Phillips v. Audio Active Ltd.

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

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_______________ 1
2 PAUL A. CHIN, Law Offices of Paul A. Chin, New York, New York, 3 for Plaintiff-Appellant. 4
5 DOROTHY M. WEBER, New York, New York (Judith A. Meyers, Shukat 6 Arrow Hafer Weber & Herbsman, LLP, New York, New York, of 7 counsel), for Defendants-Appellees. 8
9 _______________ 10

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2
CARDAMONE, Circuit Judge: 1
A plaintiff may think that as the initiator of a lawsuit he 2
is the lord and master of where the litigation will be tried and 3
under what law. But if he is a party to a contract that contains 4
forum selection and choice of law clauses his view of himself as 5
ruler of all he surveys may, like an inflated balloon, suffer 6
considerable loss of altitude. Such is the situation plaintiff 7
faces in the appeal before us, where we revisit an issue last 8
addressed by us 15 years ago: what is the effect of a forum 9
selection clause on a complaint that asserts claims arising under 10
the Copyright Act? See Corcovado Music Corp. v. Hollis Music, 11
Inc., 981 F.2d 679 (2d Cir. 1993). 12
Plaintiff Peter Phillips, professionally known as Pete Rock 13
(plaintiff or appellant), is a musician who in 2002 entered into 14
a recording contract with defendant Audio Active Limited t/a 15
Barely Breaking Even (BBE), a music company. This contract gave 16
fruit to two albums in 2004 and 2005. The first album all agree 17
was governed by the recording contract and, except for Phillips' 18
contention that BBE owes him money, it appears to have been 19
produced, released and distributed according to plan. The second 20
album is the source of the principal controversy between the 21
parties. 22
In his complaint against BBE and defendants Studio 23
Distribution (Studio), Navarre Corporation (Navarre), 24
HipHopSite.com and Sandbox Automatic, Inc. (Sandbox) 25
(collectively defendants), Phillips averred that the recording 26

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3
contract contemplated the first album only, and that the release 1
of the second album, over his objections, infringed his 2
copyrights in the 15 songs comprising the album. BBE and Studio 3
moved to dismiss plaintiff's complaint on the basis of a forum 4
selection clause in the contract pursuant to which the parties 5
had agreed to litigate in England any proceeding arising out of 6
the contract. 7
The United States District Court for the Southern District 8
of New York (Daniels, J.) held the forum clause governed 9
Phillips' action, including his copyright claims relating to the 10
second album. Phillips appeals from the district court's 11
November 30, 2005 decision and order and its December 8, 2005 12
judgment granting BBE and Studio's Rule 12(b)(3) motion to 13
dismiss his complaint for improper venue. Plaintiff contends 14
that the district court erred in reading the forum clause to 15
require -- rather than permit -- proceedings to be brought in 16
England, that his copyright claims did not arise out of the 17
recording contract and should have been exempted from operation 18
of the forum clause, and that the clause should be set aside 19
because its enforcement would be unreasonable. 20
We agree with the district court's interpretation of the 21
clause as mandatory and its holding that enforcement of the 22
clause would not be unreasonable and affirm the dismissal of 23
Phillips' breach of contract claim. However, plaintiff's 24
remaining claims predicated on defendants' alleged infringement 25

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4
of his copyrights were improperly dismissed under the forum 1
selection clause. 2
BACKGROUND 3
A. The Recording Contract 4
Phillips entered into the recording contract with BBE in 5
September 2002 under the terms of which he agreed to provide his 6
services as a recording artist and producer to create musical 7
compositions, and BBE agreed to pay the costs of production and 8
to pay royalties to Phillips, including a $90,000 advance payable 9
in two installments. 10
The contract required Phillips to produce "no less than ten 11
(10) newly recorded and previously unreleased tracks . . . of no 12
less than sixty (60) minutes" and defined these tracks as the 13
"master recordings." The minimum number of tracks was not paired 14
with a maximum anywhere in the contract, but the master 15
recordings were later defined as the album, which was 16
provisionally entitled "Soul Survivor 2." BBE acquired the right 17
to exploit all products of Phillips' services under the contract 18
and the entire copyright in the master recordings. The final 19
paragraph of the recording contract contains a choice of law and 20
forum clause that reads: "[t]he validity[,] construction[,] and 21
effect of this agreement and any or all modifications hereof 22
shall be governed by English Law and any legal proceedings that 23
may arise out of it are to be brought in England." Phillips also 24
signed a letter agreement, which is attached to the recording 25
contract, authorizing Soul Brother Records, Inc. to offer 26

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5
Phillips' services under the contract and stating that the letter 1
agreement "shall be subject to the same laws and exclusive 2
jurisdiction as the above agreement." Phillips received $55,000 3
from BBE in a first installment of his advance on royalties. 4
Pursuant to the contract, the balance of the advance was payable 5
upon delivery to BBE of the last of the master recordings. 6
B. Release of Second Album 7
In 2004 BBE released an album comprised of Phillips' musical 8
compositions entitled, as foreseen in the contract, Soul Survivor 9
2. While Phillips was preparing the songs that were released on 10
Soul Survivor 2, he composed and recorded additional music. 11
Plaintiff alleges that in 2004, BBE and Studio, a second 12
recording company, sought his permission to release the 13
additional songs, but Phillips, believing the tracks were not 14
ready for release, denied their request. BBE, Studio and 15
Navarre, a distribution company, nonetheless proceeded to release 16
a second album in August or September of 2004 containing 15 17
additional songs created by Phillips. Phillips asserts that 18
Sandbox and HipHopSite.com, both Internet-based distributors of 19
digital media, sold copies of the allegedly infringing album. 20
Plaintiff settled his claims against HipHopSite.com and these 21
were dismissed with prejudice by the district court on May 3, 22
2005. 23
C. Prior Legal Proceedings 24
Plaintiff commenced the instant action in the Southern 25
District of New York on January 26, 2005. His second amended 26

