Wu v. Pearson Education Inc.

Filing 127

MEMORANDUM ORDER AND OPINION. For the foregoing reasons, Pearson's motion for reconsideration [09 Civ. 6557, 91] is DENIED. Wu's motion for class certification with respect to the Wu I action [09 Civ. 6557, 103] is GRANTED with the modifica tions noted above. Wu's motion for class certification with respect to the Wu II action [10 Civ. 6537, 17] is DENIED. Pearson's motion to dismiss the Wu II [10 Civ. 6537, 11] action is WITHDRAWN. With regards to the Wu II, Wu may conduct ad ditional class discovery of the defendant and of third party witnesses to determine whether the defects described in this opinion can be cured. The parties are directed to meet and confer regarding a proposed discovery schedule and submit the schedul e to the Court within fourteen days of the date of this order. Re: (103 in 1:09-cv-06557-RJH-JCF) MOTION to Certify Class filed by Norbert Wu, (91 in 1:09-cv-06557-RJH-JCF) MOTION for Reconsideration re; (71) Memorandum & Opinion filed by Pearson Education Inc., (17 in 1:10-cv-06537-RJH) MOTION to Certify Class filed by Norbert Wu, (11 in 1:10-cv-06537-RJH) MOTION to Dismiss filed by Pearson Education Inc. (Signed by Judge Richard J. Holwell on 9/30/11) (rjm)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

NORBERT WU,
Plaintiff,

09 Civ. 6557 (RJH)
10 Civ. 6537 (RJH)

- against MEMORANDUM ORDER AND
OPINION

PEARSON EDUCATION, INC.,
Defendant.

Norbert Wu (“Wu”) brings two purported class action suits under the Copyright Act, 17
U.S.C. § 501, on behalf of photographers who have had their copyrights infringed by Pearson
Education, Inc. (“Pearson”), a textbook publisher. In the first action, 09 Civ. 6557 (hereinafter
“Wu I”), Wu alleges that Pearson engaged in a widespread practice of specifying a particular
print-run for its books when obtaining a licensing agreement for photographs, a term that was
incorporated into the licensing agreement, then exceeding the print-run, often by large numbers.
In the second action, 10 Civ. 6537 (hereinafter “Wu II”), Wu alleges that Pearson printed his
photographs in its books and then obtained licensing agreements only afterwards. Wu seeks
certification of both actions for class treatment. In addition, Pearson seeks reconsideration of the
Court’s September 30, 2010 opinion regarding Pearson’s motion to stay pending or, in the
alternative, to dismiss.
BACKGROUND
Wu is a professional photographer who often licenses his photographs to appear in
publications. Pearson is a textbook publisher that uses photographs in its publications, including
many photographs of Wu’s, for which Pearson did not own the copyright. In order to obtain the
right to publish these photographs, Pearson would enter into licensing agreements with the
1

copyright holders. In some instances, Pearson would obtain the rights from a photo bureau,
which would enter into licensing agreements on the photographers’ behalf. Other times, Pearson
would obtain a license directly from the photographer. When Pearson obtained a license through
a photo bureau, the resulting licensing agreements would frequently contain a list of photographs
that Pearson was licensing from the same photo bureau on a single invoice. In addition to a list
of photographs, the front of the invoice would typically list certain details regarding the
publication, such as its name and author, and then specify a print run, the number of copies of the
book that Pearson was licensed to print. On the back of the invoice would typically be listed preprinted standard terms. When Pearson entered into licensing agreements with individual
photographers, the agreements would be of varying degrees of formality.
According to Wu, Pearson has not adhered faithfully to the terms of these licensing
agreements. He has brought two separate actions alleging that Pearson engaged in widespread
copyright infringement. In Wu I, Wu alleges that Pearson routinely exceeded the print run
specified in the licensing agreements without alerting photographers or the photo bureaus to this
fact. Wu states that of the 144 total Pearson publications that featured his photographs, Pearson
exceeded the print run for “almost 40” of the publications. (Pl.’s Mem. 7.) In Wu II, Wu alleges
that Pearson often printed photographs in its textbooks without first obtaining a license for them.
After it had begun printing, Pearson would obtain licenses for the photographs, but according to
Wu without notifying the photo bureaus or copyright holders that it had already been using the
photographs. In doing so, Pearson sought to avoid paying the penalty provisions that copyright
holders frequently employ for retroactive licenses. Wu alleges that Pearson engaged in this
practice in a widespread manner and that potentially thousands of photographers were affected
by Pearson’s practices.

2

PROCEDURAL HISTORY
Wu initially brought suit in Wu I under federal copyright law as well as a variety of state
law causes of action. Pearson filed a motion to stay pending arbitration or, in the alternative, to
dismiss. On September 30, 2010, the Court granted defendant’s motion to stay Wu’s state law
claims with respect to two of the three photo bureaus through which Wu licensed his
photographs: Minden Pictures, Inc. (“Minden Pictures”) and Peter Arnold, Inc. (“Peter
Arnold”). It denied Pearson’s motion to stay Wu’s copyright claims pending the outcome of
arbitration. At the time Pearson filed its motion to dismiss, it had not located the invoice
pertaining to the one photograph licensed through the third photo bureau, identified as Animals
Animals in the complaint. The Court denied Pearson’s motion to dismiss with respect to these
claims, but noted that these claims might eventually be dismissed or stayed if Pearson were able
to locate the invoice and its terms so provided. In addition, the Court dismissed Wu’s claims
pertaining to pictures licensed through Peter Arnold because the licensing agreement contained a
condition precedent that required Pearson to receive and refuse to pay an invoice billing for
unauthorized use before a copyright suit could be brought.
On January 5, 2011, Pearson moved for reconsideration of the Court’s opinion regarding
its motion to dismiss. On January 10, 2011, after receiving leave from the Court, Wu filed a
Second Amended Complaint alleging that performance of the condition precedent in the Peter
Arnold agreement was excused because Pearson frustrated Wu’s performance. Wu alleged that
he requested information from Pearson pertaining to the excess use of his photographs, and
Pearson refused to provide the information.
With regards to his class certification motion, Wu seeks certification of the following
class for both sets of allegations:

3

[All] persons or entities entitled to bring copyright claims in their own name or on
behalf of photographers or other copyright holders (referred to herein as “content
owners” or “copyright claimaints”) whose photographic works either (1) were
used by Defendant in publications that exceeded the authorized print run; or (2)
were published by Defendant prior to Defendant’s obtaining a license to use the
image.
(Pl.’s Mem. 5.) The class would exclude author-supplied images, any images for which Pearson
owns the exclusive copyright, and images licensed to Pearson royalty-free.
Wu also proposes two subclasses, a subclass consisting of all class members whose
works appear in the same publications as Wu and a subclass consisting of members whose
content was licensed on the same invoices as Wu’s.
DISCUSSION
I.

