Case 1:10-cv-02632-LTS-JLC Document 107 Filed 10/12/12 Page 1 of 15
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`ESTATE OF WILLIAM A. STEWART, JR.,
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`Plaintiff,
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`-v-
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`SUGAR HILL MUSIC PUBLISHING
`LTD., et aI.,
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`Defendants.
`-------------------------------------------------------x
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`No. 10 Civ. 2632 (LTS)(JLC)
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`AMENDEDI MEMORANDUM OPINION AND ORDER
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`The Estate of William A. Stewart, Jr. ("Plaintiff), brings this breach of contract
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`and copyright infringement action, alleging that Defendants Sugar Hill Music Publishing, Ltd.
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`("Sugar Hill"), Diamond Head Music, Inc., Joey Robinson, Sylvia Robinson, and Leland
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`Robinson (collectively "Defendants") illegally profited by licensing Plaintiff s copyrighted 1996
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`musical composition, "No Diggity," to music subpublishers without Plaintiffs authorization.
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`Defendants assert counterclaims for breach of contract on the basis of a purported agreement
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`assigning Defendants the right to exploit "No Diggity." Plaintiff, in tum, disputes the validity of
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`the purported assignment/agreement, but also brings alternative causes of action for rescission,
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`breach of contract, and unjust enrichment which Plaintiff claims entitle it to recovery in the
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`event the assignment is determined to be valid. The Court has jurisdiction of this matter
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`pursuant to 28 U.S.C. §§ 1331 and 1332. The parties now cross-move for summary judgment.
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`The sole amendment to the Memorandum Opinion and Order is a correction to the date
`of the Final Pre-Trial Conference.
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`For the following reasons, Plaintiffs motion is granted in part and denied in part. Defendants'
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`motion is denied in its entirety.
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`BACKGROUND
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`The following facts are undisputed unless otherwise noted? In or arouqd 1996,
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`decedent William A. Stewart ("Stewart") co-wrote and registered a copyright in a composition
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`entitled "No Diggity." (PI's 56.1 St. ~~ 4-6.) Plaintiff contends that Defendants "have infringed
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`and continue to infringe the Estate's copyright in the work "No Diggity" by licensing i'No
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`Diggity" without authorization or pennission, both inside and outside the United Stat." (Am.
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`CompL ~ 28.)
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`Defendants aver that, in 1999, Stewart and the now-deceased Joe Robi~son, Sr.,
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`negotiated an agreement whereby Stewart assigned his interest in "No Diggity" to Sugar Hill in
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`exchange for 60% of the royalties. (Defs' 56.1 St. ~ 1; Declaration of Joey Robinson "Robinson
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`Dec."),
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`1.) Defendants counterclaim, on the basis of the purported assignment
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`("Assignment"), that Stewart improperly exploited "No Diggity," and that Plaintiff oWes Sugar
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`Hill a portion of those proceeds. (Defs' 56.1 St. ~12.)
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`Defendants have produced two documents that they claim support the ixistence
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`of the alleged assignment. The first is a document, dated May 25,1999, that purports ~o be the
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`Facts recited as undisputed are identified as such in the parties' statements pJuant to
`S.D.N.Y. Local Civil Rule 56.1 or drawn from evidence as to which there is no non­
`conclusory contrary factual proffer. Citations to the parties' respective Local qivil Rule
`56.1 statements ("Defs' 56.1 St." or PI's 56.1 St.") and responses thereto ("Defs' Resp.
`56.1 St." or "PI's Resp. 56.1 St.") incorporate by reference the parties' citations to
`underlying evidentiary submissions.
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`Case 1:10-cv-02632-LTS-JLC Document 107 Filed 10/12/12 Page 3 of 15
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`Assignment itself. (Robinson Dec., Ex. 1.) This document bears two signatures - on reading
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`"William A. Stewart," and one of a notary public. 3 (Id.) It is not signed by any agent f Sugar
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`Hill. (rd.) The Assignment states that it is "subject to all the terms and conditions of he
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`Agreement dated March 13, 1998, between Assignor(s) and Assignee." (Id.) Defend4nts also
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`furnish a copy of the purported agreement ("Agreement") referenced in the Assignme .1. (Defs'
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`56.1 St. ~ 9.) The Agreement appears to have been originally dated March 13, 1998, ut was
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`altered by hand to read May 25, 1998; these alterations are initialed "WAS." (Id.) Th·
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`Agreement provides that Stewart would receive 60% of all royalties collected by Sugar Hill
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`through the exploitation of "No Diggity," while the remaining 40% would be split evenly
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`between Sugar Hill and Lavaba Mallison ("Mallison"), who is not a party to this actio . (Defs'
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`Resp. 56.1 St. ~121.) Further, the Agreement states that a check for $2,500 was "[e]nc osed" to
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`Stewart as an advance on the "No Diggity" royalties. The Agreement bears two signa ures,
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`which Defendants claim are those of Stewart and Mallison. The Agreement is not si~ed by an
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`agent of Sugar Hill, nor does it bear a notary public'S signature.
