Appendix — Merchant v. Levy

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UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Nos. 1322, 1653, 1768—August Term 1995

Argued: May 2, 1996 Decided: August 7, 1996

Docket Nos. 95-7763(L), -7765(CON), -7767(XAP)

JIMMY MERCHANT and HERMAN SANTIAGO,

Plaintiffs-Appellees-

Cross-Appellants,

—_—Y—

MorRIS LEvy, BIG SEVEN MUSIC CORP.

and ROULETTE RECORDS, INC.,

Defendants-Appellants-

Cross-Appellees,

—and—

WINDSWEPT PACIFIC ENTERTAINMENT Co.,

Intervenor-Defendant-

Appellant-Cross-Appellee.

Before:

NEWMAN, Chief Judge,

FEINBERG and OAKES, Circuit Judges.

Appeal from the June 28, 1995, judgment of the

United States District Court for the Southern District of

New York (Naomi Reice Buchwald, Chief Magistrate

Judge), upholding claims of co-authorship of song writ-

ten in 1955. Appellants contend that suit is barred by

Statute of limitations.

Reversed and remanded with directions to dismiss the

complaint.

JAMES B. SHEINBAUM, New York, N.Y.,

Scott L. Baker, New York, N.Y. (Leon B.

Borstein, Borstein, Sheinbaum & Lurie,

New York, N.Y.; Alan L. Shulman,

Silverman & Shulman, New York, N.Y.,

on the briefs), for defendants-appel-

lants-cross-appellees, Morris Levy, Big

Seven Music Corp., Roulette Records,

Inc., and intervenor-defendant-appellant

cross-appellee Windswept Pacific

Entertainment Co.

ROBERT W. CINQUE, New York, N.Y. (James

P. Cinque, Cinque & Cinque, New York,

N.Y., on the brief), for plaintiffs-

appellees-cross-appellants.

JON O. NEWMAN, Chief Judge:

This appeal concerns the appropriate time period in

which those claiming to be co-authors of a work whose

to establish their co-ownership rights. Defendants-

appellants-cross-appellees Morris Levy, Big Seven

Music Corp., and Roulette Records, Inc. (the “Levy

Defendants”) and Intervenor-defendant-appellant-

cross-appellee Windswept Pacific Entertainment Co.

(“Windswept”) (collectively the “Defendants”) appeal

from the judgment of the District Court for the Southern

District of New York (Naomi Reice Buchwald, Chief

Magistrate Judge) entered on June 28, 1995. After a trial

on the issue of liability was held in part before a jury

and in part before the Court, the Court declared plain-

tiffs-appellees-cross-appellants Jimmy Merchant and

Herman Santiago (“Plaintiffs”) co-authors with Frankie

Lymon of the well-known musical composition Why Do

Fools Fall in Love (“Fools”), and co-owners of the

(S.D.N.Y. 1993). The Court awarded Plaintiffs an undi-

vided one-half interest in the copyright of Fools and

monetary damages that accrued within three years of the

filing of the lawsuit. We agree with Defendants that

Plaintiffs’ claim seeking a declaration of co-ownership

rights based on their co-authorship of Fools is time-

barred by the three-year statute of limitations, and we

therefore reverse the judgment of the District Court.

Background

Plaintiffs Merchant and Santiago are two of the orig-

inal members of the singing group “The Teenagers,”

which was formed in 1955. Plaintiffs testified that in

1955 they jointly wrote the initial version of the song

Fools. Frankie Lymon made a number of changes to the

song when he subsequently joined the group, which then

became known as “Frankie Lymon and The Teenagers.”

The jury found that Merchant, Santiago, and Lymon

were co-authors of Fools. At the time Lymon was 12

years old and Plaintiffs were each 15.

In 1956 the Teenagers recorded Fools for Gee

Records, then owned and operated by George Goldner,

now deceased. Plaintiffs testified that they relied upon

Goldner to handle the formalities of copyrighting the

song, and that Goldner informed them that only two of

the three authors could be listed on the copyright.

Subsequently, Goldner filed the Fools copyright with the

sole co-authors. The Levy Defendants maintain that

Goldner was properly listed as an author because he was

personally involved in writing and arranging Fools.

The Levy Defendants also contend that Goldner was a

co-author of Fools under the “work for hire” doctrine

because, during the Fools recording session, a saxo-

phone solo composed by a studio musician was incor-

porated into the song. The jury, however, found that

Goldner was not an author of Fools.

Sometime in the 1950s Lymon agreed to let Goldner

exploit Lymon’s interest in the song. In 1968 Lymon

died, survived by his wife Emira Lymon.

In 1964, defendant Morris Levy purchased Goldner’s

interest in several music companies, including the music

publishing company that held the copyright for Fools. In

a letter to the Copyright Office dated June 24, 1965,

Goldner stated that Levy, rather than Goldner, had

co-authored Fools with Lymon. The copyright registra-

tion was amended to reflect this statement and, there-

after, the copyright was held by Levy’s company, Big

Seven Music. !

: Plaintiffs state that defendant Roulette Records, Inc., another com-

pany owned by Levy, participated in wrongfully tates from

Plaintiffs their interest in the copyright.

Although Fools became a hit and continues to be pop-

ular today (Diana Ross has recorded a popular version),

Plaintiffs have never received any royalties from their

claimed co-authorship of Fools.

Plaintiffs reached the age of majority in 1961. They

testified that on several occasions in the 1960s they con-

tacted Goldner, and then Levy, to inquire about royalty

payments, but to no avail. The jury found that Goldner

and Levy deliberately concealed from Plaintiffs the

accrual of royalties. The jury also found, however, that

the only period during which Plaintiffs did not know,

and could not have known with the exercise of reason-

able diligence, that royalties to which they were entitled

had accrued lasted from 1955 to 1961, while Plaintiffs

were underage.

Plaintiffs also testified that they were afraid of Levy

and that this fear made them reluctant to press their

claims. Santiago testified that Levy threatened him in

1969, and Merchant testified that Levy threatened to kill

him when, in 1977, he inquired about royalties. Plaintiffs

assert that Levy was closely affiliated with organized

crime and connected to a number of violent incidents.

Levy was convicted in the late 1980s on federal extor-

tion charges and sentenced to ten years in prison. The

jury found that Levy threatened Plaintiffs with physical

force and that Plaintiffs reasonably refrained from com-

mencing suit because of the threats during a period that

began in 1969 and lasted until December 24, 1984.?

Beginning in the late 1970s, Plaintiffs took various

Steps in pursuit of their claim, including hiring an attor-

2 On that date Plaintiffs’ former attorney filed a letter with the

written by Plaintiffs that Goldner had transferred to Levy’s name.

ney and investigator to look into the status of the copy-

right. Plaintiffs did not take formal legal action, how-

ever, until 1987.

A. Procedural History

Plaintiffs brought the instant Complaint against

the Levy Defendants and Emira Lymon on October 7,

1987.> Plaintiffs asked for a declaration that they were

co-owners with Lymon of the copyright to Fools and for

an accounting of royalties. Plaintiffs also alleged copy-

right infringement, Sherman Act and Lanham Act vio-

lations, unfair competition, fraud and misappropriation,

and negligence and breach of fiduciary duty. Before trial

the District Court (Vincent L. Broderick, Judge) dis-

missed all claims against Emira Lymon, but allowed the

action to proceed against the Levy Defendants.

By agreement of the parties, trial was held in part

before a jury and in part before now-Chief Magistrate

Judge Buchwald. The jury’s findings, as already noted,

focused on the issues of authorship, fraudulent con-

cealment, and duress. The parties agreed that, based on

the jury’s findings, the Court would make final rulings

on whether Plaintiffs were entitled to an ownership

interest in the Fools copyright, and would decide issues

relating to the statute of limitations, equitable estoppel,

and laches. The Court was also to decide, as fact-finder,

whether Plaintiffs were entitled to judgment on their

unfair competition claims.*

; Broadcast Music, Inc. was also initially included as a defendant.

The other law claims had been previously dismissed for various rea-

sons, and are not at issue on this appeal.

After the jury’s verdict, the Levy Defendants argued in

post-trial motions that they were entitled to a new trial

on the co-authorship issue, and to judgment as a matter

of law (a) that the doctrines of laches and equitable

estoppel barred Plaintiffs’ claims and (b) that Plaintiffs

were not victims of duress.

The Court denied the Levy Defendants’ motion for

a new trial on the co-authorship issue, ruling that

the jury’s findings were well-supported. Merchant, 828

F. Supp. at 1058. The Court then granted judgment in

favor of the Levy Defendants on the claims of copyright

infringement, Lanham Act violations, and unfair com-

petition. Jd. at 1058-60.

The Court granted Plaintiffs’ basic request for a dec-

laration of copyright co-ownership, rejecting the three

defenses advanced by the Levy Defendants, all based on

the long delay in Plaintiffs’ assertion of their claim.

1. Duress and Statute of Limitations. The Court inter-

preted the three-year statute of limitations, applicable to

civil copyright actions, 17 U.S.C. § 507(b), as limiting

Plaintiffs’ recovery to damages accruing within three

years of the filing of the suit, rather than as an absolute

bar to Plaintiffs’ cause of action. Merchant, 828 F. Supp.

at 1056. The important question for the Court then

became whether the statute of limitations had been tolled

for any period before the filing of the suit, thereby

allowing Plaintiffs to recover damages that accrued even

prior to three years before the suit. Jd.

The Court held that in order to toll a statute of limi-

tations, “the duress experienced by the injured party

must have been operating at the time the original cause

of action arose and must be continuous.” Jd. at 1061.

The Court then found that from 1961, the time the cause

of action arose (after Plaintiffs’ majority), until at least

1969, the time of the alleged threat to Santiago, there

was no evidence of duress, and therefore Plaintiffs were

not entitled to a toll of the statute of limitations. Jd. at

1061-62. The Court also overturned the jury’s finding

that Plaintiffs’ fear reasonably lasted from 1969 until

December 1984. The Court did not identify a specific

date beyond which Plaintiffs’ fear reasonably could not

last, but indicated that any coercive effects dissipated in

the late 1970s and early 1980s, when Plaintiffs were

publicly acknowledging that Levy had “bilked” them out

of their royalties. Jd. Since the claim of duress was not

available to toll the statute of limitations, the Court con-

cluded that Plaintiffs were limited to damages that had

accrued within three years of the suit. Jd. at 1063.

2. Laches. Responding to the Levy Defendants’

laches defense, the Court, relying on equity’s “clean

hands” principle, refused to allow the Levy Defendants

to profit from their “untoward actions” by asserting

laches. Jd. at 1064.

3. Equitable Estoppel. As to equitable estoppel,

which requires proof that a defendant was misled into

justifiably believing that a plaintiff would not pursue its

claims against the defendant, the Court determined that

the Levy Defendants offered no evidence that Plaintiffs

acted in a manner that justified a belief on the part of the

Levy Defendants that their copyright was free from chal-

lenge. Id.

B. Subsequent Proceedings

The Court subsequently amended its opinion to mod-

ify the liability of Windswept, which had intervened

after acquiring the rights to Fools that Levy had

acquired from Lymon. The Court ruled that Windswept

was liable only for damages accruing since February 25,

1990, three years before its intervention. Merchant v.

Lymon, 848 F. Supp. 29 (S.D.N.Y. 1994).

In the final judgment entered on June 26. 1995, the

Court awarded Plaintiffs an undivided one-half interest

in the copyright to Fools.’ The Court also ordered the

Levy Defendants and Windswept to pay money damages

to Plaintiffs.

On this appeal Defendants challenge the District

Court’s subject matter jurisdiction, and also argue that

the District Court erred in not dismissing the action for

a declaration of copyright co-ownership as barred by the

Statute of limitations or laches. Defendants additionally

contend that Plaintiffs failed to establish that they are

joint authors of Fools. Plaintiffs cross-appeal, arguing

that the Court should have applied the tolling doctrine of

equitable estoppel to allow Plaintiffs to recover damages

accruing from 1969 to 1984, the period during which the

jury had found that Plaintiffs were subject to duress.

Discussion

I. Subject Matter Jurisdiction

Defendants challenge the Court’s subject matter juris-

diction, contending that the Complaint failed to allege a

federal cause of action. Specifically, Defendants contend

that (1) a claim for a declaration of co-ownership rights

Although Plaintiffs contended that they were each entitled to a one-

third share of the Fools copyright, the Court determined that oniy the

one-half share of the copyright owned by the Levy Defendants at the

commencement of the action was available as a joint remedy for Plain-

tiffs, since Emira Lymon previously had been dismissed from the suit.

10a

to a copyright is not a federal cause of action, and (2)

Plaintiffs’ other allegations based on federal law failed

to state a proper claim. We reject both contentions.

Federal courts have exclusive original jurisdiction

over actions arising under the federal copyright laws.

See 28 U.S.C. § 1338(a). As Judge Friendly has

explained, an action “arises under” the copyright laws

“if the complaint is for a remedy expressly granted by

the [Copyright] Act, . . . or asserts a claim requiring

construction of the Act. . . or, at the very least and per-

haps more doubtfully, presents a case where a distinctive

policy of the Act requires that federal principles control

the disposition of the claim.” 7.B. Harms Co. v. Eliscu,

339 F.2d 823, 828 (2d Cir. 1964), cert. denied, 381 U.S.

915 (1965). Plaintiffs’ action seeking to establish their

rights to copyright co-ownership because of their status

as co-authors of a joint work falls well within these

jurisdictional boundaries.

The Copyright Act provides that “[c]opyright_in a

work protected under this title vests initially in the

author or authors of the work. The authors of a joint

work are co[-Jowners of copyright in the work.” 17

U.S.C. § 201(a).® Unlike a case where a dispute as to

the parties, resolution of which depends on state contract

law, see, e.g., Keith v. Scruggs, 507 F. Supp. 968, 971

. Plaintiffs’ right to co-ownership of the Fools copyright is technically

determined by reference to the Copyright Act of 1909, Pub. L. No. 60-

349, ch. 320, 35 Stat. 1075 (1909), rather than the Copyright Act of

1976, Pub. L. No. 94-553, 90 Stat. 2541 (1976) (codified at 17 U.S.C.

