`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF PUERTO RICO
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
` CIVIL NO.: 10-1349 (JAG)
`
`
`
`
`
`LOS CANGRIS, et. al.,
`
`
`
`
`
` Plaintiffs,
`
`
`
` v.
`
`
`
`
`
`
`
`UMG RECORDINGS, INC., et. al.,
`
`
`
`
`
` Defendants.
`
`
`OPINION AND ORDER
`
`Pending before the court is a motion to intervene filed by five applicants for
`
`intervention: Ángel Martínez Alicea, Reynaldo Colón Vega, Raúl Rivera Roldán, Freddy
`
`Montalvo, and Glenn Turley (“applicants” or “proposed intervenors”) (Docket No. 67).
`
`Plaintiffs and defendants have filed responses in opposition. (Docket Nos. 72, 82). For the
`
`reasons set forth below, the motion is hereby denied.
`
`I.
`
`BACKGROUND
`
`A.
`
`Plaintiffs’ Claims and Allegations
`
`The instant case was filed on April 27, 2010 by Ramón Ayala Rodríguez (“Ayala”),
`
`a musical artist known as “Daddy Yankee,” and his publishing and recording companies,
`
`Los Cangris, Inc., and El Cartel Records, Inc., respectively (collectively, “plaintiffs”),
`
`against Universal Music Distribution Corporation (“Universal”) and UMG Recordings,
`
`Inc., d/b/a Universal Music Latin America (“UMG”) (“defendants”). At the heart of the
`
`dispute are an exclusive license agreement and a distribution agreement that plaintiffs and
`
`
`
`Case 3:10-cv-01349-JAG-MEL Document 95 Filed 05/30/12 Page 2 of 12
`
`UMG executed on January 10, 2005. (Docket No. 21, ¶ 3.5). According to the amended
`
`complaint, the license agreement, between Ayala and UMG, covered four of Ayala’s
`
`albums: Barrio Fino, El Cangri.com, Los Jonrones, and El Cartel II. (Docket No. 21, ¶¶
`
`3.4-3.5). The distribution agreement, between Los Cangris and UMG, was for the
`
`exclusive distribution of those same four albums. Id. The License agreement was to
`
`terminate five years after the date of delivery by Ayala of all the master recordings and
`
`corresponding production parts of the aforementioned four albums. (Docket No. 21, ¶
`
`3.6). The distribution agreement was for a term of three years. (Docket No. 21, ¶ 3.7). On
`
`March 21, 2008, the parties modified only the distribution agreement to include three
`
`additional albums, including Talento del Barrio. (Docket No. 21, ¶ 3.10). The proposed
`
`intervenors’ claims concern one song from the album Talento del Barrio. (Docket No. 21,
`
`¶ 5).
`
`On February 3, 2010, plaintiffs allegedly notified defendants that the term of the
`
`agreements had expired and requested a detailed status of the remaining inventory up to
`
`January 10, 2010 and an audit of the royalty statements. (Docket No. 21, ¶ 3.14). The
`
`parties agreed to a six-month sell-off period of the four albums covered by the agreement.
`
`(Docket No. 21, ¶ 3.14). The next day, however, defendants allegedly retracted from the
`
`sell-off agreement and claimed that the license and distribution agreements did not expire
`
`until March 31, 2013. (Docket No. 21, ¶ 3.16). Plaintiffs allege that defendants have
`
`continued to copy, distribute, manufacture, disseminate, and/or otherwise exploit plaintiffs’
`
`
`
`2
`
`
`
`Case 3:10-cv-01349-JAG-MEL Document 95 Filed 05/30/12 Page 3 of 12
`
`musical works from Barrio Fino in violation of plaintiff’s copyrights for those works.
`
`(Docket No. 21, ¶ 3.17).1
`
`With respect to Talento del Barrio which, once again, is the only album related to
`
`the proposed intervenors’ claims, plaintiffs seek a declaratory judgment that both the
`
`license and distribution agreements have expired and also seek rescission of said
`
`agreements. (Docket No. 21, ¶¶ 4.1-4.2, 6.1-6.2). Plaintiffs also bring a claim for
`
`collection of monies and breach of contract, claiming that defendants underreported and
`
`underestimated royalties due to them under the licensing and distribution agreements.
