United States Court of Appeals
For the First Circuit
No. 08-1498
LATIN AMERICAN MUSIC COMPANY, d/b/a Asociación de Compositores y
Editores de Música Latinoamericana (ACEMLA); ASOCIACIÓN DE
COMPOSITORES Y EDITORES DE MÚSICA LATINOAMERICANA (ACEMLA),
Plaintiffs, Appellants,
v.
AMERICAN SOCIETY OF COMPOSERS AUTHORS AND PUBLISHERS,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. José Antonio Fusté, U.S. District Judge]
Before
Torruella, Baldock* and Howard,
Circuit Judges.
Mauricio Hernandez Arroyo, with whom the Law Offices of
Mauricio Hernandez Arroyo, was on brief, for appellants.
Richard H. Reimer, with whom Diego A. Ramos, Fiddler Gonzáles
& Rodriguez, PSC, Stephen S. Young, and Holland & Knight LLP, were
on brief, for appellee.
January 29, 2010
*
Of the Tenth Circuit, sitting by designation.
HOWARD, Circuit Judge. This dispute involves rights to
a single song, "Caballo Viejo."1 The appellants are the Latin
American Music Company ("LAMCO") and the Asociación de Compositores
y Editores de Música Latino Americana ("ACEMLA").2 The appellee is
the American Society of Composers, Authors, and Publishers
("ASCAP"). After a trial, a jury found that the rights belonged to
ASCAP. This determination turned on an implicit finding that
ASCAP's predecessor in interest West Side Music Publishing, Inc.
("West Side"), lawfully terminated a 1982 contract that had
previously transferred West Side's rights in Caballo Viejo to the
appellants.
The appellants' primary argument is that the jury was
improperly instructed about the manner in which the 1982 contract
could be terminated. The appellants also take issue with an
additional jury instruction, with the verdict form, and with
comments made by ASCAP's attorney during closing argument.3 We
affirm.
1
Caballo Viejo translates into "Old Horse." The song was
composed by Simón Díaz and is a popular folk song in Venezuela.
2
The two appellants in this case, LAMCO, a music publisher
based in New York, and ACEMLA, a performance rights society based
in Puerto Rico, are affiliated with one another and their interests
are aligned in this case. Thus, we will sometimes refer to the
appellants singularly as "LAMCO."
3
An additional claim on appeal, based on a correction to the
judgment, is without any record support and warrants no discussion.
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I. Facts
We provide only the essential facts here.4 In September
1981, Simón Díaz, the composer of Caballo Viejo, granted rights to
the song to a predecessor of West Side. West Side, in turn,
through a 1982 contract "transferred and ceded" an exclusive
license to ACEMLA, LAMCO's predecessor in interest. The 1982
contract between West Side and ACEMLA, which was formed in New
York, was silent with respect to termination. It did not specify
a termination date, the conditions under which the exclusive
license could be terminated, or the manner in which the license
could be terminated.
In 1996, this lack of clarity became a sticking point, as
a dispute arose over the copyright. LAMCO filed an action in
federal court claiming, among other things, that it owned a
copyright in Caballo Viejo under the 1982 contract. ASCAP, which
was eventually brought into the case as a defendant, demurred and
claimed that it held the copyright, because its predecessor in
interest West Side5 had lawfully terminated the 1982 contract.
4
Those interested in the background of this case may consult
our previous decision in Latin Am. Music Co. v. Archdiocese, 499
F.3d 32 (1st Cir. 2007). In that decision, we vacated a grant of
summary judgment in favor of ASCAP on the ownership of Caballo
Viejo, holding that a material question of fact existed. Id. at
38-40.
5
West Side effectively became a part of ASCAP in 1993.
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After a remand from this court, see Latin Am. Music Co., 499 F.3d
at 38-40, the case proceeded to trial.