Pearson’s Motion for Reconsideration
Pearson moves for reconsideration of the Court’s September 30, 2010 opinion denying

Pearson’s motion to dismiss. Pearson moves for reconsideration on two grounds. First, it argues
that Wu’s copyright claims stemming from the Minden Pictures agreement should be stayed
pending the outcome of arbitration because Wu’s copyright claims are inextricably intertwined
with his state law claims, which the court has stayed pending arbitration. Second, it asks the
Court for reconsideration with regards to the picture licensed through Animals Animals because
it has located the invoice covering this claim.
Under Local Civil Rule 6.3, reconsideration is appropriate if the Court overlooked
controlling decisions or factual matters which, had they been considered, might reasonably have
altered the result of the underlying decision. E.g., Levine v. AtriCure, Inc., 594 F. Supp. 2d 471,
474 (S.D.N.Y. 2009). To that end, “[a]ny controlling decisions or factual matters presented by a
litigant for reconsideration must have been put before the Court in the underlying motion.”
Padilla v. Maersk Line, Ltd., 636 F. Supp. 2d 256, 258 (S.D.N.Y. 2009). Further, “a motion for
4

reconsideration is not a motion to reargue those issues already considered when a party does not
like the way the original motion was resolved.” Finkelstein v. Mardkha, 518 F. Supp. 2d 609,
611 (S.D.N.Y. 2007).
The Court has already considered and rejected Pearson’s argument that the copyright
claims should be stayed pending the outcome of arbitration. The Minden Pictures agreement
specifically carves out copyright claims from those that are subject to arbitration and states that
they may be litigated in federal court. To stay the claims pending arbitration would do violence
to the intent of the parties. Furthermore, the contractual issues at stake here appear to be
minimal. Pearson has made no argument that would cause the Court to reconsider its decision.1
Pearson next argues that the Court should stay Wu’s claims pertaining to a picture Wu
identified as being licensed through Animals Animals in his complaint. Pearson states that the
picture in question was in fact licensed through Getty Images, Inc. (“Getty”) and that the Getty
license terms contain an arbitration provision. Wu argues that it is procedurally improper for
Pearson to make such an argument on reconsideration and argues that the Court should instead
convert this portion of Pearson’s motion as one for summary judgment under Rule 56. The
motion is so converted, and the Court will consider the language of the Getty licensing
agreement. (Church Decl. Ex. J.) Paragraph 10.5 of this agreement provides:
Any disputes arising from this Agreement or its enforceability shall be settled by
binding arbitration to be held in one of the following jurisdictions . . . .
Notwithstanding the foregoing, Getty Images shall have the right to commence
and prosecute any legal or equitable action or proceeding before any court of
competent jurisdiction to obtain injunctive or other relief against Licensee in the
event that, in the opinion of Getty Images, such action is necessary or desireable.
1

Pearson also cited certain language that could be read to create a condition precedent, perhaps hoping that the
Court would consider an argument that Pearson did not make in its original motion papers. The Court notes,
however, that the language Pearson cites did not appear in the licensing agreement, but rather was taken from the
Minden Pictures website. The licensing agreement makes no reference to the website, and Pearson makes no
argument as to why this term should be read into the language of the contract.

5

(Id. at 5.)
Wu does not contest that this clause requires him to arbitrate his state law claims. But he
argues that the licensing agreement contains a carve-out for copyright claims. Paragraph 10.1
provides, “Any use of Licensed Material in a manner not expressly authorized by this Agreement
or in breach of a term of this Agreement constitutes copyright infringement, entitling Getty
Images to exercise all rights and remedies available to it under copyright laws around the world.”
Wu argues that the right to bring a suit for infringement is a right or remedy available under the
copyright law. The Court does not agree with Wu’s interpretation of the contract. It may be that
Wu will have the right to seek damages from Pearson or enjoin Pearson from further violations
of his copyright, meaning he can exercise all rights and remedies against Pearson, but the clause
does not say anything about the forum where Wu has the right to enforce those rights and
remedies. Read in conjunction with the broad arbitration agreement, this clause does not create
the sort of carve-out that Wu claims. See Robert Bosch Corp. v. ASC, Inc., 195 F. App’x 503,
507 (6th Cir. 2006) (holding in a battle of the forms inquiry that a term reserving all rights and
remedies for one party did not conflict with an arbitration provision).
II.

Class Certification—Wu I
Pursuant to Rule 23(a), plaintiffs must demonstrate that four conditions have been met

before a court will certify a class: (1) the class is so numerous that joinder of all members is
impracticable; (2) there are questions of law or fact common to the class; (3) the claims or
defenses of the representative parties are typical of the claims or defenses of the class; and (4)
the representative parties will fairly and adequately protect the interests of the class. Fed. R. Civ.
P. 23(a); Teamsters Local 445 Freight Div. Pension Fund v. Bombardier, Inc., 546 F.3d 196,
201-02 (2d Cir. 2008). In addition, the courts have read a fifth “implied requirement of
6

ascertainability” with respect to the class definition. In re Initial Pub. Offerings Sec. Litig., 471
F.3d 24, 30 (2d Cir. 2006).
Plaintiffs must also demonstrate that a class action is maintainable under one of several
different theories. Here, plaintiff argues primarily that the class action is maintainable pursuant
to Rule 23(b)(3), which requires a court to find (1) that questions of law or fact common to the
members of the class predominate over any questions affecting only individual members, and (2)
that a class action is superior to other available methods for fairly and efficiently adjudicating the
controversy. Fed. R. Civ. P. 23(b)(3); Myers v. Hertz Corp., 624 F.3d 537, 547 (2d Cir. 2010).
The plaintiff bears the burden of showing each of these elements by a preponderance of the
evidence. Teamsters Local, 546 F.3d at 202. Plaintiff also contends that both classes are
certifiable under Rule 23(b)(1)(B) and (2). Certification pursuant to Rule 23(b)(1)(B) is
appropriate where “adjudications with respect to individual members of the class would as a
practical matter be dispositive of the interests of the other members not parties to the
adjudications or substantially impair or impede their ability to protect their interests.”
Certification under Rule 23(b)(2) is appropriate where “the party opposing the class has acted or
refused to act on grounds that apply generally to the class, so that final injunctive relief or
corresponding declaratory relief is appropriate respecting the class as a whole.”
With certain exceptions that will be discussed in greater detail below, Pearson does not
dispute that Wu has met the requirements of Rule 23(a). Rather, it focuses it focuses on the
predominance requirement of Rule 23(b)(3). The Court will follow suit and begin its analysis
with Rule 23(b)(3) before returning to the Rule 23(a) requirements. It will consider each action
in turn.

7

A. Predominance
Wu argues that class treatment is appropriate under Rule 23(b)(3), which requires that
“questions of law or fact common to the members of the class predominate over any questions
affecting only individual members, and . . . [that] a class action is superior to other available
methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). “[T]o
find predominance, a Court must consider the elements of each cause of action, and determine
whether those elements can be satisfied by common, class-wide proof.” In re Currency
Conversion Fee Antitrust Litig., 230 F.R.D. 303, 309-10 (S.D.N.Y. 2004). Common questions
predominate only if plaintiffs can show that “those issues in the proposed action that are subject
to generalized proof outweigh those issues that are subject to individualized proof.” Heerwagen
v. Clear Channel Commc’ns, 435 F.3d 219, 226 (2d Cir. 2006).
Wu argues that the number of common issues is substantial, and that these common
issues predominate over individual claims. All of the claims in this case revolve around the
same issue of law, namely whether Pearson violated the copyright holder’s rights by exceeding
the print-runs specified in the licensing agreements. Wu predicts that at a later stage in the
litigation, Pearson will argue that the accepted understanding in the trade was that print-runs
were merely estimates, rather than definite limitations. (Wu Mem. 20-21.) This question
certainly represents a common question of law typical to the class. In addition, copyright holders
are entitled to a greater recovery where the infringement was committed willfully. 17 U.S.C. §
504(c)(2). “To prove ‘willfulness’ under the Copyright Act, the plaintiff must show (1) that the
defendant was actually aware of the infringing activity, or (2) that the defendant's actions were
the result of ‘reckless disregard’ for, or ‘willful blindness’ to, the copyright holder's rights.”
Island Software and Computer Serv., Inc. v. Microsoft Corp., 413 F.3d 257, 263 (2d Cir. 2005).

