J. MICHELLE CHILDS, District Judge.
This matter is before the court upon Defendant ("Hynie"), Defendant James J. Brown, II ("Brown II"), Defendant Russell L. Bauknight ("Bauknight"), and Defendant David C. Sojourner as the Limited Special Administrator's (the "LSA") (collectively, "Defendants") Motion to Revise this court's August 21, 2019 ("August Order") and September 12, 2019 ("September Order") Orders (collectively, "the Orders") (ECF No. 213). In the Orders, the court denied Defendants' Motions to Dismiss based on rules and doctrines the court found inapplicable (ECF Nos. 80, 81, 85, 101). Due to the present procedural posture of the case, Defendants now bring their Motion to Revise pursuant to Federal Rule of Civil Procedure 54(b).
On December 4, 2019, Plaintiffs Deanna Brown-Thomas, Yamma Brown, Michael D. Brown, Nicole C. Brown, Jeanette Mitchell Bellinger, Sarah LaTonya Fegan, Ciara Petit, and Cherquarius William's (collectively, "Plaintiffs") filed their Response (ECF No. 215) to Defendants' Motion to Revise, which vigorously opposes the Motion.
The court also considers the LSA's Supplemental Memorandum supporting its Motion to Dismiss ("Supplemental Motion to Dismiss) (ECF No. 194)
Upon review of all parties' briefs, the applicable law, and for the reasons set forth herein, the court
This case befalls against the backdrop of a long-standing personal and legal battle between several entities (a) Plaintiffs—the adult children to the late African-American singer, James Brown ("Brown")—,(b) Hynie—Brown's second wife and surviving spouse, (c) Brown II— Brown's son from his second marriage with Hynie and (d) Bauknight and the LSA—Fiduciaries of the James Brown Estate and Trust. The parties are undoubtedly plagued by a panoply of issues, some of which are irrelevant to this matter, stemming from the years-long battle. The crux of this matter surrounds a clash between the parties regarding the Copyright Act's Termination Provisions, 17 U.S.C. §§ 304(c), 203(a), ("Termination Provisions"), which gives Plaintiffs—as Brown's statutory heirs, Hynie—as Brown's, as of now, legally declared
Plaintiffs allege, inter alia, that Hynie, Brown II, Bauknight, and the LSA have entered into various agreements with
Moreover, Plaintiffs plead that such agreements are "void under Sections 304(c)'s and 203's protective provisions which safeguard Plaintiffs' termination rights "[n]otwithstanding any agreement to the contrary" and which also place strict time limits on when a statutory heir may assign or encumber his or her termination interests." (ECF No. 1 at ¶¶ 68, 73-77); 17 U.S.C. §§ 304(c)(5), 304(c)(6)(D), 203(a)(5), 203(b)(2)-(4).
Brown died on December 25, 2006, and left a will, disposing of his personal assets, and a trust, disposing of his music, commercial, and real estate assets. (ECF No. 1 at ¶ 41.) In January of 2007, Brown's will was submitted for informal probate in the probate court in Aiken County, South Carolina. (Id. ¶ 42.) Neither Hynie, nor Brown II, were named as beneficiaries of the will or trust. (Id. ¶ 43.) In 2007, Hynie and Brown II brought challenges to Brown's will and trust. (Id. at 11 ¶ 42.) Hynie filed for her spousal rights in South Carolina, which would have entitled her to a statutory elective share and a one-half omitted spouse's share, while Brown II asserted his right to a state statutory child share as a lawful heir. (ECF No. 80-1 at 3.) Plaintiffs, as Brown's adult children, also brought challenges to set aside his will. See Wilson v. Dallas, 743 S.E.2d 746, 750-51 (S.C. 2013);(See also ECF No. 80-1 at 3; ECF No. 80-2 at 29.) As a result of these collective challenges, Brown's will was submitted to the Probate Court of Aiken County, South Carolina. (ECF No. 1 at 11 ¶ 42.) Eventually, the Probate Court of Aiken County transferred the administration of James Brown's estate to the Aiken County Court of Common Pleas. (ECF No. 1 at 11 ¶ 43; ECF No. 80-1 at 4.)