§ 101 et seg. (1994)), since Fools was created and copyrighted before the

1976 Act went into effect, see Roth v. Pritikin, 710 F.2d 934, 938 (2d

Cir.), cert. denied, 464 U.S. 961 (1983). However, because there is no

material difference between the two Acts for the purposes of our anal-

ysis or result, for ease of reference we cite to the present Act, unless oth-

erwise specifically noted.

lla

(S.D.N.Y. 1981), copyright ownership by reason of one’s

status as a co-author of a joint work arises directly from

the terms of the Copyright Act itself. Because disposi-

tion of this case “involves the application and interpre-

tation of the copyright ownership provisions. . . federal

jurisdiction. . . [is] proper.” Goodman vy. Lee, 815 F.2d

1030, 1031-32 (5th Cir. 1987); see Lieberman v. Estate

of Chayefsky, 535 F. Supp. 90, 91 (S.D.N.Y. 1982); see

also 3 Melville B. Nimmer & David Nimmer, Nimmer on

ter view” that “in an action for a declaratory judgment to

establish the plaintiff as the defendant’s co-author and

for an accounting based thereon, . . . federal jurisdic-

tion is exclusive” (footnotes omitted)).

Defendants agree with Judge Friendly’s formulation of

the scope of federal jurisdiction, but contend that since

neither “author,” “joint author,” nor “joint work” are

defined in the Copyright Act of 1909, the resolution of

Plaintiffs’ claim does not depend on a construction of

the copyright laws.’ This argument is without merit.

Defendants are under the mistaken impression that

courts “construe” only those terms already defined in a

Statute. Windswept raises the additional contention that

only the factual determination of whether Plaintiffs par-

ticipated in composing the song is at issue in this case.

and therefore construction of the copyright statute is not

required. We disagree. Defendants offer a number of

arguments as to why Plaintiffs’ contribution to the song

is legally insufficient to make them joint authors (such

as whether Plaintiffs’ contribution was sufficiently orig-

inal), and why Goldner’s contribution sufficed to make

Although the Copyright Act of 1976 also does not define either

“author” or “joint author,” it contains a definition of “joint work.”

17 U.S.C. § 101.

12a

him a joint author (for example, based on the “work for

hire” doctrine, 17 U.S.C. § 201(b)). The resolution of

these arguments involves construing the Act. See, e.g.,

Childress v. Taylor, 945 F.2d 500, 505-09 (2d Cir. 1991).

Since the District Court’s subject matter jurisdiction

over Plaintiffs’ claim for a declaration of copyright co-

ownership is sufficient to confer jurisdiction over the

entirety of Plaintiffs’ Complaint, there is no need to con-

sider Defendants’ jurisdictional attack on Plaintiffs’

other claims. Nevertheless, to the extent that Defendants

are contending that other claims were not properly

pleaded as federal claims, we note that as a general rule

“the failure to state a proper cause of action calls for a

judgment on the merits and not for a dismissal for want

of jurisdiction.” Bell v. Hood, 327 U.S. 678, 682 (1946).

Il. Statute of Limitations

We come finally to the dispositive issue. Plaintiffs

filed the instant suit in 1987, primarily seeking a dec-

laration of their copyright ownership rights and an

accounting of profits. Civil actions under the Copyright

Act are subject to a three-year statute of limitations. 17

U.S.C. § 507(b). Defendants argue that since Plaintiffs

did not institute suit for a declaration of copyright co-

ownership within three years of the accrual of their

claim, they are now time-barred.

A cause of action accrues when a plaintiff knows or

has reason to know of the injury upon which the claim is

premised. Stone v. Williams, 970 F.2d 1043, 1048 (2d

Cir. 1992), cert. denied, 508 U.S. 906 (1993). The jury

found that Plaintiffs were charged with knowledge of

their claim as of 1961, the year they attained the age of

majority. Thus, Plaintiffs’ claim accrued in 1961, but

lee ita a a

13a

they did not initiate suit until 26 years later. Though

Plaintiffs contend on appeal that the statute was toHed,

the basis for such tolling, duress, did not arise until

1969, ending in 1984. By 1969, however, the three-year

Statute of limitations had long since expired.

The District Court nevertheless awarded Plaintiffs a

declaration of co-ownership rights and damages for a

time period beginning three years before the com-

mencement of their suit. The Court relied on our deci-

sion in Stone, supra. That decision, however, which was

based on “highly idiosyncratic facts,” 3 Nimmer, supra,

§ 12.05 at 12-108 n.2.2, does not insulate all civil actions

under the copyright law from the general three-year

Statute of limitations. Rather, Stone stands for the narrow

Proposition that, in certain situations, the statute of

limitations will not be applied to defeat the copyright

co-ownership claim of an author’s relative accruing

more than three years before the lawsuit where uncer-

tainty surrounded the relative’s status as a member of the

author’s family. Instead, if the relative prevails on the

merits and if the equities permit, the Court will grant the

relative a declaration of copyright co-ownership, but

permit damages only for the period starting three years

prior to the suit. See Stone, 970 F.2d at 1051.

Unlike Stone, where the copyright co-ownership claim

was based on plaintiff’s uncertain status as an heir, no

Similar uncertainty exists as to co-ownership rights

based on co-authorship. A co-author knows that he or

she jointly created a work from the moment of its cre-

ation. Accordingly, the concerns motivating our decision

in Stone are not present here. We hold that plaintiffs

claiming to be co-authors are time-barred three years

after accrual of their claim from seeking a declaration of

l4a

would flow from such a declaration. See Zuill v.

Shanahan, 80 F.3d 1366, 1369 (9th Cir. 1996). Our con-

clusion promotes the principles of repose integral to a

properly functioning copyright market.® Plaintiffs’ suit

is therefore barred by the statute of limitations, and we

need not discuss the other issues advanced by the

parties. The judgment of the District Court is reversed,

and the case is remanded with directions to dismiss the

complaint.

We note that Plaintiffs’ cause of action is not based on copyright

infringement, a point Plaintiffs do not contest on appeal. Our holding

here does not disturb our previous rulings that a copyright owner’s suit

for infringement is timely if instituted within three years of each infring-

ing act for which relief is sought, but recovery is barred for any infring-

ing acts occurring more than three years prior to suit. See, e.g., Stone,

970 F.2d at 1049-50 (citing Mount v. Book-of-the-Month Club, Inc., 555

F.2d 1108, 1110-11 (2d Cir. 1977)).

15a

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

87 Civ. 7199 (VLB)(NRB)

Filed June 26, 1995

JIMMY MERCHANT and HERMAN SANTIAGO,

Plaintiffs,

—against—

EMIRA LYMON, Morris LEvy, BIG SEVEN MUSIC CORP.,

ROULETTE RECORDS, INC., and BROADCAST MUSIC, INC.,

Defendants.

JUDGMENT

A trial of the issue of liability having been held in part

before a jury and in part before the Court, from November 10-

16, 1992, and the jury having answered special verdict ques-

tions, and the Court having rendered its decision on July 23,

1993 (828 F. Supp. 1048), and the parties having waived their

rights to a jury trial on the remaining issue of damages, and

a trial having been held before this court on November 14 and

15, 1994, and the Court having rendered its decision in writ-

ing on April 10, 1995, it is

ORDERED, ADJUDGED AND DECREED, that plaintiffs

Jimmy Merchant and Herman Santiago are co-authors with

Frank Lymon of the musical composition “Why Do Fools Fall

16a

in Love?” (hereinafter “Fools”) and as such plaintiffs own an

undivided one-half interest in and to the copyright in “Fools,”

and it is further

ORDERED, ADJUDGED AND DECREED that plaintiffs Jimmy

Merchant and Herman Santiago have judgment against defen-

dant Morris Levy and/or his Estate, Big Seven Music Corp.

and Roulette Records, Inc., in the amount of $245,155.00 plus

pre-judgment interest thereon at the 52 week T-Bill rate com-

pounded annually from September 21, 1988 to May 20, 1995

in the total amount of $110,284.72 for a total judgment in the

amount of $355,439.72 plus post-judgment interest from May

20, 1995, and it is further

ORDERED, ADJUDGED AND DECREED that plaintiffs Jimmy

Merchant and Herman Santiago have judgment against defen-

dant Windswept Pacific Co. in the amount of $209,293.00

plus prejudgment interest thereon at the 52 week T-Bill rate

compounded annually from September 30, 1994 to May 20,

1995 in the total amount of $7,004.34 for a total judgment in

the amount of $216,297.33 plus post-judgment interest from

May 20, 1995 pursuant to 28 U.S.C. § 1961.

DATED: New York, New York

June 19, 1995

/s/ NAOMI REICE BUCHWALD

NAOMI REICE BUCHWALD

CHIEF MAGISTRATE JUDGE

17a

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

87 Civ. 7199 (VLB)(NRB)

JIMMY MERCHANT and HERMAN SANTIAGO,

Plaintiffs,

—against—

EMIRA LYMON, Morris LEvy, BIG SEVEN MUSIC CORP.,

ROULETTE RECORDS, INC., and BROADCAST MusIc, INC.,

Defendants.

OPINION

NAOMI REICE BUCHWALD

CHIEF MAGISTRATE JUDGE

After a five-day trial in the above-captioned action, held

from November 10, 1992 through November 16, 1992. a jury

returned a special verdict finding that plaintiffs Jimmy

Merchant and Herman Santiago were co-authors, with Frank

Lymon, of the hit song Why Do Fools Fall in Love?

(“Fools”).' In addition, the jury found that plaintiffs were pre-

vented from commencing a lawsuit for copyright royalties

On September 25, 1992, both parties consented to the jurisdic-

tion of a United States Magistrate Judge for all purposes pursuant to 28

U.S.C. § 636(c) and Fed. R. Civ. P. 73.

18a

because of a reasonable fear of retribution lasting from 1969

until December 24, 1984.

Thereafter, on December 15, 1992, defendants Levy, Big

Seven Music Corp., and Roulette Records, Inc. (collectively

referred to as the “Levy defendants”)? filed a multi-faceted

post-trial motion. Of particular relevance here was their appli-

cation for judgment as a matter of law pursuant to Fed. R.

Civ. P. 50 on the ground that plaintiffs were not entitled to a

tolling of the statute of limitations as a matter of law, or alter-

natively, for the entirety of the period found by the jury. In an

Opinion dated July 22, 1993 (the “July 22 Opinion”), this

Court granted defendants’ motion in relevant part. See Mer-

chant v. Lymon, 828 F. Supp. 1048 (S.D.N.Y. 1993). Specif-

ically, we held that duress must constitute an integral part of

the cause of action in order to justify a tolling of the statute

of limitations. Alternatively, we found that the jury’s verdict

was not supported by the evidence. Furthermore, based on the

held that plaintiffs could only recover for damages accruing

within three years of October 7, 1987, the day that plaintiffs

filed their complaint. See Stone v. Williams, 970 F.2d 1043,

1051 (2d Cir. 1992), cert. denied, 113 S. Ct. 2330 (1993).

On January 7, 1993, Windswept Pacific Entertainment Co.

(“Windswept”), which acquired ownership of the Fools copy-

right in 1988, moved to intervene for all purposes under Fed.

R. Civ. P. 24(a). Plaintiffs consented to Windswept’s appli-

cation. On February 25, 1993, Windswept filed its answer,

pursuant to leave granted on February 4, 1993. Windswept

now moves for this Court to amend its July 22 Opinion to

state explicitly that Windswept is only liable for damages

accruing since February 25, 1990, three years before its inter-

vention in this action.

? Judge Broderick dismissed defendants Broadcast Music, Inc.

and Elmira Lymon from this action on February 2, 1992 and April 1S,

1992, respectively.

19a

DISCUSSION

For reasons unknown to us, plaintiffs never sought to

join Windswept as a defendant even though they knew

that Windswept had acquired ownership of the Fools copy-

right after their complaint was fiied.? In fact, to this date,

plaintiffs have offered no explanation for their failure to join

Windswept in a timely manner. Rather, in opposing this

motion, plaintiffs’ position is that Windswept was at fault for

failing to intervene sooner. (Pls.” Mem. Opp. Mot. of Def.

Windswept at 4-6.)

We reject plaintiffs’ contention. Responsibility for failure

to join Windswept must be placed squarely with plaintiffs.

The Copyright Act specifically states that “[r]ecordation of a

document in the Copyright Office gives all persons con-

structive notice of the facts stated in the recorded document.

. +." 17 U.S.C. § 205(c). See generally 3 Nimmer on Copy-

right § 10.07, 10-51 - 10-70 (1993) (“Recordation of Trans-

fers”). For a small fee, plaintiffs could have requested that the

the Fools copyright. 17 U.S.C. § 705(c).4 Such a search would

have revealed a recorded transfer of copyright interest to

Windswept on October 14, 1988. Because plaintiffs had the

knowledge and capacity to join Windswept in a timely fash-

ion, there is no reason that the calculation of the limitations

period ought not to run from the date that Windswept became

a party to the action.

, Plaintiffs’ counsel was present at pre-trial conferences at least

as early as May 4, 1992 where the fact that Big Seven Music Corp. had

sold the Fools copyright to Windswept was specifically discussed.

. This section provides that

Upon request and payment of the fee specified by section

708, the Copyright Office shall make a search of its public

records, indexes, and deposits, and shall furnish a report of

the information they disclose with respect to any particular

deposits, registrations, or recorded documents.

20a

CONCLUSION

Based on the statute of limitation applicable in copyright

cases, Windswept is liable only for damages accruing since

February 25, 1990. Defendant’s motion is granted.

IT Is SO ORDERED.

DATED: New York, New York

March 22, 1994

/s/ NAOMI REICE BUCHWALD

NAOMI REICE BUCHWALD

CHIEF MAGISTRATE JUDGE

Copies of the foregoing Opinion have been mailed on this

date to the following:

Bruce Gold, Esq.

8 Elf Road

Syosset, New York 11791

Ira G. Greenberg, Esq.

Edwards & Angell

750 Lexington Avenue, 12th Floor

New York, New York 10022

Alan L. Shulman, Esq.

Silverman & Shulman, P.C.

136 East 57th Street

New York, New York 10022

2la

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

87 Civ. 7199 (VLB) (NRB)

JIMMY MERCHANT AND HERMAN SANTIAGO,

Plaintiff,

—against—

EMIRA LYMON, as Widow and Administratrix of the Estate of

FRANK LYMON, MorRIS LEvy, BIG SEVEN MUSIC

CorP., ROULETTE RECORDS, INC., and BROADCAST

MusICc, INC.,

Defendants.

OPINION

NAOMI REICE BUCHWALD

UNITED STATES MAGISTRATE JUDGE

This litigation is primarily an action for a declaration of

rights to the copyright of the hit song Why Do Fools Fall in

Love? (“Fools”). In their complaint, filed in 1987, plaintiffs

claim, inter alia, that the copyright registration, as filed and

as amended, inaccurately attributes authorship credit for

Fools and that they are co-authors of the song with Frank

Lymon. As co-authors, each plaintiff asserts a claim to an

ownership share of the Fools copyright and a proportionate

share of the royalties earned from its exploitation.

