Music Royalty Consulting, Inc. v. Reservoir Media Mgmt., Inc.

598 F.Supp.3d 158

MUSIC ROYALTY CONSULTING, INC., Plaintiff,

v.RESERVOIR MEDIA MANAGEMENT, INC., Defendant.

No. 18 Civ. 9480 (CM)

United States District Court, S.D. New York.

Signed April 18, 2022

Thomas E.L. Dewey, Anders Weston Pauley, Dewey, Pegno & Kramarsky, LLP, New York, NY, for Plaintiff.

Barry Isaac Slotnick, Evan K. Farber, Noah Weingarten, Sarah Schacter, Loeb & Loeb LLP, New York, NY, for Defendant.

DECISION AND ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S AND DEFENDANTS’ DAUBERT MOTIONS; AND GRANTING IN PART AND DENYING IN PART THE MOTIONS FOR SUMMARY JUDGMENT

McMahon, UNITED STATES DISTRICT JUDGE:

The parties to this action are publishing companies that purchase the rights to future royalties from recording artists. Plaintiff Music Royalty Consulting, Inc. ("MRCI") alleges that Defendant Reservoir Media Management, Inc. ("Reservoir") violated its contractual obligations by withholding or short-changing royalties owed to MRCI under a publishing agreement.

Musical artists typically sign publishing agreements, in which they assign the copyright and administration rights for particular songs to a publishing company for a specified limited duration. The publishing company then licenses the songs, monitors their use, and collects the royalties that are due by virtue of the copyrights. These fees are then divided per the terms of the agreement; the publishing company sends the musical artist a "writer's share," and retains its own "publisher's share." After the term of the agreement expires, all copyrights and royalties revert back to the songwriter.

The publishing agreement principally at issue in this case (the "Publishing Agreement" or the "Agreement") was entered into in 2000 by Reservoir's predecessor-in-interest and a "songwriting services" company called Tuff Jew, which is wholly owned by Scott Storch – a singer and songwriter who was, at one time, a prominent businessman in the music industry. The Publishing Agreement required Tuff Jew to deliver the copyrights to Storch's musical compositions (songs) in exchange for which Tuff Jew would receive the entire writer's share and a portion of the publisher's share in the publishing income.

In Plaintiff MRCI's First Amended Complaint ("FAC"), MRCI asserts that, in 2012, Tuff Jew assigned to MCRI its right to the writer's share of income due to it under the Publishing Agreement to MRCI. See Dkt. No. 55. MRCI alleges that Reservoir underpaid royalties owed to MRCI over several accounting periods – and then, sometime in early 2018, stopped paying royalties to MRCI altogether. The FAC asserts a claim for breach of contract arising out of these failures to pay amounts due and owing under the Publishing Agreement.

On October 31, 2019, this court granted Reservoir's motion to dismiss so much of the FAC as sought to collect for royalties that were allegedly underpaid relating to statements issued in March 2013, September

2013, March 2014, September 2015, and March 2015. See Dkt. No 69. There is no dispute that MRCI did not object to these statements until December of 2017. Accordingly, the court concluded that any claim for unpaid royalties for the period covered by these statements was barred, as a result of the two-year incontestability period set forth in the Publishing Agreement (explained in the court's opinion found at Docket No. 69).

As a result, MRCI's claim for breach of contract is limited to (1) the alleged underpayment of the last three royalty payments made by Reservoir to MRCI, in March 2016, September 2016, and March 2017; and (2) Reservoir's failure to pay any royalties to MRCI after March 2017.

Plaintiff now moves for partial summary judgment (liability only) on so much of its breach of contract claim as is predicated on Reservoir's admitted refusal to account for royalties earned after September 2017 or to pay royalties after March 2017. MRCI does not seek summary judgment on so much of its claim as is predicated on the alleged underpayment of royalties for prior periods. MRCI also seeks summary judgment dismissing Reservoir's affirmative defense of indemnification. Dkt. No. 86.

Defendant cross-moves for summary judgment dismissing Plaintiff's breach of contract claim in its entirety. Dkt. No. 99.

Also before the court are Plaintiff's Daubert motions to exclude the expert opinions of Reservoir's proposed expert witnesses: Barry M. Massarsky and Clark Miller, LLC. Their respective expert reports can be found at Docket Numbers 91 and 94.

For the reasons outlined below, the motions are decided as follows:

1. MRCI's motion for partial summary judgment (i) holding Reservoir liable for its failure to make royalty payments; and (ii) dismissing Reservoir's affirmative defense based on indemnification is GRANTED.

