filed with the United States Copyright Office on behalf of Esteem and Sidmore (the "Amended Registration"). Id. ¶ 45. The Amended Registration purported to correct the 1960 Registration by claiming that Manos Hadjidakis was not the "author of music" but was instead "an employee for hire" for Esteem and Sidmore. Id. ¶ 46. The Amended Registration does not, however, contain any alteration or attempt to make any correction of the designation of"Billy Towne" as sole author of the English lyrics. Id. ¶¶ 47, 54.
Approximately 27 years later, on January 4, 1988, SBK Catalog Partnership, as successor-in-interest to Esteem, prepared and filed with the United States Copyright Office renewal copyright applications for the Song, and within the week, renewal registrations were issued. Id. ¶ 48. The renewal applications, for the first time, identified the author of the English lyrics as "Esteem Music Corp. as employer for hire of Billy Towne." Id. ¶ 50. Allegedly, neither Esteem, Sidmore, or SBK or any of their successors, predecessors or representatives had ever notified Al or Pauline Stillman that those entities claimed to be "employers for hire" of Al Stillman, nor that they had filed with the Copyright Office renewal applications changing the status of Billy Towne from "author" to "employee for hire." Id. ¶ 52.
In September 1999 — 29 years after the 1960 Registration and 11 years after the renewal registrations issued — Swan filed this action seeking a declaration that he is the owner of an undivided 50% interest in the copyrights to the Song and is entitled to an accounting of defendants' exploitation of the Song. Id. ¶¶ 58, 61. He also seeks a declaration that Al Stillman was the author of the English lyrics of the Song, that the English lyrics were not a work made for hire, and that the purported assignment of rights to defendants was void on the grounds of forgery. Id. ¶¶ 69, 71.
Swan also asserts claims pursuant to state law, including breach of fiduciary duty, unjust enrichment, and fraud, and he seeks the imposition of a constructive trust as well as an accounting. Id. ¶¶ 76, 79-82, 84-86, 90, and 93-98.
II. DISCUSSION
When deciding a motion to dismiss a complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, the court must accept all of the well-pleaded facts as true and draw all reasonable inferences from those allegations in favor of the plaintiff Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). A complaint will survive defendants' motion to dismiss unless "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." See Conley v. Gibson, 355 U.S. 41, 45-46 (1957). In the statute of limitations context, this means that "dismissal is appropriate only if a complaint clearly shows that the claim is out of time." Harris v. City of New York, 186 F.3d 243, 250 (2d Cir. 1999). The Copyright Act, 17 U.S.C. § 101 et seq., provides that "no civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued." 17 U.S.C. § 507(b); see Merchant v. Levy, 92 F.3d 51, 56 (2d Cir. 1996).
A. Plaintiff's Claims for Royalties Accruing Before the Copyright Renewal Term.
Although the time period for which plaintiff seeks to recover royalties is not clear from the complaint, plaintiffs Memorandum of Law in Opposition to Defendants' Motion to Dismiss states that this action seeks exclusively to establish his entitlement to a co-ownership interest in the renewal term of the Song's copyright, which began in 1988. Plaintiffs Mem. at 2-3. Accordingly, any claim for royalties accruing before the 1988 renewal term of the Song's copyright are deemed abandoned and are dismissed with prejudice. See New York State Ass'n of Career Schs. Inc. v. State Educ. Dep't, 142 F.R.D. 403, 406 (S.D.N.Y. 1992).
B. Plaintiff's Renewal Term Copyright Act Claims
When the renewal copyright registrations were filed in 1988, the copyright laws provided that:
[I]n the case of [a non-posthumous] copyrighted work . ., the widow . . ., if the author be not living, . . . shall be entitled to a renewal and extension of the copyright in such work for a further term of forty-seven years when application for such renewal and extension shall have been made to the Copyright Office and duly registered therein within one year prior to the expiration of the original term of copyright.17 U.S.C. § 304(a) (1988). In the case of co-authorship, if one co-author renews the original copyright solely in his own name, that renewal is held upon a constructive trust for the other authors see Shapiro, Bernstein Co. v. Jerry Vogel Music Co., 223 F.2d 252, 253 (2d Cir. 1955) (per curiam); Edward B. Marks Music Corp. v. Jerry Vogel Music Co., 140 F.2d 266 267 (2d Cir. 1944), or the other authors' heirs see Schmid Bros., Inc. v. W. Goebel Porzellanfabrik A.G., 589 F. Supp. 497, 501 (S.D.N.Y. 1984). Defendants concede that Pauline Stillman "would have been statutorily entitled to whatever interest, if any, [Al Stillman] had in the Song." PI.'s Reply Mem. at 7. Thus, plaintiff's claim turns on whether Al Stillman possessed any rights in the Song at the time of his death.