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6
complaint contained five counts against the defendants. Count 1
One stated that BBE had breached the recording contract by 2
failing to pay the second installment of the royalties advance. 3
Counts Two and Three were for direct and contributory copyright 4
infringement under the Copyright Act, 17 U.S.C. § 101 et seq., 5
and requested remedies provided by the Act. Counts Four and Five 6
asserted alternative state law claims for unjust enrichment and 7
unfair competition on the basis of defendants' exploitation of 8
the additional tracks. 9
On May 27, 2005 BBE and Studio moved to dismiss under Rules 10
12(b)(1), (3) and (6) on the grounds that the forum selection 11
clause in the recording contract required Phillips to bring his 12
suit in England. In a decision and order dated November 30, 2005 13
and a final judgment dated December 8, 2005, the trial court 14
granted BBE and Studio's motion to dismiss for improper venue 15
under Fed. R. Civ. P. 12(b)(3). The district court classified 16
the forum selection clause as mandatory rather than permissive, 17
and it held that Phillips had failed to show that enforcement of 18
the clause would be unreasonable. With respect to plaintiff's 19
copyright claims, Judge Daniels determined that any dispute 20
concerning the defendants' rights to exploit this music was 21
primarily contractual because the defendants had acquired 22
possession of the music legitimately under the contract. 23
Phillips appeals the November 30, 2005 decision and order and the 24
December 8, 2005 final judgment. 25

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7
DISCUSSION 1
I Forum Selection Clause 2
A. Dismissal 3
Determining whether to dismiss a claim based on a forum 4
selection clause involves a four-part analysis. The first 5
inquiry is whether the clause was reasonably communicated to the 6
party resisting enforcement. See, e.g., D.H. Blair & Co. v. 7
Gottdiener, 462 F.3d 95, 103 (2d Cir. 2006). The second step 8
requires us to classify the clause as mandatory or permissive, 9
i.e., to decide whether the parties are required to bring any 10
dispute to the designated forum or simply permitted to do so. 11
See John Boutari & Son, Wines & Spirits, S.A. v. Attiki Imps. & 12
Distribs. Inc., 22 F.3d 51, 53 (2d Cir. 1994). Part three asks 13
whether the claims and parties involved in the suit are subject 14
to the forum selection clause. See, e.g., Roby v. Corp. of 15
Lloyd's, 996 F.2d 1353, 1358-61 (2d Cir. 1993). 16
If the forum clause was communicated to the resisting party, 17
has mandatory force and covers the claims and parties involved in 18
the dispute, it is presumptively enforceable. See id. at 1362- 19
63. The fourth, and final, step is to ascertain whether the 20
resisting party has rebutted the presumption of enforceability by 21
making a sufficiently strong showing that "enforcement would be 22
unreasonable or unjust, or that the clause was invalid for such 23
reasons as fraud or overreaching." M/S Bremen v. Zapata Off- 24
Shore Co., 407 U.S. 1, 15 (1972) (establishing federal standard 25
relating to enforcement of forum clauses applicable in admiralty 26

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8
and international transactions); see Bense v. Interstate Battery 1
Sys. of Am., Inc., 683 F.2d 718, 721 (2d Cir. 1982) (applying 2
Bremen standard to contractual dispute between domestic parties 3
in non-admiralty context). 4
B. Standard of Review 5
Where the district court has relied on pleadings and 6
affidavits to grant a Rule 12(b)(3) motion to dismiss on the 7
basis of a forum selection clause, our review is de novo. See 8
Asoma Corp. v. SK Shipping Co., 467 F.3d 817, 822 (2d Cir. 2006); 9
Gulf Ins. Co. v. Glasbrenner, 417 F.3d 353, 355 (2d Cir. 2005) 10
(adopting standard applied in Rule 12(b)(2) dismissals to review 11
of Rule 12(b)(3) dismissals). In analyzing whether the plaintiff 12
has made the requisite prima facie showing that venue is proper, 13
we view all the facts in a light most favorable to plaintiff. 14
See New Moon Shipping Co. v. Man B&W Diesel AG, 121 F.3d 24, 29 15
(2d Cir. 1997). Contract interpretation as a question of law is 16
also reviewed de novo on appeal. Lee v. BSB Greenwich Mortgage 17
L.P., 267 F.3d 172, 178 (2d Cir. 2001). 18
C. Impact of Choice of Law Clause 19
In the absence of an applicable choice of law provision, it 20
is well established in this Circuit that the rule set out in M/S 21
Bremen applies to the question of enforceability of an apparently 22
governing forum selection clause, irrespective of whether a claim 23
arises under federal or state law. AVC Nederland B.V. v. Atrium 24
Inv. P'ship, 740 F.2d 148, 156 (2d Cir. 1984) (applying M/S 25
Bremen in federal question case); Bense, 683 F.2d at 720-21 26

