United States District Court, N.D. Illinois, Eastern Division
CHARLES HUNT, TERRY JOHNSON JACOB C. CAREY, Administrator of the estate of Jacob A. Carey, and LLOYD NELSON, and GEORGIA WILSON, KENNETH WILSON, and RONALD WILSON, on behalf of Paul Wilson Plaintiffs,
PEPSICO, INC. and BBDO WORLDWIDE, INC., Defendants.
The opinion of the court was delivered by: MATTHEW KENNELLY, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiffs Charles Hunt, Terry Johnson, Jacob C. Carey, as
administrator of the estate of Jacob A. Carey, Lloyd Nelson,
individually and on behalf of his mother, and Georgia, Kenneth,
and Ronald Wilson, on behalf of Paul Wilson, sued Pepsico, Inc.
and the advertising agency BBDO Worldwide, Inc., for using the
song I Only Have Eyes For You in a Pepsi commercial without
paying them reuse fees or royalties. Plaintiffs allege that they
or their predecessors in interest recorded the song for Gone
Recording Corp., which was a signatory to a collective bargaining
agreement with the American Federation of Television and Radio
Artists ("AFTRA"). Am. Compl. ¶¶ 4-5. Plaintiffs further allege
that Pepsico and BBDO were bound by a collective bargaining
agreement with AFTRA and the Screen Actors Guild called the
Commercials Contract. Id. ¶ 6. The Commercials Contract contains a general arbitration clause
in paragraph 56 that declares:
All disputes and controversies of every kind and
nature whatsoever between any Producer and the Union
or between any Producer and any . . . performer
arising out of or in connection with this Contract
. . . as to the existence, validity, construction,
meaning, interpretation, performance, nonperformance,
enforcement, operation, breach, continuance, or
termination of this Contract and/or such contract or
engagement, shall be submitted to arbitration . . .
Def. Ex. A ¶ 56. Defendants, relying on paragraph 56, have moved
to stay this action and compel arbitration.
Plaintiffs assert that their claims fall under another
provision of the Commercials Contract that they say allows a
performer to avoid arbitration and bring a legal action in court.
Paragraph 28 reads:
Producer agrees that . . . no part of any phonograph
record, tape or other audio recording or of any other
production of a principal performer made under the
jurisdiction of AFTRA (including singers unless they
are in an unidentifiable group) shall be used in
commercials without separately bargaining with the
principal performer and reaching an agreement
regarding such use prior to any utilization of such
. . . soundtrack under this Contract. . . . The
minimum compensation to which the principal performer
may agree in such bargaining will be the applicable
session fee and applicable use fees provided in this
Contract. Group singers in an unidentifiable group
shall be paid applicable use fees as provided in this
If Producer fails to separately negotiate as provided
above, the principal performer shall be entitled to
damages for such unauthorized use equivalent to three
times the amount originally paid the principal
performer for the number of days of work covered by
the material used plus the applicable minimum use
fees under this Contract but not less than three
times the applicable session fee at the rates
provided under this Contract plus the applicable
minimum use fees under this Contract. However, the
principal performer may, in lieu of accepting such
damages, elect to bring an individual legal action in
a court of appropriate jurisdiction to enjoin such
use and recover such damages as the court may fix
in such action.
Def. Ex. A ¶ 28 (emphasis added). Plaintiffs make three arguments
to the Court as to why they should be able to litigate their
claims under paragraph 28: (1) paragraph 28 should be interpreted as allowing a performer to seek injunctive or
monetary relief in litigation; (2) even if a performer must bring
injunctive relief, injunctive relief is appropriate in this case;
and (3) arbitration is an illusory remedy in this case.
For the reasons stated below, the Court grants defendants'
motion and orders arbitration of plaintiffs' claims.