8

Wu states that he intends to demonstrate willfulness by pointing to the fact that Pearson has
failed to put in place a system for tracking when it has exceeded the print-run specified in a
licensing agreement, has consistently underestimated the print-runs it would need, and has
resisted the attempts of copyright holders to uncover whether it has exceeded the print-runs
specified in the licensing agreements. (Wu Mem. 22.) Wu argues that none of this evidence of
Pearson’s practices is tied to a particular photograph, but rather applies equally to all
photographs in the class.
Pearson counters that individual issues predominate because licensing agreements
between Pearson and the copyright holders varied significantly in their terms. Pearson’s
argument begins with a premise that is legally correct, specifically that although federal law
creates Wu’s cause of action for copyright infringement, 17 U.S.C. § 501(b), where, as here, a
court must determine whether infringement has occurred by determining the scope of a licensing
agreement, it construes the terms of the licensing agreement in accordance with state contract
law, Graham v. James, 144 F.3d 229, 237 (2d Cir. 1998). Pearson argues that the process of
construing the licensing agreements in accordance with each state’s law will prove unduly
onerous. It seems that Pearson’s general practice was to send a billing request to a photo bureau
or an individual photographer and indicate that it wished to publish a particular photograph in a
particular textbook. The billing request would contain specifics regarding the print-run. The
photo bureau or individual party would then send back an invoice. When the photo bureaus sent
invoices, the invoices would usually contain a list of individual terms on the back that governed
such issues as choice of law, forum, and arbitration. Pearson makes two arguments related to
these terms. First, it argues that the requirement that the Court scrutinize many different
contracts itself defeats predominance. Second, it argues that the fact that the Court will be

9

required to conduct an individualized analysis to determine whether these additional terms are
binding means that individual issues will swamp common issues.
The case law reveals that courts have adopted two rules of thumb with regards to class
certification in breach of contract cases. On the one hand, where adjudicating breach of contract
claims require “numerous individual inquiries . . . to determine whether a breach of contract
could be found,” class treatment will generally not be appropriate. Jim Ball Pontaic-BuickGMC, Inc. v. DHL Exp. (USA), Inc., 08 Civ. 761C, 2011 WL 815209, at *6 (W.D.N.Y. Mar. 2,
2011) (collecting cases). On the other, “claims arising from interpretations of a form contract
appear to present the classic case for treatment as a class action, and breach of contract cases are
routinely certified as such.” Steinberg v. Nationwide Mut. Ins. Co., 224 F.R.D. 67, 74 (E.D.N.Y.
2004) (quoting Klay v. Humana, Inc., 382 F.3d 1241 (11th Cir. 2004)). This case falls
somewhere in between these two extremes. It is not in dispute that if it certifies a class, the
Court will be called upon to consider contracts that take a number of different forms. But at its
core, the claims here require the interpretation of a single provision that varies little in its form
from contract to contract, specifically that Pearson is authorized to print no more than a specified
number of books.
Courts faced with similar circumstances have certified cases for class treatment as long as
the relevant provisions were similar. For example, in Steinberg the court considered whether
class certification was appropriate for a plaintiff who alleged that a particular fee breached the
terms of his insurance contract. 224 F.R.D. at 69. The defendant contended that class treatment
was not appropriate on a nationwide basis because the form insurance contracts it used varied
from state to state. Id. at 76. The court found, however, that the provisions relevant to the
litigation were similar across contracts and so individual issues related to each contract did not

10

predominate. Id. at 79-80; see also Allapattah Servs., Inc. v. Exxon Corp., 333 F.3d 1248, 1261
(11th Cir. 2003) (upholding class certification of breach of contract claims where the contracts
differed, but were the same with regards to material terms). The Court’s task, then, is to
determine whether the contracts are similar with regards to their material provisions. The printrun terms seem to involve similar promises that would be susceptible to class treatment. Pearson
argues, however, that the Court must consider other provisions in the contract that vary from
contract to contract and that these issues preclude certification. The Court will consider each of
these issues in turn.
1. Clauses Restricting Where Suit May Be Brought
A number of the agreements contain clauses that require arbitration of certain or all
claims. Many, such as the Minden Pictures and Peter Arnold agreements the Court interpreted
on motion to dismiss, contain carve-outs for copyright claims. Pearson represents that others
require arbitration of all claims, including copyright. Other licenses include forum selection
clauses that are incompatible with litigation the Southern District of New York. Pearson argues
that interpreting these terms will require a significant individualized analysis. The Court
disagrees. The Court is aware of no case that suggests that forum selection clauses lose their
force in the context of a class action, and courts have found that arbitration clauses prevent
litigation through the vehicle of a class action, see In re Conversion Fee Antitrust Litig., 224
F.R.D. 555, 569-70 (S.D.N.Y. 2004) (declining to enforce arbitration clauses in a class action
suit where credit card companies snuck the arbitration clauses into cardholder agreements
following the commencement of litigation, but holding that arbitration clauses where enforceable
where the cardholder agreements contained such clauses prior to the commencement of
litigation). Nonetheless, it does not require a great deal of legal acumen to spot a forum selection

11

or arbitration clause in a form contract, and the Court believes that the best method for managing
this issue is to exclude copyright holders whose licensing agreements contain forum selection
clauses or provisions requiring the arbitration of copyright claims from the class definition.
2. Conditions Precedent
Pearson argues that some of the licensing agreements contain conditions precedent of the
sort contained in the Peter Arnold agreement. The condition precedent stated that Peter Arnold
must invoice Pearson for use in excess of the agreement before Pearson could be sued. Wu
alleges in his second amended complaint that it was impossible for him to fulfill this condition
because Pearson has refused to divulge to copyright holders how many copies of each
publication it has printed. Pearson conceded at oral argument that it was not its standard practice
to notify photographers or the photo bureaus when it exceeded a print-run limit. Without such
notice, no photographer would have the means of determining whether Pearson had exceeded the
scope of the license. Without determining whether this set of facts, if proven, would establish
excuse on the grounds of impossibility, Wu’s argument is shared among each of the class
members who might be subject to such a condition and appears susceptible to class-wide proof.
As a matter of caution, the Court believes it desirable to create a subclass of those licensing
agreements that contain condition precedents so that the Court may revisit this issue as discovery
proceeds consistent with its responsibilities under Rule 23(c)(1)(C). MacNamara v. City of New
York, 275 F.R.D. 125 (S.D.N.Y. 2011).
3. Standing Provisions
Pearson argues that a number of the contracts contain particular provisions that govern
who may bring suit for claims of copyright infringement. Some of the licensing agreements
contain provisions stating that the photo bureau may bring suit, providing by implication,

12

Pearson argues, that the photographers may not bring suit. Pearson also observes that some of
the agreements Wu entered into with the photo bureaus provided that the photo bureaus would
have the exclusive right to bring suit. Pearson predicts that many other photographers entered
into similar arrangements.
To the extent that the licensing agreements or the contracts between the photo bureaus
and the photographers specify that only the photo bureaus may bring suit, they are likely
unenforceable. Pearson concedes that at least one party must be allowed to bring suit for
copyright infringement. The Copyright Act entitles only “the legal owner legal or beneficial
owner of an exclusive right under a copyright” to bring a suit for copyright infringement. 17
U.S.C. 501(b); see also Eden Toys, Inc. v. Florelee Undergarment Co., 697 F.2d 27, 32 (2d Cir.
N.Y. 1982). Copyright holders may not grant third parties standing to sue under the Copyright
Act. Eden Toys, 697 F.2d at 32 n.3; accord ABKCO Music, Inc. v. Harrisongs Music, Ltd., 944
F.2d 971, 980 (2d Cir. 1991); Peer Int'l Corp. v. Latin Am. Music Corp., 161 F. Supp. 2d 38, 53
(D.P.R. 2001). Further, copyright holders may not grant the exclusive right to sue to a third
party and thereby bring the third party within the rubric of an “owner of an exclusive right”
because the right to bring suit is not an exclusive right recognized by the Copyright Act in 17
U.S.C. § 106. Silvers v. Sony Pictures Entm’t, Inc., 402 F.3d 881, 884-85 (9th Cir. 2005).2

