Factors Etc., Inc. v. Pro Arts, Inc.

Citation579 F.2d 215
Decision Date27 June 1978
Docket NumberD,No. 655,655
Parties, 4 Media L. Rep. 1144 FACTORS ETC., INC. and Boxcar Enterprises Inc., Plaintiffs-Appellees, v. PRO ARTS, INC. and Stop and Shop Companies, Inc., Defendants-Appellants. ocket 77-7544.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Raymond E. Scott, Detroit, Mich. (Ralph T. Rader, Burke, Va., Cullen, Settle, Sloman & Cantor, Detroit, Mich., Kane, Dalsimer, Kane, Sullivan & Kurucz, Joseph C. Sullivan, and John F. Boyle, New York City, of counsel), for defendants-appellants.

Michael C. Silberberg, New York City, and Arthur Fields, Beverly Hills, Cal. (Ervin, Cohen & Jessup, Beverly Hills, Cal., of counsel and Golenbock & Barell, New York City), for plaintiffs-appellees.

Before WATERMAN, INGRAHAM * and MANSFIELD, Circuit Judges.

INGRAHAM, Circuit Judge:

Plaintiffs-Appellees, Factors Etc., Inc. (Factors) and Boxcar Enterprises, Inc. (Boxcar), sued Defendants-Appellants, Pro Arts, Inc. (Pro Arts) and Stop and Shop Companies, Inc. (Stop and Shop), for injunctive relief and damages based upon defendants' alleged misappropriation and unauthorized use of the name and likeness of Elvis Presley (Presley). The trial court granted the plaintiffs' preliminary injunction upon its findings that the exclusive right to market Presley memorabilia survived the death of Presley, and the Presley poster printed by defendants allegedly in derogation of this right was not privileged as the publication of a newsworthy event. This is an interlocutory appeal pursuant to 28 U.S.C. § 1292(a)(1).

Because the facts are not in dispute, we need not describe them in detail. During Presley's career as an entertainer, Colonel Tom Parker (Parker) served as his close friend, mentor and personal manager. This professional relationship between the two parties began on March 26, 1956, with the execution of the first contract between them. Parker immediately began the task of creating the "Elvis persona." In so doing, both he and Presley capitalized upon the marketing of merchandise bearing the Elvis name and likeness. Parker directed this effort until Presley's death, a task reflected by the numerous extensions of the contract between the two parties. 1

Boxcar Enterprises, a Tennessee corporation controlled by Presley and Parker, 2 was the vehicle through which the commercial Elvis Presley rights were marketed. Boxcar sublicensed other companies to do the actual manufacturing and distributing of each specific item, receiving royalties from the sales. 3

On August 16, 1977, Elvis Presley died suddenly and unexpectedly. His father, Vernon Presley, was appointed executor of his estate. On August 18, 1977, two days after Presley's death, Boxcar granted Factors the exclusive license to exploit commercially the name and likeness of Elvis Presley. Factors paid Boxcar $100,000 on execution of the agreement against a guarantee of $150,000. Vernon Presley, as executor of the estate, signed the agreement licensing Factors, at the same time warranting that Boxcar was the sole and exclusive owner of the commercial Elvis Presley rights. 4 The agreement was also approved by Parker.

Immediately following Presley's death, Pro Arts decided that it too wanted a share in the market for Elvis Presley memorabilia. It purchased the copyright in the photograph of Presley from a staff photographer of the Atlanta (Georgia) Journal. On August 19, 1977, three days after his death, Pro Arts published a poster using the photograph and filed an application for registration of copyright. The poster is entitled "IN MEMORY" and below the photograph of Presley the poster bears the dates "1935-1977."

On the same day that the poster was published, Pro Arts began to market it. One of its first customers was co-defendant Stop and Shop Companies, which thereafter sold the poster through its Bradlees Stores Division in the Southern District of New York. On August 24, 1977, five days after its poster was placed on the market, Pro Arts notified Boxcar Enterprises that it was offering "a memorial 'Elvis' poster to meet the public demand." When Factors was informed of the letter, it replied to Pro Arts claiming the exclusive right to manufacture, sell and distribute all merchandise utilizing the name and likeness of Elvis Presley. Factors also warned Pro Arts that if it did not discontinue sale of the poster, it would be subject to a lawsuit for injunctive relief, damages and an accounting.

Instead of ceasing distribution of the poster, Pro Arts filed suit in the United States District Court for the Northern District of Ohio seeking a declaratory judgment of non-infringement of the rights claimed by Factors. When Factors discovered that it had been sued in Ohio, it responded by instituting this action against Pro Arts and Stop and Shop in United States District Court for the Southern District of New York. 5 This later action was filed on September 26, 1977, just five days after Pro Arts' action.

