Rosemont Enterprises, Inc. v. Random House, Inc.

• Citation: 261 F. Supp. 691
• Decision Date: 22 December 1966
• Docket Number: No. 66 Civ. 1532.,66 Civ. 1532.
• Parties: ROSEMONT ENTERPRISES, INC., Plaintiff, v. RANDOM HOUSE, INC. and John Keats, Defendants. Howard R. Hughes, Maynard E. Montrose, Chester S. Johnson, Chester C. Davis and Gregson Bautzer, Additional Defendants on Counterclaim.
• Court: U.S. District Court — Southern District of New York

261 F. Supp. 691

ROSEMONT ENTERPRISES, INC., Plaintiff, v. RANDOM HOUSE, INC. and John Keats, Defendants Howard R. Hughes, Maynard E. Montrose, Chester S. Johnson, Chester C. Davis and Gregson Bautzer, Additional Defendants on Counterclaim.

No. 66 Civ. 1532.

United States District Court S. D. New York.

December 22, 1966.

Katz, Moselle & Schier, New York City, for plaintiff; Chester C. Davis, Lola S. Lea, New York City, of counsel.

Weil, Gotshal & Manges, New York City, for defendant Random House, Inc. and co-attorneys for defendant John Keats; Horace S. Manges, Edward C. Wallace, Marshall C. Berger, New York City, of counsel.

Dilworth, Paxson, Kalish, Kohn & Dilks, Philadelphia, Pa., for defendant John Keats; William T. Coleman, Jr., Robert W. Maris, Philadelphia, Pa., of counsel.

OPINION

WEINFELD, District Judge.

Plaintiff, Rosemont Enterprises, Inc. (Rosemont), commenced this action for copyright infringement against Random House, Inc., the publisher, and John Keats, the author, of a biography of Howard Hughes, hereafter referred to as The Book. The material allegedly infringed by the defendants consisted of articles published in three issues of Look Magazine in 1954, the copyrights to which Rosemont obtained from Cowles Communications, Inc. by assignment on May 20, 1966, followed six days later by the commencement of this action. The Book was published in between on May 23,1966.

In June 1966 plaintiff applied for and was granted a preliminary injunction, which enjoined the defendants, pending final determination of the action, from distributing, advertising or selling copies of The Book.¹ The injunction was vacated by the Court of Appeals.² Familiarity with the factual references in the court's and the concurring opinions is assumed.

Rosemont and the third-party defendants now move pursuant to Rule 12(b) (6) and Rule 56 of the Federal Rules of Civil Procedure to dismiss the substantially similar counterclaim of each defendant upon the ground that upon its face and upon the undisputed facts it fails to state a claim upon which relief can be granted. The nonresident third-party defendants additionally move to dismiss for lack of jurisdiction over the person. The third-party defendants against whom the counterclaim also is asserted are: Howard Hughes, the subject of the biography; Gregson Bautzer, attorney for Hughes or corporations controlled by him; Maynard E. Montrose, an officer or employee of corporations owned or controlled by Hughes; Chester S. Johnson, a former officer or employee of such corporations; and Chester C. Davis, also an attorney representing Hughes or corporations owned and controlled by him. With the exception of Davis, the other third-party defendants are citizens of either California or Texas and service of process upon them was effected pursuant to Rule 4(e) of the Federal Rules of Civil Procedure.

Stripped to its essentials, the counterclaim in substance alleges that prior to June 1965 Hughes, in concert with the other third-party defendants who allegedly are controlled by him and acted under his direction, embarked upon a scheme or plan to prevent and suppress the publication of The Book by the defendant Random House, which had been in preparation for publication by it since September 1962, as well as to prevent others from writing or publishing biographical material about him; that the scheme encompassed, among other matters, threats to Random House that Hughes would use his vast personal fortune to tie it up in costly and vexatious litigation to deter its publication; that similar threats were made to other publishers and authors; that in furtherance of the objective to prevent the publication of The Book, Rosemont was organized, at Hughes' behest, to engage in litigation to vex and annoy authors and publishers desiring to write and publish books and other material concerning Hughes and as a medium for paying moneys to authors and publishers who agreed to refrain from so doing; that to disguise Rosemont's real purpose, a fictitious arrangement was entered into between Rosemont and Hughes under which Rosemont was granted the sole and exclusive right to publish Hughes' life story and to exploit biographical material concerning him, but that the real purpose was to prevent others from publishing a biography of Hughes and to give Rosemont a colorable basis upon which to bring actions against authors and publishers attempting to write or publish books or other material about Hughes.

