Faulkner v. Arista Records LLC
797 F. Supp. 2d 299
S.D.N.Y.2011Background
- Former Bay City Rollers members sue Arista for unpaid royalties under 1981 agreement; dispute centers on statute of limitations and revival via an acknowledgment.
- 1981 Agreement followed the 1975 Agreement; Arista stopped paying royalties by 1982 and interpleader actions ensued in 1993.
- Audits conducted over the years purportedly identified amounts owed; there is disagreement whether there were three audits or two.
- Delgado, on behalf of Arista, sent letters in 2001 and 2002 proposing payment of accrued royalties conditioned on correct payee/change of address information.
- Plaintiffs received later communications (Gawley email in 2004; KPMG memorandum draft) raising issues about payee information and recovery of pre-1997 royalties.
- Plaintiffs filed suit March 20, 2007; motions for partial summary judgment cross-moved; court also addressed motions to strike certain exhibits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a general 17-101 acknowledgment can revive a single debt | Rollers claim a general acknowledgment suffices. | Zinn requires separate debts to be acknowledged separately. | General acknowledgment suffices for a single contract. |
| Whether pre-1997 debts can be revived by later acknowledgments | Any valid acknowledgment can revive the debt. | Pre-1997 debt revival is not affected by post-1997 payments if not expressly acknowledged. | Revival applies to the debt as a whole; pre-1997 debts can be revived by a valid acknowledgment. |
| Whether the Gawley email and KPMG memorandum satisfy 17-101 | These communications can be enough if intended to influence the Rollers' conduct. | Gawley email to a third party and KPMG draft were not transmitted to the plaintiffs and not properly authenticated. | Gawley email not dispositive; factual issue remains; KPMG memorandum cannot serve as an acknowledgment because it was not shown to be transmitted to the plaintiffs. |
| Whether the Delgado letters are admissible and support 17-101 | Delgado letters show consideration of settlement and could be used to establish revival. | Rule 408 bars settlement communications as proof of liability. | Delgado letters admissible to evaluate revival under 17-101; settlement communications do not bar revival for this purpose. |
Key Cases Cited
- Lew Morris Demolition Co. v. Bd. of Educ. of City of N.Y., 40 N.Y.2d 516 (N.Y. 1976) (acknowledgment may revive a debt if it clearly contemplates payment)
- Lynford v. Williams, 34 A.D.3d 761 (N.Y. App. Div. 2006) (written acknowledgement must be communicated to plaintiff or influence conduct)
- Zinn v. Stamm, 152 A.D. 76 (N.Y. App. Div. 1912) (general acknowledgments insufficient when multiple independent debts exist)
- Clarkson Co. v. Shaheen, 533 F. Supp. 905 (S.D.N.Y. 1982) (internal documents generally not sufficient; must be communicated to plaintiff)
- Flynn v. Flynn, 175 A.D.2d 51 (N.Y. App. Div. 1991) (conditions in acknowledgments; conditional revival literature)
- Trebor Sportswear Co. v. The Limited Stores, Inc., 865 F.2d 506 (2d Cir. 1989) (Rule 408 context related to settlement negotiations and evidence)
- PRL USA Holdings, Inc. v. U.S. Polo Assoc., Inc., 520 F.3d 109 (2d Cir. 2008) (settlement evidence admissible where appropriate under Rule 408)
- Daewoo Int'l (Am.) Corp. Creditor Trust v. SSTS Am. Corp., 2004 WL 830079 (S.D.N.Y. 2004) (financial statements can contribute to revival depending on transmission)