Piaintiffs are two of the original members of the singing

group, Frankie Lymon and the Teenagers—comprised also

of Lymon, Joe Negroni and Sherman Garnes, each now

22a

deceased—who in 1956 recorded Fools for Gee Records, then

owned and operated by George Goldner, also now deceased.

Contemporaneously with the recording of Fools, Goldner

allegedly informed plaintiffs that he would handle the for-

malities of copyrighting the song, and, later, that only two of

the three authors could be listed on the copyright. Subse-

quently, Goldner filed the Fools copyright with the Copyright

Office in 1956, initially listing himself and Lymon as sole co-

authors.' In the years between the release of Fools and the ini-

tiation of the current lawsuit, plaintiffs inquired about their

interest in Fools on a number of occasions, but took no formal

legal action until the filing of this lawsuit.

Prior to the parties consenting to trial before a United

States Magistrate Judge, the defendants moved for summary

judgment predicated on various affirmative defenses arising

from plaintiffs’ delay in bringing this action. Of particular

relevance here are defendants’ arguments that plaintiffs’

claims are barred by the statute of limitations and the doc-

trines of laches and equitable estoppel. Plaintiffs countered

that they were entitled to a tolling of the statute of limitations

due to the defendants’ fraudulent concealment and exercise of

duress over plaintiffs. Specifically, plaintiffs maintain that

Levy told them that they were owed nothing and, on two

occasions, that if they persisted in their inquiries he would

have them killed. In addressing these arguments, Judge Brod-

erick identified four salient factors concerning plaintiffs’

delay:

(1) plaintiffs’ lack of sophistication about the music

business, including the fact that plaintiffs were 15 at the

time they recorded Fools and both had limited education;

In 1964, defendant Morris Levy purchased Goldner’s interest in

several music companies, including Gee Records and Patricia Music, a

music publishing company which held the copyright for Fools. On June

24, 1965, Goldner stated in a letter to the Copyright Office that Levy,

rather than Goldner, had co-authored Fools with Lymon. The copyright

registration was amended to reflect this statement and, thereafter, the

Seven Music Inc. and Roulette Records, Inc., another company owned by

Levy, are referred to collectively as “the Levy defendants”.

23a

(2) fraud perpetrated against plaintiffs by George Gold-

ner, Morris Levy and their affiliates concerning the own-

ership of the Fools copyright; (3) fear that pressing their

claims could result in violence from Morris Levy; and,

(4) the fact that plaintiffs, even taking into account all of

the above factors, clearly slept on their rights.

Memorandum Order dated April 15, 1992 at p.6 (the “April

15 Order), reaffirmed on September 18, 1992, (the “Septem-

ber 18 Order”).

With respect to whether the doctrine of fraudulent con-

cealment tolled the running of the statute of limitations, the

court found that genuine issues of material fact existed as to

whether Goldner, Levy and their affiliates deliberately con-

cealed from plaintiffs the existence of plaintiffs’ cause of

action and deliberately diverted the Fools royalties. April 15

Order at 8. The court also found that factual issues existed as

to when plaintiffs knew or should have known that they were

being defrauded. /d.

Addressing the issue of whether plaintiffs were entitled to

a duress tolling to the statute of limitations because of their

fear that Levy would retaliate to a lawsuit with violence,

Judge Broderick held, as an initial matter, that recognition of

the duress toll was consistent with the purposes of the Copy-

right Act and that New York, as the forum state, provided the

relevant rule of decision. The court noted that, under New

York law, a duress tolling was only applicable where “duress

is part of the cause of action alleged.” /d. at 11 (citation omit-

ted). Applying this restriction, the court postulated that the

entire course of the 37 year relationship between the parties

and the manner in which plaintiffs assert that title to the Fools

tinuing pattern of duress which was directed not only toward

preventing plaintiffs from suing, but toward allowing defen-

dants to acquire and hold title to the Fools copyright.” /d. at

15. Therefore, despite the fact that plaintiffs asserted no

claims which explicitly had duress or coercion as an element,

the court found that a factual question existed as to whether

“the duress which may have been exercised by the defendants

24a

was so integrally related to the plaintiffs cause of action as to

toll the statute.” Jd.

Next, Judge Broderick turned to defendants’ assertion of

laches and equitable estoppel against plaintiffs. With respect

to the doctrine of laches the court balanced plaintiffs’ delay

against the prejudice suffered by the defendants by virtue of

the delay and found that, due to the wrongful conduct of

Goldner and the Levy defendants, there was a genuine issue

of material fact as to whether plaintiffs’ suit was timely com-

menced. /d. at 15. Similarly, the court found that a factual

question existed as to whether the Levy defendants’ wrong-

ful conduct precluded their assertion of an equitable estoppel

defense. Accordingly, the court denied the Levy defendants’

motion for summary judgment.

Having previously dismissed the claims against defendant

Broadcast Music Inc. on February 5, 1992, the court held that

the justifications for plaintiffs’ delay had no application to

their claims against Emira Lymon—Frank Lymon’s widow

and, as such, the successor to his copyright interest. Conse-

quently, the only remaining named defendants in the action

are the Levy defendants.’

Factual Background

Trial of the liability issues was held, in part, before a jury

and, in part, before the Court from November 10 - 16, 1992.’

. After the trial, Windswept Pacific Entertainment Co.

(“Windswept”), the current owner of the entire Fools copyright, inter-

vened without opposition for all purposes under Fed. R. Civ. P. 24 (a),

inter alia, asserting the affirmative defenses of laches and estoppel,

requesting to be heard as a defendant with respect to fashioning any relief

in favor of plaintiffs, and joining in the Levy defendants’ post trial

motions.

, At a conference on November 9, 1993 the parties agreed to use

a special verdict form addressed to the factual issues in the case. The spe-

cial verdict form was designed to limit the number of legal issues on

which the jury would be charged. As a result, the special verdict ques-

tions focused on the issues of authorship, fraudulent concealment and

duress. Based on the jury's responses, the court was left to determine

25a

On behalf of plaintiffs the following witnesses testified:

plaintiffs themselves; Kenneth Bobo, a some time member of

The Teenagers; Gigi Merchant, plaintiff Merchant’s sister;

Herbert Cox, a performer with The Cleftones, a singing

group; Philip Groia, a writer; and Elder Henix. Plaintiffs also

introduced deposition testimony of Levy who had died in the

late 1980’s, subsequent to the filing of this lawsuit. Defen-

dants called four witnesses: Philip Kahl, a former employee

of Patricia Music; Jeri Spencer; Emira Lymon; and Howard

Fisher, former controller of Roulette Records.

The factual issues presented at trial, as narrowed by the

April 15 Order, can be placed into two broad categories. First,

as noted above, the parties disputed whether the copyright

certificate filed with the Copyright Office, and later amended,

accurately reflected the authorship of Fools. Plaintiffs

claimed that, despite Goldner’s listing as a co-author on the

original copyright, he made no contribution to the writing of

Fools, and rather that plaintiffs co-wrote the song with

Lymon. Second, the parties disputed whether plaintiffs were

justified in waiting approximately twenty-six years from the

time they reached majority under New York law in 1961 until

December 14, 1987 to pursue their claims. A review of the

trial testimony will be helpful in placing these disputes and

the jury’s verdict in context.‘

Plaintiffs testified that in April of 1955, Santiago, Mer-

chant, Garnes and Negroni formed a singing group, eventually

known as The Teenagers, that rehearsed at a local junior high

school and at other locations around Washington Heights.

At first, the group sang popular songs written by other musi-

whether plaintiffs were entitled to an ownership interest in the Fools

infringement, Lanham Act and common law unfair competition claims

and whether plaintiffs were equitably estopped from bringing their law-

suit. In addition, the Levy defendants’ equitable defense of laches was

tried to the court.

¥ Although, at the Court’s request, the Levy defendants provided

excerpts from the trial transcript neither party has been inclined to order

a full transcript. Consequently, the Court has relied largely on its own

notes to reconstruct the testimony.

26a

cians, but they later began to create their own music. Inspired

by love letters given to the group by a neighbor, plaintiffs,

neither of whom had any formal musical training, developed

the melody and lyrics for Fools, a song that the group initially

called Birds Sing So Gay. In the original arrangement of

Fools, Santiago sang the lead voice and the other group mem-

bers sang back up. Three witnesses for plaintiff, Gigi Mer-

chant, Howard Bobo and Elder Henix, testified that they

heard the original four group members rehearse Birds Sing So

Gay prior to Lymon’s joining the group. Not until June of

1955, approximately two months after the plaintiffs began to

write and rehearse this early version of Fools, did Lymon join

the group.

Due in part to Lymon’s presence, a member of another local

singing group introduced The Teenagers to Goldner, who

invited them to audition in September of 1955 at Gee

Records. After hearing the group perform Fools, Goldner sug-

gested that the group rehearse the song with Lymon replacing

Santiago as the lead singer. In December of 1955, the group

returned to Gee Records’ studios and, accompanied by a band

of studio musicians, recorded Fools. At the time Fools was

recorded, plaintiffs were fifteen years old and Lymon was

twelve.

The parties offer slightly different, but not inconsistent,

versions of the events that led up to the writing and recording

of the final version of Fools. According to Santiago, Lymon

made significant embellishments to the song during the time

between the audition and recording session, which included,

among other changes, adjusting the song to suit Lymon’s

vocal range. Plaintiffs assert that their documentary evidence,

the original record label and an unsigned Standard Uniform

Popular Songwriters Contract (Exhibit 1) listing Santiago as

well as Lymon and Goldner as authors, corroborates their tes-

timony. Plaintiffs also testified that at about the time Fools

was recorded, Goldner told plaintiffs that he would handle the

registration of the song’s copyright but that only two names

could appear on the registration form. Plaintiff testified that

they chose to include the names of the two lead singers—

Lymon and Santiago—thus accounting for the absence of

Merchant’s name from these exhibits.

27a

Relying largely on documentary evidence and what they

argue is the inherent incredibility of plaintiffs’ testimony, the

Levy defendants maintain that Goldner was personally

involved in the writing and arranging of Fools. In support of

their position defendants submitted the copyright registration

and renewals, and contemporaneous advertisements and pro-

motional materials indicating that Lymon and Goldner were

the sole co-authors of Fools. Furthermore, defendants argued

that the lengthy saxophone solo in Fools was composed dur-

ing the recording session by Jimmy Wright, a studio musician

in the employ of Gee Records. Therefore, the Levy defendants

conclude, Goldner was an author under the “work-for-hire”

doctrine as well.

As indicated by the answers to Special Verdict Questions

1-3, the jury resolved the issue of authorship in favor of

plaintiffs, finding that Santiago and Merchant, in conjunction

with Lymon, were co-authors of Fools. Furthermore, the jury

rejected both of defendants’ theories—that Goldner was an

author either through his personal involvement or under the

work-for-hire doctrine.

The remainder of the evidence at trial focused on whether

plaintiffs were justified in waiting approximately twenty-six

years to pursue their claims.’ Plaintiffs testified that on sev-

eral occasions during this time, beginning in the early 1960’s,

they, either personally or through professional advisors,

attempted to collect royalties from Levy that they believed

were due. Each one of the inquiries was met with a refusal on

Levy’s part to pay such royalties.

As noted above plaintiffs were both fifteen years old at the time

Fools was recorded. During their minority years, plaintiffs received a

weekly allowance from the Levy defendants when The Teenagers were

performing. In addition, a trust fund was established and a guardian

ad litem was appointed to administer a trust in which additional perfor-

mance royalties and other monies were to be deposited for the benefit of

plaintiffs. Upon reaching majority age, in 1961, each plaintiff received

approximately $1,000 from his trust fund. The parties do not dispute that,

under New York law, plaintiffs were entitled to a tolling of the statute of

limitations until they reached majority age. Consequently, it is undisputed

that plaintiffs’ delay in bringing their lawsuit could not have begun until

1961.

28a

Plaintiffs testified that, initially, Levy’s refusals amounted

to an ambiguous blanket statement that “there was no money

for them.” However, in two instances when they went to col-

lect the money that they believed Levy owed them, Levy

threatened plaintiffs with physical violence. Specifically, San-

tiago testified—for the first time at trial—that in 1969 he

went to Levy’s office, accompanied by Garnes, and Levy

threatened to kill him. Merchant testified-—as he had done at

his deposition and in an affidavit filed in opposition to defen-

dants’ motion for summary judgment—that in 1977 he, too,

went to Levy’s office accompanied by Garnes to ask for

money. According to Merchant, during that visit Levy told

Merchant and Garnes to leave his office or he would have

them killed. Plaintiffs testified that, as a result of these threats

and their belief that Levy had ties to organized crime, they

were afraid to file a lawsuit against Levy until December of

1987.

In response, defendants denied that Levy made these threats

and contested whether plaintiffs’ claimed fear of violence, in

fact, prevented them from taking legal action against Levy.

Defendants pointed out that prior to 1987 plaintiffs took

numerous steps to pursue their claims against Levy as to

Fools as well as to other songs. Included in these steps was

the hiring of an attorney who, in 1984, unsuccessfully chal-

lenged Levy’s renewal of the copyright to another song, enti-

tled J Want You to be My Girl.

As indicated by the answers to Special Verdict Questions

4-11, the jury found that, although Goldner and Levy delib-

erately concealed from plaintiffs the accrual of royalties from

Fools, each plaintiff knew or should have known that royal-

ties to which they believed they were entitled had accrued. In

addition the jury found that: each plaintiff had been threat-

ened by Levy; each plaintiff feared that Levy would carry out

his threats; each plaintiff’s fear was reasonable; and each

piaintiff’s fear lasted until December 24, 1984, the date plain-

tiffs’ former attorney filed a letter with the Copyright Office

challenging the registration of / Want You to be My Girl.

Special Verdict Questions 12-19.

29a

Implications of The Jury’s Findings

As a threshold matter, plaintiffs seek declaratory relief

establishing that they are co-authors of Fools and, therefore,

are co-owners of its copyright. In addition, although inartfully

constructed, the Complaint states a claim for further relief for

the deprivation of the remunerative benefit flowing from this

Ownership.

Obviously the jury’s first findings relate to the plaintiffs’

claims of authorship. As a general rule, copyright ownership

vests initially in the author or authors of the work. | Melville

B. Nimmer & David Nimmer, Nimmer on Copyright § 5.01[B]

(1992) (hereinafter “Nimmer’”). See also 17 U.S.C. § 201(a)

(1988). Copyright ownership entitles the holder to the exclu-

sive benefit from the exploitation of the underlying work.

