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LEVERT v. PHILADELPHIA INTERNATIONAL RECORDS

April 9, 2004.

EDDIE LEVERT, WALTER WILLIAMS d/b/a THE O'JAYS, and O'JAYS GIGS, INC.
v.
PHILADELPHIA INTERNATIONAL RECORDS, ASSORTED MUSIC, INC., GAMBLE-HUFF, KENNETH GAMBLE, CHUCK GAMBLE, LEON HUFF and THE RIGHT STUFF, A DIVISION OF CAPITAL RECORDS, INC



The opinion of the court was delivered by: RICHARD B. SURRICK, District Judge

MEMORANDUM & ORDER

Presently before the Court is Plaintiffs' Complaint and Application for Temporary Restraining Order and Injunctive Relief Pursuant to Fed.R.Civ.P. 65. (Doc. No. 1.) On April 2, 2004, Plaintiffs filed the complaint and requested that we temporarily restrain Defendants from releasing a music record entitled "Together We Are One" (hereinafter, "Together"). On April 6, 2004, with the parties' consent, we entered an order temporarily restraining Defendants from distributing any additional copies of "Together"*fn1 and scheduling a hearing for April 7, 2004, to hear evidence on Plaintiffs' request for a preliminary injunction. Upon consideration of the evidence presented at that hearing, arguments of counsel, and all papers filed with the Court, we will deny Plaintiffs' request for a preliminary injunction. We will also dissolve the temporary restraining order we previously issued in this case. I. BACKGROUND

Plaintiffs Edward Levert and Walter Williams are singers and performers who form the musical group known as The O'Jays.*fn2 The O'Jays have been recording music for more than forty years and have achieved great success. Notably, The O'Jays have recorded more than fifty records, including nine "platinum records" and ten "gold records".*fn3

  The O'Jays signed several recording contracts with Defendant Assorted Music Inc., d/b/a Philadelphia International Records ("PIR"), beginning in the early-1970's. The O'Jays recorded music pursuant to recording contracts with PIR until the mid-1980's. At issue in this case is the recording contract The O'Jays signed with PIR in 1979 (the "Contract"). The songs on Together were recorded by The O'Jays during the term of the Contract.*fn4 Plaintiffs claim that Defendants breached the Contract and therefore seek to enjoin the release of Together. They claim that the songs comprising Together are of inferior quality and that their release will irreparably tarnish The O'Jays' reputation in the music industry. Plaintiffs also claim that Defendants are liable for fraud, unjust enrichment, and breach of fiduciary duty. Defendants argue that we should deny Plaintiffs' request for a preliminary injunction because Defendants did not breach the Contract and because pursuant to the Contract Defendants acquired the right to release the songs on Together. Defendants also deny that they are liable for fraud, unjust enrichment, or breach of fiduciary duty. The songs comprising Together were recorded during the term of the Contract but were not previously released. Williams testified that when the O'Jays were recording songs for PIR, The O'Jays would record approximately fifteen songs for each proposed record. Seven or eight of those songs would then be selected for release on the record. The remaining songs were not released but the recordings of those songs were retained by PIR (the "Unreleased Songs"). During the time that The O'Jays recorded songs for PIR, The O'Jays recorded many Unreleased Songs.*fn5

  Plaintiffs claim that in 1999 they asked Defendants if they would help Plaintiffs secure a contract to produce and distribute a record that included only songs owned by The O'Jays. Defendants offered instead to produce a record comprised in part of songs owned by the O'Jays, and in part of Unreleased Songs, which were owned by Defendants. Plaintiffs agreed to this proposal. Levert even recorded part of one song to support this proposal. However, Defendants were unable to secure an agreement with a distributor to distribute the proposed record. Plaintiffs then entered into an agreement with another record company and were able to produce and distribute a record comprised solely of songs owned by The O'Jays.

  Sometime later, Defendants decided to produce and distribute a record that included only the Unreleased Songs. The parties presented conflicting evidence as to when Plaintiffs learned of Defendants' intentions. However, it is clear that as early as August, 2003, there were negotiations between Plaintiffs and Defendants over the Defendants' proposal to release a record comprised of the Unreleased Songs. In October, 2003, Plaintiffs learned that Defendants were actually pursuing this proposal. Sometime thereafter, Plaintiffs learned that Defendants planned to release Together on April 6, 2004. On April 2, 2004, Plaintiffs filed this action to enjoin the release of Together.

 II. ANALYSIS

  1. Legal Standard Applied to a Request for a Preliminary Injunction

  "An injunction is an extraordinary remedy, which should be granted only in limited circumstances." Novartis Consumer Health, Inc. v. Johnson & Johnson Consumer Pharms. Co., 290 F.3d 578, 586 (3d Cir. 2002) (quotations omitted). Before issuing an injunction, the moving party must show that the following four factors favor issuing the injunction: "(1) the likelihood that the moving party will succeed on the merits; (2) the extent to which the moving party will suffer irreparable harm without injunctive relief; (3) the extent to which the nonmoving party will suffer irreparable harm if the injunction is issued; and (4) the public interest." We will only issue an injunction if all four factors favor relief. AT & T V. Winback & Conserve Program, Inc., 42 F.3d 1421, 1427 (3d Cir. 1994).

  2. Likelihood of Success on the Merits

  a. Breach of Contract

  The Contract is to be construed consistent with Pennsylvania law. (Compl. Ex. A ¶ 23.) Under Pennsylvania law, the interpretation of a contract is an issue of law. Banks Eng'g Co., Inc. v. Polons, 697 A.2d 1020, 1022 (Pa. Super. 1997). "[T]he goal of contract interpretation is to discover the parties' objective mutual intent." Duquesne Light Co. v. Westinghouse Elec. Corp., 66 F.3d 604, 613 (3d Cir. 1995). Pennsylvania law "is firmly settled that the intent of the parties to a written contract is contained in the writing itself." Id. (quotations omitted). Where "the parties have reduced their agreement to writing, Pennsylvania courts presume that the parties' mutual intent can be ascertained by examining the writing." Id.

  As a preliminary matter, we must determine if the contract is clear or ambiguous. Id. A contract is clear and unambiguous if it is subject to only one reasonable interpretation. Sanford Inv. Co. v. Ahlstrom Mach. Holdings, Inc., 198 F.3d 415, 420-21 (3d Cir. 1999). However, whether contractual language is "clear and unambiguous may not be apparent without cognizance of the context in which the agreement arose." Steuart v. McChesney, 444 A.2d 659, 662 (Pa. 1982). Thus, in deciding whether contractual language is ambiguous, Pennsylvania law permits courts to consider, among other things, "the words of the contract, the alternative meanings suggested by counsel, and the nature of the objective evidence to be offered in support of that meaning." Sanford, 198 F.3d at 421. In this case, the parties did not present any extrinsic evidence to show that the Contract contained an ambiguity. Accordingly, we will look only to the Contract in determining the parties' mutual intent.

  In their complaint, Plaintiffs allege that Defendants breached the Contract in six ways. They claim that Defendants breached: (1) the Contract in that Defendants plan to release Together without Plaintiffs' authorization; (2) paragraph 29(a) of the Contract which requires Defendants to release each "Album" recorded under the Contract within 120 days of delivery of such Album to Defendants; (3) paragraph 32(f) which contemplates that the Unreleased Songs would be released in the form of 45 r.p.m. singles; (4) a provision that requires Defendants to submit to The O'Jays an estimated budget of production and other costs prior to the release of records; (5) paragraph 30(b) which requires Defendants to obtain The O'Jays' approval for album covers and any use of the O'Jays' likeness; and (6) ...


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