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`Sugar Hill asserts that it received $30,000 from the exploitation of "No Diggity"
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`after the execution of the Assignment. Sugar Hill contends that Plaintiff was entitled 0 S15,500
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`representing 60% of $30,000, less the S2,500 advance. (Defs' 56.1 St. ~118.) While
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`Defendants concede that they never paid Plaintiff the $15,500, they assert in the counterclaim
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`I
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`that Plaintiff made $100,000 by improperly exploiting "No Diggity" after the executio of the
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`Assignment and Agreement. Sugar Hill argues, in error, that it is entitled to 40% ($40 000) of
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`that amount. (Id." 17.) In fact, the Agreement clearly states that Sugar Hill is entitle to net
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`3
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`Defendants proffer the testimony of the notary public, Joseph Lamontagne, whp confirms
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`that his stamp is affixed to the Assignment. (Def s Resp. 56.1 St. ~ 31.)
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`only 20% of the royalties. Mallison is not a party in this dispute, nor has he transferre his claim
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`to Defendants. Thus, according to Sugar Hill's expert's calculations and the plain tex of the
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`Agreement, the value of its counterclaim is $4,500 (i.e., $20,000 minus the $15,500 S gar Hill
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`owes Plaintiff).
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`Plaintiff disputes the authenticity of the Assignment and the Agreemen. (PI's
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`Resp. 56.1 St. ~~ 25-26.) Plaintiff proffers the declaration of Nicole Branker, Stewart s former
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`business assistant, who avers that the signature on the Assignment is not Stewart' s. (~1' s 56.1
`St. 'l,r 31-34.) Plaintiff also denies that Sugar Hill paid Stewart the $2,500 advance rJerenced in
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`the Agreement. (PI's 56.1 S1. ~ 9.) Because Joe Robinson, Sr., is deceased, no Defendant has
`personal knowledge as to whether Stewart was paid the advance. (ld. ~~ 9, 13.) Def1dants aver
`that a fire destroyed most of Sugar Hill's business records, and that, as a result of the ]:bassage of
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`time, Defendants cannot obtain bank records proving payment of the advance. (Defs' 56.1 S1.
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`'14; Defs' Resp. 56.1 St. ~ 13.) The only evidence Defendants have proffered in response to
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`Plaintiffs attacks on the Agreement's authenticity and Plaintiffs denial that Stewart r ceived
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`the $2,500 advance is a declaration by Mallison, who states that Stewart "advised [he
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`that ...
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`he wished to assign [his] interest to Sugar Hill" and that he "executed the [Agreement ... [and]
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`gave Mr. Stewart a check in the amount of $2,500.00." (Defs' Resp. 56.1 St. ~~ 9-10, 12-14.)
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`Defendants have not provided Mallison's contact information to Plaint ff. (PI's
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`56.1 St. ~ 5.) On September 30,2010, Defendant submitted a response to Plaintiffs rst set of
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`interrogatories listing Mallison as a potential witness, but stating that Mallison's curr
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`t address
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`was unknown. (Id.) At Joey Robinson's September 8, 2011, deposition, Plaintiffs c unsel
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`requested production of Mallison's contact information; Robinson rep lied that he had btained
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`Mallison's contact information via a third party acquaintance who had obtained the in ormation
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`through Facebook, but that he could not recall who had provided him the information, and that
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`he could not obtain it again. (Deposition of Joey Robinson, at 82.) When asked by opposing
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`counsel whether he had provided his attorney with Mallison's contact information, Rqbinson
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`answered in the negative. (Id.) At the time of Robinson's deposition, however, the Mallison
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`!
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`Declaration which is dated June 28, 2011 - had already been drafted, signed, and notarized.
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`(PI's 56.1 St. ~ 5.)