Stone v. Williams, 970 F.2d 1043, 1051 (2d Cir. 1992), cert.

denied, 124 L. Ed.2d 243 (1993) (“Stone IIT’). Thus, plaintiffs

appropriately seek damages for the Levy defendants’ failure

to remit to plaintiffs their proportionate share of royalties

received from the exploitation of Fools. Cf. Stone III, 970

F.2d at 1051. Alternatively, plaintiffs seek the imposition of

a constructive trust, a remedial device imposed in favor

of one entitled to property that is wrongfully withheld, which

is the equitable analogy to a legal action for an accounting or

for damages. See Stone III, 970 F.2d at 1051-52.

Once authorship is determined, the issue of whether plain-

tiffs were justified in delaying the filing of this lawsuit

becomes relevant. Extrapolating from the jury’s conclusion

that plaintiffs were prevented from filing a lawsuit against the

Levy defendants because of their reasonable fear of retribu-

tion, plaintiffs contend that they are entitled to a tolling of the

statute of limitations for the period of time during which the

fear operated. Application of this toll to the Copyright Act’s

Statute of limitations would entitle plaintiffs to recovery, not

only for damages accruing within three years of suit, Stone

11, 970 F.2d at 1051, but also for damages accruing back to

1969, when the jury found that plaintiffs’ reasonable fear first

arose.

30a

The Levy Defendants’ current motions challenge these

results, arguing that the defendants are entitled to a new trial

on the issue of authorship, to judgment as a matter of law that

the doctrines of laches and equitable estoppel bar plaintiffs’

claims, to judgment as a matter of law that plaintiffs did not

suffer duress; and finally, to a new trial because the court

erroneously admitted certain evidence of Levy’s “mafia con-

nections” and certain “bad act” evidence related to Goldner.

In addition, each party moves for judgment on the claims

arising under the Lanham Act and common law unfair com-

petition.® I will address each motion in turn.

Discussion

The Levy Defendants Rule 59 Motion for a New Trial on the

Issue of Authorship.

Pursuant to Fed. R. Civ. P. 59, the Levy defendants move to

set aside the jury’s findings that plaintiffs’ co-authored Fools

with Lymon and that Goldner was not an author either

through his personal contribution or the work for hire doc-

trine.’? A court may, in its sound discretion, set aside a jury

verdict and grant a new trial on the grounds that the verdict is

against the clear weight of the evidence or will result in a

° Plaintiffs also cross-move for judgment that each plaintiff

receive equal ownership shares, or one-third, of the Fools copyright. On

the basis of the September 18 Order, we deny plaintiffs’ motion. After

finding that all of the plaintiffs’ claims against Emira Lymon were barred

by laches, Judge Broderick ordered a trial of the issues involving plain-

tiffs and the Levy defendants. Because the Levy defendants’ interest

related to only one-half of the Fools copyright, the plaintiffs’ relief is

limited to that ownership share.

, Rule 59(a) enables a party to move for a partial new trial limited

to discrete issues. See Brooks v. Brattleboro Memorial Hosp., 958 F.2d

525, 530-531 (2d Cir. 1992) (citing Crane v. Consolidated Rail Corp.,

731 F.2d 1042, 1050 (2d Cir.), cert. denied, 469 U.S. 854 (1984). But cf.

id. (partial new trial may not properly be resorted to unless it clearly

appears that the issue to be retried is so distinct and separable from the

others that a trial of it alone may be had without injustice) (citation omit-

ted).

3la

miscarriage of justice, even though there may be substantial

evidence in support of the verdict. Song v. Ives Labs., Inc.,

957 F.2d 1041, 1047 (2d Cir. 1992); Bevevino v. Savdiari, 574

F.2d 676, 684-685 (2d Cir. 1978).

While the court should examine the character of the

evidence and the complexity of the legal issues involved, it

should not set aside the verdict merely because the court

would have come to a different conclusion had it been the

trier of fact. Bevevino, 574 F.2d at 685: Wade v. Orange

County Sheriff's Office, 690 F. Supp. 176, 178 (S.D.N.Y.

1987), aff’d, 844 F.2d 951 (2d Cir. 1988). Nor should the trial

court encroach on the jury’s role as the primary finder of fact

and set aside the verdict unless it is quite clear that the jury’s

conclusions were egregious. Bevevino, 574 F.2d at 684, 686

n.29. However, when the verdict stems primarily from a jury’s

evaluation of a witness’ credibility, a verdict will rarely be

egregious. Cf. Dunlap-McCuller v. Riese Org., 980 F.2d 153,

158 (2d Cir. 1992). With this strict standard in mind, we

examine the evidence supporting the jury’s finding that the

plaintiffs were co-authors of Fools, and that Goldner was not.

An author is defined as the person, or one of two or more

persons, who has made a copyrightable contribution to the

creation of the work. Childress v. Taylor, 945 F.2d 500 (2d

Cir. 1991). First, the Levy defendants attack the finding that

plaintiffs’ coauthored Fools because such a finding is con-

trary to the documentary evidence, and that plaintiffs’ testi-

mony on the issue was simply incredible. In addition to the

Records and an article in the June, 1956 edition of Hit Parade

Magazine listing Goldner and Lymon as the sole co-authors of

Fools, the Levy defendants submitted two letters dated July

11, 1984 and December 24, 1984, from plaintiffs’ former

attorney, who also at one time represented Emira Lymon, to

the Copyright Office relating to the misregistration of other

songs, but not Fools.®

. Plaintiffs’ explanation for their former attorney’s conduct in rela-

tion to the challenge to the registration of Fools focused on an agreement

allegedly made between Emira Lymon and plaintiffs. In 1984, Emira

32a

Plaintiffs, on their part, offered explanations for each of the

documents submitted by the Levy defendants, plaintiffs’

exhibits 1 and 3 listing Santiago as an author, and extensive

and largely uncontradicted testimony from several witnesses

concerning plaintiffs’ involvement in the writing of Fools

prior to Lymon’s joining The Teenagers. Essentially, the Levy

defendants ask the Court to review the jury’s determination

that the plaintiffs, and the witnesses who testified on their

behalf, were credible. However, the jury heard the conflicting

testimony and were free to determine which witnesses to

believe. Recognizing that a jury’s assessment of credibility

should rarely te disturbed, Dunlap-McCuller, 980 F.2d at

158, and in light of the substantial evidence presented by

plaintiffs in support of their authorship claims, we cannot say

that the jury’s findings were egregious. Therefore, we find no

basis upon which to set aside the answers to Special Verdict

Questions 1 and 2.

Conceding that Goldner’s personal involvement in the writ-

ing of Fools was fairly subject to resolution either way, the

Levy defendants next argue that the jury’s rejection of his

authorship under the work for hire doctrine was against the

great weight of the evidence. Although the author is generally

the party who actually creates the copyrightable work, the

include an employer in the case of works for hire. Id. § 62;

Community For Creative Non-Violence v. Reid, 490 U.S. 730,

143-744 (1989). See also 17 U.S.C. § 201(b). Unlike the later

tion of “employer” and “work-for-hire” to the courts. Reid,

490 U.S. at 744. However, the employee must still satisfy the

statute’s requirements for co-authorship. Thus, in order to

Lymon sued Levy, claiming that she was the sole owner of the Fools

estate. Plaintiffs assert that in exchange for their testimony about the writ-

ing of Fools, Emira Lymon agreed to give each plaintiff a one-third own-

ership share. Emira Lymon denies that such an agreement existed and the

Levy defendants supplement her denial by contending that it is illogical

to believe that Emira Lymon would share her interest with plaintiffs based

merely on their word that they had co-authored Fools.

eens

33a

establish Goldner’s co-authorship of Fools through the work-

for-hire doctrine, the Levy defendants must establish that

Jimmy Wright, a studio musician hired by Goldner, was a

co-author of Fools, and that Wright was an “employee” as

defined by the copyright laws.

Addressing the threshold requirement that Wright is a

co-author of Fools, the Levy defendants must demonstrate

that he made a copyrightable contribution to Fools, the par-

ties intended to regard themselves as joint authors. Childress.

945 F.2d at 507-508. Defendants failed to make this showing.

At trial, the Levy defendants adduced no evidence that the

saxophone interlude amounted to more than an “incidental”

musical change. Cf. Picture Music, Inc. v. Bourne, Inc., 314

F. Supp. 640, 647 (S.D.N.Y. 1970), aff’d on other grounds,

457 F.2d 1213 (2d Cir.), cert. denied, 409 U.S. 997 (1972).

See also Childress v. Taylor, 1990 U.S. Dist. LEXIS, 15969,

*13 (S.D.N.Y. 1990), aff’d, 945 F.2d 500 (2d Cir. 1991). The

only characterization concerning Wright’s contribution to

Fools came from plaintiffs’ testimony that the solo was

merely an arrangement that followed from the song’s chord

progression. Based on this scant evidence and their own hear-

ing of the song, the jury was fully justified in finding that the

sax solo was not a substantial contribution to the song. More-

over, the Levy defendants did not demonstrate that at the time

Fools was recorded that Wright, or Goldner, intended to be

accorded the status of a co-author because of the addition of

the sax solo. Without such an intention, Wright’s contribution,

even assuming it met the threshold of authorship, would not

give rise to a joint authorship interest.

At to the second element in the work-for-hire doctrine, the

Levy defendants must establish that Wright was an employee

of Gee Records. Generally, courts have applied the work for

hire doctrine only to works made by employees in the regular

course of their employment. Reid, 490 U.S. at 744. Several

factors, no single one of which is determinative, are to be

weighed in determining whether the work was created by an

employee or an independent contractor. Reid, 490 U.S. at 751-

752. Cf. Bourne, Inc., 457 F.2d at 1216 (setting forth factors

in work-for-hire under 1909 Act). The most important factors

34a

include the hiring parties’ right to control the manner and

means of creation, the method of payment, the skill required,

the provision of employee benefits, the tax treatment of the

hired party, and whether the hiring party has the right to

assign additional projects to the hired party. Aymes v. Bonelli,

980 F.2d 857 (2d Cir. 1992).

While some of these factors were contested, the Levy

defendants produced virtually no evidence concerning the

employment relationship between Goldner and Wright. With-

out having to adopt plaintiffs’ argument that the record com-

pany’s recoupment of its payment to the studio musicians

from the royalties from Fools precludes a work-for-hire

arrangement, we find that this issue was fairly open to reso-

lution in either party’s favor. In sum, the Levy defendants’

have failed to demonstrate that the jury’s findings with

respect to Goldner’s authorship were seriously erroneous, and

thus, their motion for a new trial on the issue of authorship is

denied.

Judgment on Copyright Infringement, Lanham Act, and

Unfair Competition Claims

As described above, plaintiffs’ action is one for a declara-

tion of copyright ownership and the recovery of the royalties

which accompany such ownership. The action is not properly

framed as one for copyright infringement, which requires

a plaintiff to show ownership of a valid copyright and

the defendant’s infringement by unauthorized copying.

Laureyssens v. Idea Group, Inc., 964 F.2d 131 (2d Cir. 1992).

See April 15 Order; see generally Nimmer § 13.01 (setting

forth requirements of infringement). Notwithstanding tke

defendants’ wrongful conduct, plaintiffs clearly anticipated

that the Levy defendants would exploit the copyright, subject

to an accounting for royalties. See Eden Toys, Inc. v. Florelee

Undergarment Co., 697 F.2d 27, 36 (2d Cir. 1982) (under pre-

1978 copyright law licenses can be granted orally or by con-

duct.) Specifically, Santiago testified that he had intended to

Fane eee

35a

sign a Standard Form Songwriters Contract transferring his

rights in Fools to Goldner. Therefore, according to plaintiffs’

own testimony the Levy defendants exploited the Fools copy-

right with the plaintiffs’ authorization and, as a result, judg-

ment in favor of the Levy defendants is granted on plaintiffs’

claim for copyright infringement.

Lanham Act and State Law Unfair Competition Claims

Plaintiffs seek relief under Section 43(a) of the Lanham

Act, 15 U.S.C. § 1125(a) (1982). That section provides, in

pertinent part, that

[a]Jny person who shall affix, apply, or annex, or use in

connection with any goods, . . . any false description or

representation, including words or other symbols tend-

ing falsely to describe or represent the same. . . shall

be liable to a civil action. . . by any person who

believes that he is or is likely to be damaged by the use

of any such false description or representation.

Id. Consistent with the remedial nature of the statute and

its expansive language, courts, generally, have construed

this provision broadly. PPX Enterprises, Inc. v. Audiofidel-

ity Enterprises, Inc., 746 F.2d 120, 124 (2d Cir. 1984) (“PPX

I’). Consequently, Section 43(a) has been employed suc-

cessfully to combat a wide variety of deceptive commercial

practices, including various forms of misappropriation, mis-

representation and other examples of unfair competition. PPX

Enterprises, Inc. v. Audiofidelity Inc., 818 F.2d 266, 270

(2d Cir. 1987) (“PPX IT’) (collecting cases). These practices

traditionally involve the misappropriation of another’s talents.

Rosenfeld v. W.B. Saunders. Div. of Harcourt Brace Jovan-

ovich, Inc., 728 F. Supp. 236, 241 (S.D.N.Y.), aff’d, 923 F.2d

845 (2d Cir. 1990).

One form of unfair competition prohibited by the Lanham

Act, known as “reverse palming off,” occurs when the wrong-

doer removes the name or mark on another party’s product

and sells that product under a different name.? Jd. The grava-

’ For the most part, plaintiffs cite cases which involve “palming

off”, a second form of unfair competition proscribed by the Lanham Act,

36a

men of the harm in reverse palming off is that “the originator

of the misidentified product is involuntarily deprived of the

advertising value of its name and of the goodwill that other-

wise would stem from public knowledge of the true source of

the satisfactory product.” Jd. (citing Smith v. Montoro, 648

F.2d 602, 607 (9th Cir. 1981)). Accordingly, under this theory,

by not properly designating plaintiffs as two of the co-authors

of the highly successful Fools, the Levy defendants deprived

each plaintiff of an opportunity to develop a reputation as a

successful songwriter. See Montoro, 648 F.2d at 607 (plain-

tiff-actor whose name was removed from all credits and

advertising of a film and replaced by another actor’s could

maintain a claim of reverse palming off because accurately

crediting actors for films in which they have appeared “would

seem to be of critical importance in enabling [them] to sell

their services.’’)!°

However, in order to establish that they are entitled to dam-

ages for the Levy defendants’ “reverse palming off,” plaintiffs

must establish “the potential for a competitive or commercial

injury.” Berni v. Int'l Gourmet Restaurants, Inc., 838 F.2d

642, 648 (2d Cir. 1988). Such potential for injury goes

beyond a plaintiff’s mere subjective belief that damage has

occurred. Instead, a plaintiff must demonstrate the existence

of a reasonable interest to be protected. PPX I, 746 F.2d

and which bears little resemblance to the facts of this case. Follett v.