This section was amended by the Copyright Amendments Act of 1992, Pub.L. No. 102-307, § 102, 106 Stat. 264, 264-66. The Amendment was effective on June 26, 1992. Id. § 213, 106 Stat. at 272.
At the time he died in 1978, Stillman was listed as a co-author of the Song on the Amended Registration. Such a designation constitutes prima facie evidence that he was, in fact, a co-author of the Song. See 17 U.S.C. § 410(c). Thus, plaintiff has pled facts sufficient to establish that, upon Al Stillman's death, his widow was "entitled to a renewal and extension of the copyright in such work for a further term of forty-seven years when application for such renewal and extension shall have been made to the Copyright Office and duly registered therein within one year prior to the expiration of the original term of copyright." 17 U.S.C. § 304(a) (1988).
Defendants contend that Al Stillman gave all his rights in the Song to Esteem and Sidmore by virtue of the 1960 Agreement. However, the 1960 Agreement does not contain an assignment of the copyright renewal term. Even if it did, Swan correctly points out that such an assignment would not have vested because Stillman did not survive into the renewal term. See Stewart v. Abend, 495 U.S. 207, 219-20 (1990). Thus, regardless of the validity vel non of the 1960 Agreement, it could not and did not vitiate Swan's rights in the renewal copyright registration. Similarly, the fact that Stillman allegedly accepted "lesser royalties" pursuant to the 1960 Agreement during the initial copyright term — even if true — is not inconsistent with an assertion of rights by Stillman's heirs in the renewal copyright registration.
Nevertheless, defendants argue that Swan's claim is time-barred because Stillman's widow and nephew were placed on notice by the redesignation of Stillman as an "employee for hire" on the 1988 renewal registration, over ten years before plaintiff filed his claim. Defendants also contend that by certain statements in the complaint, plaintiff has conceded that "neither plaintiffs uncle, aunt or plaintiff himself have ever been treated as a co-author." Defs Reply Mem. at 13 (citing Compl. ¶¶ 58, 61, 63, 67, 76, 86, and 97).
As an initial matter, defendants' contention that Stillman was "never" treated as a coauthor of the Song is incorrect. Stillman was listed as a co-author, and not as an "employee for hire," on not only the 1960 Registration, but also the Amended Registration, both filed by the defendants — or their predecessors in interest — after the 1960 Agreement and Work for Hire Document were purportedly signed by "Billy Towne." In addition, the paragraphs cited by defendants as "conceding" that Stillman was never treated as a co-author contain no such concession. Moreover, defendants' invitation to this Court to draw an inference of "concession" from the complaint flies in the face of the requirement that all reasonable inferences from those allegations be drawn in favor of plaintiff. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974).
Defendants' argument that Swan's claim accrued no later than the date the 1988 renewal registration was filed must also be rejected at this stage of the litigation. Copyright claims accrue when the plaintiff "knows or should have known of the injury on which the claim is premised," Merchant, 92 F.3d at 56, or when a reasonably diligent person would have been on inquiry as to the existence of a right. See Netzer v. Continuity Graphic Associates, Inc., 963 F. Supp. 1308, 1315 (S.D.N.Y. 1997). In a dispute over co-ownership, the statute of limitations begins to run when the defendant plainly and expressly repudiates the plaintiffs claim. See Lennon v. Seaman, 63 F. Supp.2d 428, 443-44 (S.D.N.Y. 1999).
Stillman was listed as the co-author on two registrations prepared by the defendants — or their predecessors in interest — for more than a quarter of a century. Throughout that time period, defendants paid royalties to Stillman and his heirs. Indeed, defendants did so even after they obtained the renewal copyrights redesignating Stillman as an "employee for hire." The complaint alleges that neither Stillman nor his widow was ever notified that Stillman was considered an "employee for hire" of the defendants or their predecessors, and the complaint is silent as to when, if ever, their nephew was so notified.