The counterclaim further alleges that Rosemont, based upon its claimed exclusive right to publish a Hughes biography, commenced an action in February 1966 in the Supreme Court of the State of New York against the defendants charging that the anticipated publication of The Book was a commercial exploitation of the name and personality of Hughes and an invasion of his right to privacy; that plaintiff knew the claims asserted in that action were without basis in law or fact; that its purpose was not to vindicate any right of Rosemont. Charges are also made that plaintiff, in furtherance of the objective to suppress the publication of Hughes' biographical material, bribed authors or other biographers of Hughes to violate their contractual commitments to their publishers and likewise attempted to bribe Keats, the author of The Book, who was under contractual obligation to Random House, and that one or more of the conspirators made it known to Random House that either plaintiff or Hughes would pay moneys and other valuable consideration to it to refrain from publishing a book or other material about Hughes.

The counterclaim further alleges that this suit, like the state court action, is without foundation in law or fact; that the Look articles were of no value when their copyright assignments were acquired by Rosemont; that the assignments were procured solely to give Rosemont a colorable claim upon which to institute this action; that both the state action and this action were commenced in furtherance of the plan to vex and harass the defendants herein and as vehicles to carry out the conspiratorial design to suppress the publication of The Book and to deter other publishers and authors from writing or publishing books of materials on Hughes.

The defendants herein further charge that Rosemont and the third-party defendants, in furtherance of their basic conspiratorial purpose, intend to institute additional actions based on publication of The Book, knowing that such actions will have no basis in law or fact, and to engage in other acts calculated to vex and annoy the defendants, which acts are not presently known to them; and that the acquisition of the Look article copyrights constituted a violation of section 275 of the New York State Penal Law, McKinney's Consol.Laws, c. 40.³

Finally, the defendants charge that the lawsuits already commenced and all actions to date taken pursuant to said scheme or plan "were done maliciously and without justification in order to injure and damage the defendants herein and any other author or publisher who attempted to write or publish a book or other material concerning Hughes"; that as a result the defendants have suffered damages in a sum in excess of $25,000 and have suffered and will continue to suffer irreparable injury unless the parties to the claimed conspiracy are enjoined.

The above allegations are also pleaded as a separate defense of unclean hands which, it is asserted, deprives Rosemont of the right to equitable relief. However, we are here concerned only with the counterclaim based thereon, since the attack is directed only against it.

If the facts pleaded as a defense are established upon the trial, the plaintiff's conduct, under the views expressed in the concurring opinion of Chief Judge Lumbard, joined in by Judge Hays,⁴ would be sufficent to bring into play the doctrine of unclean hands and to foreclose equitable relief.⁵ However accepting the sufficiency of the defense as against Rosemont, it does not follow that the facts pleaded therein also state an independent cause of action against Rosemont, Hughes and the other third-party defendants entitling the defendants herein to affirmative equitable relief and money damages. While defendants seek to read into the concurring opinion a finding that the counterclaim, as well as the defense, was upheld as valid, the court's decision is no more than a holding that the District Court below abused its discretion in granting the preliminary injunction, since it did not appear there was a clear showing of probable success upon the trial upon the basic claim of infringement of the Look articles.⁶ The Court of Appeals did not purport to consider the question of the validity of the counterclaim—indeed, the court's opinion delineated as the only issue before it: "Was the preliminary injunction erroneously issued as a matter of law?"⁷

The parties are in accord that the substantive law of the State of New York governs the issue of the sufficiency of the counterclaim. At the outset it should be borne in mind that New York does not recognize conspiracy as a substantive tort, and the allegations that the third-party defendants and the plaintiff engaged in a joint scheme or plan or were co-conspirators do not transform an insufficient pleading into a good one.⁸

Under New York law the actions commenced by Rosemont in the state court and in this court, however ill-inspired or ulteriorly motivated as the defendants here charge, do not, without more, support a counterclaim for damages or other relief.⁹ And even if the actions were instituted by plaintiff maliciously and without probable cause, an action in favor of the defendants for malicious prosecution does not lie unless and until the claimed malicious suit has been terminated favorably to the claimant,¹⁰ which is but one of the essential elements of the action.¹¹ Both this and the state action are still pending undetermined.

So, too, under New York...