Around November 2015, the South Carolina trial court determined that Hynie was the surviving spouse of Brown. (ECF No. 80-1 at 6.). The LSA and Plaintiffs appealed the spousal order in the South Carolina Court of Appeals. (Id.) On March 8, 2017, however, the LSA along with Bauknight, entered into a written settlement agreement with Hynie (the "LSA-Bauknight-Hynie Settlement Agreement" or "LBH Settlement Agreement"). (Id.) Under the LBH Settlement Agreement, Hynie agreed to dismiss her claims against the Estate, and the LSA agreed to withdraw its appeal of the spousal order. (ECF No. 194-2.)
Moreover, and of relevance to Plaintiffs' allegations, the LBH Settlement Agreement required Hynie to "transfer sixty-five percent of proceeds from her copyright termination rights to the Trust." (ECF No. 194-2 at 2.)
Plaintiffs seek a declaratory judgment under the Copyright Act, 17 U.S.C. §§ 101 et seq, and the Declaratory Judgment Act, 28 U.S.C. § 2201, declaring the agreement(s) between Defendants, or the terms thereof, to be in violation of the Act's termination provisions and the federal principles and objectives guiding their enactment.
On August 21, 2019, after a June hearing, this court issued a fifty-seven (57) page Order discussing the applicable law and reasons for the denial of Defendants' Motions to Dismiss pursuant to Fed. R. Civ. P. 12(b)(1), 12(b)(2), and 12(b)(5). See Brown-Thomas v. Hynie, C/A No. 1:18-cv-02191-JMC, 2019 WL 1043724, at *1 (D.S.C. August 21, 2019); see also ECF No. 183.) On September 12, 2019, the court issued its eighteen (18) page Order denying Defendants' Motions to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6) (ECF No. 185.), including the LSA's Motion to Dismiss (ECF No. 85). On September 27, 2019, with leave of the court, the LSA separately filed its own Supplemental Motion to Dismiss (ECF No. 194). On November 25, 2019, nearly three months after this court's Orders, Defendants filed, under Rule 54(b), their Motion to Revise the court's August and September Orders. (ECF No. 213.) Both Motions are ripe for disposition.
Federal Rule of Civil Procedure 54(b) Motion for Reconsideration The Federal Rules of Civil Procedure provide the following:
Fed. R. Civ. P. 54(b) (emphasis added). A federal district court "retains the power to reconsider and modify its interlocutory judgments, including partial summary judgments, at any time prior to final judgment when such is warranted." Am. Canoe Ass'n v. Murphy Farms, Inc., 326 F.3d 505, 514-15 (4th Cir. 2003). "Compared to motions to reconsider final judgments pursuant to Rule 59(e) of the Federal Rules of Civil Procedure, Rule 54(b)'s approach involves broader flexibility to revise interlocutory orders before final judgment as the litigation develops. Despite the inherent flexibility embodied within Rule 54(b), the United States Court of Appeals for the Fourth Circuit has mindfully cautioned that "the discretion afforded by Rule 54(b) `is not limitless,' . . . ." U.S. Tobacco Coop. Inc. v. Big S. Wholesale of Va., LLC, 899 F.3d 236, 256 (4th Cir. 2018) (quoting Carlson, 856 F.3d 320 at 325). Specifically, the Fourth Circuit has emphasized that a federal district court's revision pursuant to Rule 54(b) is "cabined . . . by treating interlocutory rulings as law of the case." Carlson, 856 F.3d at 325 (emphasis added) (citations omitted). Although Rule 54(b) provides a federal district court with discretion to revisit an earlier ruling, "such discretion is `subject to the caveat that where litigants have once battled for the court's decision, they should neither be required, nor without good reason permitted, to battle for it again.'" U.S. Tobacco Coop. Inc., 899 F.3d at 257 (emphasis added) (quoting Official Comm. of Unsecured Creditors of Color Tile, Inc. v. Coopers & Lybrand, LLP, 322 F.3d 147, 167 (2d Cir. 2003)).
