Case 1:05-cv-00390-LAP-JCF Document 140 Filed 06/10/13 Page 1 of 10
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`USDCSDNY
`DOCU~,.ffiN1"
`ELECTRONICftJ.J...Y FILED
`DOC II:
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`05 Civ. 390 (LAP)
`
`,-,
`
`MEMORANDUM & ORDER
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`
`EMI ENTERTAINMENT WORLD, INC.,
`
`x
`
`Plaintiff,
`
`-against-
`
`INC., KAREN
`KAREN RECORDS,
`PUBLISHING INC., BIENVENIDO
`ISABEL RODRIGUEZ and
`RODRIGUEZ,
`FIDEL HERNANDEZ,
`
`Defendants.
`
`- X
`
`LORETTA A. PRESKA, Chief United States District Judge:
`
`Plaintiff, after being granted partial summary judgment
`
`[dkt. no. 90] in the above-referenced action, was awarded a
`
`$100,000 judgment in its action against Defendants for copyright
`
`infringement.
`
`See Memorandum and Order (Holwell, J.), Aug. 31,
`
`2011 [dkt. no. 110]
`
`("Judgment").) Defendants move to set aside
`
`the judgment pursuant to Federal Rule of Civil Procedure
`
`60(b) (1), (3), and (4) on the grounds that
`
`intiff lacked
`
`standing to bring the lawsuit and therefore that this Court
`
`lacked jurisdiction to hear this case. For the reasons set
`
`forth herein, Defendants' motion [dkt. no. 128] is GRANTED,
`
`the
`
`judgment [dkt. no. 110] is VACATED, and the complaint is
`
`DISMISSED.
`
`
`
`USDCSDNY
`DOCU~,.ffiN1"
`ELECTRONICftJ.J...Y FILED
`DOC II:
`DAlE FILEj):~.F, 0-,3
`--......_--
`--.;..,.
`05 Civ. 390 (LAP)
`
`,-,
`
`MEMORANDUM & ORDER
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`
`EMI ENTERTAINMENT WORLD, INC.,
`
`x
`
`Plaintiff,
`
`-against-
`
`INC., KAREN
`KAREN RECORDS,
`PUBLISHING INC., BIENVENIDO
`ISABEL RODRIGUEZ and
`RODRIGUEZ,
`FIDEL HERNANDEZ,
`
`Defendants.
`
`- X
`
`LORETTA A. PRESKA, Chief United States District Judge:
`
`Plaintiff, after being granted partial summary judgment
`
`[dkt. no. 90] in the above-referenced action, was awarded a
`
`$100,000 judgment in its action against Defendants for copyright
`
`infringement.
`
`See Memorandum and Order (Holwell, J.), Aug. 31,
`
`2011 [dkt. no. 110]
`
`("Judgment").) Defendants move to set aside
`
`the judgment pursuant to Federal Rule of Civil Procedure
`
`60(b) (1), (3), and (4) on the grounds that
`
`intiff lacked
`
`standing to bring the lawsuit and therefore that this Court
`
`lacked jurisdiction to hear this case. For the reasons set
`
`forth herein, Defendants' motion [dkt. no. 128] is GRANTED,
`
`the
`
`judgment [dkt. no. 110] is VACATED, and the complaint is
`
`DISMISSED.
`
`
`
`Case 1:05-cv-00390-LAP-JCF Document 140 Filed 06/10/13 Page 2 of 10
`
`BACKGROUND
`I.
`The background of this action has been discussed in two
`opinions granting partial summary judgment and damages to
`Plaintiff, and familiarity with which is presumed.
`Plaintiff EMI Entertainment World Inc. (“EMI” or
`“Plaintiff”) is a music publisher that purported to own or
`control copyrights to four musical compositions that Defendants
`Karen Records, Inc. and Karen Publishing Inc.—owned by
`individual Defendants Isabel Rodriguez and husband Bienvenido
`Rodriguez—(collectively, “Defendants”) used on records they
`released between 1999 and 2001. (Judgment at 2.) Beginning in
`1998, EMI initiated several legal actions against Defendants for
`copyright infringement based on unpaid royalties for numerous
`compositions, including the four at issue in this action. (Id.)
