Murphy et al v. Style Records Limited et al

Filing 57

MEMORANDUM OPINION OF THE COURT. Signed by District Judge Aleta A. Trauger on 8/22/2012. (eh)

UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
TARYN MURPHY and CHRIS LANDON,

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Plaintiffs,
v.
SERGY LAZAREV,
Defendant.

Case No. 3:10-cv-0530
Judge Aleta A. Trauger
Magistrate Judge Knowles

MEMORANDUM
Pending before the court is the defendant’s Motion to Dismiss (Docket No. 39), which
moved the court to dismiss the claims pursuant to Fed. R. Civ. P. 12(b)(6) or to transfer venue of
the case pursuant to Fed. R. Civ. P. 12(b)(3). The plaintiffs filed a Response in opposition to the
motion (Docket No. 45), supported by the Declaration of Taryn Murphy (Docket No. 46) and the
Affidavit of Ekaterina S. Canes (Docket No. 47), which referenced materials outside of the
pleadings. Pursuant to Fed. R. Civ. 12(d), the court therefore treated the motion as a motion for
summary judgment and granted the parties additional time to file supplemental materials.
(Docket No. 48.) The defendant accordingly filed a Supplemental Memorandum of Law (Docket
No. 49) supported by three declarations (Docket Nos. 50 (Pedchenko Declaration), 51
(Mikhailenko Declaration), and 52 (Lazarev Declaration)).1 For the reasons stated herein,
summary judgment will be granted to the defendant.

1

Notwithstanding their opportunity to do so, the plaintiffs did not file any additional
materials.
1

BACKGROUND2
Plaintiffs Taryn Murphy and Chris Landon are United States citizens who copyrighted
the lyrics and music of the song “Almost Sorry” (hereinafter, “Almost Sorry”). The plaintiffs
claim that, in November 2006, they orally agreed to license Almost Sorry to Style Records, Ltd.
(“Style Records”), a Cyprus corporation with a principal place of business in Moscow, Russia.
(Docket No. 31, First Am. Compl. ¶ 6.) At an unspecified point in “mid-2007,” (id.), the
plaintiffs claim that they entered into a written licensing agreement with Style Records
(“Licensing Contract”) ( Docket No. 1, Compl., Ex. 2).3
The Licensing Contract granted Style Records a license to utilize Almost Sorry for five
years and the right to grant sublicenses to Russian musician Sergey Lazarev specifically and
other artists generally.4 In return for receiving the license, Style Records agreed to pay periodic
royalties to the plaintiffs reflecting a percentage of “income received from [Almost Sorry],”
towards which Style Records agreed to pay a $4,000 advance. The agreement, which by its own
2

Unless otherwise noted, the court relies on the parties’ affidavits and draws all
reasonable inferences in favor of the non-moving party. Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986); Brown v. United
States, 583 F.3d 916, 919 (6th Cir. 2009).
3

The plaintiffs’ First Amended Complaint, which is the operative complaint, references
several exhibits, but no exhibits are attached. Those exhibits appear to correspond to several
exhibits attached to the original Complaint, which the court will treat as incorporated by
reference into the First Amended Complaint. The version of the Licensing Contract filed by the
plaintiffs is unsigned and contains the date “November 20, 2006,” which does not correspond to
the unspecified date in “mid-2007" when the plaintiffs claim the contract was executed. At any
rate, the defendant has not challenged the authenticity of the version of the Licensing Contract
relied upon by the plaintiffs. Accordingly, for purposes of the pending motion only, the court
will assume that the Licensing Contract was in fact executed in mid-2007 and that it contained
the language referenced in the version attached to the original Complaint.
4

Sergey Lazarev is incorrectly identified in the First Amended Complaint as “Sergy
Lazarev.”
2

terms is governed by the laws of the Russian Federation,5 specifies that the parties must attempt
to resolve any disputes related to the agreement through negotiation before filing suit and that
the parties would adjudicate any disputes “at the Licensee’s location.” The Licensing Contract
contains signature blocks for the plaintiffs and Style Records, who are defined as the “Parties.”
On April 15, 2005, Lazarev entered into a producer’s agreement (“Producer’s
Agreement”) with Style Records, pursuant to which Style Records agreed to obtain licenses for
musical works and to pay royalties to Lazarev to use those works in his performances and
recordings.6 After Style Records obtained the license to Almost Sorry in mid-2007, it
sublicensed the song to Lazarev, who recorded it. Since that time, the song has become popular
in Russia and Lazarev has performed, recorded, and/or marketed it in various formats, including
on his own website. In 2010, Style Records released an album containing a version of Almost
Sorry performed by Lazarev.
Lazarev avers that he has only been entitled to receive two forms of compensation for
using the work. First, under the Producer’s Agreement, Style Records agreed to pay him
royalties for its commercial exploitation of his recordings of Almost Sorry. However, he avers
that Style Records never actually paid him any royalties. Second, Lazarev was entitled to
receive income from his public performances of Almost Sorry.

