law briefs

Supreme Court, New York County, New York. Tony SILVESTER, Lester Chambers, Carl Gardner, Bill Pinkney, Individually and on Behalf of all oth-

ers similarly situated, Plaintiffs, v.

TIME WARNER, INC., Universal Music Group, Inc., Sony Music Entertainment, Inc., BMG Enter-

tainment, Inc., Defendants. June 20, 2003.

Class of individual recording artists brought action against recording companies and their predecessors for breach of recording contracts by the companies' digitalization of the recordings without protecting the artists' rights to royalties and licensing fees and for copyright infringement. Recording companies moved to dismiss. The Supreme Court, New York County, Helen E. Freedman, J., held that: (1) con- tracts between artists and companies were not breached by the companies' digitalization of the artists' recordings; (2) cause of action for breach of fiduciary duty accrued when digital audio files of the artists' recordings on compact discs were first released and sold; (3) artists failed to state a claim for breach of covenant of good faith and fair deal- ing; (4) cause of action for negligence accrued when compact discs containing the digital audio files were first created or distributed; and (5) artists were precluded from bringing copyright claim in state court.

Motion granted.

West Headnotes

[1] Pretrial Procedure 307A 681

307A Pretrial Procedure 307AIII Dismissal

307AIII(B) Involuntary Dismissal 307AIII(B)6 Proceedings and Effect

307Ak681 k. Matters Considered in General. Most Cited Cases

Pretrial Procedure 307A 682.1

307A Pretrial Procedure 307AIII Dismissal

307AIII(B) Involuntary Dismissal 307AIII(B)6 Proceedings and Effect

307Ak682 Evidence 307Ak682.1 k. In General. Most

Cited Cases In determining a motion to dismiss, the court's role is ordinarily limited to determining whether or not the complaint states a cause of action; however, where documentary evidence and undisputed facts negate or dispose of the claims in the complaint or conclusively establish a defense, dismissal may be granted on ground of defense founded upon docu- mentary evidence. McKinney's CPLR 3211(a), par. 1.

[2] Copyrights and Intellectual Property 99 107

99 Copyrights and Intellectual Property 99II Intellectual Property

99k107 k. Contracts. Most Cited Cases Contracts between recording artists and recording companies which provided that the companies would have unrestricted right to manufacture, use, distribute, and sell recordings “by any method now known, or hereafter to become known,” clearly an- ticipated the development of new technologies and were not breached by the companies' digitalization of the artists' analog recordings.

[3] Copyrights and Intellectual Property 99 107

99 Copyrights and Intellectual Property 99II Intellectual Property

99k107 k. Contracts. Most Cited Cases Agreements between recording artists' union and recording companies, which governed the minimum wage and fee compensation terms for artists, had no affect on contracts conveying artists' property rights

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to recording companies; union agreements did not affect the broader contractual provisions conveying artists' property rights and some agreements spe- cifically permitted copying of master recordings.

[4] Fraud 184 7

184 Fraud 184I Deception Constituting Fraud, and Liabil-

ity Therefor 184k5 Elements of Constructive Fraud

184k7 k. Fiduciary or Confidential Rela- tions. Most Cited Cases Under New York law, an artist's assignment of rights to a record company in exchange for royal- ties is contractual and does not create a fiduciary relationship or duty; unless parties can show a sep- arate duty other than to perform under the contract, no fiduciary relationship between them is estab- lished.

[5] Fraud 184 38

184 Fraud 184II Actions

184II(A) Rights of Action and Defenses 184k38 k. Time to Sue and Limitations.

Most Cited Cases Actions for monetary damages from breach of fidu- ciary duty are governed by three year statute of lim- itations. McKinney's CPLR 214, subd. 4.

[6] Limitation of Actions 241 99(1)

241 Limitation of Actions 241II Computation of Period of Limitation

241II(F) Ignorance, Mistake, Trust, Fraud, and Concealment or Discovery of Cause of Action

241k98 Fraud as Ground for Relief 241k99 In General

241k99(1) k. In General. Most Cited Cases Recording artists' cause of action for breach of fi- duciary duty against recording companies accrued, and three-year limitations period began to run, when digital audio files of the artists' analog re-

cordings on compact discs were first released and sold, not when production of digital audio files per- mitted piracy to occur in the first instance. McKin- ney's CPLR 214, subd. 4.

