Fantasy, Inc. v. Fogerty

Decision Date02 February 1993
Docket NumberNos. 88-15815,89-15118,89-15120,88-15816,s. 88-15815
Citation984 F.2d 1524
Parties1993 Copr.L.Dec. P 27,062, 27 U.S.P.Q.2d 1039 FANTASY, INC., Plaintiff-Counterdefendant-Appellee, v. John C. FOGERTY, Defendant-Counterclaimant-Appellant. FANTASY, INC., Plaintiff-Appellee, v. John C. FOGERTY, Defendant, and Warner Bros. Records, Inc.; WEA International, Inc.; Warner Communications, Inc.; WEA Manufacturing, Inc.; and WEA Corporation, Defendants-Appellants. FANTASY, INC., Plaintiff-Counterdefendant-Appellee, v. John C. FOGERTY, Defendant-Counterclaimant-Appellant. FANTASY, INC., Plaintiff-Appellee, v. John C. FOGERTY, Defendant, and Warner Bros. Records, Inc.; WEA International, Inc.; Warner Communications, Inc.; WEA Manufacturing, Inc.; and WEA Corporation, Defendants-Appellants.
CourtU.S. Court of Appeals — Ninth Circuit

Kenneth I. Sidle, Gipson Hoffman & Pancione, Los Angeles, CA, for defendants-appellants.

Malcolm Burnstein and Catherine Trimbur, Burnstein & Trimbur, San Francisco, CA, for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California.

Before: BOOCHEVER, NOONAN, and O'SCANNLAIN, Circuit Judges.

BOOCHEVER, Circuit Judge:

BACKGROUND

In 1970 appellant John Fogerty, a popular musician and songwriter, wrote a song entitled "Run Through the Jungle" ("Jungle"). Fogerty sold the exclusive publishing rights to the song to Fantasy, Inc.'s predecessors-in-interest, Cireco Music and Galaxy Records, in exchange for a sales percentage and other royalties derived from the song's exploitation. Cireco and Galaxy obtained a copyright on "Jungle," which Fantasy subsequently obtained by assignment.

In 1985 Fogerty published a song entitled "The Old Man Down the Road" ("Old Man"), registered a copyright, and authorized Warner Brothers Records, Inc. to distribute "Old Man." Fantasy alleged that "Old Man" was merely "Jungle" with new words and filed an action for copyright infringement against Fogerty, Warner, and related companies. Fogerty pleaded four counterclaims, seeking rescission of the music publishing agreements he had entered into with Cireco and Galaxy and restitution of the songs covered by those contracts and, assuming a favorable ruling on the rescission claim, alleging copyright infringement of those songs by Fantasy and seeking damages and an accounting. After a jury trial on Fantasy's copyright claim in late 1988, a jury returned a verdict for Fogerty, finding that Fogerty did not infringe "Jungle" with his song "Old Man."

Fogerty appeals several of the district court's orders that preceded and followed the jury trial. First, the court ruled in 1986 to strike from Fogerty's First Counterclaim allegations that Saul Zaentz, a general partner in Galaxy and later a minority shareholder and director of Fantasy, and Argosy Venture, Galaxy's sole shareholder, had fraudulently induced Fogerty to enter an unwise and illegal tax shelter scheme between 1969 and 1974 ("the Zaentz/Argosy allegations"). Second, the court ruled in 1987 that Fantasy was entitled to summary judgment on Fogerty's First and Second Counterclaims, holding that Fantasy's payment of Fogerty's songwriting royalties into an irrevocable escrow account pending resolution of the copyright action did not constitute a material breach warranting rescission of the music publishing agreements. Fantasy, Inc. v. Fogerty, 664 F.Supp. 1345, 1353-55 (N.D.Cal.1987). Finally, after Fogerty had prevailed at trial, the court denied Fogerty's motion for

                attorneys' fees.   This court has jurisdiction under 28 U.S.C. § 1291.   We affirm in all respects
                
DISCUSSION
I

In its 1986 order, the district court denied Fantasy's motion to dismiss Fogerty's First and Second Counterclaims, but ordered the striking of allegations concerning Zaentz and Argosy that the court found were barred by the statute of limitations and by res judicata. Fogerty challenges this order on the grounds that the Zaentz/Argosy allegations were only part of a claim that, as a whole, was not barred, and that the entire course of conduct between the parties was relevant to Fogerty's counterclaims because it went to the materiality of Fantasy's breach of the music publishing agreements. We review a district court's decision to strike matter pursuant to Fed.R.Civ.P. 12(f) for an abuse of discretion. See Federal Sav. & Loan Ins. Corp. v. Gemini Management, 921 F.2d 241, 243 (9th Cir.1990) (striking of affirmative defenses under Rule 12(f)); Northern Cheyenne Tribe v. Hodel, 851 F.2d 1152, 1155 (9th Cir.1988).