`
`(Docket No. 21, ¶¶ 5.1-5.5).
`
`B.
`
`Proposed Intervenors’ Claims and Allegations
`
`The five individuals who wish to intervene are all music producers who allege that
`
`they jointly composed the song “Salgo pa la Calle,” which appeared on Ayala’s album
`
`Talento del Barrio. (Docket No. 67, ¶ 5). The proposed intervenors (incorrectly identified
`
`in their motion as “third party plaintiffs”) each entered into separate producer agreements
`
`and management agreements with Francisco Saldaña (“Saldaña”), a producer known as
`
`“Luny,” who is the principal of LT Benjamin Records and Mas Flow, Inc.. (Docket Nos.
`
`67, ¶ 4; 67-1, pp. 1-12; 68-1, p. 3, ¶ 3).2 The producer agreements granted Mas Flow “all
`
`right title and interest” in the copyrights of the masters of each song that applicants
`
`produced, but excluded the copyrights in the compositions themselves. (Docket No. 68-1,
`
`
`1 Plaintiffs do not allege that they hold copyrights for the works contained in any of the other albums covered
`by the two agreements. (See Docket No. 30)
`2 Neither the proposed third-party complaint nor the motion to intervene indicates the date that said
`agreements were executed.
`
`
`
`3
`
`
`
`Case 3:10-cv-01349-JAG-MEL Document 95 Filed 05/30/12 Page 4 of 12
`
`p. 2, ¶ 5). Applicants produced one album and at least forty-five other songs pursuant to
`
`this agreement. (Docket No. 68-1, p. 5, ¶ 16). One of those songs was “Salgo pa la Calle.”
`
`Saldaña and his companies had, in turn, a joint venture agreement with Machete
`
`Music, a division of UMG Recordings, according to which the latter would distribute
`
`albums produced by LT Benjamin Records and pay Saldaña royalties and profit advances.
`
`(Docket No. 67, ¶ 1-2). That agreement was executed on August 13, 2007. Id.
`
`Applicants’ proposed third-party complaint (attached as an exhibit to their motion to
`
`intervene) also references a distribution agreement between LT Benjamin Records and
`
`Machete Music signed in 2004 and a profit sharing agreement between those same parties
`
`signed in April of 2007. (Docket No. 68-1, p. 20, ¶ 71-72). Applicants appear to allege
`
`that, pursuant to those agreements, Saldaña was responsible for paying a portion of the
`
`royalties from Machete Music to his various producers.
`
`Applicant Raúl Rivera Roldán (also referred to in the complaint as “Raúl Roldán
`
`Rivera”) also alleges that, while working with Mas Flow, he wrote and produced two of
`
`the songs that appeared on an album by the musical duo known as “Wisin y Yandel,”
`
`composed of Juan L. Morera Luna and Llandel V. Malave, who are also named as
`
`defendants in the proposed third-party complaint. (Docket No. 68-1, ¶¶ 19-22). He alleges
`
`that those works appeared on Wisin y Yandel’s 2005 album Pa’l Mundo, and that he is
`
`thus owed royalties from those album sales. (Docket No. 68-1, p. 6, ¶ 23, p. 19, ¶¶ 66-70).
`
`With respect to “Salgo pa la Calle”—once again, the only musical composition
`
`relevant to both applicants’ and plaintiffs’ claims—applicants allege that the song was
`
`intended to be released on their album “Erre XI,” which was created pursuant to the joint
`
`
`
`4
`
`
`
`Case 3:10-cv-01349-JAG-MEL Document 95 Filed 05/30/12 Page 5 of 12
`
`venture agreement between Saldaña and Machete Music. (Docket No. 68-1, pp. 4-5, ¶¶ 10,
`
`14). However, that song “ended up somehow” as track number 7 on Ayala’s album,
`
`Talento del Barrio. (Docket No. 68-1, p. 4, ¶ 10). On March 2, 2012, applicants were
`
`granted copyright registration for the song “Salgo pa la Calle.” (Docket No. 68-1, ¶ 13).
