Downing v. A&E Television Networks LLC

Background

Raymond Downing and Studio Macbeth, Inc. alleged that A&E Television Networks, LLC (AETN) and Divisa Red SAU doing business as Divisa Home Video infringed copyrights in materials used in two Spanish-language television programs. AETN moved to compel arbitration under settlement agreements from 2014 and 2018 and to stay the court proceedings while arbitration occurred.

The 2014 settlement agreement included a license allowing AETN and Left/Right, Inc. to use Macbeth materials already included in three specified programs. It also released AETN from claims arising before July 23, 2014 and required disputes about the agreement’s enforcement, interpretation, or effect to be submitted to binding arbitration through JAMS. The 2018 agreement included another arbitration clause and addressed later disputes concerning the 2012 litigation, the 2014 agreement, and a 2017 copyright dispute.

Arbitration Decision

The court held that each plaintiff had at least one valid agreement to arbitrate disputes with AETN. Downing was a party to the 2014 agreement. Studio Macbeth was a party to both the 2014 and 2018 agreements. The court rejected AETN’s argument that Downing was bound by the 2018 agreement under contract-by-estoppel or agency principles, because AETN had not shown that Downing knowingly accepted a direct benefit from that agreement or intended to assume personal liability. The 2014 agreement was sufficient for the court’s ruling.

The court then addressed who should decide whether the copyright dispute was covered by the arbitration clauses. The court found clear and unmistakable evidence that the parties had delegated that question to an arbitrator. Both agreements incorporated JAMS rules, and the applicable JAMS rule states that the arbitrator decides disputes about arbitrability—the question of whether a dispute must be arbitrated. The agreements also used broad language covering disputes about their enforcement, interpretation, or effect.

Because the arbitrator must decide whether the copyright claims against AETN fall within the agreements, the court did not decide the merits of that coverage question or the merits of the copyright claims. The court also noted that interpreting the 2014 license and release would be important to resolving the claims.

Stay of Proceedings

The court found that the proceedings against Divisa should also be stayed, even though no party argued that Divisa had agreed to arbitrate. The claims against AETN and Divisa involved the same two programs and required overlapping factual inquiries about the copyrighted materials and whether plaintiffs had authorized their use. The complaint did not distinguish clearly between the defendants’ alleged infringements or the injuries they allegedly caused.

Disposition

Judge Kimba M. Wood granted AETN’s motion to compel arbitration of the plaintiffs’ claims as to AETN. The court granted AETN’s motion to stay proceedings as to all defendants pending arbitration. The court denied the plaintiffs’ request for oral argument and directed the clerk to terminate the relevant motions.