Arbor House Pub. Co., 208 U.S.P.Q. 597 (S.D.N.Y. 1980); (exaggeration

of the now famous plaintiff’s role in creating work), Benson v. Paul Win-

ley Record Sales Corp., 452 F. Supp. 516 (S.D.N.Y. 1978) (same);

Gilliam v. Am. Broadcasting Cos., 538 F.2d 14 (2d Cir. 1976) (attribution

of a substantially altered work to its original creator.) These cases are

inapposite because the current case does not involve the selling of a good

or service of the defendant’s own creation under the name or mark of a

more popular competitor.

10 Apparently, in addition to the above argument, plaintiffs also

assert that the Levy defendants falsely represented that they haa per-

mission to publish and record Fools. As indicated above, notwithstanding

the Levy defendants failure to account for the royalties received from

Fools, plaintiffs clearly intended that the Levy defendants release and

market Fools. Therefore, we need not address whether such a claim of

false representation of permission to publish and record a song consti-

tutes a violation of the Lanham Act.

m4 37a

at 125. Without reaching the question of whether plaintiffs

could meet the standard of specificity for proving the quan-

tum of damages under the Lanham Act, plaintiffs failed to

submit sufficient evidence to meet the more forgiving stan-

dard of establishing the existence of a reasonable interest to

be protected.

Plaintiffs’ assertions that they lost Opportunities that

included, inter alia, writing songs for other contemporary

artists, were entirely unsupported by the record. Although the

testimony and evidence indicated that plaintiffs had written

other songs performed by The Teenagers, there was no evi-

dence that either plaintiff attempted to write songs for other

performers. In addition, there was no evidence that the roy-

alties to which plaintiffs claim entitlement were in any way

diminished by the misdesignation of Fools’ origin. Cf. Rosen-

feld, 728 F. Supp. at 243 (beneficial owners of copyright lost

potential royalties each time a purchaser bought defendants’

book.) Moreover, plaintiffs adduced no evidence to indicate

that the Levy defendants actions diminished their ability to

sell their “services.” Cf. Montoro, 648 F.2d at 607. To the

contrary, the evidence at trial demonstrated that plaintiffs’

careers have been significantly enhanced by their association

with Fools.

We note further that plaintiffs’ position that the Lanham

Act covers circumstances where an author has not been prop-

erly credited for his authorship role would simply transform

virtually every copyright action into a Lanham Act action as

well. Here, plaintiffs have an action under copyright law that

fully encompasses the injury that they have proven. Accord

Shaw v. Lindheim, 919 F.2d 1353, 1363 (9th Cir. 1990)

(declining to expand scope of Lanham Act to cases in which

plaintiffs have failed to prove that they suffered injury to any

interest protected by Section 43(a).

Finally, plaintiffs premise their cause of action for common

law unfair competition on the same rationale as their Lanham

Act claim. Plaintiffs Mem. in Support at p.12. Since the ele-

ments of a cause of action for unfair competition under New

York law are essentially the same as the elements of false des-

38a

ignation of origin under the Lanham Act, see Perfect Fit

Indus. Inc. v. Acme Quilting Co., 484 F. Supp. 643, 646

(S.D.N.Y. 1979), aff’d in part and rev'd in part, 618 F.2d 950

(2d Cir. 1980), judgment on the Lanham Act and common law

unfair competition claims should be entered in favor of the

Levy defendants.

The Levy Defendants Rule 50 Motion for Judgment as a

Matter of Law

A court may grant a motion for judgment as a matter of

law, under Fed. R. Civ. P. 50", where the evidence, viewed

most favorably to the party who secured the jury verdict, does

not provide a legally sufficient basis to support a verdict in

that party’s favor. Samuels v. Health and Hosps. Corp., 591

F.2d 195 (2d Cir. 1979); Lederle Labs., 785 F. Supp. at 1125;

5A James W. Moore et al, Moore’s Federal Practice 9 50.07[2]

(1993) (“Moore’s”). Unlike in a motion for a new trial, the

trial court cannot assess the weight of the evidence, pass on

the credibility of the witnesses, or substitute its judgment for

that of the jury. Rather, after drawing all reasonable infer-

ences in favor of the non-moving party, judgment as a matter

of law after the verdict should be granted only when

(1) there is such a complete absence of evidence sup-

porting the verdict that the jury’s findings could only

have been the result of sheer surmise and conjecture or

(2) there is such an overwhelming amount of evidence in

favor of the movant that reasonable and fairminded men

could not arrive at a verdict against him.

" Rule 5o was amended in 1991 to abandon the formal differences

between motions made under prior subsection (a), denominated as a

directed verdict, and (b), denominated as judgment notwithstanding the

verdict (“JNOV”). Under the 1991 Amendment to Rule 50 a motion made

under either subsection is properly termed a motion for “judgment as a

matter of law.” Moore’s 150.01-1. The amended rule carries forward the

substance and procedure of the predecessor rule while employing the new

terminology. Therefore, the traditional standards governing a Rule 50

motion are essentially left unchanged. Jones v. Lederle Labs., Div. of Am.

Cyanamid Co., 785 F. Supp. 1123, 1125 (E.D.N.Y.), aff'd, 982 F.2d 63

(1992); Moore’s 4 50.01-1.

39a

W.W.W. Pharmaceutical Co. v. Gillette Co., 984 F.2d 567 (2d

Cir. 1993); see also Fiacco v. City of Rensselaer, 783 F.2d

319, 329 (2d Cir. 1986), cert. denied, 480 U.S. 922 (1987):

Lederle Labs., 785 F. Supp. at 1125.

In support of their Rule 50 motion, the Levy Defendants

advance essentially three arguments, each assuming arguendo

that duress is a cognizable toll to the copyright law’s statute

of limitations. Specifically, the Levy defendants maintain that

(a) the duress toll is limited to circumstances “in which duress

[is] an element of the claim in suit,” (b) the threats which

form the basis of the duress must be directed toward pre-

venting the filing of a lawsuit and (c) the evidence does not

reasonably support the jury’s finding that the plaintiffs’ fear

did not dissipate until December 14, 1987.'?

We address the Levy defendants’ first point, namely that

because proof of plaintiffs’ underlying claim to copyright

ownership does not entail evidence of duress, the toll is not

cognizable. Judge Broderick noted in his April 15 Order that,

under New York law, duress is available to toll a statute of

limitations only where duress is part of the gravamen of a

plaintiff’s claim. Jd. at 11 (citing Cullen v. Margiotta, 811

2 At the outset, the Levy Defendants argue that the copyright laws

do not recognize a duress toll to the statute of limitations. Since, as dis-

cussed below, we grant the Levy defendants’ Rule 50 motion in part, on

other grounds, we need not reach the issue of whether in any circum-

stance, duress may toll the copyright statute of limitations. However, we

note that Judge Broderick, in his April 15 Order, held “that under the

facts of this case, the recognition of a toll for duress would be consistent

with the purposes of the Copyright Act and the duress toll which should

be utilized is that provided under the law of this court’s forum state, New

York.” April 15 Order at 11; Cf. Donahue v. Pendleton Wooler Mills.

Inc., 633 F. Supp. 1423, 1442 (S.D.N.Y. 1986) (acknowledging that

duress toll may have a role, albeit a narrow one, in antitrust actions.) But

cf. Center Cadillac, Inc. v. Bank Leumi Trust Co., 808 F. Supp. 213, 225

n.2 (S.D.N.Y. 1992) (holding that duress toll to statute of limitations

under state law had no application to federal RICO statute of limitations).

In any event, it is doubtful that we could revisit Judge Broderick’s ear-

lier ruling. See Wright v. Cayan, 817 F.2d 999, 1002 n.3 (2d Cir.), cert.

denied, 484 U.S. 853 (1987) (reiterating that law of the case doctrine dic-

tates a general practice of refusing to reopen issues in cases that have

already been decided).

40a

F.2d 698, 722 (2d Cir.), cert. denied, 483 U.S. 1021 (1987));

see also Day v. Moscow, 955 F.2d 807, 812 (2d Cir.), cert.

denied, 121 L. Ed.2d 37 (1992); Jastrzebski v. New York, 423

F. Supp. 669, 673 (S.D.N.Y. 1976) (noting that under New

York law duress must be part of conduct for which plaintiff is

seekiny recovery.) In order to be sufficiently connected to the

underlying claim, the duress experienced by the injured party

must have been operating at the time the original cause of

action arose and must be continuous. See Cullen, 811 F.2d at

722 (plaintiffs who made payments to defendant-employers’

political party under duress could similarly feel forced to

restrain from filing suit until duress dissipated); Pacchiana v.

Pacchiana, 94 A.D.2d 721, 462 N.Y.S. 2d 256 (2d Dept.

1983) (statute of limitations in action to invalidate antenup-

tial agreement entered into under duress could be tolled for

period of time that duress operated). Cf. Baratta v. Kozlowski,

94 A.D.2d 454, 464 N.Y.S.2d 803 (2d Dept. 1983) (death

threats aimed at preventing lawsuit occurred after underlying

claim for conversion accrued).

Notwithstanding Judge Broderick’s ruling that a factual

question existed as to whether Goldner or the Levy defen-

dants acquired the Fools copyright, in the context of a rela-

_tionship characterized by a continuous pattern of duress

exerted on plaintiffs, plaintiffs did not establish that, during

the early relationship between the parties, either Goldner or

Levy exercised dominion over either plaintiff’s mind or in

any other manner deprived them of their freedom of will. See

Int'l Railways of Cent. Am. v. United Fruit Co., 254 F. Supp.

233 (S.D.N.Y. 1966), aff’d in part and rev'd in part, 373 F.2d

408 (2d Cir.), cert. denied, 387 U.S. 921 (1967). Although the

jury found that Goldner and Levy defrauded the plaintiffs of

their ownership in the Fools copyright and deliberately con-

cealed the accrual of royalties, there was no evidence of

coercion with respect to these activities. To the contrary,

the testimony indicated that Santiago, Lymon and their

guardians voluntarily signed what they believed to be a valid

Standard Form Songwriters Contract. Furthermore, plaintiffs

approached Levy several times to ask for money prior to

1969, the first threat, as testified to by Santiago, and twelve

4la

years after the Fools copyright was filed. Such conduct

demonstrate a willingness, at this early stage, to confront

Levy, at least with requests for additional money.

Moreover, plaintiffs’ belief that Levy had ties to organized

crime is on its own insufficient to support their claim for a

tolling of the statute of limitations. Although their belief had

been formed around the time they first met Levy in 1957,

plaintiffs could not point to a single threat or other action by

the Levy defendants prior to 1969 directed at the plaintiffs

that could have caused them to be fearful of maintaining their

legal interest in Fools. Cf. Jastrzebski, 423 F. Supp. at 674

(anticipated duress does not give rise to duress toll); Pahlavi

v. Palandjian, 809 F.2d 938, 942 (Ist Cir. 1987) (same).

Based on the foregoing, plaintiffs failed to prove that they

were motivated by fear of either Goldner or the Levy defen-

dants continuously from the time their cause of action

accruec.. Without proof that the relationship between the par-

ties was characterized throughout by a continuing pattern of

duress, plaintiffs’ ciaim that they are entitled to a tolling of

the statute of limitations fails as a matter of law.'?

In the event that a reviewing court disagrees with our find-

ing that duress must constitute an integral part of the under-

lying cause of action in order to justify a toll of the statute of

limitations, we examine the Levy defendants third argument

- The Levy defendants second position that the threats involved

must be directed specifically at the filing of a law suit is against the great

weight of authority. See, e.g., Pacchiana vy. Pacchiana, 94 A.D.2d at

721, 462 N.Y.S. 2d at 256; Cullen, 811 F.2d at 722; Jastrzebski, 423 F.

Supp. at 673-674 (citing Kamenitsky v. Corcoran, 97 Misc. 384. 16]

N.Y.S. 756 (1st Dept. 1916), rev’d on other grounds, 177 A.D. 605, 164

N.Y.S. 297 (1st Dept. 1917)). See also Pahlavi, 809 F.2d at 94] (noting

that claim would have been Strengthened if threat had been explicitly

aimed at preventing a lawsuit) (citing Jastrzebski). Instead the logic of

these cases suggests that a person induced or coerced by fear to take a

certain action is unlikely to feel free to bring suit until that fear subsides

regardless of whether the coercion is directed explicitly at the filing of

a lawsuit. Cullen, 811 F.2d at 723. Therefore, the Levy defendants argu-

ment that the coercive action must be specifically aimed at the preven-

tion of filing a lawsuit adds an element to the duress toll unsupported by

the case law.

42a

that the evidence does not reasonably support the jury’s find-

ing that the plaintiffs’ fear did not dissipate until December

14, 1987. As soon as plaintiffs’ “compulsion through fear

cease[s],” they are no longer entitled to a toll for duress.

Cullen, 811 F.2d at 722. Despite the jury’s finding that the

plaintiffs’ fear reasonably lasted until December 14, 1984, the

evidence adduced at trial does not support a finding that

the plaintiffs fear lasted beyond the time they first agreed to

take part in a legal action against Levy.

By the late 1970’s and early 1980’s plaintiffs were publicly

acknowledging that Levy had bilked them out of their royal-

ties from Fools. During this time, the plaintiffs enlisted the

services of several people, including two attorneys, who

either attempted to collect copyright royalties from Levy or

accessed plaintiffs’ legal claim to royalties. Furthermore,

plaintiffs testified that they entered into an agreement in 1984

with Emira Lymon to testify on her behalf in her lawsuit

against Levy, claiming that Frank Lymon was the sole owner

of the Fools copyright. Plaintiffs testified that in return for

their testimony Emira Lymon agreed to give them each a one-

third ownership share of the Fools copyright.

In the face of such a persistent effort to vindicate their

rights to royalties in Fools, plaintiffs’ distinction between the

asking for money, a request which Levy could simply refuse,

and the taking of action which would legally and involun-

tarily deprive Levy of money cannot be deemed reasonable.

Their agreement to join Emira Lymon’s lawsuit, albeit not as

named plaintiffs, would entail their potentially giving testi-

mony in open court about the events which underlie the cur-

rent lawsuit. At that point, plaintiffs were represented by

counsel and were fully aware of the potential consequences of

their testimony. Thus, it was unreasonable for plaintiffs to

maintain what had become a purely semantic distinction

between their asking for money and their invoking the legal

process to obtain it.

