Opinion
99 Civ. 10369 (CSH)
May 22, 2002
MEMORANDUM OPINION AND ORDER
Plaintiff brought this action against multiple defendants seeking compensation for copyright infringement. Plaintiff alleges that recordings of defendants' songs "Just Like Daddy" and "Jagged Little Pill" contain infringing samples of portions of the song "Impeach the President," for which plaintiff claims to own the copyrights. Defendants Interscope Records, Inc. and Songs of Universal, Inc. have moved pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss the complaint on the basis of issue preclusion. Specifically, defendants assert that the court in Tuff "N' Rumble Management, Inc. v. Profile Records, Inc., No. 95 Civ. 0246,1997 WL 158364 (S.D.N.Y. Apr. 2, 1997) (Stein, J.), decided in granting the defendant's motion for summary judgment that plaintiff does not own any copyrights to "Impeach the President." The present motion in this case is being treated as one for summary judgment under Rule 56, in accordance with the last sentence of Rule 12(b)(6). For the reasons that follow, defendants' motion is denied.
Plaintiff does not deny that TufAmerica, Inc. and Tuff "N' Rumble Management, Inc. are the same entity. TufAmerica, Inc. also does business under the names Tuff City Records and Tuff City Music Group. The various "Tuff' entities will be collectively referred to as "plaintiff" defendants' motion is denied.
BACKGROUND
Analysis of defendants' assertion of issue preclusion necessarily turns on the circumstances of the decision of summary judgment in Profile, which took place in the context of an acrimonious dispute between Tufamerica and its former attorney, Hy Shore.
In 1995, plaintiff brought suit against Profile Records, Inc. and several other defendants for infringement of its copyrights in the song "Impeach the President." Plaintiff claimed that defendants' recordings of the songs "Back from Hell" and "Dana Dane with Fame" illegally copied drumtracks of "Impeach the President." None of the defendants in the Profile case are parties to the present case. When the Profile case was filed, plaintiff was represented by Shore.
On July 9, 1996, the defendants in Profile filed a motion for summary judgment. The motion was granted by the court on April 2, 1997. In its order, the court stated that plaintiff had "demonstrated neither that it owns a valid copyright nor that defendants engaged in unauthorized copying." 1997 WL 158364 at *2. With regard to the issue of copyright ownership, the court made several particularized findings. Plaintiff had registered its copyright for "Impeach the President" on November 25, 1991. Since the registration stated that the song was first published in 1973, the court did not accept the registration as prima facie proof that plaintiffs copyright was valid and placed on plaintiff the burden of proving the validity of its copyright. Id. Plaintiff also had offered an agreement dated May 5, 1982, in which Roy C. Hammond, identified in the 1991 copyright registration as the author of "Impeach the President," purported to transfer the copyright in the sound recording to plaintiff ("the 1982 Agreement"), an agreement dated March 22, 1988, in which Hammond purported to transfer the copyright in the composition to plaintiff ("the 1988 Agreement"), and an agreement dated July 24, 1990, amending the 1982 agreement ("the 1990 Agreement"). The court found that plaintiff had failed to offer any evidence showing "that Hammond himself had any rights to convey the work." Id. The court observed that the 1973 sound recording of "Impeach the President" identified an entity by the name of "Alaga" as the copyright owner and noted that plaintiff failed to offer any evidence "explaining how, when, or if Alaga transferred copyright ownership to Hammond . . . ." Id. at 3. the court concluded its discussion of the issue of copyright ownership as follows:
Roy C. Hammond and Alaga Records were both named as defendants in the present suit.
Because Tuff has no direct knowledge of who owned the original copyright in "Impeach the President" [and] cannot explain why the copyright notice on the 1973 single states Alaga is the owner . . . the Court concludes that Tuff has not met its burden of proving it is the owner of a valid copyright.Id. The court reached that conclusion with respect to both the musical composition and sound recording aspects of the 1991 copyright registration.