[7] Contracts 95 168

95 Contracts 95II Construction and Operation

95II(A) General Rules of Construction 95k168 k. Terms Implied as Part of Con-

tract. Most Cited Cases Every contract contains an implied covenant of good faith and fair dealing; however, such covenant does not impose any obligation upon a party to the contract beyond what the explicit terms of the con- tract provide.

[8] Contracts 95 312(1)

95 Contracts 95V Performance or Breach

95k312 Acts or Omissions Constituting Breach in General

95k312(1) k. In General. Most Cited Cases Where no party has acted in a way to prevent the performance of or the rights under the contract, a claim for breach of covenant of good faith and fair dealing must fail.

[9] Limitation of Actions 241 21(1)

241 Limitation of Actions 241I Statutes of Limitation

241I(B) Limitations Applicable to Particular Actions

241k21 Contracts in General 241k21(1) k. In General. Most Cited

Cases Breach of implied covenants of good faith and fair dealing are subject to a six year statute of limita- tion. McKinney's CPLR 213.

[10] Copyrights and Intellectual Property 99 107

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99 Copyrights and Intellectual Property 99II Intellectual Property

99k107 k. Contracts. Most Cited Cases Recording artists failed to state a claim for breach of covenant of good faith and fair dealing against recording companies related to companies' digital- ization of the artists' analog recordings, where artists did not allege that the companies intention- ally interfered with their rights to obtain royalties under the contracts.

[11] Torts 379 114

379 Torts 379I In General

379k110 Contracts in Relation to Torts 379k114 k. Duty, Breach, or Wrong Inde-

pendent of Contract. Most Cited Cases (Formerly 379k12)

A simple breach of contract is not to be considered a tort unless a legal duty independent of the con- tract itself has been violated.

[12] Limitation of Actions 241 55(5)

241 Limitation of Actions 241II Computation of Period of Limitation

241II(A) Accrual of Right of Action or De- fense

241k55 Torts 241k55(5) k. Injuries to Property in

General. Most Cited Cases Recording artists' cause of action for negligence against recording companies for the creation of di- gital audio files accrued, and three-year statute of limitations period began to run, when compact discs containing the digital audio files were first created or distributed, not when production of digit- al audio files permitted piracy to occur in the first instance. McKinney's CPLR 214, subd. 6.

[13] Courts 106 489(3)

106 Courts 106VII Concurrent and Conflicting Jurisdiction

106VII(B) State Courts and United States

Courts 106k489 Exclusive or Concurrent Juris-

diction 106k489(3) k. Suits Relating to Inven-

tions or Patent Rights. Most Cited Cases Recording artists could not enforce their rights un- der copyright laws against recording companies in state court; rights under copyright laws could only be enforced in federal courts. 17 U.S.C.A. § 501(b); 28 U.S.C.A. § 1338(a). **913 Cravath, Swaine & Moore, New York City ( Katherine B. Forrest of counsel), for Time Warner, Inc., defendant.

Pryor Cashman Sherman & Flynn, New York City ( Andrew H. Bart and Suzan Arden of counsel), and Mitchell, Silberberg & Knupp, Los Angeles, Cali- fornia (Russell J. Frackman and Jeffrey D. Gold- man of counsel), for Universal Music Group, Inc., defendant.

Paul, Weiss, Rifkind, Wharton & Garrison, New York City (Jay Cohen of counsel), for Sony Music Entertainment, Inc., defendant.

Proskauer Rose LLP, New York City (Charles B. Ortner of counsel), for BMG Entertainment, Inc., defendant.

Wolf Haldenstein Adler Freeman & Herz LLP, New York City (Mark Rifkin and Fred Isquith of counsel), and Feldman **914 & Rifkin, LLP, Jenk- intown, Pennsylvania (Mark C. Rifkin of counsel), for plaintiffs.

HELEN E. FREEDMAN, J.

