David v. Showtime/The Movie Channel, Inc., 85 Civ. 9017 (CHT).

• Decision Date: 18 October 1988
• Docket Number: No. 85 Civ. 9017 (CHT).,85 Civ. 9017 (CHT).
• Citation: 697 F. Supp. 752
• Parties: Hal DAVID, et al., Plaintiffs, v. SHOWTIME/THE MOVIE CHANNEL, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

697 F. Supp. 752

Hal DAVID, et al., Plaintiffs, v. SHOWTIME/THE MOVIE CHANNEL, INC., Defendant.

No. 85 Civ. 9017 (CHT).

United States District Court, S.D. New York.

October 18, 1988.

Paul, Weiss, Rifkind, Wharton & Garrison (Jay Topkis, Allan Blumstein, David E. Nachman, David S. Nalven, of counsel), Bernard Korman (Ross Charap, I. Fred Koenigsberg, of counsel), New York City, for plaintiffs.

Weil, Gotshal & Manges (R. Bruce Rich, Kenneth L. Steinthal, Suzanne E. Hawkins, of counsel), New York City, for defendant.

OPINION

TENNEY, District Judge.

Plaintiffs, individual members of the American Society of Composers, Authors and Publishers ("ASCAP") bring this copyright infringment action under the Copyright Act, 17 U.S.C. § 101 et seq. (1983), against defendant Showtime/The Movie Channel, Inc. ("SMC"). Defendant neither contests the validity of plaintiffs' copyrights nor denies that Showtime and The Movie Channel both broadcast the works at issue in this dispute. Rather, SMC interposes various affirmative defenses.

The court has before it two motions brought by plaintiffs. The first seeks class certification pursuant to Fed.R.Civ.P. ("Rule") 23 or alternatively under Rule 23.2. The second, brought under Rule 56(c), seeks to strike or dismiss six affirmative defenses. For the reasons stated below, plaintiffs' motion for class certification is granted; plaintiffs' motion to dismiss the defenses is granted in part and denied in part.

BACKGROUND

SMC provides television programming to thousands of cable television system operators through Showtime and The Movie Channel, its two cable television services. Both services transmit programming to cable system operators, who in turn broadcast the programs via cable directly to individual subscribers. The bulk of SMC's programming transmissions consist of motion pictures created for theatrical release, many of which contain plaintiffs' musical compositions.

SMC was created in 1983 from the merger of Showtime and The Movie Channel. Prior to 1980, both entities had been licensed by ASCAP to transmit plaintiffs' copyrighted works. These licenses terminated on December 31, 1979.¹ Upon their termination, ASCAP advised both cable services that it preferred not to negotiate with them for new licenses. ASCAP's intent was to license the cable system operators directly with respect to broadcasts of music in programming furnished to the cable operators by services such as Showtime and The Movie Channel.

It appears that ASCAP encouraged the two cable services not to make written applications for a determination of fees. ASCAP apparently believed that these would have interfered with negotiations with the cable operators. In fact, neither Showtime nor The Movie Channel elected to follow the procedures set forth in the consent decree.

The negotiations between ASCAP and the cable operators lasted two years but were in vain. Sometime in 1982 or 1983, after failing in its attempt to license the cable operators directly, ASCAP returned to both Showtime and The Movie Channel in an effort to resume the prior licensing relationships. The parties entered into negotiations that lasted two years but they did not conclude in any written agreements. During these negotiations, SMC still chose not to invoke its right to a license by the procedures specified in the consent decree.

During these efforts at renewing their agreements, ASCAP apparently treated both Showtime and The Movie Channel as if they were licensed. Accordingly, neither company was deemed to be a copyright infringer and hence no legal action was taken. Both parties agreed that in the event the negotiations were unsuccessful, the issue of a reasonable fee would be submitted to the Rate Court in accordance with the procedure set forth in the consent decree.

According to ASCAP, its agreement to treat both Showtime and The Movie Channel as licensed during the negotiation period was conditioned on both companies' agreement to apply any prospective fee rate retroactively back to January 1, 1980, the date after the previous licenses had expired. ASCAP claims that this agreement was to apply regardless of whether the parties agreed on a fee or whether a fee was imposed by the Rate Court. Showtime and The Movie Channel claim that they had agreed to pay a fee back to January 1, 1980 only if the direct negotiations were successful. SMC further claims that it never relinquished its right to assert a statute of limitations defense in any Rate Court proceeding.