Paragraph 56 is a broad arbitration provision covering any
dispute relating to the Commercials Contract. Such broad
arbitration clauses create a presumption of arbitrability. See,
e.g., Fyrnetics (Hong Kong) Ltd. v. Quantum Group, Inc.,
293 F.3d 1023, 1030 (7th Cir. 2002); see generally, AT&T Techs.,
Inc. v. Communications Workers of America, 475 U.S. 643, 650
Plaintiffs argue that paragraph 28 entitles them to bring suit
in court for disputes concerning unauthorized use in a commercial
of a work made under AFTRA's jurisdiction. The Court previously
ruled, however, that paragraph 28 only allows a suit in court by
a performer who has a claim for injunctive relief a remedy not
available in arbitration. Hunt v. Pepsico, No. 03 C 7151, 2004
WL 1114592 (N.D. Ill. May 18, 2004). The Court ruled that under
paragraph 28, a performer entitled to take advantage of this
exception can also seek damages as part of his suit for an
Plaintiffs do not have a viable claim for an injunction. A
court may grant an injunction when there is a risk of irreparable
injury and legal remedies are inadequate. Weinberger v.
Romero-Barcelo, 456 U.S. 305, 311 (1982); see also, Younger v.
Harris, 401 U.S. 37, 46 (1971) (showing of irreparable injury is
the "traditional prerequisite to obtaining an injunction"). In
this case a showing of irreparable injury would require some
indication that the defendants might use I Only Have Eyes For
You again in the future. But the plaintiffs have advanced no
viable argument that any such risk exists. They waited well over
six years after the song was used by the defendants to file suit,
and in the interim the use was not repeated. They point to no
evidence suggesting any possibility that the defendants would, at
this late date, revive the 1997 commercial or use the song in
some other commercial.
Plaintiffs' arguments regarding the proper interpretation of
paragraph 28 of the Commercials Contract do not warrant
reconsideration of the Court's earlier construction of that
provision. At most plaintiffs have suggested some doubt regarding
whether their dispute is arbitrable. But the law is clear that
doubts regarding whether a broad arbitration clause like this one
covers a particular dispute are to be resolved in favor of
arbitration. See, e.g., Moses H. Cone Mem. Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 24 (1983); Kiefer Specialty
Flooring, Inc. v. Tarkett, Inc., 174 F.3d 907, 909 (7th Cir.
1999). What this means is that "`[a]n order to arbitrate should
not be denied unless it may be said with positive assurance that
the arbitration clause is not susceptible of an interpretation
that covers the asserted dispute.'" AT&T Techs.,
475 U.S. at 650 (quoting Steelworkers v. Warrior & Golf Navigation Co.,
363 U.S. 574, 582-83 (1960)). No such "positive assurance" exists
here As discussed in the Court's earlier ruling, the Commercials
Contract is plainly susceptible of a reasonable interpretation
that disputes of this type are subject to arbitration, except in
cases in which a viable claim for injunctive relief may be made,
in which case the performer may file suit in court. None of the
considerations cited by plaintiffs in their response to the
motion to stay require or warrant a construction of the contract
that permits performers to ignore the broad arbitration clause
and file suit in court in cases like this one in which there is no viable injunctive relief claim.
Finally, the Court rejects plaintiffs' argument that the
arbitration remedy is illusory. Plaintiffs contend that the
Screen Actors Guild will refuse to arbitrate plaintiffs' claim
because plaintiffs elected to file suit in court. This amounts to
a contention that a performer can defeat the contract's
arbitration requirement simply by electing to file suit instead.
That would render the arbitration requirement meaningless. The
Court rejects plaintiffs' argument and assumes that SAG will
serve the interests of its members by conducting arbitration as
it agreed to do in the Commercials Contract. In this regard, the
Court is unpersuaded by plaintiffs' citation to Universal City
Studios, Inc. v. Screen Actors Guild, Inc., No. CV 01-9028 (C.D.
Cal. Feb. 22, 2002), in which the court appears to have accepted
an interpretation of the Commercials Contract that gives the
performer an unfettered option to elect whether to enforce the
contract by arbitration or by filing suit.
For the reasons stated above, the Court dismisses plaintiffs'
request for an injunction and therefore grants defendants' motion
to stay and compel arbitration [docket no. 15]. Plaintiffs are
directed to submit their claim against the defendants to
arbitration under paragraph 56 of the Commercials Contract. The
Court assumes plaintiffs will do so promptly and therefore sets
the case for a status hearing in approximately 120 days, on
February 9, 2005 at 9:30 a.m. All other schedules and deadlines are vacated as moot.
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