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9
(same); Jones v. Weibrecht, 901 F.2d 17, 18-19 (2d Cir. 1990) 1
(reaffirming Second Circuit rule that Bremen standard applies to 2
diversity cases). 3
Here, where the parties have agreed that the validity, 4
construction and effect of the recording contract is to be 5
governed by English law, we confront a different legal issue. In 6
analyzing a forum selection clause, what effect should we give to 7
a choice of law provision contained in the same contract? 8
Largely for the reasons we hold parties to their contractual 9
promises to litigate in a specified forum, federal courts give 10
substantial weight to choice of law provisions. See Roby, 996 11
F.2d at 1362-63 (discussing presumptive validity of choice of law 12
clauses in international transactions); State Trading Corp. of 13
India, Ltd. v. Assuranceforeningen Skuld, 921 F.2d 409, 417 (2d 14
Cir. 1990) ("[A] contractual choice of law clause generally takes 15
precedence over choice of law rules . . . ."); Richards v. 16
Lloyd's of London, 135 F.3d 1289, 1292-93 (9th Cir. 1998) 17
(extending Bremen standard to evaluation of choice of law 18
clauses). But see Advani Enters., Inc. v. Underwriters at 19
Lloyds, 140 F.3d 157, 162 (2d Cir. 1998) (incorporating choice of 20
law provision into multi-factor test to determine "points of 21
contact" between transaction and potential fora in admiralty 22
case). 23
Despite the presumptive validity of choice of law clauses, 24
our precedent indicates that federal law should be used to 25
determine whether an otherwise mandatory and applicable forum 26

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10
clause is enforceable under Bremen, i.e., step four in our 1
analysis. This is because enforcement of forum clauses is an 2
essentially procedural issue, Jones, 901 F.2d at 19, while choice 3
of law provisions generally implicate only the substantive law of 4
the selected jurisdiction. See Siegelman v. Cunard White Star, 5
221 F.2d 189, 194 (2d Cir. 1955); cf. Woodling v. Garrett Corp., 6
813 F.2d 543, 551-52 (2d Cir. 1987) (explaining New York rule 7
honoring parties' choice of law to govern substantive but not 8
procedural issues). Were it otherwise, choice of law provisions 9
selecting jurisdictions that disfavor forum clauses would put a 10
district court to the awkward choice of either ignoring the 11
parties' choice of law or invalidating their choice of forum. 12
See, e.g., Bense, 683 F.2d at 722 (declining to apply law 13
specified in contract where such application would render the 14
forum selection clause meaningless). 15
We find less to recommend the invocation of federal common 16
law to interpret the meaning and scope of a forum clause, as 17
required by parts two and three of our analysis. Little 18
discussion of the issue can be found in federal court decisions. 19
See Yavuz v. 61 MM, Ltd., 465 F.3d 418, 427 (10th Cir. 2006). 20
For example, we have turned to federal precedent to interpret 21
forum clauses, but the underlying choice of law question has been 22
left unaddressed. See, e.g., Boutari, 22 F.3d at 52-53 (applying 23
federal precedent to ascertain meaning of forum clause where 24
parties had elected Greek law); Roby, 996 F.2d at 1361 (applying 25
federal precedent to assess scope of clause where parties had 26

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11
chosen English law); see also Manetti-Farrow Inc. v. Gucci Am., 1
Inc., 858 F.2d 509, 513 (9th Cir. 1988) ("[B]ecause enforcement 2
of a forum clause necessarily entails interpretation of the 3
clause before it can be enforced, federal law also applies to 4
interpretation of forum selection clauses."). But see AVC 5
Nederland, 740 F.2d at 155 (noting that interpretation of Dutch- 6
language forum selection clause in contract among predominantly 7
Dutch principals executed in the Netherlands required application 8
of Dutch law). See generally Jacob Webb Yackee, Choice of Law 9
Considerations in the Validity & Enforcement of International 10
Forum Selection Agreements: Whose Law Applies?, 9 UCLA J. Int'l 11
L. & Foreign Aff. 43, 67 (2004) (describing practice of federal 12
courts reflexively to disregard choice of law provisions when 13
assessing forum selection clauses); Yavuz, 465 F.3d at 427 14
(same). 15
The Tenth Circuit recently discussed the novel question 16
posed by contracts containing choice of law and forum provisions. 17
Yavuz, 465 F.3d at 427-31. Reviewing a clause reading, "[t]his 18
convention is governed by the Swiss law . . . . Place of courts 19
is Fribourg," id. at 427, the court noted that before deciding 20
whether to enforce the clause, it had to resolve several 21
subsidiary questions: whether the clause was mandatory or 22
permissive, and whether it governed all of plaintiff's claims. 23
Id. Yavuz observed that the Supreme Court's guidance on forum 24
clauses did not extend to the choice of law question before it 25
(and now before us) because the meaning of each forum or 26

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12
arbitration provision before the Supreme Court in M/S Bremen and 1
its progeny has never been in question. Id. at 430. 2
In light of the Supreme Court's invocation of compelling 3
reasons to uphold contractual choice of law -- like choice of 4
forum -- provisions, Yavuz held that "under federal law the 5
courts should ordinarily honor an international commercial 6
agreement's forum-selection provision as construed under the law 7
specified in the agreement's choice of law provision," id. at 8
428-30; see also Abbott Labs. v. Takeda Pharm. Co., 476 F.3d 421, 9
423 (7th Cir. 2007) ("Simplicity argues for determining the 10
validity and meaning of a forum selection clause . . . by 11
reference to the law of the jurisdiction whose law governs the 12
rest of the contract in which the clause appears."). 13
Without the benefit of briefing by the parties on this 14
issue, we cannot understand why the interpretation of a forum 15
selection clause should be singled out for application of any law 16
other than that chosen to govern the interpretation of the 17
contract as a whole. See Yavuz, 465 F.3d at 428. However, the 18
parties neither objected to the district court's citation to 19
federal precedent in its interpretation of the clause before us, 20
nor construed the clause under English law in their briefs. We 21
will assume from the parties' briefing that they do not rely on 22
any distinctive features of English law and apply general 23
contract law principles and federal precedent to discern the 24
meaning and scope of the forum clause. See Motorola Credit Corp. 25
v. Uzan, 388 F.3d 39, 61 (2d Cir. 2004) ("[T]he parties' briefs 26