`EMI filed this suit in 2005. Following discovery in 2008,
`parties filed cross-motions for summary judgment. (Id. at 3.)
`In March 2009, the Court granted summary judgment to EMI with
`respect to certain of its claims, specifically that EMI had
`terminated Defendants’ compulsory licenses to certain of the
`compositions, and that the Defendants never obtained a license
`to the remaining composition. (Id. at 3.) In 2011, the Court
`found willful copyright infringement, and granted Plaintiffs a
`$100,000 judgment.
`
`
`
`2
`
`
`
`Case 1:05-cv-00390-LAP-JCF Document 140 Filed 06/10/13 Page 3 of 10
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`Defendants filed this motion to set aside the judgment on
`August 15, 2012. (See Memorandum of Law in Support of
`Defendants’ Motion to Set Aside Judgment [dkt. no. 130] (“Def.
`Memo”).) Defendants move to set aside the judgment on the
`grounds that newly discovered evidence shows that Plaintiff has
`no direct ownership interest in the copyrights over which it has
`sued because those rights are owned by subsidiaries of the
`Plaintiff who were never joined to the action. (Def. Memo at
`1.) Thus, Defendants argue, Plaintiffs lacked standing to bring
`the action. (Id.) Defendants move to vacate the judgment
`pursuant to Federal Rule of Civil Procedure 60(b)(1), (3),
`and (4).
`II. DISCUSSION
`a.
`Legal Standard
`Under Rule 60(b), a district court may relieve a party from
`a final judgment or order for, among others, the following
`reasons: (1) mistake, inadvertence, surprise, or excusable
`neglect; (3) fraud (whether intrinsic or extrinsic),
`misrepresentation, or misconduct by an opposing party; or, (4)
`the judgment is void. “Motions under Rule 60(b) are addressed
`to the sound discretion of the district court and are generally
`granted only upon a showing of exceptional circumstances.”
`Mendell ex rel. Viacom, Inc. v. Gollust, 909 F.2d 724, 731 (2d
`
`
`
`3
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`
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`Case 1:05-cv-00390-LAP-JCF Document 140 Filed 06/10/13 Page 4 of 10
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`Cir. 1990) (citing Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir.
`1986)).
`Rule 60(b)(1) “permits a district court to grant relief
`from a judgment based on ‘mistake, inadvertence, surprise, or
`excusable neglect.’” Johnson v. Univ. of Rochester Med. Ctr.,
`642 F.3d 121, 125 (2d Cir. 2011) (quoting Fed. R. Civ. P.
`60(b)(1)). The Court of Appeals has interpreted “mistake” to
`include both errors of a party or his representatives, see In re
`Emergency Beacon Corp., 666 F.2d 754, 759 (2d Cir. 1981), and
`mistakes of law or fact made by the district court, see In re
`310 Assocs., 346 F.3d 31, 35 (2d Cir. 2003).
`Rule 60(b)(4) provides that the court may vacate a judgment
`if “the judgment is void.” Fed. R. Civ. P. 60(b)(4). A
`judgment is not void within the meaning of Rule 60(b)(4) merely
`because it is erroneous. In re Texlon Corp., 596 F.2d 1092,
`1099 (2d Cir. 1979) (citing 11 Wright & Miller, Federal Practice
`and Procedures § 2862, at 198 (1973)). A judgment is void “only
`if the court that rendered it lacked jurisdiction of the subject
`matter, or of the parties, or if it acted in a manner
`inconsistent with due process of law.” Grace v. Bank Leumi
`Trust Co. of N.Y., 443 F.3d 180, 193 (2d Cir. 2006) (quoting
`Texlon, 596 F.2d at 1099).
`
`
`
`4
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`Case 1:05-cv-00390-LAP-JCF Document 140 Filed 06/10/13 Page 5 of 10
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`“Finally, even where a movant can demonstrate that one of
`the enumerated grounds in Rule 60(b) applies, in order to
`prevail the movant must still demonstrate a strong case that the
`movant has a meritorious claim.” United States v. Billini, No.
