     05-7017
     Phillips v. Audio Active Ltd.



 1                                   UNITED STATES COURT OF APPEALS
 2                                       FOR THE SECOND CIRCUIT
 3
 4                                          _______________
 5
 6                                         August Term, 2006
 7
 8              (Argued October 26, 2006                  Decided July 24, 2007)
 9
10                                       Docket No. 05-7017-cv
11
12                                          _______________
13
14                   PETER PHILLIPS, professionally known as Pete Rock,
15
16                                                      Plaintiff-Appellant,
17
18                                                 v.
19
20               AUDIO ACTIVE LIMITED, trading as Barely Breaking Even,
21                  STUDIO DISTRIBUTION and SANDBOX AUTOMATIC, INC.,
22
23                                                      Defendants-Appellees,
24
25                                          HIPHOPSITE.COM,
26
27                                                      Defendant.
28
29                                          _______________
30
31   Before:
32                                   CARDAMONE, WALKER, and STRAUB,
33                                           Circuit Judges.
34
35                                          _______________
36
37        Peter Phillips, p/k/a Pete Rock, appeals the November 30,
38   2005 decision and order and the December 8, 2005 final judgment
39   of the United States District Court for the Southern District of
40   New York (Daniels, J.) dismissing his complaint against defendant
41   music companies for improper venue under Federal Rule of Civil
42   Procedure 12(b)(3).
43
44              Affirmed in part, reversed in part, and remanded.
45
46                                          _______________
 1                            _______________
 2
 3   PAUL A. CHIN, Law Offices of Paul A. Chin, New York, New York,
 4        for Plaintiff-Appellant.
 5
 6   DOROTHY M. WEBER, New York, New York (Judith A. Meyers, Shukat
 7        Arrow Hafer Weber & Herbsman, LLP, New York, New York, of
 8        counsel), for Defendants-Appellees.
 9
10                            _______________
1    CARDAMONE, Circuit Judge:

2         A plaintiff may think that as the initiator of a lawsuit he

3    is the lord and master of where the litigation will be tried and

4    under what law.   But if he is a party to a contract that contains

5    forum selection and choice of law clauses his view of himself as

6    ruler of all he surveys may, like an inflated balloon, suffer

7    considerable loss of altitude.   Such is the situation plaintiff

8    faces in the appeal before us, where we revisit an issue last
9    addressed by us 15 years ago:    what is the effect of a forum

10   selection clause on a complaint that asserts claims arising under

11   the Copyright Act?   See Corcovado Music Corp. v. Hollis Music,

12   Inc., 981 F.2d 679 (2d Cir. 1993).

13        Plaintiff Peter Phillips, professionally known as Pete Rock

14   (plaintiff or appellant), is a musician who in 2002 entered into

15   a recording contract with defendant Audio Active Limited t/a

16   Barely Breaking Even (BBE), a music company.   This contract gave

17   fruit to two albums in 2004 and 2005.   The first album all agree
18   was governed by the recording contract and, except for Phillips'

19   contention that BBE owes him money, it appears to have been

20   produced, released and distributed according to plan.   The second

21   album is the source of the principal controversy between the

22   parties.

23        In his complaint against BBE and defendants Studio

24   Distribution (Studio), Navarre Corporation (Navarre),

25   HipHopSite.com and Sandbox Automatic, Inc. (Sandbox)

26   (collectively defendants), Phillips averred that the recording

                                       2
1    contract contemplated the first album only, and that the release

2    of the second album, over his objections, infringed his

3    copyrights in the 15 songs comprising the album.   BBE and Studio

4    moved to dismiss plaintiff's complaint on the basis of a forum

5    selection clause in the contract pursuant to which the parties

6    had agreed to litigate in England any proceeding arising out of

7    the contract.

8         The United States District Court for the Southern District
9    of New York (Daniels, J.) held the forum clause governed

10   Phillips' action, including his copyright claims relating to the

11   second album.   Phillips appeals from the district court's

12   November 30, 2005 decision and order and its December 8, 2005

13   judgment granting BBE and Studio's Rule 12(b)(3) motion to

14   dismiss his complaint for improper venue.   Plaintiff contends

15   that the district court erred in reading the forum clause to

16   require -- rather than permit -- proceedings to be brought in

17   England, that his copyright claims did not arise out of the
18   recording contract and should have been exempted from operation

19   of the forum clause, and that the clause should be set aside

20   because its enforcement would be unreasonable.

21        We agree with the district court's interpretation of the

22   clause as mandatory and its holding that enforcement of the

23   clause would not be unreasonable and affirm the dismissal of

24   Phillips' breach of contract claim.   However, plaintiff's

25   remaining claims predicated on defendants' alleged infringement



                                      3
1    of his copyrights were improperly dismissed under the forum

2    selection clause.

3                                  BACKGROUND

4                        A.    The Recording Contract

5         Phillips entered into the recording contract with BBE in

6    September 2002 under the terms of which he agreed to provide his

7    services as a recording artist and producer to create musical

8    compositions, and BBE agreed to pay the costs of production and
9    to pay royalties to Phillips, including a $90,000 advance payable

10   in two installments.

11        The contract required Phillips to produce "no less than ten

12   (10) newly recorded and previously unreleased tracks . . . of no

13   less than sixty (60) minutes" and defined these tracks as the

14   "master recordings."     The minimum number of tracks was not paired

15   with a maximum anywhere in the contract, but the master

16   recordings were later defined as the album, which was

17   provisionally entitled "Soul Survivor 2."    BBE acquired the right
18   to exploit all products of Phillips' services under the contract

19   and the entire copyright in the master recordings.    The final

20   paragraph of the recording contract contains a choice of law and

21   forum clause that reads:    "[t]he validity[,] construction[,] and

22   effect of this agreement and any or all modifications hereof

23   shall be governed by English Law and any legal proceedings that

24   may arise out of it are to be brought in England."    Phillips also

25   signed a letter agreement, which is attached to the recording

26   contract, authorizing Soul Brother Records, Inc. to offer

                                        4
1    Phillips' services under the contract and stating that the letter

2    agreement "shall be subject to the same laws and exclusive

3    jurisdiction as the above agreement."     Phillips received $55,000

4    from BBE in a first installment of his advance on royalties.

