Cartagena Enterprises, Inc. et al v. J. Walter Thompson Company et al
Filing
37
OPINION AND ORDER re: 12 MOTION to Dismiss Or Transfer Venue, filed by Banco Popular De Puerto Rico, 17 MOTION to Compel Arbitration And Transfer Venue, filed by J. Walter Thompson Company Caribbean, J. Walter Thompson USA, Inc, J. Walter Thompson Company. For the foregoing reasons, Defendants' motion to dismiss Cartagena's claims and transfer Rico's claims is GRANTED. The Clerk of the Court is directed to close these motions [Docket Nos. 12, 17] and this case. (Signed by Judge Shira A. Scheindlin on 10/16/2013) (ja)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------------------------){
CARTAGENA ENTERPRISES, INC. d/b/a
CARTAGENA PUBLISmNG; and RICO
RECORDS, LLC,
Plaintiffs,
OPINION AND ORDER
- against
13 Civ. 4238 (SAS)
J. WALTER THOMPSON COMPANY; J.
WALTER THOMPSON USA, INC.; J.
WALTER THOMPSON COMPANY
CARIBBEAN d/b/a JWT PUERTO RICO;
and BANCO POPULAR DE PUERTO
RICO,
Defendants.
-------------------------------------------------------){
SHIRA A. SCHEINDLIN, U.S.D.J.:
I.
INTRODUCTION
Plaintiffs Cartagena Enterprises Inc. d/b/a Cartagena Publishing
("Cartagena") and Rico Records, LLC ("Rico") have sued J. Walter Thompson
Company ("JWT Co."), J. Walter Thompson USA, Inc. ("JWT USA"), J. Walter
Thompson Company Caribbean d/b/a JWT Puerto Rico Inc. ("JWT Puerto Rico")
(collectively "JWT Defendants") and Banco Popular de Puerto Rico ("Popular")
(with JWT Defendants, "Defendants") for (i) copyright infringement under the
U.S. Copyright Act and the Berne Convention for Protection of Literary and
Artistic Works and (ii) breach of contract. Jurisdiction is based on the presence of
a federal question, pursuant to 28 U.S.C. § 1331. Defendants move to dismiss
Cartagena’s claims under Rule 12(b)(1) and compel arbitration, and to transfer
Rico’s claims to the United States District Court for the District of Puerto Rico.
Alternatively, Defendants move to dismiss Rico’s claims for lack of standing and
failure to state a claim.
For the following reasons, Defendants’ motions are granted.
II.
BACKGROUND
A.
Facts
Cartagena is a family-owned music publishing company that licenses
the distribution and sale of musical compositions.1 Cartagena was formed under
New York law with its principal place of business in New Jersey.2 Cartagena
exclusively owns the copyrights to the musical composition “Y No Hago Más Ná”
and has registered its copyright with the Register of Copyrights.3 Rico is a small,
family-owned recording company that records, sells, and licenses the distribution
1
See Complaint (“Compl.”) ¶ 10; Declaration of Ralph Cartagena (“Cartagena
Decl.”) ¶ 3.
2
See Compl. ¶ 4.
3
See id. ¶¶ 12-14.
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and sale of sounds recordings.4 Rico is a New Jersey entity with its principal place
of business in New Jersey.5 Rico exclusively owns the sound recordings for the
albums “La Universidad de la Salsa” and “Salsa Classics Revisited,” which both
include recordings of “Y No Hago Más Ná,” and has registered its copyrights for
both albums with the Register of Copyrights.6 Rico exclusively owns the artwork
for the album “Salsa Classics Revisited,” and the registered copyrights to the sound
recording for the album “Bailando con el Mundo,” which includes a recording of
“Don Goyo.”7
JWT Puerto Rico is an advertising agency headquarted and operating
in Puerto Rico.8 Popular, JWT Puerto Rico’s client, is a financial institution
formed under Puerto Rican law with its principal place of business in Puerto Rico.9
4
See id. ¶ 15; Cartagena Decl. ¶ 8.
5
See Compl. ¶ 5.
6
See id. ¶¶ 16, 18-20.
7
See id. ¶¶ 17, 22-24.
8
See id. ¶ 8. JWT Puerto Rico and JWT USA are subsidiaries of JWT Co.,
but only JWT Puerto Rico is a party to the License Agreement. See id. ¶¶ 28, 3541.
9
See id. ¶¶ 9, 29.