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`In its motion for summary judgment, Plaintiff argues that Defendants
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`ve failed
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`to proffer evidence sufficient to establish the existence of a valid Assignment. Plainti f also
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`argues that, even if the Court were to find that a genuine dispute exists as to the validi y of the
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`Assignment, Plaintiff should prevail because Defendants failed to pay royalties under he
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`accompanying Agreement, which constitutes grounds for rescission. Plaintiff also m
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`es for
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`summary judgment on Defendants' counterclaim, arguing that Defendants cannot pro e damages
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`and that Defendants are estopped from asserting the counterclaim.
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`In their motion for summary judgment, Defendants argue that Plaintiffs
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`copyright claims fail because the Assignment authorized Defendants to license "No D ggity,"
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`and that Plaintiff is estopped from asserting claims based on Defendants' alleged brea h of the
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`Agreement because Plaintiff has argued that no such Agreement exists. In addition, efendants
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`argue that the Court lacks subject matter jurisdiction of the contract claims because th
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`amount
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`in controversy is less than $75,000, and of the copyright claims because the exploitati
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`composition occurred abroad.
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`Summary judgment is to be granted in favor of a moving party if "the avant
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`shows that there is no genuine dispute as to any material fact and the movant is entitle to
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`judgment as a matter oflaw." Fed. R. Civ. P. 56(a); see also Anderson v. Libertv Lotlbv. Inc.,
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`477 U.S. 242, 256, (1986) (the moving party bears the burden of establishing that thele is no
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`genuine issue of material fact). A fact is considered material "if it might affect the ou come of
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`the suit under the governing law," and an issue of fact is a genuine one where "the evidence is
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`such that a reasonable jury could return a verdict for the nonmoving party." Holtz v. ~ockefeller
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`& Co. Inc., 258 F.3d 62,69 (2d Cir. 2001) (quoting Anderson, 477 U.S. at 248). The Second
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`Circuit has explained that "[tJhe party against whom summary judgment is sought ... 'must do
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`more than simply show that there is some metaphysical doubt as to the material facts. . .. [TJhe
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`nonmoving party must come forward with specific facts showing that there is a genuiI e issue for
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`trial. '" Caldarola v. Calabrese, 298 F.3d 156, 160 (2d Cir. 2002) (quoting Matsushita Elec.
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`Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986». Similarly, "mere COl clusory
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`allegations, speculation or conjecture" will not suffice to defeat summary judgment. Cifarelli v.
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`Vill. of Babylon, 93 F.3d 47,51 (2d Cir. 1996); see also Fed. R. Civ. P. 56(e). When ~eciding
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`cross-motions for summary judgment, the standard to be used "is the same as that for ndividual
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`summary judgment motions and a court must consider each motion independent ofth€ other."
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`Schultz v. Stoner, 308 F. Supp. 2d 289,298 (S.D.N.Y. 2004) (internal quotations omi ted).
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`In demonstrating the absence of a material factual dispute, the moving Jarty must
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`rely on "such facts as would be admissible in evidence." Raskin v. Wyatt Co., 125 F. d 55, 66
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`(2d Cir. 1997). Because the purpose of summary judgment is to weed out cases in wh ch there is
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`"no genuine issue as to any material fact and ... the moving party is entitled to a judgJlnent as a
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`matter oflaw," it is appropriate for district courts to decide questions regarding the ad nissibility
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`of evidence on summary judgment. Id. A district court deciding a summary judgmen motion
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`has broad discretion in choosing whether to admit evidence, and the admissibility of e idence on
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`Case 1:10-cv-02632-LTS-JLC Document 107 Filed 10/12/12 Page 7 of 15
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`a motion for summary judgment is subject to the same rules that govern the admissibl ityof
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`evidence at trial. Id. at 65; see also Presbyterian Church of Sudan v. Talisman Energy Inc., 582
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`F.3d 244, 264 (2d Cir. 2009).