Accordingly, as explicitly mandated by the Fourth Circuit, "a court may revise an interlocutory order under the same circumstances in which it may depart from the law of the case: `(1) a subsequent trial producing substantially different evidence; (2) a change in applicable law; or (3) clear error causing manifest injustice.'" Id. (emphasis added) (quoting Carlson, 856 F.3d at 325). While this standard resembles the standard under Rule 59(e), it accounts for "potentially different evidence discovered during litigation as opposed to the discovery of `new evidence not available at trial.'" Carlson, 856 F.3d at 325 (emphasis added) (quoting Pac. Ins. Co. v. Am. Nat'l Fire Ins. Co., 148 F.3d 396, 403 (4th Cir. 1998)).
The Copyright Act's termination provisions in §§ 203(a)(5) and 304(c)(5) "allow[ ] an author, if he is living, or his widow and children, if he is not, to recapture ... the rights that had previously been transferred to third parties." Classic Media, Inc. v. Mewborn, 532 F.3d 978, 983 (9th Cir. 2008). "Termination of the grant may be effected at any time during a period of five years beginning at the end of thirty-five years from the date of execution of the grant." 17 U.S.C. § 203(a)(3). This termination right is inalienable because, under the statute, "[t]ermination of the grant may be effected notwithstanding any agreement to the contrary, including an agreement to make a will or to make any future grant." Id. (citing § 304(c)(5)).
If an author is survived by a spouse and children, the surviving spouse is deemed to own fifty-percent of the termination interest, and the author's surviving children, and the grandchildren of any deceased child, own collectively the other fifty-percent of the termination interest on a per stirpes basis. A previous spouse is not entitled to termination interests. The termination right can only be exercised by those persons that collectively own more than one-half of the termination interest. §§ 304(c)(2)(A)-(C), 203(a)(2)(A)-(C). Statutory heirs co-own the copyright interests in a work recaptured via statutory termination in the same proportion as their share of the termination interests. These co-ownership interests vest upon the service of the applicable notice of termination. §§ 304(c)(6)(B), 203(b)(2).
The court first addresses Defendants' Motion to Revise under Fed. R. Civ. P. 54(b) (ECF No. 213). The Motion raises three arguments: (1) the court does not have subject matter jurisdiction over the entire case, (2) the court erred in holding that Plaintiffs have standing, and (3) Plaintiffs' claims are not ripe. As such, the court will limit its analysis to the pertinent arguments therein.
Expanding these grounds, Defendants claim that "this Court's recognition of an implied right of action for Plaintiffs' first claim is unquestionably prohibited by modern Supreme Court and Fourth Circuit authority" (ECF No. 213 at 20.), and that the court "failed to apply the current applicable United States Supreme Court standard for determining whether the Copyright Act afforded Plaintiffs a private right of action." (ECF No. 213 at 3.)
Plaintiffs assert that Defendants' Motion is procedurally and substantively deficient as the Motion is untimely and only aims to impermissibly relitigate issues previously contemplated by the court. (ECF No. 215 at 1-10.)
As stated above, in order for the court to revise its August and September Orders, clear precedent mandates that Defendants must show one of the following: "(1) a subsequent trial producing substantially different evidence; (2) a change in applicable law; or (3) clear error causing manifest injustice." U.S. Tobacco Coop. Inc., 899 F.3d at 257 (quoting Carlson, 856 F.3d at 325). Defendants do not maintain that there is "potentially different evidence discovered during litigation" within their Motion. Secondly, at no point do Defendants ever suggest that there is "a change in applicable law" or an alteration to the legal principles which guided the court's August or September Orders. Finally, despite Defendants' unpersuasive arguments, the court has committed no clear error causing manifest injustice.
In Defendants' view, the court apparently "presumed a facial attack on subject matter jurisdiction" when it determined:
(ECF Nos. 213 at 2; 183 at 35.) (Emphasis added.)