At trial, the only evidence that was presented about
termination was the videotaped deposition of West Side's president,
Hector Varona. In his deposition, Varona testified that he had
verbally terminated the 1982 agreement with ACEMLA. He testified
that the verbal termination occurred during a conversation that he
had with the president of ACEMLA, Raul Bernard.6
At the close of the evidence, the parties disagreed over
whether the court should instruct the jury that Varona's purported
termination of the 1982 contract had to be in writing. LAMCO
argued that the federal Copyright Act governed termination of the
agreement and that any notice of termination therefore had to be in
writing. It further argued that, even if New York state law rather
than the Copyright Act governed the termination, the notice of
termination still had to be in writing. For its part, ASCAP argued
that New York law governed termination and that, under New York
law, a contract of an unspecified duration could be terminated upon
reasonable notice. In ASCAP's view, whether Varona's verbal
communication constituted "reasonable notice" was a question for
the jury.
6
Bernard is the chief executive officer, director, and
majority stockholder of both ACEMLA and LAMCO.
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The district court ultimately agreed with ASCAP,
instructing the jury as follows:
In order for ASCAP to prevail on its
declaration of legal rights claim, ASCAP must
prove by a preponderance of the evidence that
the agreements between West Side Music and
LAMCO parties had either expired by their own
terms or were terminated by Hector Varona
before January 1st, 1992, so that ASCAP and
not LAMCO had the rights to license public
performances of Caballo Viejo after January
the 1st, 1993. And that's where the dispute
is. That's what you have to look into.
And how is it that you look into those
things? You know, a licensing agreement
without a specific term may be ended by one
party after a reasonable duration and after
reasonable notice is given to the other party.
And there are many things you can
consider. Obviously one thing that you can
consider is whether the development of the
transaction, as such, was made in writing or
not. You can also consider what kind of
letters the parties exchanged as these things
developed to figure out what was the intention
of them.
You can also consider the written words
of the contracts that they signed. You may
also consider the conduct of the parties to
ascertain if the actions of one party or the
other was consistent with the positions they
assumed in reference to the termination of the
contract at issue here.
Had it been totally black and white, we
probably would not be here obviously. It may
be better to make it in black and white, but I
don't think that the law requires in the case
of a termination of an agreement that it be
only in black and white. Better, yes, but not
only.
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And that's why I say that you have to
look at the whole scenario. You have to look
at what was it that the parties did, how was
it that they reacted to it, what was it that
they -- how was it that they conducted
themselves in reference to this? And then,
out of that, out of that circumstantial
evidence, perhaps you can figure out whether
indeed it is ASCAP, or it's the other party,
the one entitled to the rights of this song
Caballo Viejo.
(emphasis added).
When the court finished instructing the jury, LAMCO again
objected to the court's termination instruction. Again, LAMCO
argued that any notice of termination had to be in writing. The
court did not budge and the case went to the jury. The jury found
in favor of ASCAP. This appeal ensued.
II. Discussion
A. Jury Instructions
LAMCO objects to two instructions given by the district
court. We examine each instruction in turn.
1. Termination instruction
a. Which law governs termination?
LAMCO first argues that the district court erred when it
applied New York law, rather than the Copyright Act, when
instructing the jury on whether there had been an effective
termination of the 1982 contract. We review this claim of
instructional error de novo. SEC v. Happ, 392 F.3d 12, 28 (1st
Cir. 2004). A jury instruction is erroneous if it is misleading,
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confusing, or incorrect as a matter of law. Davignon v. Clemmey,
322 F.3d 1, 9 (1st Cir. 2003).
Ordinarily, unless a contract provides otherwise, it is
governed by the law of the state in which it was formed. See U.S.
Trust Co. v. New Jersey, 431 U.S. 1, 19 n. 17 (1977); see also
Norfolk & W. Ry. Co. v. Am. Train Dispatchers Ass'n, 499 U.S. 117,
130 (1991). Where a contract formed in a particular state is
silent with respect to certain terms, state rules of enforcement
and interpretation may serve to fill those gaps. See U.S. Trust
Co., 431 U.S. at 19 n.17 ("The obligations of a contract long have
been regarded as including not only the express terms but also the
contemporaneous state law pertaining to interpretation and
enforcement."); see also Norfolk & W. Ry. Co., 499 U.S. at 130
("Laws which subsist at the time and place of the making of a
contract, and where it is to be performed, enter into and form a
part of it, as fully as if they had been expressly referred to or
incorporated in its terms.") (quoting Farmers and Merchs. Bank of
Monroe v. Fed. Reserve Bank of Richmond, 262 U.S. 649, 660 (1923));
Walthal v. Rusk, 172 F.3d 481, 485 (7th Cir. 1999) (explaining that
a contract reached in Illinois that was silent as to duration was
"terminable at will" under Illinois law).
