Radioactive J.V. V. Manson 153 F.Supp.2D 462 United States District Court for the Southern District of New York July 29, 2001
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Radioactive J.V. v. Manson 153 F.Supp.2d 462 United States District Court for the Southern District of New York July 29, 2001 RADIOACTIVE, J.V., Plaintiff, v. Shirley MANSON, Defendant. No. 01 Civ.1948(SAS). COUNSEL: Steve A. Marenberg, Charles E. Elder, Irell & Manella LLP, Los Angeles, California, Andrew H. Bart, David S. Levine, Pryor, Cashman, Sherman & Flynn LLP, New York, New York, for Plaintiff. Marc Marmaro, Elizabeth Barrowman Gibson, Christina Harvell Brown, Jeffer, Mangels, Butler & Marmaro LLP, Los Angeles, California, Robert Jossen, Louis Solomon, Swidler Berlin Shereff Friedman,LLP, New York, New York, for Defendant. SCHEINDLIN, District Judge. On March 7, 2001, Radioactive Records, J.V. (“Radioactive”) filed this diversity action against Shirley Manson, a well-known singer and performer, alleging, inter alia, a claim for breach of contract. Manson now moves to dismiss this action in favor of parallel state court proceedings in California, arguing that the California Action was filed first and that this Court should abstain from exercising jurisdiction. Radioactive cross-moves for partial summary judgment on two issues: (1) that New York law governs the recording contract between Manson and Radioactive; and (2) because New York law governs, California Labor Code § 2855 (“section 2855”) is inapplicable to that recording contract. For the reasons set forth below, both motions are granted. I. BACKGROUND A. The Relevant Contracts On February 23, 1993, Manson, a resident of Scotland, signed a recording contract with Radioactive, a joint venture between Radioactive, Inc. and MCA Records (now Universal Music Group (“UMG”)) (the “Manson-Radioactive Agreement”). See Plaintiff's Statement Pursuant to Local Rule 56.1 (“Pl.56.1”) ¶¶ 1, 2, 10; 4/27/01 Declaration of Shirley Manson in Support of Motion to Dismiss (“Manson Decl. I”) ¶ 2. That contract obligates Manson to deliver at least one album and, at the sole option of Radioactive, up to six additional albums. See Complaint ¶¶ 7. The contract also designates New York as the forum of choice and New York law as the rule of decision in any future dispute over the contract. See Pl. 56.1 ¶ 3; 2/23/93 Manson-Radioactive Agreement, Ex. G to 4/25/01 Declaration of Elizabeth Barrowman Gibson, Manson's counsel (“Gibson Decl.”), at 40. ˇThe Manson-Radioactive Agreement provides: 93 This agreement has been entered into in the State of New York. The validity, interpretation and legal effect of this agreement is governed by the laws of New York applicable to contracts entered into and performed entirely within such State. The New York courts (state and federal), only, will have jurisdiction over any controversies regarding this agreement, and the parties hereto consent to the jurisdiction of said courts.^ In late 1994, Butch Vig, Steve Marker, and Doug (Duke) Erikson formed the band Garbage in Madison, Wisconsin and signed a recording contract with Almo Records (“Almo”). See 12/21/94 Agreement between Almo and Garbage (“Almo-Garbage Agreement”), Ex. A to 5/21/01 Declaration of William A. Berrol, counsel for defendant, in Opposition to Plaintiff's Motion for Partial Summary Judgment (“Berrol Decl. II”). As veteran music producers, Vig, Marker, and Erickson wanted to ensure that their endeavor would be directed by Jerry Moss, a legendary figure in the music industry. See First Amended Complaint (“FAC”) in Garbage, Inc. v. Almo Sounds, Inc., No. BC244047 (Cal. Supp. filed Jan. 29, 2001) (“Garbage v. Almo” ), Ex. A to Gibson Decl, ¶ 2. To that end, Garbage negotiated the inclusion of a “Key Man” clause in its agreement. See Almo-Garbage Agreement at 78. Garbage would only be bound to Almo Records as long as Jerry Moss was Chairman. See id. The contract also designates California as the forum of choice and California law as the rule of decision. See id. at 62. Having seen Manson in an Angelfish video on MTV, Garbage invited Manson to record with them as the band's lead singer. See 5/18/01 Declaration of Shirley Manson in Opposition to Motion for Partial Summary Judgment (“Manson Decl. II”) ¶ 11; see also Manson Decl. I ¶ 4. On August 10, 1994, Manson entered into a written agreement with Garbage-an agreement which was negotiated and entered into in California (“Manson-Garbage Agreement”). See Manson's Response to Plaintiff's Statement Pursuant to Local Rule 56.1 (“Def.56.1”) ¶ 23; Manson Decl. I ¶ 10. On December 21, 1994, Manson and Radioactive executed an Inducement Letter as a material part of the Garbage- Almo Agreement (“Manson Inducement Letter”). See Def. 56.1 ¶ 24; Manson Decl. I ¶ 9. The Manson Inducement Letter contains a California choice of forum and a California choice of law provision. See Def. 56.1 ¶ 14; Manson Inducement Letter, Ex. 5 to 5/23/01 Declaration of Marc Marmaro, Manson's counsel, in Opposition