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`L
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`Subject Matter Jurisdiction
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`Neither of Defendants' challenges to the Court's subject matter jurisdi< tion of
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`Plaintiffs claims is availing. Defendants first assert that the Court lacks jurisdiction (fthe
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`contract claims because the amount in controversy is less than $75,000. When assess'ng
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`whether the value of a diversity claim brought in district court exceeds 28 U.S.C. § 1332' s
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`S75,000 threshold, "the sum claimed by the plaintiff controls if the claim is apparenth made in
`good faith." St. Paul Mercury lndem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (193 n Courts
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`in the Second Circuit "recognize[] a rebuttable presumption that the face of the compl~int is a
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`good faith representation of the actual amount in controversy." Wolde-Meskel v. Vocational
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`Instruction Project Cmty. Servs., Inc .. 166 F.3d 59,63 (2d Cif. 1999). To rebut such a
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`presumption, the moving party must show that it is "a legal certainty that the claim is eally for
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`less than the jurisdictional amount to justify dismissaL" St. Paul Mercurv Indem. Co. 303 U.S.
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`at 288-89. The Second Circuit has interpreted the legal certainty standard to mean tha "the legal
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`impossibility of recovery must be so certain as virtually to negative the plaintiffs gooe faith in
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`asserting the claim. If the right ofrecovery is uncertain, the doubt should be resolved .. in
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`favor of the subjective good faith of the plaintiff." Tongkook Am. Inc. v. Shioton SO( rtswear
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`Co., 14 F.3d 781,785-86 (2d Cir. 1994). Plaintiff has submitted an expert report which values
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`Plaintiff s contract claim between approximately $190,000 and $317,000. (Expert Re Dort of Jay
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`L. Berger, attached as Ex. 10 to Declaration of Gary Adelman, docket entry no. 71.) While
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`Case 1:10-cv-02632-LTS-JLC Document 107 Filed 10/12/12 Page 8 of 15
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`Defendants contest that report's calculations, they have failed to show conclusively th t
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`Plaintiffs recovery of more than $75,000 is a legal impossibility.
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`Defendants also argue that the Court lacks subject matter jurisdiction b cause
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`Sugar Hill only licensed "No Diggity" to foreign publishers, and the Copyright Act do s not
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`extend to extraterritorial infringement. Defendants rely on Update Art, Inc. v. Modiin
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`Publishing Ltd., 843 F.2d 67 (2d Cir. 1988). However, subsequent to Update Art, the Supreme
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`Court held that "a threshold limitation on a statute's scope" shall only count as jurisdi tional
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`when Congress "clearly states" so. Arbaugh v. Y&H Corp., 546 U.S. 500,515 (2006 . Because
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`nothing in the Copyright Act "clearly states" that the scope of the statute's jurisdiction 1 reach
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`affects the court's power to adjudicate the claim, the Court will treat this issue as an el ment of
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`Plaintiffs claim. See Litecubes, LLC v. N. Light Prods., Inc., 523 F.3d 1353, 1367 (F d. Cir.
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`2008) (whether an accused action is within the extraterritorial limitation [of the Copyr ght Act]
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`should be treated as an element of the claim, not a predicate for subject matter jurisdi
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`(citing Arbaugh, 546 U.S. at 515); accord Roberts v. Keith, 04 Civ. 10079(LAP),200 WL
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`357296, at *2 (S.D.N.Y. Oct. 23, 2009).
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`Moreover, "[ w Jhile the United States copyright regime does not gener
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`extraterritorial application, an exception exists where the defendant commits a predic te act of
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`infringement within the U.S." Richard Feiner & Co., Inc. v. BMG Music Spain, S.A, 01 Civ.
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`0937(JSR), 2003 WL 740605 (S.D.N.Y. Mar. 4, 2003) (citing Update Art, 843 F.2d a 73).
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`Plaintiff has adduced evidence that Defendants signed the sub-publishing agreements
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`United States. (Adelman Decl., Ex. 4.) This predicate act suffices to establish the ap lication of
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`the Copyright Act to Plaintiffs claims.
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`II.
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`Validity of the Assi gnment/ Agreement
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`Case 1:10-cv-02632-LTS-JLC Document 107 Filed 10/12/12 Page 9 of 15
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`There is a genuine dispute as to the validity of the Assignment and the
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`Agreement. The Assignment bears the signature "William A. Stewart" and is notariz d. A
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`notarized assignment is prima
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`evidence of a valid transfer, see 17 U.S.c. § 204( )(1), and
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`notarized documents are considered self-authenticating under the Federal Rules ofEv dence. See
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`Fed. R. Evid. 902(8). Plaintiff fixates on the fact that the Assigmnent was not signed ~y
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`Robinson or any representative of Sugar Hill. However, neither federal nor New Y or~ law4
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`requires both parties to have signed an assignment in order for it to be deemed valid.