5    Pursuant to the contract, the balance of the advance was payable

6    upon delivery to BBE of the last of the master recordings.

7                          B.   Release of Second Album

8            In 2004 BBE released an album comprised of Phillips' musical
9    compositions entitled, as foreseen in the contract, Soul Survivor

10   2.   While Phillips was preparing the songs that were released on

11   Soul Survivor 2, he composed and recorded additional music.

12   Plaintiff alleges that in 2004, BBE and Studio, a second

13   recording company, sought his permission to release the

14   additional songs, but Phillips, believing the tracks were not

15   ready for release, denied their request.     BBE, Studio and

16   Navarre, a distribution company, nonetheless proceeded to release

17   a second album in August or September of 2004 containing 15
18   additional songs created by Phillips.     Phillips asserts that

19   Sandbox and HipHopSite.com, both Internet-based distributors of

20   digital media, sold copies of the allegedly infringing album.

21   Plaintiff settled his claims against HipHopSite.com and these

22   were dismissed with prejudice by the district court on May 3,

23   2005.

24                         C.   Prior Legal Proceedings

25           Plaintiff commenced the instant action in the Southern

26   District of New York on January 26, 2005.     His second amended

                                         5
1    complaint contained five counts against the defendants.     Count

2    One stated that BBE had breached the recording contract by

3    failing to pay the second installment of the royalties advance.

4    Counts Two and Three were for direct and contributory copyright

5    infringement under the Copyright Act, 17 U.S.C. § 101 et seq.,

6    and requested remedies provided by the Act.     Counts Four and Five

7    asserted alternative state law claims for unjust enrichment and

8    unfair competition on the basis of defendants' exploitation of
9    the additional tracks.

10        On May 27, 2005 BBE and Studio moved to dismiss under Rules

11   12(b)(1), (3) and (6) on the grounds that the forum selection

12   clause in the recording contract required Phillips to bring his

13   suit in England.   In a decision and order dated November 30, 2005

14   and a final judgment dated December 8, 2005, the trial court

15   granted BBE and Studio's motion to dismiss for improper venue

16   under Fed. R. Civ. P. 12(b)(3).    The district court classified

17   the forum selection clause as mandatory rather than permissive,
18   and it held that Phillips had failed to show that enforcement of

19   the clause would be unreasonable.      With respect to plaintiff's

20   copyright claims, Judge Daniels determined that any dispute

21   concerning the defendants' rights to exploit this music was

22   primarily contractual because the defendants had acquired

23   possession of the music legitimately under the contract.

24   Phillips appeals the November 30, 2005 decision and order and the

25   December 8, 2005 final judgment.



                                        6
1                                    DISCUSSION

2                         I   Forum Selection Clause

3                               A.     Dismissal

4          Determining whether to dismiss a claim based on a forum

5    selection clause involves a four-part analysis.     The first

6    inquiry is whether the clause was reasonably communicated to the

7    party resisting enforcement.      See, e.g., D.H. Blair & Co. v.

8    Gottdiener, 462 F.3d 95, 103 (2d Cir. 2006).      The second step
9    requires us to classify the clause as mandatory or permissive,

10   i.e., to decide whether the parties are required to bring any

11   dispute to the designated forum or simply permitted to do so.

12   See John Boutari & Son, Wines & Spirits, S.A. v. Attiki Imps. &

13   Distribs. Inc., 22 F.3d 51, 53 (2d Cir. 1994).      Part three asks

14   whether the claims and parties involved in the suit are subject

15   to the forum selection clause.      See, e.g., Roby v. Corp. of

16   Lloyd's, 996 F.2d 1353, 1358-61 (2d Cir. 1993).

17         If the forum clause was communicated to the resisting party,
18   has mandatory force and covers the claims and parties involved in

19   the dispute, it is presumptively enforceable.      See id. at 1362-

20   63.   The fourth, and final, step is to ascertain whether the

21   resisting party has rebutted the presumption of enforceability by

22   making a sufficiently strong showing that "enforcement would be

23   unreasonable or unjust, or that the clause was invalid for such

24   reasons as fraud or overreaching."      M/S Bremen v. Zapata Off-

25   Shore Co., 407 U.S. 1, 15 (1972) (establishing federal standard

26   relating to enforcement of forum clauses applicable in admiralty

                                         7
1    and international transactions); see Bense v. Interstate Battery

2    Sys. of Am., Inc., 683 F.2d 718, 721 (2d Cir. 1982) (applying

3    Bremen standard to contractual dispute between domestic parties

4    in non-admiralty context).

5                             B.   Standard of Review

6         Where the district court has relied on pleadings and

7    affidavits to grant a Rule 12(b)(3) motion to dismiss on the

8    basis of a forum selection clause, our review is de novo.        See
9    Asoma Corp. v. SK Shipping Co., 467 F.3d 817, 822 (2d Cir. 2006);

10   Gulf Ins. Co. v. Glasbrenner, 417 F.3d 353, 355 (2d Cir. 2005)

11   (adopting standard applied in Rule 12(b)(2) dismissals to review

12   of Rule 12(b)(3) dismissals).      In analyzing whether the plaintiff

13   has made the requisite prima facie showing that venue is proper,

14   we view all the facts in a light most favorable to plaintiff.

