Twelve Sixty LLC et al v. Viacom International Inc. et al

Filing 41

MEMORANDUM AND ORDER: granting 20 Motion to Dismiss. For the reasons set forth above, defendants' motion to dismiss is granted. The Clerk of Court is respectfully directed to terminate this case and any motions pending therein. SO ORDERED. (Signed by Judge Naomi Reice Buchwald on 3/25/2019) (ama) Transmission to Orders and Judgments Clerk for processing.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
----------------------------------X
TWELVE SIXTY LLC, ARON MARDEROSIAN,
and ROBERT MARDEROSIAN,
Plaintiffs,
MEMORANDUM AND ORDER
- against 18 Civ. 93 (NRB)
VIACOM INTERNATIONAL INC., ON-SITE
PRODUCTIONS, INC.,
Defendants.
----------------------------------X
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE
In this action, plaintiffs assert a single cause of action
for breach of contract.

Defendants move to dismiss the complaint

for failure to state a claim under Rule 12(b)(6).

For the reasons

stated below, we grant defendants’ motion and dismiss plaintiffs’
complaint in its entirety with prejudice.
BACKGROUND1
Plaintiffs

Aron

Marderosian

and

Robert

Marderosian

are

California-based song writers, musicians, and producers of musical
recordings who are professionally known as “Heavy Young Heathens.”
Compl. ¶ 10.

They own and operate plaintiff Twelve Sixty LLC, a

California limited liability company, for purposes of licensing

The following allegations are drawn from plaintiffs’ complaint, see ECF No.
7, and are assumed to be true for purposes of this motion. See Glob. Network
Commc’ns, Inc. v. City of New York, 458 F.3d 150, 154 (2d Cir. 2006).
1

1

their music.

Id. ¶¶ 1, 11.

In January 2014, plaintiffs entered

into a loanout agreement (“Agreement”) with defendant On-Site
Productions Inc. (“On-Site”), a subsidiary entity of defendant
Viacom International Inc. (“Viacom”).

Id. ¶ 12.

Under the Agreement, plaintiffs agreed to create and deliver
a theme song for defendants’ television show called “Are You the
One?”.

Id. ¶ 13.

$10,000.
their

In exchange, On-Site agreed to pay plaintiffs

Id. ¶ 14.

“writer’s

Plaintiffs were also entitled to receive

share”

of

public

performance

income

(“PPI”),

“which may be payable directly” from plaintiffs’ performing rights
society (“PRO”) that collects and distributes royalties for public
performances of musical works.2

Id. Ex. A ¶ 6(b).

Plaintiffs’

receipt of their share of PPI “shall be the sole responsibility of
[plaintiffs] and shall occur solely through the efforts and at the
expense of [plaintiffs].”

Id.

In the Agreement, plaintiffs

designated Broadcast Music, Inc. (“BMI”) as their PRO.

Id. ¶ 14.

Plaintiffs produced a song titled “Smooth Hand” (“the song”), which
was accepted by defendants.3

Id. ¶ 16.

According to plaintiffs,

defendants used the song “domestically and internationally as a
theme song for the television program ‘Are You the One?’ and its
related Viacom distributed spinoff series.”4

Id.

As the song’s publisher, On-Site was entitled to the “publisher’s share” of
PPI and the entirety of all other publishing income. Compl. Ex. A ¶ 6(b).
3 Per the Agreement, defendants paid plaintiffs $10,000 for the song.
4 Plaintiffs allege that defendants are both “broadcasters” and “publishers” of
2

2

Plaintiffs allege that defendants breached the Agreement by
“failing to file cue sheets and/or require the filing of cue sheets
in order for plaintiffs to properly collect their royalties,” id.
¶ 17, even though they used the song as a theme song for the show
and

its

multiple

“spinoff

series,

commercials,

teasers,

and

promos” that aired domestically and internationally, id. ¶ 23.5
Because of defendants’ alleged failure, plaintiffs claim that they
were deprived of their proper share of PPI.6

Id. ¶ 22-23.

PROCEDURAL HISTORY
Plaintiffs filed their complaint on January 5, 2018, see ECF
No. 1, and defendants filed a motion to dismiss for failure to
state a claim on May 25, 2018, see ECF No. 20.