Therefore, we hold, alternatively, that the jury’s finding

that plaintiffs’ reasonable fear lasted until December 1984 is

against the overwhelming weight of the evidence. As a result,

the answers to Special Verdict Questions 16, 19 are set aside

43a

and plaintiffs may only pursue those damages which accrued

within three years of this lawsuit.

Equitable Doctrines of Repose: Laches and Equitable

Estoppel Laches

In order to prevail on a laches defense, the Levy defendants

‘must demonstrate that plaintiffs, in asserting their rights, were

guilty of unreasonable delay and that the delay prejudiced the

defendants.'* See Stone v Williams, 873 F.2d 620, 623 (2d Cir.

1989) (“Stone I’) (citing Gardner v. Panama Railroad Co.,

342 U.S. 29, 31 (1951)). While statutes of limitations and

laches promote similar values of repose, the latter’s dual

inquiry involves a balancing of the equitable circumstances of

each case rather than the former’s more mechanical applica-

tion of a time bar within which suit must be instituted. Jd. at

623-625. Consistent with this balancing, defendants must

have suffered some amount of prejudice to successfully

invoke laches, even if plaintiffs have a weak or no excuse for

their delay. Jd. at 625. Relevant factors in assessing prejudice

include the decreased ability of the defendants to vindicate

themselves, on account of the death of witnesses or fading

memories and stale evidence, as well as the prejudice that

may result from a change in the defendant’s position. /d.

Counterbalancing these factors is the defendant’s culpability

in creating the circumstances causing the prejudice. Stone v.

Williams, 891 F.2d 401, 405 (2d Cir. 1989) (“Stone II”).

In Stone II, the Second Circuit reconsidered its affirmance

of a grant of summary judgment on the grounds of laches and

- The parties tried to the Court the issue of whether the doctrine

of laches barred plaintiffs’ claim for relief. However, when a jury has

decided a factual issue, its determination has the effect of precluding the

court from deciding the same fact issue in a different way. Sorlucco v.

New York City Police Dept., 971 F.2d 864, 873 (2d Cir. 1992): Wade v.

Orange County Sheriff's Office, 844 F.2d 951, 954 (2d Cir. 1988).

Grounded in the Seventh Amendment, this rule furthers the integrity of

the judicial process by promoting consistent determinations of any par-

ticular question. Wade, 844 F.2d at 954 (citations omitted). Accordingly,

in determining the applicability of the laches defense, we defer to the

jury’s findings, when relevant and if supported by the evidence.

44a

held that the defendant’s egregious conduct, undiscovered

at the time of the first ruling, tipped the balance of equities

in the plaintiff’s favor. /d. at 404-405. The plaintiff, a non-

marital child of the late country western singer Hank

Williams, brought a lawsuit asserting a claim for a share of

her father’s copyrights almost twelve years after reaching the

age of majority. Jd. at 404. Without reexamining the trial

court’s finding of inexcusable delay, the court held that the

defendants’ knowing participation in a conspiracy to defraud

the plaintiff of her copyright interest precluded the defen-

dant’s assertion of prejudice. Jd. at 405.

Relying on traditional equitable principles, id. at 404 (“one

who seeks Equity’s assistance must stand before the court

with clean hands”) (citation omitted), and on the principle

that the defendant’s could not fairly rely on a delay caused in

part by their own actions, the court held that allowing laches

to apply when defendants had acted in such an “unworthy

manner” would grant them a windfall. /d. at 405. In addition,

the court noted that the defendants could have avoided any

prejudice by seeking a court declaration of their rights vis-a-

vis the plaintiff. Jd.

Similarly, the Levy defendants cannot fairly plead prejudice

from the passage of time and the death and disappearance of

key witnesses in light of their conduct toward plaintiffs.

Focusing first on the years from 1961-1969, beginning with

plaintiffs’ reaching majority and ending with Levy’s threat to

Santiago,'> the Levy defendants argue that plaintiffs’ rights

were cut off during this period because plaintiffs’ delay pur-

suing their rights was inexcusable and the prejudice to the

iS Notwithstanding our discussion in n.14 that we are bound by the

jury’s factual findings in this case, we express serious reservations about

the truthfulness of Santiago’s testimony concerning Levy’s threat.

Despite several occasions during the course of this litigation when tes-

timony about this threat would have been useful, Santiago failed to tes-

tify until trial about this event. Considering the importance of the duress

toll to plaintiff’s case and the abject fear he felt following the threat, we

find it inconceivable that he forgot to mention the incident or that his

attorney counseled him not to mention it. However, we are satisfied that

the doctrine of laches would not apply even in the absence of this threat

in 1969.

45a

defendants was manifest. However, the jury’s finding that

Goldner and Levy had fraudulently concealed from plaintiffs

the accrual of royalties from Fools for a period of approxi-

mately six years underlines the defendants’ claim of preju-

dice. Considering also the jury’s finding that plaintiffs’

co-wrote Fools and the testimony that Santiago signed a song-

writer’s contract, a ruling barring plaintiffs’ claims would

allow the Levy defendants to profit from their untoward

actions. Under the rationale of Stone //, a court sitting in

equity should not countenance such a result.

Turning to the period of time between 1969 and 1984, we

find that the equitable principles discussed above apply with

equal force. As noted earlier, the jury found that threatened

plaintiffs on two occasions, in 1969 and again in 1977, and

that plaintiffs, due to their reasonable fear that these threats

would be carried out, delayed until 1987 the filing of their

suit. By virtue of the jury’s finding of Levy’s egregious con-

duct, the Levy defendants cannot now complain of the prej-

udice they would suffer due to their efforts to exploit Fools

and to the loss of witnesses and business records.

In sum, the Levy defendants knew from the late 1950’s the

circumstances under which the Fools copyright was obtained

and attempted until Levy’s death either to conceal these facts,

see Deposition of Morris Levy p. 82 (stating that Levy was a

co-author of Fools), or to coerce plaintiffs into abandoning

their rights. These actions tip the balance of equities in plain-

tiffs’ favor and relieve plaintiffs from the defense of laches.

Equitable Estoppel

The issue of equitable estoppel was withheld from the jury

because the Levy defendants did not offer sufficient evidence

to meet the elements of the defense. In order to prevail on the

defense of equitable estoppel the defendant must have been

misled into reasonably and justifiably believing that the plain-

tiff would not pursue his claims against the defendant. Glus

v. Brooklyn Eastern Dist. Terminal, 359 U.S. 231, 234 (1959):

Mikinberg v. Baltic S.S. Co., 988 F.2d 327, __, 1993 US.

App. LEXIS 4404, *9-10 (2d Cir. 1993); Travellers Int'l

46a

AG vy. Trans World Airlines, Inc., 722 F. Supp. 1087, 1098

(S.D.N.Y. 1989). In the context of a copyright action the

plaintiff-copyright holder’s rights may be destroyed if the

defendant shows that: a) the plaintiff knew of the defendant’s

wrongful conduct; b) the plaintiff intended that his conduct be

acted upon or acted in a way that the defendant had a right to

believe it was so intended; c) the defendant was ignorant of

the true facts; and d) the defendant relied on plaintiff's con-

duct to his detriment. Basic Books, Inc. v. Kinko’s Graphics

Corp., 758 F. Supp. 1522, 1539-1540 (S.D.N.Y. 1991). See

Lottie Joplin Thomas Trust v. Crown Publishers Inc., 456 F.

Supp. 531 (S.D.N.Y. 1977), aff’d, 592 F.2d 651 (2d Cir.

1978); Hampton v. Paramount Pictures Corp, 279 F.2d 100,

104 (9th Cir.), cert. denied, 364 U.S. 555 (1960). See also 3

Nimmer, § 13.07 at 13-133 n.2 (noting that the defense of

estoppel may sometimes be asserted in a contract action for

royalties.)

At trial, the Levy defendants offered no evidence that the

plaintiffs acted in a manner which justified a belief on the

part of defendants that their copyright was free from chal-

lenge. Although in some instances, silence and inaction may

induce justifiable reliance on the part of the defendant, those

circumstances are not present when the defendant is in a posi-

tion to ascertain the extent of the competing claim. Hampton,

279 F.2d at 105. See also 3 Nimmer, § 13.07 (acknowledging

that such acts of omission rarely satisfy elements of estoppel.)

In the instant case, not only did Goldner and Levy know of

the plaintiffs’ claim to ownership of the Fools copyright and

attempt to conceal the accrual of royalties from them, but

Levy also, in part, caused the plaintiffs’ silence and inaction.

Cf. Stone II, 891 F.2d 401, 404, (“one who seeks Equity’s

assistance must stand before the court with clean hands”)

(citation omitted). Applying the jury’s findings to the estop-

pel claim it is clear that whatever change in position under-

taken by Levy in reliance on the plaintiffs’ inaction was

unwarranted. Therefore, the Levy defendants’ motion for

judgment on the grounds of equitable estoppel is denied.

47a

The Evidentiary Issues

In support of their motion for a new trial, the Levy defen-

dants renew their objections to the admission of two cate-

gories of evidence that reached the jury: 1) the so-called “raft

of ‘Mafia’ evidence”, and 2) the testimony of Herbert Cox

stating that Goldner had put his name on the copyrights of

songs written by Cox’s group, The Cleftones, that Goldner

had not authored.

With respect to the “raft of Mafia” evidence, the Levy

defendants point in particular to plaintiff Merchant’s testi-

mony concerning a 1981 Village Voice article which included

references to Levy’s reputed “Mafia” connections. Defendants

advance two arguments as to why this evidence was in-

admissible. First, defendants assert that the evidence was

hearsay and not within a recognized exception. Second,

defendants rely on their offer to stipulate that any actual

reliance on Levy’s threats would be deemed objectively

reasonable rendered this evidence irrelevant under Fed. R.

Evid. 401. Addressing each point in turn and without adopt-

ing the defendants’ characterization of this evidence, we find

that neither argument has merit nor, if error, would warrant a

new trial.

In the first instance, Merchant testified that he had read the

article at the time it was published and that it confirmed for

him Levy’s reputation as a “gangster”. This evidence was

introduced to explain Merchant’s fear of filing a lawsuit

against Levy. See, e.g., United States v. Delia, 944 F.2d 1010

(2d Cir. 1991) (witness’s belief that defendant had ties to

organized crime was basis of inference that she acted in

accordance with that fear). Upon defendants’ counsel’s

request, on two occasions the Court gave a limiting instruc-

tion explaining to the jury that this type of evidence was only

admissible to explore the plaintiff’s state of mind and could

not be considered for its truth. Tr. 218, 221. Furthermore, the

Court excluded evidence of Levy’s criminal activities that

were unknown to plaintiffs during the period which the duress

was operative. Therefore, admitted on this basis and with con-

temporaneous limiting instructions, the evidence of Levy’s

48a

ties to organized crime does not constitute hearsay under Fed.

R. Evid. 801, and was not erroneously admitted.

Second, while we disagree with defendants’ assertion that

the challenged evidence was prejudicial, see United States v.

Gilliam, 1993 U.S. App. LEXIS 13073, *8 (2d Cir. June 2,

1993) (“evidence is prejudicial only when it tends to have

some adverse effect upon a defendant beyond tending to

prove the fact or issue that justified its admission into evi-

dence”) (citation omitted), because a stipulation may not pro-

vide a jury with a basis for evaluating probative force, the

admission of potentially prejudicial evidence with probative

value may be proper even though the party against whom it is

offered is willing to stipulate to the proposition for which the

evidence was offered. United States v. Valentine, 644 F. Supp.

818, 822-23 (S.D.N.Y. 1986); 1 Jack B. Weinstein & Margaret

A. Berger, Weinstein’s Evidence 94 403[3] (1992 & Supp.

1993) ¢hereinafter “Weinstein”); cf. Gilliam, 1993 U.S. App.

13073, *14 (where potentialiy prejudicial evidence directly

establishes an element in the case, defendant may not stipu-

late to that element in order to bar that evidence). Indeed, as

a general rule, a party is not required to accept a judicial

admission of his adversary but may insist on proving the fact

in order to present to the jury a picture of the events relied

upon. To substitute for such a picture a naked admission

might have the effect of eliminating from the evidence much

of its fair and legitimate weight. Weinstein § 403[3]; Parr v.

United States, 255 F.2d 86 (Sth Cir.), cert. denied, 358 U.S.

824 (1958). In the current case, plaintiffs’ state of mind was

relevant and probative to the issue, under the duress toll and

under the doctrines of laches and equitable estoppel, of

whether their fear was reasonable. Without evidence of the

Levy’s reputation as it was known to plaintiffs, Merchant and

Santiago would have been severely hampered in attempting to

explain their motivation for avoiding a legal confrontation

with Levy until 1987.

Addressing Herbert Cox’s testimony that Goldner’s or one

of his employee’s names appeared on copyrights for songs

written solely by Cox’s group, The Cleftones, the Levy defen-

dants argue that Fed. R. Evid. 404 precludes this evidence

49a

from reaching the jury. The Levy defendants maintain that

this evidence “painted defendants as music industry thieves”

for the sole purpose of showing that defendants acted in con-

formity with such a characterization when dealing with plain-

tiffs. Defendants’ Mem. at 27. However, defendant’s reliance

on Rule 404(b) is misplaced. Evidence that aids the trier of

fact in determining the probative value of other relevant

evidence is itself relevant even if the proffered evidence itself

does not relate to a consequential fact. See Weinstein

91 401[05].

Cox testified to eight or nine instances of either Goldner or

Henry Glover, an employee of Gee, listing their names on a

Without commenting on whether this activity constituted theft

or any other “bad act” as encompassed by Fed. R. Evid.

404(b), we note that this testimony directly refutes the Levy

defendants’ position that Goldner’s listing as an author on the

Fools copyright entitles him to a presumption of authorship.

Even upon reflection, we adhere to our original conclusion

that Cox’s testimony was relevant, highly probative and not

introduced as evidence of Goldner’s character. Therefore, this

evidence was properly put before the jury.

CONCLUSION

In conclusion, considering the ample evidence adduced at

trial concerning the authorship of Fools, and my review of the

evidentiary rulings discussed above, I deny the Levy defen-

dants’ motion for a new trial. However, in light of the total

absence of evidence indicating that the Levy defendants

acquired the Fools copyright by duress, I find that the duress

later exercised by Levy on plaintiffs was not integrally related

to plaintiffs’ cause of action. Therefore, I grant the defen-

dants’ motion for judgment as a matter of law on the issue of

the duress toll to the statute of limitations thus limiting recov-

ery to damages that accrued within three years of the filing of

the lawsuit. Furthermore, I grant judgment in favor of the

Levy defendants for copyright infringement and unfair com-

50a

petition claims arising under both the Lanham Act and com-

mon law. In addition, I deny the Levy defendants’ motions for

judgment based on the equitable doctrines of laches and

estoppel. Finally, plaintiffs’ cross motions for a judgment as

a matter of law on the issue of fraudulent concealment and for

judgment that each plaintiff be granted a one-third share of

the Fools copyright are denied in their entirety.