`99 Cr. 156, 2006 WL 3457834, at *2 (S.D.N.Y. Nov. 22, 2006)
`(citing United States v. Cirami, 563 F.2d 26, 35 (2d Cir.
`1977)); accord Snyman v. W.A. Baum Co., Inc., 360 F. App’x 251,
`254 (2d Cir. 2010) (“[T]he district court may properly consider
`the merits of the underlying action in determining whether to
`grant a motion pursuant to Rule 60(b).”).
`b.
`Analysis
`A claim that a party lacks standing to bring suit is an
`attack on a court’s subject matter jurisdiction over that party.
`Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541–42
`(1986). Standing is not subject to waiver, and the court is
`obligated to address standing even in the absence of the issue
`being raised by the parties themselves. United States v. Hays,
`515 U.S. 737, 742 (1995). Lack of standing of the party
`bringing suit would result in a lack of jurisdiction of the
`Court to hear the matter and would require a dismissal of the
`action. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–
`61 (1992); Abortion Rights Mobilization, Inc. v. Baker, 885 F.2d
`1020, 1023 (2d Cir. 1989). Plaintiff’s standing and ownership
`
`
`
`5
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`
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`Case 1:05-cv-00390-LAP-JCF Document 140 Filed 06/10/13 Page 6 of 10
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`interests in the copyrights at issue were never challenged or
`analyzed by the court. (Def. Memo at 3.) Thus, this issue is
`ripe for review pursuant to a Rule 60 motion for
`reconsideration. See In re Bulk Oil (USA) Inc., No. 93 Civ.
`4492, 4494, 2007 WL 1121739, at *10 (S.D.N.Y. Apr. 11, 2007).
`Plaintiff does not dispute that it does not have, and has
`never had, direct ownership of any of the copyrights at issue in
`this lawsuit but argues that the rights at issue are owned by
`“wholly-owned” subsidiaries of Plaintiff or entities on behalf
`of which Plaintiff was authorized to act. (See Letter from Neil
`J. Saltzman, Esq., Sept. 7, 2012 [dkt. no. 132] (“Def. Supp.
`Memo”), at 1; Plaintiff’s Memorandum in Opposition to
`Defendant’s Motion, Sept. 27, 2012 [dkt. no. 133] (“Pl. Opp.”),
`at 3.) Copyright certification notices provided by Plaintiff
`demonstrate that Plaintiff is not the named owner of the
`copyrights. (Decl. of Jordan Greenberger in Opposition to
`Motion to Set Aside and Stay Enforcement of Judgment, Sept. 27,
`2012 [dkt. no. 143], at Ex. 3.) Plaintiff has also not
`attempted to join the subsidiaries that do hold the rights to
`the compositions at issue as real parties in interest pursuant
`to Fed. R. Civ. P. 17 until this time. (Def. Supp. Memo at 1.)
`There is support from decisions in this circuit for the
`holding that a parent company lacks standing to bring claims on
`
`
`
`6
`
`
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`Case 1:05-cv-00390-LAP-JCF Document 140 Filed 06/10/13 Page 7 of 10
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`behalf of its subsidiary. See, e.g., Feinberg v. Katz, No. 99
`Civ. 45, 2002 WL 1751135, at *6 (S.D.N.Y. July 26, 2002); Diesel
`Sys., Ltd. v. Yip Shing Diesel Eng’g Co., Ltd., 861 F. Supp.
`179, 181 (E.D.N.Y. 1994); Bross Utils. Serv. Corp. v.
`Aboubshait, 618 F. Supp. 1442, 1445 (S.D.N.Y. 1985). This
`conclusion follows from the principle that “a parent corporation
`cannot create a subsidiary and then ignore its separate
`corporate existence whenever it would be advantageous to the
`parent.” Feinberg, 2002 WL 1751135 at *6 (quoting Pa. Eng’g
`Corp. v. Islip Res. Recovery Agency, 710 F. Supp. 456, 465
`(E.D.N.Y. 1989)). Plaintiffs do not provide in their papers a
`citation to a case holding otherwise. Although Plaintiff argues
`that it was authorized to act on the copyright claimants’
`behalf, (Pl. Opp. at 3), the law requires more than an assurance
`of authorization to confer Article III standing upon a party.