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13
assume that New York law controls this issue, and such implied 1
consent . . . is sufficient to establish choice of law."); John 2
Wyeth & Brother Ltd. v. CIGNA Int'l Corp., 119 F.3d 1070, 1074 3
(3d Cir. 1997) (Alito, J.) (applying general contract law 4
principles to interpret forum clause where parties made little 5
reference to English law). 6
II The Forum Clause Requires that any Covered Proceeding 7 Be Brought in England 8
9 Forum selection clauses may serve two distinct purposes. 10
Contracting parties may intend to agree on a potential situs for 11
suit so as to guarantee that at least one forum will be available 12
to hear their disputes. A so-called permissive forum clause only 13
confers jurisdiction in the designated forum, but does not deny 14
plaintiff his choice of forum, if jurisdiction there is otherwise 15
appropriate. See Boutari, 22 F.3d at 53 (reversing dismissal 16
based on permissive choice of forum clause); AVC Nederland, 740 17
F.2d at 155 ("[A] jurisdiction-conferring clause . . . provid[es] 18
a plaintiff with a guaranteed forum, [but] does not deprive him 19
of the right to sue in another having personal jurisdiction over 20
the defendant."); see also Blanco v. Banco Indus. de Venez., 21
S.A., 997 F.2d 974, 980, 984 (2d Cir. 1993) (granting motion for 22
dismissal based on inconvenient forum despite permissive choice 23
of forum clause specifying forum chosen by plaintiff). 24
Alternatively, contracting parties may intend to agree in advance 25
on a forum where any and all of their disputes must be brought to 26
eliminate surprise of having to litigate in a hostile forum. 27

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14
Roby, 996 F.2d at 1363. A mandatory forum clause is entitled to 1
the Bremen presumption of enforceability. Id. 2
Our inquiry is one of contract interpretation. Hence, our 3
initial focus is on the language of the contract. Here that 4
language provides that "any legal proceedings that may arise out 5
of [the agreement] are to be brought in England." A forum 6
selection clause is viewed as mandatory when it confers exclusive 7
jurisdiction on the designated forum or incorporates obligatory 8
venue language. See Boutari, 22 F.3d at 52-53. 9
The district court found this clause mandatory. We agree. 10
The parties' use of the phrase "are to be brought" establishes 11
England as an obligatory venue for proceedings within the scope 12
of the clause. The reference to a particular location, although 13
lacking the specificity of a particular court or city, adequately 14
distinguishes the parties' language from the clause we reviewed 15
in Boutari. 22 F.3d at 52. In that case, we construed the 16
phrase "[a]ny dispute . . . shall come within the jurisdiction of 17
the . . . Greek Courts" as a permissive clause because it dealt 18
solely with jurisdiction without indicating that such 19
jurisdiction was exclusive. Id. at 52-53. We recognized in 20
Boutari that obligatory venue language suffices to give mandatory 21
force to a forum selection clause. Id. at 53; see Seward v. 22
Devine, 888 F.2d 957, 962 (2d Cir. 1989); Docksider, Ltd. v. Sea 23
Tech., Ltd., 875 F.2d 762, 764 (9th Cir. 1989). Further, the 24
mandatory force of the words "are to be" differentiates the 25
instant clause from the language used by the parties in Blanco, 26

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15
agreeing to certain fora in which their disputes "may" be 1
brought. 997 F.2d at 976, 979. 2
Our distinct treatment of jurisdiction and venue in this 3
context is clear. Because jurisdiction may be properly conferred 4
on two or more fora, the fact that the contract in Boutari 5
conferred jurisdiction on the courts of Greece did not preclude 6
the parties from commencing litigation in a court outside of 7
Greece. 22 F.3d at 52-53. However, contract language such as 8
that presented in this case -- mandating that a proceeding be 9
brought in England -- is incompatible with venue lying in New 10
York. Our finding that the clause is mandatory is buttressed by 11
the stipulation in the letter agreement attached to the recording 12
contract that the former is subject to the same exclusive 13
jurisdiction as the latter. 14
III Scope of the Forum Selection Clause In the Instant Case 15
We turn now to decide whether the language in the recording 16
contract mandating that any legal proceedings that may arise out 17
of it be brought in England encompasses Phillips' suit. However 18
important a forum selection clause is to the efficient 19
functioning of international business, see, e.g., Scherk v. 20
Alberto-Culver Co., 417 U.S. 506, 516-17 (1974), it is a creature 21
of contract. Plaintiff's choice of forum in bringing his suit in 22
federal court in New York will not be disregarded unless the 23
contract evinces agreement by the parties that his claims cannot 24
be heard there. Cf. Louis Dreyfus Negoce S.A. v. Blystad 25
Shipping & Trading Inc., 252 F.3d 218, 224 (2d Cir. 2001) (noting 26