Plaintiffs former attorney, Shore, drafted papers in opposition to the motion for summary judgment, but these papers were not officially filed until April 15, 1997, after the court granted the motion. Nevertheless, it is apparent from the court's decision that the court considered Shore's arguments. Plaintiff claims that Shore possessed but did not submit key evidence relevant to the motion for summary judgment in Profile. In particular, plaintiff had "informed Shore that Hammond was the founder and sole owner of Alaga" and provided him with documents that could serve as proof. Pl. Brief at 19. Plaintiff asserts that these documents "could have prevented the Profile court's finding regarding ownership of the copyright." Id.
While the summary judgment motion in Profile was pending, a heated conflict erupted between plaintiff and Shore. Plaintiff was beginning to doubt the competence of Shore. In July 1996, plaintiffs in-house counsel asked to review legal files in Shore's possession and were denied access. Plaintiff cryptically states that in August 1996, it "tried" to replace Shore as its attorney. Pl. Brief at 13. On September 9, 1996, Shore wrote a letter to plaintiffs president, Aaron Fuchs, in which Shore stated that after a twenty-five year relationship with Fuchs, they could no longer work together. Shore also stated that he would not return any files until Fuchs paid him for the work he had done. The letter made reference to three cases, Tuff Rumble Management, Inc. v. Profile Records, Tuff Rumble Management, Inc. v. Landmark Distrib., and Tuff Rumble Management, Inc. v. Livin' Large, et al.
Shore referred in the letter to "sharp practices," "screaming fits," and "threats" by Fuchs. Ex. 9 to Declaration of Jeffrey Gandel dated March 16, 2001.
Over the course of the next four years, plaintiff repeatedly attempted to gain access to the files in Shore's possession. On December 5, 1996, the New York Supreme Court, which was hearing the Landmark case, ordered Shore to return the files within two days. On July 7, 1997, the Supreme Court found Shore to be in contempt of its order and again directed Shore to return the files. Shore tried unsuccessfully to appeal to the Appellate Division and the Court of Appeals. Eventually, he was sent to jail for contempt of court on July 1, 1999. Shore was released from jail upon his promise to turn over the files. Shore allowed plaintiffs in-house counsel to review the files in his office. The next day, Shore disappeared. Plaintiff was later informed that Shore moved to France and died there. Plaintiff was unable, "[d]ue to a variety of obstacles left by Shore, and instructions left with his estate," to obtain any of its files until September of 2000. Pl. Brief at 18. By then, many of the files had been destroyed.
The July 7 order formalized findings made by the court on March 11, 1997.
The Appellate Division denied Shore's appeals with respect to the December 5 order of the Supreme Court in orders dated April 16, 1998 and June 4, 1998, and denied Shore's motion for reargument in an order dated December 29, 1998. The Court of Appeals denied Shore's appeal in a decision dated May 6, 1999. The Appellate Division denied yet another appeal by Shore on June 22, 1999.
At some point soon after plaintiffs relationship with Shore disintegrated in 1996, plaintiff obtained the services of new counsel, Cobrin Gittes Samuel ("CGS"). Plaintiff continues in the present case to be represented by that same firm, now practicing as Cobrin Gittes. On April 16, 1997, CGS moved on behalf of plaintiff for reconsideration of the Profile court's order of April 2, 1997, granting summary judgment to the defendants. In its brief, CGS argued:
CGS was not officially substituted as new counsel for plaintiff in the Profile case until April29, 1997.
This grossly inequitable outcome is the direct result of a lack of competent counsel, as personified by disgruntled counsel Hy Shore, Esq., who is now in contempt of Court for his behavior towards Tuff, and who states that he is being sent to jail. In responding to Defendants' Motion for Summary Judgment, Hy Shore refused to utilize probative documents and testimony provided to him by Tuff (at the same time refusing to permit Tuff or any of its employees or agents to review the Opposition Memorandum and other papers). This evidence would have conclusively proven: (1) Tuffs copyright ownership in Impeach . . . . Because Hy Shore refused to advise this Court of the simple fact that Roy C. Hammond was the president and sole owner of Alaga, Tuff has been subjected to a grossly inequitable result.Tuff`N' Rumble Brief at 1-2, Ex. 2 to Decl. of Oren J. Warshavsky dated Feb. 12, 2002.
