The federal district court in New York City has granted a motion by children’s author Nick Katsoris and the charitable Loukoumi Make a Difference Foundation and ordered WME IMG, LLC and IMG Productions, LLC, though not defendant Viacom, Inc., to arbitrate Katsoris’s and Loukoumi’s claims that the children’s reality show, "All In with Cam Newton," is a derivative work that infringes on Katsoris’s copyrights. The court ordered the litigation stayed pending the arbitration (Katsoris v. WME IMG, LLC, February 27, 2017, Abrams, R.).
Plaintiffs Katsoris and Loukoumi Foundation allege in their complaint that in 2012 Katsoris approached defendant IMG, Productions, LLC, to represent him in pitching a children’s reality TV series based on his Loukoumi book series. According to the complaint, Loukoumi is "a fluffy little lamb that just wants to make the world a better place," and the books "teach children life lessons including believing in and pursuing their dreams, doing good deeds, and preventing bullying." The series would show kids living their "Dream Days" by following a different career choice in each episode. After unsuccessful pitches, in May 2014, the Loukoumi Foundation and IMG entered into a work-for-hire agreement under which IMG agreed to produce a "Make a Difference with Loukoumi TV Special," the content of which IMG would create as "a work made for hire" for the Loukoumi Foundation as owner. The agreement also contained an arbitration provision.
The TV Special was produced in the summer of 2014 and aired nationwide. In July 2015, Katsoris and the Loukoumi Foundation presented the TV Special and other pitch materials to Nickelodeon representatives, who rejected it. In June 2015, Nickelodeon had announced a development deal with IMG for a children’s reality show featuring NFL quarterback Cam Newton, which "will help kids find their dreams." The show ultimately began airing in 2016 under the title "All In with Cam Newton." Plaintiffs contend that this show is a derivative work from the TV Special.
After sending a cease and desist letter, Katsoris and the Loukoumi Foundation filed suit against IMG, its successor WME, and Viacom, Inc. (Nickelodeon’s parent). Plaintiffs’ requests for the defendants to arbitrate the dispute with the American Arbitration Association were unsuccessful, and defendants moved to dismiss the claims. Plaintiffs cross-moved to compel arbitration.
Waiver. Defendants first argued that the motion to compel arbitration should be denied because plaintiffs waived their right to arbitrate by not filing a formal motion to compel arbitration until more than five months after filing the complaint. The court disagreed, noting that "no time at all elapsed" between the filing of the complaint and plaintiffs’ request for arbitration, in that the complaint itself sought an "injunction in aid of arbitration" against IMG under the Federal Arbitration Act. Further, prior to filing, plaintiff had contacted IMG to express interest in mediation, a prerequisite to arbitration under the work-for-hire agreement, and after filing the complaint, plaintiffs continued to discuss arbitration with defendants. In any event, five months is not necessarily a long enough delay to find a waiver, the court held.
The court also rejected defendants’ argument that by filing the federal lawsuit, plaintiffs waived the right to arbitrate. Although in some instances, a plaintiff waives an arbitration right by filing a complaint, filing both arbitral and judicial proceedings may be reasonable where a party seeks to protect its rights by commencing both kinds of proceedings. In this case, because Viacom is not a party to the work-for-hire agreement, plaintiffs may have felt it necessary to bring the lawsuit in order to compel all parties to arbitrate, the court noted. Although the filing of the lawsuit "gives pause," it is not enough to constitute a waiver, the court held.
Finally, the court held that defendants did not show sufficient prejudice to them from having to incur the costs of responding to several amended complaints, given plaintiffs’ decision to file the lawsuit as well as seek arbitration. As the court noted, IMG had initially agreed to arbitrate and Viacom had agreed to a stay of the litigation, before IMG ultimately declined to arbitrate. Any costs could have been avoided had IMG stuck to its agreement, the court found.
Arbitrability. Defendants also argued that the dispute is not arbitrable. The court held, however, that at least as to IMG (and its successor WME), under the terms of the work-for-hire agreement’s arbitration provision, arbitrability must be decided by the arbitrator. Even though IMG was the only defendant signatory, WME, as its successor has a "sufficient relationship" with the plaintiffs and the rights created under the agreement to be bound by it.
Viacom would not be compelled to arbitrate, however, the court held. Viacom did not have a "sufficient relationship" with plaintiffs, was not a signatory to the agreement, and is not "linked textually" to the agreement so as to be bound by its terms. The court also concluded that Viacom is not estopped from contesting the arbitration provision of the agreement due to having "knowingly exploited" the agreement’s benefits, as plaintiffs had argued. Even if Viacom received the benefit of plaintiffs’ concept for the show and used it as a basis for "All In with Cam Newton," that benefit does not "flow directly from the agreement," according to the court. The agreement dealt only with production of the plaintiffs’ show, not distribution rights.
Stay. The court also granted plaintiffs’ motion to stay the litigation as to all parties, including Viacom, pending the arbitration.
The case is No. 1:16-cv-00135-RA.
Attorneys: Raymond James Dowd (Dunnington Bartholow & Miller, LLP) for Nick Katsoris. Michael Charles Lynch (Kelley Drye & Warren LLP) for WME IMG LLC and IMG Productions, LLC. Elizabeth A. McNamara (Davis Wright Tremaine LLP) for Viacom Inc. d/b/a Nickelodeon.
Companies: Loukoumi Make a Difference Foundation, Inc.; IMG Productions, LLC; Viacom, Inc. d/b/a/ Nickelodeon; WME IMG, LLC
MainStory: TopStory Copyright NewYorkNews
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