830 F. Supp. 2d 501
N.D. Ill.2011Background
- Joe Brown was a Chicago musician who founded Lawn, JOB, and Ruler labels circa 1949; Estate is successor to those labels and their copyrights.
- Michael Brown was appointed independent administrator of Joe Brown’s Estate and filed suit alleging breaches of fiduciary duty, fraud, copyright infringement, and civil conspiracy.
- The Estate filed a Second Amended Complaint after two rounds of motions to dismiss, naming Music Sales Corp., Frederick Music Co., Katrina Music Co., Katrina Cobbs, Arc Music Group, and Opus 19 Music, LLC as defendants.
- The court dismissed all claims with prejudice except that the Estate may replead its accounting and unjust enrichment claims against Arc Defendants within 30 days.
- The 1964 Publishing Agreement between Lawn and Frederick Music, later assigned to Music Sales, is central to the dispute over royalties; the court found many claims time-barred or inadequately pleaded and denied leave to amend against most defendants.
- The court’s analysis led to dismissals of: fiduciary duty against Music Sales (Count V), fraud (Count VI), unjust enrichment (Count VIII), accounting (Count IX), constructive trust (Count X), and civil conspiracy (Count XI) as to Music Sales; and similar dismissals for the Frederick and Katrina Defendants, with limited permission to replead accounting and unjust enrichment relating to two songs against Arc within 30 days.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fiduciary duty claim viability against Music Sales | Brown Estate alleges a fiduciary duty due to trust between Lawn and Music Sales | No fiduciary relationship arises from contract/ownership; merely assuming duties under a contract is not fiduciary | Count V dismissed for lack of fiduciary relationship |
| Fraud claim sufficiency against Music Sales | Estate alleges concealment and failure to pay royalties under Frederick Catalogue | Allegations amount to breach of contract, not fraud under Rule 9(b) | Count VI dismissed for failure to state fraud claim under Rule 9(b) |
| Statute of limitations as a bar to Frederick Defendants’ claims | Fraudulent concealment tolling equivalence; discovery in 2008 | Action barred since breach occurred in 1976; tolling not shown | Claims against Frederick Defendants dismissed with prejudice as time-barred |
| Copyright infringement against Arc Defendants | Arc improperly registered and exploited works; co-ownership alleged | Joint authorship bars infringement claims against co-owners; need for accounting may exist | Count I dismissed with prejudice; potential for accounting on two songs permitted upon later pleading; other state-law claims dismissed with prejudice |
| Leave to amend after multiple dismissals | Estate needs one more amendment to cure deficiencies | Repeated failures to cure; amendment would be futile | Leave to amend denied for Music Sales; Arc allowed limited repleading within 30 days for accounting/unjust enrichment; Katrina and Frederick also denied with prejudice |
Key Cases Cited
- Apple Records, Inc. v. Capitol Records, Inc., 137 A.D.2d 50 (N.Y.App.Div. 1988) (long-enduring relationship can be distinct from contract; not a blanket fiduciary duty)
- DiLeo v. Ernst & Young, 901 F.2d 624 (7th Cir. 1990) (fraud pleading requires who/what/when/where/how; 9(b) specificity)
- Martha Graham Sch. and Dance Found., Inc. v. Martha Graham Ctr. of Contemp. Dance, Inc., 380 F.3d 624 (2d Cir. 2004) (authorship disputes and work-for-hire considerations; governing ownership issues)