`
`Applicants allege that Ayala is liable for infringement of that copyright. (Docket No. 68-1,
`
`¶ 10).
`
`In addition to their copyright infringement claim against Ayala for “Salgo pa la
`
`Calle,” the proposed third-party complaint contains a lengthy, and rather confusing, litany
`
`of copyright and contract claims against the following twelve defendants: LT Benjamin
`
`Records, Saldaña, Victor Cabrera (Saldaña’s production partner, known as “Tunes”), Mas
`
`Flow, Machete Music/UMG Recordings, Ayala, Los Cangris, El Cartel Records, Blue
`
`Kraft Publishing, White Kraft Publishing, Universal, and Wisin y Yandel. In sum,
`
`applicants’ claims relate to Saldaña’s alleged breach of the producer and management
`
`agreements, copyright claims for the songs they produced for Erre XI, and claims for
`
`royalties due from the songs they produced for Saldaña. Applicants also allege that they
`
`are entitled to damages for Machete’s breach of its joint venture agreement with Saldaña
`
`under a third party beneficiary theory. In total, the proposed third-party complaint contains
`
`twelve separately pleaded claims.
`
`II.
`
`ANALYSIS
`
`Applicants move to intervene as of right and permissively under Federal Rule of
`
`Civil Procedure 24(a) and 24(b), respectively. Plaintiffs and defendants have all opposed
`
`
`
`5
`
`
`
`Case 3:10-cv-01349-JAG-MEL Document 95 Filed 05/30/12 Page 6 of 12
`
`intervention, and, largely for the reasons set forth in those oppositions, the court finds that
`
`intervention is unwarranted.
`
`
`
`A.
`
`Intervention as of Right
`
`
`
`To intervene as of right under Rule 24, an applicant for intervention must show
`
`that: (1) the applicant has an interest relating to the property or transaction that is the
`
`subject of the action; (2) the disposition of the action may as a practical matter impair or
`
`impede the absentee’s ability to protect that interest, (3) the existing parties cannot
`
`adequately represent that interest; and (4) that the motion is timely. Fed. R. Civ. P.
`
`24(1)(2). The applicant must “fulfill all four of these preconditions. The failure to satisfy
`
`any one of them dooms intervention.” Pub. Serv. Co. of New Hampshire v. Patch, 136
`
`F.3d 197, 204 (1st Cir. 1998). The First Circuit has noted that this standard is somewhat
`
`imprecise, and that the “inherent imprecision . . . dictates that [the requirements] ‘be read
`
`not discretely, but together,’ and always in keeping with a commonsense view of the
`
`overall litigation.” Id. (citing United States v. Hooker Chems. & Plastics Corp., 749 F.2d
`
`968, 983 (2d Cir. 1984). While applicants may be able to demonstrate an interest and
`
`fulfill the first requirement, they clearly do not fulfill the second and third preconditions.
`
`
`
`With respect to that first element, applicants argue that they have an interest in a
`
`sum of money that defendants have deposited with the court, which is the amount that
`
`plaintiffs allege defendants improperly withheld from their royalty payments. (See Docket
`
`Nos. 57-59). Whether or not plaintiffs are entitled to these funds, however, depends on
`
`whether UMG did in fact improperly withhold those funds as per the license and
`
`distribution agreements, which are the real subject of this litigation. Applicants’ interest in
`
`
`
`6
`
`
`
`Case 3:10-cv-01349-JAG-MEL Document 95 Filed 05/30/12 Page 7 of 12
`
`those agreements is, at best, tenuous. Out of their numerous claims against the defendants
`
`named in their proposed third-party complaint, only their claims related to “Salgo pa la
`
`Calle” have any relevance to the agreements between plaintiffs and defendants.
`
`Applicants’ own characterization of this interest shows how tenuous it really is. They
`
`argue that they “have a direct interest in a portion of the monies in controversy in the
`
`present action [because their] royalties for ‘Salgo Pa La Calle’ are dependent on the
`
`amount of royalties paid to out by [sic] UMG to other parties, as they are paid by LT
`
`[Benjamin Records] and LT’s royalties will depend on the deductions UMG takes.” (D.E.
