Montalvo v. LT's Benjamin Records, Inc.

Decision Date05 November 2014
Docket NumberCivil No. 12–1568GAG.
Citation56 F.Supp.3d 121
PartiesFreddy MONTALVO et al., Plaintiffs v. LT'S BENJAMIN RECORDS, INC. et al., Defendants.
CourtU.S. District Court — District of Puerto Rico

David A. Mech, Springfield, M. Jorge Maldonado–Rios, Cayey, PR, for Plaintiffs.

Miguel E. Gierbolini–Gierbolini, Gierbolini & Carroll, PSC, Jesus A. Santiago–Rosario, San Juan, PR, Michael A. Trauben, Singh & Trauben, LLP, Beverly Hills, CA, for Defendants.

OPINION AND ORDER

GUSTAVO A. GELPÍ, United States District Judge.

Plaintiffs in this matter, Angel Martínez Alicea, Reynaldo Colón Vega, Raul Roldán Rivera, Freddy Montalvo, Glen Turley, Anthony Calo Cotto, and Aaron Peña (collectively Plaintiffs) brought this action against LT's Benjamin Records, Inc., Mas Flow, Inc., Francisco Saldaña, Victor Cabrera, Francisco Saldaña, d/b/a White Kraft Publishing and Blue Kraft Publishing, and EMI Music Publishing (collectively Defendants), seeking redress for, inter alia, alleged acts of copyright infringement, breach of contract, unjust enrichment, fraud, and conversion. Plaintiffs bring their federal claims pursuant to the Copyright Act, 17 U.S.C. § 101.

Presently before the court is Defendants' Motion to Dismiss Plaintiffs' Third Amended Complaint or, in the alternative, for a more definite statement. (Docket No. 186.) In sum, Defendants argue that Plaintiffs fail to state a copyright claim upon which relief can be granted, thereby depriving this court of the necessary subject matter jurisdiction to adjudicate the remaining state law claims against Defendants. (Id. ) Plaintiffs opposed the motion. (Docket No. 188.) Defendants thereafter responded to Plaintiffs' opposition. (Docket No. 193.) After reviewing the pleadings and pertinent law, the court GRANTS in part and DENIES in part Defendants' motion to dismiss at Docket No. 186.

I. Standard of Review

As courts of limited jurisdiction, the federal courts must construe their jurisdictional grants narrowly. Destek Grp. v. State of N.H. Pub. Utils. Comm'n., 318 F.3d 32, 38 (1st Cir.2003). Consequently, the party asserting jurisdiction carries the burden of showing the existence of federal jurisdiction. Viqueira v. First Bank, 140 F.3d 12, 16 (1st Cir.1998). When deciding whether to dismiss a complaint for lack of subject matter jurisdiction, the court “may consider whatever evidence has been submitted, such as ... depositions and exhibits.” Aversa v. United States, 99 F.3d 1200, 1210 (1st Cir.1996) ; Torres v. Bella Vista Hosp., Inc., 523 F.Supp.2d 123, 132 (D.P.R.2007). Motions brought under Rule 12(b)(1) are subject to the same standard of review as Rule 12(b)(6) motions. Negrón–Gaztambide v. Hernández–Torres, 35 F.3d 25, 27 (1st Cir.1994) ; Torres, 523 F.Supp.2d at 132.

When considering a motion to dismiss for failure to state a claim upon which relief can be granted, see Fed.R.Civ.P. 12(b)(6), the court analyzes the complaint in a two-step process under the current context-based “plausibility” standard established by the Supreme Court. See Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55 (1st Cir.2012) (citing Ocasio–Hernández v. Fortuño–Burset, 640 F.3d 1, 12 (1st Cir.2011) which discusses Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). First, the court must “isolate and ignore statements in the complaint that simply offer legal labels and conclusions or merely rehash cause-of-action elements.” Id. A complaint does not need detailed factual allegations, but [t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678–79, 129 S.Ct. 1937. Second, the court must then “take the complaint's well-pled (i.e., non-conclusory, non-speculative) facts as true, drawing all reasonable inferences in the pleader's favor, and see if they plausibly narrate a claim for relief.” Schatz, 669 F.3d at 55. Plausible, means something more than merely possible, and gauging a pleaded situation's plausibility is a context-specific job that compels the court to draw on its judicial experience and common sense. Id. (citing Iqbal, 556 U.S. at 678–79, 129 S.Ct. 1937 ). This “simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of” the necessary element. Twombly, 550 U.S. at 556, 127 S.Ct. 1955.

