Merchant v. Levy

92 F.3d 51
CourtCourt of Appeals for the Second Circuit
DecidedAugust 7, 1996
DocketNos. 1322, 1653, 1768, Dockets 95-7763L, 95-7765CON, 95-7767XAP
StatusPublished
Cited by47 cases

This text of 92 F.3d 51 (Merchant v. Levy) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Merchant v. Levy, 92 F.3d 51 (2d Cir. 1996).

Opinion

JON O. NEWMAN, Chief Judge.

This appeal concerns the appropriate time period in which those claiming to be coauthors of a work whose copyright is registered to another person may sue to establish their co-ownership rights. Defendants-appellants-cross-appellees Morris Levy, Big-Seven Music Corp., and Roulette Records, Inc. (the “Levy Defendants”) and intervenor-defendant-appellant-cross-appellee Windswept Pacific Entertainment Co. (‘Windswept”) (collectively, the “Defendants”) appeal from the judgment of the District Court for the Southern District of New York (Naomi Reice Buehwald, Chief Magistrate Judge) entered on June 28, 1995. After a trial on the issue of liability was held in part before a jury and in part before the Court, the Court declared plaintiffs-appellees-cross-appellants Jimmy Merchant and Herman Santiago (“Plaintiffs”) co-authors with Frankie Lymon of the well-known musical composition Why Do Fools Fall in Love (“Fools”), and co-owners of the copyright therein. Merchant v. Lymon, 828 F.Supp. 1048 (S.D.N.Y.1993). The Court awarded Plaintiffs an undivided one-half interest in the copyright of Fools and monetary damages that accrued within three years of the filing of the lawsuit. We agree with Defendants that Plaintiffs’ claim seeking'a declaration of co-ownership rights based on their co-authorship of Fools is time-barred by the three-year statute of limitations, and we therefore reverse the judgment of the District Court.

Background

Plaintiffs Merchant and Santiago are two of the original members of the singing group “The Teenagers,” which was formed in 1955. Plaintiffs testified that in 1955 they jointly wrote the initial version of the song Fools. Frankie Lymon made a number of changes to the song when he subsequently joined the group, which then became known as “Frankie Lymon and The Teenagers.” The jury found that Merchant, Santiago, and Lymon were co-authors of Fools. At the time, Ly-mon was 12 years old and Plaintiffs were each 15.

In 1956 the Teenagers recorded Fools for Gee Records, then owned and operated by George Goldner, now deceased. Plaintiffs testified that they relied upon Goldner to handle the formalities of copyrighting the song, and that Goldner informed them that only two of the three authors could be listed on the copyright. Subsequently, Goldner filed the Fools copyright with the Copyright Office in 1956, listing himself and Lymon as sole co-authors. The Levy Defendants maintain that Goldner was properly listed as an author because he was personally involved in writing and arranging Fools. The Levy Defendants also contend that Goldner was a coauthor of Fools under the “work for hire” doctrine because, during the Fools recording [53]*53session, a saxophone solo composed by a studio musician was incorporated into the song. The jury, however, found that Goldner was not an author of Fools.

Sometime in the 1950s Lymon agreed to let Goldner exploit Lymon’s interest in the song. In 1968 Lymon died, survived by his wife Emira Lymon.

In 1964 defendant Morris Levy purchased Goldner’s interest in several music companies, including the music publishing company that held the copyright for Fools. In a letter to the Copyright Office dated June 24, 1965, Goldner stated that Levy, rather than Gold-ner, had co-authored Fools with Lymon. The copyright registration was amended to reflect this statement and, thereafter, the copyright was held by Levy’s company, Big Seven Music.1

Although Fools became a hit and continues to be popular today (Diana Ross has recorded a popular version), Plaintiffs have never received any royalties from their claimed co-authorship of Fools.

Plaintiffs reached the age of majority in 1961. They testified that on several occasions in the 1960s they contacted Goldner, and then Levy, to inquire about royalty payments, but to no avail. The jury found that Goldner and Levy deliberately concealed from Plaintiffs the accrual of royalties. The jury also found, however, that the only period during which Plaintiffs did not know, and could not have known with the exercise of reasonable diligence, that royalties to which they were entitled had accrued lasted from 1955 to 1961, while Plaintiffs were underage.

Plaintiffs also testified that they were afraid of Levy and that this fear made them reluctant to press their claims. Santiago testified that Levy threatened him in 1969, and Merchant testified that Levy threatened to kill him when, in 1977, he inquired about royalties. Plaintiffs assert that Levy was closely affiliated with organized crime and connected to a number of violent incidents. Levy was convicted in the late 1980s on federal extortion charges and sentenced to ten years in prison. The jury found that Levy threatened Plaintiffs with physical force and that Plaintiffs reasonably refrained from commencing suit because of the threats during a period that began in 1969 and lasted until December 24,1984.2

Beginning in the late 1970s, Plaintiffs took various steps in pursuit of their claim, including hiring an attorney and investigator to look into the status of the copyright. Plaintiffs did not take formal legal action, however, until 1987.

A. Procedural History

Plaintiffs brought the instant Complaint against the Levy Defendants and Emira Ly-mon on October 7,1987.3 Plaintiffs asked for a declaration that they were co-owners with Lymon of the copyright to Fools and for an accounting of royalties. Plaintiffs also alleged copyright infringement, Sherman Act and Lanham Act violations, unfair competition, fraud and misappropriation, and negligence and breach of fiduciary duty. Before trial the District Court (Vincent L. Broder-ick, Judge) dismissed all claims against Emi-ra Lymon, but allowed the action to proceed against the Levy Defendants.

By agreement of the parties, trial was held in part before a jury and in part before now-Chief Magistrate Judge Buchwald. The jury’s findings, as already noted, focused on the issues of authorship, fraudulent concealment, and duress. The parties agreed that, based on the jury’s findings, the Court would make final rulings on whether Plaintiffs were entitled to an ownership interest in the Fools copyright, and would decide issues relating to the statute of limitations, equitable estoppel, and laches. The Court was also to decide, as fact-finder, whether Plaintiffs were entitled to judgment on their copyright infringement, [54]*54Lanham Act, and common law unfair competition claims.4

After the jury’s verdict, the Levy Defendants argued in post-trial motions that they were entitled to a new trial on the co-authorship issue, and to judgment as a matter of law (a) that the doctrines of laches and equitable estoppel barred Plaintiffs’ claims and (b) that Plaintiffs were not victims of duress.

The Court denied the Levy Defendants’ motion for a new trial on the co-authorship issue, ruling that the jury’s findings were well-supported. Merchant, 828 F.Supp. at 1058. The Court then granted judgment in favor of the Levy Defendants on the claims of copyright infringement, Lanham Act violations, and unfair competition. Id. at 1058-60.

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Bluebook (online)
92 F.3d 51, Counsel Stack Legal Research, https://law.counselstack.com/opinion/merchant-v-levy-ca2-1996.