Thursday, December 27, 2012, 9:18 AM

Northern District of Georgia dismisses copyright and state law claims brought by Master Mind Music, Inc.

Introduction

On December 18, 2012, the U.S. District Court for the Northern District of Georgia issued a decision dismissing a copyright infringement action and all but one of the pendent state law claims.   There is no indication from that decision, however, that as to three state law claims dismissed on statute-of-limitation grounds, the parties considered Georgia revival statutes.

Factual Background

Discussed below as a “factual background” is the court’s summary of the allegations in the plaintiff’s complaint, taking the allegations as true solely for purposes of motions to dismiss filed by the defendants. 

Plaintiff Master Mind Music, Inc. (“Master Mind”) entered into an agreement with Mr. Jasiel Robinson (professionally known as Yung Joc) on February 3, 2005.  Master Mind received the exclusive right to manufacture and sell records and exploit the master recordings and gained co-ownership of Yung Joc compositions.  In return, Master Mind was obligated to actively seek a recording and distribution agreement for Yung Joc.

Yung Joc recorded his debut single “It’s Goin’ Down,” which gained airtime on Atlanta radio and drew the attention of Russell Spencer (“Spencer”) of Block Enterprises, LLC (“Block”).  Block and Master Mind entered into a Joint VentureAgreement on October 28, 2005, with Master Mind to distribute Yung Joc’s first album, the master recordings of which had already been completed.  Under that Joint Venture Agreement, if Block were successful in negotiating a distribution agreement, 50% of the revenues from that agreement would go to Block. 

On December 20, 2005, Block executed a distribution agreement with another defendant, Bad Boy Records, LLC (“Bad Boy”), without disclosing the Master Mind rights.  Master Mind was not a party to the agreement, did not participate in negotiations, and was not identified as a third-party beneficiary.

Bad Boy released two albums: “New Joc City” in June 2006, and “Hustlenomics” in August 2007.  Master Mind was not consulted, was paid no remuneration, and was denied, after request, credit as “co-executive producer.”  Master Mind registered copyrights for both albums on January 5, 2012.  Bad Boy had registered copyrights on the first album on September 15, 2006, and on the second on June 4, 2008.

The opinion notes that two prior actions were brought by Master Mind against Block in the Superior Court of Fulton County based on similar facts and allegations – the first brought on February 14, 2007, and mutually dismissed without prejudice on June 15, 2009, and the second brought ten days later on June 25, 2009, and dismissed for lack of prosecution on August 25, 2001 – less than five months before the federal court action was commenced in the Northern District of Georgia.

Block sought dismissal of Master Mind’s copyright infringement claim under 17 U.S.C. § 507(b), which bars the filing of such a claim more than three years after the claim accrued.  The court recognized that the Eleventh Circuit had not “squarely addressed” the date on which a copyright infringement claim accrued.  Calhoun v. Lillenas Publ’g, 298 F.3d 1128, 1236 (11thCir. 2002) (accrual occurs with actual infringement), was compared with United States v. Shabazz, 724 F.2d 1536, 1540 (11th Cir. 1984) (period begins to run “on date of last infringing act”).   The court then noted that some courts have distinguished between ownership and infringement claims, citing Kwan v. Schlein, 634 F.3d 224, 228 (2d Cir. 2011) (ownership claims only accrue once – when “a reasonably diligent plaintiff would have been put on inquiry as to the existence of a right.”), and Ediciones Musicales Y Representatciones Internacionales, S.A. v. Matea San Martin, 582 F. Supp. 2d 1358, 1360-61 (S.D. Fla. 2008) (accrues when plaintiff “had reason to know of alleged injury.”).

Block and the other defendants also sought dismissal of all but one of Master Mind’s state law claims[1], citing Georgia statutes of limitation as to three of them and other grounds against the remaining claims.