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16
that an arbitration clause, a creature of contract, does not 1
compel arbitration of a dispute that parties did not intend to 2
submit to arbitration). 3
A. Breach of Contract Claim 4
We dispose of the contract claim quickly. Phillips asserts 5
BBE breached the recording contract by failing to pay the second 6
installment on his advance on royalties due upon delivery of the 7
master recordings. He makes no argument that the forum selection 8
clause, if found mandatory and enforceable, does not apply to his 9
contract claim. The contract claim for money owed and due 10
falls squarely under the forum selection clause: the contract 11
establishes Phillips' right to receive, and BBE's duty to pay, 12
the installment and sets forth the relevant conditions. 13
B. Federal Copyright Infringement Claims 14
The effect of the forum selection clause on Phillips' 15
copyright claims presents a more difficult question. The 16
language of that clause frames our question: Do Phillips' 17
copyright claims arise out of the recording contract? 18
Plaintiff implicitly offers a straightforward argument of 19
mutual exclusivity: Because his copyright infringement claims 20
arise under the Copyright Act, they cannot arise out of the 21
contract. In T.B. Harms Co. v. Eliscu, 339 F.2d 823 (2d Cir. 22
1964) (Friendly, J.), we held a claim arises under the Copyright 23
Act and accordingly falls within the jurisdiction of the federal 24
courts if "the complaint is for a remedy expressly granted by the 25
Act, e.g., a suit for infringement or for the statutory royalties 26

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17
for record reproduction." Id. at 828; see Bassett v. 1
Mashantucket Pequot Tribe, 204 F.3d 343, 349, 355 (2d Cir. 2000) 2
(reaffirming Harms test in federal jurisdiction context). Counts 3
Two and Three of Phillips' complaint allege direct and indirect 4
copyright infringement and request remedies under § 504 of the 5
Copyright Act, 17 U.S.C. § 504. We agree these claims arise 6
under the Copyright Act. Thus, federal jurisdiction is properly 7
invoked. See Kamakazi Music Corp. v. Robbins Music Corp., 684 8
F.2d 228, 229 (2d Cir. 1982) (holding defendant's interposition 9
of a contract as defense to copyright claims did not transform 10
copyright suit into breach of contract action). 11
The relevance of Harms to the present inquiry is where we 12
part from appellant. Despite its surface appeal, we are not 13
persuaded by Phillips' suggestion that a claim arising under the 14
Copyright Act for jurisdictional purposes cannot also "arise out 15
of" a contract for purposes of interpreting a forum selection 16
clause. 17
1. Federal Courts Have Repeatedly Found Statutory Claims to 18 "Arise out of" Contract in Interpreting Scope of 19
Contractual Provisions 20
21 Insofar as Harms relies on the law invoked by the plaintiff 22
to state his claims, it is anchored in doctrines that have long 23
governed our exercise of "arising under" jurisdiction under 28 24
U.S.C. § 1331, whereby "[a] suit arises under the law that 25
creates the cause of action," Am. Well Works Co. v. Layne & 26
Bowler Co., 241 U.S. 257, 260 (1916) (Holmes, J.), and federal 27
jurisdiction is proper where the complaint "is so drawn as to 28

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18
seek recovery directly under the Constitution or laws of the 1
United States," Bell v. Hood, 327 U.S. 678, 681 (1946). 2
Looking to cases involving similar contractual provisions 3
and claims under other laws of the United States, we see that 4
federal courts have routinely rejected Phillips' suggestion that 5
a claim arising under a law of the United States is exempt from 6
provisions governing disputes between contracting parties. See, 7
e.g., Scherk, 417 U.S. at 508-09, 520-21 (holding that claim 8
under Securities Exchange Act was covered by arbitration clause 9
in international contract governing "any controversy or claim 10
[arising] out of this agreement or the breach thereof"); Bense, 11
683 F.2d at 720 (finding complaint brought under federal 12
antitrust law arose from distribution agreement between parties); 13
Abbott Labs., 476 F.3d at 424 (rejecting plaintiff's argument 14
that breach of fiduciary duty claim arising under Delaware tort 15
law did not arise from the contract). 16
Moreover, it is inappropriate in the present context to 17
depend solely on the legal labels used by plaintiff to decide if 18
his case arises out of the contract. When the question is one of 19
federal jurisdiction, we recognize the plaintiff is in charge of 20
deciding what law he will rely upon in bringing suit, Bell, 327 21
U.S. at 681; see Bassett, 204 F.3d at 355. It follows that legal 22
causes of action stated by plaintiff afford all the information 23
we need to decide whether "arising under" jurisdiction lies. It 24
does not follow that plaintiff is the master to decide the 25
meaning of a disputed contractual provision, which is, in effect, 26

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19
what appellant suggests in asking us to hold that his claims do 1
not arise out of the recording contract based solely on the laws 2
he cites in his complaint. Phillips' proposed approach is 3
inconsistent with our refusal in Roby to allow "a party's solemn 4
promise to be defeated by artful pleading." 996 F.2d at 1360. 5
Instead, when ascertaining the applicability of a 6
contractual provision to particular claims, we examine the 7
substance of those claims, shorn of their labels. Id. at 1361. 8
This approach is consistent with the focus on factual allegations 9
rather than on the causes of action asserted when deciding 10
whether an arbitration clause applies to particular claims. See 11
JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 173 (2d Cir. 12
2004); Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 846 (2d 13
Cir. 1987). 14
Because we cannot presume that the parties intended to 15
exclude all statutory claims, or even all copyright claims, from 16
the forum selection clause, we examine the substance of Phillips' 17
claims as they relate to the precise language of the clause. See 18
New Moon, 121 F.3d at 33 ("The scope of the forum selection 19
clause is a contractual question that requires the courts to 20
interpret the clause and, where ambiguous, to consider the intent 21
of the parties."); Wyeth, 119 F.3d at 1075 ("[W]hether or not a 22
forum selection clause applies depends on what the specific 23
clause at issue says."). 24

