Spurlock v. Thomson Reuters America Corporation

Background

The plaintiffs are freelance photographers and photojournalists who license and distribute their photographs through Imagn Content Services, LLC. They sued under the Copyright Act, alleging that the defendants offered many thousands of their photographs for sale on online platforms without obtaining a valid license or permission, or acted beyond the scope of any license they obtained.

The plaintiffs’ agreements with Imagn differed in some respects but generally granted Imagn broad rights to reproduce, distribute, display, license, sublicense, and otherwise use the photographs. The plaintiffs retained the copyrights. The agreements also addressed Imagn’s authority to pursue unauthorized uses, settle claims, and distribute recoveries. The agreements contained arbitration provisions requiring disputes arising under, or in some instances relating to, the agreements or photographs to be resolved through arbitration in Virginia.

Motions and Arbitration

Thomson Reuters America Corporation, Adobe Inc., and Sipa Press, Inc. moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which concerns whether a complaint adequately states a claim. Alternatively, they sought summary judgment under Rule 56, a ruling based on evidence when the moving party contends that no material factual dispute requires a trial. They also sought a stay, meaning a temporary pause of the federal case, until the arbitration between the plaintiffs and Imagn ended.

The moving defendants argued that the plaintiffs lacked standing to bring the copyright claims, that the Contributor Agreements defeated the plaintiffs’ infringement theory, and that the complaint did not adequately identify the alleged infringement. They also argued that Imagn had already released the defendants from liability. The plaintiffs opposed a stay, arguing that the court should first resolve the issues raised in the dismissal and summary-judgment motions and that a stay could delay discovery and allow further unauthorized use of their photographs.

The arbitration, filed by the plaintiffs and other claimants against Imagn, includes claims concerning the Contributor Agreements, licensing violations, duties of good faith and fair dealing, fiduciary duties, unjust enrichment, copyright infringement, and New York’s Freelance Isn’t Free Act. The arbitration also seeks declarations about the validity of the agreement provision concerning enforcement and settlements, and about purported settlement agreements between Imagn and Reuters and Sipa. Imagn asserted a counterclaim alleging that the plaintiffs breached that provision by bringing and continuing the federal case without proper authorization.

Court’s Analysis

Judge Cronan concluded that a discretionary stay was warranted because the arbitration and federal case involve substantially overlapping facts and legal issues. The court identified questions about whether the Contributor Agreements gave Imagn exclusive licenses, whether Imagn had authority to pursue infringement claims, when the plaintiffs could sue alleged infringers themselves, and whether Imagn’s agreements released the defendants from liability.

The court reasoned that the arbitration’s resolution of the agreements’ scope and validity could at least partly determine whether the plaintiffs have standing to sue, whether the defendants may be liable for infringement, and whether the defendants have defenses that could prevent recovery. A stay would also reduce duplicative discovery, conserve judicial resources, and limit the risk of inconsistent results. The court found no indication that the moving defendants would hinder the arbitration or that the stay would cause undue hardship. It also concluded that delay in discovery alone did not establish unfair prejudice.

Disposition

The court granted the moving defendants’ motion to stay this action pending the outcome of the arbitration between the plaintiffs and Imagn. It denied without prejudice the moving defendants’ motions to dismiss and for summary judgment. The parties were directed to file a status letter by June 30, 2022, or within one week after a decision in the arbitration, whichever was earlier. The Clerk of Court was directed to terminate the motion at Docket Number 55 and stay the case. The opinion did not decide whether the plaintiffs had standing, whether the defendants infringed the copyrights, or whether the defendants’ defenses would succeed.