Muller v. Walt Disney Productions, 93 Civ. 0427 (GLG)
| Citation | 876 F. Supp. 502 |
| Decision Date | 24 January 1994 |
| Docket Number | No. 93 Civ. 0427 (GLG),93 Civ. 6175 (GLG).,93 Civ. 0427 (GLG) |
| Parties | Herman E. MULLER, Jr., as the Executor under the Last Will and Testament of Leopold Stokowski, Plaintiff, v. The WALT DISNEY PRODUCTIONS, The Walt Disney Company, and Buena Vista Home Video, Defendants. The WALT DISNEY COMPANY and Buena Vista Home Video, Plaintiffs, v. Herman E. MULLER, in his capacity as Executor for the Estate of Leopold Stokowski, deceased, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Richard H. Dolan, Barlett, Pontiff, Stewart & Rhodes, P.C., Glens Falls, NY, for Herman E. Muller, Jr.
Elizabeth M. Guggenheimer, Dewey Ballantine, Clark E. Walter, Edward J. Nowak, Eric J. Lobenfeld, New York City, for Walt Disney Production.
Elizabeth M. Guggenheimer, Clark E. Walter, Edward J. Nowak, Eric J. Lobenfeld, New York City, for Walt Disney Co., Buena Vista Home Video.
The cases before us in this motion arose from a 1939 contract between Leopold Stokowski, then the conductor of the Philadelphia Orchestra, and Walt Disney Productions, entered into for the purpose of making the beautiful music that accompanied the movie "Fantasia." Somewhat surprisingly, "Fantasia" was not a financial success upon its initial release. However, "Fantasia's" fall 1991 release on videocassette and laser disc has been profitable, to the tune of $190 million, according to Stokowski's estate. This event turned relations between Disney and various participants in the making of "Fantasia" discordant, leading to several different lawsuits, including those before us today. The instant motion to dismiss by Muller, the Executor under the Last Will and Testament of Leopold Stokowski, concerns claims by Disney for indemnification and a setoff from Stokowski's estate against possible judgments on behalf of the Philadelphia Orchestra Association and the publisher of Igor Stravinsky's "The Rite of Spring."
In May 1992, the Philadelphia Orchestra Association (hereafter the "Association") filed suit against Disney in the Eastern District of Pennsylvania. See The Philadelphia Orchestra Ass'n v. The Walt Disney Co., No. 92 Civ. 2634 (E.D.Pa.) (McGlynn, J.) On December 30, 1992 Disney filed suit against Muller, also in the Eastern District of Pennsylvania, seeking a declaration that Stokowski's estate has no rights in connection with the sale and distribution of "Fantasia," and that Stokowski's estate must indemnify Disney for any sums adjudged against Disney in the Association's lawsuit. See The Walt Disney Co. v. Muller, No. 92 Civ. 7440, 1993 WL 273416 (E.D.Pa.) (McGlynn, J.).
In January 1993, Muller sued Disney in the Southern District of New York. See Muller v. Disney, No. 93 Civ. 0427 (S.D.N.Y.) (Goettel, J.). The apparent reason Muller sued in this district is that Stokowski's will was probated in the Westchester County Surrogate's Court. (While he died in England in 1977, Stokowski lived out his life as a domiciliary of Scarsdale, New York.) Muller's Amended Complaint seeks, inter alia, fifty percent of Disney's profits from home sales of "Fantasia." Disney filed a motion in this court in February 1993 seeking to transfer Muller v. Disney to the Eastern District of Pennsylvania, or in the alternative, to stay the action pending resolution of Disney v. Muller. On May 26, 1993, we denied Disney's motion. See Muller v. The Walt Disney Productions, 822 F.Supp. 1033 (S.D.N.Y.1993). On July 20, 1993, Judge McGlynn granted Muller's motion to transfer Disney v. Muller to this district.
The other related lawsuit against Disney is Boosey & Hawkes Music Publishers, Ltd. v. The Walt Disney, Co., No. 93 Civ. 0373 (S.D.N.Y.) (Conboy, J.), in which the publishers of Igor Stravinsky's "The Rite of Spring," which was featured in "Fantasia," are seeking damages on the grounds that a 1939 license did not grant Disney the right to exploit "The Rite of Spring" on videocassette.