5

The relevant provisions of Russian law are codified in the Grazhdandskii Kodeks
Rossiiskoi Federatsii [GK RF] [Civil Code] (Russ.). Hereinafter, the court will refer to the GK
RF as the “Russian Civil Code,” identifying the relevant articles as “Article XXX.”
6

Lazarev entered into a supplemental producer’s agreement with Style Records in
September 2007. For purposes of the motion, it does not appear that the supplemental agreement
differs in any relevant respect from the original Producer’s Agreement. For simplicity, the court
will refer to the contractual basis for the relationship between Lazarev and Style Records from
April 2005 forward as the “Producer’s Agreement.”
3

With respect to the Licensing Contract between the plaintiffs and Style Records, the
plaintiffs aver that Style Records did not pay the full amount of royalties owed. Style Records
paid the initial advance of $4,000, but, despite the song’s popularity in Russia, the plaintiffs did
not receive any subsequent royalty payments for the Russian version of the song.7 Between
November 2008 and July 2009, the plaintiffs raised concerns about the lack of royalty payments
with a contact person at Style Records, to no avail. After months of offering excuses for Style
Records’ failure to pay royalties, that contact person abruptly wrote that he was leaving the
company, promised to forward their concerns to Style Records’ “legal team,” and provided the
plaintiffs with no alternate contact person. Style Records did not contact the plaintiffs at any
point thereafter.
Lazarev has continued to perform and market the song Almost Sorry, claiming that he has
a valid sublicense to do so.
PROCEDURAL HISTORY
The plaintiffs originally filed suit against both Lazarev and Style Records on May 28,
2010, alleging claims for breach of contract against Style Records, copyright violations under
United States federal law (hereinafter, “federal law”) against both Style Records and Lazarev,
violation of Russian copyright law against Style Records and Lazarev, and intentional
misrepresentation against Style Records.

7

With respect to the English version of Almost Sorry, the plaintiffs received $1,639.09 in
royalty payments from BMI, a United States-based organization that collects and disburses
royalty payments. (Murphy Decl. ¶ 18.) It is not clear from the Murphy Declaration whether the
plaintiffs are alleging that BMI made these payments on behalf of Style Records. At any rate,
for purposes of this motion, the court assumes that these reflect only partial payments with
respect to the English version of Almost Sorry.
4

After a series of extensions to effectuate service of process on Lazarev and Style
Records, Lazarev filed a letter responding to the Complaint on January 10, 2010. (Docket No.
16.) On May 4, 2011, Lazarev filed what appears to be an identical letter responding to the
Complaint.8 (Docket No. 20.) It does not appear that any further activity took place in the case
until February 2012, when the court received a call from plaintiffs’ counsel, inquiring about the
trial date. (Docket No. 22.) On February 14, 2012, the court ordered the plaintiffs to file notice
as to whether they intended to proceed against Style Records, which had never been served with
process. (Docket No. 22.) On February 22, 2012, without explanation, the plaintiffs voluntarily
dismissed Style Records without prejudice. (Docket No. 24.)
On April 16, 2012, with leave of court, the plaintiffs filed a First Amended Complaint
(Docket No. 31) “to make it abundantly clear” that they were seeking to recover for continued
alleged copyright violations by Lazarev (Docket No. 28). The First Amended Complaint added
a claim against Lazarev for breach of contract.
SUMMARY JUDGMENT STANDARD
Rule 56 requires the court to grant a motion for summary judgment if “the movant shows
that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a) (2011). At the summary judgment stage, the moving party
bears the initial burden of identifying those parts of the record that demonstrate the absence of
any genuine issue of material fact. Moldowan v. City of Warren, 578 F.3d 351, 374 (6th Cir.
2009); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 91 L. Ed. 2d 265
(1986). However, if the moving party seeks summary judgment on an issue for which it does not