Defendants would have this court to ignore the specific standard set forth by Judge Friendly in T.B. Harms Co. v. Eliscu, 339 F.2d 823, 828 (2d Cir. 1964), which was explicitly adopted by the Fourth Circuit in Arthur Young Co. v. City of Richmond, 895 F.2d 967, 969 (4th Cir. 1990) and consistently applied in virtually all circuits to determine whether subject matter jurisdiction `arises under' the Copyright Act. The court declines to do so. While the court understands that the wellestablished standard set forth in T.B. Harms may not be particularly advantageous to Defendants, it is, indeed, the correct standard to apply and was, in fact, the standard the court followed in its Orders. As Plaintiffs astutely observe, "under this well-settled test, a federal court has subject matter jurisdiction if
Defendants assert that "The United States Supreme Court has greatly narrowed the second prong of the T.B. Harms test since 1964." (ECF No. 213 at 3.) Interestingly, Defendants present no Supreme Court case that narrows the second prong of the T.B. Harms test—which, as a reminder, states that jurisdiction is conferred if a "
In its Orders, the court, like others courts,
More importantly, federal courts have determined whether an agreement was "to the contrary" such that it violated the Copyright Act's termination provisions and that investigation has conferred subject matter jurisdiction upon those courts. The issue before the Second Circuit in Marvel Characters, Inc. v. Simon is precisely on point:
310 F.3d 280, 290-91 (2d Cir. 2002) (emphasis added).
To further drill the subject matter issue, the Second Circuit in Penguin Group (USA) Inc. v. Steinbeck, 537 F.3d 193 (2d Cir. 2008), was tasked with determining "whether [an agreement] [was] an `agreement to the contrary'" under 17 U.S.C. § 304(c)(5).
Penguin 537 F.3d at 202.
Because the Penguin Court did not decide issues present in this case (alleged side agreements, etc.) and because Penguin, like all of the cited cases, was decided on summary judgment where discovery had ensued and where the court had an opportunity to examine the agreements at issue, this portion of Penguin is not helpful to Defendants' argument. The main dispute here is whether a federal court has jurisdiction to decide the very question that was presented in Penguin: whether an agreement constitutes an "agreement to the contrary" under the termination provisions. A federal court does have jurisdiction to determine that question.
The court finally observes that federal courts have also determined whether a work of art constituted a "work for hire". See Pastime LLC v. Schreiber, No. 16-8706, 2017 US Dist. LEXIS 199943 (S.D.N.Y. Dec. 5, 2017) (District court denied defendant's motion to dismiss plaintiffs' claim for declaratory judgment action for lack of subject matter jurisdiction because the claim turned on whether defendant's revision of a book constituted "work for hire" and the allegations required interpretation of the Copyright Act's provisions). The court discerns no legally significant difference for purposes of subject matter jurisdiction in the present case.
To bookend, Defendants assert that the court did not consider whether Congress intended for a private right of action to exist under the termination provisions. To the contrary, the court went into detail within the section of the Orders titled "Relevant Statutory Provisions", whereby the court discussed the purpose and intent of Congress in enacting the provisions at issue:
(ECF No. 183 at 5.)
Additionally, the court now highlights the House Report's note stating that "although affirmative action is needed to effect a termination, the right to take this action
Of note, sections 203 and 304(c) do not mention who may challenge the existence of "an agreement to the contrary" that impacts termination rights or the validity of termination notices. See 17 U.S.C. §§ 203, 304(c); see also Ray Charles, 795 F.3d at 1113 ("Both § 203 and § 304(c) are silent on who may challenge the validity of termination notices."). The court correctly applied the applicable standard in T.B. Harms, which is the authoritative case controlling interpretation of section 1338(a) and thus used to determine whether federal subject matter jurisdiction exists under the Copyright Act.
Defendants re-assert that Plaintiffs lack standing to bring this suit and attack the court's determination regarding injury and ripeness. Specifically, Defendants state that "no such injury can occur unless and until (1) Mrs. Brown is determined to be the surviving spouse by the South Carolina Supreme Court; (2) Mrs. Brown survives until 2021; and (3) each Plaintiff survives until 2021 (because the next copyright ripe for termination arises in 2021)." (See ECF No. 213 at 27.) However, as Defendants are well aware, they have already argued the same points in various pastdenied motions, wherein the court noted:
(See ECF Nos. 80, 81, 85, 101.)