[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) ). If, however, the “factual content, so taken, ‘allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged,’ the claim has facial plausibility.” Ocasio–Hernández, 640 F.3d at 12 (quoting Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 ).

II. Relevant Factual and Procedural Background

Plaintiffs are producers of music in the Raggaeton musical genre. (See Docket No. 183 at ¶ 2.) Defendants Saldaña and Cabrera are co-founders of the production companies Mas Flow and LT's Benjamin Records. (Id. at ¶ 45–47.) From the years 2004 to 2009, Plaintiffs created numerous original musical compositions at Mas Flow's studios, pursuant to artist and producer agreements. (Id. at ¶ 8.) There were two different artist and producer agreements with Mas Flow, of which all Plaintiffs were parties. In the first line of agreements, which Alicea, Vega, and Montalvo were parties, said plaintiffs granted Mas Flow all rights, titles, and interests in the copyright to all masters they created during the term of the agreement, as such masters were considered “works made for hire.” (Docket No. 185–2 at 25.) A master was defined in the agreement as “any recording of sound, whether or not coupled with a visual image, by any method and on any substance or material, whether now or hereafter known, that is or is intended to be on a Record or [digital electronic music distribution].” (Docket No. 185–2 at 27.) The agreement also granted Mas Flow “an irrevocable license under copyright to reproduce each Controlled Composition on Records and distribute such Records in the United States and Canada,” in exchange for mechanical royalties. (Id. at 26.) A Controlled Composition was defined as “a Composition wholly or partly written, owned or controlled by [Plaintiff] ... an individual producer or any Person in which [Plaintiff] ... or an individual producer has a direct or indirect interest.” (Id. )

In the second line of agreements, which Rivera, Cotto, and Peña were parties, said plaintiffs exclusively granted all rights to master recordings created and/or worked on by them to Mas Flow, as such masters were considered “works made for hire,” and further agreed that Mas Flow “may dispose of these master recordings as it sees fit and necessary in any electronic or digital platform, presently known or invited in the future.” (Docket No. 185–3 at 15–16.) The agreement also allowed said plaintiffs to retain ownership of the compositions or works created by them during the term of the agreement, but granted Mas Flow “an exclusive, perpetual, and irrevocable license ... for the commercial exploitation of all the exclusive rights recognized and inherent in these works/compositions” in exchange for royalties. (Id. at 14–15.)

In addition to the artist and producer agreements, all Plaintiffs entered into management contracts with Mas Flow, in which they agreed that Mas Flow would advise them in all matters pertaining to their career in the entertainment industry for the term of the agreement. (See Docket Nos. 185–2 at 30 and 185–3 at 16–17.)

Throughout the term of the agreements between Plaintiffs and Mas Flow, Plaintiffs allege that Mas Flow, and later LT's Benjamin Records (the alleged successor in interest of Mas Flow), accepted completed master recordings for various compositions that were written and produced by Plaintiffs, and altered said masters by removing Plaintiffs from the final version of many the masters and replacing their parts with other parties' work, and then attributed the entire work to the other parties. (Docket No. 183 at ¶ 9.) Plaintiffs further allege that they were not paid any monies owed to them for the exploitation of such works, despite the clear language in the agreements which discusses payment of mechanical and other royalties and a share of profits in exchange for Plaintiffs granting licenses to Defendants in their compositions. (Id. at ¶ 12, 59–60.)

On August 17, 2012, Plaintiffs filed their first amended complaint against various defendants, including the present Defendants, asserting a myriad of claims, including copyright infringement, violations of the Racketeer Influenced and Corrupt Organizations Act and Lanham Act, unjust enrichment, and fraud. (See Docket No. 9.) Since then, the court has allowed Plaintiffs to amend their complaint twice, with the latest amendment being filed on July 21, 2014. (See Docket No. 183.) The third amended complaint before this court sets forth eleven claims against Defendants, alleging the following: (1) breach of contract; (2) breach of management contract; (3) direct copyright infringement; (4) contributory copyright infringement; (5) vicarious copyright infringement; (6) unjust enrichment; (7) joint authorship in all works described in the complaint; (8) breach of fiduciary duty; (9) fraud; (10) conversion; and (11) copyright reversion for all works assigned by Defendants. (Id. )

Defendants moved to dismiss Plaintiffs' third amended complaint, arguing that Plaintiffs fail to state a federal copyright claim upon which relief can be granted, thereby depriving this court of the necessary subject matter jurisdiction to adjudicate the remaining state law claims against Defendants. (Docket No. 186 at 9–15.) Additionally, Defendants move to dismiss each of Plain...

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