*252 This is a motion pursuant to CPLR 3211 (a)(1),(a)(2) and (a)(7) to dismiss the Complaint and the claims set forth therein based on document- ary evidence and on jurisdictional and statutory grounds, including time limitations. As class rep- resentatives, plaintiffs seek to recover a share of the proceeds of defendants' successful prosecution of the RIAA v. MP3.com litigation in the United States District Court for the Southern District of New

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York. The latter concerned distribution over the in- ternet of digital audio files.

Parties

Plaintiffs are individual recording artists who, as long ago as the 1950's, signed recording contracts with defendant companies or their predecessors, which granted master recording and licensing rights to defendants or their assignors. Plaintiff Tony Sil- vester d/b/a the Main Ingredient, is a citizen of New York who has recording contracts with RCA Re- cords, as predecessor to defendant BMG Entertain- ment, Inc., dated 1969,1972,1980 and 1981, and one or more record contracts with Polydor Records, as predecessor to defendant Universal Music Group, Inc., dated 1989. Silvester and the other plaintiffs were primarily members of the named groups, and still hold rights to perform under those names. Lester Chambers, d/b/a The Chambers Brothers, is a citizen of California who has record- ing contracts with Columbia Records, predecessor to Sony Music Entertainment, Inc, dated 1966 and 1969. Carl Gardner, d/b/a The Coasters, is a citizen of Florida who has record contracts with Atlantic Records, predecessor to defendant Time Warner, Inc. et al. dated 1955, 1959, and 1965. Bill Pinkney, d/b/a The Original Drifters, is a citizen of South Carolina, and has created master recordings pursuant to contracts with Atlantic Records, prede- cessor to Time Warner, Inc., and other record la- bels. Various Defendants also have licensing and cross-licensing agreements to use Pinkney's works dated 1959, 1961, 1964 and 1970.

Defendants Time Warner Inc, Universal Music Group, Inc. (“UMG”), Sony Music Entertainment, Inc. (“Sony”), and BMG Entertainment, Inc (“BMG”) are successors in interest to companies with which plaintiffs have recording contracts and are all either incorporated in New York or have principal places of business in New York.

*253 Claims

Plaintiffs' Claims

Plaintiffs claim to represent a class of thousands of recording artists and their heirs, executors, suc- cessors and assignees who, at various times between 1956 and February 1, 1996, signed master recording agreements with defendants or their pre- decessors in interest. The gist of the complaint is that the recording contracts gave defendants no right to exploit plaintiffs' work in digital format. Plaintiffs allege that they and other proposed class members have no agreements with any defendant which authorize or entitle defendants to exploit plaintiffs' sound recordings in any form other than as phonograph records or other “analog media”. Plaintiffs claim that their contracts, for which they receive trailing royalties for previously recorded works, did not confer rights on defendants to ex- ploit the sound recordings through digital media in- cluding compact discs (“CD's”) and digital audio files that can be distributed over the internet and across computer networks. Plaintiffs also claim that their contracts do not constitute the full agreements between the parties because they are subject to the terms and **915 provisions of the National Codes of Fair Practice for Sound Recordings of the Amer- ican Federation of Television and Radio Artists, (the “Phono Codes”), a series of collective bargain- ing agreements between the American Federation of Television and Radio Artists (“AFTRA”) and re- cord producers, which plaintiffs contend provide that the sound recordings could not be used in any medium other than phonograph records.

Plaintiffs aver that the new digital mastering tech- nology that record companies adopted in the early 1980's enabled recordings to be copied copying without the loss of sound quality or distortions as- sociated with the copying of analog recordings; thus digitalization was not permitted by the con- tracts or Phono Codes. Before the release of CD's in digital form, sound recordings could only be dis- tributed in fixed tangible analog media (vinyl re- cords or tapes). In or about 1999, an audio format, “MP3”. was developed, allowing digital audio files

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to be compressed into much smaller files with little degradation of sound quality, which in turn made distribution over the Internet and across computer networks much easier (and permitted consumers to download digital audio files containing plaintiffs' and other class members' recordings at low or no cost). Plaintiffs also claim that various members of the recording industry, by prosecuting claims against MP3.com and Napstar, Inc. obtained settle- ments of approximately $15 to $20 million and warrants *254 to purchase shares of MP3.com com- mon stock and licensing fees of at least $6 million in exchange for releases. Plaintiffs claim that de- fendants had no right to enter into any agreements with MP3.com or Napster licensing the right to dis- tribute sound recordings in digital form over the In- ternet.