15   See New Moon Shipping Co. v. Man B&W Diesel AG, 121 F.3d 24, 29

16   (2d Cir. 1997).    Contract interpretation as a question of law is

17   also reviewed de novo on appeal.        Lee v. BSB Greenwich Mortgage
18   L.P., 267 F.3d 172, 178 (2d Cir. 2001).

19                     C.   Impact of Choice of Law Clause

20        In the absence of an applicable choice of law provision, it

21   is well established in this Circuit that the rule set out in M/S

22   Bremen applies to the question of enforceability of an apparently

23   governing forum selection clause, irrespective of whether a claim

24   arises under federal or state law.       AVC Nederland B.V. v. Atrium

25   Inv. P'ship, 740 F.2d 148, 156 (2d Cir. 1984) (applying M/S

26   Bremen in federal question case); Bense, 683 F.2d at 720-21

                                         8
1    (same); Jones v. Weibrecht, 901 F.2d 17, 18-19 (2d Cir. 1990)

2    (reaffirming Second Circuit rule that Bremen standard applies to

3    diversity cases).

4         Here, where the parties have agreed that the validity,

5    construction and effect of the recording contract is to be

6    governed by English law, we confront a different legal issue.     In

7    analyzing a forum selection clause, what effect should we give to

8    a choice of law provision contained in the same contract?
9    Largely for the reasons we hold parties to their contractual

10   promises to litigate in a specified forum, federal courts give

11   substantial weight to choice of law provisions.   See Roby, 996

12   F.2d at 1362-63 (discussing presumptive validity of choice of law

13   clauses in international transactions); State Trading Corp. of

14   India, Ltd. v. Assuranceforeningen Skuld, 921 F.2d 409, 417 (2d

15   Cir. 1990) ("[A] contractual choice of law clause generally takes

16   precedence over choice of law rules . . . ."); Richards v.

17   Lloyd's of London, 135 F.3d 1289, 1292-93 (9th Cir. 1998)
18   (extending Bremen standard to evaluation of choice of law

19   clauses).   But see Advani Enters., Inc. v. Underwriters at

20   Lloyds, 140 F.3d 157, 162 (2d Cir. 1998) (incorporating choice of

21   law provision into multi-factor test to determine "points of

22   contact" between transaction and potential fora in admiralty

23   case).

24        Despite the presumptive validity of choice of law clauses,

25   our precedent indicates that federal law should be used to

26   determine whether an otherwise mandatory and applicable forum

                                      9
1    clause is enforceable under Bremen, i.e., step four in our

2    analysis.   This is because enforcement of forum clauses is an

3    essentially procedural issue, Jones, 901 F.2d at 19, while choice

4    of law provisions generally implicate only the substantive law of

5    the selected jurisdiction.    See Siegelman v. Cunard White Star,

6    221 F.2d 189, 194 (2d Cir. 1955); cf. Woodling v. Garrett Corp.,

7    813 F.2d 543, 551-52 (2d Cir. 1987) (explaining New York rule

8    honoring parties' choice of law to govern substantive but not
9    procedural issues).    Were it otherwise, choice of law provisions

10   selecting jurisdictions that disfavor forum clauses would put a

11   district court to the awkward choice of either ignoring the

12   parties' choice of law or invalidating their choice of forum.

13   See, e.g., Bense, 683 F.2d at 722 (declining to apply law

14   specified in contract where such application would render the

15   forum selection clause meaningless).

16        We find less to recommend the invocation of federal common

17   law to interpret the meaning and scope of a forum clause, as
18   required by parts two and three of our analysis.    Little

19   discussion of the issue can be found in federal court decisions.

20   See Yavuz v. 61 MM, Ltd., 465 F.3d 418, 427 (10th Cir. 2006).

21   For example, we have turned to federal precedent to interpret

22   forum clauses, but the underlying choice of law question has been

23   left unaddressed.     See, e.g., Boutari, 22 F.3d at 52-53 (applying

24   federal precedent to ascertain meaning of forum clause where

25   parties had elected Greek law); Roby, 996 F.2d at 1361 (applying

26   federal precedent to assess scope of clause where parties had

                                       10
1    chosen English law); see also Manetti-Farrow Inc. v. Gucci Am.,

2    Inc., 858 F.2d 509, 513 (9th Cir. 1988) ("[B]ecause enforcement

3    of a forum clause necessarily entails interpretation of the

4    clause before it can be enforced, federal law also applies to

5    interpretation of forum selection clauses.").     But see AVC

6    Nederland, 740 F.2d at 155 (noting that interpretation of Dutch-

7    language forum selection clause in contract among predominantly

8    Dutch principals executed in the Netherlands required application
9    of Dutch law).   See generally Jacob Webb Yackee, Choice of Law

10   Considerations in the Validity & Enforcement of International

11   Forum Selection Agreements:   Whose Law Applies?, 9 UCLA J. Int'l

12   L. & Foreign Aff. 43, 67 (2004) (describing practice of federal

13   courts reflexively to disregard choice of law provisions when

14   assessing forum selection clauses); Yavuz, 465 F.3d at 427

15   (same).

16         The Tenth Circuit recently discussed the novel question

17   posed by contracts containing choice of law and forum provisions.
18   Yavuz, 465 F.3d at 427-31.    Reviewing a clause reading, "[t]his

19   convention is governed by the Swiss law . . . .    Place of courts

20   is Fribourg," id. at 427, the court noted that before deciding

21   whether to enforce the clause, it had to resolve several

22   subsidiary questions:   whether the clause was mandatory or

23   permissive, and whether it governed all of plaintiff's claims.

24   Id.   Yavuz observed that the Supreme Court's guidance on forum

25   clauses did not extend to the choice of law question before it

26   (and now before us) because the meaning of each forum or

                                      11
1    arbitration provision before the Supreme Court in M/S Bremen and

2    its progeny has never been in question.   Id. at 430.