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`U.S.c.A. § 204(b )(1) (West 2009) ("A transfer of copyright ownership, other than by
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`of law, is not valid unless an instrument of conveyance, or a note or memorandum of
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`e
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`transfer, is in writing and signed by the owner of the rights conveyed ....") (emphasi . added);
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`Consarc Corp. v. Marine Midland Bank, N.A., 996 F.2d 568, 572 (2d Cir. 1993) ("writings
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`creating a contract may consist of letters bearing the signature of only one party or evJn
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`memoranda unsigned by either party"); N.Y. Gen. Oblig. Law § 5-1107 (McKinney 21~11) ("An
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`assignment shall not be denied the effect of irrevocably transferring the assignor's rig
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`s because
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`of the absence of consideration, if such assignment is in writing """,an"",d~si==.=.t--="'-=~=~
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`his agent.") (emphasis added).
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`Likewise, there is a material dispute of fact as to whether Stewart sign d the
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`Agreement and whether Stewart received the $2,500 advance. The Agreement, in which
`acknowledges receipt of the advance, bears the signature "William A. Stewart" in a SC~ipt that
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`Interpretation of an agreement purporting to grant a copyright license is a matt~r of state
`contract law.
`Random House, mc. v. Rosetta Books LLC, 150 F. Supp. 2 613,61
`18 (S.D.N.Y. 2001); Boose & Hawkes Music Publishers Ltd. v. Walt Disne Co., 145
`F.3d 481, 487 (2d Cir. 1998). Here, both parties assume in their bri efing that ew York
`law governs. Thus, the Court construes the contract in accordance with New ork law.
`See Fed. Ins. Co. v. Am. Home Assurance Co., 639 F.3d 557, 566 (2d Cir. 2011) ("Under
`New York choice of law rules ... where the parties agree that New York law ontrols,
`this is sufficient to establish choice onaw.").
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`closely resembles the signature affixed to the Assignment. Neither party has supplied expert
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`testimony attesting to or disputing the authenticity of that signature.
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`Defendants also proffer the declaration of Lavaba Mallison, who claim to have
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`witnessed the execution ofthe Agreement and attests to the payment of the $2,500 ad ance.
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`Plaintiff has moved to exclude the Mallison declaration on the grounds that Defendants
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`prevented Plaintiff from taking his deposition by refusing to disclose his contact infol·ation.
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`Federal Rule of Civil Procedure 26(a)(l )(A)(i) provides that "a party ust,
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`without awaiting a discovery request, provide to the other parties ... the name and, if own, the
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`address and telephone number of each individual likely to have discoverable informat on along
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`with the subjects of that information ..... that the disclosing party may use to support its laims or
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`defenses." Fed. R. Civ. P. 26(a)(I)(A). Rule 26(e)(l)(A) requires a party to supplemdnt its Rule
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`26(a) disclosures "in a timely manner if the party learns that in some material respect he
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`disclosure or response is incomplete or incorrect, and if the additional or corrective in ormation
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`has not otherwise been made known to the other parties during the discovery process r in
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`writing." Fed. R. Civ. P. 26(e). Rule 37(c)(l) provides that, "if a party fails to provid
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`information or identify a witness as required by Rule 26(a) or (e), the party is not allo ed to use
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`that information or witness to supply evidence on a motion, at a hearing, or at a trial, nless the
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`failure was substantially justified or is harmless." Fed. R. Civ. P. 37(c)(l). In determ'ning
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`whether preclusion pursuant to Rule 37(c)(1) is appropriate, the court must consider ".1) the
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`party's explanation for the failure to comply with the [disclosure requirement]; (2) the
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`importance of the testimony of the precluded witness[es]; (3) the prejudice suffered b
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`opposing party as a result of having to prepare to meet the new testimony; and (4) the ossibility
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`of a continuance." Patterson v. Balsamico, 440 F.3d 104, 117 (2d Cir. 2006).
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`Defendants' explanation for failing to disclose Mallison's contact info
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`ation
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`the passing of Joey Robinson's mother and Plaintiffs failure to "follow up on [his] re
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`the contact information - do not remotely excuse Defense counsel's neglect oftheir d'scovery
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`obligations. However, given the paucity of evidence regarding the authenticity of the
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`greement
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`and, thus, the importance of Mallison's testimony and the ease with which the dis
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`losure
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`violation can be cured by requiring Defendants to produce Mallison for deposition, th
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`Court
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`finds that preclusion is unwarranted.