On April 4, 1984, SMC made written application to ASCAP to become officially licensed once again. Subsequent to this written application, SMC, on September 12, 1984, instituted a fee determination proceeding in the Rate Court, pursuant to the consent decree. The application sought a prospective fee determination and a retroactive fee rate back only to April 4, 1981, rather than back to the date the cable services ceased to be licensed, January 1, 1980. In essence, SMC took the position that it would not pay fees for the performance of ASCAP music from January 1, 1980, to April 3, 1981.

In response to SMC's application, ASCAP wrote a letter dated April 9, 1984, in which it stated that ASCAP would be willing to continue treating the cable services as fully licensed from January 1, 1980, provided that the two services confirmed their "continued willingness" to pay any subsequently determined fees back to that date. Defendant's Memorandum of Law in Opposition to Plaintiff's Motion for Summary Judgment ("Def. Mem.") at 8 (quoting ASCAP's letter dated April 4, 1984). SMC claims that this was the first time that ASCAP took the position that in a Rate Court proceeding, the time period for submission was to be retroactive to January 1, 1980, irrespective of any possible statute of limitations defense. Id. In an April 13, 1984, response, SMC wrote that it had never agreed to waive its statute of limitations defenses in any subsequent rate proceeding.

The rate proceeding was assigned to Judge William C. Conner, who referred the matter to Magistrate Michael H. Dolinger. ASCAP was granted interim relief effective April 4, 1984, but it also moved to dismiss the retroactive portion of SMC's application. Magistrate Dolinger granted that motion. See Memorandum and Order of Magistrate Dolinger, dated July 8, 1986, attached as Exhibit B to the Affidavit of Allan Blumstein, sworn to July 22, 1987 ("Blumstein Aff."). Magistrate Dolinger ruled that under the terms of the consent decree, the Rate Court had no jurisdiction to determine a retroactive fee. Id. at 7.²

Plaintiffs commenced this action on November 15, 1985. Due to the Copyright Act's three-year statute of limitations, plaintiffs' complaint seeks damages for copyright infringement only from November 15, 1982, until April 4, 1984, the date SMC became officially licensed by virtue of its written application to ASCAP.

Plaintiffs now move for class certification and for partial summary judgment seeking dismissal of the six affirmative defenses claimed by SMC. These defenses are that: (1) plaintiffs have failed to state a claim upon which relief can be granted; (2) Showtime and The Movie Channel did not "publicly perform" the copyrighted works within the meaning of the Copyright Act; (3) Showtime and The Movie Channel were licensed because of alleged agreements with ASCAP; (4) SMC was licensed due to its application to the Rate Court; (5) and (6) plaintiffs are estopped from charging infringement because of ASCAP's alleged conduct.

DISCUSSION

A. Class Certification

Plaintiffs move pursuant to Rule 23 or alternatively under Rule 23.2 for an order certifying this litigation as a class action. In certifying and managing a class action the court is afforded substantial discretion. Fink v. National Sav. and Trust Co., 772 F.2d 951, 960 (D.C.Cir.1985). At the outset, the court rejects the proposition that Rule 23.2 may be invoked by plaintiffs. Rule 23.2 was designed to facilitate class actions brought by unincorporated associations on their own behalf. The accompanying notes of the advisory committee suggest that Rule 23.2 was adopted to give "entity treatment" to representatives of the membership of an unincorporated association when for formal reasons it cannot sue or be sued as a jural person under Rule 17(b). See Rule 23.2 advisory committee's notes. Here, plaintiffs are bringing suit on behalf of themselves as individual members of ASCAP. Plaintiffs concede that only individual members of ASCAP are entitled to bring this action. Plaintiffs' Memorandum in Support of its Motion for Summary Judgment ("Pl.Mem.") at 2 n. 1. Therefore, because ASCAP is not suing for itself, Rule 23.2 is inapplicable.

Rule 23, however, is appropriate for this motion but in resolving a motion for class certification a court must undertake a rigorous analysis of Rule 23. General Tel. Co. v. Falcon, 457 U.S. 147, 161, 102 S.Ct. 2364, 2372, 72 L.Ed.2d 740 (1982). The burden of establishing that all of the requirements of Rule 23 have been met falls directly on the party seeking class certification. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 162, 94 S.Ct. 2140, 2145, 40 L.Ed. 2d 732 (1974). The requirements of Rule 23 are as follows: the plaintiffs must demonstrate (1) that the action satisfies all four of the threshold requirements enumerated in Rule 23(a); and (2) that the action falls within one of the three categories of Rule 23(b).

1. Rule 23(a)

Rule 23(a) provides:

(a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.

(a) Numerosity...