3         In light of the Supreme Court's invocation of compelling

4    reasons to uphold contractual choice of law -- like choice of

5    forum -- provisions, Yavuz held that "under federal law the

6    courts should ordinarily honor an international commercial

7    agreement's forum-selection provision as construed under the law

8    specified in the agreement's choice of law provision," id. at
9    428-30; see also Abbott Labs. v. Takeda Pharm. Co., 476 F.3d 421,

10   423 (7th Cir. 2007) ("Simplicity argues for determining the

11   validity and meaning of a forum selection clause . . . by

12   reference to the law of the jurisdiction whose law governs the

13   rest of the contract in which the clause appears.").

14        Without the benefit of briefing by the parties on this

15   issue, we cannot understand why the interpretation of a forum

16   selection clause should be singled out for application of any law

17   other than that chosen to govern the interpretation of the
18   contract as a whole.   See Yavuz, 465 F.3d at 428.   However, the

19   parties neither objected to the district court's citation to

20   federal precedent in its interpretation of the clause before us,

21   nor construed the clause under English law in their briefs.    We

22   will assume from the parties' briefing that they do not rely on

23   any distinctive features of English law and apply general

24   contract law principles and federal precedent to discern the

25   meaning and scope of the forum clause.    See Motorola Credit Corp.

26   v. Uzan, 388 F.3d 39, 61 (2d Cir. 2004) ("[T]he parties' briefs

                                     12
1    assume that New York law controls this issue, and such implied

2    consent . . . is sufficient to establish choice of law."); John

3    Wyeth & Brother Ltd. v. CIGNA Int'l Corp., 119 F.3d 1070, 1074

4    (3d Cir. 1997) (Alito, J.) (applying general contract law

5    principles to interpret forum clause where parties made little

6    reference to English law).

 7       II   The Forum Clause Requires that any Covered Proceeding
 8                          Be Brought in England
 9
10        Forum selection clauses may serve two distinct purposes.

11   Contracting parties may intend to agree on a potential situs for

12   suit so as to guarantee that at least one forum will be available

13   to hear their disputes.   A so-called permissive forum clause only

14   confers jurisdiction in the designated forum, but does not deny

15   plaintiff his choice of forum, if jurisdiction there is otherwise

16   appropriate.   See Boutari, 22 F.3d at 53 (reversing dismissal

17   based on permissive choice of forum clause); AVC Nederland, 740

18   F.2d at 155 ("[A] jurisdiction-conferring clause . . . provid[es]

19   a plaintiff with a guaranteed forum, [but] does not deprive him
20   of the right to sue in another having personal jurisdiction over

21   the defendant."); see also Blanco v. Banco Indus. de Venez.,

22   S.A., 997 F.2d 974, 980, 984 (2d Cir. 1993) (granting motion for

23   dismissal based on inconvenient forum despite permissive choice

24   of forum clause specifying forum chosen by plaintiff).

25   Alternatively, contracting parties may intend to agree in advance

26   on a forum where any and all of their disputes must be brought to

27   eliminate surprise of having to litigate in a hostile forum.


                                     13
1    Roby, 996 F.2d at 1363.   A mandatory forum clause is entitled to

2    the Bremen presumption of enforceability.      Id.

3         Our inquiry is one of contract interpretation.     Hence, our

4    initial focus is on the language of the contract.     Here that

5    language provides that "any legal proceedings that may arise out

6    of [the agreement] are to be brought in England."     A forum

7    selection clause is viewed as mandatory when it confers exclusive

8    jurisdiction on the designated forum or incorporates obligatory
9    venue language.    See Boutari, 22 F.3d at 52-53.

10        The district court found this clause mandatory.     We agree.

11   The parties' use of the phrase "are to be brought" establishes

12   England as an obligatory venue for proceedings within the scope

13   of the clause.    The reference to a particular location, although

14   lacking the specificity of a particular court or city, adequately

15   distinguishes the parties' language from the clause we reviewed

16   in Boutari.   22 F.3d at 52.   In that case, we construed the

17   phrase "[a]ny dispute . . . shall come within the jurisdiction of
18   the . . . Greek Courts" as a permissive clause because it dealt

19   solely with jurisdiction without indicating that such

20   jurisdiction was exclusive.    Id. at 52-53.   We recognized in

21   Boutari that obligatory venue language suffices to give mandatory

22   force to a forum selection clause.    Id. at 53; see Seward v.

23   Devine, 888 F.2d 957, 962 (2d Cir. 1989); Docksider, Ltd. v. Sea

24   Tech., Ltd., 875 F.2d 762, 764 (9th Cir. 1989).      Further, the

25   mandatory force of the words "are to be" differentiates the

26   instant clause from the language used by the parties in Blanco,

                                      14
1    agreeing to certain fora in which their disputes "may" be

2    brought.    997 F.2d at 976, 979.

3            Our distinct treatment of jurisdiction and venue in this

4    context is clear.    Because jurisdiction may be properly conferred

5    on two or more fora, the fact that the contract in Boutari

6    conferred jurisdiction on the courts of Greece did not preclude

7    the parties from commencing litigation in a court outside of

8    Greece.    22 F.3d at 52-53.   However, contract language such as
9    that presented in this case -- mandating that a proceeding be

10   brought in England -- is incompatible with venue lying in New

11   York.    Our finding that the clause is mandatory is buttressed by

12   the stipulation in the letter agreement attached to the recording

13   contract that the former is subject to the same exclusive

14   jurisdiction as the latter.

15     III     Scope of the Forum Selection Clause In the Instant Case

16           We turn now to decide whether the language in the recording

17   contract mandating that any legal proceedings that may arise out
18   of it be brought in England encompasses Phillips' suit.    However

19   important a forum selection clause is to the efficient

20   functioning of international business, see, e.g., Scherk v.