Here, the contract was formed in New York and is silent
with respect to termination. Under New York law, such a contract
remains in force for a reasonable time and is subject to
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termination upon reasonable notice. Italian & French Wine Co. of
Buffalo, Inc. v. Negociants U.S.A., Inc., 842 F. Supp. 693, 699
(W.D.N.Y. 1993) ("[W]ell-settled New York law [] provides that a
contract with no stated duration is terminable only after a
reasonable duration and after reasonable notice is given."); see
also Laugh Factory, Inc. v. Basciano, 608 F. Supp. 2d 549, 556
(S.D.N.Y. 2009); Rogers v. HSN Direct Joint Venture, 1999 U.S.
Dist. LEXIS 12111, at * 3 (S.D.N.Y. Aug. 6, 1999).
LAMCO, however, argues that the Copyright Act preempts
this default rule of termination because the Act and the default
rule are in conflict. Walthal, 172 F.3d at 485 (explaining, when
deciding whether the Copyright Act preempted state law, that "state
contract law cannot provide the basis of a decision if that law
conflicts with federal law"). LAMCO argues further that, under the
Copyright Act, Varona's notice of termination had to be in writing.
We discern no conflict between the federal law and New
York law, because we conclude that the sections of the Copyright
Act cited by LAMCO are inapplicable in this case. Accordingly, we
reject LAMCO's preemption argument.
LAMCO first directs our attention to § 204 of the
Copyright Act, applicable to the transfers of copyright ownership.
17 U.S.C. § 204. It provides in relevant part:
Execution of transfers of copyright ownership.
(a) A transfer of copyright ownership, other
than by operation of law, is not valid unless
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an instrument of conveyance, or a note or
memorandum of the transfer, is in writing and
signed by the owner of the rights conveyed or
such owner's duly authorized agent.
Id. § 204 (a).
LAMCO suggests that this section is applicable to the
alleged termination of rights at issue in this case. The logic is
as follows. West Side transferred an exclusive license to ACEMLA
through the 1982 contract. Upon West Side's termination of that
contract, ownership of the copyright would be transferred from
ACEMLA back to West Side. Because the effect of the contract
termination was to transfer copyright ownership, § 204 applied and
required a writing to effectuate the transfer. And, because there
was no writing, no transfer of ownership interest could have
occurred.
Section 204, which requires a writing signed by the
transferor, however, applies to the transfer or grant of copyright
ownership, not to the termination of such a transfer or grant.
LAMCO cites no case suggesting otherwise, nor are we are aware of
any such case. Moreover, extending § 204 to the termination of
copyright interests would lead to untenable results. A transferee
of a copyright interest could effectively veto a lawful termination
of that interest by refusing to reconvey that interest to the
terminating party under § 204. For example, in this case, LAMCO,
the transferee, could have prevented West Side from terminating the
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exclusive license by simply choosing not to reconvey the license to
West Side through either an instrument of conveyance, or a note or
memorandum of transfer.
Next, LAMCO cites § 203, which explicitly deals with
termination of transfers and licenses granted by an author. 17
U.S.C. § 203. Under that section, an author, or an author's
statutory heirs, may, under certain conditions, terminate an
exclusive grant of a license "by serving an advance notice in
writing . . . upon the grantee or the grantee's successor in
title." Id. § 203 (a)(4) (emphasis added).
That section, however, is also inapplicable. According
to its plain language, § 203 only applies where an author or an
author's statutory heirs are terminating the grant. Id. § 203
(a)(1)-(2); 3 Melville B. Nimmer & David Nimmer, Nimmer on
Copyright § 11.03[B], at 11-40.5 (2007) ("Grants executed on or
after January 1, 1978 are subject to termination only if executed
by the author.") (emphasis added). West Side is neither the author
nor a statutory heir of the author. Furthermore, LAMCO does not
contend that West Side should be treated as either an author or
statutory heir for purposes of § 203. In light of the plain
language of § 203, there is no basis to conclude that § 203 applies
to this contract.