After the motion

was fully briefed, plaintiffs requested leave to file under seal
a supplemental declaration in opposition to defendants’ motion.
See July 31, 2018 Letter from Michael G. Marderosian to the Court

the song. See Feb. 20. 2019 Decl. of Robert Marderosian, ECF No. 33, ¶ 5. As
the owner of the song, defendants are considered “publishers.” Defendants are
also considered “broadcasters” of the song because they broadcast “Are You the
One?”, for which the song serves as a theme song.
5 Plaintiffs
also alleged that defendants had registered the song under
different composers’ names and song title with a domestic PRO other than BMI.
See Mem. of Law in Supp. of. Pls.’ Opp. to Defs.’ Mot. to Dismiss, ECF No. 24,
at 3. However, the documents plaintiffs submitted to support their allegation
demonstrate that the registration at issue was in fact for a different song
used in the same television show. See Defs.’ Reply Mem. of Law in Supp. of
Mot. to Dismiss, ECF No. 26, at 7-8. Since there is no longer any issue as to
plaintiffs’ receipt of royalties for domestic broadcasts, see infra, plaintiffs
cannot assert any claim based on defendants’ alleged failure to properly
register the song.
6 In addition, plaintiffs alleged that defendants had failed to give them proper
credit in the end credits for multiple seasons of the television show. Compl.
¶ 24. However, this allegation was stricken from the complaint in accordance
with the parties’ May 18, 2018 Stipulation and Order. See ECF No. 19.

3

(“Pls.’ Request to File Supp. Decl.”), ECF No. 27.

The declaration

attached an email designated as confidential by a third party in
another action7 in this District brought by plaintiffs and still
pending.

Id.

The email included cue sheets that defendants

submitted to BMI with respect to broadcasts of the song in Brazil.
Id.

According

to

plaintiffs,

the

cue

sheets

confirm

that

defendants “have the obligation to submit the cue sheets and are
now attempting to do so to correct their previous misconduct.”
Id.

Opposing plaintiffs’ request, defendants argued that the

proposed submission should not be considered by this Court because:
(1) it was irrelevant to determining whether defendants had a
contractual obligation to submit cue sheets; and (2) it was not
included in plaintiffs’ complaint.8

See Aug. 3, 2018 Letter from

Wook Hwang to the Court (“Defs.’ Opp. to Pls.’ Supp. Decl.”), ECF
No. 29.

We reserved our ruling on plaintiffs’ request until our

consideration of defendants’ motion to dismiss.
After

reviewing

the

parties’

briefs

in

response

to

defendants’ motion, we held a telephone conference on February 14,
2019, to discuss defendants’ factual challenge to plaintiffs’

Twelve Sixty LLC, et al. v. Extreme Music Library Ltd., et al., 17-cv-1479
(PAC) (S.D.N.Y. filed on Feb. 28, 2017) (“Extreme Music Library action”).
8 Defendants also maintained that plaintiffs’ submission of the confidential
email violated the confidentiality order entered in the Extreme Music Library
action. Judge Paul Crotty, while noting that it would have been preferable if
plaintiffs had followed the procedure of the confidentiality order in his case,
de-designated the email as confidential, thus permitting this Court to consider
the email. See ECF No. 129, 17-cv-1479 (PAC).
7

4

allegations that defendants had failed to properly submit cue
sheets for some domestic broadcasts.

At the conference, we

instructed plaintiffs to go through the cue sheets
received

from

defendants

and

to

identify

specific

they had
domestic

broadcasts for which they asserted defendants had not submitted
cue sheets.

After a flurry of letters, see ECF Nos. 33, 34, 35,

the parties agreed at the subsequent oral argument that defendants
had only failed to submit cue sheets for two domestic broadcasts.9
See Mar. 4, 2019 Hr’g Tr., ECF No. 40, 10:7-19.

Shortly after the

oral argument, defendants submitted an affidavit stating that they
had submitted cue sheets for the two broadcasts on March 6, 2019.
See Mar. 8, 2019 Decl. of Anita Chinkes-Ratner, ECF No. 36-1, ¶ 3.
Thus, plaintiffs’ claims as to domestic broadcasts of the song are
moot, and only claims related to defendants’ alleged failure to
submit cue sheets for foreign broadcasts of the song remain.
DISCUSSION
Given

that

plaintiffs’

claims

with

respect

to

domestic

broadcasts are now moot, it would usually be unnecessary to discuss
our analysis of the claims as if they were still alive.

However,

in this case, our analysis of the domestic claims informs our

Plaintiffs also claimed that defendants had failed to submit cue sheets for
the use of the song in the latest season of “Are You the One?”. In response,
defendants submitted an affidavit stating that cue sheets had in fact been
submitted. See Feb. 23, 2019 Decl. of Anita Chinkes-Ratner, ECF No. 34-3.
9

5

analysis of defendants’ obligation, if any, to provide cue sheets
for foreign broadcasts.
In

their

motion

to

dismiss,

defendants

asserted

that

plaintiffs’ cause of action is meritless because the payment of
plaintiffs’

share

of

Plaintiffs and BMI.”