21   Alberto-Culver Co., 417 U.S. 506, 516-17 (1974), it is a creature

22   of contract.    Plaintiff's choice of forum in bringing his suit in

23   federal court in New York will not be disregarded unless the

24   contract evinces agreement by the parties that his claims cannot

25   be heard there.     Cf. Louis Dreyfus Negoce S.A. v. Blystad

26   Shipping & Trading Inc., 252 F.3d 218, 224 (2d Cir. 2001) (noting

                                         15
1    that an arbitration clause, a creature of contract, does not

2    compel arbitration of a dispute that parties did not intend to

3    submit to arbitration).

4                         A.    Breach of Contract Claim

5         We dispose of the contract claim quickly.        Phillips asserts

6    BBE breached the recording contract by failing to pay the second

7    installment on his advance on royalties due upon delivery of the

8    master recordings.    He makes no argument that the forum selection
9    clause, if found mandatory and enforceable, does not apply to his

10   contract claim.   The contract claim for money owed       and due

11   falls squarely under the forum selection clause:       the contract

12   establishes Phillips' right to receive, and BBE's duty to pay,

13   the installment and sets forth the relevant conditions.

14                B.   Federal Copyright Infringement Claims

15        The effect of the forum selection clause on Phillips'

16   copyright claims presents a more difficult question.       The

17   language of that clause frames our question:      Do Phillips'
18   copyright claims arise out of the recording contract?

19        Plaintiff implicitly offers a straightforward argument of

20   mutual exclusivity:       Because his copyright infringement claims

21   arise under the Copyright Act, they cannot arise out of the

22   contract.   In T.B. Harms Co. v. Eliscu, 339 F.2d 823 (2d Cir.

23   1964) (Friendly, J.), we held a claim arises under the Copyright

24   Act and accordingly falls within the jurisdiction of the federal

25   courts if "the complaint is for a remedy expressly granted by the

26   Act, e.g., a suit for infringement or for the statutory royalties

                                         16
1    for record reproduction."    Id. at 828; see Bassett v.

2    Mashantucket Pequot Tribe, 204 F.3d 343, 349, 355 (2d Cir. 2000)

3    (reaffirming Harms test in federal jurisdiction context).    Counts

4    Two and Three of Phillips' complaint allege direct and indirect

5    copyright infringement and request remedies under § 504 of the

6    Copyright Act, 17 U.S.C. § 504.    We agree these claims arise

7    under the Copyright Act.    Thus, federal jurisdiction is properly

8    invoked.    See Kamakazi Music Corp. v. Robbins Music Corp., 684
9    F.2d 228, 229 (2d Cir. 1982) (holding defendant's interposition

10   of a contract as defense to copyright claims did not transform

11   copyright suit into breach of contract action).

12          The relevance of Harms to the present inquiry is where we

13   part from appellant.   Despite its surface appeal, we are not

14   persuaded by Phillips' suggestion that a claim arising under the

15   Copyright Act for jurisdictional purposes cannot also "arise out

16   of" a contract for purposes of interpreting a forum selection

17   clause.
18     1.    Federal Courts Have Repeatedly Found Statutory Claims to
19             "Arise out of" Contract in Interpreting Scope of
20                          Contractual Provisions
21
22          Insofar as Harms relies on the law invoked by the plaintiff

23   to state his claims, it is anchored in doctrines that have long

24   governed our exercise of "arising under" jurisdiction under 28

25   U.S.C. § 1331, whereby "[a] suit arises under the law that

26   creates the cause of action," Am. Well Works Co. v. Layne &

27   Bowler Co., 241 U.S. 257, 260 (1916) (Holmes, J.), and federal

28   jurisdiction is proper where the complaint "is so drawn as to

                                       17
1    seek recovery directly under the Constitution or laws of the

2    United States," Bell v. Hood, 327 U.S. 678, 681 (1946).

3         Looking to cases involving similar contractual provisions

4    and claims under other laws of the United States, we see that

5    federal courts have routinely rejected Phillips' suggestion that

6    a claim arising under a law of the United States is exempt from

7    provisions governing disputes between contracting parties.     See,

8    e.g., Scherk, 417 U.S. at 508-09, 520-21 (holding that claim
9    under Securities Exchange Act was covered by arbitration clause

10   in international contract governing "any controversy or claim

11   [arising] out of this agreement or the breach thereof"); Bense,

12   683 F.2d at 720 (finding complaint brought under federal

13   antitrust law arose from distribution agreement between parties);

14   Abbott Labs., 476 F.3d at 424 (rejecting plaintiff's argument

15   that breach of fiduciary duty claim arising under Delaware tort

16   law did not arise from the contract).

17        Moreover, it is inappropriate in the present context to
18   depend solely on the legal labels used by plaintiff to decide if

19   his case arises out of the contract.    When the question is one of

20   federal jurisdiction, we recognize the plaintiff is in charge of

21   deciding what law he will rely upon in bringing suit, Bell, 327

22   U.S. at 681; see Bassett, 204 F.3d at 355.    It follows that legal

23   causes of action stated by plaintiff afford all the information

24   we need to decide whether "arising under" jurisdiction lies.    It

25   does not follow that plaintiff is the master to decide the

26   meaning of a disputed contractual provision, which is, in effect,

                                    18
1    what appellant suggests in asking us to hold that his claims do

2    not arise out of the recording contract based solely on the laws

3    he cites in his complaint.   Phillips' proposed approach is

4    inconsistent with our refusal in Roby to allow "a party's solemn

5    promise to be defeated by artful pleading."   996 F.2d at 1360.