IT Is SO ORDERED.

DATED: New York, New York

July 22, 1993

/s/ NAOMI REICE BUCH WALD

NAOMI REICE BUCHWALD

UNITED STATES MAGISTRATE JUDGE

Copies of the foregoing Memorandum and Order have been

mailed on this date to the following:

Carl E. Person, Esq.

250 West 57th Street, Suite 529

New York, New York 10107-0100

Ira G. Greenberg, Esq.

Edwards & Angell

750 Lexington Avenue, 12th Floor

New York, New York 10022

Alan L. Shulman, Esq.

Silverman & Shulman, P.C.

136 East 57th Street

New York, New York 10022

Sla

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

87 Civ. 7199 (VLB)

Filed April 16, 1992

JIMMY MERCHANT and HERMAN SANTIAGO,

Plaintiffs,

—against—

EMIRA LYMON, as widow and Administratrix of the Estate of

FRANK LYMON, Morris LEvy, BIG SEVEN MUuSIc Corp.

and ROULETTE RECORDS, INC.

Defendants.

MEMORANDUM ORDER

VINCENT L. BRODERICK, U.S.D_J.

This is an action seeking ownership of the copyright for the

hit song “Why Do Fools Fall in Love” (“Fools”) in which

defendants have moved for summary judgment on plaintiffs’

claims for a declaratory judgment of copyright ownership and

validity and for copyright infringement.

On February 5, 1992, I heard oral argument on defendants’

motions for summary judgment, granted the summary judg-

ment motion of former defendant Broadcast Music Inc. and

reserved decision on the motions made by the remaining

52a

defendants. This Memorandum Order reflects the decision of

those motions.

The Teenagers were a singing group which was formed in

1955. The original members of the group were plaintiffs

Jimmy Merchant and Herman Santiago and two persons

who are now deceased, Joe Negroni and Sherman Garnes.

Plaintiffs claim that they jointly wrote Fools in 1955 while

members of the Teenagers and that after the song was written,

defendant Emira Lymon’s decedent Frankie Lymon joined the

Teenagers and made a number of changes to the song. Thus,

plaintiffs assert, Fools was written by Jimmy Merchant, Her-

man Santiago and Frankie Lymon.

Fools, in 1955, was recorded for Gee Records, which was

owned by George Goldner, now deceased, and published by

Patricia Music which was also owned by Goldner. At the time

the song was written Frankie Lymon was apparently twelve

years old and plaintiffs were both fifteen. Plaintiffs assert that

Goldner told them that there could only be two authors listed

for the record and presented a contract for roya!ties to plain-

tiffs. This contract, which was signed by Goldner, and by

their guardians on behalf of Lymon and Santiago, described

the song as being authored by Santiago, Lymon and George

Goldner, but omitted plaintiff Merchant’s name according to

plaintiffs, Goldner told them the contract had to be written

that way. Plaintiffs also assert that Goldner did not in fact

play any role in writing the song. At least one early printing

of the record also listed as authors the three parties to the

original royalty contract, that is, plaintiff Santiago, defendant

Lymon and defendant Goldner.

Plaintiffs assert that Goldner told them that he would take

care of copyrighting the song. The song was copyrighted in

1956 and listed as authors George Goldner and Frankie

Lymon but omitted the names of plaintiffs Santiago and

Merchant. Plaintiffs claim that Goldner told them that they

would be given credit, along with Lymon, as the authors of

53a

the song, but he never registered plaintiffs’ names on the

song’s copyright. Plaintiffs also assert that the record labels

for Fools first listed Lymon and Santiago as authors. then

added Goldner’s name and later deleted Santiago’s name,

leaving only Goldner and Lymon. Piaintiffs claim that they

have never received any writers’ royalties from their author-

ship of Fools.

Fools was released in 1956 and rapidly became the number

one selling record in the United States on the popular music

charts. It continues to be a popular song today and has been

recorded by a number of other artists. Frankie Lymon left the

Teenagers in 1958 and died in 1968.

Plaintiffs reached the age of majority in 1961. At that time.

they assert, they were supposed to receive payments from a

trust fund which had been established for them. Payments

were made from the fund, but plaintiffs did not receive any

royalties from Fools at the time. Plaintiffs’ complaint asserts

that Goldner sold Patricia Music, which held the copyright for

Fools, to Morris Levy in 1964 and that the copyright was

thereafter held by Levy’s company, defendant Big Seven

Music Inc. !

Plaintiffs’ first attempt to pursue royalty payments came in

the mid 1960’s. Plaintiff Santiago testified at his deposition

that he contacted Morris Levy on several occasions beginning

in the mid 1960’s to inquire about royalty payments due to

plaintiffs from Fools but received a negative response from

Levy on each occasion.

Morris Levy was convicted in the late 1980's on federal

extortion charges and sentenced to ten years in prison. He

subsequently died. Plaintiffs assert that Levy was closely

affiliated with organized crime throughout his career in the

music industry, was connected to a number of violent inci-

dents during his career and was at once revered and greatly

feared by people in the music business. Plaintiffs claim that

The complaint asserts that defendant Roulette Records is a com-

pany which was controlled by Levy and participated with him in

the fraud allegedly perpetrated upon plaintiffs with respect to the Fools

54a

they were afraid of Levy and that this fear made them reluc-

tant to press their claims with him concerning their royalties.

Plaintiffs also claim that Levy threatened to kill Merchant in

a conversation which took place sometime after 1980 in

which Merchant pressed Levy on the royalty issue.

In 1979-1980 plaintiffs retained an attorney who searched

on Fools was owned by Lymon and Morris Levy but that

plaintiffs were not listed on the copyright. Plaintiffs also

retained an investigator to investigate the status of the copy-

right at about the same time. Plaintiffs did not take any legal

action with respect to the reports received from the lawyer

and the investigator, however.

In 1981, plaintiffs were contacted by Charles Rubin, who

worked for an organization which helped artists with claims

for royalty payments. Rubin arranged a meeting between

plaintiffs and defendant Emira Lymon who was a joint owner

meeting Merchant, Santiago and Emira Lymon agreed that

Fools had been written by Santiago, Merchant and Lymon,

and they agreed that all three would take steps to cause the

transfer of the copyright in equal shares to themselves. There

was no written record ever made of this agreement.

Rubin and Emira Lymon dispute plaintiffs’ description of

what transpired at the 1984 meeting, and assert that Rubin

called plaintiffs to the meeting to discuss their supporting

Emira Lymon’s claim to ownership of the Fools copyright.

When plaintiffs suggested to Emira Lymon that the copyright

should be split three ways, Rubin and Emira Lymon assert,

Emira Lymon said she would have to discuss it with her

lawyer.

Following the meeting, Emira Lymon filed suit against

Morris Levy and other defendants seeking full ownership

of the Fools copyright. (Lymon v. Levy 84 Civ. 7000, Brod-

erick J.). Neither Santiago nor Merchant was a party to this

suit. In 1987 Emira Lymon discharged the attorney who was

handling the suit; it was at that point, plaintiffs assert, that

they realized that Emira Lymon was not going to honor the

55a

agreement they had made to seek three-way ownership of the

Lymon stipulated to a dismissal with prejudice of her suit

against Levy and the related defendants in May of 1991.

III

The Motions of these defendants concern a number of alter-

native theories which are primarily based upon plaintiffs’ 30-

year delay in bringing this action. The facts which have been

developed thus far appear to indicate that plaintiffs’ delay in

bringing suit in this case was due to four factors: (1) plain-

tiffs’ lack of sophistication about the music business, includ-

ing the fact that plaintiffs were 15 at the time they recorded

Fools and both had a limited education: (2) fraud perpetrated

against the plaintiffs by George Goldner, Morris Levy and

their affiliates concerning the ownership of the Fools copy-

right; (3) fear that pressing their claims could result in vio-

lence from Morris Levy; and, (4) the fact that plaintiffs, even

taking into account all of the above factors, clearly slept on

their rights. The difficult issue in these motions is the degree

to which each of these factors played a part in plaintiffs’ long

delay in bringing suit and the weight each factor should be

given in determining these motions.

Defendants would be entitled to summary judgment in this

action only if “there is no genuine issue as to any material

factand. . . the moving party is entitled to judgment as a

matter of law” Fed. Rule of Civil Procedure 56(c); Anderson

v. Liberty Lobby Inc. 477 U.S. 242, 248 (1986).

Statute of Limitations

Defendants argue that plaintiffs’ copyright claims should be

dismissed because plaintiffs’ suit was commenced after the

statute of limitations on these claims had run. The statute of

limitations for actions arising under the copyright laws is

three years after the time a cause of action accrues. 17 U.S.C.

§ 507(b). Plaintiffs have asserted two copyright claims, for a

declaratory judgment and for copyright infringement, and

56a

have apparently attempted to argue that with respect to the

second of these claims, the statute of limitations did not begin

to run until defendants’ last infringing act occurred.

Plaintiffs’ complaint, however, does not properly state a

cause of action for copyright infringement—plaintiffs have

never been the registered owners of the copyright. Rather, the

complaint seeks to try title to the copyright and to cause own-

ership of the copyright to be transferred to plaintiffs’ names.

As such, I hold that the three year statute of limitations pro-

vided in 17 U.S.C. § 507(b) is applicable to both of plaintiffs’

claims and that these claims did not accrue until plaintiffs

knew or had reason to know of the injury that is the basis of

this action. See Stone v. Williams 766 F. Supp. 158, 164-165

(S.D.N.Y. 1991); Cullen v. Margiotta 811 F. 2d 698, 725 (2nd

Cir. 1987), cert. den. 483 U.S. 1021. Defendants apparently

concede, and I agree, that the inquiry as to when plaintiffs’

tiffs reached the age of twenty one in 1961 rather than at the

time the Fools copyright was registered in 1956, when plain-

tiffs were both sixteen years old.”

I shall first direct my attention to the motions of Morris

Levy, Big Seven Music Corp. and Roulette Records, Inc.,

(hereafter, the “Levy defendants”).

1. Fraudulent concealment.

With respect to the Levy defendants inquiry must be made

into whether or not the doctrine of fraudulent concealment

- Even assuming, however, that defendants do not concede this

point, I find that the imposition of a toll for infancy in this case would be

consistent with the purposes of the Copyright Act and that the appro-

priate toll which should be applied is the toll provided by this court’s

forum state, New York. The infancy toll applicable in New York during

the period between 1956 and 1961 would have tolled this action until!

plaintiffs had reached the age of twenty one. See New York Civil Prac-

tice Law and Rules §§ 105(j), 208.

57a

tolled the running of the statute of limitations. Under this doc-

trine, “read into every federal statute of limitations. . . is the

equitable doctrine that in case of defendant’s fraud or delib-

erate concealment of material facts relating to his wrongdo-

ing, time does not begin to run until plaintiff discovers or by

reasonable diligence could have discovered, the basis of the

lawsuit.” Barrett v. United States 689 F. 2d 324, 327 (2nd Cir.

1982), cert. den. 462 U.S. 1131.

There are genuine issues of material fact as to whether or

not George Goldner, Morris Levy and their affiliates delib-

erately concealed from plaintiffs the existence of plaintiffs’

cause of action and deliberately diverted the Fools’ royalties

to themselves at plaintiffs’ expense. There is also a factual

issue as to whether or not, plaintiffs knew, or through

the exercise of reasonable diligence could have known, that

they were being swindled. Thus plaintiff Herman Santiago

described how, at age fifteen, he was told by George Goldner

that for space reasons his name could not be printed on the

Fools recording:

I did not understand the significance of what he was

doing at the time. I knew how to compose lyrics and

melodies, and how to sing, but I did not know about

the business of music, especially the dishonest way it

was being practiced at the time by George Goldner

and later by Morris Levy and his related companies. . .

Mr. Goldner said that Jimmy Merchant (whose name was

left off the contract) would be given credit (with Lymon

and myself) as writers of Fools, but this obviously was

never done. We didn’t know anything about copyrights

or copyright practices and Goldner never mentioned this

to anyone, except that he would take care of it for us. See

Affidavit of Herman Santiago, 94 8-9.

As noted supra, Goldner proceeded to register himself as a

half-owner of the Fools copyright, although the record in this

case contains no evidence and defendants have not even

attempted to assert that Goldner had anything to do with writ-

ing the song. Thus plaintiffs have presented a factual issue as

58a

to whether or not there was a delay in the accrual of their

limitations with respect to those claims was tolled by the

fraudulent concealment of Goldner, Levy and their related

companies for some period of time subsequent to 1961.

Plaintiffs did, however, discover that they had a viable

cause of action well before they brought suit in 1987. By

1979-1980 they had hired both an attorney and an investiga-

tor to determine the status of the Fools copyright. Their attor-

ney at the time—seven years prior to the institution of this

action—reported to plaintiffs that they had no registered

interest in the copyright. Plaintiffs had never received any

royalties from the song in the 19 year period between 1961

and 1980, and from this they should have been able to infer

that no interest of theirs in the copyright of Fools was on the

registry at the Copyright Office. This should have suggested

to them, certainly by 1980, that they had a viable cause of

action.

Plaintiffs assert that they asked Morris Levy for their roy-

alties on more than one occasion but were told they were not

owed anything. Plaintiff Santiago testified by deposition that

he visited Morris Levy in an attempt to obtain Fools royalties

on 3 or 4 occasions between the mid 1960’s and 1984:

At different times, I went with Sherman Garnes to see if

there was any money there, and Levy said there was

nothing there for us to get out of there, get away from

there. . . I went back there again, because I felt that

there was some money there for us, because every time

we turned around, our records were playing on the air so

I felt that something had to give. Santiago Dep. at 32,

Defendants’ Motion for Summary Judgment, Ex. B.

Thus under federal accrual principles or the fraudulent con-

cealment doctrine, plaintiffs cannot claim that they were

unaware of their copyright claims or that they were reason-

ably diligent during the period from 1961 to 1987 in attempt-

ing to discover whether or not they had a cause of action.

At most, plaintiffs could attempt to invoke the fraudulent

59a

concealment doctrine to toll the statute of limitations only

until 1980.3

2. Duress

A second doctrine which may have tolled the statute of lim-

itations with respect to plaintiffs’ claims against the Levy

defendants was duress. Neither party has cited any case which

has considered whether the Copyright Act’s statute of limi-

tations may be tolled by duress. In order to determine whether

a duress toll is applicable to a federal limitations period, the

appropriate inquiry is whether the recognition of such a toll

would be consistent with the federal statute at issue. See

Emirch v. Touche Ross & Co. 846 F.2d 1190, 1199 (9th Cir.

