Garfield Baker v. Warner/Chappell Music, Inc.

• Court: Court of Appeals for the Eleventh Circuit
• Decided: November 27, 2018
• Docket: 18-11798
• Status: Unpublished

Opinion

Case: 18-11798 Date Filed: 11/27/2018 Page: 1 of 12

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 18-11798 Non-Argument Calendar ________________________

D.C. Docket No. 1:14-cv-22403-JG

GARFIELD BAKER, BYRON SMITH,

Plaintiffs - Appellants,

SHERMAN NEALY, MUSIC SPECIALIST, INC.,

Intervenor Plaintiffs - Appellants,

versus

WARNER/CHAPPELL MUSIC, INC., a Delaware Corporation, ARTIST PUBLISHING GROUP, L.L.C., a Delaware limited liability corporation, KAREN L. STETSON, an individual, 321 MUSIC L.L.C., a Florida limited liability corporation, TONY BULTER, an individual, PANDISC MUSIC CORPORATION, a Florida corporation, Case: 18-11798 Date Filed: 11/27/2018 Page: 2 of 12

WHOOPING CRANE MUSIC, INC., a Florida Corporation, ROBERT CRANE, an individual,

Defendants - Appellees,

ATLANTIC RECORDING CORPORATION, et al.,

Defendants.

________________________

Appeal from the United States District Court for the Southern District of Florida ________________________

(November 27, 2018)

Before WILSON, NEWSOM, and HULL, Circuit Judges.

PER CURIAM:

Garfield Baker, Byron Smith, Sherman Nealy, and Music Specialists, Inc.

appeal a district court order granting Robert Crane, Pandisc Music Corporation,

and Whooping Crane Music, Inc. a stay under the Colorado River doctrine in

deference to related state-court litigation. In invoking the doctrine, the district

court found that the federal and state suits at issue were sufficiently parallel and

that the Colorado River factors weighed in favor of abstention. Although the

Colorado River doctrine provides but a narrow exception to our “virtually

unflagging obligation” to exercise our jurisdiction when it exists, we cannot say

2 Case: 18-11798 Date Filed: 11/27/2018 Page: 3 of 12

that the district court abused its discretion in granting the motion to stay. We

affirm.

I

This case concerns the rights and royalties to 14 songs co-authored by

Garfield Baker, Byron Smith, Tony Butler, and Sherman Nealy between 1984 and

1987. Nealy’s company, Music Specialists, Inc., was the first to record, publish,

and distribute these songs; it also filed the original copyright registrations for most

of the songs. Music Specialists was administratively dissolved, however, between

1986 and 2008 while Nealy was incarcerated.

During this time, Butler—along with his companies Captain Productions and

C-Tan Music—decided to license the rights to the songs without Music

Specialists’s involvement. Between 1989 and 1992 Butler entered into several

licensing agreements with Robert Crane and Crane’s companies Pandisc Music

Corporation and Whooping Crane Music, Inc.

In 2006, the Crane companies sued the Butler companies in Florida state

court, alleging that Butler was falsely telling third parties that Crane did not have

any licensing rights to the subject songs. Two years later, Butler—through a new

company called 321 Music, LLC—entered into yet another licensing agreement,

this time with Warner/Chappell Music, purporting to license the same songs he had

earlier licensed to the Crane companies. The Crane companies then filed a

3 Case: 18-11798 Date Filed: 11/27/2018 Page: 4 of 12

copyright-infringement suit against Butler and Warner/Chappell Music in federal

court to protect their rights in the songs. Two of the other songwriters, Baker and

Smith, moved to intervene, claiming copyright infringement and constructive trust.

All of the parties reached a settlement agreement that outlined a distribution of

royalties based in part on Butler’s representations that he had recently re-licensed

the songs to another company, Universal UK.