Specifically, plaintiffs and putative class members seek compensatory and punitive damages for the following allegations. Plaintiffs allege defendants breached express and implied provisions of the re- cording contracts, as modified by the “Phono Codes”, by digitalizing recordings and allowing or facilitating distribution of recordings over the inter- net, without protecting plaintiffs' rights to royalties and licensing fees. Plaintiffs also claim copyright infringement pursuant to 17 USC 501(b), and seek “equitable” shares of defendants' recovered dam- ages for copyright infringement in the federal courts, specifically one-half of the infringement damages or other proceeds obtained by defendants from MP3.com in the MP3.com litigation and an accounting of all payments already made to song- writers and others to recoup improper payments. Plaintiffs assert that defendants have “judicially ad- mitted” that they will share the MP3.com proceeds with all artists whose sound recordings appeared on the MP3.com website, based on a statement during argument before the Second Circuit. They also ad- mitted a contractual agreement to share proceeds with Tony Silvester. Additionally, plaintiffs claim that defendants negligently and recklessly exposed class members to the risk of music piracy by releas- ing sound recordings in digital audio files on CDs,

and that defendants breached both implied coven- ants of good faith and fair dealing and a fiduciary obligation to protect plaintiffs' beneficial interests or property rights in their sound recordings.

Defendants' Claims

Defendants move to dismiss on the basis that the plain language of each of the recording agreements in question provided that in exchange for royalties, plaintiffs gave all of their rights in the sound re- cordings to the record companies. Additionally, de- fendants claim that the Copyright Act does not provide for equitable apportionment; thus plaintiffs would not be entitled**916 to any portion of the proceeds of the settlements in the copyright in- fringement litigation against MP3.com, Inc. They further assert that Copyright Act claims are exclus- ively within the jurisdiction of the federal courts, and that they have already been dismissed by the federal court. *255Chambers et al. v. Time Warner, Inc. et al., 123 F.Supp.2d 198 (S.D.N.Y.2000), va- cated and remanded, 282 F.3d 147 (2d Cir.2002), dismissed without prejudice based on lack of sub- ject matter jurisdiction on June 27, 2002. With re- spect to the various other claims, including breach of fiduciary duty and breach of implied covenant of good faith and fair dealing, defendants assert that the plain terms of the contracts define the duties of each party and that neither a fiduciary duty nor cov- enants not contained in the contracts exist inde- pendently. Finally, defendants claim that the claims are time barred because plaintiffs' claims accrued in the early 1980's when CD's were first developed and marketed.

History

All of the claims asserted in this action were the subject of a Second amended Complaint brought by plaintiffs in the United States District Court for the Southern District of New York. The original com- plaint was dismissed by the Hon. Jed Rakoff in Chambers et al. v. Time Warner, Inc. et al., 123

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F.Supp.2d 198 (S.D.N.Y.2000) but vacated and re- manded 282 F.3rd 147 (2d cir.2002) On remand again dismissed without prejudice for lack of sub- ject matter jurisdiction on June 27, 2002. The claims were refiled here pursuant to 28 U.S.C. 1367(d), as authorized by the stipulated Order of the Court. The Second Circuit vacated and re- manded the original decision of the Southern Dis- trict on the ground that the district court considered matters outside the pleadings in determining the motion to dismiss.