2

17 U.S.C. § 106 provides:
Subject to sections 107 through 122, the owner of copyright under this title has the exclusive
rights to do and to authorize any of the following:
(1) to reproduce the copyrighted work in copies or phonorecords;
(2) to prepare derivative works based upon the copyrighted work;
(3) to distribute copies or phonorecords of the copyrighted work to the public
by sale or other transfer of ownership, or by rental, lease, or lending;
(4) in the case of literary, musical, dramatic, and choreographic works,

13

In any event, the Court notes that Wu’s definition does not exclude photo bureaus to the
extent that they are “entitled to bring copyright claims in their own name or on behalf of
photographers . . . .” Pearson claims that because Wu is not a photo bureau, he cannot represent
class members who are. But this argument misses the point: Wu seeks to represent copyright
holders. If a photo bureau happens to be a copyright holder in a given case—although this would
appear to be unusual—the Court sees no reason why Wu cannot adequately represent the
bureau’s interest as such.3
4. Covenant versus Condition
Pearson argues that the Court will be required to conduct an individualized analysis of the
contract to determine whether the print-run term was a covenant or a condition. As a general
matter, “[a] copyright owner who grants a nonexclusive license to use his copyrighted material
waives his right to sue the licensee for copyright infringement.” Graham v. James, 144 F.3d
229, 236 (2d Cir. 1998). When a licensee fails to comply with the terms of the license
agreement, the Court must determine whether the violated term was merely a covenant or a
condition precedent. Id. at 236-37. If the term is a condition, the copyright holder will still have
pantomimes, and motion pictures and other audiovisual works, to perform the
copyrighted work publicly;
(5) in the case of literary, musical, dramatic, and choreographic works,
pantomimes, and pictorial, graphic, or sculptural works, including the individual
images of a motion picture or other audiovisual work, to display the copyrighted
work publicly; and
(6) in the case of sound recordings, to perform the copyrighted work publicly
by means of a digital audio transmission.
3
Pearson makes several other observations regarding differences among the agreements between individual
photographers and the photo bureaus. Different agreements provide for different sharing of licensing fees between
the photo bureaus and the photographers. Pearson has made no argument as to why this difference is relevant in the
instant suit. Similarly, Pearson points out that different agreements provide the photo bureaus with varying amounts
of authority to enter into different types of agreements. Wu does not argue that the photo bureaus were without
authority to license his photographs, so it is unclear how these differences are relevant.

14

a cause of action for copyright infringement because the license is not effective unless the
licensee fulfills the condition. Id. But if the contested term is merely a covenant, the copyright
holder can sue only for breach of contract. Id. “After expiration of a license, further exercise by
the licensee of the licensed exploitation rights constitutes copyright infringement. More
generally, when a license is limited in scope, exploitation of the copyrighted work outside the
specified limits constitutes infringement.” NIMMER ON COPYRIGHT § 10.15.
Pearson argues that the Court must conduct an individualized analysis of each contract to
determine whether the print run consisted of a condition or a covenant. This argument is
seriously flawed. The Court will not be required to conduct the sort of individualized analysis
that Pearson foretells. First, the vast majority of the contracts use the term “print-run,”
“circulation,” or some similar term. They do not appear to provide further explanation for this
term that varies contract to contract, meaning that analysis of the term would likely not differ
significantly. An examination of a case that has considered this very issue supports this
conclusion. In Wood v. Houghton Mifflin Harcourt Publ’g Co., the court addressed whether a
print-run placed a limitation of the scope of the licensing agreement, in other words whether the
copyright holder was allowed to bring an infringement suit for failure to comply with this term.
589 F. Supp. 2d 1230, 1238-39 (D. Colo. 2008). The court concluded that an apparently
standard print-run provision constituted a specific limitation as to the scope of the licensing
agreement. Id. The Court need not decide whether to follow the Wood court at this stage in the
litigation, but the Wood court’s analysis further suggests that the question of whether the printrun creates a limit to the scope of the licensing agreement will be determined by common, rather
than individual, proof.

15

5. Choice of Law and Battle of the Forms
Pearson observes that a number of the contracts contain choice of law provisions. It
argues that for the remaining contracts, the Court will be required to conduct an individualized
choice of law analysis. According to Pearson, the burden of conducting this analysis and then
applying the law of many different states will lead individual issues to predominate. It is true, of
course, that “[f]ederal courts sitting in diversity look to the choice-of-law rules of the forum
state.” Int’l Bus. Machs. Corp. v. Liberty Mut. Ins. Co., 363 F.3d 137, 143 (2d Cir. 2004). And
under New York choice-of-law rules, “the first step” is to determine “whether there is an actual
conflict between the laws invoked by the parties.” Booking v. Gen. Star Mgmt. Co., 254 F.3d
414, 419 (2d Cir. 2001) (citation omitted). But Pearson has not pointed to any conflict between
the laws of the fifty states that would trigger a choice of law analysis or fracture the Court’s
substantive analysis.
The most important term of the contract is the print-run term, specifically whether it
imposes an actual limitation on Pearson’s authorization to publish the photographs or whether, as
Wu predicts Pearson will argue, the term merely constitutes an estimate of how many copies
Pearson will publish. Pearson has not cited any case that suggests that the law of the various
states would vary on this issue, and the Court doubts seriously that different courts would come
to different determinations as to the plain meaning of a contract term. See Am. Airlines v.
Wolens, 513 U.S. 219, 233 n.8 (1995) (“[C]ontract law is not at its core diverse, nonuniform, and
confusing.”) (internal citation and quotations omitted).
Pearson also argues that state law will vary on how to resolve a “battle of the forms” that
Pearson claims is brewing in the underlying documentation. A typical battle of the forms occurs
when two commercial parties orally agree to certain terms and then exchange formal written

16

acknowledgements that embody the oral agreement, but contain additional terms that are often in
conflict with one another. Peters Fabrics, Inc. v. Jantzen, Inc., 582 F. Supp. 1287, 1289 n.2
(S.D.N.Y. 1984). For a typical sale of goods contract, the courts determine which of these terms
applies by applying U.C.C. § 2-207, which provides that additional terms are to become the
language of the contract unless “(a) the offer expressly limits acceptance to the terms of the
offer; (b) they materially alter it; or (c) notification of objection to them has already been given
or is given within a reasonable time after notice of them is received.” U.C.C. § 2-207(2).4
When Pearson sought permission to print a photograph in one of its textbooks, it would
send a billing request to the photo bureau that would list publication details for the books,
including a proposed print-run. The photo bureau would then send back an invoice that largely
copied the details from the billing request on the front and contained a list of standard terms on
the back. Pearson argues that the agreement between the parties is captured not by a single
document, the invoice, but rather by the interaction between the two documents. It further
represents that different of Pearson’s departments used different versions of the forms, further
increasing the variations that the Court will need to examine.
Analyzing Pearson’s arguments is a bit like opening a box, only to find that it contains a
smaller box inside. Pearson argues in vague terms that state law differs on issues such as how to
resolve the battle of the forms, then describes in equally vague terms which so-called battle the
Court will be called upon to resolve. While Pearson devotes a great deal of ink in its brief to
arguing that resolving battle of the forms inquiries is too complex for resolution on a class-wide
basis, it devotes much less space to pointing out outcome determinative conflicts in the various

4

Pearson suggests that the U.C.C. is not applicable to licensing agreements in all states. A number of the
agreements themselves, including the Minden Pictures and Peter Arnold agreements, contain provisions stating that
the U.C.C. applies. Nonetheless, the Court’s reference to the U.C.C. is mainly for illustrative purposes.