-3-
On July 22, 2011, Cartagena and JWT Puerto Rico entered into a
license agreement that allowed JWT Puerto Rico to create a derivative work of “Y
No Hago Más Ná,” titled “Echar Pa’ Lante,” as part the Popular advertising
campaign.10 Under the License Agreement, Cartagena remained the owner of the
copyrights to “Y No Hago Más Ná,” and would become the sole owner of
copyright interests in “Echar Pa’ Lante” after the six-month license period ended.11
Additionally, the License Agreement allowed JWT Puerto Rico to exploit “Echar
Pa’ Lante” only in certain media within Puerto Rico during the six-month Popular
campaign.12 JWT Puerto Rico’s only right with respect to “Y No Hago Más Ná,”
was to publish the lyrics in a newspaper in Puerto Rico one time during the license
period.13 JWT Puerto Rico paid Cartagena $90,000 in exchange for the rights
under the License Agreement.14
Section 10 of the License Agreement includes an arbitration clause
that states:
Any claim or dispute that arises from or is related to the
10
See id. ¶¶ 35-37.
11
See id. ¶ 38.
12
See id. ¶ 39.
13
See id. ¶ 40.
14
See id. ¶ 42.
-4-
Agreement or the default thereof shall be resolved by arbitration
in San Juan, Puerto Rico, in accordance with the rules and
regulations obtained at that time from the panel governed by three
members of the American Arbitration Association. The parties to
the Agreement agree to abide by the arbitration decision and the
said decision may be reviewed by any court that has jurisdiction
in Puerto Rico on the matter in question.15
Additionally, section 9 of the License Agreement states that “[the]
Contract shall be governed by the laws of the Commonwealth of Puerto Rico
applicable to copyright contracts and/or law including the Copyright Act.”16
In October 2011, Cartagena informed JWT Puerto Rico that it had
breached the License Agreement by (1) distributing “Echar Pa’ Lante” to movie
theaters throughout Puerto Rico; (2) using “Echar Pa’ Lante” as Popular’s
telephone “on-hold” music; and (3) posting “Echar Pa’ Lante” on
soundcloud.com.17 JWT Puerto Rico denied the breaches and stated that it had
ceased any alleged unauthorized uses.18 After the six-month license period ended,
JWT Puerto Rico distributed video excerpts of “Echar Pa’ Lante” and “Don Goyo”
and cover art from “Salsa Classics Revisited” to numerous advertising awards
15
Translated License Agreement, Ex. 2 to the Declaration of Marc J. Rachman
in Support of JWT’s Motion to Compel Arbitration and Transfer Venue
(“Rachman Decl.”), at 3. The original License Agreement was drafted in Spanish.
16
Id.
17
See Compl. ¶ 44.
18
See id. ¶ 45.
-5-
organizations worldwide, which hosted the videos on their websites.19 In addition,
JWT Co., JWT Puerto Rico, and Popular posted the videos on their websites and
on social media sites.20
Plaintiffs filed their Complaint in the Southern District of New York,
seeking damages and injunctive relief based on (1) their copyright infringement
claims against Defendants; and (2) Cartagena’s breach of contract claim against
JWT Puerto Rico.21
III.
LEGAL STANDARD
A.
Arbitrability
Arbitration clauses are subject to the Federal Arbitration Act
(“FAA”).22 “‘[A]ny doubts concerning the scope of arbitrable issues should be
resolved in favor of arbitration.’”23 “‘Accordingly, federal policy requires us to
19
See id. ¶¶ 82-153.
20
See id. ¶¶ 154-174. Popular posted only video excerpts of “Echar Pa’
Lante,” not “Don Goyo.” See id. ¶¶ 161-174.
21
See id. ¶¶ 189-247.
22
See Stolt-Nielson S.A. v. Animal Feeds Int’l Corp., 559 U.S. 662, 681
(2010).
23
In re Am. Exp. Fin. Advisors Sec. Litig., 672 F.3d 113, 128 (2d Cir. 2011)
(quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25
(1983)).
-6-
construe arbitration clauses as broadly as possible.’”24 Courts “will compel
arbitration ‘unless it may be said with positive assurance that the arbitration clause
is not susceptible of an interpretation that covers the asserted dispute.’”25
However, “[d]espite the ‘liberal federal policy favoring arbitration agreements,’
‘arbitration is a matter of contract and a party cannot be required to submit to
arbitration any dispute which he has not agreed so to submit.’”26
The Second Circuit applies a two-part test to determine the
arbitrability of claims: “(1) whether the parties have entered into a valid agreement
to arbitrate, and, if so, (2) whether the dispute at issue comes within the scope of
the arbitration agreement.”27
The Supreme Court has distinguished “questions of arbitrability,”
which are reserved for judicial resolution unless the parties have clearly agreed
otherwise, from other “gateway matters,” which are presumptively reserved for the
24
Id. (quoting Collins & Aikman Prods. Co. v. Building Sys., Inc., 58 F.3d 16,
19 (2d Cir. 1995) (brackets and internal quotation marks omitted)).