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20
2. Meaning of "Arise Out Of" 1
To "arise out of" means "to originate from a specified 2
source," Webster's Third New International Dictionary 117 (1981); 3
see Coregis Ins. Co. v. Am. Health Found., Inc., 241 F.3d 123, 4
128 (2d Cir. 2001), and generally indicates a causal connection, 5
Coregis, 241 F.3d at 128. 6
We do not understand the words "arise out of" as 7
encompassing all claims that have some possible relationship with 8
the contract, including claims that may only "relate to," be 9
"associated with," or "arise in connection with" the contract. 10
See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 11
U.S. 614, 644 (1985) (Stevens, J., dissenting) (distinguishing 12
between scope afforded by phrases "arise" out of and "in relation 13
to"); Coregis, 241 F.3d at 128-29; Wyeth, 119 F.3d at 1074 14
(reasoning that "arising in relation to" is broader than "arising 15
under"); but cf. Roby, 996 F.2d at 1361 (declining to 16
differentiate between phrases "relating to," "in connection 17
with," and "arising from" and holding that broadly worded clause 18
encompassed non-contract claims). 19
In the same vein, we decline to ascribe to these three words 20
the expansive connotations set out in Omron Healthcare, Inc. v. 21
Maclaren Exps. Ltd., 28 F.3d 600 (7th Cir. 1994), where the 22
Seventh Circuit enforced a substantially similar forum selection 23
clause in a comparable factual scenario. In Omron, the Seventh 24
Circuit enforced a forum clause covering "all disputes arising 25
out of" a contract against the plaintiff-distributor who had 26

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21
brought suit alleging that the defendant-manufacturer continued 1
to sell merchandise bearing the plaintiff's trademark after the 2
distribution agreement between the parties had terminated. Id. 3
at 601-04. The Omron court reasoned that "all disputes the 4
resolution of which arguably depend on the construction of an 5
agreement 'arise out of' that agreement." Id. at 603. 6
The scope attributed by the Seventh Circuit to the words 7
"arise out of" was adopted from its interpretation of arbitration 8
clauses. Id. at 603. Like the Seventh Circuit, typically we 9
view phrases similar to "arise out of" in arbitration clauses to 10
cover collateral matters that implicate issues of contract 11
construction. See Louis Dreyfus, 252 F.3d at 224-25. Unlike the 12
court in Omron, we decline to import whole the interpretive 13
guidelines developed by the federal courts to assess the scope of 14
arbitration clauses into the present context. See Omron, 28 F.3d 15
at 603. 16
Our assessment of the scope of arbitration clauses is 17
governed by the Federal Arbitration Act, 9 U.S.C. § 1, et seq., 18
which establishes "as a matter of federal law" that "any doubts 19
concerning the scope of arbitrable issues should be resolved in 20
favor of arbitration," including where "the problem at hand is 21
the construction of the contract itself." Mitsubishi, 473 U.S. 22
at 626. "[U]nless it may be said with positive assurance that 23
the arbitration clause is not susceptible of an interpretation 24
that covers the asserted dispute," the federal courts are obliged 25
to find a particular claim falls within the scope of an 26

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22
arbitration clause. Genesco, 815 F.2d at 847 (quoting S.A. 1
Mineracao da Trindade-Samitri v. Utah Int'l, Inc., 745 F.2d 190 2
(2d Cir. 1984)). 3
While we do not overlook the Supreme Court's emphatic 4
endorsement of freely negotiated and reasonable forum selection 5
clauses, see, e.g., M/S Bremen, 407 U.S. at 13-14, or our own 6
commitment to enforcing applicable forum clauses, see, e.g., 7
Roby, 996 F.2d at 1362-63, the absence of a congressional policy 8
on forum clauses prompting us to err on the side of coverage is 9
significant. 10
Specifically, we see no reason to presume the parties meant 11
anything other than the dictionary definition of the term: to 12
originate from a specified source. Webster's Third New 13
International Dictionary 117 (1981). This meaning is especially 14
likely where parties wishing to designate a mandatory forum to 15
hear a broader category of disputes are free to do so. See, 16
e.g., M/S Bremen, 407 U.S. at 2 ("Any dispute arising must be 17
treated before the London Court of Justice."); Abbott Labs., 476 18
F.3d at 422 (designating a mandatory forum for "a dispute . . . 19
arising from, concerning or in any way related to this 20
Agreement"). 21
Further, we approve of the approach outlined by the Third 22
Circuit, which highlights the language-specific nature of this 23
inquiry and discounts the precedential weight of cases that deal 24
with dissimilarly worded clauses. Wyeth, 119 F.3d at 1075 25
("Drawing analogy to other cases is useful only to the extent 26

