Smith v. Harry Wayne Casey, Individually, K.C. & the Sunshine Band, Inc.

• Decision Date: 22 January 2014
• Docket Number: Non–Argument Calendar.,No. 13–12351,13–12351,n–Argument Calendar.
• Citation: 741 F.3d 1236
• Parties: Ronald Louis SMITH, Jr., as Personal Representative of the Estate of Ronald Louis Smith, Plaintiff–Appellant, v. Harry Wayne CASEY, individually, K.C. & The Sunshine Band, Inc., a Florida Corporation, Sunshine Sound Entertainment, Inc., agent of Sunshine Sound Enterprises, Inc., Harrick Music, Inc., a Florida Corporation, Jimmie Horace Horne, Jr., individually, f.k.a. Jimmy “Bo” Horne, Joy Productions, Inc., a Florida Corporation, Defendants–Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

741 F.3d 1236

Ronald Louis SMITH, Jr., as Personal Representative of the Estate of Ronald Louis Smith, Plaintiff–Appellant,

v.Harry Wayne CASEY, individually, K.C. & The Sunshine Band, Inc., a Florida Corporation, Sunshine Sound Entertainment, Inc., agent of Sunshine Sound Enterprises, Inc., Harrick Music, Inc., a Florida Corporation, Jimmie Horace Horne, Jr., individually, f.k.a. Jimmy “Bo” Horne, Joy Productions, Inc., a Florida Corporation, Defendants–Appellees.

No. 13–12351

Non–Argument Calendar.

United States Court of Appeals, Eleventh Circuit.

Jan. 22, 2014.

Lita T. Rosario, Wyz Girl Entertainment Consulting, LLC, Washington, DC, Brett Barnard Trembly, Trembly Law Firm, Miami, FL, for Plaintiff–Appellant.

Franklin L. Zemel, Brett A. Duker, Arnstein & Lehr, LLP, Fort Lauderdale, FL, Judith L. Grubner, Arnstein & Lehr, LLP, Chicago, IL, for Defendants–Appellees.

Appeal from the United States District Court for the Southern District of Florida. D.C. Docket No. 1:12–cv–23795–UU.

Before WILSON, FAY and KRAVITCH, Circuit Judges.

KRAVITCH, Circuit Judge:

At issue in this appeal is whether the author of a musical composition who assigned his rights in exchange for royalties may rely for purposes of standing to sue for infringement under the Copyright Act on a registration his publisher filed. Ronald Louis Smith, Jr., as representative for the estate of his late father, sued several entities with whom Ronald Louis Smith, Sr. (Smith), recorded music in the late 1970s. The estate alleged infringement of Smith's copyright in a musical composition entitled “Spank,” along with a claim for breach of contract and a claim seeking a declaration of the validity of copyright transfer terminations the estate filed under 17 U.S.C. § 203. Concluding the estate lacked statutory standing to sue for infringement, the district court dismissed that claim and denied a motion to amend the complaint as futile. The court then concluded the declaratory-judgment claim was not ripe and declined to exercise supplemental jurisdiction over the contract claim. Because the conclusion that the estate lacked statutory standing to sue for copyright infringement was erroneous, we reverse.

I.

When reviewing a dismissal for failure to state a claim, we accept as true the allegations in the complaint and recite them in the light most favorable to the plaintiff. See Starship Enters. of Atlanta, Inc. v. Coweta Cnty., Ga., 708 F.3d 1243, 1252 (11th Cir.2013). Smith wrote “Spank,” and he later produced a recording of the song by another artist under a Recording Agreement he had signed with a company known at the time as Sunshine Sound Enterprises, Inc. (Sunshine Sound). Sunshine Sound released the record in early 1979 and registered a copyright for the sound recording. Smith's Recording Agreement contained a provision ¹ requiring him—either with Sunshine Sound or a publishing company of its choosing—to “execute ... a separate Songwriter's Agreement in respect of each ... Composition” recorded under the agreement “in the form of Exhibit ‘A’ attached hereto....” ² Under that form songwriter's contract, Smith would “sell[ ], assign[ ], and deliver[ ]” his rights in a composition in exchange for scheduled royalties for different uses of the work. In the event Smith failed to execute the form agreement for any given composition, he gave Sunshine Sound authority “to execute said agreement in [his] name.”

With respect to “Spank,” however, neither Smith nor Sunshine Sound acting on his behalf inked such an agreement. Nonetheless, around the same time it was recorded, Harrick Music, Inc. (Harrick Music), a publishing company affiliated with Sunshine Sound, registered a copyright for the musical composition “Spank,” identifying Smith as composer and itself as claimant. Harrick Music checked a box on the registration indicating the song was not a composition made for hire.