17

forms. Based on the Court’s review of the exhibits, it appears that Pearson sent out standard
form billing requests that proposed a list of photographs to be used in a specified textbook and,
importantly, provided for a particular print run. The photo bureau responded by producing an
invoice that parroted back these terms, including the print-run, and added additional terms on the
back. With regards to the terms on the back, it appears that the photo bureaus employed
standardized terms although there is variation among the forms used. But except for the few
provisions that the Court has analyzed above, Pearson fails to identify differences in the terms
that could affect the liability issues in this case.
Pearson does identify a few discrete instances where there is a discrepancy between the
print-run requested by Pearson and the print-run listed by the photo bureau in their final invoice.
Approximately forty of invoices that bill for Wu’s photographs contain print overrun claims.
Pearson has identified two instances among these invoices where there is a discrepancy between
the print-run on Pearson’s billing request and on the final invoice prepared by the photo bureau.
(Def.’s Opp’n 17.) In one instance, the billing request and invoice both provide for a print run of
up to 300,000, but the invoice has the term 300,000 crossed out and the number 500,000
handwritten in. (Id.) In another instance, the billing request lists a print run of up to 40,000, but
the invoice does not list a print run at all. (Id.) Pearson has also identified discrepancies in eight
other invoices that would be involved in this suit, but the Court could not determine how many
invoices Pearson scrutinized in order to locate these discrepancies. These discrepancies are thus
not instructive in estimating the approximate percentage overall that will require individualized
scrutiny. It seems that these sorts of discrepancies, while they do occur, are relatively rare in
comparison to the larger number of invoices that do not contain such discrepancies. Such
discrepancies as may exist are better addressed if and when damages are assessed in a claims

18

procedure. Alternatively, the Court may refine the class at a later date to exclude invoices that
are inconsistent with Pearson’s billing request regarding the print-run term.
Pearson argues that the need to determine the meaning of the contract in instances like
these will defeat predominance. But the mere fact that some individual questions exist is not
sufficient to defeat predominance. Brown v. Kelly, 609 F.3d 467, 483 (2d Cir. 2010) (“We
acknowledge that the district court will be required to make individualized inquiries with respect
to some of the plaintiffs and some of the claims. We conclude, however, that it was within the
district court's discretion to find that common issues predominated.”) (upholding certification of
individuals criminally charged pursuant to a statute previously ruled to be unconstitutional).
Judge Sand faced a set of facts similar to those in the case at bar in Spicer v. Pier Sixty, LLC, 269
F.R.D. 321 (S.D.N.Y. 2010). There, servers at private banquets sued, claiming that their
employer improperly withheld a portion of a mandatory service charge applied to the bill. Id. at
327. Most clients were made aware of the charge because it was described in one of two form
contracts that the banquet hall used. Id. On rare occasions, clients inquired as to what the
service charge covered, and the employer would provide further explanation. Id.
In order to determine whether the employer was proper in withholding a portion of the
service charge, Judge Sand was required to apply a totality of the circumstances test to determine
whether the reasonable client for each event would have understood that the service charge was a
substitute for a gratuity. Id. at 338. He determined that in most instances, the factual inquiry
surrounding what the reasonable client would have understood would be exactly the same
because the defendant employers used the same contract for each event and most clients sought
no more information than what was printed in the contract. Id. Common questions
predominated notwithstanding the fact that the Court would be required in select instances to

19

inquire into the representations made to each client. Id. Judge Sand’s approach is instructive. In
the vast majority of cases, it appears that the there are no discrepancies between the billing
requests and the invoices, and the Court will be called upon to interpret the same or similar
language regarding print-run. It might be the case that in select instances, the Court will be
required to inquire into the terms of a particular contract. But these issues will arise relatively
infrequently and will not overwhelm the numerous common legal and factual issues. The Court
is not persuaded that either choice of law issues or battle of the forms issues will defeat
predominance. The one exception, however, is those agreements that require the application of
foreign law. Those agreements that must be construed in accordance with the laws of another
country will not be included in the class definition.
6. Fraud
Pearson also argues that predominance is defeated by the need to show reliance for each
of its fraud claims. (Def.’s Opp’n 38-40.) The Court has stayed all of Wu’s fraud claims
pending arbitration. Wu does not advance any argument that these claims should be certified.
Fraud claims, therefore, are irrelevant to the Court’s predominance inquiry.
7. Registration
Pearson claims that determining whether individual photographs have been properly
registered will require individualized analysis that will defeat predominance. Although Pearson
makes vague pronouncements to the effect that determining whether a particular photograph has
been registered “can be quite complex,” (Defs.’ Mem. 41), Pearson provides little explanation as
to why answering this question will be burdensome in this case. The Court has reviewed a
number of copyright cases in this District and found few in which registration is a litigated issue.
Pearson has identified one of these cases, Muench Photography, Inc. v. Houghton Mifflin

20

Harcourt Publ’g Co., 712 F. Supp. 2d 84, 95 (S.D.N.Y. 2010), in which Judge Preska held that
compilation registrations filed by photo bureaus on behalf of photographers were not valid
registrations. Judge Preska determined that an entire method of registration was invalid. Should
this Court adopt Judge Preska’s reasoning, it will exclude such compilations from the class. This
should be a relatively simple task. This determination would not involve, for example, deciding
whether a registration extended to a particular object as is necessary in interpreting a design
copyright. Cf. Nicholls v. Tufenkian Import/Export Ventures, Inc., 367 F. Supp. 2d 514, 520
(S.D.N.Y. 2005) (adjudicating whether a rug registered in a particular color with the Copyright
Office also covered the same pattern in a different color).
Further, at least one court has specifically considered and rejected the argument that
consideration of individual copyright registration defeats predominance. In In re Napster
Copyright Litig., the court considered whether to certify a class of copyright holders who alleged
that their musical works had been shared through Napster, a popular, but now defunct peer-topeer file sharing service. 04 Civ. 1671, 2005 WL 1287611 (N. D. Cal. June 1, 2005). The court
determined that even though it would be required to make a work-by-work analysis of issues
surrounding proof of ownership, registration, and damages, these individualized determinations
were less significant than the uniting fact that each violation occurred through the same filesharing system. Id. at *6. In the end, although Pearson has raised the specter of individual issues
with regards to copyright registration, it has done little to substantiate its claim. The Court
believes that, as in Napster, registration will not create insurmountable issues.
8. Statute of Limitations
Finally, Pearson argues that determining the applicable statute of limitations will require
an individualized inquiry. The Copyright Act specifies that claims for infringement must be

21

brought within three years. 17 U.S.C. § 507(b). If individual acts of infringement occurred
within three years of the date of filing, it is clear that the copyright holder has satisfied the statute
of limitations. Auscape Int’l v. Nat’l Geographic. Soc., 409 F. Supp. 2d 235, 241 (S.D.N.Y.
2004). Pearson appears to argue that this period may be muddied if plaintiffs argue that a
discovery rule should apply instead. (Def.’s Mem. 40-41.) Under such a rule, copyright claims
would accrue when a plaintiff “knows or has reason to know” of the alleged infringement.
Auscape, 409 F. Supp. 2d at 242. The status of the discovery rule within this Circuit is unclear.
Id. at 242-248 (concluding after an exhaustive analysis that the discovery rule should not apply
in copyright claims, but noting that a number of courts in this district had reached the opposite
conclusion). It is not appropriate for the Court to consider the merits of the discovery rule at this
juncture, nor have the parties briefed the issue in any meaningful way. In any event, the Court
notes that plaintiff’s argument for extending the statute of limitations is premised on class-wide
proof that Pearson’s practice was not to disclose over-run information to any copyright holders.
B. Superiority
The superiority question under Rule 23(b)(3) requires a court to consider whether a class
action is superior to other methods of adjudication. The court should consider, inter alia, “the
interest of the members of the class in individually controlling the prosecution or defense of
separate actions” and “the difficulties likely to be encountered in the management of a class
action.” Fed. R. Civ. P. 23(b)(3). “[F]ailure to certify an action under Rule 23(b)(3) on the sole
ground that it would be unmanageable is disfavored and should be the exception rather than the
rule.” In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d. 124, 140 (2d Cir. 2001)
(internal quotations and citations omitted).