25
Id. (quoting AT&T Techs., Inc. v. Communications Workers of Am., 475 U.S.
643, 650 (1986)).
26
Id. at 127 (quoting Moses H. Cone, 460 U.S. at 24, and Howsam v. Dean
Witter Reynolds, Inc., 537 U.S. 79, 83 (2002)).
27
Id. at 127–28. The validity of the arbitration agreement is not in dispute.
-7-
arbitrator.28 “‘Questions of arbitrability’ is a term of art covering disputes about
[1] whether the parties are bound by a given arbitration clause as well as
disagreements about [2] whether an arbitration clause in a concededly binding
contract applies to a particular type of controversy.”29 Both disputes involve the
arbitration agreement’s scope.30 “‘Those issues should be decided by the courts
unless there is clear and unmistakable evidence from the arbitration agreement that
the parties intended that they be decided by the arbitrator.’”31 Clear and
unmistakable evidence includes the incorporation of the AAA Rules into a
contract.32 Such a contractual agreement requires both parties to
submit issues of arbitrability to the arbitrator.33
28
Republic of Ecuador v. Chevron Corp., 638 F.3d 384, 393 (2d Cir. 2011)
(citing Howsam, 537 U.S. at 83–85).
29
VRG Linhas Aereas S.A. v. MatlinPatterson Global Opportunities Partners
II L.P., 717 F.3d 322, 325 n.2 (2d Cir. 2013) (quoting Republic of Ecuador, 638
F.3d at 393).
30
See id.
31
Id. (quoting Republic of Equador, 638 F.3d at 393).
32
See Gwathmey Siegel Kaufman & Assocs. Architects, LLC v. Rales, 898 F.
Supp. 2d 610, 616 (S.D.N.Y. 2012) (citing Contec Corp. v. Remote Solution, Co.,
Ltd., 398 F.3d 205, 208 (2d Cir. 2005).
33
See Contec, 398 F.3d at 208 (noting that AAA Rule 7(a) gives the arbitrator
the power to rule on his or her own jurisdiction).
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B.
Rule 12(b)(1) Motion to Dismiss34
Rule 12(b)(1) provides for the dismissal of a claim when the federal
court lacks jurisdiction over the subject matter. “‘The plaintiff bears the burden of
proving subject matter jurisdiction by a preponderance of the evidence.’”35 In
considering a motion to dismiss for lack of subject matter jurisdiction, the court
must assume the truth of the material facts alleged in the complaint.36 However,
“‘[j]urisdiction must be shown affirmatively, and that showing is not made by
34
“There is a ‘lack of clarity in the case law of this Circuit (and others) as to
what procedural mechanism must be employed by courts to dismiss actions in
which the parties are bound to resolve (or attempt resolution of) their claims in
accordance with a contractual grievance procedure, such as an agreement to
arbitrate.’” Sleepy’s LLC v. Escalate, Inc., No. 10 Civ. 1626, 2010 WL 2505678,
at *1 n.15 (S.D.N.Y. June 18, 2010) (quoting Tyler v. City of New York, No. 05
Civ. 3620, 2006 WL 1329753, at *2 (E.D.N.Y. May 16, 2006) (cataloging cases
and secondary texts). Accord Rosenhoff Ltd. v. Cataclean Americas, LLC, No. 12
Civ. 1143A, 2013 WL 2389725, at *5 (W.D.N.Y. May 30, 2013) (resolving
motion to compel arbitration under Rule 12(b)(1)). Because Plaintiffs do not
contest Defendants’ invocation of Rule 12(b)(1), the Court will proceed using that
standard.
35
Al-Khazraji v. United States, 519 Fed. App’x 711, 713 (2d Cir. 2013)
(quoting Liranzo v. United States, 690 F.3d 78, 84 (2d Cir. 2012) (internal
quotation marks omitted)).
36
See Hijazi v. Permanent Mission of Saudi Arabia to United Nations, 403
Fed. App’x 631, 632 (2d Cir. 2010) (citing Triestman v. Federal Bureau of
Prisons, 470 F.3d 471, 474 (2d Cir. 2006)).
