Court Opinion

ID: 4289121
Source: CourtListenerOpinion
Date Created: 2018-06-27 21:00:13.615409+00
Date Added: 2024-06-11T09:22:30.639961
License: Public Domain

United States Court of Appeals
                        For the First Circuit

No. 16-2456

                       LUIS ADRIÁN CORTÉS-RAMOS,

                         Plaintiff, Appellant,

                                  v.

              ENRIQUE MARTIN-MORALES, a/k/a Ricky Martin,
                         JOHN DOE, RICHARD DOE,

                        Defendants, Appellees.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                 FOR THE DISTRICT OF PUERTO RICO

         [Hon. Daniel R. Domínguez, U.S. District Judge]

                                Before

                     Torruella, Lipez, and Barron,
                            Circuit Judges.

     Juan R. Rodríguez, with whom Rodríguez Lopez Law Offices,
P.S.C. was on brief, for appellant.

     David C. Rose, with whom Pryor Cashman LLP, Jorge I. Peirats,
and Pietrantoni Méndez & Alvarez LLC, were on brief, for appellees.

                             June 27, 2018
               BARRON, Circuit Judge.         This case concerns Luis Adrián

Cortés-Ramos' appeal from a District Court order that dismissed

his claims that the singer Enrique Martin-Morales violated various

articles of the Puerto Rico Civil Code and federal copyright and

trademark laws.         The suit arises in connection with a songwriting

contest held in Puerto Rico in 2014.

               For    purposes   of   this    appeal,    Cortés-Ramos   does    not

dispute that, as a contestant, he agreed to the terms of the

contest's rules and that they included an arbitration provision

that compelled the submission to arbitration of those of his claims

that "aris[e] in connection with, touch[e] upon or relat[e] to"

those rules.          He contends, though, that the District Court erred

in granting Martin's motion to dismiss his claims based on that

arbitration provision.

               We agree with Cortés-Ramos.            We therefore reverse the

order dismissing his claims pursuant to Federal Rule of Civil

Procedure 12(b)(6).1

                                         I.

               In 2013, Sony Music Entertainment, Sony Music Brasil,

Sony       Pictures    Television,    Inc.,     and     Sony   Electronics,    Inc.

(collectively "Sony") co-sponsored the "SuperSong" contest.                    The

       1
       Martin contended below that he does not have the necessary
"minimum contacts" with Puerto Rico to subject him to personal
jurisdiction in that District. We need not resolve that issue.

                                       - 2 -
contest invited entrants to compose, record, and submit an original

musical composition and accompanying music video.          According to

the contest's rules, the winning composition would potentially be

included   on   the   2014   Fédération   Internationale   de   Football

Association ("FIFA") World Cup Official Album.

           On January 2nd, 2014, Cortés-Ramos entered the contest

by uploading a song and accompanying music video to the contest's

website prior to the submission deadline of January 6, 2014.          On

January 8, 2014, Cortés-Ramos was notified by email that he was

selected as one of twenty finalists, and, on January 15, 2014,

Cortés-Ramos received an email from a representative of one of the

contest co-sponsors that requested that, in connection with his

entry in the contest, he sign several documents and return the

documents to Sony.      Cortés-Ramos signed the documents before a

notary public and returned them.

           On February 10, 2014, a different entrant was announced

as the winner of the contest. On or about April 22, Martin released

a song and music video entitled "Vida."

           Cortés-Ramos alleges in his suit, which he filed on

February 8, 2016 in the United States District Court for the

District of Puerto Rico, that Martin's "Vida" music video is

similar to the music video that he had submitted as an entrant in

the contest.    On the basis of that allegation, he claimed that he

was entitled to damages pursuant to federal and Puerto Rico law.

                                  - 3 -
               The    District    Court    dismissed       all    of   Cortés-Ramos'

claims, however, based on a provision of the contest's rules.

Those        rules    state      that     "[b]y        entering    this     Contest,

entrant . . . expressly agrees to all terms and conditions set

forth in these Official Rules."                  The rules then describe, among

other things, requirements for eligibility, winner selection, a

description of the prize, and a list of contest "Co-Sponsors."

And, most relevant to this appeal, the rules include an arbitration

provision, which states:

               These Official Rules shall be governed by and
               construed in accordance with the laws of the
               State of New York, United States of America,
               without regard to choice of law principles.
               All   actions  or   proceedings  arising   in
               connection with, touching upon or relating to
               these Official Rules, the breach thereof
               and/or the scope of the provisions of this
               Section 6 shall be submitted to [the
               arbitration provider].

