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Andrews v Sony ATV Music Publishing

USDC, S.D. New York, February 23, 2017

District court dismisses suit brought by members of ’90s R&B group Dru Hill against music publishers Sony and EMI, which entered administration agreement with group’s original publishing company, citing failure to allege enforceable implied contract between group and either Sony or EMI.

Recording artists and songwriters Mark Andrews, James Green and Larry Anthony Jr., known professionally as ’90s R&B group Dru Hill, sued Sony/ATV Music Publishing LLC, EMI April Music Inc. and EMI Blackwood Music Inc., and others in 2015 for breach of contract, breach of fiduciary duty and conversion, seeking more than $600,000 in unpaid royalties. According to their original complaint, the members of Dru Hill entered into individual music publishing and administration agreements with nonparty Art of War Publishing in 1996. Art of War then entered an exclusive administration agreement with EMI in 2002, which provided that EMI would pay royalties directly to the Dru Hill members under contract with Art of War, but that the members were not intended third-party beneficiaries. In 2005, Andrews contracted with defendant 27 Red Music Publishing LLC and its owner to collect from EMI allegedly unpaid royalties from 1996 to 2005; however, plaintiffs allegedly never received those royalties. The original complaint maintained plaintiffs were “intended beneficiaries” under EMI’s administration agreement with Art of War, and asserted a single breach of contract claim against Sony, alleging that Sony’s payments to 27 Red and Robinson of post-2005 royalties violated that agreement.

Plaintiffs later filed a second amended complaint, alleging that the original EMI agreement was automatically terminated after three years, but that, because EMI continued to administer the Art of War catalog and collect royalties, an implied contract was created between EMI/Sony and plaintiffs. Defendants allegedly breached that implied contract by failing to pay royalties directly to plaintiffs.

The district court ruled that the second amended complaint failed to plausibly allege an enforceable implied contract, stating that “Plaintiffs make essentially one substantive allegation in support of their implied contract claim: that, following the purported termination of the EMI administration agreement, EMI ‘continued to administer the Art of War catalog’ and ‘collect royalties due plaintiffs.’ That is insufficient without more to allege the existence of an implied contract.” The district court explained that plaintiffs failed to allege any of the circumstances surrounding the alleged implied contract’s formation, or any facts — other than a generalized requirement that EMI/Sony pay royalties — that would allow the court to infer any intention or assent to be bound.

The court also held that, even if plaintiffs had plausibly alleged the existence of an implied contract, that contract would be barred by New York’s Statute of Frauds, which renders unenforceable agreements that cannot, by their own terms, be performed within one year. The district court found that the purported implied contract fell within that statute, because it did not have any termination provision or end date, and because plaintiffs sought all royalties from 2005 to the present. Alternatively, the court held that, if plaintiffs alleged that the implied contract lasted less than one year, plaintiffs’ claim of breach would be barred by New York’s six-year statute of limitations, and that plaintiffs were thus “caught between the Scylla and Charybdis.”

Finally, the district court noted that its decision did not resolve plaintiffs’ remaining claims against 27 Red, and stated that plaintiffs may move for default judgment against it on their breach of contract and breach of fiduciary duty and conversion claims.

Summary prepared by Tal Dickstein and Peter Pottier