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23
those other cases address contract language that is the same or 1
substantially similar to that at issue."). 2
3. Phillips' Federal Copyright Claims 3
With the preceding discussion on the scope of the forum 4
selection clause as background, we turn now to ascertain whether 5
Phillips' copyright claims originate from the recording contract. 6
The substance of Phillips' claims for direct and contributory 7
copyright infringement is that the defendants impermissibly 8
manufactured and distributed songs to which Phillips retained a 9
valid copyright. To succeed on a claim for direct infringement 10
under the Copyright Act, a plaintiff must show that (a) he owned 11
a valid copyright to the songs and (b) defendants copied original 12
constituent elements of these songs. See Fonar Corp. v. 13
Domenick, 105 F.3d 99, 103 (2d Cir. 1997); see also Gershwin 14
Publ'g Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 15
(2d Cir. 1971) (stating that claim for contributory copyright 16
infringement requires additional element that defendants, with 17
knowledge, induce, cause or materially contribute to infringing 18
conduct of another). 19
To decide whether Phillips' copyright claims arise out of 20
the agreement, we are therefore required to determine if 21
Phillips' rights -- here predicated on valid ownership of the 22
copyrights to the 15 songs -- originate from the recording 23
contract. We hold they do not. Appellant does not rely on the 24
recording contract to establish his ownership of the relevant 25
copyrights, but on his authorship of the work, a status afforded 26

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24
him as the composer who translates an idea into a fixed, tangible 1
musical expression entitled to copyright protection. Cmty. for 2
Creative Non-Violence v. Reid, 490 U.S. 730, 737 (1989); see also 3
17 U.S.C. §§ 102(a), 201(a). Plaintiff asserts, not implausibly 4
-- there is no suggestion of bad faith on his part -- that he has 5
been the rightful owner of the copyrights from the moment the 6
songs became entitled to copyright protection. The uninterrupted 7
nature of his asserted ownership distinguishes Phillips' case 8
from one in which a plaintiff-creator asserts that the relevant 9
copyrights reverted to him upon breach of contract by the 10
defendants. See Howard B. Abrams, 2 The Law of Copyright, 11
§ 13:13 (2006) (distinguishing factual scenarios in which 12
plaintiffs' copyright/contract claims may arise). Indeed, if 13
Phillips were to succeed in persuading the trial court of his 14
interpretation of the recording contract, success on the merits 15
of his copyright claims would leave the recording contract 16
undisturbed. 17
In reasoning that Phillips' copyright claims do not arise 18
out of the contract because Phillips has asserted no rights or 19
duties under that contract, we find support in our decision in 20
Corcovado. 981 F.2d at 681-83. In that case, a musician entered 21
into two contracts, one with a publisher (predecessor of the 22
defendants) assigning original term copyrights to five songs, and 23
another with the plaintiff assigning the renewal term copyrights. 24
Id. at 680-81. When the plaintiff brought suit in federal court 25
alleging infringement of its renewal term copyrights, the 26

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25
defendants moved to dismiss on the basis of the forum selection 1
clause contained in their separate contract with the musician. 2
Id. at 681. We affirmed the denial of the motion and held that 3
the forum clause, contained in a contract that was relevant only 4
as a defense, was without effect. Id. at 682-83. 5
Here too, while the defendants are expected to invoke the 6
contract, Phillips denies that the contract has any role or 7
relevance whatever with respect to his copyright claims. See 8
Cheever v. Acad. Chicago Ltd., 685 F. Supp. 914, 916-17 (S.D.N.Y. 9
1988); cf. Hugel v. Corp. of Lloyd's, 999 F.2d 206, 209 (7th Cir. 10
1993) ("Regardless of the duty sought to be enforced in a 11
particular cause of action, if the duty arises from the contract, 12
the forum selection clause governs the action."). Because the 13
recording contract is only relevant as a defense in this suit, we 14
cannot say that Phillips' copyright claims originate from, and 15
therefore "arise out of," the contract. 16
In Corcovado, neither party had signed the contract 17
containing the forum clause. 981 F.2d at 682. While this 18
circumstance facilitated our ruling the plaintiffs' claims were 19
wholly independent of the contract, non-signatory status is not 20
dispositive of the question of applicability of a forum clause to 21
a plaintiff's claims. See id. (citing with approval district 22
court decision that held that forum clause had no effect on 23
signatory who asserted no rights under the contract). 24
The recording contract, as already noted, mandates that any 25
legal proceedings that may arise out of it be brought in England. 26

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26
We do not construe the reference to proceedings, as opposed to 1
claims, as requiring us to take into consideration the source of 2
rights or duties asserted on defense. But see Wyeth, 119 F.3d at 3
1074 (reasoning that reference to dispute in forum clause 4
implicates broader reach than reference to claim); Abbott Labs., 5
476 F.3d at 424 (same). The clause speaks only to where a 6
proceeding is brought and thus obligates the party who brings the 7
suit (or other claims, see Karl Koch Erecting Co. v. N.Y. 8
Convention Ctr. Dev., 838 F.2d 656, 659 (2d Cir. 1988)) to decide 9
where his suit may be heard. In most cases the plaintiff cannot 10
divine, or anticipate, the defenses, or any other legal action, 11
that may be interposed by another party to the suit. 12
Moreover, the proceedings on the copyright infringement 13
claims here do not originate from the recording contract; the 14
proceedings may begin in court without any reference to the 15
contract. The only nexus between the proceedings and the 16
contract arises when the defendants raise their defenses. Given 17
this sequence of events, one cannot say that the origins of the 18
proceedings were in the recording contract. 19
Our focus on the source of the rights or duties sought to be 20
enforced by the complaining party allows us to distinguish the 21
only precedent cited by defendants where we addressed a similarly 22
worded forum clause. Bense, 683 F.2d at 720 (reviewing dismissal 23
on basis of clause covering "any suits or causes of action 24
arising directly or indirectly from this [agreement]"). In 25
Bense, the plaintiff could only show injury by demonstrating that 26