In the case at bar, this Court ordered plaintiff to submit copies of all documents that had been submitted in connection with the Profile motion for summary judgment and motion for reconsideration, along with a copy of the court order denying the motion for reconsideration. Order dated June 11, 2001. Counsel for plaintiff was unable to obtain copies of those documents, either from its own files or from federal archives. Eventually, counsel for plaintiff notified the Court that it had computer files of the final drafts of those documents, and the Court ordered plaintiff to submit printed copies of those files. Order dated Feb. 5, 2002. The Court obtained a copy of the court order denying the motion for reconsideration directly from the chambers of Judge Stein.
The court denied plaintiffs motion for reconsideration in a two-page order filed May 1, 1997. The court's order concluded: "Since plaintiff, in its motion for reconsideration, has merely attempted to assert new legal theories in support of its original position and to introduce evidence that could have been adduced during the pendency of the original motion, the motion for reconsideration is hereby denied." That order did not specifically refer to plaintiffs allegations of misconduct by Shore. Then, on August 15, 1997, the court granted the defendants' motion for an award of attorneys' fees and costs. 1997 WL 470114. The court emphasized the "consistently obstreperous conduct" of both plaintiff and plaintiffs attorney during discovery and the failure of plaintiffs attorney "to research properly the law or facts involved in [plaintiffs] claims." Id. at *1. The court dismissed plaintiffs argument that his prior attorney was to blame, citing Link v. Wabash R.R. Co., 370 U.S. 626, 633-34 (1962) ("Petitioner voluntarily chose this attorney as his representative in the action, and he cannot now avoid the consequences of the acts or omissions of this freely selected agent."). Id. at *2.
Plaintiff filed the present case for copyright infringement on October 8, 1999, naming as defendants Interscope Records (a music recording company), Songs of Universal (a music publishing company) and several other companies and persons in the music industry. Among the defendants named are Roy C. Hammond and Alaga Records. It appears that plaintiff has settled its dispute with Hammond and Alaga, although no stipulation of settlement or motion for voluntary dismissal has been submitted to the court. Plaintiff submits as exhibits an "Agreement" dated October 1, 1999, and signed October 21, 1999 by Aaron Fuchs on behalf of Tuff'n Rumble Management, Inc. and by Roy C. Hammond on behalf of himself, Alaga Records, and Johnson and Hammond Publishing (the "1999 Agreement"); and a "Settlement Agreement" dated January 1, 2001, and missing a signature page but identifying the same parties (the "2001 Agreement"). Exs. 6, 7 to Gandel Decl. dated March 16, 2001. Under the 1999 Agreement, Hammond and Alaga purport to transfer to plaintiff all rights to the composition and all rights to the sound recording of "Impeach the President," effective as of March 22, 1988 and May 5, 1992 respectively. 1999 Agreement at 6. The 2001 Agreement provides that plaintiff shall have a fifty-percent ownership interest in the composition and sound recording copyrights for "Impeach the President" and shall be the exclusive administrator of all copyrights. 2001 Agreement at 12, 14.
The first paragraph of the 1999 Agreement identifies the parties, somewhat differently, as TufAmenca, Inc. ("Tuff City"), Roy C. Hammond, and Alaga Records.
Defendants Interscope Records and Songs of Universal filed this motion to dismiss the complaint on February 13, 2001. On March 8, 2001, the Court granted defendants' motion as unopposed. At plaintiffs request, the Court vacated the order of dismissal on March 15, 2001, and granted plaintiff additional time to respond in accordance with a schedule agreed upon by the parties. On June 11, 2001, the Court gave notice to the parties that this motion would be treated as one for summary judgment pursuant to the last sentence of Rule 12(b)(6) and provided the parties with additional time to submit relevant material. The Court did not receive from plaintiff certain documents which it had directed plaintiff to produce until February 12, 2002.
See supra note 7.