Nevertheless, defendants claim that Stillman and his heirs knew that the amount of royalties they were being paid was below what they would have been entitled to as a co-author, and that therefore they should have expected an increase in royalty payments in 1988. When the payments did not increase, argue defendants, Pauline Stillman and her nephew were on inquiry notice of their claim, and the exercise of due diligence would have led to the discovery that the renewal registrations had redesignated Stillman as an "employee for hire." The complaint, however, is devoid of any allegations concerning either the actual or relative amount of royalties due or paid, and, therefore, dismissal of the claim for royalties on this basis is not warranted.
In addition, defendants have not cited, and the Court has not found, any case finding that the mere filing of a renewal registration is sufficient to place an author on notice that his rights are being violated. Instead, defendants have cited cases involving persons who had actual notice that their work was being exploited without compensation, thus triggering a duty to inquire into the copyright status of the work in question. See Willsea v. Theis, No. 98 Civ. 6773, 1999 WL 595629, at *5 (S.D.N.Y. Aug. 6, 1999); Margo v. Weiss, No. 96 CIV. 3842, 1998 WL 2558 (S.D.N.Y. Jan. 5, 1998); see also Merchant v. Levy, 92 F.3d 51, 56-57 (2d. Cir. 1996). In this case, in contrast, the parties agree that Stillman and his heirs were being compensated while the work was being exploited. Thus, unless plaintiff knew or should have known that the level of compensation was inconsistent with his rights, he was not on inquiry notice as to his claims.
In sum, the date plaintiffs claims accrued is, at this stage of the litigation, a disputed issue of fact. Thus, resolution of defendants' statute of limitations defense is inappropriate on a motion to dismiss. See, e.g., Koch v. Dwyer, No. 98 Civ. 5519, 1999 WL 528181, at *10 (S.D.N.Y. July 22, 1999); ABF Capital Management v. Askin Capital Management. L.P., 957 F. Supp. 1308, 1325 (S.D.N.Y. 1997).
C. Plaintiff's Renewal Term State Law Claims
Resolution of defendants' statute of limitations defenses to plaintiffs state law claims also is inappropriate on a motion to dismiss for the reasons discussed in the copyright context. Defendants also contend, however, that Swan's claim for unjust enrichment is preempted by the Copyright Act, and should therefore be dismissed, and that Swan's claim for breach of fiduciary duty should be dismissed for failure to allege a fiduciary relationship.
1. Unjust Enrichment
"The Copyright Act preempts a state cause of action if the subject matter of the state law right falls within the subject matter of federal copyright law and the state law rights are equivalent to the rights federal copyright law protects." Netzer, 963 F. Supp. at 1321; See also Boyle v. Stevens, No. 97 CIV. 1351, 1998 WL 690816, at *4 (S.D.N.Y. Sept. 29, 1998). In determining whether a state law creates rights that are equivalent to those provided by federal copyright law, a Court must determine whether the state cause of action requires an "extra element" in addition to or instead of the acts of "reproduction, performance, distribution or display" required by the Copyright Act. Computer Assoc. Int'l. Inc. v. Atlai. Inc., 982 F.2d 693, 716 (2d Cir. 1992).
Here, the unjust enrichment claim arises from the same circumstances and seeks vindication of the same rights as plaintiffs claims pursuant to copyright law. That claim is therefore dismissed.
2. Breach of Fiduciary Duty
No fiduciary relationship exists between a music publisher and a composer as a matter of law, unless "special circumstances" are found to exist giving rise to such a relationship. Carter v. Goodman Group Music Publishers, 848 F. Supp. 438, 445 (S.D.N.Y. 1994). As currently pled, plaintiffs claim for breach of fiduciary duties is devoid of any "special circumstances" establishing the existence of a fiduciary duty.
Swan seeks leave to replead this claim on the basis that the former owner of defendant LLEE Music Corp., Lee V. Eastman, was also the personal attorney for Stillman and that this relationship constitutes one of the "special circumstances" giving rise to a fiduciary relationship. Plaintiff will be given leave to replead this claim.
III. CONCLUSION
For the reasons set forth above, defendants' motion to dismiss is: (1) granted with prejudice as to plaintiffs claim for royalties for any time period covered by the 1960 Registration or the Amended Registration; (2) granted with prejudice as to plaintiffs sixth claim (for unjust enrichment); (3) granted without prejudice to plaintiff serving an amended complaint within 20 days as to plaintiffs fifth claim (for breach of fiduciary duty); and (4) in all other respects denied.
SO ORDERED.