Raquel v. Education Management Corp.

• Decision Date: 25 November 1996
• Docket Number: Civil A. No. 95-1620.
• Citation: 955 F.Supp. 433
• Parties: RAQUEL, a partnership, Plaintiff, v. EDUCATION MANAGEMENT CORP., Geffen Records, Inc., Nirvana, a partnership, Defendants. EDUCATION MANAGEMENT CORP., Third-Party Plaintiff, v. ELIAS/SAVION ADVERTISING, INC., Third-Party Defendant. GEFFEN RECORDS, INC., Nirvana, Third-Party Plaintiffs, v. ART INSTITUTES INTERNATIONAL, INC., Third-Party Defendant.
• Court: U.S. District Court — Western District of Pennsylvania

955 F.Supp. 433

RAQUEL, a partnership, Plaintiff, v. EDUCATION MANAGEMENT CORP., Geffen Records, Inc., Nirvana, a partnership, Defendants.

EDUCATION MANAGEMENT CORP., Third-Party Plaintiff, v. ELIAS/SAVION ADVERTISING, INC., Third-Party Defendant.

GEFFEN RECORDS, INC., Nirvana, Third-Party Plaintiffs, v. ART INSTITUTES INTERNATIONAL, INC., Third-Party Defendant.

Civil A. No. 95-1620.

United States District Court, W.D. Pennsylvania.

November 25, 1996.

Bruce M. Campbell, James A. Lewis, Edward C. Terreri, Plowman, Spiegel & Lewis, Pittsburgh, PA, for Raquel.

Dennis St. John Mulvihill, Robb, Leonard & Mulvihill, Pittsburgh, PA, for Education Management Corp. and Art Institutes Intern., Inc.

Elizabeth L. Rabenold, Michael J. Kline, Thorp, Reed & Armstrong, Pittsburgh, PA, for Geffen Records, Inc. and Nirvana.

Thomas C. Wettach, Titus & McConomy, Pittsburgh, PA, Irvin S. Bails, Frank, Bails, Kirk, Murcko & Toal, Pittsburgh, PA, for Elias/Savion Advertising, Inc.

MEMORANDUM ORDER

LEE, District Judge.

On October 10, 1996, this case was referred to United States Magistrate Judge Francis X. Caiazza for pretrial proceedings in accordance with the Magistrates Act, 28 U.S.C. §§ 636(b)(1)(A) and (B), and Rules 72.1.3 and 72.1.4 of the Local Rules for Magistrates.

The magistrate judge's report and recommendation, filed on October 11, 1996, recommended that the Motion to Dismiss (document number twenty-eight) filed by the Third Party Defendant Elias/Savion Advertising, Inc. against the original Plaintiff Raquel be granted, without prejudice. The report also recommended that although the Defendants — Education Management Corporation, Geffen Records, Inc. and Nirvana, a partnership — did not move for the dismissal of the Plaintiff's claims against them, these claims should likewise be dismissed, without prejudice, because the Plaintiff's action filed against the remaining Defendants is not based upon diversity of citizenship and because there is no subject matter jurisdiction. The Report further recommended that the pendent state claims likewise should be dismissed without prejudice because the court no longer has supplemental jurisdiction of the breach of contract and conversion claims since there is no independent basis for federal jurisdiction of these pendent state claims. The parties were allowed ten (10) days from the date of service to file objections. Service was made on all parties and objections were filed by the Plaintiff Raquel and also by the third party Defendant Elias/Savion on October 28, 1996. After de novo review of the pleadings and documents in the case, together with the report and recommendation and objections thereto, the following order is entered:

AND NOW, this 25th day of November, 1996;

IT IS HEREBY ORDERED that the Motion to Dismiss (document number twenty-eight) filed by the Third Party Defendant Elias/Savion Advertising, Inc. against the original Plaintiff Raquel is granted, without prejudice.

IT IS FURTHER ORDERED that the action against Education Management Corporation, Geffen Records, Inc. and Nirvana, a partnership, is also dismissed, without prejudice.

IT IS FURTHER ORDERED that because the Third-Party Plaintiffs; viz., Geffen Record, Inc and Nirvana have been dismissed, there now is no basis for their action against the Third-Party Defendant, Art Institutes International, Inc. Accordingly, the action against Art Institutes International, Inc., is likewise dismissed, without prejudice.

Finally, Elias-Savion's Motion for Counsel Fees is denied.

The report and recommendation of Magistrate Judge Caiazza, Document No. 34, dated October 11, 1996, is adopted as the opinion of the court.

MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION

CAIAZZA, United States Magistrate Judge.

I. RECOMMENDATION

The Motion to Dismiss (document number twenty-eight) filed by the Third Party Defendant Elias/Savion Advertising, Inc. against the original Plaintiff Raquel should be granted, without prejudice. Although the Defendants — Education Management Corporation, Geffen Records, Inc. and Nirvana, a partnership — did not move for the dismissal of the Plaintiff's claims against them, these claims should likewise be dismissed, without prejudice, because the Plaintiff's action filed against the remaining Defendants is not based upon diversity of citizenship and because there is no subject matter jurisdiction. Also, the court no longer has supplemental jurisdiction of the breach of contract and conversion claims because there is no independent basis for federal jurisdiction of these pendent state claims. Accordingly, the pendent state claims should be dismissed, without prejudice.

