Los Cangris, Inc. et al v. UMG Recordings, Inc. et al
Filing
30
OPINION AND ORDER - GRANTING IN PART AND DENYING IN PART 17 Motion to Dismiss filed by Defendants Universal Music Distribution, Corp. and UMG Recordings, Inc. Signed by Judge Jose A. Fuste on 4/28/2011. (mld)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
LOS CANGRIS, INC., et al.,
Plaintiffs
v.
CIVIL NO. 10-1349 (JP)
UMG RECORDINGS, INC., et al.,
Defendants
OPINION AND ORDER
Before the Court are: (1) Defendants UMG Recordings, Inc.
(“UMG”) and Universal Music Group Distribution Corp.’s (“UMGD”)
motion
to
dismiss
alternatively,
(2)
Plaintiffs
the
Los
(No.
17)
unjust
the
copyright
enrichment
Cangris,
Inc.
infringement
claims
(“Los
or,
against
them;
Cangris”),
Ramón
Ayala-Rodríguez (“Daddy Yankee”), and El Cartel Records, Inc.’s
(“Cartel Records”) opposition to Defendants’ motion to dismiss
(No. 22); (3) Defendants’ reply to Plaintiffs’ opposition (No. 25);
and (4) Plaintiffs’ surreply (No. 27).1
Defendants move to dismiss
pursuant to Federal Rule of Civil Procedure 12(b)(6).
For the
reasons stated herein, Defendants’ motion to dismiss is hereby
GRANTED IN PART AND DENIED IN PART.
1.
Also before the Court is Plaintiffs’ motion to amend the complaint (No. 20).
Said motion is GRANTED.
The amended complaint was tendered at docket
number 21.
CIVIL NO. 10-1349 (JP)
-2I.
FACTUAL ALLEGATIONS
Plaintiffs allege that, from 2003 until 2004, Daddy Yankee
produced and composed all the songs contained in the album entitled
“Barrio Fino.” On July 20, 2004, Daddy Yankee registered Barrio Fino
with
the
copyright
number SR348-713.
office
and
was
issued
registration
Also, on April 13, 2005, Daddy Yankee registered
the compositions contained in Barrio Fino including (1) “King Daddy,”
(2)
“Dale
Caliente,”
(3)
“No
Me
Dejes
Solo,”
(4)
“Gasolina,”
(5) “Like You,” (6) “El Muro,” (7) “Lo Que Pasó,” (8) “Pasó,”
(9)
“Tu
Príncipe,”
(10)
“Cuéntame,”
(11)
“Santifica
Tus
Escapularios,” (12) “Sabor a Melao,” (13) “El Empuje,” (14) “Qué Vas
a Hacer, Salud y Vida,” (15) “Corazones,” (16) “Golpe de Estado,”
(17) “2 Mujeres,” and (18) “Saber Su Nombre” (collectively referred
to as the “musical works”).
for the musical works.
Copyright number PA1-281-843 was issued
Daddy Yankee assigned his copyright in the
musical works and in the sound recording Barrio Fino to Los Cangris.
On or about 2005, Los Cangris assigned the copyright of Barrio Fino
to Cartel Records.
On January 10, 2005, Daddy Yankee, Los Cangris and UMG allegedly
summarized the terms of an agreement they reached.
of
the
document
was
an
Exclusive
License
The first part
Agreement
(“License
Agreement”) between Daddy Yankee and UMG for Barrio Fino and the
albums listed in Schedule A of said agreement.
The albums listed in
CIVIL NO. 10-1349 (JP)
-3-
Schedule A were “El Cangri.com,” “Los Jonrones,” and “El Cartel II.”
The second part of the agreement was a Distribution Agreement between
Los Cangris and UMG for the exclusive distribution of the albums
listed in Schedule A (“Distribution Agreement”).
The terms of the
License Agreement commenced on the date of the agreement and was
scheduled to end five years after Daddy Yankee delivered all of the
masters and corresponding production parts of the albums listed in
said license.
The Distribution Agreement was to last for a term of
three years.
The parties modified several provisions in the Distribution
Agreement on October 1, 2006.
On March 28, 2008, the parties
allegedly entered into a Digital and Mobile Distribution Agreement
(“DMD Agreement”) for the albums “Talento de Barrio,” “Más Grande que
Tú,” and “El Heredero.”
All the albums included in the January 10,
2005 agreement were expressly excluded from said agreement.
Plaintiffs allege that the Distribution Agreement was further
amended to include the album “Talento de Barrio” to Schedule A on
March 31, 2008.