`
`67, p. 9-10). This argument makes it difficult to understand why applicants’ claim to
`
`royalties relates to the agreements between UMG and Ayala that are the subject of this
`
`action. Based on the facts alleged in applicants’ proposed third-party complaint, any
`
`royalties due to them from LT Benjamin Records derive from their contracts with Saldaña,
`
`which do not appear to have any relation to the contracts in this case.
`
`Perhaps what applicants wish to express is that Ayala owes them royalties for his
`
`wrongful use of their song, “Salgo pa la Calle,” on his album Talento del Barrio, and that
`
`any royalties that Ayala receives for the song come from UMG as per the distribution
`
`agreement.3 In that case, applicants might have an interest in a portion of the royalties that
`
`UMG allegedly owes Ayala—that is, the portion solely for that one song. However, this
`
`interest is peripheral to the main issues being litigated in the present action, and is also
`
`only a small part of applicants’ entire claim. The First Circuit has noted that “the type of
`
`interest sufficient to sustain intervention as of right is not amenable to precise and
`
`
`3 Once again, according to plaintiffs’ complaint, Talento del Barrio was not included in the licensing
`agreement.
`
`
`
`7
`
`
`
`Case 3:10-cv-01349-JAG-MEL Document 95 Filed 05/30/12 Page 8 of 12
`
`authoritative definition,” but that it must be read in conjunction with the next two
`
`elements, “and always in keeping with a commonsense view of the overall litigation.”
`
`Pub. Serv. Co. of New Hampshire, 136 F.3d at 204 (citations omitted). Viewed through
`
`this lens, it is evident that applicants’ interest is not sufficient to warrant intervention due
`
`to their inability to satisfy the next two preconditions and the posture of the overall
`
`litigation.
`
`
`
`With respect to the second factor, applicants argue that they will be unable to
`
`protect their interests if they are not allowed to intervene because “they will have to file an
`
`identical suit in this court.” (Docket No. 67, p. 10). Recognizing the inherent
`
`contradiction in this argument, defendants counter that applicants can protect their interests
`
`by doing that very thing: filing a separate lawsuit. In fact, applicants have already sought
`
`to protect their interest in “Salgo pa la Calle” and their other claims in two previous
`
`lawsuits. The first, filed in the United States District Court for the District of
`
`Massachusetts, was dismissed for lack of personal jurisdiction over the defendants. (See
`
`Civil No. 10-30002 (MAP), attached as Exhibit C at Docket No. 67-2). Applicants argue
`
`that they “were not provided a fair opportunity to litigate their claims in that case,” (Docket
`
`No. 67, ¶ 21), but a dismissal due to inability to exercise jurisdiction can hardly be deemed
`
`unfair. To the extent that applicants disagree with the personal jurisdiction ruling, they
`
`may file a motion for reconsideration with the Massachusetts District Court. In fact, they
`
`have expressed their intention to do that very thing in their motion to intervene. (Docket
`
`No. 67, ¶ 21). Therefore, applicants may, and currently are, protecting their interests in the
`
`Massachusetts litigation.
`
`
`
`8
`
`
`
`Case 3:10-cv-01349-JAG-MEL Document 95 Filed 05/30/12 Page 9 of 12
`
`
`
`Additionally, if they are unable to obtain personal jurisdiction over the defendants
`
`they wish to sue in Massachusetts, there is nothing to stop applicants from filing suit in
`
`Puerto Rico, or wherever said defendants may be subject to personal jurisdiction. In fact,
`
`on August 12, 2011, applicants did just that, by filing a complaint in this court with
`
`substantially similar claims against most of the same defendants named in their proposed
`
`third-party complaint.4 (See Docket No. 1 in Civil No. 11-1795 (CCC)). On January 13,
`
`2012, the court dismissed that complaint for applicants’ failure to serve any of the
`
`defendants within the time period allowed by Federal Rule of Civil Procedure 4(m).
`
`(Docket No. 8 in Civil No. 11-1795 (CCC)). The court’s order denying applicants’ motion
`
`for reconsideration of that dismissal noted that their explanation for the failure to serve
`
`process was that certain defendants were evading service, but that applicants had never
`
`made any effort to move for service by publication. Id. at pp. 2-3. Therefore, applicants
`
`lost their ability to protect their interests via that litigation due to their own inaction.