22

Class action is the superior method for resolving this dispute for several different reasons.
First, Wu has argued forcefully that after he filed this lawsuit, Pearson stopped publishing his
photographs in its textbooks. Because Wu is a professional photographer, Pearson’s alleged
actions have threatened his livelihood. Class treatment is often the superior method of resolving
claims where “there is reason to believe that class members may fear reprisal . . . .” Noble v. 93
Univ. Place Corp., 224 F.R.D. 330, 346 (S.D.N.Y. 2004). Wu also represents that Pearson has
been extremely secretive about its overruns and has even adopted a policy that it will not reveal
information about its print-runs to photographers unless they agree not to use the information in
subsequent litigation. It seems unlikely that individual photographers will gain the necessary
information to file suit except through the device of a class action. Courts have often opined that
“[i]t is appropriate for the court to consider the inability of the . . . uninformed to enforce their
rights . . . .” Casale v. Kelly, 257 F.R.D. 396, 407 (S.D.N.Y. 2009).
Against these arguments, Pearson counters that the availability of attorney fees and
statutory damages provides individual copyright holders to bring suit individually. This fact
alone does not determine the issue of superiority. In Napster, the class members were also
potentially entitled to attorney fees and statutory damages, and the court still found class
treatment the superior method for adjudication. 2005 WL 1287611, at *8. The court there
considered the fact that each copyright holder had sought representation through a music agency
to license his or her works and collect royalty fees and concluded that this choice “suggests a
preference for delegating copyright licensing and enforcement duties that is inconsistent with a
widespread desire on the part of absent class members to prosecute their claims in individual
actions.” Id. So too here.

23

Pearson also suggests that class certification is inappropriate because Wu has sought
certification only for his copyright claims, but not his state common law claims. Claim-splitting
is a concern only “where the class representatives had left aside the far stronger claims for
monetary damages and sought to have the weaker claims certified, for dubious strategic
purposes.” Coleman v. GM Acceptance Corp., 220 F.R.D. 64, 82 (M.D. Tenn. 2004). As the
court determined in considering whether to stay Wu’s copyright claims pending the outcome of
his state law claims in arbitration, the core of Wu’s gripe with Pearson is that Pearson has
infringed his copyright. Pearson’s concerns about claim-splitting are misplaced. The Court has
determined that Wu’s proposed class, with certain modifications, meets the requirements of Rule
23(b)(3). The Court will now return to the requirements of Rule 23(a). It should be noted that
Pearson does not contest the Rule 23(a) factors with the exception of adequacy and
ascertainability.
C. Numerosity
The first of the Rule 23(a) prerequisites is that “the class is so numerous that joinder of
all members is impracticable.” Numerosity is presumed when the class contains forty or more
members. Consol. Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir. 1995). Each
invoice bills Pearson for the use of many different photographs. For example, a single Minden
Pictures invoice dated May 11, 2009 for photographs to be used in a book entitled BIOLOGY 8TH
ED.,

bills for the works of the works of twenty different photographers. (Nelson Decl., Ex. 1.)

Numerous such invoices are at stake in this litigation. It is clear that Wu has demonstrated that
numerosity is satisfied.

24

D. Commonality and Typicality
Next, Wu must demonstrate that “there are questions of law or fact common to the class.”
Fed. R. Civ. P. 23(a)(2). “A court may find a common issue of law even though there exists
some factual variation among class members’ specific grievances.” Dupler v. Costco Wholesale
Corp., 249 F.R.D. 29, 37 (E.D.N.Y. 2008) (internal quotation and citation omitted). Wu must
also demonstrate typicality, meaning that “the claims the claims or defenses of the representative
parties are typical of the claims or defenses of the class.” Fed. R. Civ. P. 23(a)(3). “The
commonality and typicality requirements often tend to merge into one another, so that similar
considerations animate analysis of both.” Brown v. Kelly, 609 F.3d 467, 475 (2d Cir. 2010).
“The crux of both requirements is to ensure that ‘maintenance of a class is economical and that
the named plaintiff’s claim and the class claims are so interrelated that the interests of the class
members will be fairly and adequately protected in their absence.’” Marisol A v. Giuliani, 126
F.3d 372, 376 (2d Cir. 1997) (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 157 n.13
(1982)). The Court has already determined that common issues predominate with respect to the
Minden Pictures invoices, and so the commonality requirement is necessarily satisfied. The
typicality requirement is also satisfied. Wu argues that Pearson engaged in a common course of
conduct, specifically underestimating its print-run needs and then failing to seek additional
licensing as necessary. Wu argues that when Pearson engaged in this practice it infringed his
copyright. Thus, his claims are typical of the class claims.
E. Adequacy
The final requirement of Rule 23(a) is that “the representative parties will fairly and
adequately represent the interests of the class.” In order to satisfy this requirement, the plaintiff
must demonstrate that class counsel is qualified, experienced, and generally able to conduct the

25

litigation and that that there is no conflict of interest between the named plaintiffs and other
members of the plaintiff class. Marisol A., 126 F.3d at 378. It is apparent from his papers that
both Wu and his counsel have dedicated a great deal of time to the pursuit of this litigation and
are ably representing the interests of the class.
Pearson argues that Wu is not an adequate representative of photographers who
contracted directly with Pearson because he has entered into a settlement with Pearson for claims
stemming from direct agreements with Pearson. But it is not clear how the fact that Wu has
settled certain claims with Pearson would make him antagonistic to other class members. As Wu
correctly observes, the Court need not consider Wu’s invoices where a settlement has already
been reached. In support of its argument, Pearson cites In re Schering Plough Corp. ERISA
Litig., 589 F.3d 585, 599-600 (3d Cir. 2009). But Schering is inapposite. There, the plaintiff had
signed a general release in return for a severance package. Here, there is no dispute that Wu’s
claims through the photo bureaus are live claims. It does not appear that Wu has interests
antagonistic to that of the class.
F. Ascertainability
“Although Rule 23(a) does not expressly require that a class be definite in order to be
certified, Second Circuit courts have implied a requirement that a class be identifiable before it
may be properly certified.” Friedman-Katz v. Lindt & Sprungli (USA), Inc., 270 F.R.D. 150, 154
(S.D.N.Y. 2010). “An identifiable class exists if its members can be ascertained by reference to
objective criteria. Where any criterion is subjective, e.g., state of mind, the class is not
ascertainable.” Spagnola v. Chubb Corp., 264 F.R.D. 76, 97 (S.D.N.Y. 2010) (internal quotation
omitted). Pearson appears to argue that the class is not sufficiently ascertainable because the
Court will have to make a determination about the merits of each claim in deciding whether a

