Garfield Baker v. Warner/Chappell Music, Inc.

Case: 18-11798 Date Filed: 11/27/2018 Page: 1 of 12
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 18-11798
Non-Argument Calendar
________________________
D.C. Docket No. 1:14-cv-22403-JG
GARFIELD BAKER,
BYRON SMITH,
Plaintiffs - Appellants,
SHERMAN NEALY,
MUSIC SPECIALIST, INC.,
Intervenor Plaintiffs - Appellants,
versus
WARNER/CHAPPELL MUSIC, INC.,
a Delaware Corporation,
ARTIST PUBLISHING GROUP, L.L.C.,
a Delaware limited liability corporation,
KAREN L. STETSON,
an individual,
321 MUSIC L.L.C.,
a Florida limited liability corporation,
TONY BULTER,
an individual,
PANDISC MUSIC CORPORATION,
a Florida corporation,
Case: 18-11798 Date Filed: 11/27/2018 Page: 2 of 12
WHOOPING CRANE MUSIC, INC.,
a Florida Corporation,
ROBERT CRANE,
an individual,
Defendants - Appellees,
ATLANTIC RECORDING CORPORATION, et al.,
Defendants.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(November 27, 2018)
Before WILSON, NEWSOM, and HULL, Circuit Judges.
PER CURIAM:
Garfield Baker, Byron Smith, Sherman Nealy, and Music Specialists, Inc.
appeal a district court order granting Robert Crane, Pandisc Music Corporation,
and Whooping Crane Music, Inc. a stay under the Colorado River doctrine in
deference to related state-court litigation. In invoking the doctrine, the district
court found that the federal and state suits at issue were sufficiently parallel and
that the Colorado River factors weighed in favor of abstention. Although the
Colorado River doctrine provides but a narrow exception to our “virtually
unflagging obligation” to exercise our jurisdiction when it exists, we cannot say
2
Case: 18-11798 Date Filed: 11/27/2018 Page: 3 of 12
that the district court abused its discretion in granting the motion to stay. We
affirm.
I
This case concerns the rights and royalties to 14 songs co-authored by
Garfield Baker, Byron Smith, Tony Butler, and Sherman Nealy between 1984 and
1987. Nealy’s company, Music Specialists, Inc., was the first to record, publish,
and distribute these songs; it also filed the original copyright registrations for most
of the songs. Music Specialists was administratively dissolved, however, between
1986 and 2008 while Nealy was incarcerated.
During this time, Butler—along with his companies Captain Productions and
C-Tan Music—decided to license the rights to the songs without Music
Specialists’s involvement. Between 1989 and 1992 Butler entered into several
licensing agreements with Robert Crane and Crane’s companies Pandisc Music
Corporation and Whooping Crane Music, Inc.
In 2006, the Crane companies sued the Butler companies in Florida state
court, alleging that Butler was falsely telling third parties that Crane did not have
any licensing rights to the subject songs. Two years later, Butler—through a new
company called 321 Music, LLC—entered into yet another licensing agreement,
this time with Warner/Chappell Music, purporting to license the same songs he had
earlier licensed to the Crane companies. The Crane companies then filed a
3
Case: 18-11798 Date Filed: 11/27/2018 Page: 4 of 12
copyright-infringement suit against Butler and Warner/Chappell Music in federal
court to protect their rights in the songs. Two of the other songwriters, Baker and
Smith, moved to intervene, claiming copyright infringement and constructive trust.
All of the parties reached a settlement agreement that outlined a distribution of
royalties based in part on Butler’s representations that he had recently re-licensed
the songs to another company, Universal UK.
After the agreement, however, some dispute arose as to whether Butler had
indeed contracted with Universal UK, resulting in royalties to be distributed per the
settlement agreement. Baker and Smith filed several motions to enforce the
agreement in federal court, but the district judge denied the motions, explaining
that it no longer had jurisdiction over the settlement agreement and that any
recourse to be had would be found in a state-court contract action.
Baker and Smith instead initiated this suit in federal court,1 alleging that
they were the “beneficial owners” of the works at issue because they had assigned
their original rights in the songs to Music Specialists in exchange for royalties.2
After the district judge dismissed the first two complaints for, among other things,
1
About a month after filing this suit, Baker and Smith also filed a breach-of-contract claim in
state court seeking to recover royalties allegedly due under the settlement agreement. The
second state-court case has been stayed pending resolution of this suit.
2
Baker and Smith, initiating this suit pro se, at first asserted that they were the “copyright
owners” of the songs, but in their reply to the Crane companies’ motion to dismiss they clarified
that they were the “beneficial owners,” entitled to royalties based on Music Specialists’s
copyright ownership.
4
Case: 18-11798 Date Filed: 11/27/2018 Page: 5 of 12
“shotgun” pleadings, the parties consented to magistrate-judge jurisdiction, and
Baker and Smith filed the currently-operative complaint. The magistrate judge
granted Nealy and Music Specialists leave to intervene, based on claims that Music
Specialists was “the sole and exclusive owner” of the copyrights and that it had
never assigned its rights to anyone else.