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b. Reasonable notice under New York law
LAMCO also argued below that it was entitled to relief
even under New York law. The contention is that, under the
circumstances of this case, only written notice of termination
could constitute "reasonable notice" under New York law, and the
court should have instructed the jury accordingly. In support of
this argument, LAMCO contended that New York law would require a
party who is terminating an exclusive license to comply with §
203's termination provision, whether or not the terminating party
is an author or statutory heir.
We need not linger over this argument. On appeal, LAMCO
makes only a passing reference to the argument, fails to cite any
authority in support of it, and does not develop the argument in
any meaningful way. As a result, the argument is waived. See
United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990) (noting
the "settled appellate rule that issues adverted to in a
perfunctory manner, unaccompanied by some effort at developed
argumentation, are deemed waived").
2. Missing witness instruction
Varona, West Side's president, did not testify in person
at trial. Instead, a videotape of his deposition was shown to the
jury. Because Varona did not testify in person, LAMCO asked the
district court to give the jury a "missing witness" instruction.
The district court declined the request. LAMCO claims that this
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was in error. "We review the grant and denial of missing witness
instructions for abuse of discretion." Grajales-Romero v. Am.
Airlines, Inc., 194 F.3d 288, 298 (1st Cir. 1999).
Although far more common in criminal cases7, a missing
witness instruction may be given in a civil case as well. See
Grajales-Romero, 194 F.3d at 298. The instruction informs the jury
that a party's failure to produce a particular witness may justify
the inference that the witness' testimony would have been
unfavorable to that party. United States v. Lewis, 40 F.3d 1325,
1336 (1st Cir. 1994). The instruction, however, should only be
given where "the witness is either actually unavailable to the
party seeking the instruction or so obviously partial to the other
side that the witness [though technically available] is deemed to
be legally unavailable." United States v. Perez, 299 F.3d 1, 3
(1st Cir. 2002). When deciding whether to issue a missing witness
instruction the "court must consider the explanation (if any) for
the witness's absence and whether the witness, if called, would be
likely to provide relevant, non-cumulative testimony." Id.
Here, the court acted within its discretion in refusing
to give the jury a missing witness instruction. Varona was not
missing in the classic sense. Although he did not testify in
7
In criminal cases, the instructions are typically given
against the government. See, e.g., United States v. Pagan-Santini,
451 F.3d 258, 267 (1st Cir. 2006); United States v. Jimenez, 419
F.3d 34, 44 (1st Cir. 2005).
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person, he testified in a deposition in which he was questioned by
LAMCO's counsel. This deposition was videotaped and shown to the
jury. See Poulin v. Greer, 18 F.3d 979, 983 n.3 (1st Cir. 1994)
(noting that, where the witness's deposition testimony was entered
into evidence, "we do not believe that the district court abused
its discretion in refusing to give a missing witness instruction");
see also Cameo Convalescent Ctr., Inc. v. Senn, 738 F.2d 836, 844
(7th Cir. 1984) (explaining that "the justification for the missing
witness instruction diminishes with the availability of the tools
of discovery"). Furthermore, Varona's inability to testify in
person was explained at trial. Both parties stipulated that Varona
would appear by videotape because he resided outside of the
district. See Perez, 299 F.3d at 3.
B. Verdict form
The district court provided the jury with a general
verdict form that required it only to find in favor of either ASCAP
or LAMCO. LAMCO claims that this was error and that the court
instead should have given the jury a verdict form requiring the
jury to determine whether there had been a writing memorializing
the termination. Because LAMCO failed to object to the verdict
form below, our review is for plain error. See Fed. R. Civ. P.
51(d)(2).8
8
Under this standard of review, LAMCO must show an error that
was plain, (i.e., obvious and clear under current law), prejudicial
(i.e., affected the outcome of the district court proceedings), and
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This claim amounts to a rehash of LAMCO's argument
regarding the district court's termination instruction.