DISCUSSION
Summary judgment is proper where all the evidence shows that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celtox Corp. v. Catrett, 477 U.S. 317, 322-33 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Matshushita Electric md. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). The Court may consider affidavits submitted by the parties to the extent that they are "made on personal knowledge [and] set forth such facts as would be admissible in evidence." Fed.R.Civ.P. 56(e); see also Celtox Corp. v. Catrett, 477 U.S. at 324; Santos v. Murdock, 243 F.3d 681, 683 (2d Cir. 2001); Randell v. United States, 64 F.3d 101, 109 (2d Cir. 1995).The doctrine of issue preclusion, or collateral estoppel, bars a party from relitigating in a second proceeding an issue that was decided in a prior proceeding. Allen v. McCurry, 449 U.S. 90,94 (1980); Metromedia Co. v. Fugazy, 983 F.2d 350, 365 (2d Cir. 1992); see generally 18 James Win. Moore et al., Moore's Federal Practice § 132 (3d ed. 2000); Restatement (Second) of Judgments § 27 (1982). The doctrine represents a policy choice in favor ofjudicial efficiency sometimes at the expense of correctness. Gelb v. Royal Globe Ins. Co., 798 F.2d 38, 44 (2d Cir. 1986); see also Montana v. United States, 440 U.S. 147, 153-54 (1979). This policy serves the interests of litigants and the judiciary. Montana v. United States, 440 U.S. at 154-55; Greene v. United States, 79 F.3d 1348, 1353 (2d Cir. 1996).
The doctrine of mutuality once limited issue preclusion to disputes between the parties to the first litigation, but now other parties may assert issue preclusion either offensively or defensively. Parklane Hosiery Co. v. Shore, 439 U.S. 322,331 (1979) (permitting nonmutual
offensive issue preclusion); Blonder — Tongue Lab., Inc. v. University of Ill. Found. 402 U.S. 313, 350 (1971) (permitting nonmutual defensive issue preclusion). For example, a company that has failed to prove that it owns a valid patent in a litigation against one alleged infringer may be precluded from suing other entities for patent infringement. See, e.g., Blonder — Tongue, 402 U.S. at 350; Stevenson v. Sears, Roebuck Co., 713 F.2d 705, 709 (Fed. Cir. 1983).
For issue preclusion to apply, the issues in the current proceedin'g ahd the prior proceeding must be identical, and the controlling facts or legal principles must not have changed significantly. Furthermore, the issue in the prior proceeding must have been actually litigated and decided and must have been necessary to support a valid and final judgment on the merits. Nevertheless, issue preclusion should not apply where a party lacked a full and fair opportunity to litigate the issue in the prior proceeding or where other special circumstances are present. See Montana, 440 U.S. at 155 (formulating three-part test for issue preclusion); Gelb, 798 F.2d at 44 (formulating four-part test). Ultimately, the application of issue preclusion should "rest on the trial courts' sense ofjustice and equity." Blonder-Tongue, 402 U.S. at 334.
Defendants assert that plaintiff actively litigated the issue of copyright ownership in the Profile case and that the court decided that plaintiff does not own valid copyrights in either the composition or the recording of "Impeach the President." Defendants argue that plaintiff therefore should be precluded from relitigating the same issue in this case.
Plaintiff advances multiple reasons why issue preclusion should not apply in this case. Several of plaintiffs arguments are completely without merit and can be dismissed with little discussion.
First, plaintiff argues that "given the improper legal standard applied, and the lack of evidentiary foundation for its finding, the Profile court improperly reached its finding." Pl. Brief at 10. This Court may not review the decision in the prior proceeding for error; such appellatestyle review would completely nullify the doctrine of issue preclusion. See Stevenson, 713 F.2d at 709 ("[A]n inappropriate inquiry is whether the prior finding of invalidity was correct . . . .") (emphasis added); see also Gelb, 798 F.2d at 44 ("Reexamination of an issue may well demonstrate that its previous resolution was incorrect, as a result of such ractors as better evidence, better advocacy, or better decision-making . . . . [but] judicial efficiency demands that there be an end to litigation at some point.").
