In Re McGraw-hill Global Educ. Holdings LLC
909 F.3d 48
3rd Cir.2018Background
- Photographers Ed Kashi and Bob Krist entered representation agreements with Corbis authorizing Corbis to sublicense their works; photographers received royalties and limited audit rights but royalty statements lacked detailed license scope.
- Corbis sublicensed images to McGraw-Hill under master Preferred Pricing Agreements (PPAs) and invoices that incorporated Corbis Terms and Conditions; PPAs/Terms contained mandatory exclusive forum-selection clauses designating New York.
- Kashi and Krist sued McGraw-Hill in the E.D. Pa. for copyright infringement, alleging McGraw-Hill exceeded licensed uses (copies, distribution, medium, duration).
- McGraw-Hill moved to transfer under 28 U.S.C. §1404(a), invoking the Corbis forum-selection clause; the district courts split: Judge Beetlestone (Kashi) denied transfer, Judge Davis (Krist) granted transfer.
- The Third Circuit consolidated mandamus petitions to review whether non-signatory photographers are bound by the Corbis forum-selection clause as intended third-party beneficiaries or closely related parties, and whether Atlantic Marine’s modification to §1404(a) applies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether photographers are intended third-party beneficiaries of Corbis–McGraw‑Hill agreements | Photographers contend they are not; they receive royalties only via separate Corbis contracts | MHE argues invoices and license limits directly benefit photographers making them intended beneficiaries | Held: Photographers are not intended third‑party beneficiaries (benefit flows via photographers’ Corbis contracts; invoices alone insufficient) |
| Whether photographers are "closely related" (bind non-signatory) | Photographers deny close relation; no ownership, negotiation role, or direct benefit from McGraw‑Hill–Corbis contracts | MHE argues equitable estoppel/closely related parties doctrine binds non-signatories | Held: Photographers are not closely related; doctrine not met on facts |
| Foreseeability of enforcement of forum clause against non-signatories | Photographers argue clause not reasonably communicated; lack evidence they knew clause specified New York | MHE points to photographers’ own Corbis agreements (which named New York) and widespread practice | Held: District court’s foreseeability finding was insufficiently supported, though evidence (photographers’ agreements) made foreseeability arguable; not clear, indisputable error |
| Scope of forum-selection clause: do copyright claims "regarding this Agreement" fall within clause? | Photographers argue copyright claims are independent and plaintiffs need not plead license as part of prima facie case | MHE argues disputes over license scope bring copyright claims within clause | Held: The clause is broad ("dispute regarding this Agreement") and can encompass copyright suits where licenses are implicated; Judge Davis correct on scope though some reasoning (prima facie "unauthorized" element) was erroneous |
Key Cases Cited
- Howmedica Osteonics Corp. v. Stryker, 867 F.3d 390 (3d Cir. 2017) (mandamus review of §1404(a) transfers and framework when some parties bound by forum clause)
- Atlantic Marine Constr. Co. v. U.S. Dist. Ct., 571 U.S. 49 (2013) (forum-selection clause narrows §1404(a) analysis to public-interest factors when clause governs parties)
- E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fibers & Resin Intermediates, 269 F.3d 187 (3d Cir. 2001) (treatment of non-signatories re arbitration/forum clauses; third‑party beneficiary/closely related doctrines)
- Dun & Bradstreet Software Servs., Inc. v. Grace Consulting, Inc., 307 F.3d 197 (3d Cir. 2002) (elements of copyright claim discussed; district panel clarifies scope/prima facie issues)
- Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (1991) (copyright infringement elements and originality standard)
- Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709 F.2d 190 (3d Cir. 1983) (foreseeability as prerequisite for binding non-signatory to forum clause)
- Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir. 1995) (§1404(a) balancing factors)
- Sunbelt Corp. v. Noble, Denton & Assocs., 5 F.3d 28 (3d Cir. 1993) (plenary review of legal determinations on §1404(a) transfer)