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drawing from the pleadings inferences favorable to the party asserting it.’”37 In
fact, “in dismissing a complaint for lack of subject-matter jurisdiction under Rule
12(b)(1), a court ‘may refer to evidence outside the pleadings.’”38
C.
Motion to Transfer Venue
Section 1404(a) provides that “[f]or the convenience of parties and
witnesses, in the interest of justice, a district court may transfer any civil action to
any other district or division where it might have been brought. . . .” In order to
transfer an action under section 1404(a), the moving party must satisfy two
requirements.39 First, the transferee court must have jurisdiction over the parties
and must be an appropriate venue for the action.40 Second, the balance of justice
and convenience must favor transfer.41 The second requirement “‘is essentially an
37
Jordan v. Verizon Corp., 391 Fed. App’x 10, 12 (2d Cir. 2010) (quoting
APWU v. Potter, 343 F.3d 619, 623 (2d Cir. 2003) (internal quotation marks
omitted)).
38
Burfeindt v. Postupack, 509 Fed. App’x 65, 67 (2d Cir. 2013) (quoting
Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)).
39
See Markel v. Sweeney, No. 12 Civ. 3555, 2012 WL 2930194, at *5
(S.D.N.Y. July 9, 2012) (citing Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 2930 (1988)).
40
See id.
41
See id.
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equitable task’ left to the Court’s discretion.”42 District courts have “wide
discretion to adjudicate motions for transfer according to an ‘individualized,
case-by-case consideration of convenience and fairness.’”43 The burden is on the
movant to show that transfer is warranted.44
To determine whether transfer is warranted, the court considers: (1)
the plaintiff’s choice of forum, (2) the convenience of witnesses, (3) the location of
relevant documents and ease of access to sources of proof, (4) the convenience of
the parties, (5) the locus of operative facts, (6) availability of process to compel the
attendance of unwilling witnesses, (7) the relative means of the parties, (8) the
forum’s familiarity with the governing law, and (9) trial efficiency and the interest
of justice, based on the totality of the circumstances.45
IV.
DISCUSSION
42
Id. (quoting First City Nat’l Bank & Trust Co. v. Simmons, 878 F.2d 76, 80
(2d Cir. 1989)).
43
Thyssenkrupp Materials N.A., Inc. v. M/V Fed. Shimanto, No. 13 Civ. 1543,
2013 WL 3947749, at *2 (July 30, 2013) (quoting Stewart, 487 U.S. at 29).
44
See Iragorri v. United Techs. Corp., 274 F.3d 65, 71 (2d Cir. 2001) (citing
Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947)).
45
See Fellus v. Sterne, Agee & Leach, Inc., 783 F. Supp. 2d 612, 617
(S.D.N.Y. 2011); see also D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 106-07 (2d
Cir. 2006) (listing factors 1–7 as “some” of the factors to consider).
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A.
Arbitrability of Cartagena’s Claims46
Cartagena does not dispute that its breach of contract claim should be
arbitrated.47 As to Cartagena’s copyright claims, the Court must first determine the
threshold issue of whether the Court or the arbitrator will decide arbitrability.48
Here, there is “clear and unmistakable evidence” that the parties intended the
46
The License Agreement contains a choice-of-law provision, stating that the
License Agreement is governed by Puerto Rican law. See Translated License
Agreement at 3. However, it is not clear from the face of the License Agreement
that the parties intended Puerto Rican law to apply to the threshold question of who
decides arbitrability. “Unless parties have objectively done so, courts have been
reluctant to apply a choice-of-law provision to such an inquiry, as it concerns ‘the
allocation of power between courts and arbitrators.’” Holzer v. Mandadori, No. 12
Civ. 5234, 2013 WL 1104269, at *6 (S.D.N.Y. Mar. 14, 2013) (quoting FR 8
Singapore Pte. Ltd. v. Albacore Maritime Inc., 794 F. Supp. 2d 449, 453 (S.D.N.Y.
2011)). Accord National Union Fire Ins. Co. v. Belco Petroleum Corp., 88 F.3d
129, 134–35 (2d Cir. 1996) (quoting Mastrobuono v. Shearson Lehman Hutton,
Inc., 514 U.S. 52, 60 (1995)). Thus, federal law should govern the question of who
decides abitrability. See Holzer, 2013 WL 1104269, at *6 (applying federal
arbitrability law to the question of who decides despite a choice-of-law provision
that required the contract to be construed under Dubai law); Jesus-Santos v.