`In light of the recently unearthed determination that
`Plaintiff lacks of standing, Rules 60(b)(1) and 60(b)(4) provide
`appropriate bases in this case to vacate the judgment. The
`“mistake” in this case was that all parties and the Court
`assumed jurisdiction over Plaintiff based on Plaintiff’s
`representations that it was the owner of the copyrights at
`issue. Although Defendant could have raised this issue at an
`earlier stage in the proceeding, and even admitted that
`
`
`
`7
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`
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`Case 1:05-cv-00390-LAP-JCF Document 140 Filed 06/10/13 Page 8 of 10
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`Plaintiff controlled the copyrights at issue, (Pl. Opp. at 7–9,
`12), standing cannot be waived by either party, and the Court
`has an obligation to raise the matter sua sponte. See Mancuso
`v. Consol. Edison Co. of N.Y., 130 F. Supp. 2d 584, 588–89
`(S.D.N.Y. 2001). Because of this jurisdictional flaw, the
`judgment is void.
`Further, although Plaintiff has attempted to provide
`ratification by the subsidiary owners of the copyrights, or to
`now join those subsidiaries as parties in real interest pursuant
`to Fed. R. Civ. P. 17, (Pl. Opp. at 12–13), Rule 17 requires
`that joinder to be made within a reasonable time after an
`objection is raised, and the party must have a reasonable basis
`for naming the wrong party at the outset. See Advanced
`Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d 11, 20 (2d
`Cir. 1997) (“[T]he district court retains some discretion to
`dismiss an action where there was no semblance of any reasonable
`basis for the naming of an incorrect party . . . .”).
` Defendants state that they alerted Plaintiff to the
`jurisdictional defect in April 2012, only to be directed in
`circles to the original copyright notices and other sources over
`the course of several months. (See Decl. of Neil J. Saltzman in
`Support of Defendants’ Motion to Set Aside Judgment, Aug. 15,
`2012, [dkt. no. 129], at Ex. B.) Plaintiff’s counsel, who has
`
`
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`8
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`
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`Case 1:05-cv-00390-LAP-JCF Document 140 Filed 06/10/13 Page 9 of 10
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`been representing Plaintiff throughout the entire course of this
`litigation beginning in 2005, did not seek to remedy the
`situation procedurally. Thus, the reasonable period of time for
`joinder of the subsidiaries has passed. Additionally, Plaintiff
`has not identified a reasonable basis for failing to name the
`subsidiaries as plaintiffs initially. The identities of the
`real parties in interest have been known to Plaintiff since the
`initiation of the lawsuit, as demonstrated in the copyright
`papers Plaintiff submitted to the court. (See Decl. of Christos
`P. Badavas, Mar. 14, 2008 [dkt. no. 57], at Exs. G-J.)
`Finally, as stated above, Defendant’s argument that
`Plaintiff lacks standing is a meritorious defense, and thus
`satisfies the requirement of Rule 60(b) that a moving party must
`demonstrate a meritorious claim. Billini, 2006 WL 3457834, at
`*2.
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`9
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`Case 1:05-cv-00390-LAP-JCF Document 140 Filed 06/10/13 Page 10 of 10
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`III. CONCLUSION
`
`For the foregoing reasons, Defendants' motion [dkt. no.
`
`128] is GRANTED,
`
`the judgment [dkt. no. 110] is VACATED, and the
`
`complaint is DISMISSED.
`
`In light of the judgment being
`
`vacated,
`
`aintiff's pending motion for attorney's fees [dkt.
`
`no. 114] is denied as moot.
`
`SO ORDERED.
`
`Dated: New York, New York
`June A, 2013
`
`~AlA{)', yJ~
`
`UNITED STATES DISTRICT JUDGE
`
`10
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