Muller's motion seeks to dismiss various Disney claims for failure to state a claim under which relief can be granted, and as time barred. The first object of Muller's motion is Disney's claim, embodied in Count II of the complaint in Disney v. Muller, and the first counterclaim in Muller v. Disney, that Stokowski's estate must indemnify Disney against sums awarded to the Association because Stokowski was contractually obligated to deliver to Disney an agreement between the Orchestra and Disney providing that the Orchestra and its members would retain no rights in connection with "Fantasia." Disney's second counterclaim in Muller v. Disney seeks, on the same grounds, to set off any sums awarded to the Association against any sums awarded to Stokowski's estate.
The basis for this claim is a contract dated January 18, 1939 between Leopold Stokowski and Walt Disney Productions, engaging Stokowski's services in arranging, conducting, and consulting on the music for the motion picture "Fantasia." Clause 6 provides in part:
You Stokowski agree to use your best efforts, at your own expense, to obligate the Philadelphia Symphony Orchestra Association, Inc. to do said recording. You further agree to furnish us Disney with a written commitment executed by the properly constituted and empowered authority, granting us the right to use the said Philadelphia Symphony Orchestra, its name and the music rendered by it hereunder for the purposes herein provided and contemplated in this contract.
The second object of Muller's motion to dismiss is Disney's claim, set forth in the second and third counterclaims in Muller v. Disney, that since the Association and Stravinsky's publisher are after the same videocassette and laser disc profits that Stokowski's estate is pursuing, any award in favor of the Association or Stravinsky's publisher must be set off against any award for Stokowski's estate. Disney points out that both the Association and Stokowski's estate seek to split the profits with Disney "fifty-fifty," and that all three suits against Disney seek a sum equal to any unjust enrichment by Disney. A setoff, Disney argues, is the proper mechanism for avoiding inconsistent judgments.
The initial question is which state's laws we must apply. The well-established rule is that a federal court sitting in diversity follows the choice of law rules of the state in which it is located. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Since Muller began his action against Disney in New York, we apply New York's choice of law rules. However, since Disney began its action against Muller in the Eastern District of Pennsylvania, and the action was subsequently transferred to our district pursuant to 28 U.S.C. § 1404(a) after a motion by Muller, we must apply Pennsylvania's choice of law rules in Disney's action. Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964).
New York courts apply a "paramount interest" test to choice of law disputes involving contract issues. Hutner v. Greene, 734 F.2d 896, 899 (2d Cir.1984). "Under such a test, `the law of the jurisdiction having the greatest interest in the litigation will be applied and ... the facts or contacts which obtain significance in defining State interests are those which relate to the purpose of the particular law in conflict.'" Id. (citations omitted). Pennsylvania courts apply a combination of "interest analysis" and the "significant relationship" approach of the Restatement Second of Conflicts of Law to choice of law disputes involving contract issues. Melville v. American Home Assurance Co., 584 F.2d 1306, 1311 (3d Cir.1978). This approach "takes into account both the grouping of contacts with the various concerned jurisdictions and the interests and policies that may validly be asserted by each jurisdiction." Id.
Under these similar approaches, the most likely candidates to supply the governing law in this case are California and Pennsylvania. The central issue is the relationship between Stokowski and Disney, as embodied in the 1939 contract. The contract was executed in California, and performed largely in Pennsylvania. At the time the contract was signed, as well as at the present, Disney had its principal place of business in Burbank, California. Stokowski, we were informed at oral argument, lived in many different places around the United States during this period, including California and Pennsylvania. We need not choose between California and Pennsylvania for purposes of this motion, since under either state's laws, the outcome is the same.
We begin with a brief discussion of ripeness. Whether a question is ripe for adjudication "turns on `the fitness of the issues for judicial decision' and `the hardship to the parties of withholding court consideration.'" Pacific Gas and Electric Co. v. State Energy Resources Conservation and Development Comm'n, 461 U.S. 190, 201, 103 S.Ct. 1713, 1720, 75 L.Ed.2d 752 (1983) (quoting Abbott Laboratories v. Gardner, 387 U.S. 136, 149, 87 S.Ct. 1507, 1515, 18 L.Ed.2d 681 (1967)). Since Disney has not yet, and may never, incur the liability to the Association for which it seeks indemnification, the possibility of unripeness must be considered.
Indeed, in another case in this district in which the defendant raised a counterclaim demanding that the plaintiff provide indemnification or contribution against a claim asserted by a nonparty, the counterclaim was dismissed as unripe. See Allied Roofers Supply Corp. v. Jervin Construction, Inc., 675 F.Supp. 130, 133 (S.D.N.Y.1987). However, the result in that case rested largely on the fact that the issue of indemnification could not be determined without knowing more about the nonparty claim. Id. In the instant case, by contrast, we already have all the information we need to adjudicate Disney's demands for indemnification. Following Disney's pleadings, the issue turns on...
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