Morgan Stanley Dean Witter Inc., No. Civ. 05-1336, 2006 WL 752997, at *6 (Mar.
22, 2006) (applying federal, rather than Puerto Rican law, to the question of who
decides arbitrability).
47
See Plaintiffs’ Memorandum of Law in Opposition to (i) JWT Defendants’
Motion to Compel Arbitration and to Transfer Any Remaining Claims to the
District of Puerto Rico or in the Alternative, Stay Any Such Remaining Claims and
(ii) Popular’s Motion to Dismiss and Transfer Venue (“Opp. Mem.”) at 16.
48
See VRG Linhas Aereas S.A., 717 F.3d at 324 (“The question of who is to
decide whether a dispute is arbitrable is one that must necessarily precede the
question of whether a dispute is arbitrable.”).
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arbitrator to decide the issue of arbitrability.49 First, the parties incorporated the
AAA rules into their Agreement.50 The Second Circuit has held that parties who
incorporate AAA rules into their Agreement are assenting to arbitrate issues of
arbitrability.51 Thus, AAA Rule R–7(a), allowing the arbitrator to determine her
own jurisdiction, governs.52 Second, the parties’ intent to arbitrate the question of
arbitrability is evidenced by the language of the arbitration clause. The License
Agreement states that “[a]ny claim or dispute that arises from or is related to the
Agreement . . . shall be resolved by arbitration.”53 The Second Circuit has held that
a contract that refers “any and all” controversies to arbitration reflects a “broad
grant of power to the arbitrators” and evinces the parties’ clear “inten[t] to
49
See Republic of Ecuador, 638 F.3d at 393 (citing Bell v. Cendant Corp., 293
F.3d 563, 566 (2d Cir.2002)).
50
See Translated License Agreement at 3.
51
See Schneider v. Kingdom of Thailand, 688 F.3d 68, 72 (2d Cir. 2012);
Contec, 398 F.3d at 211. See also VRG Linhas Aereas S.A., 717 F.3d at 326 (“[A]n
arbitration clause subjecting disputes to the rules and procedures of the ICC
International Court of Arbitration clearly and unmistakably commits to arbitration
any questions about the arbitrability of particular disputes.”).
52
See AAA Rule R-7(a) (“The arbitrator shall have the power to rule on his or
her own jurisdiction, including any objections with respect to the existence, scope,
or validity of the arbitration agreement or to the arbitrability of any claim or
counterclaim.”).
53
Translated License Agreement at 3.
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arbitrate issues of arbitrability.”54
However, a question remains whether the parties also intended to
permit Popular, a non-signatory to the License Agreement, to compel the
arbitration of arbitrability issues.55 “When a non-signatory moves to compel
arbitration of arbitrability, the language of the arbitration clause itself may clarify
whether the parties in fact intended to delegate that threshold question to the
arbitrator.”56 However, even where an arbitration clause is limited to disputes
“between the parties,” a non-signatory may be able to compel arbitration of
arbitrability issues.57 Under equitable estoppel, a non-signatory may compel a
54
Shaw Grp. Inc. v. Triplefine Int’l Corp., 322 F.3d 115, 121 (2d Cir. 2003)
(“[B]ecause the parties’ arbitration agreement is broadly worded to require the
submission of ‘all disputes’ concerning the Representation Agreement to
arbitration, and . . . for arbitration to be conducted under the rules of the ICC,
which assign the arbitrator initial responsibility to determine issues of arbitrability,
. . . the agreement clearly and unmistakably evidences the parties intent to arbitrate
questions of arbitrability.”).
55
Cartagena fails to raise this issue directly, arguing only that Popular cannot
compel Rico to arbitrate because both are non-signatories. See Opp. Mem. at 12.
The point is moot because Defendants do not seek to compel Rico to arbitrate.
56
Holzer, 2013 WL 1104269, at *8 (citing Contec, 398 F.3d at 209 (noting
that a signatory’s agreement to arbitrate issues of arbitrability with another
signatory does not necessarily indicate its intent to arbitrate the same issues with a
non-signatory)); Republic of Iraq v. BNP Paribas USA, 472 Fed. App’x 11, 12–13
(2d Cir. 2012).
57
See Contec, 398 F.3d at 210.