Accordingly, for reasons already discussed, the claim fails.
C. Closing Argument
LAMCO claims that counsel for ASCAP made improper
statements to the jury during closing argument. According to
LAMCO, ASCAP's counsel intimated to the jury that there never was
an agreement between West Side and ACEMLA (LAMCO's predecessor in
interest).
To fully understand LAMCO's claim, some additional
background information is necessary. At trial, evidence was
presented that indicated that ACEMLA did not exist in 1982. This
evidence was a 1985 decision from the Copyright Royalty Tribunal
that effectively concluded that ACEMLA did not exist in 1982. In
relevant part, the Tribunal wrote:
The Tribunal concludes from the evidence
established on the record that Mr. Bernard
began a music publishing company sometime
before April 1981, that he incorporated in
April, 1981, and that he filed an assumed name
for a subdivision of his music publishing
company to be called ACEMLA in April, 1984.
Since LAM has rescinded its claim that either
Latin American Music or Latin American Music
Co., Inc. were performing rights societies in
1982, and 1983, and since ACEMLA did not even
legally exist until 1984, none of the LAM
that seriously impaired the fairness, integrity, or public
reputation of the judicial proceedings. See Colon-Millin v. Sears
Roebuck de P.R., Inc., 455 F.3d 30, 41 (1st Cir. 2006).
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claimants were a performing rights society in
1982 and 1983.
However, Mr. Bernard claims that ACEMLA began
in 1980 or earlier. The record is devoid of
any activity by ACEMLA before 1984. ACEMLA
did not license a single user, receive a
single royalty or make a single distribution
in 1982 and 1983. Not a single agreement with
a domestic or foreign entity refers to ACEMLA.
Based on the Copyright Royalty Tribunal decision, which
was entered into evidence as Exhibit 18, ASCAP's attorney said the
following to the jury during closing argument:
Now, remember, this agreement is purportedly
with ACEMLA. Remember that? Not with LAMCO.
With ACEMLA. But in 1982, as the date of the
agreement, what do we know? Was there ACEMLA
active? No . . . . That's what the Copyright
Tribunal held. And you can read that from
Exhibit 18, which we read at the very last
part of the case.
These comments form the basis of LAMCO's claim. Because
LAMCO did not object to these comments in a timely fashion, our
review is for plain error. Smith v. Kmart Corp., 177 F.3d 19, 25
(1st Cir. 1999); see also Wilson v. Town of Mendon, 294 F.3d 1, 16
n.30 (1st Cir. 2002) (explaining that a party should typically
voice such an objection at the conclusion of an opponent's closing
argument).
There was no plain error here for at least two reasons.
First, we doubt there was any error in the first place. Counsel's
statements appear to fall within the bounds of permissible
argument. The statements are supported by the Copyright Royalty
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Tribunal decision, an exhibit that was admitted into evidence
without any objection from LAMCO.
Second, even if there was error, any possible prejudice
that the statements could have caused LAMCO was countered by the
district court's instructions to the jury. The district court
effectively instructed the jury that the 1982 contract did exist.
Again, some background information is necessary. West Side entered
into two separate contracts with ACEMLA concerning Caballo Viejo,
the 1982 contract, which is relevant to this particular dispute,
and a 1981 contract, which expired by its own terms in 1986. The
district referred to both contracts when instructing the jury,
thereby dispelling any notion that the 1982 contract did not exist.
The district court instructed the jury:
In order for ASCAP to prevail on its
declaration of legal rights claim, ASCAP must
prove by a preponderance of the evidence that
the agreements between West Side Music and
LAMCO parties had either expired by their own
terms or were terminated by Hector Varona
before January 1st, 1992, so that ASCAP and
not LAMCO had the rights to license public
performances of Caballo Viejo after January
the 1st, 1993.
(emphasis added).
Although we doubt that any more is necessary, we also
note that the district court emphasized to the jury that closing
arguments were not evidence and "of course cannot be considered."
This further limited any ill effects that counsel's statements
could have caused LAMCO.
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III. Conclusion
For the reasons provided above, the judgment is affirmed.
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