2. Reservoir's cross-motion for summary judgment dismissing MRCI's breach of contract claim is DENIED.

3. MRCI's motion to exclude the expert opinion of Barry M. Massarsky is GRANTED.

4. MRCI's motion to exclude the expert opinion of Clark Miller is GRANTED in part and DENIED in part.

BACKGROUND

For the purpose of the motions before the court, facts are drawn from the parties’ joint and respective Rule 56.1 statements and counter statements of facts, and the record in support of Plaintiff's motion for partial summary judgment ("MRCI Mot."), Defendant's cross-motion for summary judgment ("Res. Mot."), and Plaintiff's Daubert motions.

The court presumes familiarity with the facts of this case, which have been recounted at length in two previous opinions. See Music Royalty Consulting, Inc. v. Reservoir Media Mgmt. , Inc., No. 18-CV-9480 (CM) (KNF), 2019 WL 1950137, at *1 (S.D.N.Y. Apr. 17, 2019) (Order Granting in Part and Denying in Part Defendant's Motion to Dismiss the Complaint) (Dkt. No. 48); Music Royalty Consulting, Inc. v. Reservoir Media Mgmt., Inc. , No. 18-CV-9480 (CM) (KNF), 2019 WL 6335261 (S.D.N.Y. Oct. 31, 2019) (Order Granting in Part and Denying in Part Defendant's Motion to Dismiss the First Amended Complaint, Dkt. No. 69).

Accordingly, only the facts relevant to the pending motions are summarized below.

A. Key Players

Plaintiff MRCI, a California corporation, is a publishing company. As part of its business, it purchases music-publishing royalty income from artists. MRCI also buys music-related assets and other income streams. See Joint Local Rule 56.1 Statement of Undisputed Facts, Dkt. No. 102 ("JSUF"), ¶ 4.

Defendant Reservoir, a Delaware corporation, is an independent music publisher. Like MRCI, Reservoir owns musical copyrights, administration rights, master recordings, and royalty collection rights, and administers and markets music. JSUF ¶ 1. Reservoir is the successor-in-interest to a company called TVT Music, Inc. ("TVT"). Id.

Non-party Scott Storch is a renowned songwriter and music producer who has co-written and produced multiple hit songs, including Justin Timberlake's "Cry Me a River," Beyoncé’s "Naughty Girl," Dr. Dre's "Still D.R.E.," and 50 Cent's "Candy Shop." Storch has his own-wholly owned "songwriting services" company, Tuff Jew Productions, LLC ("Tuff Jew"). JSUF ¶¶ 2-3. For the limited purpose of this opinion, Storch (the person) and Tuff Jew (Storch's company) are often referenced interchangeably.

B. Operative Agreements

There are four agreements relevant to the instant dispute between the parties. Plaintiff's claim for breach of contract relates to only one of those agreements – the Publishing Agreement, explained in detail below – but it is impossible to understand this lawsuit without understanding all four agreements.

i. The Publishing Agreement

On June 14, 2000, Tuff Jew entered into the Publishing Agreement with Reservoir's predecessor-in-interest, TVT.

Per the terms of the Publishing Agreement, Tuff Jew agreed to provide Storch's songwriting services "exclusively" to the publisher (TVT, and later Reservoir, referred to interchangeably as the "publisher") and granted the publisher 50% of its copyrights in Storch's songs – both those he had already written and those he would write during the life of the Agreement – in exchange for receiving 100% of the writer's share and 50% of the publisher's share in the publishing income. See Publishing Agreement, Dkt. No. 100-5, ¶ 7. The publisher retained the other half of the publisher's share. Id. In exchange for Storch's exclusive services and assignment of copyrights, the publisher agreed to license and market the compositions, and to collect and distribute "all monies earned." Publishing Agreement, ¶ 5(b).

The initial period of the Publishing Agreement ran from June 14, 2000, through June 30, 2001 (the "Initial Period"). During the Initial Period, Tuff Jew was not obligated to deliver a specific number of new songs. But after the initial period, the publisher had two separate options to extend the term of the Publishing Agreement for additional periods, on the same terms and conditions that were applicable to the Initial Period. Publishing Agreement, ¶ 2(a) & (b). During each successive options period (each a "Term" of the Publishing Agreement), Tuff Jew was required to satisfy its Minimum Delivery and Release Commitment ("MDRC") by delivering no fewer than ten new songs for the publisher to exploit on their mutual behalf.¹ Each new Term period began as soon as the publisher exercised its option to extend the life of the Agreement and continued until thirty days after Tuff Jew fulfilled its MDRC for that option period, but not earlier than one year after the commencement of the period. Publishing Agreement, ¶ 2(b).

TVT, the publisher at the time, exercised a new option period upon termination of the Initial Period of the Publishing Agreement in June of 2001, and again after the first option period terminated when Tuff Jew fulfilled the MDRC. It is not clear from the record exactly when the first options period ended and the second commenced.

Under the Publishing Agreement, the publisher was obligated to pay the songwriter a cash advance when exercising each option...