(Emphasis added).

               That   provision    goes     on    to   describe    the    arbitration

process in some detail, and, in particular, it makes clear that

for disputes otherwise within the provision's scope, a cause of

action may only be brought in specified circumstances.2

        2   That exception to the requirement to arbitrate provides:
               Neither party shall be entitled or permitted
               to commence or maintain any action in a court
               of law with respect to any matter in dispute
               until such matter shall have been submitted to
               arbitration as herein provided and then only

                                          - 4 -
           The District Court ruled that Cortés-Ramos' claims must

be   dismissed   pursuant   to   the   arbitration   provision,   as   that

provision encompasses "[a]ll actions or proceedings arising in

connection with, touching upon or relating to these Official Rules,

the breach thereof and/or the scope of the provisions of this

Section 6 shall be submitted to [the arbitration provider.]"            The

District Court explained that "a non-signatory may . . . acquire

rights under an arbitration agreement under ordinary state-law

principles of . . . contract[,]" Restoration Pres. Masonry Inc. v.

Grove Eur. Ltd., 325 F.3d 54, 63 n.2 (1st Cir. 2003)[,]" and that

Martin, who "was an active part of the SuperSong Contest," could

do so "[e]ven if [Martin] was not a co-sponsor," because he

           was a third-party beneficiary and the face of
           the SuperSong Contest. See Motorsport Eng’G
           v. Maserati S.P.A., 316 F.3d 26, 29 (1st Cir.
           2002) ("A third-party beneficiary is one who
           is given rights under a contract to which that
           person is not a party."). Defendant was even
           included in many parts of said contract. See
           Docket No. 8, Exhibit B. ("I understand and
           agree that materials relating to the Contest,
           Television Special, FIFA World Cup and Ricky

           for the enforcement of the arbitrator's award;
           provided,   however,   that   prior   to   the
           appointment of the arbitrator or for remedies
           beyond the jurisdiction of an arbitrator, at
           any time, either party may seek pendente lite
           relief in a court of competent jurisdiction in
           New York, New York or, if sought by Co-
           Sponsors, such other court that may have
           jurisdiction over the entrant, without thereby
           waiving its right to arbitration of the
           dispute or controversy under this Section.
           (Emphases added).

                                   - 5 -
             Martin, and/or portions thereof, including
             the SuperSong Materials, will be distributed
             to the public, in any medium.").

             Cortés-Ramos   now   brings     this   appeal   in    which     he

challenges    the   District    Court's    ruling   that   the    arbitration

agreement requires the dismissal of his claims against Martin.

Our review is de novo.         See Ocasio-Hernández v. Fortuño-Burset,

640 F.3d 1, 7 (1st Cir. 2011).

                                    II.

             We note at the outset that Martin argues that Cortés-

Ramos effectively conceded the premise on which his appeal rests

in his complaint because it states that Martin was a "sponsor or

co-sponsor of the . . . Contest" and there is no question that if

Martin is a co-sponsor he may enforce the arbitration provision.

But, the language in Cortés-Ramos' complaint that states that

Martin and Sony "claimed that they were sponsors or co-sponsors"

of the contest does not constitute a concession by Cortés-Ramos

that Martin is a sponsor or co-sponsor of the contest.                     That

statement merely describes an assertion that Martin and Sony made

about Martin's status.3

     3 Martin also claims that the argument that he cannot invoke
the arbitration agreement was waived by Cortés-Ramos, as it was
made for the first time in Cortés-Ramos' reply in opposition to
Martin's motion to dismiss. We do not agree. Cortés-Ramos' suit
in federal court itself impliedly asserts that there was no barrier
to his decision to attempt to resolve this dispute in a court, and
when Martin affirmatively invoked the arbitration agreement as a

                                   - 6 -
              Martin does not make any other argument that we may

affirm the ruling below on the ground -- not reached by the

District Court -- that he is a co-sponsor or sponsor of the contest

and thus that he may enforce the agreement to arbitrate as a party

to it.   As a result, we now turn to the basis for Cortés-Ramos'

challenge to the District Court's order of dismissal, which we

find persuasive.