After the agreement, however, some dispute arose as to whether Butler had

indeed contracted with Universal UK, resulting in royalties to be distributed per the

settlement agreement. Baker and Smith filed several motions to enforce the

agreement in federal court, but the district judge denied the motions, explaining

that it no longer had jurisdiction over the settlement agreement and that any

recourse to be had would be found in a state-court contract action.

Baker and Smith instead initiated this suit in federal court,1 alleging that

they were the “beneficial owners” of the works at issue because they had assigned

their original rights in the songs to Music Specialists in exchange for royalties.2

After the district judge dismissed the first two complaints for, among other things,

1 About a month after filing this suit, Baker and Smith also filed a breach-of-contract claim in state court seeking to recover royalties allegedly due under the settlement agreement. The second state-court case has been stayed pending resolution of this suit. 2 Baker and Smith, initiating this suit pro se, at first asserted that they were the “copyright owners” of the songs, but in their reply to the Crane companies’ motion to dismiss they clarified that they were the “beneficial owners,” entitled to royalties based on Music Specialists’s copyright ownership.

4 Case: 18-11798 Date Filed: 11/27/2018 Page: 5 of 12

“shotgun” pleadings, the parties consented to magistrate-judge jurisdiction, and

Baker and Smith filed the currently-operative complaint. The magistrate judge

granted Nealy and Music Specialists leave to intervene, based on claims that Music

Specialists was “the sole and exclusive owner” of the copyrights and that it had

never assigned its rights to anyone else.

The Crane companies then moved to stay this proceeding under the

Colorado River doctrine pending resolution of the original 2006 state-court

proceeding. 3 The district court granted the motion, and Baker, Smith, Nealy, and

Music Specialists timely appealed.

II

The Colorado River doctrine “addresses the circumstances in which federal

courts should abstain from exercising their jurisdiction because a parallel lawsuit is

proceeding in one or more state courts.” Ambrosia Coal & Const. Co. v. Pages

Morales, 368 F.3d 1320, 1327 (11th Cir. 2004). We review a district court’s order

abstaining from the exercise of jurisdiction on Colorado River grounds for abuse

of discretion. TranSouth Fin. Corp. v. Bell, 149 F.3d 1292, 1294 (11th Cir. 1998).

Our precedent makes clear that federal courts should rarely yield jurisdiction

to a state court simply because litigation would be duplicative—a pending action in

state court does not normally bar proceedings regarding the same matter in federal

3 Defendants-Appellees Warner/Chappell Music, Inc., Artist Publishing Group, LLC, and Karen L. Stetson separately filed a motion to dismiss which the district court denied.

5 Case: 18-11798 Date Filed: 11/27/2018 Page: 6 of 12

court. Jackson-Platts v. Gen. Elec. Capital Corp., 727 F.3d 1127, 1140 (11th Cir.

2013). That said, in Colorado River Water Conservation District v. United States,

the Supreme Court acknowledged that federal courts could abstain from exercising

otherwise-proper jurisdiction in certain extraordinary circumstances involving the

“contemporaneous exercise of concurrent jurisdictions.” 424 U.S. 800, 814, 817

(1976). The Court clarified, however, that such instances would be rare, as federal

courts have a “virtually unflagging obligation . . . to exercise the jurisdiction given

them” when it exists. Id. at 817 (citation omitted).

A

As a threshold matter, the Colorado River analysis is limited to situations in

which federal and state proceedings involve “substantially the same parties and

substantially the same issues.” Ambrosia Coal, 368 F.3d at 1330. In this case,

they do. As the district court correctly observed, both the state and federal

proceedings here concern the same issue: ownership of and licensing rights to

certain musical works. The parties are also substantially the same—in state court,

the Crane companies sued to enjoin the Butler companies and Music Specialists

from claiming ownership rights in the songs; in federal court Music Specialists,

Nealy, Baker, and Smith sued the Crane companies, seeking a declaration of rights

in the same songs. Although Baker and Smith are not parties to the state action, as

“beneficial owners” their alleged interest is inextricably linked to Music

6 Case: 18-11798 Date Filed: 11/27/2018 Page: 7 of 12

Specialists’s ownership interest, which is directly at issue in the state proceeding.