`
`Nevertheless, their claims were dismissed without prejudice and they are thus unhindered
`
`from bringing their claims again in a new lawsuit. (See Docket No. 8 in Civil No. 11-1795
`
`(CCC)). Therefore, even if applicants may have an interest within the meaning of Rule
`
`24(a), they cannot show that they will be unable to protect it unless they intervene in the
`
`present action.
`
`
`
`Moreover, applicants have failed to illuminate why Ayala does not adequately
`
`represent their interests in the present action. It is applicants’ contention that they have an
`
`interest in the royalties that UMG owes Ayala for “Salgo pa la Calle.” Because Ayala is
`
`
`4 The complaint in Civil No. 11-1795 (CCC) excludes the claim regarding the tracks that applicant Raúl
`Rivera Roldán allegedly produced for the album Pa’l Mundo, and thus names all of the same defendants
`except for Wisin y Yandel.
`
`
`
`9
`
`
`
`Case 3:10-cv-01349-JAG-MEL Document 95 Filed 05/30/12 Page 10 of 12
`
`suing UMG for those very royalties, it is, of course, in his interest to recover the maximum
`
`amount possible. As already discussed, applicants may bring a separate action against
`
`Ayala to recover their portion of those royalties. With respect to the contracts between
`
`UMG and Ayala, applicants only interest is in what Ayala may obtain from UMG for one
`
`song, “Salgo pa la Calle.” Ayala can adequately represent that interest.
`
`This court has noted that “[t]he goal of the interest requirement [in Rule 24(a)] is to
`
`dispose of lawsuits by involving as many concerned parties as is compatible with
`
`efficiency and due process.” Combustion Engineering Caribe, Inc. v. Geo P. Reintjes Co.,
`
`Inc., Civil No. 02-2466 (RLA), 2007 WL 1521566 at *5 (D.P.R. MAY 24, 2007) (quoting 6
`
`JAMES WM. MOORE, ET. AL., MOORE’S FEDERAL PRACTICE ¶ 24.03[2][a]). Here, the
`
`amount of complexity and time that applicants’ claims would add to this action would in
`
`fact compromise efficiency and due process for the present parties. Accordingly, Rule
`
`24(a)’s goal would not be served by their intervention.
`
`B.
`
`Permissive Intervention
`
`Rule 24(b) provides, in pertinent part, that upon “timely motion, the court may
`
`permit anyone to intervene who . . . has a claim or defense that shares with the main action
`
`a common question of law or fact.” Fed. R. Civ. P. 24(b)(1)(B). Once that threshold
`
`requirement is met, “the district court can [then] consider almost any factor rationally
`
`relevant but enjoys very broad discretion in granting or denying the motion.” Dagget v.
`
`Comm’n on Governmental Ethics & Election Practices, 172 F.3d 104, 113 (1st Cir. 1999)
`
`(citing U.S. Postal Serv. v. Brennan, 579 F.2d 188, 191-92 (2d Cir. 1978)). One factor that
`
`
`
`10
`
`
`
`Case 3:10-cv-01349-JAG-MEL Document 95 Filed 05/30/12 Page 11 of 12
`
`the court must consider is “whether intervention will unduly delay or prejudice the
`
`adjudication of the original parties’ rights.” Fed. R. Civ. P. 24(b)(3).
`
`As an initial matter, it is doubtful that applicants meet even the threshold
`
`requirement for permissive intervention. They argue that their claims “involve the same
`
`parties, contracts, and subject matter as the present case,” but their proposed third-party
`
`complaint belies the inaccuracy of this assertion. Intervenors propose to add no less than
`
`five new plaintiffs, eight additional defendants, and at least five claims that are completely
`
`unrelated to any of the songs or albums covered by the license and distribution agreements
`
`that are the subject of the instant case. Only seven of the twelve claims contained in the
`
`proposed third-party complaint relate even tangentially to “Salgo pa la Calle.” (Docket
`
`No. 68-1, Counts 5-11). Ayala’s only claims regarding Talento del Barrio, the album
`
`containing “Salgo pa la Calle,” are for unfair competition, breach of contract, rescission,
`
`and unjust enrichment. (See Docket No. 30). Unlike applicants, Ayala is not asserting a
`
`copyright claim regarding this song. See id.