6         Instead, when ascertaining the applicability of a

7    contractual provision to particular claims, we examine the

8    substance of those claims, shorn of their labels.   Id. at 1361.
9    This approach is consistent with the focus on factual allegations

10   rather than on the causes of action asserted when deciding

11   whether an arbitration clause applies to particular claims.    See

12   JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 173 (2d Cir.

13   2004); Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 846 (2d

14   Cir. 1987).

15        Because we cannot presume that the parties intended to

16   exclude all statutory claims, or even all copyright claims, from

17   the forum selection clause, we examine the substance of Phillips'
18   claims as they relate to the precise language of the clause.      See

19   New Moon, 121 F.3d at 33 ("The scope of the forum selection

20   clause is a contractual question that requires the courts to

21   interpret the clause and, where ambiguous, to consider the intent

22   of the parties."); Wyeth, 119 F.3d at 1075 ("[W]hether or not a

23   forum selection clause applies depends on what the specific

24   clause at issue says.").




                                     19
1                      2.   Meaning of "Arise Out Of"

2         To "arise out of" means "to originate from a specified

3    source," Webster's Third New International Dictionary 117 (1981);

4    see Coregis Ins. Co. v. Am. Health Found., Inc., 241 F.3d 123,

5    128 (2d Cir. 2001), and generally indicates a causal connection,

6    Coregis, 241 F.3d at 128.

7         We do not understand the words "arise out of" as

8    encompassing all claims that have some possible relationship with
9    the contract, including claims that may only "relate to," be

10   "associated with," or "arise in connection with" the contract.

11   See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473

12   U.S. 614, 644 (1985) (Stevens, J., dissenting) (distinguishing

13   between scope afforded by phrases "arise" out of and "in relation

14   to"); Coregis, 241 F.3d at 128-29; Wyeth, 119 F.3d at 1074

15   (reasoning that "arising in relation to" is broader than "arising

16   under"); but cf. Roby, 996 F.2d at 1361 (declining to

17   differentiate between phrases "relating to," "in connection
18   with," and "arising from" and holding that broadly worded clause

19   encompassed non-contract claims).

20        In the same vein, we decline to ascribe to these three words

21   the expansive connotations set out in Omron Healthcare, Inc. v.

22   Maclaren Exps. Ltd., 28 F.3d 600 (7th Cir. 1994), where the

23   Seventh Circuit enforced a substantially similar forum selection

24   clause in a comparable factual scenario.   In Omron, the Seventh

25   Circuit enforced a forum clause covering "all disputes arising

26   out of" a contract against the plaintiff-distributor who had

                                     20
1    brought suit alleging that the defendant-manufacturer continued

2    to sell merchandise bearing the plaintiff's trademark after the

3    distribution agreement between the parties had terminated.        Id.

4    at 601-04.    The Omron court reasoned that "all disputes the

5    resolution of which arguably depend on the construction of an

6    agreement 'arise out of' that agreement."      Id. at 603.

7         The scope attributed by the Seventh Circuit to the words

8    "arise out of" was adopted from its interpretation of arbitration
9    clauses.     Id. at 603.   Like the Seventh Circuit, typically we

10   view phrases similar to "arise out of" in arbitration clauses to

11   cover collateral matters that implicate issues of contract

12   construction.     See Louis Dreyfus, 252 F.3d at 224-25.     Unlike the

13   court in Omron, we decline to import whole the interpretive

14   guidelines developed by the federal courts to assess the scope of

15   arbitration clauses into the present context.      See Omron, 28 F.3d

16   at 603.

17        Our assessment of the scope of arbitration clauses is
18   governed by the Federal Arbitration Act, 9 U.S.C. § 1, et seq.,

19   which establishes "as a matter of federal law" that "any doubts

20   concerning the scope of arbitrable issues should be resolved in

21   favor of arbitration," including where "the problem at hand is

22   the construction of the contract itself."      Mitsubishi, 473 U.S.

23   at 626.    "[U]nless it may be said with positive assurance that

24   the arbitration clause is not susceptible of an interpretation

25   that covers the asserted dispute," the federal courts are obliged

26   to find a particular claim falls within the scope of an

                                        21
1    arbitration clause.   Genesco, 815 F.2d at 847 (quoting S.A.

2    Mineracao da Trindade-Samitri v. Utah Int'l, Inc., 745 F.2d 190

3    (2d Cir. 1984)).

4         While we do not overlook the Supreme Court's emphatic

5    endorsement of freely negotiated and reasonable forum selection

6    clauses, see, e.g., M/S Bremen, 407 U.S. at 13-14, or our own

7    commitment to enforcing applicable forum clauses, see, e.g.,

8    Roby, 996 F.2d at 1362-63, the absence of a congressional policy
9    on forum clauses prompting us to err on the side of coverage is

10   significant.

11        Specifically, we see no reason to presume the parties meant

12   anything other than the dictionary definition of the term:     to

13   originate from a specified source.   Webster's Third New

14   International Dictionary 117 (1981).   This meaning is especially

15   likely where parties wishing to designate a mandatory forum to

16   hear a broader category of disputes are free to do so.     See,

17   e.g., M/S Bremen, 407 U.S. at 2 ("Any dispute arising must be
18   treated before the London Court of Justice."); Abbott Labs., 476

19   F.3d at 422 (designating a mandatory forum for "a dispute . . .

20   arising from, concerning or in any way related to this

21   Agreement").

22        Further, we approve of the approach outlined by the Third

23   Circuit, which highlights the language-specific nature of this

24   inquiry and discounts the precedential weight of cases that deal

25   with dissimilarly worded clauses.    Wyeth, 119 F.3d at 1075

26   ("Drawing analogy to other cases is useful only to the extent

                                     22
1    those other cases address contract language that is the same or

2    substantially similar to that at issue.").