Second, plaintiff argues: "In Profile, the Court found that Tuff City was unable to sustain its burden of demonstrating that the copyright to Impeach was validly owned. However, the court did not hold that the copyright registration was invalid." Pl. Brief at 11 (emphasis in original). It is irrelevant for purposes of issue preclusion that the court in the prior case held that plaintiff did not prove that it was the owner of a valid copyright rather than holding that plaintiff was not in fact the owner of a valid copyright. The decision in the prior proceeding was on a motion for summary judgment and so dealt with the sufficiency of the proof offered by plaintiff. Decisions on summary judgment are entitled to full preclusive effect. Stevenson, 713 F.2d at 712; Scripps Clinic Research Found. v. Baxter Travenol Lab., Inc., 729 F. Supp. 1473, 1475 (D. Del. 1990); see also Moore, supra, at § 132.03[2][j].
Third, plaintiff argues:
Although it did reach a determination on the issue of ownership, the Profile court based its decision on the fact that it found no substantial similarity between the copyright-in-suit and the accused works. Indeed, in granting summary judgment, the Profile court held: "Having carefully assessed the three musical works, the Court concludes that neither `Back from Hell' nor `Dana Dane with Fame' is substantially similar to `Impeach the President.' Therefore, summary judgment is granted in favor of defendants." At no point did the Profile court indicate that the grant of summary judgment was based upon the ownership findings.
Pl. Brief at 11-12. Contrary to plaintiffs assertion, the court in Profile did base its decision on plaintiffs failure to prove copyright ownership. At the outset of the court's discussion, the court stated: "In the context of copyright infringement, courts have regularly granted summary judgment where it is "clear' that the plaintiff cannot make out the essential elements of the claim. . . . In this case, plaintiff has demonstrated neither that it owns a valid copyright nor that defendants engaged in unauthorized copying." 1997 WL 158364, at *2. The court then proceeded to analyze the issues of copyright ownership and unauthorized copying in separate sections. Plaintiff misrepresents the court's holding by quoting only from the latter section. Where a court's decision is based on alternate holdings, each separate holding is considered to be necessary to the judgment for purposes of issue preclusion. Gelb, 798 F.2d at 45 (stating general rule in Second Circuit), citing Irving National Bank v. Law, 10 F.2d 721, 724 (2d Cir. 1926) (L. Hand, J.). Exceptions to this general rule have been strictly limited. See Winters v. Lavine, 574 F.2d 46, 67 (2d Cir. 1978) (limiting exception to bankruptcy context).
Fourth, plaintiff asserts that issue preclusion should not apply because plaintiff clearly owns the copyrights to "Impeach the President" and defendants have clearly infringed on those copyrights. Pl. Brief at 2 1-22. These issues are by no means uncontested. Regardless, a party may not avoid the application of issue preclusion merely by arguing that it expects to succeed on the merits.
The remaining arguments advanced by plaintiff require more discussion. Plaintiff contends that the 1999 and 2001 Agreements establish a new chain of title and therefore that the factual issues in this case are not identical to the factual issues decided in Profile. The existence of new facts may sometimes prevent the application of issue preclusion. Montana, 440 U.S. at 159 ("[C]hanges in facts essential to a judgment will render collateral estoppel inapplicable in a subsequent action raising the same issues."); see also Greene, 79 F.3d at 1353 ("[D]etermining the scope of an issue previously litigated is "[o]ne of the most difficult problems in the application' of issue preclusion . . . .") (quoting Restatement (Second) 6f Judgments § 27 cmt. c (1980)). In this case, however, the new agreements do not raise any issues of fact that were not decided in Profile.
The court in Profile noted that plaintiff had offered evidence of a transfer of copyright from Hammond to plaintiff:
Tuff has produced copies of two written agreements, both signed by Hammond as licensor. The first agreement, dated March 22, 1988, licenses Tuffs [sic] predecessor to use "Impeach the President" in exchange for $100. . . . The second agreement, dated July 24, 1990, purports to make Tuff the exclusive licensee of "Impeach the President."