As such, the parties in the state and federal proceedings are “substantially” the

same such that this Court may consider the Colorado River factors. Id. at 1329–30

(rejecting an argument that parties and issues must be identical to trigger Colorado

River abstention).

B

When the parties and issues are substantially the same, we analyze the

propriety of Colorado River abstention by weighing several factors: (1) whether

the state or federal court has assumed jurisdiction over any property at issue; (2)

the relative inconvenience of the federal forum; (3) the likelihood of “piecemeal

litigation”; (4) the order in which the courts obtained jurisdiction; (5) whether state

or federal law will be applied; (6) whether the state court can adequately protect

the parties’ rights; and (7) “the vexatious or reactive nature of either the federal or

the state litigation.” See Ambrosia Coal, 368 F.3d at 1331; Am. Bankers Ins. Co. of

Fla. v. First State Ins. Co., 891 F.2d 882, 884 (11th Cir. 1990) (per curiam). In

conducting this analysis we consider the factors pragmatically, keeping in mind

that “[n]o one factor is necessarily determinative,” Colorado River, 424 U.S. at

818, and that while “[t]he weight to be given to any one factor may vary greatly

from case to case,” our analysis as a whole should be “heavily weighted in favor of

7 Case: 18-11798 Date Filed: 11/27/2018 Page: 8 of 12

the exercise of jurisdiction.” Moses H. Cone Mem’l Hosp. v. Mercury Constr.

Corp., 460 U.S. 1, 16 (1983).

The first two factors require only a brief look here. As to the first, the

relevant cases are not proceedings in rem so this factor is inapplicable—neither

court has taken jurisdiction over property. And as to the second, convenience of

the forums, neither party contends that the federal forum is less convenient than the

state forum. Thus, neither the first nor the second factor weighs in favor of

abstention. See Ambrosia Coal, 368 F.3d at 1332.

Looking to the third factor, the district court appropriately found that the

likelihood of piecemeal litigation weighs in favor of abstention. Our case law

instructs that while the potential for piecemeal litigation does not in and of itself

weigh in favor of abstention, the probability of “abnormally excessive or

deleterious” piecemeal litigation does. Jackson-Platts, 727 F.3d at 1142. Here,

Baker and Smith filed a suit in federal court seeking to determine the same

ownership and licensing issues pending in state court (and arguably already

decided in an earlier state-court proceeding), including whether Music Specialists

has rights in the musical works. This parallel federal litigation is not tangentially

or somewhat related to the state suit—the issues are essentially identical. The

possibility that this Court and the state court will come to contradictory

conclusions on which licensing agreements are lawful and which parties own the

8 Case: 18-11798 Date Filed: 11/27/2018 Page: 9 of 12

songs could certainly create “piecemeal litigation that is abnormally excessive or

deleterious.” Ambrosia Coal, 368 F.3d at 1333. Thus, the third Colorado River

factor weighs in favor of abstention.

The fourth factor—namely, the order in which the forums obtained

jurisdiction—“should not be measured exclusively by which complaint was filed

first, but rather in terms of how much progress has been made in the two

actions.” Moses H. Cone, 460 U.S. at 21. Here, the state suit was not only filed

long before the federal suit—2006 versus 2014—it has progressed further. In the

state-court proceeding, the parties have gone through discovery and a motion for

summary judgment is pending. In the federal proceeding, by contrast, discovery

has yet to occur—the district court recently denied the other Defendants-

Appellees’s motion to dismiss but granted the Crane companies’ motion to stay,

resulting in this appeal. Given the progress made in state court, this Colorado

River factor weighs in favor of abstention.

The fifth factor, whether state or federal law controls, “favors abstention

only where the applicable state law is particularly complex or best left for state

courts to resolve.” Jackson-Platts, 727 F.3d at 1143; see also Noonan South v.