The document is titled “Re: Machete Music, a
division of UMG Recordings, Inc. (“Machete”) - w - El Cartel Records,
Inc./El Cangri Music, Inc. (Amendment to Distribution Agreement).”
Said
amendment
made
reference
“to
the
exclusive
distribution
agreement between Universal Music Group Recordings, Inc. and El
Cangri Music, Inc. dated as of January 10, 2005[.]”
2008 amendment did not alter the License Agreement.
The March 31,
CIVIL NO. 10-1349 (JP)
-4-
On February 3, 2010, Plaintiffs allegedly notified Defendants
that the term of the License Agreement and the Distribution Agreement
for Barrio Fino, El Cangri.com, Los Jonrones, and El Cartel II had
expired.
Plaintiffs
also
requested
a
detailed
remaining inventory up to January 10, 2010.
status
of
the
After communicating on
the issue, the parties allegedly agreed upon a six month sell-off
period of the products in the License Agreement and Distribution
Agreement.
One day after reaching said agreement, Plaintiffs allege
that Defendants retracted claiming that the License Agreement and
Distribution Agreement were scheduled to run until March 31, 2013.
Since
January
10,
2010
and
without
Plaintiffs’
authorization,
Defendants have allegedly continued to copy, distribute, manufacture,
disseminate, and/or otherwise exploit Plaintiffs’ musical works as
contained in Barrio Fino in violation of Plaintiffs’ copyright.
As such, Plaintiffs filed the instant action in which they:
(1) request a declaratory judgment clarifying that the terms of the
License Agreement and Distribution Agreement, which deal with Barrio
Fino, El Cangri.com, Los Jonrones, and El Cartel II, have expired;
(2) claim that Defendants violated the copyrights of Plaintiffs;
(3) argue that Defendants violated the contracts between the parties;
(4) claim that the License Agreement, the Distribution Agreement and
the DMD Agreement should be rescinded; and (5) state that Defendants
have been unjustly enriched by their acts and have engaged in unfair
competition.
CIVIL NO. 10-1349 (JP)
-5II.
LEGAL STANDARD FOR A MOTION TO DISMISS
According to the Supreme Court, “once a claim has been stated
adequately,
it
may
be
supported
by
showing
any
consistent with the allegations in the complaint.”
Corp. v. Twombly, 550 U.S. 544, 563 (2007).
set
of
facts
Bell Atlantic
As such, in order to
survive a motion to dismiss, a complaint must state a claim to relief
that is plausible on its face, not merely conceivable.
Id. at 570.
The First Circuit Court of Appeals has interpreted Twombly as
sounding the death knell for the oft-quoted language of Conley v.
Gibson, 355 U.S. 41, 45-46 (1957), that “a complaint should not be
dismissed for failure to state a claim unless it appears beyond doubt
that the plaintiff can prove no set of facts in support of his claim
which would entitle him to relief.” Rodríguez-Ortiz v. Margo Caribe,
Inc., 490 F.3d 92, 95-96 (1st Cir. 2007). Still, a court must “treat
all allegations in the Complaint as true and draw all reasonable
inferences therefrom in favor of the plaintiff.”
Rumford Pharmacy,
Inc. v. City of East Providence, 970 F.2d 996, 997 (1st Cir. 1992).
III.
ANALYSIS
Defendants argue that their motion to dismiss for failure to
state claim should be granted because: (1) Plaintiffs have failed to
allege that the albums and songs from which they base their copyright
infringement claims have been registered with the copyright office;
CIVIL NO. 10-1349 (JP)
-6-
and (2) alternatively, that if Plaintiffs have properly pled their
copyright infringement claims, their state law claims are preempted.
Plaintiffs oppose the motion.
The Court will now consider the
parties’ arguments.
A.
Copyright Infringement Claims
In their original complaint, Plaintiffs did not allege that they
registered a copyright for the albums which they claim were infringed
by Defendants.
As such, Defendants filed the instant motion to
dismiss. Thereafter, Plaintiffs amended the complaint to allege that
they had properly registered the copyright for Barrio Fino and the
musical works.
Moreover, they opposed Defendants’ motion arguing
that registration was not a requirement to bring the instant action
based on Reed Elsevier, Inc. v. Muchnick, 130 S.Ct. 1237 (2010).
Also, Plaintiffs appear to raise copyright infringement claims based
on
Defendants’
acts
related
to
the
albums
El
Cangri.com,
Los
Jonrones, El Cartel II, Talento de Barrio, Más Grande que Tú, and El
Heredero.