Discussion

Motion to dismiss

[1] In determining a motion to dismiss, the Court's role is ordinarily limited to determining whether or not the complaint states a cause of action. Frank v. DaimlerChrysler Corp., 292 A.D.2d 118, 741 N.Y.S.2d 9 (1st Dept.2002). However, where docu- mentary evidence and undisputed facts negate or dispose of the claims in the complaint or conclus- ively establish a defense, dismissal may be granted pursuant to CPLR 3211(a)(1). Biondi v. Beekman Hill House Apt. Corp., 257 A.D.2d 76, 692 N.Y.S.2d 304 (1st Dept.1999), Kliebert v. McKoan, 228 A.D.2d 232, 643 N.Y.S.2d 114 (1st Dept.1996) , Gephardt v. Morgan Guaranty Trust Co. Of N.Y., 191 A.D.2d 229, 594 N.Y.S.2d 248 (1st Dept.199), Juliano v. McEntee, 150 A.D.2d 524, 541 N.Y.S.2d 232 (1st Dept.1989). See also Leon v. Martinez, 84 N.Y.2d 83, 614 N.Y.S.2d 972, 638 N.E.2d 511 (1994), Frank v. DaimlerChrysler Corp., supra.

Breach of Contract Claims

[2] Based on the submissions contained here, it ap- pears that all of the original agreements contain provisions conveyed full *256 ownership rights to the master recordings to the defendant companies or their predecessors. While there is some variation among the contracts, they all contain language identical or similar to the following:

All recordings, phonograph record masters and re- productions made therefrom, together with the performances embodied therein, shall be entirely [the Record Company's] property. [The Record Company] shall have the unrestricted right to manufacture, use, distribute and sell sound pro- ductions of the performances recorded hereunder made by any method now known, or hereafter to become known..

**917 (Atlantic Contract) See also Columbia Con- tract, RCA Contract, PolyGram Contract, aff. of Katherine B. Forrest.

Such contracts have been interpreted according to their plain meaning. The words by any method now or hereafter known or to become known, which are contained in these contracts clearly anticipate de- velopment of new technologies. See discussion in Greenfield v. Philles Records Inc., 98 N.Y.2d 562, 750 N.Y.S.2d 565, 780 N.E.2d 166 (2002).

In Greenfield v. Philles Records Inc., 98 N.Y.2d 562, 750 N.Y.S.2d 565, 780 N.E.2d 166 (2002), the Court of Appeals, interpreting a recording artist's contract transfer of ownership rights to a record company, held that in the absence of “an explicit contractual reservation of rights by the artists,” the “artists' transfer of full ownership rights to the mas- ter recordings of musical performances carried with it the unconditional right of the producer to redis- tribute those performances in any technological format.” 98 N.Y.2d at 566, 750 N.Y.S.2d 565, 780 N.E.2d 166 That case involved the right of Philles Records to license master recordings for synchron- ization and redistribution of domestic licenses in 1987 based on a 1963 contract. The Court found that, despite the technological innovations that are revolutionizing the recording industry, long settled common-law contract law governed. The broad contractual provisions of the agreements conveying to the defendants the “right to make phonograph re- cords, tape recordings or other reproductions of the performances embodied in such recordings by any method now or hereafter known”, id. at 568-69, 750 N.Y.S.2d 565, 780 N.E.2d 166, was a clear and un-

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ambiguous provision that authorized defendants to license performances for use in all visual media, i.e., television or movies. The Court stated that “a written agreement that is complete, clear and unam- biguous on its face must be enforced according to the plain meaning of its terms,” Id. at 569, 750 N.Y.S.2d 565, 780 N.E.2d 166.

The conclusion reached by the Court of Appeals in Greenfield, supra, mirrored that reached by Judge Rakoff, in the Southern District action when he stated

*257 This language (and the equivalent language in the other contracts) is clear. Without limitation it conveys all of plaintiffs' rights in these record- ings to the [r]ecord [c]ompanies, including the right to exploit the recordings by any method whatsoever, whether known at the time or ‘hereafter to become known.’ Chambers, 123 F.Supp.2d at 200.

[3] Plaintiff's claim that somehow, the fact that the recording contracts here were subject to AFTRA union contracts or “Phono Codes” distinguishes their situation from that of the Ronettes in Green- field is not persuasive. The Phono Codes are a series of fair practices agreements between AFTRA and the record companies which govern minimum wage and fee compensation and terms, including minimal payments for benefits to welfare funds and conditions for the engagement of artists making phonograph recordings. They do not affect the broader contractual provisions that convey the artists' property rights to the record companies. In fact, the language of some of the AFTRA agree- ments or the Phono Codes specifically permits copying of master recordings on “microgroove re- cordings or tape or any other similar or dissimilar device now or hereafter devised.” (Provision 8 of the 1962 AFTRA contract) See also Chambers, 123 F.Supp.2d at 201, rejecting the claim that AFTRA contracts affect the recording contracts. Thus the breach of contract claims must be dismissed.