The Crane companies then moved to stay this proceeding under the
Colorado River doctrine pending resolution of the original 2006 state-court
proceeding. 3 The district court granted the motion, and Baker, Smith, Nealy, and
Music Specialists timely appealed.
II
The Colorado River doctrine “addresses the circumstances in which federal
courts should abstain from exercising their jurisdiction because a parallel lawsuit is
proceeding in one or more state courts.” Ambrosia Coal & Const. Co. v. Pages
Morales, 368 F.3d 1320, 1327 (11th Cir. 2004). We review a district court’s order
abstaining from the exercise of jurisdiction on Colorado River grounds for abuse
of discretion. TranSouth Fin. Corp. v. Bell, 149 F.3d 1292, 1294 (11th Cir. 1998).
Our precedent makes clear that federal courts should rarely yield jurisdiction
to a state court simply because litigation would be duplicative—a pending action in
state court does not normally bar proceedings regarding the same matter in federal
3
Defendants-Appellees Warner/Chappell Music, Inc., Artist Publishing Group, LLC, and Karen
L. Stetson separately filed a motion to dismiss which the district court denied.
5
Case: 18-11798 Date Filed: 11/27/2018 Page: 6 of 12
court. Jackson-Platts v. Gen. Elec. Capital Corp., 727 F.3d 1127, 1140 (11th Cir.
2013). That said, in Colorado River Water Conservation District v. United States,
the Supreme Court acknowledged that federal courts could abstain from exercising
otherwise-proper jurisdiction in certain extraordinary circumstances involving the
“contemporaneous exercise of concurrent jurisdictions.” 424 U.S. 800, 814, 817
(1976). The Court clarified, however, that such instances would be rare, as federal
courts have a “virtually unflagging obligation . . . to exercise the jurisdiction given
them” when it exists. Id. at 817 (citation omitted).
A
As a threshold matter, the Colorado River analysis is limited to situations in
which federal and state proceedings involve “substantially the same parties and
substantially the same issues.” Ambrosia Coal, 368 F.3d at 1330. In this case,
they do. As the district court correctly observed, both the state and federal
proceedings here concern the same issue: ownership of and licensing rights to
certain musical works. The parties are also substantially the same—in state court,
the Crane companies sued to enjoin the Butler companies and Music Specialists
from claiming ownership rights in the songs; in federal court Music Specialists,
Nealy, Baker, and Smith sued the Crane companies, seeking a declaration of rights
in the same songs. Although Baker and Smith are not parties to the state action, as
“beneficial owners” their alleged interest is inextricably linked to Music
6
Case: 18-11798 Date Filed: 11/27/2018 Page: 7 of 12
Specialists’s ownership interest, which is directly at issue in the state proceeding.
As such, the parties in the state and federal proceedings are “substantially” the
same such that this Court may consider the Colorado River factors. Id. at 1329–30
(rejecting an argument that parties and issues must be identical to trigger Colorado
River abstention).
B
When the parties and issues are substantially the same, we analyze the
propriety of Colorado River abstention by weighing several factors: (1) whether
the state or federal court has assumed jurisdiction over any property at issue; (2)
the relative inconvenience of the federal forum; (3) the likelihood of “piecemeal
litigation”; (4) the order in which the courts obtained jurisdiction; (5) whether state
or federal law will be applied; (6) whether the state court can adequately protect
the parties’ rights; and (7) “the vexatious or reactive nature of either the federal or
the state litigation.” See Ambrosia Coal, 368 F.3d at 1331; Am. Bankers Ins. Co. of
Fla. v. First State Ins. Co., 891 F.2d 882, 884 (11th Cir. 1990) (per curiam). In
conducting this analysis we consider the factors pragmatically, keeping in mind
that “[n]o one factor is necessarily determinative,” Colorado River, 424 U.S. at
818, and that while “[t]he weight to be given to any one factor may vary greatly
from case to case,” our analysis as a whole should be “heavily weighted in favor of
7
Case: 18-11798 Date Filed: 11/27/2018 Page: 8 of 12
the exercise of jurisdiction.” Moses H. Cone Mem’l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 16 (1983).
The first two factors require only a brief look here. As to the first, the
relevant cases are not proceedings in rem so this factor is inapplicable—neither
court has taken jurisdiction over property. And as to the second, convenience of
the forums, neither party contends that the federal forum is less convenient than the
state forum. Thus, neither the first nor the second factor weighs in favor of
abstention. See Ambrosia Coal, 368 F.3d at 1332.
Looking to the third factor, the district court appropriately found that the
likelihood of piecemeal litigation weighs in favor of abstention. Our case law
instructs that while the potential for piecemeal litigation does not in and of itself
weigh in favor of abstention, the probability of “abnormally excessive or
deleterious” piecemeal litigation does. Jackson-Platts, 727 F.3d at 1142. Here,
Baker and Smith filed a suit in federal court seeking to determine the same
ownership and licensing issues pending in state court (and arguably already
decided in an earlier state-court proceeding), including whether Music Specialists
has rights in the musical works. This parallel federal litigation is not tangentially
or somewhat related to the state suit—the issues are essentially identical. The
possibility that this Court and the state court will come to contradictory
conclusions on which licensing agreements are lawful and which parties own the
8
Case: 18-11798 Date Filed: 11/27/2018 Page: 9 of 12
songs could certainly create “piecemeal litigation that is abnormally excessive or
deleterious.” Ambrosia Coal, 368 F.3d at 1333. Thus, the third Colorado River
factor weighs in favor of abstention.