to Plaintiff's Motion for Partial Summary Judgment (“Marmaro Decl.”), at 149. Shortly thereafter, Radioactive was asked to allow Manson to record one song with Garbage. See Complaint ¶ 9. Radioactive granted such permission and subsequently agreed to let Manson record an entire album with Garbage. See Pl. 56.1 ¶ 13; Complaint ¶ 10. The album, eponymously named “Garbage,” was very successful, selling over 4 million copies worldwide and garnering three Grammy 94 nominations. See Complaint ¶ 11; FAC in Garbage v. Almo ¶ 1. By agreement dated September 1, 1997, Radioactive agreed to allow Manson to record a second album with Garbage in return for a portion of the royalties. See Pl. 56.1 ¶ 14; Def. 56.1 ¶ 25; see also 9/1/97 Agreement between Almo and Radioactive (“Almo-Radioactive Agreement”), Ex. 6 to Marmaro Decl.; FAC in Garbage v. Almo ¶ 1. The Almo-Radioactive Agreement also contained California choice of forum and choice of law clauses. See Def. 56.1 ¶ 25; Almo-Radioactive Agreement at 166. Garbage's second album, titled “Garbage Version 2.0,” was also successful, selling another 4 million copies. See FAC in Garbage v. Almo ¶ 1. By Garbage's estimation, Radioactive garnered more than $1,000,000 in royalties from the album's sales. See Def. 56.1 ¶ 55. In 2000, Moss sold his publishing company, which included Almo, among other affiliates, to UMG, the successor to MCA Records. See Berrol Decl. ¶ 10; see also Irv Lichtman, “Moss, Alpert Sell Rondor to Universal, Settle Lawsuit,” Billboard, August 12, 2000, Ex. C. to Berrol Decl. II, at 395. Thereafter, invoking the Key Man clause, Garbage sought on October 25, 2000 to terminate its contract with Almo on the assumption, supported by press coverage, that Jerry Moss was no longer the Chairman of Almo. See Barrol Decl. ¶ 11; FAC in Garbage v. Almo ¶ 2. According to Garbage, the band met with representatives of UMG, who informed them that even if they could terminate their contract, UMG would still control Manson's original contract with Radioactive. See Berrol Decl.¶ 12; FAC in Garbage v. Almo ¶ 2. B. The California Action On January 29, 2001, Manson and Garbage filed suit in California state court essentially seeking to become “free agents” (the “California Action”). See Pl. 56.1 ¶ 15. Their complaint seeks a declaratory judgment that both the Almo- Garbage Agreement and the Almo-Radioactive Agreement are unenforceable and/or have terminated. See Complaint in Garbage v. Almo ¶¶ 25-28. On February 5, 2001, the plaintiffs in the California Action filed the FAC, adding a claim that the Manson-Radioactive Agreement, executed in February 1993, become unenforceable after February 23, 2000 pursuant to California Labor Code § 2855 (“section 2855”), which provides that personal service contracts “may not be enforced ... beyond seven years from the commencement of service under” the contract. See FAC in Garbage v. Almo ¶ 26. ˇSection 2855 states, in pertinent part: [A] contract to render personal service, other than a contract of apprenticeship as provided in Chapter 4 (commencing with Section 3070), may not be enforced against the employee beyond seven years from the commencement of service under it.^ On March 8, 2001, one day after filing the instant complaint, Radioactive moved to dismiss the declaratory judgment claim in the California Action 95 asserting that any claim regarding the Manson-Radioactive Agreement must be brought in New York. See Gibson Decl. ¶ 5. Then, on March 15, 2001, Radioactive filed a Cross-Complaint against Manson in the California Action. See id. at 3; see also Conditional Cross-Complaint of Radioactive J.V., Ex. E to Gibson Decl. The Cross-Complaint asserted the same claims and factual allegations brought in the instant action. See Gibson Decl. ¶ 6. Radioactive's motion to dismiss was denied on April 10. The California court noted that both of the relevant contracts-the Almo-Garbage Agreement and the Manson-Radioactive Agreement-were inextricably intertwined, that dismissal would lead to piecemeal litigation, and that it expected the New York federal court to respect its decision. See 4/10/01 Minute Order of the Honorable Marvin M. Lager (“California Order”), Ex. C to Gibson Declaration; 4/10/01 Transcript of Proceedings before the Honorable Marvin M. Lager (“California Tr.”), Ex. D to Gibson Decl., at 4-6, 10, 22, 25. On June 25, the California Court of Appeal denied Radioactive's petition for writ of mandate seeking review of the California court's order. See Radioactive Records, J.V. v. Shirley Manson, No. B149619 (Cal.App. 4th June 25, 2001), Ex. A to 6/26/01 Letter from Elizabeth Barrowman Gibson. C. The Instant Action Radioactive filed this action more than five weeks after the California Action was filed. In this action, Radioactive asserts three claims. In Claim I, plaintiff contends that Manson breached the Manson-Radioactive Agreement by repudiating her obligations in the recording contract and refusing to deliver the required additional six albums.