**918 Breach of Fiduciary Obligation

[4][5][6] Plaintiffs' complaint states a claim that de- fendants breached a fiduciary obligation owed to defendants. However, under New York law, an artist's assignment of rights to a record company in exchange for royalties is contractual and does not create a fiduciary relationship or duty. Unless parties can show a separate duty other than to per- form under the contract, no fiduciary relationship between them is established. Sony Music Entertain- ment, Inc. v. Robison, 2002 WL 272406 (S.D.N.Y.2002), Savage Records v. Jones, 247 A.D.2d 274, 667 N.Y.S.2d 906 (1st Dept.1998), Rodgers v. Roulette Records, Inc., 677 F.Supp. 731 (S.D.N.Y.1988), Mellencamp v. Riva Music, Ltd., 698 F.Supp. 1154 (S.D.N.Y.1988), Carter v. Good- man Group Music Publishers, 848 F.Supp. 438 (S.D.N.Y.1994). See also, Evans v. Jelly's Jams LLC. Index No. 601308/01 (Sup.Ct.N.Y.Co.2002) (“a contract for the collection and payment of roy- alties on music, does not, by itself, give rise to a fi- duciary relationship.”). Moreover, actions for mon- etary damages from breach of fiduciary duty are governed *258 by the three year statute of limita- tions set forth in CPLR 214(4). Kaszirer v. Kaszirer, 286 A.D.2d 598, 730 N.Y.S.2d 87 (1st Dept.2001), Loengard v. Santa Fe Industries, 70 N.Y.2d 262, 519 N.Y.S.2d 801, 514 N.E.2d 113 (1987), Yatter v. William Morris Agency, Inc., 256 A.D.2d 260, 682 N.Y.S.2d 198 (1st Dept.1998).. Plaintiffs' claims that creation and distribution of their works through digital media resulted in a breach of fiduciary duty accrued in the early 1980's when digital audio files on CD's were first released and sold. The argument that there was a continuing breach is unavailing because the underlying alleged breach occurred when the production of digital au- dio files permitted piracy to occur in the first in- stance. See Woodlaurel, Inc. v. Wittman, 199 A.D.2d 497, 606 N.Y.S.2d 39 (2d Dept.1993) (holding that the statute of limitations runs when a party making the demand first becomes entitled to make it whether or not the party is aware that it may have a cause of action). Plaintiffs, further

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claim that the damages did not accrue until the late 1990's, when third parties downloaded the digital files and transmitted them over computer networks does not state a claim against ***12 defendants. In fact, once the downloading occurred, defendants aggressively pursued claims against these third parties, in the Napster and MP3.com litigations, the results of which will accrue to the benefit of plaintiffs.

Breach of Covenant of Good Faith and Fair Deal- ing

[7][8][9][10] The claims for breach of good faith and fair dealing do not state an independent cause of action. Every contract contains an implied cov- enant of good faith and fair dealing. However, such covenant does not impose any obligation upon a party to the contract beyond what the explicit terms of the contract provide. Poley v. Sony Music Ent., Inc., 163 Misc.2d 127, 619 N.Y.S.2d 923 (Sup.Ct.N.Y.Co.1994). Where, as here, no party has acted in a way to prevent the performance of or the rights under the contract, the claim must fail. Max- on Int'l, Inc. v. International Harvester, 82 A.D.2d 1006, 442 N.Y.S.2d 588 (3d Dept.1981) aff'd, 56 N.Y.2d 879, 453 N.Y.S.2d 428, 438 N.E.2d 1143 (1982)(where defendant did what the contract ex- pressly permitted, there is no evidence of bad faith). Here, here is no claim that defendants intentionally interfered with plaintiffs' rights to obtain royalties under their contracts. PVM Oil Futures, Inc. v. Banque Paribas, 161 A.D.2d 220, 554 N.Y.S.2d 606 (1st Dept.1990). In fact, the pursuit of claims in the copyright litigations indirectly furthered plaintiffs' **919 interests under the contracts, inas- much as in the federal actions, defendants sought to eliminate piracy to protect recording sales, the source of plaintiffs' royalties.. Finally, breach of implied covenants of good faith and fair dealing are subject to *259 a six year statute of limitation. Liberman v. Worden, 268 A.D.2d 337, 701 N.Y.S.2d 419 (1st Dept.2000).