26

particular individual is a class member, that is, whether Pearson exceeded the print run. Of
course, the mere fact that class membership overlaps with an element of the plaintiff's legal claim
does not mean that the class is not ascertainable. See Friedman-Katz, 270 F.R.D. at 154-55
(S.D.N.Y. 2010) (holding that a class of individuals whose receipts contained more than the last
five digits of their credit card number or the expiration date of their credit card number was
ascertainable even though these criteria were also elements of the plaintiff’s legal claim); Noble
v. 93 Univ. Place Corp., 224 F.R.D. 330, 341 (S.D.N.Y. 2004) (certifying a 23(b) class in a
collective action of non-exempt employees who were not paid overtime in a case where the
defendant contested whether the plaintiffs were entitled to overtime pay). The question is merely
whether class membership can be determined by reference to objective criteria. Friedman-Katz,
270 F.R.D. at 154.
The analysis in Wilson v. Toussie is particularly instructive. 01 Civ. 4568, 2008 WL
905903 (E.D.N.Y. Mar. 31, 2008). There the plaintiffs alleged that the defendants had steered
prospective black and Hispanic homeowners to particular neighborhoods and then induced them
through deceptive conduct to purchase overvalued homes. Id. at *5. The court observed that if
the plaintiffs had merely confined their class definition to those black and Hispanic purchasers
who had been steered to certain neighborhoods pursuant to a blanket policy, this definition
would have been ascertainable. Id. It would be easy enough to determine who had purchased
homes from the seller and where. But the question of whether a particular class member fell
victim to deceptive conduct was a fact-intensive inquiry that would require determination by
subjective criteria. Id.
Here, the question of whether Pearson exceeded the print run is a fairly mechanical
inquiry. The licensing agreement lists a print run, and Pearson has printed a number of copies of

27

a textbook that is either greater or less than that number. The additional requirements that the
Court has proposed, namely that the licensing agreements do not require the arbitration of
copyright claims and allow for litigation in the Southern District of New York, are similarly
mechanical inquiries. Since class membership is determined by objective criteria, the class is
ascertainable.
*

*

*

The Court holds, therefore, that the class as modified can proceed. The class shall consist
of:
All persons or entities entitled to bring copyright claims in their own names or on
behalf of photographers or other copyright holders (referred to herein as “content
owners” or “copyright claimaints”) whose photographic works were used by
Defendant in publications that exceeded the authorized print run. Copyright
claims subject to exclusive arbitration clauses, requiring the application of foreign
law, or specifying a venue that is incompatible with the Southern District of New
York shall be excluded. The class will also exclude author-supplied images, any
images for which Pearson owns the exclusive copyright, and images licensed to
Pearson royalty-free.
The Court will also create a subclass of consisting of class members whose licensing agreements
require that the licensee be billed for overruns before suit can be brought.
III.

Class Certification—Wu II
In the Wu II action, Wu alleges that Pearson often printed photographs in its textbooks

without obtaining a license for these works prior to going to press. In many cases, Pearson
obtained these photographs from a digital repository of photographs to which Pearson
encouraged photographers to contribute, assuring them that it would obtain a license in the event
that it decided to include a photograph in a textbook. After the book’s publication, Pearson
would then allegedly approach photo bureaus or the photographers and seek licenses for the
photographs without disclosing that it had already included them in its publications. Wu argues

28

that each pre-license use of the photograph is an act of copyright infringement, for which he and
other potential class members are entitled to compensation. As with the print overrun claims, the
Court will begin its inquiry by considering whether common claims predominate pursuant to
Rule 23(b)(3).
A. Predominance
Wu argues that common issues will predominate because the Court will be called upon to
consider a great deal of common evidence, including evidence of Pearson’s systematic practice
of obtaining permission after publication as well as its presumed defense that its practice was
standard in the industry. Evidence of Pearson’s uniform practice will be relevant to the question
of whether Pearson’s infringement is considered willful.
Pearson argues that individual issues will predominate because it will seek to introduce
evidence that it had permission to publish an unspecified number of the photographs. In some
instances, it argues, the permission was memorialized in the invoice itself, citing instances where
the license start date listed on the invoice preceded the date of the invoice itself. (Def.’s Mem.
31.) It further contends that it was accepted industry practice to make informal arrangements
that Pearson could publish photographs, then to formalize the arrangement later through the use
of an invoice. (Id.) In support of this argument, Pearson points to the fact that non-exclusive
licenses under the copyright need not be written in order to be valid. See Weinstein Co. v.
Smokewood Entmt. Group, LLC, 664 F Supp. 2d 332, 344 (S.D.N.Y. 2009).
Wu argues that the evidence does not support Pearson’s contention that it entered into
oral licenses and then later formalized these arrangements through written invoices. He argues
that Pearson employees themselves acknowledge that a license is not created until Pearson
receives or often until it pays an invoice. The proffered deposition testimony is somewhat vague

29

on this point. Julie Orr, who appears to have been tasked with bringing Pearson’s permissioning
into compliance in the wake of this and similar lawsuits, is one such employee. (Julie Orr Dep.,
May 3, 2010 (hereinafter “Orr Dep.”), 85:23-86:9.) She testified that she became aware that
Pearson’s practice of seeking licenses after the fact was problematic through “industry news.”
(Id., 85: 6-11.) According to Orr, a number of people came forward with complaints against
Pearson and other publishing companies. (Id.) Prior to these revelations, Orr had not considered
the practice problematic because vendors did not raise concerns about it. (Id. 85:23-26:9.)
Elaine Soares, an employee who worked on obtaining permissions during the period
when Pearson was engaged in obtaining licenses after the fact, stated that the photo bureaus and
photographers had a tacit understanding of Pearson’s practices. Soares stated that in many
instances, Pearson would request a high resolution copy of an image before they sent a billing
request and that at that stage, it was understood that the picture would appear in the book.
(Elaine Soares Dep., April 8, 2010 (hereinafter “Soares Dep.”), 96:24-100:12.) She stated that
this understanding was not explicitly worked out. In her words, “There is an understanding, a
working relationship and an understanding, and that is the way the business, the industry has
conducted business.” (Id. 98:9-13.) Pearson would later formalize the arrangement through a
billing request and an invoice. When asked whether Pearson would disclose in such situations
that the book had already been published, Soares stated,
There is no need to tell them because it was—it’s understood. There were many
vendors and many photographers that understand that. They know how books are
put together. So the industry, there was an unspoken—it’s not an unspoken rule.
There was an understanding that you’re at press and you’re trying to get
permission because there are numerous times when we’re at the printer and we’re
calling photographers or agencies trying to get an image and asking them for their
verbal okay to proceed.

