(CN) - A federal judge has largely thrown out a lawsuit claiming Sony Music, Universal Music Group and others delayed complaining about copyright infringing uploads to YouTube into order to "extort" larger payments for the works later.
The ruling by U.S. District Judge Roy Dalton Jr. relieves the defendants, which also include Warner Music and Capital Records, of defending themselves against claims of tortious interference with contractual rights and civil conspiracy.
However, they still must face a claim that they violated their implied duty of good faith and fair dealing. Since Judge Dalton's ruling, the defendant companies have asked for and been granted an extension of their deadline to file a motion to compel discovery by U.S. Magistrate Judge David Baker.
The dispute between the plaintiffs, Alicor Inc. and Amway Corp., and the defendants, , goes back some 16 years.
In stems from a related copyright infringement action -- Arista Records, Inc. v. Amway Corporation -- that was partially resolved pursuant to a 1998 settlement agreement between the defendants in this case, and the plaintiffs' predecessors.
Alicor and Amway sued the defendants in April 2014, claiming the defendants failed to live up to their obligations under the settlement and have engaged in a conspiracy for the purpose of "extorting money from Plaintiffs, harassing Plaintiffs by requiring unnecessary infringement investigations under the Agreement, and seeking 'double recovery' from Plaintiffs based on the Youtube uploads," Dalton's ruling states.
The trial court tossed most of the plaintiffs' claims, but allowed them to file amended complaint.
However, in doing so, Judge Dalton wrote, the plaintiffs made only a few incidental changes and largely restated the claims that had already been dispensed with by the trial court.
It was the amended complaint that brought a tortious interference claim against Warner Music.
The plaintiffs also included new allegations that each defendant is a "stranger to the agreement" with respect to every other defendants' independent obligation to plaintiffs.
But Dalton remained largely unmoved by the plaintiff's arguments, noting that while they have "some superficial appeal .. they fail upon closer examination. "
"First, the Court is not persuaded that a party to a contract can somehow be a stranger to that contract because there are multiple signatories. The Court's review of Florida law leaves it unpersuaded that the Florida Supreme Court would adopt such a theory of liability," he wrote.
"The Court also finds that the First Amended Complaint does not include factual allegations sufficient to plausibly state that the Defendants' used 'improper' methods of interference under Florida law," he continued. "Notably, each 'improper method' recited in the Amended Complaint parallels Plaintiffs' allegations concerning Defendants' alleged breaches of the Agreement, but adds the allegation that the breaches/methods resulted from a conspiracy. The Court finds such allegations to be too circular to plausibly support Plaintiffs' claims."
Dalton then turned to the tortious interference claim itself.
"Although the propriety of methods allegedly used by a defendant to tortiously interfere with a plaintiff's contract rights is often resolved by a trier of fact on a developed record, in some instances, the matter may be resolved as a matter of law," he wrote.
"Specifically, the Court finds as a matter of law that conduct alleged to breach a contract may not simultaneously constitute the 'improper method' used to procure breach of a contract. This is so even when a plaintiff includes conclusory allegations of a conspiracy."
"Because Plaintiffs have not persuaded the Court that Florida's well-settled law that only strangers to a contract or business relationship may be liable for tortious interference is either satisfied or inapplicable in this action, Counts II and III are due to be dismissed. Finally, the Court finds that failure of the tortious interference claims again forecloses Plaintiffs' conspiracy claim," Dalton added.
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