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Levy v. Zimmerman

Trial court dismisses suit by wife of songwriter seeking share of profits from sale of folk and rock icon Bob Dylan’s catalog to Universal Music Group, finding that 1975 agreement vested copyrights in Dylan and gave songwriter rights to royalties only from certain licensing activities, not from sale of catalog. 

Claudia Levy, wife of the late songwriter Jacques Levy, sued multiple defendants, including folk and rock legend Bob Dylan and Universal Music Group, for breach of contract and tortious interference with contract, arising from Dylan’s sale of his 600-song catalog to Universal. Levy and Dylan collaborated in the early 1970s on 10 songs, seven of which were included in Dylan’s hit 1976 album Desire, including “Hurricane,” one of Dylan’s most famous songs. In 1975, Dylan and Levy entered an agreement through which Dylan agreed to hire Levy as an “employee” to help write lyrics for the 10 songs. The agreement gave Dylan ownership of the copyright in the 10 songs, as well as the right to “assign, transfer, sell, or otherwise dispose” of the songs, subject to Levy’s rights to 35% of income earned from “mechanical rights [to reproduce songs on CDs and digital formats], electrical transcriptions [for use of a song for public broadcast such as radio], reproducing rights [for use in consumer products such as ring tones and music boxes], motion picture synchronization and television rights, and all other rights therein. …” After the sale, Universal continued to pay Levy royalties under the 1975 agreement. 

Claudia Levy filed suit alleging breach of the 1975 agreement and claiming she was entitled to $1.75 million in damages representing her deceased husband’s portion of the revenue received by Dylan in the catalog sale, as well as $2 million in punitive damages. She also asserted a claim for breach of the sale agreement between Dylan and Universal as a third-party beneficiary, and a claim against Universal for tortious interference with the 1975 agreement. 

The court granted defendants’ joint motion to dismiss the suit in its entirety and with prejudice, finding that Claudia Levy’s claim was governed by the express language of the 1975 agreement between her husband and Dylan. Although she sought to introduce evidence of music industry custom and the testimony of a purported expert on copyright law, the court ruled this evidence was inadmissible and irrelevant, because the express language in the 1975 contract unambiguously gave Dylan ownership of the copyrights and gave Jacques Levy only a right to royalties derived from specific licensing activities. Because the contract did not give Levy any rights to profits from the sale of Dylan’s catalog, the court dismissed the breach of contract claim. The court also rejected Claudia Levy’s argument based on a handwritten interlineation, which provided that her husband would be entitled to 35% of any purchase price paid for the songs, pointing out that the provision was expressly limited to a sale “for use for the basis of a screenplay, teleplay or dramatic work,” which was not the case here. The court also rejected an argument that Jacques Levy could not have transferred his rights to Dylan, because his rights were automatically assigned to his company in the first instance, as the 1975 agreement with Dylan confirmed that Levy had not previously sold or disposed of any of his rights to the compositions.

The court also rejected Claudia Levy’s assertion that she was a third-party beneficiary of the catalog sale agreement, finding that the 1975 agreement gave Dylan the right to sell or assign his rights in the songs and only expressed the intent that Jacques Levy would continue to receive the 35% royalties from any assignee—in this case, Universal. The court noted that plaintiff was not actually seeking to enforce the Universal sale agreement but rather seeking to enforce the right to compensation under the 1975 agreement. Because the dispute turned entirely on whether the 1975 agreement entitled Levy to a share of the sale proceeds, the court held that Levy was not an intended third-party beneficiary under the Dylan-Universal agreement.

On Levy’s tortious interference claim against Universal, the court once again looked to the 1975 agreement. Plaintiff alleged that Universal tortiously induced Dylan to breach the 1975 agreement “by advising and/or instructing the Dylan Defendants not to render any revenue, income and/or payments to Plaintiffs in connection with the Catalog Sale.” The court dismissed the claim, finding that plaintiff could not establish two essential elements of tortious interference: Universal’s intentional procuring of a breach of the 1975 agreement and damages as a result. Noting the “most obvious deficiency in plaintiffs’ tortious interference claim is that there was no breach of the contract (i.e., the 1975 Agreement),” the court also held that the complaint failed to plead any facts beyond conclusory allegations that would establish that Universal caused any alleged breach of the agreement resulting in damage to plaintiff. 

Summary prepared by Tal Dickstein and Michael Segal