“[N]o civil action for infringement of the copyright in any
United States work shall be instituted until preregistration or
registration of the copyright claim has been made in accordance with
this
title.”
17
U.S.C.
§
411(a).
Contrary
to
Plaintiffs’
contention, the United States Supreme Court has clarified that while
said statute does not present a jurisdictional bar to bringing a
copyright infringement claim, said statute does make copyright
CIVIL NO. 10-1349 (JP)
-7-
registration a prerequisite to filing a federal suit such as this
one.
See Reed Elsevier, 130 S.Ct. at 1245-49.
In the instant case, Plaintiffs have properly pled, and provided
the accompanying registrations, that Barrio Fino and the musical
works have been registered with the copyright office.
Plaintiffs’
copyright
infringement
claims
based
on
As such,
said
album
survives Defendants’ motion to dismiss.
On the other hand, Plaintiffs have failed to plead that the
albums El Cangri.com, Los Jonrones, El Cartel II, Talento de Barrio,
Más Grande que Tú, and El Heredero have been registered with the
copyright office.
been provided.
Also, the registrations for said albums have not
Accordingly, the Court finds that Plaintiffs have
failed to state a cause of action for their copyright infringement
claims based on the albums El Cangri.com, Los Jonrones, El Cartel II,
Talento de Barrio, Más Grande que Tú, and El Heredero.
See, e.g.,
Sony/ATV Music Pub. LLC v. D.J. Miller Music Distributors, Inc.,
2010 WL 3872802 at *4 (M.D. Tenn. Sept. 28, 2010); TI Training Corp.
v. FAAC, Inc., 2010 WL 2490535 at *3 (D.Colo. Jun. 15, 2010).
B.
Puerto Rico Law Claims
In
their
original
enrichment claims.
complaint,
Plaintiffs
brought
unjust
In the amended complaint and after Defendants
filed their motion to dismiss, Plaintiffs appear to have added
CIVIL NO. 10-1349 (JP)
-8-
breach of contract, rescission, and unfair competition claims.2
Defendants argue that the amendment is futile as the new claims are
also preempted by the copyright infringement claims.
After
considering
the
arguments,
the
Court
agrees
with
Defendants that the copyright infringement claims involving Barrio
Fino and the musical works preempt any unfair competition, breach of
contract, rescission, and unjust enrichment claims that could be
brought by Plaintiffs regarding Barrio Fino and the musical works.
This is the case because said claims are based on the same set of
facts and conduct that led to Plaintiffs’ copyright infringement
claims.
See Banco Popular de Puerto Rico, Inc. v. Latin American
Music Co., Inc., 2009 WL 3294790 at *1 (D.P.R. Oct. 9, 2009); see
also, John G. Danielson, Inc. v. Winchester-Conant Properties, Inc.,
322 F.3d 26, 44-45 (1st Cir. 2003); Amador v. McDonald’s Corp.,
601 F. Supp. 2d 403, 409 (D.P.R. 2009); Alvarez Guedes v. Marcano
Martínez, 131 F. Supp. 2d 272, 280 (D.P.R. 2001). As such, the state
law claims based on Defendants alleged acts related to Barrio Fino
and the musical works are preempted.
This ruling does not apply to
the other albums for which Plaintiffs failed to properly plead a
copyright infringement claim.
2.
From the amended complaint, it is unclear whether the unjust enrichment claims
have been abandoned since paragraphs 7.4 and 7.5 of the amended complaint still
allege that Defendants have unjustly enriched themselves. As such, the Court
will analyze the arguments as if said claims are still present.
CIVIL NO. 10-1349 (JP)
-9IV.
CONCLUSION
Thus, the Court: (1) GRANTS Plaintiffs’ motion to amend the
complaint; (2) GRANTS Defendants’ motion to dismiss the copyright
infringement claims based on the albums El Cangri.com, Los Jonrones,
El Cartel II, Talento de Barrio, Más Grande que Tú, and El Heredero;
(3) DENIES Defendants’ motion to dismiss the copyright infringement
claims based on Barrio Fino and the musical works; and (4) GRANTS
Defendants’ motion to dismiss Plaintiffs’ state law claims based on
Barrio Fino and the musical works.
The Court will enter a separate
Partial Judgment accordingly.
IT IS SO ORDERED.
In San Juan, Puerto Rico, this 28th day of April, 2011.
s/José Antonio Fusté
JOSÉ ANTONIO FUSTÉ
UNITED STATES DISTRICT JUDGE
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