30

(Id. 38:15-39:4.) When Pearson eventually sent out billing requests for photographs that had
already been published, the request would disclose the fact that the works had already been
published in that the request would list the copyright date of the book. (Id. 221:13-25.)
Soares’s testimony is in many respects vague and at times contradictory. Although she
states that Pearson obtained licenses prior to publication, it appears that in most cases her proof
for this contention is a supposed industry-wide “understanding.” To the extent that Pearson
intends to argue that industry practice was to infer a verbal license from a billing request or other
communication, this argument is susceptible to class-wide proof. Nonetheless, Soares also
seems to suggest, in her references to “verbal okays to proceed,” that Pearson and the
photographers or photo bureaus would have conversations where one might infer an oral license
from the circumstances of the exchange. Soares states that in particular instances, she would
inform the copyright holders that the book was at the press and ask for their permission to
proceed. Of course, this description of events is somewhat at odds with Soares’s characterization
of an industry-wide attitude of permissiveness when it came to licensing. If it was assumed that
a license would be granted at the moment Pearson asked for a high resolution image, it is unclear
why Pearson would need to engage in these frantic exchanges at the printers. It is also unclear
how often Pearson actually asked for permission to proceed without a written license and how
often they relied upon the supposed tacit understanding in the industry. Nonetheless, the fact
that Pearson has unearthed a number of invoices that appear to explicitly grant retroactive rights
suggests that at least in some instances, the photo bureaus were aware that Pearson was seeking
permission to publish photographs in books that had already gone to press.
As a general matter common issues do not predominate where liability hinges on a
variety of oral representations. See, e.g., Johnston v. HBO Film Mgmt., Inc., 265 F.3d 178, 190

31

(3d Cir. 2001) (“[I]t has become well-settled [sic] that, as a general rule, an action based
substantially on oral rather than written communications is inappropriate for treatment as a class
action.”); Mullaney v. Delta Air Lines, Inc., 258 F.R.D. 274, 279 (S.D.N.Y. 2009) (individual
issues predominate where plaintiff’s claims turn on whether individual class members received
the same or similar representations from airline personnel about rebooking tickets); McCracken
v. Best Buy Stores, LP, 248 F.R.D. 162, 167-68 (S.D.N.Y. 2008) (individual issues predominate
where plaintiff relies on contemporaneous oral representations in an attempt to defeat the plain
language of a form contract). Nonetheless, where liability with regards to the majority of class
members can be determined on a class-wide basis by resort to the examination of printed
documents, the fact that a court must consider oral communications in a relatively small number
of cases does not defeat predominance. See Spicer v. Pier Sixty, LLC, 269 F.R.D. at 338. From
the submissions the parties have made thus far, the Court cannot get a sense for how frequently
resolution of the case will require consideration of individualized oral representations.
In addition, it is unclear whether the licensing agreements themselves will allow for the
consideration of such evidence. A number of the licensing agreements, for example the Minden
Pictures and Peter Arnold agreements, explicitly state that Pearson was granted a license only
after the photo bureau received payment on the invoice. A number of the licensing agreements
also contain integration clauses. For example, the Peter Arnold agreement states, “The terms set
forth in our Delivery Contract and invoice represents our entire agreement concerning the
delivery of images to you, your review and usage therof. All prior understandings or
representations, oral or written, based on ‘industry custom’ or past dealings, are hereby merged
in this Contract.”

32

Although copyright law is a matter of federal law, interpretation of the language of
licensing agreements is a matter of state law. Graham v. James, 144 F.3d 229, 237 (2d Cir.
1998). While state law is generally consistent on issues of contract interpretation, the particular
issue raised by Pearson—alleged oral agreements—turns on the admissibility of parol evidence
to explain the meaning of a contract. There are some obvious differences among the states on
this issue that are not addressed by Wu. For example, the Peter Arnold agreement states that it is
to be interpreted in accordance with New York law. New York takes a traditional approach to
the parol evidence rule. In New York, “where the language is clear, unequivocal and
unambiguous, the contract is to be interpreted by its own language” and extrinsic evidence will
not be considered. R/S Assocs. v. N.Y. Job Dev. Auth., 771 N.E.2d 240, 242 (N.Y. 2002). The
Minden Pictures agreement, by contrast, calls for the application of California law. California
does not apply the parol evidence rule as it is usually conceived. Under California law “[i]f one
side is willing to claim that the parties intended one thing, but the agreement provides for
another,” extrinsic evidence is admissible regardless of how plain the language of the contract
may be. Trident Ctr. v. Conn. Gen. Life Ins. Co., 847 F.2d 564, 569 (9th Cir. 1988).
It should be noted that differences in state law do not always present an insuperable
barrier to class certification. In Steinberg, for example, the court concluded that it could
categorize differences in state parol evidence rules as applied to form contracts into four groups
and sort class members into four subclasses based on these differences. 224 F.R.D. at 76-79. It
is possible that such a resolution is possible here. Nonetheless, “[i]n a motion for class
certification, plaintiffs bear the burden of providing an extensive analysis of state law variations
to determine whether there are ‘insuperable obstacles’ to class certification.” In re Currency
Conversion Fee Antitrust Litig., 230 F.R.D. 303, 312 (S.D.N.Y. 2004) (quoting In re Ford Motor

33

Co. Ignition Switch Prods., 174 F.R.D. 332, 349 (D.N.J. 1997)). Wu has not met that burden
here.
Wu has also requested the Court to certify two subclasses, one of claims stemming from
photographs appearing in the same book as Wu’s and one of claims stemming from photographs
that appeared on the same invoices as Wu’s. Neither of these subclasses cures the problem of
oral representations. Whatever oral licenses Pearson obtained could easily vary from photograph
to photograph, even within the same book or invoice. For example, a Pearson employee could
have called one photo bureau to seek a license ahead of time and forgotten to call another. Or
she could have mentioned one photograph when speaking with a photo bureau and not revealed
that Pearson also intended to use another photo licensed by the same bureau until she submitted a
billing request. At this point, Wu has not satisfied the Court that common issues will
predominate. If discovery should show that the testimony of Pearson’s witnesses does not
withstand scrutiny (or, alternately, that Pearson is relying on “industry practice”), Wu may seek
leave to renew this aspect of his class certification motion.5
B. Certification Pursuant to Rule 23(b)(1)(B) or (b)(2)
Wu argues that certification is appropriate pursuant to Rule 23(b)(1)(B), which allows for
certification where there is a risk of inconsistent judgments. Wu seems to argue that certification
under this subsection is warranted because any court’s opinion on an individual case is likely to
have precedential effect for the rest. In order to invoke this subsection, however, “the party
seeking class certification must be able to allege something more than that an individual
adjudication may be given stare-decisis effect in other lawsuits . . . .” 7AA Charles Alan Wright,

5

The Court questions whether individualized issues would predominate over common issues if discovery were to
show that the number of oral agreements was de minimis. Any renewed motion should provide a survey of state law
pertinent to the parol evidence rule. See Steinberg, 224 F.R.D. at 79.

34

Arthur R. Miller & Mary Kay Kane, FEDERAL PRACTICE AND PROCEDURE § 1774 (3d ed. 2005).
Wu has made no such showing. Class certification is not appropriate under this subsection.
Wu also argues that certification is appropriate under Rule 23(b)(2). In the intervening
period between briefing and the issuance of this opinion, the Supreme Court issued an opinion in

Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011). This case restricted the availability of
Rule 23 (b)(2) certification in situations where a plaintiff seeks both damages and injunctive
relief, holding that such cases may not be certified where "monetary relief is not incidental to the
injunctive or declaratory relief." Id. at 2557. It is clear that Wu's copyright claims for damages
are not incidental. Class certification is therefore inappropriate under this subsection.

CONCLUSION
For the foregoing reasons, Pearson's motion for reconsideration [09 Civ. 6557, 91] is
DENIED. Wu's motion for class certification with respect to the Wu I action [09 Civ. 6557, 103]
is GRANTED with the modifications noted above. Wu's motion for class certification with
respect to the Wu II action [10 Civ. 6537, 17] is DENIED. Pearson's motion to dismiss the Wu II
[10 Civ. 6537, 11] action is WITHDRAWN. With regards to the Wu II, Wu may conduct
additional class discovery of the defendant and of third party witnesses to determine whether the
defects described in this opinion can be cured. The parties are directed to meet and confer
regarding a proposed discovery schedule and submit the schedule to the Court within fourteen
days of the date of this order.

SO ORDERED.
Dated: New York, New York
September'Jy2011

Richard J. Holwell
United States District Judge
35