1997 WL 158364, at *2. What plaintiff failed to prove in Profile was that Alaga Records was the original copyright holder and that Hammond, as founder and sole owner of Alaga Records, had authority to transfer the copyright to plaintiff. In fact, plaintiff argued to the court in Profile that Alaga Records was not the original copyright holder. The court explained plaintiffs failure of proof as follows:
Tuff has produced no evidence affirming that Hammond himself had any rights to convey the work . . . .
However, there is evidence available on the record itself as to who possessed the original copyright in "Impeach the President" — the sound recording contains the letter "P" in a circle, the date "1973, " and the name "Alaga." . . . Thus, the only sound evidence before this Court that indicates who owned the original copyright in "Impeach the President" is that "Alaga" was that owner. . . . Tuff offers no proof explaining how, when, or if Alaga transferred copyright ownership to Hammond, which would have had to occur by written instrument memorializing such a transfer . . . .
. . . Tuff argues that there is no proof that Alaga owned the copyright in the song. In support of this argument, Tuff relies on a 1982 agreement that Fuchs purportedly entered into with Hammond . . . . the agreement does not provide any evidence that the copyright in "Impeach the President" did not belong to Alaga or did belong to Hammond.
Because Tuff has no direct knowledge of who owned the original copyright in "Impeach the President," cannot explain why the copyright notice on the 1973 single states Alaga is the owner, and produces no contrary evidence from any person qualified to testify about these matters, the Court concludes that Tuff has not met its burden of proving it is the owner of a valid copyright.
1997 WL 158364, at *2-3, 3 n. 3.
The 1999 and 2001 Agreements, which plaintiff offers as new evidence, simply reexecute the transfer to plaintiff from Hammond. The court in Profile did not find that plaintiff failed to offer evidence of a transfer to it of a purported copyright in "Impeach the President." What the court found was that plaintiff failed to offer evidence concerning the original copyright ownership of "Impeach the President" and the right of Hammond to transfer copyright. The new evidence obtained by plaintiff does not create new issues of fact relating to the original copyright ownership of "Impeach the President" or the right of Hammond to transfer copyright, and application of issue preclusion properly prevents plaintiff from relitigating these issues.
It should be noted that plaintiffs reliance on the 1999 and 2001 Agreements is problematic in other respects as well. First, the 2001 Agreement is missing a signature page. Rule 56(e) of the Federal Rules of Civil Procedure requires that affidavits supporting or opposing a motion for summary judgment "shall set forth such facts as would be admissible in evidence . . . . ." See also Santos, 243 F.3d at 683. Second, both the 1999 Agreement and the 2001 Agreement were executed subsequent to the filing of this case on October 8, 1999. See Delacroix v. Lublin Graphics, Inc., 993 F. Supp. 74, 83 (D. Conn. 1997) ("The one remaining problem with plaintiffs assignment theory is that it is based upon an agreement entered into two years after this lawsuit was filed. To the extent that plaintiff seeks to establish his standing to bring this lawsuit based upon this assignment, it was too late to conferstanding that did not already exist. Plaintiff must show standing at the time he filed his complaint."), citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 569 n. 4 (1992) and Newman-Green, Inc. v. AlfonzoLarrain, 490 U.S. 826, 830 (1989).
Plaintiff's final and strongest argument is that special circumstances at the time of the Profile proceeding, particularly the incompetence of its former attorney, Hy Shore, deprived it of a full and fair opportunity to litigate the summary judgment motion in Profile.
When the Supreme Court in Blonder-Tongue first abrogated the mutuality requirement for issue preclusion, it adopted, as "a most significant safeguard," "the requirement of determining whether the party against whom an estoppel is asserted had a full and fair opportunity to litigate." 402 U.S. at 328. The Court permitted the defendant in that case to invoke issue preclusion to prevent the plaintiff from relitigating the validity of its patent where that patent had been found invalid in a prior proceeding involving a different defendant. The Court concluded that patentees should not be permitted to "relitigat[e] validity issues as long as new defendants are available. This is especially true if the court in the second litgation must decide in a principled way whether or not it is just and equitable to allow the plea of estoppel in the case before it." Id. at 334.
