Gomba Music, Inc. v. Avant
| Decision Date | 24 November 2014 |
| Docket Number | Case No. 14–CV–11767. |
| Citation | 113 U.S.P.Q.2d 1551,62 F.Supp.3d 632 |
| Parties | GOMBA MUSIC, INC., and Harry Balk, Plaintiffs, v. Clarence AVANT and Interior Music Corp., Defendants. Interior Music Corp., Third–Party Plaintiff, v. Sixto Rodriguez, Third–Party Defendant. |
| Court | U.S. District Court — Eastern District of Michigan |
Howard Hertz, Hertz Schram, Bloomfield Hills, MI, for Plaintiffs.
David S. McDaniel, Peter M. Falkenstein, Jaffe Raitt Heuer & Weiss, PC, Ann Arbor, MI, for Defendants/Third–Party Plaintiff.
This dispute involves the rights to songs that were composed and released commercially more than forty years ago. Music publisher Harry Balk alleges that he owns all rights to the songs based on an exclusive song-writing agreement between his company, Gomba Music, Inc., and the songs' author, Sixto Rodriguez. But he says he did not learn that he had been defrauded of his rights to the songs until they were featured in the Oscar-winning documentary Searching for Sugarman in 2012. He filed this lawsuit in May 2014 on behalf of Gomba Music alleging copyright infringement, fraudulent concealment, tortious interference with copyright, and fraud.1 (Dkt. 1.)
Defendants filed a motion to dismiss the Complaint. They argued that an action for infringement of a copyright cannot be brought unless the copyright registration has first been issued or denied. (Dkt. 13.) In response, Balk amended the Complaint. The First Amended Complaint stated: “Plaintiffs have withdrawn the copyright infringement claim from this suit until such time as copyright filings made by Plaintiff are registered or denied by the Copyright Office.” (Id. ¶ 12.) Defendants filed a second motion to dismiss, which is now before the Court. (Dkt. 18, Mot. to Dismiss.) It has been fully briefed and the Court heard oral argument on November 4, 2014. (See Dkt. 21, Resp. to Mot. to Dismiss; Dkt. 24, Reply for Mot. to Dismiss.)
After the second motion to dismiss was filed, the Copyright Office denied Balk's application for copyrights to the compositions at the heart of this case. Balk therefore filed a motion to amend the complaint to reinstitute his copyright infringement claim. Defendants opposed, arguing that permitting the amendment would be futile because Balk cannot state a claim. (See Dkt. 31, Resp. to Mot. to Am.) The Court heard oral argument on this motion as well on November 4, 2014, and will decide the motions together.
For the reasons that follow, Defendants' Motion to Dismiss the First Amended Complaint (Dkt. 18) is GRANTED as to Gomba Music and DENIED in all other respects. Balk's Motion to Amend the Complaint (Dkt. 27) is GRANTED IN PART. Balk is ORDERED to revise the proposed Second Amended Complaint to reflect the dismissal of Gomba Music's claims.
The Federal Rules of Civil Procedure require that pleadings contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). A plaintiff “must allege ‘enough facts to state a claim of relief that is plausible on its face.’ ” Traverse Bay Area Int. Sch. Dist. v. Mich. Dep't of Educ., 615 F.3d 622, 627 (6th Cir.2010) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Facial plausibility means that “the complaint has to ‘plead[ ] factual content that allows the court to draw the reasonable inference that the defendant liable for the misconduct alleged.’ ” Ohio Police & Fire Pension Fund v. Std. & Poor's Fin. Servs., LLC, 700 F.3d 829, 835 (6th Cir.2012) (alteration in original) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). “This standard does not require detailed factual allegations, but a complaint containing a statement of facts that merely creates a suspicion of a legally cognizable right of action is insufficient.” HDC, LLC v. City of Ann Arbor, 675 F.3d 608, 614 (6th Cir.2012) (citation and internal quotation marks omitted).
The court must “accept all well-pleaded factual allegations as true and construe the complaint in the light most favorable to plaintiffs.” Bennett v. MIS Corp., 607 F.3d 1076, 1091 (6th Cir.2010). The court “need not, however, accept unwarranted factual inferences.” Id. (citing Twombly, 550 U.S. at 570, 127 S.Ct. 1955 ). Nor are “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements” entitled to an assumption of truth. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not ‘show [n]’—‘that the pleader is entitled to relief.’ ” Iqbal, 556 U.S. at 679, 129 S.Ct. 1937 (quoting Fed.R.Civ.P. 8(a)(2) ).