PPI

was

“exclusively

a

matter

between

Mem. of Law in Supp. of Defs.’ Mot. to

Dismiss, ECF No. 22, at 3.

Defendants also correctly noted that

the Agreement clearly states that the writer’s share was to “be
payable directly from Composer’s [PRO]” and that the receipt of
these royalties “shall be the sole responsibility of Composer and
shall occur solely through the efforts and at the expense of
Composer.”

Compl., Ex. A ¶ 6(b).

Nonetheless, under New York

law,10 all contracts imply a covenant of good faith and fair dealing
in the course of performance.

See, e.g., Smith v. General Acc.

Ins. Co., 697 N.E.2d 168, 170 (N.Y. 1998); Dalton v. Educational
Testing Serv., 663 N.E.2d 289, 291 (N.Y. 1995).

This covenant

embraces a pledge that “neither party shall do anything which will
have the effect of destroying or injuring the right of the other
party to receive the fruits of the contract.”
at 291.

Dalton, 663 N.E.2d

According to BMI (plaintiffs’ designated PRO), it cannot

pay royalties to song composers if cue sheets are not submitted
properly

by

the

song’s

publisher

or

broadcaster

(i.e.,

Pursuant to the choice-of-law provision of the Agreement, New York law governs
plaintiffs’ action. See Compl. Ex. A ¶ 15(g).
10

6

defendants).11
4.

See Feb. 20. 2019 Decl. of Robert Marderosian, ¶

Since plaintiffs cannot receive “the fruits of the contract”

- their entitled share of PPI under the Agreement - without
defendants’ proper submission of cue sheets to BMI, we would have
found that defendants had an implied obligation to take such
affirmative steps to ensure plaintiffs’ receipt of royalties for
domestic broadcasts.
However, defendants’ implied obligation exists only as to
domestic broadcasts of the song because the Agreement references
only BMI, which “licenses public performances in the United States
only.”12

Defs.’ Opp. to Pls.’ Supp. Decl.

As plaintiffs admitted

at oral argument, the Agreement does not contain: (1) any reference
to a foreign PRO; (2) any provision requiring defendants to make
payments to foreign PROs; or (3) any provision that entitles
plaintiffs to receive their share of PPI from PROs other than
BMI.13

See Hr’g Tr. 19:5-22.

Since the implied covenant of good

In support of this position, plaintiffs filed under seal a portion of the
transcript from the deposition of Alison Smith, BMI’s executive vice president,
that was conducted in the Extreme Music Library action.
12 Plaintiffs alleges that, based on the BMI website’s description of its
reciprocal agreements with PROs throughout the world, defendants should have
sent BMI cue sheets for foreign broadcasts of the song.
See Feb. 20. 2019
Decl. of Robert Marderosian, ¶ 10 & n.4. However, the BMI website unambiguously
states, “[t]he foreign PROs calculate payments to BMI composers, songwriters
and publishers in accordance with their own distribution rules and remit royalty
payments to BMI.”
How We Pay Royalties – International Royalties, BROADCAST
MUSIC,
INC.,
https://www.bmi.com/creators/royalty/foreign_royalties
(last
visited Mar. 20, 2019) (emphasis added). In other words, BMI does not directly
handle PPI or cue sheets for broadcasts outside of the United States; rather,
it simply processes payments received from foreign PROs for composers whose
works are registered with BMI.
13 According to plaintiffs, defendants’ submission of cue sheets for broadcasts
11

7

faith and fair dealing "cannot be used to impose an obligation
that is inconsistent with express contractual terms," see,
Murphy v. Am.
there

is

Home Prods. Corp.,

no basis

to

448 N.E.2d 86,

extend defendants'

91

(N.Y.

e.g.,
1983),

implied obligation to

submit cue sheets for domestic broadcasts to broadcasts occurring
outside of the United States.
CONCLUSION

For the reasons set forth above, defendants' motion to dismiss
is

granted.

The

Clerk

of

Court

is

respectfully

directed

to

terminate this case and any motions pending therein.
SO ORDERED.

Dated:

New York, New York
Marchi6, 2019

L~~
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE

of the song 1n Brazil demonstrates that defendants have the obligation to submit
cue sheets for international broadcasts.
See Pls.' Request to File Supp. Deel.
However,
since the Agreement's languag;;;--"admits of only one reasonable
interpretation" that BMI, a domestic PRO, is plaintiffs' designated PRO, we
need not "look at extrinsic evidence of parties' intent" to determine whether
defendants have an implied obligation to submit cue sheets to PROs other than
BMI.
Am. Home Prods. Corp. v. Liberty Mut. Ins. Co., 748 F.2d 760, 765 (2d
Cir. 1984).

8