Negligence Claim

[11][12] Plaintiffs also assert that defendants negli- gently failed to protect plaintiffs' rights to maxim- ize royalties by releasing digital files that were sub- ject to piracy. However, such claim is unavailing because the contractual rights specifically provide for the right to exploit the copyrighted Sound Re- cordings in “future technologies”, which clearly in- cludes compact discs and other digital media. A plaintiff cannot transform a claim for breach of contract into a negligence claim my merely alleging a breach of due care. “.. A simple breach of con- tract is not to be considered a tort unless a legal duty independent of the contract itself has been vi- olated.” Clark-Fitzpatrick, Inc. v. Long Island R. Co., 70 N.Y.2d 382, 389, 521 N.Y.S.2d 653, 516 N.E.2d 190 (1987). The only possible claim for negligence is the creation of digital audio files that were subject to piracy. Compact discs were first created or distributed some twenty years ago (1983) and, therefore, a claim arising from that act is time barred under CPLR 214(6). The piracy occurred many years later in 1999 and 2000, and, In fact, de- fendants aggressively pursued claims against the wrongdoers in the Napster and MP.3 litigations; the injunctions obtained in those lawsuits will accrue to the benefit of plaintiffs.

Copyright and Equitable Apportionment Claims

[13] Plaintiffs' claim for equitable apportionment pursuant to Section 501(b) of the Copyright Act does not state a cause of action and, if it did, would not be enforceable in this Court. The Copyright Law does not give rights to “beneficial owners” to equitable apportionment of damages recovered for infringement. It merely allows legal or beneficial owners to bring actions for copyright infringement. 17 U.S.C. § 501(b). Moreover, rights under the Copyright laws may only be enforced in federal courts 28 U.S.C. § 1338(a). Estate of Hemingway v. Random House, Inc., 53 Misc.2d 462, 279 N.Y.S.2d 51, (Sup.Ct.N.Y.Co.1966) aff'd, 29 A.D.2d 633, 285 N.Y.S.2d 568 1st Dept.1967, aff'd, 23 N.Y.2d

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341, 296 N.Y.S.2d 771, 244 N.E.2d 250 (1968), Shaw v. Kastner, 151 Misc.2d 654, 573 N.Y.S.2d 595 (Sup.Ct. N.Y. Co.1991).

Plaintiffs' claim for equitable apportionment under New York law is also unsupported. The only such claim recognized by New York law arises out of apportionment of damages among tortfeasors, which is not the case here. Plaintiffs also claim that in the MP3.com litigation, they were promised 50% of the recovery because of a statement made by de- fendants in the Second Circuit, which they deem a judicial admission, entitling them to *260 an equit- able claim in this court. However, such a claim be- longs in the forum where it was allegedly made and where its validity can be determined in an appropri- ate context. The transcript of the Second Circuit ar- gument does not support this claim and indicates that the promise related to obtaining royalties under the contract.

Based on the foregoing, the claims set forth, are hereby dismissed and the clerk is directed to ENTER Judgment for defendants.

N.Y.Sup.,2003. Silvester v. Time Warner, Inc. 1 Misc.3d 250, 763 N.Y.S.2d 912, 2003 N.Y. Slip Op. 23707

END OF DOCUMENT

FOR EDUCATIONAL USE ONLY Page 9 1 Misc.3d 250, 763 N.Y.S.2d 912, 2003 N.Y. Slip Op. 23707 (Cite as: 1 Misc.3d 250, 763 N.Y.S.2d 912, 2003 N.Y. Slip Op. 23707)

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