The Sixth Circuit has noted that “a motion under Rule 12(b)(6), which considers only the allegations in the complaint, is generally an inappropriate vehicle for dismissing a claim based upon the statute of limitations,” unless “the allegations in the complaint affirmatively show that the claim is time-barred.” Cataldo v. U.S. Steel Corp., 676 F.3d 542, 547 (6th Cir.2012), cert. denied, ––– U.S. ––––, 133 S.Ct. 1239, 185 L.Ed.2d 177 (2013).
When a party seeks to amend its pleading under Federal Rule of Civil Procedure 15(a)(2), “[t]he court should freely give leave when justice so requires.” The factors to be considered are “[u]ndue delay in filing, lack of notice to the opposing party, bad faith by the moving party, repeated failure to cure deficiencies by previous amendments, undue prejudice to the opposing party, and futility of amendment are all factors which may affect the decision.” Wade v. Knoxville Utilities Bd., 259 F.3d 452, 458 (6th Cir.2001) (quoting Head v. Jellico Hous. Auth., 870 F.2d 1117, 1123 (6th Cir.1989) ). Defendants oppose amendment solely on grounds of futility. A proposed claim is futile if it fails to state a claim upon which relief may be granted as that phrase is used in Rule 12(b)(6). Rose v. Hartford Underwriters Ins. Co., 203 F.3d 417, 420 (6th Cir.2000).
On a motion to dismiss for failure to state a claim, the Court may consider “the Complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to defendant's motion to dismiss so long as they are referred to in the Complaint and are central to the claims contained therein.” Bassett v. NCAA, 528 F.3d 426, 430 (6th Cir.2008).
Defendants attached the following exhibits to their motion to dismiss: (1) articles of incorporation for Gomba Music filed with the state of Michigan in June 2014, (2) state of Michigan records regarding the incorporation of Gomba Music in 1965 and its dissolution in 1971, (3) original and renewal Gomba copyright registrations for “Forget It,” and (4) a snapshot from www.amazon.com of the Cold Fact album reissue. (See Mot. to Dismiss Exhibits.) Balk's response to the motion to dismiss attaches the following exhibits: (A) an affidavit by Balk regarding the corporate status of Gomba Music, (B) a July 25, 2014, letter from Michigan's Department of Licensing and Regulatory Affairs, (C) records of copyright applications filed in the name of Gomba Music in March 2014, (D) a June 27, 2014 email from the Copyright Office acknowledging receipt of copyright applications, and (E) the Copyright Office Catalog of Copyright Entries for July–December 1969. (See Resp. to Mot. to Dismiss Exhibits.)
The Court finds that Exhibits 1 to 3 to the motion to dismiss and Exhibits C and E to Balk's response to the motion to dismiss are public records and therefore may be considered. See, e.g., Brown v. S. Florida Fishing Extreme, Inc., No. 08–20678, 2008 WL 2597938, at *1 (S.D.Fla. June 27, 2008) (); Ajaxo, Inc. v. Bank of Am. Tech. & Operations, Inc., No. 2:07–CV–945, 2007 WL 4180361, at *2 (E.D.Cal. Nov. 21, 2007) (); Grassmueck v. Barnett, 281 F.Supp.2d 1227, 1232 (W.D.Wash.2003)(taking judicial notice of articles of incorporation on a motion to dismiss because “[a]s certified public records kept by the Secretaries of State in Washington and Delaware, the Articles fall directly into the category of items” that could be thus considered); see also Kaempe v. Myers, 367 F.3d 958, 965 (D.C.Cir.2004) ().
The Court further finds that Exhibit D (an email from the Copyright Office acknowledging receipt of copyright applications) is closely related to Balk's claims. But Exhibit 4 (the snapshot from amazon.com of the 2008 reissue of Cold Fact ), and Exhibits A and B (Balk's affidavit and the letter from Michigan regarding Gomba's corporate status) are not public records and are not central to Balk's claims. The Court therefore STRIKES Exhibit 4 to Defendants' Motion to Dismiss and Exhibits A and B to Balk's Response to the Motion to Dismiss.
On July 25, 1966, Sixto Rodriguez signed an “Exclusive Writer Agreement” with Gomba Music (“Gomba/Rodriguez Agreement”), which was solely owned and controlled by Harry Balk. The agreement provided:
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