Hacienda Records, LP v. Ramos

HACIENDA RECORDS, LP, Plaintiff, v. RUBEN RAMOS, et al., Defendants.

CIVIL ACTION NO. 2:14-19

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS CORPUS CHRISTI DIVISION

June 29, 2016

MEMORANDUM OPINION & ORDER

Pending before the Court is Hacienda Records, L.P.'s ("Hacienda") Motion for Summary Judgment on its Counterclaim (D.E. 183), to which Claimants Ruben Ramos, Hugo Cesar Guerrero, and Arturo Rene Serrata (collectively "Claimants") have responded (D.E. 187) and Hacienda has replied (D.E. 190). For the reasons set forth below, Hacienda's motion is GRANTED.

I. Background

The facts giving rise to this litigation, as well as its extensive procedural history, are set forth at length in the Court's prior orders granting in part Hacienda's motion for judgment on the pleadings and dismissing Claimants Guerrero and Serrata's claims (D.E. 169) and granting summary judgment in favor of Hacienda on Claimant Ramos' claims (D.E. 176). See Hacienda Records v. Ramos, 2015 WL 5732558 (S.D. Tex. Sept. 30, 2015), 2015 WL 6680597 (S.D. Tex. Nov. 2, 2015).

Remaining is Hacienda's counterclaim for a declaration of ownership of its master sound recordings and related matters. According to Hacienda, Claimants entered into various recording agreements with Hacienda dating back to the 1980s, whereby Claimants were hired to record vocals onto sound recordings for Hacienda and agreed that Hacienda would own the master sound recordings to the albums. However, Claimants now assert that they own the copyrights to Hacienda's master sound recordings, and their attorney has improperly deposited with the U.S. Copyright Office several of Hacienda's entire master CD compilations, as opposed to a mere sound recording of Claimants' voices.

Hacienda now moves for summary judgment on its counterclaim and seeks a declaratory judgment under 18 U.S.C. § 2201 that: (1) Hacienda owns the copyright to the master sound recordings and compilations; (2) Claimants and their assigns have no copyright ownership in the master sound recordings and compilations; and (3) any copyright registrations by Claimants to Hacienda's master sound recordings and compilations are invalid.

II. Summary Judgment Standard

Summary judgment is proper if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). A genuine issue exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The court must examine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52. In making this determination, the court must consider the record as a whole by reviewing all pleadings, depositions, affidavits, and admissions on file, and drawing all justifiable inferences in favor of the party opposing the motion.Caboni v. Gen. Motors Corp., 278 F.3d 448, 451 (5th Cir. 2002). The court may not weigh the evidence or evaluate the credibility of witnesses. Id. Furthermore, "affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." FED. R. CIV. P. 56(e); see also Cormier v. Pennzoil Exploration & Prod. Co., 969 F.2d 1559, 1561 (5th Cir. 1992) (per curiam) (refusing to consider affidavits that relied on hearsay statements); Martin v. John W. Stone Oil Distrib., Inc., 819 F.2d 547, 549 (5th Cir. 1987) (per curiam) (stating that courts cannot consider hearsay evidence in affidavits and depositions). Unauthenticated and unverified documents do not constitute proper summary judgment evidence. King v. Dogan, 31 F.3d 344, 346 (5th Cir. 1994) (per curiam).

The moving party bears the initial burden of showing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party demonstrates an absence of evidence supporting the nonmoving party's case, then the burden shifts to the nonmoving party to come forward with specific facts showing that a genuine issue for trial does exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). To sustain this burden, the nonmoving party cannot rest on the mere allegations of the pleadings. FED. R. CIV. P. 56(e); Anderson, 477 U.S. at 248. "After the nonmovant has been given an opportunity to raise a genuine factual issue, if no reasonable juror could find for the nonmovant, summary judgment will be granted." Caboni, 278 F.3d at 451. "If reasonable minds could differ as to the import of the evidence, . . . a verdict should not be directed." Anderson, 477 U.S. at 250-51. Theevidence must be evaluated under the summary judgment standard to determine whether the moving party has shown the absence of a genuine issue of material fact. "[T]he substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id. at 248.

