McKenzie-Morris v. V.P. Records Retail Outlet, Inc.

Background

Shauna McKenzie-Morris, professionally known as Etana, and Freemind LLC sued entities associated with VP Records and Greensleeves Publishing, Ltd. The plaintiffs alleged that the defendants failed to properly account for and pay royalties under several recording, songwriting, and publishing agreements entered between 2007 and 2014. The First Amended Complaint asserted fourteen causes of action: four contract claims and ten claims that did not sound in breach of contract.

The defendants moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally sufficient claim, against the ten non-contract claims. In deciding the motion, the court accepted the complaint’s factual allegations as true but did not consider a supplemental affirmation submitted with the plaintiffs’ opposition because it was not part of, attached to, or properly incorporated into the complaint.

Rulings on the challenged claims

The court dismissed the fifth cause of action for copyright infringement. The complaint said that some works were registered with the Copyright Office but did not identify which works were registered and which were not. Because copyright registration generally must occur before an infringement suit, the court could not determine which works could support the claim.

The court dismissed the seventh cause of action for unjust enrichment and the ninth cause of action for conversion as preempted by the Copyright Act. The claims concerned musical recordings and allegedly unauthorized publication or use, rights the court found equivalent to rights protected by copyright law. The court also explained that, to the extent the conversion claim concerned royalties rather than recordings, it was impermissibly duplicative of the contract claims.

The court dismissed the tenth cause of action for tortious interference. The claim was not preempted because it included allegations that the defendants made false or misleading representations to third parties. But the plaintiffs did not identify the terms of existing contracts allegedly affected, and they did not adequately allege the wrongful means required for interference with prospective business relations.

The court divided its ruling on the sixth cause of action for fraud. It held that the claim against VP Records was adequately pleaded. The plaintiffs identified an alleged October 13, 2008 statement by Olivier Chastan, then an executive vice president of VP Records, that VP Records did not administer Greensleeves Publishing in the United States. The court found that the complaint adequately alleged that the statement was knowingly false, intended to induce McKenzie-Morris to rely on Greensleeves Publishing’s independence, did induce her to enter the songwriting agreement, and caused damages in the form of lost royalties.

The court dismissed the sixth cause of action against Greensleeves Publishing, Ltd. The complaint did not allege that Greensleeves Publishing was responsible for Chastan’s statement, and its other fraud allegations were either duplicative of the contract claims or did not identify the alleged fraudulent statements with the detail required for fraud claims.

The court dismissed the eighth cause of action for breach of fiduciary duty. It held that the complaint did not plausibly allege a fiduciary relationship independent of the parties’ contracts. The alleged responsibility to administer recordings arose from the contracts, and the plaintiffs’ allegations about the length of the relationship and co-ownership of compositions did not establish the required special relationship of trust and confidence.

Because the complaint did not adequately allege a fiduciary relationship, the court dismissed the eleventh cause of action for an accounting and the thirteenth cause of action seeking imposition of a collective trust. The court also dismissed the twelfth cause of action for declaratory judgment and the fourteenth cause of action for a permanent injunction, explaining that those are forms of relief rather than independent causes of action and that the plaintiffs had not adequately pleaded entitlement to them.

Disposition

Judge Gregory H. Woods granted the defendants’ motion to dismiss in part. The sixth cause of action for fraud could proceed against VP Records but was dismissed against Greensleeves Publishing, Ltd.; the other challenged causes of action—counts five and seven through fourteen—were dismissed. The court granted the plaintiffs leave to file an amended complaint addressing the deficiencies within 14 days of the order. The opinion did not decide the four contract-based causes of action.