8

Both letters were docketed by the Clerk as “Answers.”
5

bear the burden of proof at trial, the moving party may meet its burden by showing that there is
an absence of evidence to support the non-moving party’s case. Id. (citing Celotex, 477 U.S. at
325). “When the moving party has carried this burden, ‘its opponent must do more than simply
show that there is some metaphysical doubt as to the material facts.’” Id. (quoting Matsushita
Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d
538 (1986).) The non-moving party also may not rest upon its mere allegations or denials of the
adverse party’s pleadings, but rather must set forth specific facts showing that there is a genuine
issue for trial. Id.
At this stage, “‘the judge’s function is not . . . to weigh the evidence and determine the
truth of the matter, but to determine whether there is a genuine issue for trial.’” Moldowan, 578
F.3d at 374 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 91 L.
Ed. 2d 202 (1986)). “In evaluating the evidence, the court must draw all inferences in the light
most favorable to the nonmoving party.” Moldowan, 578 F.3d at 374 (citing Matsushita, 475
U.S. at 587). But “[t]he mere existence of a scintilla of evidence in support of the non-moving
party’s position will be insufficient,” Moldowan, 578 F.3d at 374 (quoting Anderson, 477 U.S. at
252), and the non-movant’s proof must be more than “merely colorable.” Anderson, 477 U.S. at
249. An issue of fact is “genuine” only if the record taken as a whole could lead a rational trier
of fact to find for the non-moving party. Moldowan, 578 F.3d at 374 (citing Matsushita, 475
U.S. at 587).

Also, under Fed. R. Civ. P. 44.1, in determining foreign law, “the court may consider
any relevant material or source, including testimony, whether or not submitted by a party or
admissible the Federal Rules of Evidence. The court’s determination must be treated as a ruling

6

on a question of law.” See Tschira v. Willingham, 135 F.3d 1077, 1084 (6th Cir. 1998) (in
construing meaning of particular word in contract written in German, relying on English
translations of German law and presentation of expert testimony on meaning of word); McGinnis
v. Taitano, 3 F. Supp. 2d 767, 770-772 (W.D. Ky. 1998) (in determining German law concerning
collateral source rule, relying on German Civil Code and its commentary, as well as secondary
treatises concerning German law). Here, the parties have filed translations of relevant portions
of the Russian Civil Code. (See, e.g., Docket No. 40, Attachment A.)9
ANALYSIS
I.

Motion to Transfer Venue
For the reasons stated in Part II of this Section, Lazarev is not bound by or subject to the

terms of the Licensing Contract entered into between the plaintiffs and Style Records. Thus, the
venue provision in the Licensing Contract does not apply to the plaintiffs’ claims against him.
The court will therefore deny Lazarev’s request to transfer venue.
II.

Breach of Contract
It is undisputed that Lazarev never signed a contract with the plaintiffs – the Licensing

Contract was between the plaintiffs and Style Records only. The plaintiffs have not articulated
any viable alternative theory under Russian law pursuant to which Lazarev could be held liable
to the plaintiffs under the Licensing Contract. Therefore, absent privity of contract and any
viable alternative theory of contractual liability against Lazarev, the breach of contract claims

9

In some instances, the parties have not relied on the same English translations of
relevant portions of the Russian Civil Code. However, neither party has objected to the
translations upon which the other party relies, nor do these differences appear to be material for
purposes of the motion.
7

against Lazarev will be dismissed with prejudice. Because the breach of contract claims will be
dismissed, the court need not reach Lazarev’s argument that the plaintiffs failed to meet a
condition precedent to filing suit under the Licensing Contract.
III.

Copyright Claims
The plaintiffs contend, inter alia, that Lazarev does not actually possess a valid

sublicense, because (1) the Licensing Contract was never effective in the first place; (2) Style
Records’ failure to pay full royalties to the plaintiffs effectively rescinded the Licensing Contract
and the associated license; and/or (3) Style Records went bankrupt at some point in or before the
year 2010, thereby rescinding the Licensing Contract by operation of law.10
A.

The Licensing Contract Was Supported by Consideration

The plaintiffs argue that the Licensing Contract “never became effective” because of a
lack of consideration. ” (First Am. Compl. ¶ 23.) The plaintiffs’ position, which does not cite
to any Russian authority, improperly conflates consideration with performance. With respect to
the Licensing Contract, it is undisputed that Style Records obligated itself to pay royalties to the
plaintiffs, including a $4,000 cash advance. Style Records in fact paid the $4,000 advance to the
plaintiffs, thereby partially performing its obligations. Therefore, whether or not Style Records
paid the requisite royalties thereafter, there was consideration for the contract – i.e., the promised
royalty payments and an associated advance. Even if the plaintiffs are correct that they are in
fact owed more royalties than they have received from Style Records, Style Records’ failure to

10

Although the plaintiffs only articulated the first of these three theories in the First
Amended Complaint, Lazarev’s Memorandum in support of his Motion for Summary Judgment
argues that the license was never rescinded, thereby opening the door to the plaintiffs’ additional
theories as to why the license had been rescinded.
8

pay constitutes a failure to perform its obligations under the Licensing Contract, not a lack of
consideration for the agreement itself.
Indeed, Russian law provides that, where a licensee of an artistic work fails to make
promised royalty payments to the licensor, the licensor may withdraw from the license contract
and demand the reimbursement of losses caused by the withdrawal. Russian Civil Code, Art.
1237. Implicit in that provision is the assumption that, until the licensor withdraws from a
licensing agreement, the agreement is otherwise effective and enforceable, notwithstanding the
licensor’s failure to pay royalties. Here, the Licensing Contract was effective upon execution,
and Russian law recognizes that Style Records’ failure to perform thereunder provided the
plaintiffs with a breach of contract action, not a basis for finding that the contract was
unenforceable ab initio. Accordingly, the court finds that the plaintiffs initially conveyed an
enforceable license to Almost Sorry through the Licensing Agreement.
B.