Defendants cannot now use Rule 54(b) to re-argue points which have previously failed. See generally U.S. Home Corp. v. Settler Crossing, LLC, C/A No. DKC 08-1863, 2012 WL 5193835, at *3 (D. Md. Oct. 18, 2012) ("A motion for reconsideration under Rule 54(b) may not be used to merely reiterate arguments previously rejected by the court." (citation omitted)). Accordingly, the court finds that there is no clear error of law nor manifest injustice in its August or September Orders. See Fed. R. Civ. P. 54(b). Therefore, the court
The LSA's main argument is that the court should dismiss the action as to it because copyright termination rights are outside of the course and scope of its fiduciary duties and authority and it "has never possessed the legal capacity or authority to enter into the purported `secret' agreements, which Plaintiffs allege are unlawful under the Copyright Act." (ECF No. 194 at 1.) In support of its assertion, the LSA cites the state court's Appointment Order as proof of its limited role:
(ECF No. 85-1.)
The LSA contends that "the only specific allegations in the Complaint as to the LSA are mere references to [its] involvement in the South Carolina Probate Court." (ECF No. 209 at 5.) The LSA further asserts that Plaintiffs' allegations are mere speculation. (ECF No. 209 at 6.)
On the other hand, Plaintiffs argue that "throughout the Complaint, the LSA is alleged to be a participant or contributor to the alleged wrongful conduct." (ECF No. 209 at 5.) For instance, Plaintiffs mention that the "LSA is a party to the disclosed LBH Settlement Agreement
The question on a motion to dismiss "is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Sikhs for Justice v. Nath, 893 F.Supp.2d 598, 615 (S.D.N.Y. 2012) (quoting Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d Cir. 1995)). "[T]he purpose of Federal Rule of Civil Procedure 12(b)(6) is to test, in a streamlined fashion, the formal sufficiency of the plaintiff's statement of a claim for relief without resolving a contest regarding its substantive merits" or "weigh[ing] the evidence that might be offered to support it." Halebian v. Berv, 644 F.3d 122, 130 (2d Cir. 2011) (internal quotation marks and citations omitted). Accordingly, when ruling on a motion to dismiss pursuant to Rule 12(b)(6), the court accepts all factual allegations in the complaint as true and draws all reasonable inferences in the plaintiff's favor. Nielsen v. Rabin, 746 F.3d 58, 62 (2d Cir. 2014); see also Twombly, 550 U.S. at 556, 127 S.Ct. 1955 ("[A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable ...."). "For purposes of this rule, the complaint is deemed to include any written instrument attached to it as an exhibit or any statements or documents incorporated in it by reference." Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002) (internal quotation marks and citations omitted).
The court observes the following specific allegations against the LSA:
(ECF No. 1.) (Emphasis added).
The court is unpersuaded by the LSA's argument that it cannot potentially be held liable for any of Plaintiffs' claims solely on the basis that it "lacks the legal authority to enter into contracts that violate the Copyright Act" and that the LSA is "legally incapable of `conspiring with' the other defendants to usurp Plaintiffs' rights and interests under the Copyright Act." The Complaint plainly alleges that the LSA "was a party and signatory to the Purported Settlement Agreement [LBH Settlement Agreement] which itself is alleged in the Complaint to violate the Copyright Act." (ECF No. 194 at 15.) The LSA attached the "Order Authorizing Settlement", which also clearly states that "the Appointment Order does not expressly list a power to settle claims; however, the Court finds
The LSA is hard-pressed to, in the first instance, argue that it has authority to enter and bind the Estate when the ends are beneficial, then distance itself from the same authority when it is not beneficial. The Appointment Order and the Settlement Order both establish that the LSA has enormous discretion to enter and bind the Estate into agreements that it determines "is in the best interest of the Estate", whether those agreements violate the Copyright Act is up to this court, not Defendants, to determine.
The court requires more factual development to determine whether the agreements at issue constitute "Agreements to the Contrary" under the Copyright Act. At this stage of the litigation, and considering all facts in the light most favorable to Plaintiffs, the court
After careful consideration of Defendants' Motion to Revise (ECF No. 213) and the LSA's Supplemental Motion to Dismiss (ECF No. 194), the court