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`Accordingly, the Court will order Defendants to facilitate and pay all e
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`penses
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`associated with Plaintiffs deposition of Lavaba Mallison. Failure to do so by Novem
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`er 16,
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`2012, will result in preclusion of the Mallison declaration and any future testimony b
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`Mallison.
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`Even without Mallison's testimony, however, there exists a genuine di Ipute as to
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`whether Stewart signed the Assignment and Agreement. Accordingly, both parties'
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`summary judgment on this point are denied.
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`III.
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`Plaintiff s Rescission Claim
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`Plaintiff argues that, even if the Assignment and Agreement are valid,
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`entitled to rescission because Defendants failed to remit royalties as required by the te
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`s of the
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`Agreement. 5
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`Under New York law, "[ r ]escission of a contract is an extraordinary re edy" and
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`"the party asserting rescission ... has the burden of proving it." Ariel UK Ltd. v. R uters
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`Group PLC, No. 95 Civ. 9646,2006 WL 3161467, at *8 (S.D.N.Y. Oct. 31, 2006) (in emal
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`quotations omitted). A right to rescind a contract arises if the breach is "material and
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`illful or,
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`Defendants argue that Plaintiff is estopped from arguing rescission or breach 0 contract
`because Plaintiff had previously denied the existence of a valid Agreement or
`Assignment. Defendants' position is meritless. Plaintiffs claims for rescissio or breach
`of contract are properly pled in the alternative.
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`ifnot willful, so substantial and fundamental as to strongly tend to defeat the object 0
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`the parties
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`in making the contract." Nolan v. Sam Fox Publ'g Co., 499 F.2d 1394, 1397 (2d Cir. 974).
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`"[I]n the absence of fraud, a contract assigning rights in a musical composition cannot be
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`rescinded for non-payment of royalties unless the failure to pay royalties is total." Ca fert v.
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`Scotti Brothers Records, ]nc., 969
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`Supp. 193,205 (S.D.N.Y. 1997); see also "",S~e~t"",e~"",,-,,~
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`Publ'g, B.Y. v. Stein & Day, ]nc., 884 F.2d 675, 678-79 (2d Cir. 1989).
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`Plaintiffs rescission claim is predicated on the assertion that Stewart n ver
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`received any payments under the Agreement. However, as explained above, there is a genuine
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`dispute as to whether Sugar Hill paid Stewart a $2,500 advance. If such an advance as paid, no
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`action for rescission will lie. See Maldonado v. Yalsyn, S.A., No. 06 Civ. 15290(RM ),2009
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`WL 3094888, at *4 (S.D.N.Y. Sept. 23, 2009) affd, 390 F. App'x 27 (2d Cir. 2010) (
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`rescission where defendants failed to remit royalty payments but plaintiffs received al
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`due under the contract); accord Harris v. Wu-Tang Prods., ]nc., No. 05 Civ. 3157,20 6 WL
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`1677127, at *4 (S.D.N.Y. June 16,2006) ("[P]laintiffs attempt to distinguish advance payments
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`from royalties is purely academic, as the Second Circuit applied the Nolan rule to sim'lar
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`advance payments in Septembertide PUbl'g, B.Y. v. Stein & Day Inc."). Moreover, it 's well
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`established that rescission is inappropriate where damages are an adequate remedy. See.
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`New Paradigm Software Corp., v. New Era of Networks, Inc., 107 F. Supp.2d 325,33
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`(S.D.N.Y. 2000); Yestron, Inc. v. Nat'l Geographic Soc., 750
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`Supp. 586, 594 (S.D.
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`.Y. 1990)
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`("Where a distributor has not wholly defaulted in making royalty payments and where its
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`breaches, if any, can be compensated in damages, rescission is not an appropriate rem dy.").
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`Plaintiff has not explained why damages would not suffice to make it whole. Accordi gly, the
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`Court finds that Plaintiff has failed to carry its burden of establishing grounds for resc' ssion.
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`Case 1:10-cv-02632-LTS-JLC Document 107 Filed 10/12/12 Page 13 of 15
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`IV.
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`Defendants' Counterclaim
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`Plaintiff moves for summary judgment on Defendants' counterclaim, a
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`guing that
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`Defendants' damages' expert, Gary Cohen, is unreliable, and that his report should be
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`excluded.