3                  3.   Phillips' Federal Copyright Claims

4         With the preceding discussion on the scope of the forum

5    selection clause as background, we turn now to ascertain whether

6    Phillips' copyright claims originate from the recording contract.

7    The substance of Phillips' claims for direct and contributory

8    copyright infringement is that the defendants impermissibly
9    manufactured and distributed songs to which Phillips retained a

10   valid copyright.   To succeed on a claim for direct infringement

11   under the Copyright Act, a plaintiff must show that (a) he owned

12   a valid copyright to the songs and (b) defendants copied original

13   constituent elements of these songs.     See Fonar Corp. v.

14   Domenick, 105 F.3d 99, 103 (2d Cir. 1997); see also Gershwin

15   Publ'g Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162

16   (2d Cir. 1971) (stating that claim for contributory copyright

17   infringement requires additional element that defendants, with
18   knowledge, induce, cause or materially contribute to infringing

19   conduct of another).

20        To decide whether Phillips' copyright claims arise out of

21   the agreement, we are therefore required to determine if

22   Phillips' rights -- here predicated on valid ownership of the

23   copyrights to the 15 songs -- originate from the recording

24   contract.   We hold they do not.    Appellant does not rely on the

25   recording contract to establish his ownership of the relevant

26   copyrights, but on his authorship of the work, a status afforded

                                        23
1    him as the composer who translates an idea into a fixed, tangible

2    musical expression entitled to copyright protection.       Cmty. for

3    Creative Non-Violence v. Reid, 490 U.S. 730, 737 (1989); see also

4    17 U.S.C. §§ 102(a), 201(a).    Plaintiff asserts, not implausibly

5    -- there is no suggestion of bad faith on his part -- that he has

6    been the rightful owner of the copyrights from the moment the

7    songs became entitled to copyright protection.      The uninterrupted

8    nature of his asserted ownership distinguishes Phillips' case
9    from one in which a plaintiff-creator asserts that the relevant

10   copyrights reverted to him upon breach of contract by the

11   defendants.     See Howard B. Abrams, 2 The Law of Copyright,

12   § 13:13 (2006) (distinguishing factual scenarios in which

13   plaintiffs' copyright/contract claims may arise).      Indeed, if

14   Phillips were to succeed in persuading the trial court of his

15   interpretation of the recording contract, success on the merits

16   of his copyright claims would leave the recording contract

17   undisturbed.
18        In reasoning that Phillips' copyright claims do not arise

19   out of the contract because Phillips has asserted no rights or

20   duties under that contract, we find support in our decision in

21   Corcovado.     981 F.2d at 681-83.    In that case, a musician entered

22   into two contracts, one with a publisher (predecessor of the

23   defendants) assigning original term copyrights to five songs, and

24   another with the plaintiff assigning the renewal term copyrights.

25   Id. at 680-81.    When the plaintiff brought suit in federal court

26   alleging infringement of its renewal term copyrights, the

                                          24
1    defendants moved to dismiss on the basis of the forum selection

2    clause contained in their separate contract with the musician.

3    Id. at 681.   We affirmed the denial of the motion and held that

4    the forum clause, contained in a contract that was relevant only

5    as a defense, was without effect.    Id. at 682-83.

6         Here too, while the defendants are expected to invoke the

7    contract, Phillips denies that the contract has any role or

8    relevance whatever with respect to his copyright claims.       See
9    Cheever v. Acad. Chicago Ltd., 685 F. Supp. 914, 916-17 (S.D.N.Y.

10   1988); cf. Hugel v. Corp. of Lloyd's, 999 F.2d 206, 209 (7th Cir.

11   1993) ("Regardless of the duty sought to be enforced in a

12   particular cause of action, if the duty arises from the contract,

13   the forum selection clause governs the action.").     Because the

14   recording contract is only relevant as a defense in this suit, we

15   cannot say that Phillips' copyright claims originate from, and

16   therefore "arise out of," the contract.

17        In Corcovado, neither party had signed the contract
18   containing the forum clause.   981 F.2d at 682.   While this

19   circumstance facilitated our ruling the plaintiffs' claims were

20   wholly independent of the contract, non-signatory status is not

21   dispositive of the question of applicability of a forum clause to

22   a plaintiff's claims.   See id. (citing with approval district

23   court decision that held that forum clause had no effect on

24   signatory who asserted no rights under the contract).

25        The recording contract, as already noted, mandates that any

26   legal proceedings that may arise out of it be brought in England.

                                     25
1    We do not construe the reference to proceedings, as opposed to

2    claims, as requiring us to take into consideration the source of

3    rights or duties asserted on defense.   But see Wyeth, 119 F.3d at

4    1074 (reasoning that reference to dispute in forum clause

5    implicates broader reach than reference to claim); Abbott Labs.,

6    476 F.3d at 424 (same).   The clause speaks only to where a

7    proceeding is brought and thus obligates the party who brings the

8    suit (or other claims, see Karl Koch Erecting Co. v. N.Y.
9    Convention Ctr. Dev., 838 F.2d 656, 659 (2d Cir. 1988)) to decide

10   where his suit may be heard.   In most cases the plaintiff cannot

11   divine, or anticipate, the defenses, or any other legal action,

12   that may be interposed by another party to the suit.

13        Moreover, the proceedings on the copyright infringement

14   claims here do not originate from the recording contract; the

15   proceedings may begin in court without any reference to the

16   contract.   The only nexus between the proceedings and the

17   contract arises when the defendants raise their defenses.     Given
18   this sequence of events, one cannot say that the origins of the

19   proceedings were in the recording contract.

20        Our focus on the source of the rights or duties sought to be

21   enforced by the complaining party allows us to distinguish the

22   only precedent cited by defendants where we addressed a similarly

23   worded forum clause.   Bense, 683 F.2d at 720 (reviewing dismissal

24   on basis of clause covering "any suits or causes of action

25   arising directly or indirectly from this [agreement]").   In

26   Bense, the plaintiff could only show injury by demonstrating that

                                     26
1    the defendant had breached the contract by terminating without

2    due cause.   The contract containing the forum clause was the

3    source of the right, duty and injury asserted by the plaintiff

4    and we accordingly held the clause to govern his claims.      Id. at

5    721-22.   Such reasoning has no application to the case at hand.