Volusia Cty., 841 F.2d 380, 382 (11th Cir. 1988) (same). Here, although the

interpretation of the licensing agreements at issue is a matter of state law, federal

9 Case: 18-11798 Date Filed: 11/27/2018 Page: 10 of 12

courts are well equipped to decide contract cases under state law and routinely do

so. Because of this, the fifth factor does not counsel in favor of abstention.

The sixth factor, whether the state court will adequately protect the interests

of the parties, is similarly neutral because nothing indicates that either forum

would be incapable of protecting the parties’ rights in a routine contracts action.

See Noonan South, 841 F.2d at 383 (explaining that this factor does not weigh in

favor of abstention when both forums are adequate to protect the parties’ rights).

The seventh factor—“the vexatious or reactive nature of either the federal or

the state litigation”—weighs in favor of abstention. Baker and Smith filed this

federal copyright lawsuit on the heels of an unsuccessful attempt to enforce a

settlement agreement in federal court and one month before filing a breach-of-

contract action concerning the same settlement agreement in state court. The

initial complaint in this case was dismissed as an impermissible “shotgun

pleading” because it named nine defendants in six counts with no attempt to clarify

who was allegedly responsible for what. See, e.g., Anderson v. Dist. Bd. of

Trustees of Cent. Fla. Cmty. Coll., 77 F.3d 364, 366 (11th Cir. 1996) (holding that

plaintiffs are required to “present each claim for relief in a separate count” rather

than asserting numerous claims within a single count). Moreover, Baker and

Smith filed the present suit long after the state court had been asked to decide

Music Specialists’s ownership interest in the songs—on which their derivative

10 Case: 18-11798 Date Filed: 11/27/2018 Page: 11 of 12

“beneficial” interests depend. This sequence of events indicates that this suit is

likely reactive, weighing in favor of abstention. See Moses H. Cone, 460 U.S. at

17 n.20; Ambrosia Coal, 368 F.3d at 1331.

Although only three of the seven factors weigh in favor of abstention here,

we do not find that the district court abused its discretion in granting the Crane and

Warner companies’ motion to stay. Given that the state and federal proceedings

both directly concern ownership rights in the contested works, that the state court

proceedings have been unfolding for over a decade, and that Baker and Smith filed

their federal complaint as an apparent end run around the settlement agreement,

this case arguably fits within the narrow exception for Colorado River abstention,

even given the presumption in favor of exercising jurisdiction.4 See Moses H.

Cone, 460 U.S. at 16 (advising that “[t]he weight to be given to any one factor may

vary greatly from case to case”); Colorado River, 424 U.S. at 818 (instructing that

the factors should be applied flexibly and pragmatically).

In so holding we note that whether we would come out differently

considering this question in the first instance is irrelevant—our review is for abuse

of discretion. “The application of an abuse-of-discretion review recognizes the

range of possible conclusions the trial judge may reach.” United States v.

4 We also note that Baker and Smith brought copyright-infringement claims in the 2009 federal suit, and that the suit was resolved via a settlement agreement. Because we do not find that the district court abused its discretion in granting a stay, we need not address whether Baker and Smith’s claims are also collaterally estopped.

11 Case: 18-11798 Date Filed: 11/27/2018 Page: 12 of 12

Frazier, 387 F.3d 1244, 1259 (11th Cir. 2004) (en banc). Thus, “we must affirm

unless we find that the district court has made a clear error of judgment, or has

applied the wrong legal standard.” Amlong & Amlong, P.A. v. Denny’s, Inc., 500

F.3d 1230, 1238 (11th Cir. 2007) (quotation omitted). The district court in this

case carefully examined the Colorado River factors and reasonably concluded that

abstention was warranted. We will not disturb its decision.

III

In sum, the district court did not abuse its discretion in staying this case

under the Colorado River doctrine pending the resolution of the parallel state court

action.

AFFIRMED.