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`Federal Rule of Evidence 702 permits a "witness who is qualified as a
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`expert by
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`knowledge, skill, experience, training, or education" to testify ifhis or her "scientific,
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`echnical,
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`or other specialized knowledge will help the trier of fact to understand the evidence or
`to
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`determine a fact in issue," and if:
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`[:I] the testimony is based on sufficient facts or data, [2] the testimony' s the
`product of reliable principles and methods, and [3] the witness has reli bly
`applied the principles and methods to the facts of the case.
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`Fed. R Evid. 702. The Court exercises a "gatekeeping" function in connection with e pert
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`testimony. See GE v. Joiner, 522 U.S. 136, 142 (1997); Daubert v. Merrell Dow Pha
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`. Inc.,
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`509 U.S. 579, 589 (1993). To this end, the trial judge must "ensur[e] that an expert's estimony
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`rests on a reliable foundation and is relevant to the task at hand." Kumho Tire Co. v.
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`Carmichael, 526 U.S. 137, 141 (1999). This gatekeeping obligation "applies not only 0
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`testimony based on 'scientific' knowledge, but also to testimony based on 'technical' nd 'other
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`specialized' knowledge." Id. at 141. "[W]hen an expert opinion is based on data, a
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`methodology, or studies that are simply inadequate to support the conclusions reached Daubert
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`and Rule 702 mandate the exclusion of that unreliable opinion testimony." :C=='-b!.'=-'q"-"'-!"":'
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`National RR Passenger Corp., 303 F.3d 256,266 (2d Cir. 2002).
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`The Court is not persuaded by Plaintiffs arguments that the report sho ld be
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`excluded because Cohen neglected to sign the report or strictly comply with the disclo ure
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`requirements of Federal Rule of Civil Procedure 26(a)(2)(B). Cohen has attested to t
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`report's
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`accuracy in a subsequent, signed declaration and he complied with the disclosure requ rements
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`prior to his deposition. (See Declaration of Gary Cohen ("Cohen Decl.") ~ 2.) Howe
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`Court finds that Cohen's testimony and expert report do not meet the Daubert standar of
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`reliability.
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`Plaintiff has identified numerous flaws in Cohen's methodology. Coh n's
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`conclusions are founded largely on hearsay supplied by Defendants' counsel and dubi us
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`assumptions. First, Cohen uncritically relied on Defendants' representations regardin the
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`amount to which Defendants were entitled under the Assignment and Agreement and,
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`consequently, miscalculated the value of the counterclaim. Cohen assumed in his rep rt that
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`Defendants were entitled to 40% of the royalties under the Agreement, when in fact, t ey were
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`entitled to only 20%. As a result, Cohen overstated the value of the counterclaim by $ 0,000.
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`Cohen admitted in his deposition that he relied on royalty summaries that were create by
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`Defendants and that, deviating from his usual practice, he neglected to review the und rlying
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`documents or even ask Defendants which documents were used to prepare the summa ies.
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`When asked in his deposition whether he knew whether the documents were accurate, he replied:
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`"I do not." (Deposition of Gary Cohen ("Cohen Dep.") Tr. 43:20-22.) He also admitt din
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`deposition that he based his calculations on the assumption - which he was unable to justify
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`that certain companies were collecting 100% of the foreign performance royalties for xploiting
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`"No Diggity." Defendants offer no meaningful response to the flaws that Plaintiff has identified.
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`Accordingly, the Court grants Plaintiffs request to exclude Cohen's re ort and
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`testimony. Because Defendants have no other competent evidence of damages relatin
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`to their
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`counterclaim, Plaintiff s motion for summary judgment dismissing the counterclaim i granted.
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`Plaintiff s motion for summary judgment dismissing Defendants' coun erclaim is
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`granted. Plaintiffs motion for summary judgment is denied in all other respects. Defi ndants'
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`motion for summary judgment is denied. Defendants are ordered to facilitate and pay 11
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`expenses associated with Plaintiffs deposition of Lavaba Mallison. Failure to do so b
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`November 16, 2012 will result in preclusion of the Mallison declaration and any futur
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`testimony by Mallison.
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`A Final Pre-Trial Conference will be held on February 8, 2013 at 2:00p.m.
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`This Memorandum Order resolves docket entry nos. 61 and 69.
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`SO ORDERED.
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`Dated: New York, New York
`October 12,2012
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`United States District Jud e
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