Upon the filing of the complaint in this action, the district judge entered an "order to show cause" requiring Pro Arts to show cause why an injunction should not issue against it. Pro Arts responded with a motion to dismiss, stay or transfer the suit to the Northern District of Ohio. On October 13, 1977, the New York court filed an opinion and order of preliminary injunction against Pro Arts. The injunction restrained Pro Arts during the pendency of the action from manufacturing, selling or distributing (1) any more copies of the poster labeled "IN MEMORY . . . 1935-1977," (2) any other posters, reproductions or copies containing any likeness of Elvis Presley, and (3) utilizing for commercial profit in any manner or form the name or likeness of Elvis Presley. The order also denied Pro Arts' motion to dismiss, stay or transfer. Pro Arts has duly perfected this interlocutory appeal from the order. 6

Before addressing the merits, we must first dispose of Pro Arts' contention that the trial court abused its discretion in denying Pro Arts' motion to stay or transfer the present action to the Northern District of Ohio. 7 Pro Arts first argues that the case should have been transferred under 28 U.S.C. § 1404(a) (1976) for the convenience of parties and witnesses. According to Pro Arts, none of the parties are residents of New York, but instead each is incorporated and a resident of another state Factors (Delaware), Boxcar (Tennessee), Pro Arts (Ohio), Stop and Shop (Massachusetts). Furthermore, Pro Arts contends that it is the chief defendant in the case and its principal place of business is located in Ohio, the state where all of its records, officers and witnesses are located. Defendant Stop and Shop, on the other hand, is merely a "straw man" joined to make possible a New York suit, and has nothing to do with the printing or manufacturing of the poster.

There can be no doubt that the burden is on the defendant, when it is the moving party, to establish that there should be a change of forum. See Ford Motor Co. v. Ryan, 182 F.2d 329, 330 (2d Cir.), Cert. denied,340 U.S. 851, 71 S.Ct. 79, 95 L.Ed. 624 (1950); New York v. General Motors Corp., 357 F.Supp. 327, 328 (S.D.N.Y.1973); C. Wright, A. Miller and E. Cooper, 15 Federal Practice and Procedure 244 (1976) (hereinafter cited as Federal Practice and Procedure). When a party seeks the transfer on account of the convenience of witnesses under § 1404(a), he must clearly specify the key witnesses to be called and must make a general statement of what their testimony will cover. 15 Federal Practice and Procedure 270. See, e. g., Mendelson v. Fleischmann, 386 F.Supp. 436, 439 (S.D.N.Y.1973). Not only was no such demonstration attempted, but Pro Arts did not even urge the convenience of witnesses and parties below as a ground for § 1404(a) transfer. Because the issue was not raised in the district court and supported by affidavits, there could be no abuse of discretion in not granting transfer on these grounds.

Pro Arts argues in the alternative that the case should have been transferred to Ohio under § 1404(a) or stayed pending resolution of the Ohio action, since essentially the same lawsuit involving the same parties and the same issues had been filed in Ohio before the New York case was filed. The rule in this circuit is that the first suit should have priority, " 'absent the showing of balance of convenience in favor of the second action' . . . or unless there are special circumstances which justify giving priority to the second." William Gluckin & Co. v. International Playtex Corp., 407 F.2d 177, 178 (2d Cir. 1939), Quoting Remington Products Corp. v. American Aerovap, Inc., 192 F.2d 872 (2d Cir. 1951). The Supreme Court has articulated the test to be "wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation . . . ." Kerotest Manufacturing Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 183, 72 S.Ct. 219, 221, 96 L.Ed. 200 (1952). In deciding between competing jurisdictions, the balancing of convenience should be left to the sound discretion of the district court. Id. at 183-84, 72 S.Ct. 219; William Gluckin & Co. v. International Playtex Corp., 407 F.2d at 178.

We conclude that the district court did not abuse its discretion by allowing the later filed action to proceed. First, at the time that this case was filed, two additional lawsuits against other defendants by Factors presenting the identical issue for resolution were pending in the Southern District of New York. 8 Efficient and responsible judicial administration dictated that these three cases be tried before the same forum. Id. See Remington Products Corp. v. American Aerovap, Inc., 192 F.2d 872, 873 (2d Cir. 1951).

Second, Pro Arts' suit for declaratory judgment was filed in apparent anticipation of Factors' New York suit. When the declaratory judgment action has been triggered by a notice letter, this equitable...

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