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signatory to arbitrate a dispute where “a careful review of ‘the relationship among
the parties, the contracts they signed . . . , and the issues that had arisen’ among
them disclose[ ] that ‘the issues the nonsignatory is seeking to resolve in arbitration
are intertwined with the agreement that the estopped party has signed.’”58 This
does not mean, however,
that whenever a relationship of any kind may be found among the
parties to a dispute and their dispute deals with the subject matter
of an arbitration contract made by one of them, that party will be
estopped from refusing to arbitrate . . . . [I]n addition to the
“intertwined” factual issues, there must be a relationship among
the parties of a nature that justifies a conclusion that the party
which agreed to arbitrate with another entity should be estopped
from denying an obligation to arbitrate a similar dispute with the
adversary which is not a party to the arbitration agreement.59
Here, nothing in the first sentence of the arbitration clause, agreeing to
resolve “[a]ny claims or dispute that arises from or is related to the Agreement” by
arbitration, limits arbitration to the parties.60 Limiting language is found only in
the second sentence: “[T]he parties to the Agreement agree to abide by the
58
Ragone v. Atlantic Video at Manhattan Ctr., 595 F.3d 115, 126-27 (2d Cir.
2010) (quoting Choctaw Generation Ltd. P’ship v. American Home Assurance Co.,
271 F.3d 403, 406 (2d Cir. 2001)).
59
Sokol Holdings, Inc. v. BMB Munai, Inc., 542 F.3d 354, 359 (2d. Cir.2008).
60
See Translated License Agreement at 3.
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arbitration decision . . . .”61 Nevertheless, the principle of equitable estoppel allows
Popular to compel arbitration of the arbitrability issue.
The equitable estoppel test is necessarily fact-specific. In Ragone v.
Atlantic Video at Manhattan Center, the plaintiff, an employee of a television
production company, was estopped from avoiding arbitration of her claims against
ESPN, a client of the television production company.62 The plaintiff argued that
the arbitration clause in her employment agreement with the television production
company did not require her to arbitrate disputes with ESPN, a non-signatory.63
The Second Circuit disagreed and held that the plaintiff was estopped from
avoiding arbitration with ESPN because she clearly understood ESPN to be her
“co-employer” when she entered into the agreement, was hired to provide services
to ESPN, and treated ESPN effectively as her employer.64
Cartagena is similarly estopped from avoiding arbitration with
Popular. First, Cartagena’s claims against Popular are clearly intertwined with
61
Id.
62
See 595 F.3d at 126–27.
63
See id. at 127.
64
See id.; Astra Oil Co., Inc. v. Rover Navigation, Ltd., 344 F.3d 276, 280-81
(2d Cir. 2003).
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Cartagena’s claims against JWT Puerto Rico. Cartagena alleges that, “[i]n addition
to the infringing Videos produced and distributed by JWT, JWT Puerto Rico and
Popular, Popular also distributed videos [] that breached the License Agreement
and infringed Cartagena’s copyright . . . .”65 The issue is the same: whether or not
Defendants breached the terms of the License Agreement and infringed
Cartagena’s copyright by distributing and posting the videos. Although
Cartagena’s breach of contract claim is technically directed only against JWT
Puerto Rico, Cartagena’s claims against Popular are factually intertwined with the
subject matter of the License Agreement. In fact, Cartagena treats Popular as a
signatory to the License Agreement by alleging that Popular breached it.66
Second, the parties’ close relationship supports the application of
equitable estoppel. The License Agreement states that “Y no hago mas na” was
created for an advertising campaign for one of JWT Puerto Rico’s clients.67 The
Complaint identifies the client as Popular.68 Furthermore, under the License
Agreement’s “Terms and Conditions,” the parties refer to the “promotional
65
Compl. ¶ 161.
66
See id. ¶ 161-173.
67
See Translated License Agreement at 1.
68
See Compl. ¶ 31.
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materials of the Bank” in “BPPR branches,” and BPPR’s website and Facebook
page.69 This is not a case where Popular is a “stranger” to the contract or where the
signatories did not intend Popular to be a party to the contract.70 Instead,
Cartagena entered into the License Agreement with JWT Puerto Rico, intending to
bind Popular to the License Agreement’s terms. Just as the plaintiff in Ragone
treated ESPN as her co-employer, Cartagena treated Popular as its co-licensee.
Thus, Cartagena is compelled to arbitrate the issue of arbitrability with
Defendants.71
69
See Translated License Agreement at 2. “BPPR” is a well-known acronym
for Banco Popular de Puerto Rico. Popular is thus, “textually linked” to the
contract. See Popular’s Motion to Dismiss under Fed. R. Civ. P. 12(b)(1) and for
Transfer of Venue under 28 U.S.C. § 1404(a) (“Popular Mem.”) at 7.