"Determining whether a [plaintiff] has had a full and fair chance to litigate the validity of his [claim] in an earlier case is of necessity not a simple matter. . . . In the end, decision will necessarily rest on the trial courts' sense ofjustice and equity." Blonder-Tongue, 402 U.S. at 333-34. Some appropriate considerations are the plaintiffs incentive to litigate vigorously the first action, the presence of procedural opportunities in the second action that were unavailable in the first action, and the existence of inconsistent judgments. Blonder-Tongue, 402 U.S. at 333 34; Parklane Hosiery, 439 U.S. at 330-331. Another recognized factor is "whether without fault of his own the [plaintiff] was deprived of crucial evidence or witnesses in the first litigation." Blonder-Tongue, 402 U.S. at 333.
Under New York law, one of the factors to be taken into account in determining whether a party had a full and fair opportunity to litigate in a prior proceeding is "the competence and expertise of counsel." Hickerson v. City of New York, 146 F.3d 99, 109 (2d Cir. 1998) (internal quotation marks and citation omitted). The parties have not brought to the Court's attention any case holding that attorney incompetence is a factor that may appropriately be considered in applying the doctrine of issue preclusion under federal law.
Ordinarily, parties are bound by the acts of their freely-chosen attorneys. Link v. Wabash R.R. Co., 370 U.S. 626, 633-34 (1962) ("Petitioner voluntarily chose this attorney as his representative in the action, and he cannot now avoid the consequences of the acts or omissions of this freely selected agent."); accord Davis v. United Fruit Co., 402 F.2d 328, 331 (2d Cir. 1968). The circumstances of this case, however, rise above misconduct or incompetence. Plaintiff was first denied access to its files by Shore during the same month, July of 1996, that the motion for summary judgment in Profile was filed, and Shore terminated his relationship with plaintiff in September of 1996, seven months before the court decided the motion. Plaintiff was unable to gain access to any of its legal files until September of 2000, well after the Profile case was closed. It is apparent that Shore was no longer acting as the freelychosen agent of plaintiff during the pendency of the summary judgment motion in Profile. The termination of plaintiffs relationship with Shore, and particularly Shore's refusal to allow plaintiff access to legal files and his complete disregard of important evidence provided to him by the plaintiff, deprived plaintiff of the opportunity to present crucial evidence to the court.
The question arises, however, whether plaintiff had a fair opportunity to challenge the summary judgment decision in Profile through new counsel, CGS, which plaintiff hired prior to the close of the Profile case. See United States Postal Serv. v. Gregory, 534 U.S. 1, 122 S.Ct. 431. 439 n. 2 (2001) (Ginsburg, J., concurring) ("It is well settled that one who fails timely to appeal an adverse decision is bound by that decision in later proceedings."); Irish Lesbian and Gay Org. v. Giuliani, 143 F.3d 638, 646 (2d Cir. 1998) ("ILGO did have a full and fair opportunity to litigate the issue in that it could have appealed the district court's dismissal of the facial challenge."); Gelb, 798 F.2d at 44 ("[F]ailure to appeal does not prevent preclusion . . . . .") Plaintiff unsuccessfully moved for reconsideration of the summary judgment decision and had the opportunity to move for relief from the judgment or appeal the judgment. The availability of these options, however, did not substantially restore plaintiffs "full and fair opportunity" to litigate the summary judgment motion.
Plaintiff makes no mention in its brief of the fact that it obtained the representation of CGS in the Profile case or the fact that CGS filed a motion for reconsideration, which was denied.
CGS made a timely motion on behalf of plaintiff for reconsideration of the Profile court's decision on summary judgment. CGS brought to the court's attention the fact that Shore had failed to present evidence provided to him by plaintiff on the issue of copyright ownership and that Shore had been held in contempt of court due to his misconduct in his representation of plaintiff. Motions for reconsideration should be limited, however, to "matters or controlling decisions which counsel believes the court has overlooked." S.D.N.Y. Local Civ. R. 6.3. Accordingly, the court denied plaintiffs motion for reconsideration on the ground that plaintiff "merely attempted to assert new legal theories in support of its original position and to introduce evidence that could have been adduced during the pendency of the original motion." Order filed May 1, 1997, at 2. Thus, plaintiff was unable, through a motion for reconsideration, to present to the court evidence which Shore had failed to offer in opposing the motion for summary judgment.