1988).

I hold that under the facts of this case, the recognition of a

toll for duress would be consistent with the purposes of the

lized is that provided under the law of this court’s forum

state, New York.

Under New York law, duress is available to toll a statute of

limitations only where “duress is part of the cause of action

alleged”. Cullen v. Margiotta supra, 811 F.2d at 722 (quota-

tion omitted). The toll continues until the plaintiff’s “com-

pulsion through fear ceased.” Jd. at 722 (quotation omitted):

[New York law] stands only for the proposition that

duress tolls the running of a statute of limitations if

duress against the plaintiff is an element of the cause of

action asserted. If a plaintiff was under some duress from

the defendant not to sue but duress is not part of the

° Despite the facts recounted supra, plaintiffs claim in their affi-

davits that they were not aware of any claim to the Fools royalties until

1984. See Santiago Aff. 421 (“I was not aware of any Claim to collect

royalties as writers or publishers for Fools until my initial communica-

tion with Charles Rubin of Artists Enforcement Corp. and attorney

Richard Bennett in 1984.”); Merchant Aff. 94 20 (Identical affirmation).

These conclusory assertions are directly contradicted by plaintiffs’ own

testimony and come close to being violative of Fed. Rule of Civil Pro-

cedure 56(g).

60a

gravamen of his claim, New York courts do not toll the

statute of limitations.

Cullen supra 811 F.2d at 722.

This restriction on the use of the duress toll under New

York law dates from an 1897 New York Court of Appeals

decision, Piper v. Hoard 107 N.Y. 67 (1897). One court has

noted that among the rationales for the limitation on the use

of the duress toll are “the undesirability of a rule that turns on

the reasonableness of reliance upon threats”, the ease with

which such threats can be fabricated,and judicial reluctance

to create new defenses to the use of the statute of limitations

bar. Baratta v. Kozlowski 464 N.Y.S. 2d 803, 806 (A.D.

2 Dept. 1983). In Baratta the court held that death threats

made by the defendant for the purpose of persuading the

plaintiff not to sue in a fraud action were insufficient to toll

the statute of limitations, where such death threats were not

connected to plaintiff’s underlying claims.

In this case, plaintiff’s complaint does not include any

claim which explicitly has duress or coercion as one of its

elements. There is a factual question, however, as to whether

or not the duress which may have been exercised by the

defendants was so integrally related to plaintiffs’ cause of

action as to toll the statute. The entire course of the 37 year

relationship between the parties and the manner in which

plaintiffs assert that title to the Fools copyright was acquired

by the defendants (other than Lymon) suggests a continuing

pattern of duress which was directed not only toward pre-

venting plaintiffs from suing, but toward allowing the defen-

dants to acquire and hold title to the Fools copyright. Thus the

duress impinged directly upon the gravamen of plaintiffs’

claim. When, as plaintiffs assert, George Goldner told twelve

and fifteen-year-old songwriters that he would take care

of copyrighting the song they had written and when Morris

Levy told plaintiffs that there would be no royalties for

them and that they would be killed if they pursued the matter,

the duress exerted upon plaintiffs not only prevented them

from suing, but along with defendants’ fraud, it constituted

the mechanism through which the defendants acquired and

61a

retained the Fools copyright. Under these circumstances,

plaintiffs should be allowed to demonstrate at trial that, with

respect to all the defendants other than Emira Lymon, the

Statute of limitations was tolled for part or all of the period

between the time plaintiffs’ claim accrued and the time they

brought suit.

3. Equitable Estoppel.

Plaintiffs also assert that the Levy defendants should be

estopped from relying upon a statute of limitations defense by

virtue of their fraud. The equitable estoppel doctrine as

applied to toll a limitations period has had various judicial

formulations. The Second Circuit noted in one case that the

doctrine applies where “the plaintiff knew of the existence of

his cause of action but the defendant’s conduct caused him

delay in bringing his lawsuit.” Cerbone v. International

Ladies Garment Workers supra 768 F.2d 45, 50 (2nd Cir.

1985). The Cerbone court noted that the doctrine is most

often utilized in cases where defendants lull plaintiffs into not

bringing suit by engaging in settlement negotiations or by

misrepresenting the length of a limitations period. /d. at 50.

4. Laches and Equitable Estoppel Against the

Plaintiffs.

In addition to their statute of limitations argument, defen-

dants argue that they should be granted summary judgment by

virtue of the laches doctrine. Laches will bar an action where

a plaintiff is guilty of unreasonable delay in bringing suit, if

the defendant is prejudiced by the delay. See Stone v. Williams

873 F.2d 320 (2nd Cir. 1989) (“Stone I”) reversed and

remanded 891 F.2d 401 (2nd Cir. 1989) (“Stone IT’) cert. den.

110 S. Ct. 3215. The Stone decisions are particularly instruc-

tive in this case since they contain detailed discussions by the

Second Circuit of the laches defense in a suit to recover roy-

alties under a copyright.

The Second Circuit in Stone | analyzed the factors of plain-

tiff’s delay and the resulting prejudice to a defendant. With

delay the focus is not on the length of a delay but on its rea-

62a

sonableness. This analysis is then balanced against the pre}-

udice suffered by a defendant by virtue of a delay:

“Where there is no excuse for delay. . . defendants need

show little prejudice; a weak excuse for delay may, on

the other hand, suffice to defeat a laches defense if no

prejudice has been show.”

873 F.2d at 625. Among the types of prejudice recognized by

the court in Stone | were the inability to defend an action by

virtue of the death of witnesses and actions taken by a defen-

dant in reliance upon the absence of a suit by a plaintiff.

In Stone II, however, the Second Circuit, which vacated its

earlier rulings that plaintiff's claims were barred by laches,

introduced additional layers into the analysis, most notably

that of wrongful concealment. The court relied upon findings

of fraud which had been made in a related state action,

focused upon the egregious conduct of the defendants, and

held that any prejudice suffered by the defendants had been

caused by their own wrongful conduct in concealing plain-

tiff’s claims:

One who seeks Equity’s assistance must stand before the

court with clean hands (quotation omitted) . . . [IJn

reassessing the equitable circumstances peculiar to this

case, the equities fall on plaintiff’s side. . . To allow

defendants to bar plaintiff from claiming her rights when

the availability of the laches defense was obtained by

them in such an unworthy manner would not only grant

defendants a windfall in this suit to which they are not

entitled, but would also encourage a party to deliberately

mislead a court.

Stone II 891 F.2d at 405.

In this action there was a long delay in bringing suit, which

was partially excusable and partially the result of plaintiffs’

neglect. Defendants will suffer prejudice by having to defend

this action many years after the fact. Plaintiffs’ delay, how-

ever, was caused in substantial part by the wrongful conduct

of George Goldner and the Levy defendants, who would ben-

efit from their own wrongdoing if plaintiffs were barred

63a

by the laches doctrine from bringing suit at this juncture.

The “equities fall on plaintiff’s side.” Stone I], 891 F.2d at

405. The Levy defendants’ motion for summary judgment

premised upon the doctrine of laches is therefore denied.

The Levy defendants argue that summary judgment is

appropriate because plaintiffs should be equitably estopped

from pursuing their claims by virtue of their delay. The equi-

table estoppel doctrine “prevents one party from enforcing

rights which would result in a fraud or injustice upon a sec-

ond party who, in justifiable reliance upon the former parties’

words or conduct, had been misled into acting upon the belief

that such enforcement would not be sought.” Travellers Intern

AG v. Trans World Airlines 722 F. Supp. 1087, 1098 (S.D.N-Y.

1989) (citations omitted).

Given the allegations in this case that the Levy defendants

defrauded and threatened plaintiffs in order to prevent them

from obtaining copyright royalties it is difficult to see why

these defendants should be entitled to assert an equitable

estoppel defense now.

With respect to the Levy defendants there are genuine

issues of material fact as to whether or not plaintiffs’ suit was

timely commenced. The Levy defendants’ motion for sum-

mary judgment is therefore denied in all respects.

Whatever force the fraudulent concealment and duress

tolling arguments have with respect to the Levy defendants,

they have none when applied to Emira Lymon. No evidence in

the record warrants the conclusion that Emira Lymon fraud-

ulently concealed the existence of plaintiffs’ cause of action,

or exerted duress upon plaintiffs, in order to prevent them

from pursuing their claims. Thus even were plaintiffs able to

demonstrate that they did not discover their cause of action

for a time, and even were the statute of limitations deemed

tolled during the period between 1984 and 1987 (when plain-

tiffs allege they refrained from bringing suit based upon

Emira Lymon’s promise that she would do so), the statute of

64a

limitations would have run with respect to the claims asserted

against Emira Lymon long before 1984.* Defendant Emira

Lymon’s motion for summary judgment with respect to plain-

tiffs’ copyright claims is therefore granted.

While the parties have focused only upon plaintiffs’ copy-

right claims in their submissions, plaintiffs have also asserted

claims for common law fraud and misappropriation, negli-

gence and breach of fiduciary duty, violation of the Sherman

Act, 15 U.S.C. § 1 et. seg., violation of the Lanham Act, 15

U.S.C. § 1125(a) and the imposition of a constructive trust on

the Fools royalties held by the defendants.

1. The Levy Defendants.

These claims have varied applicable statutes of limitations,

and the analysis of the tolling principles applicable to each

claim might necessitate an analysis different from that out-

lined above. The Levy defendants have made no argument,

however, in their memoranda of law as to why these claims

may have been untimely commenced. Thus I find it unnec-

essary to determine whether or not these claims were com-

menced within the applicable limitations period. I strongly

suspect, however, that in the event the Levy defendants had

argued for the dismissal of these claims on statute of limita-

7 It is arguable that the equitable estoppel doctrine tolled the

statute during the period between 1984, when plaintiffs assert they agreed

with defendant Emira Lymon jointly to pursue the copyright royalties,

and 1987, when plaintiffs claim they discovered that Lymon would not

live up to the alleged agreement. If plaintiffs were able to demonstrate

that they were lulled into not bringing suit by the alleged 1984 agreement

with Lymon they would perhaps be entitled to rely upon an equitable

estoppel toll during the period between 1984 and 1987. But this limited

tolling, even if available, would not have been sufficient to prevent the

statute of limitations from imposing a bar with respect to Emira Lymon,

who is not alleged to have been involved in the wrongful conduct of the

Levy defendants.

65a

tions grounds the result would have paralleled the result

I have reached on plaintiffs’ copyright claims.

2. Emira Lymon.

In addition to the copyright claim, the only remaining claim

in plaintiffs’ complaint which could be construed as being

directed at Emira Lymon is plaintiffs’ seventh cause of action,

which asserts that che monies earned from Fools should be

held by the defendants in a constructive trust for plaintiffs’

benefit. While this count is pleaded in a confusing manner, it

apparently alludes to the alleged 1984 oral agreement between

plaintiffs and Emira Lymon under which Lymon agreed to

attempt to obtain ownership of the copyright in equal shares

for Lymon, Merchant and Santiago. The seventh count seems

to suggest, without properly pleading any claim, that Emira

Lymon committed a breach of a contractual or quasi-con-

tractual duty to plaintiffs by not honoring this agreement. Any

alleged oral agreement between plaintiffs and Emira Lymon

is, however, barred by the Copyright Act’s statute of frauds,

17 U.S.C. § 204(a), which requires that to be enforceable

any transfer of a copyright must be in writing. See also

Mellancamp v. Riva Music Ltd. 698 F. Supp. 1154 (S.D.N.Y.

1988); Techniques Inc. v. Rohn 592 F. Supp. 1195 (S.D.N.Y.

1984) (17 U.S.C. § 204(a) makes unenforceable an oral con-

tract for the transfer of copyright ownership.)

The 1984 agreement alleged by plaintiffs was to cooperate

in a suit against the Levy defendants. The alleged agreement,

however, was also implicitly in part an agreement to have the

ownership of the copyright transferred, since under the agree-

ment Emira Lymon would exchange a half interest in the

equal shares to Merchant and Santiago.

In Mellancamp, supra, the court considered the effect of a

contract for the conveyance of a music copyright (and related

interests) which was partially covered by, and partially

exempt from, New York’s U.C.C. statute of frauds. The court

noted that under New York law, a contract which was partially

covered by the statute of frauds was unenforceable in its

66a

entirety unless the portion of the contract not covered by the

statute could be severed from the covered portion and sepa-

rately enforced. Mellancamp supra 698 F. Supp. at 1162. See

also Apostolos v. R.D.T. Brokerage Corp. 559 N.Y.S. 2d 295

(A.D. Ist Dept., 1990) (Same).

That portion of the alleged oral agreement which contem-

plated transfer of Emira Lymon’s interests under the copyright

cannot be severed from those portions of the agreement which

arguably might be uncovered by the Copyright Act’s statute

of frauds. Thus even if it could be argued that the agreement

by Emira Lymon, Santiago and Merchant to sue Morris Levy

and his affiliated companies was not covered by the Copy-

right Act’s statute of frauds, the statute clearly is implicated

by Lymon’s agreement to transfer part of her rights under the

Vil

Defendant Emira Lymon’s motion for summary judgment is

granted in its entirety and Emira Lymon is dismissed from

this action. -

Plaintiffs’ suit will be allowed to proceed to trial only

against the Levy defendants. This will leave a one-half own-

ership interest in the copyright with Emira Lymon and allow

plaintiffs’ claims against the Levy defendants to proceed with

respect to the remaining one-half interest in the copyright.

SO ORDERED.

; In light of this holding, it is unnecessary to determine whether

the enforcement of the alleged oral agreement between the parties

may also be barred under New York’s U.C.C. statute of frauds, U.C.C.

§ 1-206, which provides that sales of personal property in excess of

$5,000 must be evidenced by a writing to be enforceable. The district

court in Mellancamp, supra, however, carefully analyzed this provision

and concluded that it applied to contracts for the transfer of copyrights.

Mellancamp, supra, 698 F. Supp. at 1163.

67a

/s/ VINCENT L. BRODERICK

VINCENT L. BRODERICK, U.S.D.J.

Dated: White Plains, New York

April, 15 1992

Copies have been mailed to:

Magistrate Naomi Reice Buchwald

Foley Square

40 Centre Street

New York, NY 10007

Ira Greenberg, Esq.

Summit Rovins & Feldesman

445 Park Avenue

New York, NY 10022

Carl Person

250 West 57th Street, Suite 529

uNew York, New York 10107-0100

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.