70
Cf. Ross v. American Express Co., 547 F.3d 137, 148 (2d Cir. 2008)
(holding that a non-signatory could not compel arbitration with plaintiffs where it
was “a complete stranger to the plaintiffs’ [contracts], [] did not sign them, [] is not
mentioned in them, and [] performs no function whatsoever relating to their
operation.”); Republic of Iraq, 472 Fed. App’x at 13 (holding that non-signatory
could not compel signatory to arbitrate where language of arbitration clause was
limited to the “parties,” there was no business relationship between non-signatory
and signatories, and signatories did not conduct themselves as if they had a
contract with non-signatory).
71
The other non-signatory Defendants, JWT Co. and JWT USA, may also
compel Cartagena to arbitrate. See JLM Indus. Inc.v. Stolt-Nielsen SA, 387 F.3d
163, 178 (2d Cir. 2004) (holding that non-signatory parent company could compel
arbitration based on agreement signed by subsidiary); Astra Oil Co., Inc., 344 F.3d
at 280 (compelling arbitration where plaintiff treated non-signatory corporate
affiliate as a signatory).
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B.
Transfer of Rico’s Claims
Defendants next move to transfer Rico’s claims to the District of
Puerto Rico.72 As to the first requirement under section 1404(a), Plaintiffs could
have brought this action in the District of Puerto Rico, which has subject matter
jurisdiction over copyright infringement claims.73 JWT Puerto Rico and Popular
are located in Puerto Rico and a substantial part of the events giving rise to the
claims occurred there.74 Rico does not argue that its action could not have been
brought in Puerto Rico, only that the Southern District of New York is “a proper
forum.”75
As to the second requirement — convenience and justice — the
72
Contrary to Plaintiffs’ assertion, Defendants do not move to compel
arbitration of Rico’s claims. See Reply Memorandum of Law in Further Support
of JWT Defendants Motion to Compel Arbitration and to Transfer Venue (“JWT
Def. Reply”) at 4 n.2; Popular’s Reply in Support of its Motion to Dismiss under
Fed. R. Civ. P. 12(b)(1) and for Transfer of Venue under 28 U.S.C. 1404(A)
(“Popular Reply”) at 2 n.2.
73
See 28 U.S.C. § 1338(a).
74
See id. § 1391(b)(2) (stating that a civil action may be brought in “a judicial
district in which a substantial part of the events or omissions giving rise to the
claim occurred, or a substantial part of property that is the subject of the action is
situated.”); id. § 1400(a) (“Civil actions, suits, or proceedings arising under any
Act of Congress relating to copyrights or exclusive rights in mask works or designs
may be instituted in the district in which the defendant or his agent resides or may
be found.”).
75
See Opp. Mem. at 18-19.
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balance of factors favor transfer. First, Rico will not be inconvenienced by the
transfer. After Cartagena’s claims are sent to the arbitrators in Puerto Rico, only
Rico will remain in this district. Because Rico is based in New Jersey, its forum
choice should be given little weight, regardless of whether its preferred attorney is
licensed in New York.76 The Cartagena family owns both Rico and Cartagena, and
Cartagena has signed a License Agreement, stating that it will arbitrate all disputes
arising from or relating to the License Agreement in Puerto Rico.77 Thus, Rico
cannot plausibly claim that the transfer to Puerto Rico would be inconvenient.
Second, the convenience and availability of the witnesses and the
evidence favor transfer. Convenience of the witnesses is considered the most
important factor.78 All of JWT-Puerto Rico’s witnesses that designed, developed,
and distributed the videos for the Popular advertising campaign are in Puerto
76
See Legrand v. City of New York, No. 09 Civ. 9670, 2010 WL 742584, at *2
(S.D.N.Y. Mar. 3, 2010) (A plaintiff’s forum choice is accorded less deference
“where the forum is not the plaintiff’s home and the cause of action did not arise in
the forum.”) (citing Iragorri v. United Tech. Corp., 274 F.3d 65, 71 (2d Cir.
2001)).
77
See Translated License Agreement at 3; see also Cartagena Decl. ¶¶ 2, 3, 8.
78
See Randle v. Alexander, No. 10 Civ. 9235, 2013 WL 2358601, at *22
(S.D.N.Y. May 30, 2013); see also Filmline (Cross–Country) Prods., Inc. v. United
Artists Corp., 865 F.2d 513, 520 (2d Cir. 1989).