Plaintiff did not move for relief from the judgment under Rule 60 of the Federal Rules of Civil Procedure. It is possible that had plaintiff made such a motion, the court, in its discretion, would have found it equitable to vacate the judgment to allow plaintiff to submit additional evidence in opposition to the motion for summary judgment. There is a strong possibility, however, that the court would have denied such a motion in fairness to the defendants in that case. The defendants had expended time and effort in litigating the motion for summary judgment. Additionally, the defendants had been prejudiced by Shore's misconduct, and the plaintiffs misconduct, during litigation. In its order dated August 15, 1997, granting the defendants' motion for an award of attorneys' fees and costs, the court noted the "consistently obstreperous conduct" of both plaintiff and plaintiffs attorney during discovery and failure of plaintiffs attorney "to research properly the law or facts involved in [plaintiffs] claims." 1997 WL 470114, at *1. Therefore, there was a slim possibility that a motion for relief from the judgment would have been successful, but that slim possibility did not restore to plaintiff a "full and fair opportunity" to litigate the summary judgment motion.
Plaintiff also chose not to appeal the summary judgment decision. However, an appeal would also not likely have given plaintiff the opportunity to introduce evidence which Shore had failed to offer in opposing the motion for summary judgment. "Because the function of the circuit court is to review district court decisions, the record is, with minor exceptions . . ., limited to material that was presented to the district court." 20 Moore's Federal Practice § 310.02[1] (3d ed. 2001).
In sum, the appearance of CGS on behalf of plaintiff in the Profile case happened after the damage, irreparable as a practical matter, had already been done. The termination of the relationship between plaintiff and Shore denied plaintiff a "full and fair opportunity" to litigate the summary judgment motion, and the presence of new counsel did not substantially restore that opportunity. While plaintiffs decision not to move for relief from the judgment or appeal the judgment may preclude plaintiff from collaterally attacking the judgment, it does not preclude plaintiff from avoiding the preclusive effect of that judgment in an action with different parties.
It is worth emphasizing the difference between avoiding the effect of a judgment as between the parties to the original case and avoiding the preclusive effect of the judgment in a subsequent action involving different parties. The defendants in Profile fully litigated the issue of copyright ownership and endured the additional hardship imposed on them by the misconduct and unprofessionalism of Shore. On the other hand, the defendants in the present case have not yet litigated the issue of plaintiffs copyright ownership and were not prejudiced by the conduct of plaintiffs attorney in Profile. Different concerns are implicated by nonmutual issue preclusion than by mutual issue preclusion. A party seeking nonmutual issue preclusion is not seeking to be protected from "the expense and vexation attending multiple lawsuits." Montana, 440 U.S. at 154-55. Therefore, in the context of nonmutual issue preclusion, courts give greater consideration to the party against whom issue preclusion is sought by examining whether that party had "a full and fair opportunity to litigate." Id. at 328. In this case, plaintiff was unfairly deprived of the opportunity to submit crucial evidence to the court in Profile, and it is not unfair to the present defendants to decline to apply issue preclusion under such citcumstances.
CONCLUSION
For the reasons discussed above, I conclude that the doctrine of issue preclusion does not prevent plaintiff from relitigating the issues relating to copyright ownership that were decided by the court in Tuff "N' Rumble Management, Inc. v. Profile Records, Inc., No. 95 Civ. 0246, 1997 WL 158364 (S.D.N.Y. Apr. 2, 1997). Therefore, defendants' motion for summary judgment is denied.
Defendants are directed to file and serve their answer to the Complaint not later than June 21, 2002.
The parties are directed to hold a Rule 26(f) conference within twenty-one (21) days after service of the answer and to comply fully with the requirements of that rule.