The Plaintiffs Did not Cancel the Licensing Agreement In Compliance With
Russian Law.

The parties have identified only one source of Russian law concerning the default rules
for withdrawing from an existing contract.11 Under Article 450 of the Russian Civil Code, “the
amendment or the cancellation of the contract shall be possible only by an agreement between
the parties, unless otherwise stipulated by the present Code, by the other legal acts or by the
contract.” Furthermore, a contract may be amended or cancelled by a court decision, but “only
(1) in case of an essential violation of the contract by the other party; or (2) in the other cases,

11

To the extent the parties cite to legal authority other than Russian law concerning
cancellation of the Licensing Contract, that authority is inapposite, because the Licensing
Contract is governed by Russian law.
9

[as] stipulated by the present Code, by the other legal acts or by the contract.” Russian Civil
Code, Art. 450(2).
Here, the plaintiffs and Style Records did not agree to cancel the Licensing Contract (see
Art. 450), nor, in the absence of such an agreement, did the plaintiffs file a claim to cancel the
contract in an appropriate court of law (see Art. 450(2)).12 Thus, the plaintiffs did not cancel the
contract in compliance with the Russian Civil Code. The plaintiffs have not cited to any
contrary Russian authority concerning the circumstances under which a party may cancel,
revoke, or otherwise rescind a contract, nor have they articulated any other plausible
interpretation of the Russian Civil Code provisions cited by the defendants. Thus, even if it were
true that Style Records refused to pay the full amount of royalties owed to the plaintiffs, the
court finds that the plaintiffs did not cancel the contract in compliance with applicable Russian
law.13
C.

Revocation of the License by Operation of Law

The parties have submitted competing materials concerning whether Style Records is an
active company. The Canes Affidavit, filed on behalf of the plaintiffs, claims that certain

12

Pursuant to the forum selection clause in the Licensing Contract, any disputes
concerning that agreement must be brought at Style Records’ “location.” The Licensing
Contract does not specify whether that “location” is in Cyprus, where Style Records was
incorporated, or in Russia, where Style Records apparently does business. At any rate, the
plaintiffs did not file a claim in either jurisdiction to cancel the Licensing Agreement.
13

Article 452 also provides that “[a] claim for the amendment or for cancellation of the
contract may be filed by the party with the court only after it has received the refusal from the
other party in response to its proposal to amend or to cancel the contract, or in case of its nonreceipt of any response within the term, indicated in the proposal or fixed by the law or by the
contract, and in the absence thereof . . . within a 30-day term.” With respect to Lazarev, it does
not appear that the plaintiffs complied with this provision either.
10

Russian media sources reported that Style Records went bankrupt at some point in or about the
year 2010, but the affidavit does not attach any of these materials, nor does it provide a basis for
the court to assess the reliability of the referenced hearsay media sources. The Mikhailenko
Affidavit, filed on behalf of Lazarev, purports to attach records from the “Unified Register of
Legal Entities” in Russia and the “Registrar of Companies of Cyprus” demonstrating that Style
Records and its parent company remain “active.”
The court need not determine whether and to what extent it may rely on the defendant’s
materials.14 First, the plaintiffs’ materials plainly do not establish that Style Records went
bankrupt and/or is no longer a functioning company. Second, even if it were true that Style
Records went bankrupt in 2010, the plaintiffs have not identified any Russian legal authority
establishing that such a bankruptcy would have extinguished the Licensing Contract (and the
associated license to Almost Sorry) by operation of law.
SUMMARY
For the reasons stated herein, the court will deny the request to transfer venue, summary
judgment will be granted to Lazarev, and the plaintiffs’ claims against him will be dismissed
with prejudice.
An appropriate order will enter.
______________________________
ALETA A. TRAUGER
United States District Judge

14

The document from the Unified Register of Legal Entities is not translated into English,
but appears to bear some sort of official seal. The Cyprian document is translated into English,
but (a) contains what appear to be handwritten notations by Lazarev’s counsel, and (b) does not
appear to contain any type of official seal.
11