Rule 12(f) provides that a court "may order stricken from any pleading ... any redundant, immaterial, impertinent, or scandalous matter." "[T]he function of a 12(f) motion to strike is to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial...." Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir.1983). " 'Immaterial' matter is that which has no essential or important relationship to the claim for relief or the defenses being pleaded." 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1382, at 706-07 (1990). " 'Impertinent' matter consists of statements that do not pertain, and are not necessary, to the issues in question." Id. at 711. Superfluous historical allegations are a proper subject of a motion to strike. See, e.g., Healing v. Jones, 174 F.Supp. 211, 220 (D.Ariz.1959).

Fogerty's First Counterclaim, as amended in his second answer, contained some seven pages of allegations concerning the tax shelter plan and his dealings with Zaentz and Argosy; only a few lines were devoted to Fogerty's allegation that Fantasy committed a material breach by escrowing Fogerty's royalties after the copyright infringement action arose. The district court reasonably construed paragraph 84 of Fogerty's second answer as suggesting that "the Zaentz/Argosy allegations and the 1985 failure to pay royalties constitute independent and cumulative grounds for rescission." Order re Plaintiff's Motion to Dismiss Amended Counterclaims and Defendant's Motion to Reconsider Imposition of Sanctions at 4. If these allegations, based on events occurring between 1969 and 1974, were indeed meant to serve as the basis of a separate claim for rescission, they were barred by the four-year statute of limitations for an action to rescind a written contract. See Cal.Civ.Proc.Code § 337 (West 1982). The only basis on which Fogerty properly could base his rescission counterclaim was Fantasy's escrowing of royalties beginning in January 1985.

Fogerty was also barred by res judicata from relitigating the tax plan claims against Zaentz or his successors-in-interest. Although Fogerty gained substantial recovery from his lawyers and accountants for his injuries from the tax shelter plan, the California Superior Court dismissed Fogerty's claims against Zaentz based on the statute of limitations. Fogerty appealed that ruling, but later abandoned the appeal. Fogerty now denies that Zaentz was Fantasy's predecessor-in-interest, although his answer alleged otherwise. 1 Fogerty cannot Fogerty argues on appeal that the district court misconstrued his pleading and that the Zaentz/Argosy allegations were not meant to constitute an independent ground for rescission, but rather to present "relevant background and foundational facts" establishing a pattern of abuse to support his claim of Fantasy's material breach of the music publishing agreements. Even were we to accept Fogerty's "pattern of abuse" argument, however, the district court did not abuse its discretion in striking the Zaentz/Argosy allegations. The district court expressly found that no pattern of abuse existed and concluded that Fogerty had offered "no legal theories regarding the relevance of these so-called 'abusive acts' to the claims for rescission and restitution ... [nor] any coherent legal argument that the string of alleged 'abuses' he lists constitutes fraud which would justify the rescission of songwriting contracts made in 1969." Order re Motions to Reconsider and Motions for Attorneys' Fees and Costs at 4. Although the course of conduct between the parties to a contract may be relevant to the materiality of a breach, Fogerty offers no authority for the proposition that the conduct of a predecessor-in-interest is relevant to materiality; in fact, he now denies that Zaentz was a predecessor-in-interest to Fantasy. Fogerty had ample opportunity to present his legal arguments to the district court, and he failed to do so. The court did not abuse its discretion in concluding that whether Zaentz fraudulently induced Fogerty's consent to the tax plan agreements simply was not relevant to the materiality of any breach Fantasy might have committed by escrowing royalties in 1985.

                reassert the allegations of fraud regarding the tax plan, either as the basis for a damages claim (as he did in state court) or as a ground for rescission (as he did in district court here).   Because the statute of limitations and res judicata would prevent proof of the Zaentz/Argosy allegations from being introduced at trial, the material was properly stricken under Rule 12(f).   See 5 Wright & Miller, supra, § 1382, at 711-12
                

Moreover, in granting Fantasy's motion to strike, the district court correctly noted that the Zaentz/Argosy allegations created serious risks of prejudice to Fantasy, delay, and confusion of the issues. The allegations did not involve the parties to the copyright infringement action, but rather consisted of stale and barred charges that had already been extensively litigated and would have been burdensome for Fantasy to answer. There was a strong likelihood that evidence of the disputes between Fogerty and Zaentz/Argosy would lead to unwarranted and prejudicial inferences against Fantasy. See Loughrey v. Landon, 381 F.Supp. 884, 888 (E.D.Pa.1974). Finally,...

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