Smith's relationship with Sunshine Sound deteriorated after “Spank” was released. As a result, on September 30, 1980, he signed a Release Agreement with the company terminating his recording contract and mutually releasing all claims and obligations under it “except as otherwise provided” in the Release. As relevant here, the Release stated that sound recordings made under the Recording Agreement remained Sunshine Sound's property and Sunshine Sound remained “obligated to [Smith] under the royalty provisions” of the Recording Agreement. The Release was wholly silent, however, as to where ownership rested for the copyrights in the musical compositions embodied on the recordings. And Harrick Music was not a party to the Release.

In the ensuing years, Smith acquiesced in Harrick Music's administration of the “Spank” composition copyright, but, he alleged, the company never remitted a cent to him. According to the complaint, neither did Sunshine Sound. Under the Recording Agreement and the form songwriter's agreement attached to it, however, Smith was owed percentage royalties for the song's exploitation in exchange for assigning his rights to it. So on November 28, 2011, shortly before his death, Smith through counsel sent a cease-and-desist letter revoking Harrick Music's authority to administer “Spank.” And Smith also filed with the Copyright Office four Notices of Termination, seeking to formally record his revocation. Despite this, the defendants continued to commercially exploit the composition.

So on October 18, 2012, Smith's estate filed suit against Sunshine Sound, Harrick Music, and several related entities seeking, among other things, damages for infringement ³ from the November 2011 date of the cease-and-desist letter. The estate also alleged the entities had breached agreements with Smith under the Recording Agreement for “Spank” and an album released under his own name in 1978 entitled Party Freaks, Come On. And the estate sought a declaration of the validity of the termination notices it had filed.

Two defendants the Smith estate named—Jimmie Horne, Jr., who performed “Spank” on the recording Smith produced that was released under Horne's stage name Jimmy “Bo” Horne in 1979, and a related company called Joy Productions, Inc.—moved to dismiss the infringement count as to them. No other defendant joined the motion. But, after reviewing it, the district court concluded Smith lacked statutory standing to pursue his copyright claim and sua sponte dismissed that count with prejudice as to all of the defendants. Harrick Music, not Smith or his estate, had registered the copyright, the district court noted, and registration was a necessary precondition to filing suit for infringement. The district court also observed that Smith's allegations were inadequate to state a plausible claim of infringement against Horne and Joy Productions but that it was possible the deficiency could be cured by amendment. Doing so, however, would be “futile,” the district court decided, “given that [the estate] lacks statutory standing to bring a copyright infringement charge at the present time.”

Smith's estate moved the court to reconsider its dismissal of the copyright infringement claim, contending statutory standing for the claim existed as a result of the registration Harrick Music had filed. And the estate requested leave to file an amended complaint, stating that it could cure any deficiency if the allegations of infringement against Horne and Joy Productions were insufficient. The district court denied the motion, without any word regarding the motion to amend, presumably resting upon its previous determination that amendment would be futile. That decision was based on the court's finding that the Smith estate “may not rely on Harrick's copyright registration in order to bring a suit for copyright infringement.” Later, the court sua sponte dismissed the remainder of the estate's case, concluding the declaratory judgment claim was unripe. Without that claim, the court concluded, there was no independent basis for federal subject matter jurisdiction, and the court declined to exercise supplemental jurisdiction over the estate's claims that Harrick Music and Sunshine Sound breached express and implied contracts with Smith. This is the estate's appeal.

II.

Smith's estate argues the court was wrong to conclude it lacked statutory standing to bring an infringement claim and, concomitantly, abused its discretion in denying as futile leave to amend the complaint. As a result, the estate contends, an independent federal claim exists in the case, and the court should not have declined to exercise pendent jurisdiction over the breach-of-contract claim. Finally, the estate urges that its declaratory judgment claim was ripe for disposition. We agree with the first two points but disagree with the third.

We review de novo a district court's dismissal of a complaint for failure to state a claim upon which relief could be granted. Starship Enters. of Atlanta, Inc., 708 F.3d at 1252. And we review for an abuse of discretion the denial of a motion to reconsider, Region 8 Forest Service Timber Purchasers Council v. Alcock, 993 F.2d 800, 805–06 (11th Cir.1993), reviewing any attendant question of law de novo, see Coventry First, LLC v. McCarty, 605 F.3d 865, 869 (11th Cir.2010).

“To make out a prima facie case of copyright infringement, a plaintiff must show that (1) it owns a valid copyright in the [work] and (2) defendants copied protected elements from the [work].” Saregama India Ltd. v. Mosley, 635 F.3d 1284, 1290 (11th Cir.2011) (alterations in original) (internal quotation marks omitted). “The legal or beneficial owner of an exclusive right under a copyright is entitled, subject to the requirements of section 411 [of the Copyright Act], to institute an action for any infringement of that particular right committed while he or she is the owner of it.” 17 U.S.C. § 501(b). Section § 411(a) provides, in turn, that “no civil action for infringement of the copyright in any United States work shall be...