`
`Even if applicants’ complaint did share a common question of law or fact with
`
`plaintiffs’ claims, the court, in its discretion, finds that intervention is not warranted here.
`
`As previously expressed, the number of unrelated claims and parties that applicants wish to
`
`add to this case would expand the present action exponentially. Also, because applicants’
`
`biggest complaint is with Saldaña, who is not a party to this case, the focus of the litigation
`
`would be considerably expanded. This would inevitably delay the adjudication of the
`
`original parties’ rights, contrary to Rule 24(b)’s mandate.
`
`
`
`
`
`11
`
`
`
`Case 3:10-cv-01349-JAG-MEL Document 95 Filed 05/30/12 Page 12 of 12
`
`III. CONCLUSION
`
`Accordingly, based on the foregoing reasons, applicants’ motion to intervene
`
`(Docket No. 67) is hereby DENIED.5
`
`IT IS SO ORDERED.
`
`In San Juan, Puerto Rico this 23rd day of May, 2012.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`s/Marcos E. López
`U.S. Magistrate Judge
`
`
`
`
`
`
`5 There is a split of authority as to whether a motion to intervene is a non-dispositive matter within the
`meaning of Federal Rule of Civil Procedure 72(a). Compare Oakland County, et. al. v. Fed. Nat’l Mortg.
`Ass’n, Civil No. 11-12666, 2011 WL 4374252, at *8 n.1 (E.D. Mich. Sept. 20, 2011) (comparing motion to
`intervene to motions for joinder or to add parties and thus finding it similarly non-dispositive), Oregon
`Natural Desert Ass’n v. Bureau of Land Mgmt, No. 09-CV-00369 (PK), 2011 WL 774037, *1 (D. Or. Mar.
`2, 2010) (treating motion to intervene as non-dispositive), Rhodes v. Ohse, No. 97-CV-17 (FJS), 1998 WL
`809510, *1 (N.D.N.Y. Oct. 30, 1998) (holding that motion to intervene is non-dispositive because Congress
`did not list it at 28 U.S.C. § 636(b)(1)(A)), and United States v. Certain Real Prop. & Premises, et. al.,751 F.
`Supp. 1060 (E.D.N.Y. 1989) (holding that motion to intervene is not dispositive), with Newman v. Sun
`Capital, Inc., No. 09-CV-445-FtM-29SPC, 2010 WL 326069, *1 (M.D. Fla. Jan. 21, 2010) (deciding, without
`discussion, that motion to intervene is dispositive), and Miss. Power & Light Co., 621 F. Supp. 718 (S.D.
`Miss. 1985) (holding that motion to intervene was equivalent to involuntary dismissal and thus dispositive);
`compare also Stackhouse v. McKnight, 168 Fed. Appx. 464, 466 (2d Cir. 2006) (holding that a motion to
`intervene must be decided by district judge where existing parties have consented to magistrate judge’s
`jurisdiction under 28 U.S.C. § 636(c), but there is no consent from proposed intervenor), with People Who
`Care v. Rockford Bd. of Educ. Sch. Dist. No. 205, 171 F.3d 1083, 1089 (7th Cir. 1999) (holding that consent
`was not required for magistrate judge to rule on motion to intervene where present parties had consented). It
`appears that the First Circuit has not addressed this question. The order on the present motion will not
`dispose “of a party’s claim or defense,” Fed. R. Civ. P. 72(a), because applicants are not parties to this action.
`Moreover, 28 U.S.C. § 636(b)(1)(A) provides that a district judge may designate a magistrate judge to
`“determine” pending pretrial matters, except for certain types of motions listed in that subsection of the
`statute. Motions to intervene do not appear in that list of exceptions. Therefore, the undersigned treats this as
`a non-dispositive motion and has accordingly issued an opinion and order.
`
`
`
`12