II.

REPORT

Procedural Background

The Plaintiff, Raquel, a musical partnership, consisting of band members William Covert, Ronald Alan English, Lawrence Sean McDonald, Eric Gadrix and Kevin Lawrence McDonald, filed this action on October 11, 1995, for copyright infringement under the Copyright Act of 1976, 17 U.S.C. § 101 et seq. against the Defendants Education Management Corporation (EMC), Geffen Records, Inc. (Geffen) and Nirvana, a partnership. EMC filed a Third Party Complaint against Elias/Savion Advertising, Inc. (Elias/Savion) seeking indemnification and/or contribution regarding its potential liability to Raquel.

In its Complaint, Raquel alleges that subject matter jurisdiction exists with this court pursuant to the provisions of 28 U.S.C. §§ 1331 and 1338 regarding its copyright infringement claim against EMC, Geffen and Nirvana. Relatedly, this action is premised upon an alleged infringement of a copyright based on an agreement entered into by Raquel, EMC and Elias/Savion, acting as the agent of EMC. The underlying facts are these.

Factual Background

Phillip Elias (Elias), President of Elias/Savion, was contacted by Greg Temnick of EMC in August of 1990 to produce television commercials for EMC. The commercials were designed to focus on the music industry's educational programs offered by Art Institutes International, which is operated by EMC. One of the television commercials was entitled "Before the Crowd Roars." Elias commenced the project by directing the script preparation, which included a musical rock performance, and a search was conducted to hire musicians to perform in the commercials. The Plaintiff Raquel was the successful applicant.

Although Elias/Savion originally planned to use prerecorded music for the Commercial, Raquel submitted a demonstration tape of their own musical work entitled "Pop Goes the Music." EMC then agreed to use the Raquel song and, as a result Raquel, EMC and Elias/Savion executed a license agreement for the use of Raquel's musical work as well as their performance of "Pop Goes the Music" in the commercial. In its Complaint, Raquel generally alleges that the agreement provided for a three year license for the use of their original work "Pop Goes the Music" and "that the Defendant EMC continued to use the Subject Work in television advertising at various times after the end of the three year period without permission from the Plaintiff and thereby knowingly and willfully infringed upon the Plaintiff's copyright in the Subject Work." Compl. ¶ 27. The Plaintiff also claims that EMC, acting through Art Institutes International, entered into an agreement with the Defendants Geffen and Nirvana for a "video show which embodied and included the Subject Work." Compl. at ¶ 29. Also included in the Complaint are supplemental state claims based upon a breach of contract action and a conversion action.

Prior to commencing this action, Raquel's individual members registered a federal copyright which identified the title of the work as "Pop Goes the Music" and the nature of the work as being an "Audiovisual Work." In that portion of the application document entitled "Nature of Authorship" each author described the work as "All music & lyrics & arrangements."

Now before the court for resolution is a Motion of Third Party Defendant Elias/Savion to Dismiss Plaintiff's Complaint Pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(h)(3).

Motion to Dismiss, Subject Matter Jurisdiction; Rule 12(b)(1) Standard

A Motion to Dismiss filed pursuant to the provisions of Federal Rule of Civil Procedure 12(b)(1) typically raises the question of the federal court's subject matter jurisdiction. The burden of proof regarding a 12(b)(1) motion rests with the party asserting jurisdiction. Thomson v. Gaskill, 315 U.S. 442, 62 S.Ct. 673, 86 L.Ed. 951 (1942). Fundamentally, the moving party questions the authority of the court to hear the case. Relative to the federal question issue, a case arises under federal law only if it is federal law that creates the cause of action. Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983); however, jurisdiction may arise under federal law "where the vindication of a right under state law necessarily turns on some construction of federal law." Id. at 9, 103 S.Ct. at 2846. Next, in diversity cases, the plaintiff must demonstrate complete diversity of citizenship. City of Indianapolis v. Chase National Bank, 314 U.S. 63, 62 S.Ct. 15, 86 L.Ed. 47 (1941). Also, a court should not permit an amendment of the pleadings if subject matter jurisdiction cannot be truthfully averred in the complaint. Harrison v. Local 54, AFSCME, 518 F.2d 1276 (3d Cir.1975).

Position of Elias/Savion

Elias/Savion claims that the Plaintiff Raquel admitted in its Complaint that the videotaped footage embodying Raquel's performance of the Song (Pop Goes the Music) was produced by Elias/Savion for use in both the separate full length video of the band's performance of the song (the Video) and the commercial entitled "Before the Crowd Roars" (the Commercial). See Br. in Supp. of Mot. to Dismiss at 5 (hereafter Def.'s Br.). Elias/Savion also refers the court to the Agreement appended to the Plaintiff's Complaint which states that "`Elias/Savion...