Marcy Playground, Inc. v. Capitol Records, Inc.

• Decision Date: 13 July 1998
• Docket Number: No. 98 CIV. 2853 LAK.,98 CIV. 2853 LAK.
• Citation: 6 F.Supp.2d 277
• Parties: MARCY PLAYGROUND, INC., et al., Plaintiffs, v. CAPITOL RECORDS, INC., et al., Defendants.
• Court: U.S. District Court — Southern District of New York

Page 277

6 F.Supp.2d 277

MARCY PLAYGROUND, INC., et al., Plaintiffs, v. CAPITOL RECORDS, INC., et al., Defendants.

No. 98 CIV. 2853 LAK.

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

July 13, 1998.

Peter Herbert, Russell Beck, Epstein, Becker & Green, P.C., New York City, for Plaintiffs.

Christine Lepera, Howard H. Weller, Jeannie Costello, Gold, Farrell & Marks, New York City, for Defendants John Wozniak, Dylan Keefe, Dan Rieser and Chris Blake.

Richard S. Mandel, Jonathan Z. King, Cowan, Liebowitz & Latman, P.C., New York City, for Defendants Capitol Records, Inc. and EMI Records, Inc.

MEMORANDUM OPINION

KAPLAN, District Judge.

Plaintiffs here seek to enjoin the continued distribution of the hit album entitled Marcy Playground and the "single" entitled Sex and Candy on the theory that these recordings have been released without crediting the plaintiffs for their alleged contributions as producers and therefore violate the Lanham Act and plaintiffs' contractual rights. The Court concludes that plaintiffs have failed to show the necessary threat of immediate and irreparable injury both because they delayed too long in seeking interlocutory relief and because the alleged irreparable injury is speculative. In any case, plaintiffs have not shown a strong likelihood of success on the merits because the facts critical to determination of the action are sharply disputed and have failed to demonstrate that the balance of hardships tips decidedly in their favor. Accordingly, the motion for a preliminary injunction is denied.

Facts

Background

Plaintiff Jared Kotler and defendant John Wozniak meet as high school classmates and budding musicians in the mid-1980's. Both aspired to careers in the music business. Their paths diverged, but they resumed contact in or about 1993 or 1994. Although the details of Kotler's right to have done so are hotly disputed, Kotler obtained a "demo" recording which included, perhaps among other things, certain of Wozniak's compositions, and submitted it to EMI-America, then a significant record company. While this did not result in a deal, Don Rubin of EMI expressed interest in considering additional material, although the parties disagree as to whether the additional material in which he was interested consisted only of Wozniak's music or of the joint efforts of Wozniak and Kotler.

In 1995, Wozniak moved to New York. He and Kotler began playing together on an almost daily basis, Wozniak on guitar and Kotler on drums. According to Kotler, they agreed that the pair would perform and record together as a two-member musical group known as "Marcy Playground," that Kotler would be the producer of the project, and that Jeff White, Kotler's cousin and the financier of their efforts, would be the executive producer. Wozniak, on the other hand, contends that he coined and began using the name "Marcy Playground" years before, although he does not directly dispute the other aspects of Kotler's account of this phase of their endeavors.

Whatever the precise arrangements among Kotler, White and Wozniak, the group, assisted by studio musicians, participated in a significant recording session in the spring of 1995 at Sabella Recording Studios in Roslyn, New York. The session was financed by White. The group recorded 13 to 15 compositions by Wozniak, with Wozniak on guitar and Kotler on drums, although the parties are at loggerheads concerning who "produced" the recording.

The EMI Deal and the Formation of Marcy Playground, Inc.

The product of the Sabella Recording session was another "demo" which was submitted to EMI. This led to a live audition on May 31, 1995 at which EMI executives expressed an intention to sign a record deal with Marcy Playground, which of course then included Kotler as its drummer. Wozniak, to be sure, contends that he was the "key artist" whose presence was the real attraction to EMI.

Although success appears to have been on the horizon, Wozniak contends that it had become increasingly clear to him by mid-1995 that Marcy Playground was being harmed because Kotler's skills as a drummer were not at a professional level. Although it is unclear whether there is a connection with Wozniak's claimed dissatisfaction with Kotler's drumming, he and Kotler recruited Dylan Keefe, a bass guitarist, and Keefe began playing with them over the summer of 1995.