III. Declaratory Judgment Act

The Declaratory Judgment Act has been "repeatedly characterized . . . as 'an enabling act, which confers discretion on the courts rather than an absolute right on a litigant.'" Wilton v. Seven Falls Co., 515 U.S. 277, 287 (1995) (quoting Pub. Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 241 (1952)). In analyzing whether to decide a declaratory judgment action, a court must determine: (1) whether the declaratory action is justiciable; (2) whether the court has the authority to grant declaratory relief; and (3) whether to exercise its discretion to decide or dismiss the action. Orix Credit Alliance, Inc. v. Wolfe, 212 F.3d 891, 895 (5th Cir. 2000). The Fifth Circuit has also identified seven non-exclusive factors that district courts must consider when deciding whether to exercise their discretion to decide a declaratory judgment action. St. Paul Ins. Co. v. Trejo, 39 F.3d 585, 590-91 (5th Cir. 1994). These factors include:

"1) whether there is a pending state action in which all of the matters in controversy may be fully litigated, 2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant, 3) whether the plaintiff engaged in forum shopping in bringing the suit, 4) whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist, 5) whether the federal court is a convenient forum for the parties and witnesses, and 6) whether retaining the lawsuit in federal court would serve the purposes of judicial economy," and . . . [7)] whether the federal court is being called on to construe a state judicial decreeinvolving the same parties and entered by the court before whom the parallel state suit between the same parties is pending.

Id. (quoting Travelers Ins. Co. v. La. Farm Bureau Fed'n, 996 F.2d 774, 778 (5th Cir. 1993)). In Sherwin-Williams, the Fifth Circuit added another factor—the presence of a federal question—stating that "'[t]he presence of federal law issues must always be a major consideration weighing against surrender' of federal jurisdiction." Sherwin-Williams Co. v. Homes County, 343 F.3d 383, 396 (5th Cir. 2003) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 26 (1983)).

The application of the Trejo factors supports the Court's retention of this case. There is no pending parallel state proceeding, and Hacienda's complaint raises federal questions, making it appropriate for federal court. While Hacienda did file this lawsuit in anticipation of litigation by Claimants, "[m]erely filing a declaratory judgment action in federal court with jurisdiction to hear it, in anticipation of . . . litigation, is not in itself improper anticipatory litigation . . . ." Sherwin-Williams, 343 F.3d at 391. Indeed, if Hacienda did not anticipate a lawsuit, its declaratory judgment claim would lack the immediacy required for the controversy to be justiciable. See Rowan Cos., Inc. v. Griffin, 876 F.2d 26, 28 (5th Cir. 1989) ("A controversy, to be justiciable, must be such that it can presently be litigated and decided and not hypothetical, conjectural, conditional or based upon the possibility of a factual situation that may never develop.") (quoting Brown & Root, Inc. v. Big Rock Corp., 383 F.2d 662, 665 (5th Cir. 1967)). There is no evidence of forum shopping, and the Corpus Christi Division appears to be the most convenient forum, as Hacienda's principal place of business is in Corpus Christi and two of the fiveClaimants named in Hacienda's First Amended Complaint reside in the Corpus Christi Division. Finally, the Court has already ruled on Claimants' counter-claims and is intimately familiar with the facts of this case; thus, retaining this lawsuit would serve the purposes of judicial economy.

Moreover, this district has recognized that "[d]eclaratory judgment is an appropriate means of determining intellectual property rights when: (1) the party seeking declaratory judgment has real and reasonable apprehension of litigation; and (2) the party seeking declaratory judgment has engaged in a course of conduct that brings it into adversarial dispute with its opponent." Baisden v. I'm Ready Prods., Inc., 804 F. Supp. 2d 549, 552 (S.D. Tex. 2011) (citing Texas v. West Pub. Co., 882 F.2d 171, 175 (5th Cir. 1989)). "Traditional indicia of an objectively reasonable fear of litigation are direct threats by the defendant or a history of litigation between the parties." West Pub., 882 F.2d at 176. As set forth in the Court's prior orders, Hacienda filed this action in response to a letter from counsel for Claimants, David Showalter, requesting: copies of contracts or agreements between Claimant Ramos and Hacienda with respect to certain songs recorded by Hacienda and sung by...