The Court’s Analysis

The court observed that Master Mind sought a declaration that it was sole owner of the copyrighted works and that such ownership was disputed and time-barred.  The failure of the ownership claim was, in turn, dispositive of the infringement claim.[2] 

The court next addressed the Block/Spencer motion to dismiss the tortious interference with contractual relations claims under the Georgia four-year statute of limitations (O.C.G.A. § 9-3-31 – defendants erroneous citation to O.C.G.A. § 9-3-26 was deemed immaterial).  The court noted that the discovery rule only applies to continuing torts, expressly limited in Georgia to personal injury claims.  See Corp. of Mercer Univ. v. Nat. Gypsum Co., 258 Ga. 365, 368 S.E.2d 732, 733 (1988).  The court  found the claims time-barred whether they accrued when the Bad Boy contract was signed or when the albums released – as both events were over 4 years before the action was filed. 

Presumably the parties did not consider Georgia laws permitting avoidance of statutes of limitation when suits are dismissed and refilled within six months.  The opinion is silent on the effect of the prior suits, specifically the suit that was dismissed for want of prosecution on August 2011.  It is understandable that the court would not address the language of O.C.G.A. § 9-11-41(e), if no one brought it to the court’s attention.  That statute concludes:  “When an action is dismissed under this subsection, if the plaintiff recommences the action within six months following the dismissal then the renewed action shall stand upon the same footing, as to limitation, with the original action.”  See also O.C.G.A. § 9-2-61 (restricting use of this right to one occasion after the expiration of the statute of limitations and requiring the payment of costs).

The court also dismissed Master Mind’s claims against Block and Spencer based fraudulent misrepresentation and on fraud based on the four-year statute of limitations.  Again, there was no analysis of O.C.G.A. §§ 9-11-41 and 9-2-61.  The Court referred to the earlier suits as establishing Master Mind’s knowledge of the fraud, and found that the fraud claim accrued at the latest in 2007 by the time of filing the first suit on February 14 of that year.

The court dismissed Master Mind’s conversion claim on a separate ground, namely, thatthe property allegedly converted was specified as being “funds of an unknown amount.”  Thus, Master Mind’s pleadings undermined its own conversion claim.  Similarly, Master Mind’s claim for money had and received was barred because the dispute at issue arose from an express contract.

The court next turned to the motions to dismiss of defendants Bad Boy and Atlantic Recording Corp. (“Atlantic”).  Based on the same reasoning made as to Spencer and Block, Judge Story dismissed the declaratory relief claim on copyright ownership asserted against Bad Boy on the three-year statute of limitations.  The copyright infringement claims against Bad Boy and Atlantic were similarly dismissed.  The conversion claims against Bad Boy and Atlantic also met the same fate as the identical claims against Block and Spencer.  The accounting claim was dismissed because there was no showing that it “would likely result in the discovery of an amount of money to which [Master Mind] is entitled.”


The decision is Master Mind Music, Inc. v. Block Enter., LLC, No. 1:12-cv-162-RWS, 2012 U.S. Dist. LEXIS 179221 (N.D. Ga. Dec. 18, 2012).


[1] Against Block and defendant Russell Spencer, Master Mind asserted, in addition to its copyright claim, state law claims of breach of contract (not addressed in the dismissal motions), tortious interference with contractual relations, conversion, and fraudulent misrepresentation.  Additionally, as to Block, Master Mind asserted state law claims of fraud and “money had and received.”  Against defendants Bad Boy and Atlantic, Master Mind asserted state law claims of conversion and accounting, as well as a copyright claim.

[2] Later in this post there is a description of O.C.G.A. §§ 9-11-41 and 9-2-61 in connection with the dismissal and refilling of suits.  However, because a federal copyright claim cannot be asserted in a state court (see 28 U.S.C. § 1338(a)), the author does not consider that discussion necessarily pertinent to the dismissal of copyright claims based on the statute of limitations.  To apply those statutes to copyright claims might require a finding that the new copyright claims were part of the original “action” and that the running of federal statutes of limitation can be tolled by state law.

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