6    As a consequence, we conclude Phillips' copyright claims did not

7    originate in the recording contract and are therefore not

8    governed by the forum selection clause.
9                       C.   Phillips' State Law Claims

10        Phillips has asserted two alternative causes of action under

11   state law for unjust enrichment and unfair competition.      Both are

12   premised on defendants' allegedly improper exploitation of the 15

13   songs.    For the reasons just discussed in relation to appellant's

14   federal copyright claims, his state law claims do not originate

15   from the recording contract and are exempt from operation of the

16   forum selection clause.

17        On remand, the district court should determine whether one
18   or both of Phillips state law claims are preempted by the

19   Copyright Act.    See generally Briarpatch Ltd. v. Phoenix

20   Pictures, Inc., 373 F.3d 296, 304-06 (2d Cir. 2004) (setting

21   forth preemption doctrine as applied to copyright claims).     We

22   think it likely, without deciding, that they are.    See id. at 306

23   (finding plaintiff's unjust enrichment claim under New York law

24   preempted by Copyright Act); Computer Assocs. Int'l, Inc. v.

25   Altai, Inc., 982 F.2d 693, 716-17 (2d Cir. 1992) (stating that

26   unfair competition claims grounded solely on copying are

                                       27
1    preempted); Warner Bros. Inc. v. Am. Broad. Cos., 720 F.2d 231,

2    247 (2d Cir. 1983) (same as Briarpatch).

3         The district court may of course properly exercise

4    supplemental jurisdiction over any state law claim surviving

5    preemption, but the decision to decline such jurisdiction

6    pursuant to 28 U.S.C. § 1367(c) is left to its discretion, see

7    Briarpatch, 373 F.3d at 308.

 8       IV   Enforcement of the Forum Selection Clause to Dismiss
 9                   Contract Claim Was Not Unreasonable
10
11        Under M/S Bremen, dismissal of Phillips' breach of contract

12   claim is proper unless appellant makes a prima facie showing that

13   the clause should be set aside.    407 U.S. at 15; see New Moon,

14   121 F.3d at 29 (holding at initial stage of litigation plaintiff

15   required to show prima facie that chosen forum is proper).   We

16   have explained that a forum clause is enforceable unless (1) its

17   incorporation was the result of fraud or overreaching; (2) the

18   law to be applied in the selected forum is fundamentally unfair;

19   (3) enforcement contravenes a strong public policy of the forum
20   state; or (4) trial in the selected forum will be so difficult

21   and inconvenient that the plaintiff effectively will be deprived

22   of his day in court.   Roby, 996 F.2d at 1363.

23        Phillips does not contend the first three circumstances are

24   present here.   His argument, under the fourth factor, is that

25   none of his witnesses, documents, or any parties to the action

26   are located in England, rendering litigation in that country

27   impossible.   Appellant also notes that defendants have proffered


                                       28
1    no evidence that their relevant documents or witnesses are

2    located in England.

3         The gap in Phillips' reasoning is that his averments suggest

4    that litigation in England may be more costly or difficult, but

5    not that it is impossible.   He has not alleged any circumstances

6    -- whether affecting him personally or a component of his case or

7    prevailing in England generally -- that would prevent him from

8    bringing suit in England.    See Effron v. Sun Line Cruises, Inc.,
9    67 F.3d 7, 10-11 (2d Cir. 1995) (enforcing clause requiring U.S.

10   citizen to litigate in Greece and noting that the distance

11   between a selected forum and pertinent parties or places did not

12   render a forum inconvenient if readily accessible by air travel).

13   In addition, Phillips has not declared any of his claimed

14   hardships are other than the obvious concomitants of litigation

15   abroad, id. at 10, or were not foreseeable when he agreed to

16   litigate in England.   M/S Bremen, 407 U.S. at 16.

17        In light of our holding that only Phillips' breach of
18   contract claim, which is levied against defendant BBE, is subject

19   to the forum clause, we do not address Phillips' contention that

20   the clause is inoperative against the remaining defendants who

21   were not signatories to the recording contract.

22        V Separate Treatment of Separate Claims Is Appropriate
23        Where Some But Not All Claims Are Subject to the Clause
24
25        Analyzing separately each claim asserted by Phillips, we

26   have held that Phillips' federal copyright claims and state law

27   claims are outside the ambit of the forum clause, while his


                                      29
1    contract claim is subject to it.     We address finally whether it

2    is proper in these circumstances to dismiss one claim and retain

3    jurisdiction over others.

4         We are aware that the commencement of separate proceedings

5    in two countries is a likely inconvenience to the parties and

6    that they, in choosing to refer to proceedings instead of claims,

7    may have intended to bundle all claims constituting any

8    proceeding to avoid fractured litigation.    We have considered
9    that the parties' intent and continued interests may lie in

10   treating Phillips' five claims uniformly, but our twin

11   commitments to upholding forum selection clauses where these are

12   found to apply and deferring to a plaintiff's proper choice of

13   forum constrain us in the present context to treat Phillips'

14   claims separately.   Cf. Dean Witter Reynolds, Inc. v. Byrd, 470

15   U.S. 213, 221 (1985) (holding that district courts are required

16   to compel arbitration of claims subject to arbitration clause

17   "even if the result is 'piecemeal' litigation").
18                               CONCLUSION

19        Accordingly, for the foregoing reasons, we affirm the

20   dismissal of Phillips' breach of contract claim, reverse the

21   dismissal of his remaining claims, and remand the case to the

22   district court for further proceedings consistent with this

23   opinion.




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