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27
the defendant had breached the contract by terminating without 1
due cause. The contract containing the forum clause was the 2
source of the right, duty and injury asserted by the plaintiff 3
and we accordingly held the clause to govern his claims. Id. at 4
721-22. Such reasoning has no application to the case at hand. 5
As a consequence, we conclude Phillips' copyright claims did not 6
originate in the recording contract and are therefore not 7
governed by the forum selection clause. 8
C. Phillips' State Law Claims 9
Phillips has asserted two alternative causes of action under 10
state law for unjust enrichment and unfair competition. Both are 11
premised on defendants' allegedly improper exploitation of the 15 12
songs. For the reasons just discussed in relation to appellant's 13
federal copyright claims, his state law claims do not originate 14
from the recording contract and are exempt from operation of the 15
forum selection clause. 16
On remand, the district court should determine whether one 17
or both of Phillips state law claims are preempted by the 18
Copyright Act. See generally Briarpatch Ltd. v. Phoenix 19
Pictures, Inc., 373 F.3d 296, 304-06 (2d Cir. 2004) (setting 20
forth preemption doctrine as applied to copyright claims). We 21
think it likely, without deciding, that they are. See id. at 306 22
(finding plaintiff's unjust enrichment claim under New York law 23
preempted by Copyright Act); Computer Assocs. Int'l, Inc. v. 24
Altai, Inc., 982 F.2d 693, 716-17 (2d Cir. 1992) (stating that 25
unfair competition claims grounded solely on copying are 26

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28
preempted); Warner Bros. Inc. v. Am. Broad. Cos., 720 F.2d 231, 1
247 (2d Cir. 1983) (same as Briarpatch). 2
The district court may of course properly exercise 3
supplemental jurisdiction over any state law claim surviving 4
preemption, but the decision to decline such jurisdiction 5
pursuant to 28 U.S.C. § 1367(c) is left to its discretion, see 6
Briarpatch, 373 F.3d at 308. 7
IV Enforcement of the Forum Selection Clause to Dismiss 8 Contract Claim Was Not Unreasonable 9
10 Under M/S Bremen, dismissal of Phillips' breach of contract 11
claim is proper unless appellant makes a prima facie showing that 12
the clause should be set aside. 407 U.S. at 15; see New Moon, 13
121 F.3d at 29 (holding at initial stage of litigation plaintiff 14
required to show prima facie that chosen forum is proper). We 15
have explained that a forum clause is enforceable unless (1) its 16
incorporation was the result of fraud or overreaching; (2) the 17
law to be applied in the selected forum is fundamentally unfair; 18
(3) enforcement contravenes a strong public policy of the forum 19
state; or (4) trial in the selected forum will be so difficult 20
and inconvenient that the plaintiff effectively will be deprived 21
of his day in court. Roby, 996 F.2d at 1363. 22
Phillips does not contend the first three circumstances are 23
present here. His argument, under the fourth factor, is that 24
none of his witnesses, documents, or any parties to the action 25
are located in England, rendering litigation in that country 26
impossible. Appellant also notes that defendants have proffered 27

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29
no evidence that their relevant documents or witnesses are 1
located in England. 2
The gap in Phillips' reasoning is that his averments suggest 3
that litigation in England may be more costly or difficult, but 4
not that it is impossible. He has not alleged any circumstances 5
-- whether affecting him personally or a component of his case or 6
prevailing in England generally -- that would prevent him from 7
bringing suit in England. See Effron v. Sun Line Cruises, Inc., 8
67 F.3d 7, 10-11 (2d Cir. 1995) (enforcing clause requiring U.S. 9
citizen to litigate in Greece and noting that the distance 10
between a selected forum and pertinent parties or places did not 11
render a forum inconvenient if readily accessible by air travel). 12
In addition, Phillips has not declared any of his claimed 13
hardships are other than the obvious concomitants of litigation 14
abroad, id. at 10, or were not foreseeable when he agreed to 15
litigate in England. M/S Bremen, 407 U.S. at 16. 16
In light of our holding that only Phillips' breach of 17
contract claim, which is levied against defendant BBE, is subject 18
to the forum clause, we do not address Phillips' contention that 19
the clause is inoperative against the remaining defendants who 20
were not signatories to the recording contract. 21
V Separate Treatment of Separate Claims Is Appropriate 22 Where Some But Not All Claims Are Subject to the Clause 23
24 Analyzing separately each claim asserted by Phillips, we 25
have held that Phillips' federal copyright claims and state law 26
claims are outside the ambit of the forum clause, while his 27

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30
contract claim is subject to it. We address finally whether it 1
is proper in these circumstances to dismiss one claim and retain 2
jurisdiction over others. 3
We are aware that the commencement of separate proceedings 4
in two countries is a likely inconvenience to the parties and 5
that they, in choosing to refer to proceedings instead of claims, 6
may have intended to bundle all claims constituting any 7
proceeding to avoid fractured litigation. We have considered 8
that the parties' intent and continued interests may lie in 9
treating Phillips' five claims uniformly, but our twin 10
commitments to upholding forum selection clauses where these are 11
found to apply and deferring to a plaintiff's proper choice of 12
forum constrain us in the present context to treat Phillips' 13
claims separately. Cf. Dean Witter Reynolds, Inc. v. Byrd, 470 14
U.S. 213, 221 (1985) (holding that district courts are required 15
to compel arbitration of claims subject to arbitration clause 16
"even if the result is 'piecemeal' litigation"). 17
CONCLUSION 18
Accordingly, for the foregoing reasons, we affirm the 19
dismissal of Phillips' breach of contract claim, reverse the 20
dismissal of his remaining claims, and remand the case to the 21
district court for further proceedings consistent with this 22
opinion. 23

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