At about this time, White suggested that the group retain a music industry lawyer in connection with the EMI recording deal, and the trio — White, Kotler and Wozniak — retained Fred Davis for that purpose. Marcy Playground, Inc. ("MPI"), the corporate plaintiff was formed, with Kotler and Wozniak each allegedly owning 45 percent of the shares and White the balance, to exploit the products of the group — although Wozniak claims that he was neither consulted nor advised concerning the implications of this step and asserts that Davis had a conflict of interest in representing all three in this connection.

On October 27, 1995, MPI entered into a recording contract, signed on its behalf by Wozniak, with EMI pursuant to which it granted EMI the exclusive recording artist services of Wozniak and Kotler performing as Marcy Playground. The contract was accompanied by a so-called Inducement Letter in which MPI represented and agreed that it possessed the exclusive right to the services of Wozniak and Kotler as recording artists and that it was the sole owner of their product to date including what the parties have referred to as the Original Marcy Playground Recordings. The Original Marcy Playground Recordings were intended as the source of the first two albums of the three album EMI deal.

The Emergence of the Dispute

On the heels of the signing of the EMI deal, Wozniak and Kotler fell out. Keefe began to accompany the group's live performances, allegedly over Kotler's objection. According to Wozniak, EMI executives and other music industry professionals expressed concern that Kotler's allegedly poor drum performances were hurting the group. Wozniak and Keefe persuaded Kotler to play second guitar behind Wozniak and to permit Wozniak's friend, Dan Rieser, to play the drums. Tension was in the air.

By the spring of 1996, EMI had not released the first album contemplated by the recording agreement, which came to be known as Marcy Playground. It was at about this point, Kotler claims, that a senior EMI executive threatened to withhold release of the album unless Kotler agreed to stop performing as a member of Marcy Playground. In any case, it is undisputed that Kotler stopped performing with Marcy Playground at about this point.

Wozniak contends that the absence of any final agreement among himself, Kotler and White at the time of Kotler's departure from the group threatened to delay or prevent release of the first album and that EMI executives assisted in settlement discussions among the combatants. Kotler requested, among other things, that he be credited on the album as co-producer and that a Kotler/White production company logo be included on the outer packaging, both to further their alleged ambitions as record producers. Wozniak, allegedly "[i]n an effort to defuse a volatile, painful situation and because [he] believed a settlement was close," agreed. The album was released in February 1997 with the credits Kotler had requested. The anticipated settlement among White, Kotler and Wozniak thereupon failed to materialize.

Marcy Playground was not an immediate success, achieving only insignificant sales in the first weeks following its release. In the meantime, EMI ceased record operations in April-May 1997. Some time later, its affiliate, defendant Capitol Records, Inc. ("Capitol") assumed the MPI recording agreement and decided to reissue Marcy Playground. According to Kotler, Wozniak, his agent and Capitol insisted that he and White agree to the previously rejected settlement proposal as a condition for giving Kotler and the Kotler/White entity (Mighty Slim Productions) the same credit on the reissued album as on the original. Wozniak and his agent rejoin that they decided to eliminate the producer credits previously given to Kotler, White and their company because those credits never reflected the reality of what had occurred and were given only as a gratuitous gesture in anticipation of a settlement that never was consummated. Capitol, for its part, says that it was aware of conflicting claims as to who had produced what, that it had no way to determine the truth, and that it therefore acted in conformity to the alleged custom of the industry by accepting the information provided by the band's manager, who at that point of course was Wozniak's creature.

Marcy Playground was reissued on September 25, 1997 and has become a substantial success. Approximately 1.5 million copies have been sold, and the album remains number 54 on the relevant Billboard magazine chart. An undetermined number remains in Capitol's inventory.

It should be noted also that Capitol on March 12, 1998 released the first "single" from Marcy Playground, which is entitled Sex and Candy and actually includes three songs only one of which is also on Marcy Playground. Sex and Candy, however, was deleted from Capitol's catalog on April 4, 1998, and there are no plans for any additional printings.

Post-Reissue Settlement Discussions and this Litigation

There were sporadic efforts to resolve the dispute between Wozniak and Kotler from the time of Marcy Playground's initial release in March 1997 through its reissuance in late September 1997 punctuated by the expected exchange of "pleasantries" when Kotler learned that the credits would be revised for the reissued album. By the time of the reissuance, the parties had set forth their positions and retreated in silence to their respective corners. As indicated above, however, the reissued album rapidly achieved great success. On November 20, 1997, plaintiff's counsel contacted Capitol and raised the issue of...