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Rico.79 Popular’s witnesses who worked on the publicity campaign are all in
Puerto Rico.80 Additionally, third-party witnesses, such as the Puerto Rican
musical group that recorded the original “Y No Hago Más Ná” and “Echar Pa’
Lante” are based in Puerto Rico.81 By contrast, Rico’s potential New York-based
witnesses all lack personal knowledge of the material facts.82 Rico plans to depose
JWT Company’s Chairman and CEO, Bob Jeffrey, who was involved in the
creation of a video that documents successful JWT campaigns.83 However, Jeffrey
has no personal knowledge of the creation of the video, he merely narrated a few
statements in the video while in Puerto Rico.84 Rico also seeks to depose a Sarah
79
See Declaration of Jorge Rodriguez (“Rodriguez Decl.”) ¶¶ 5, 10.
80
See Reply Affidavit of Mariel Arraiza-Antonmattei (“Arraiza-Antonmattei
Decl.”) ¶¶ 1-3.
81
See Memorandum of Law in Support of JWT Defendants’ Motion to
Compel Arbitration as to the Claims by Cartagena and to Transfer Remaining
Claims to the District of Puerto Rico, or in the Alternative, Stay Any Such
Remaining Claims (“JWT Def. Mem.”) at 18.
82
See JWT Def. Reply at 5-7.
83
See Opp. Mem. at 23-24.
84
See Declaration of Jaime Rosado (“Rosado Decl.”) ¶ 9; Caldwell v. Slip-NSlide Records, Inc., No. 10 Civ. 9106, 2011 WL 3251502, at *2 (S.D.N.Y. July 26,
2011) (noting that the locus of operative facts in infringment case is typically
“where the allegedly infringing product was designed and developed”).
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Seigel — a blogger — and Ralpha Cartagena’s two sons, none of whom have
personal knowledge of the alleged infringment.85 Rico’s other potential witness,
Jaime Rosado, JWT Puerto Rico’s Vice President Regional Creative Director, is
located in Puerto Rico.86 Moreover, nearly all relevant evidence is located in
Puerto Rico, e.g., documents concerning the advertising campaign and the
infringing videos, copies of infringing videos, and JWT-Puerto Rico’s
communications with Cartagena and Rico.87
Third, the locus of operative facts is clearly in Puerto Rico, where the
infringing videos were created and distributed to the advertising awards
committees.88
Fourth, the remaining factors — the relative means of the parties, the
forum’s familiarity with the governing law, and trial efficiency — favor transfer.
Federal courts are presumed to be “equally familiar” with the law in federal
copyright infringement actions, and Puerto Rican law governs the construction of
85
See Opp. Mem. at 25.
86
See Rosado Decl. ¶¶ 3-4.
87
See JWT Def. Mem. at 20; Popular Mem. at 19.
88
See Opp. Mem. at 20.
-22-
the License Agreement. 89 Although Plaintiffs have submitted tax fonus, they have
not demonstrated that litigating in Puerto Rico would be "unduly burdensome. n9o
Finally, trial efficiency and the interest ofjustice favor transfer because Plaintiffs
do business in Puerto Rico, agree to resolve disputes in Puerto Rico, and will be
traveling to Puerto Rico to detenuine the arbitrability of Cartagena's claims. 91
v.
CONCLUSION
For the foregoing reasons, Defendants' motion to dismiss Cartagena's
claims and transfer Rico's claims is GRANTED. The Clerk of the Court is directed
to close these motions [Docket Nos. 12, 17] and this case.
Dated:
New York, New York
October 16, 2013
See Colour & Design v. u.s. Vinyl Mfg. Corp., No. 04 Civ. 8332,2005 WL
1337864, at *4 (S.D.N.Y. June 3,2005).
89
90
See Cartagena Dec!.
91
See JWT Def. Reply at 9.
~~
5, 10.
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- Appearances For Plaintiffs:
Nicole Haff, Esq.
Roger Juan Maldonado, Esq.
Balber, Pickard, Battistoni, Maldonado, & Van Der Tuin, P.C.
1370 Avenue of the Americas
New York, NY 10019
(212) 246-2400
For JWT Defendants:
C. Andrew Keisner, Esq.
Marc J. Rachmann, Esq.
Davis & Gilbert, L.L.P.
1740 Broadway
New York, New York 10019
(212) 468-4800
For Defendant Popular:
Raymond J. Dowd, Esq.
Dunnington, Bartholow & Miller, L.L.P.
1359 Broadway, Suite 600
New York, New York 10018
(212) 682-8811
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