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Entertainment and Sports Law Litigation

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California Federal Judge Refuses, Among Other Things, to Drop Fiduciary Breach Claim Against AMC Networks over Fear the Walking Dead TV Series
New York Appellate Division Decides UMG Recordings Isn’t Alter Ego of Cash Money Records

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California Federal Judge Refuses, Among Other Things, to Drop Fiduciary Breach Claim Against AMC Networks over Fear the Walking Dead TV Series

The U.S. District Court for the Northern District of California found a claim for breach of fiduciary duty can continue against AMC in a lawsuit that also alleges the Fear the Walking Dead TV show infringes on the copyright of comic book creator Melvin Smith. Smith v. AMC Networks Inc., 18-CV-03803. Smith claims the zombie-themed TV series on AMC Networks infringes on the copyright for his comic book Dead Ahead, about “zombies on the high seas.” Smith’s agent David Alpert had become co-executive producer of the TV series. First, allowing Smith’s copyright infringement claim to move forward, District Judge Lucy H. Koh noted: “Given that Defendants’ motions [to dismiss] are 12(b)(6) motions, there is no full record to review or any expert testimony upon which the Court may rely.” District Judge Koh then denied AMC’s request for her to take judicial notice of “generic elements of action-adventure, thriller, and horror films and television series, including those involving invasions or outbreaks of some sort and those that take place at sea.” The district judge stated: “AMC Defendants reference more than a dozen books, films, Wikipedia articles, and websites, none of which are mentioned in [Smith’s complaint].” She added: “In essence, what AMC Defendants ask is that the Court take judicial notice of the aforementioned concepts based purely on AMC Defendants’ representation that the underlying works, of which the Court is not asked to take judicial notice, show that the above concepts are generic. … [T]he Court finds that whether the above concepts are generic is subject to reasonable dispute ….” Finally, Smith also alleges Alpert “violated and continues to violate his fiduciary duty [as Smith’s agent] by engaging in a pattern and practice of self-dealing.” In permitting this fiduciary breach claim to also proceed against the AMC defendants, Judge Kohl explained: “Plaintiff also alleges that AMC Defendants employee Dave Erickson ‘worked closely and in concert with David Alpert and [series co-executive producer] Robert Kirkman in the developing, scripting, casting and production of FEAR THE WALKING DEAD ….” Moreover, ‘as showrunner and a credited co-creator, Dave Erickson served as the primary creative contributor acting on behalf of the AMC Entities, in their collaboration in and funding of the development, scripting, casting, and production of FEAR THE WALKING DEAD.’”

As a result, the court concluded: “AMC Defendants’ argument that there are no allegations that AMC defendants provided ‘substantial assistance or encouragement’ to Alpert is unavailing.”

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New York Appellate Division Decides UMG Recordings Isn’t Alter Ego of Cash Money Records

The New York Appellate Division, First Department, reversed the denial of a motion by UMG Recordings Inc. to dismiss it from a lawsuit also filed against co-defendant Cash Money Records over royalties from Drake’s recordings. Aspire Music Group LLC v. Cash Money Records Inc., 2019 NY Slip Op 983. Aspire signed Drake to a six-album deal in 2008, then signed an agreement in 2009 to provide Drake’s services to Cash Money affiliate Young Money Entertainment (YME). The 2009 agreement promised Aspire would receive one-third of the net profits from the Drake recordings. Aspire sued in 2017, however, claiming underpayment of royalties. The New York Supreme Court, New York County, dismissed Aspire’s breach of contract claim as untimely under New York’s six-year statute of limitations but allowed Aspire’s claim for breach of implied covenant of good faith and fair dealing to proceed. In denying Universal’s bid to let out of the litigation, the county court had noted: “Aspire alleges that Cash Money is a mere corporate instrument of Universal, that Universal shares offices with Cash Money, that Universal operates Cash Money’s website, that the business affairs of the two entities are intermingled, that Cash Money itself remains undercapitalized in relation to its needs and that Cash Money is entirely dependent on advances and direct payments from Universal. Allegations of this sort have been held sufficient on a pre-answer motion to dismiss.” In its reversal, the appellate division found: “The complaint essentially alleges that Universal took advantage of Cash Money’s cash flow problems by helping to satisfy millions of dollars of Cash Money’s debts in exchange for control of Cash Money, and then, through such control, paid itself higher distribution fees, thereby reducing the net profits that plaintiff was entitled to receive under the Aspire/YME Agreement. These allegations describe legitimate business conduct; there is no indication that Universal engaged in this conduct for the purpose of harming plaintiff ….”

 

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Stan Soocher is Editor-in-Chief of Entertainment Law & Finance and Professor of Music & Entertainment Studies at the University of Colorado’s Denver Campus. He is also an entertainment attorney, as well as author of the books Baby You’re a Rich Man: Suing the Beatles for Fun & Profit and They Fought the Law: Rock Music Goes to Court, the latter which is available in an updated, expanded edition in Amazon’s Kindle Store. For more information: www.stansoocher.com.

The views expressed in the article are those of the authors and not necessarily the views of their clients or other attorneys in their firm.

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