The fourth factor—namely, the order in which the forums obtained
jurisdiction—“should not be measured exclusively by which complaint was filed
first, but rather in terms of how much progress has been made in the two
actions.” Moses H. Cone, 460 U.S. at 21. Here, the state suit was not only filed
long before the federal suit—2006 versus 2014—it has progressed further. In the
state-court proceeding, the parties have gone through discovery and a motion for
summary judgment is pending. In the federal proceeding, by contrast, discovery
has yet to occur—the district court recently denied the other Defendants-
Appellees’s motion to dismiss but granted the Crane companies’ motion to stay,
resulting in this appeal. Given the progress made in state court, this Colorado
River factor weighs in favor of abstention.
The fifth factor, whether state or federal law controls, “favors abstention
only where the applicable state law is particularly complex or best left for state
courts to resolve.” Jackson-Platts, 727 F.3d at 1143; see also Noonan South v.
Volusia Cty., 841 F.2d 380, 382 (11th Cir. 1988) (same). Here, although the
interpretation of the licensing agreements at issue is a matter of state law, federal
9
Case: 18-11798 Date Filed: 11/27/2018 Page: 10 of 12
courts are well equipped to decide contract cases under state law and routinely do
so. Because of this, the fifth factor does not counsel in favor of abstention.
The sixth factor, whether the state court will adequately protect the interests
of the parties, is similarly neutral because nothing indicates that either forum
would be incapable of protecting the parties’ rights in a routine contracts action.
See Noonan South, 841 F.2d at 383 (explaining that this factor does not weigh in
favor of abstention when both forums are adequate to protect the parties’ rights).
The seventh factor—“the vexatious or reactive nature of either the federal or
the state litigation”—weighs in favor of abstention. Baker and Smith filed this
federal copyright lawsuit on the heels of an unsuccessful attempt to enforce a
settlement agreement in federal court and one month before filing a breach-of-
contract action concerning the same settlement agreement in state court. The
initial complaint in this case was dismissed as an impermissible “shotgun
pleading” because it named nine defendants in six counts with no attempt to clarify
who was allegedly responsible for what. See, e.g., Anderson v. Dist. Bd. of
Trustees of Cent. Fla. Cmty. Coll., 77 F.3d 364, 366 (11th Cir. 1996) (holding that
plaintiffs are required to “present each claim for relief in a separate count” rather
than asserting numerous claims within a single count). Moreover, Baker and
Smith filed the present suit long after the state court had been asked to decide
Music Specialists’s ownership interest in the songs—on which their derivative
10
Case: 18-11798 Date Filed: 11/27/2018 Page: 11 of 12
“beneficial” interests depend. This sequence of events indicates that this suit is
likely reactive, weighing in favor of abstention. See Moses H. Cone, 460 U.S. at
17 n.20; Ambrosia Coal, 368 F.3d at 1331.
Although only three of the seven factors weigh in favor of abstention here,
we do not find that the district court abused its discretion in granting the Crane and
Warner companies’ motion to stay. Given that the state and federal proceedings
both directly concern ownership rights in the contested works, that the state court
proceedings have been unfolding for over a decade, and that Baker and Smith filed
their federal complaint as an apparent end run around the settlement agreement,
this case arguably fits within the narrow exception for Colorado River abstention,
even given the presumption in favor of exercising jurisdiction.4 See Moses H.
Cone, 460 U.S. at 16 (advising that “[t]he weight to be given to any one factor may
vary greatly from case to case”); Colorado River, 424 U.S. at 818 (instructing that
the factors should be applied flexibly and pragmatically).
In so holding we note that whether we would come out differently
considering this question in the first instance is irrelevant—our review is for abuse
of discretion. “The application of an abuse-of-discretion review recognizes the
range of possible conclusions the trial judge may reach.” United States v.
4
We also note that Baker and Smith brought copyright-infringement claims in the 2009 federal
suit, and that the suit was resolved via a settlement agreement. Because we do not find that the
district court abused its discretion in granting a stay, we need not address whether Baker and
Smith’s claims are also collaterally estopped.
11
Case: 18-11798 Date Filed: 11/27/2018 Page: 12 of 12
Frazier, 387 F.3d 1244, 1259 (11th Cir. 2004) (en banc). Thus, “we must affirm
unless we find that the district court has made a clear error of judgment, or has
applied the wrong legal standard.” Amlong & Amlong, P.A. v. Denny’s, Inc., 500
F.3d 1230, 1238 (11th Cir. 2007) (quotation omitted). The district court in this
case carefully examined the Colorado River factors and reasonably concluded that
abstention was warranted. We will not disturb its decision.
III
In sum, the district court did not abuse its discretion in staying this case
under the Colorado River doctrine pending the resolution of the parallel state court
action.
AFFIRMED.
12