              Cortés-Ramos contends that the District Court erred in

ruling that Martin, even if not a party to the agreement, could

invoke its requirement that suits "arising from, touching on, or

relating to" the contest's rules be submitted to arbitration.             We

have explained that the intent to provide a benefit to third

parties in an arbitration agreement "constitutes an exception to

the general rule that a contract does not grant enforceable rights

to nonsignatories" and thus that "a person aspiring to such status

must   show    with   special   clarity   that    the   contracting   parties

intended to confer a benefit on him."            McCarthy v. Azure, 22 F.3d
351, 362 (1st Cir. 1994).

              In requiring a showing of "special clarity," McCarthy

relied on Mowbray v. Moseley, Hallgarten, Estabrook & Weeden, Inc.,

795 F.2d 1111 (1st Cir. 1986).        In Mowbray, we acknowledged that

parties to an arbitration agreement may intend for a third party

defense, Cortés-Ramos responded in his reply briefs, arguing that
Martin could not enforce the agreement.

                                    - 7 -
to be a beneficiary of it and thus to be entitled to enforce it.

Id. at 1117.         We found, however, that the agreement at issue did

not reveal that the parties to it intended for a third party to

benefit from it with the requisite clarity, and we did so for

reasons that also apply here.

               The    arbitration      provision      at   issue     in    Mowbray    was

contained in a customer agreement that had been signed by the

plaintiffs, who were stock purchasers, and a clearing house broker.

Id. at 1112.          The defendants in the suit were an introducing

stockbroker and his brokerage firm, and the defendants were not a

party to the customer agreement. Id. Nevertheless, the defendants

sought    to    invoke    the       arbitration      provision     in     the   customer

agreement in order to dismiss the plaintiffs' claims.                         Id.

               In ruling that the defendants could not invoke the

arbitration provision, we explained that it expressly referred

only     to    both     the    plaintiffs       --    through      the     words     "the

undersigned" -- and the non-party clearing house broker, and thus

not to any of the defendants.            Id. at 1117.        Nevertheless, we noted

that it was "undisputed" that the parties to the agreement signed

it "in connection with the opening of plaintiffs' accounts with

the    defendants."           Id.      We    also    noted    that      the     agreement

"tangentially refers to defendants in their 'introducing firm'

role."    Id. at 1115.        In the end, though, we held that it did not

follow from these references to the defendants that the plaintiff

                                            - 8 -
"intended that the introducing broker be able to invoke [the

clearing house broker's] power to compel arbitration[.]"                        Id.

             Critical to our conclusion was "the language of the

agreement itself."            Id.    We noted that the agreement:

             refers throughout to three parties: (1) "you,"
             i.e., SSC, the clearing house broker; (2) "the
             undersigned," i.e., plaintiffs-appellants,
             the customers; and (3) "the introducing firm,"
             i.e., defendants-appellees, the introducing
             brokers. The agreement goes on to selectively
             include, and exclude, the introducing firm
             from certain provisions. Specifically, the
             introducing broker is not included in the
             clause providing for compulsory arbitration:
             "Any   controversy   between   you   and   the
             undersigned arising out of or relating to this
             contract, or the breach thereof, shall be
             settled by arbitration."

Id. at 1117-18.          We then explained that "because the drafters

specifically included the introducing firm in certain provisions,

and   because      the    introducing         firm    was   not      included    in   the

arbitration clause, we believe the reasonable inference to be that

the parties did not intend defendants-appellees, the introducing

firm, to be a beneficiary of the arbitration clause." Id. at 1118.

             Unlike      in    Mowbray,      the    language    of    the   arbitration

provision at issue in this case sets forth the requirement to

arbitrate    in    general          terms   that    are   not   clearly     cabined    to

encompass only disputes between the parties to the agreement to

arbitrate.      See id. at 1117-18 (noting that clause providing for

arbitration       covered       "[a]ny      controversy     between     you     and   the

                                            - 9 -
undersigned arising out of or relating to this contract, or the

breach thereof, shall be settled by arbitration") (emphasis in

original).     But the arbitration provision that we consider here

does contain an exception to the requirement to arbitrate that

suggests that it simply does not apply to a dispute involving

Martin because he is neither a contestant nor a co-sponsor.

             In describing the limited types of actions that may be

brought   in    court     notwithstanding    the   underlying   dispute's

connection to the contest rules, the exception refers to "either

party" and to "neither party."       See supra note 2.   And, the context

in which those references appears makes clear that the only

"parties" contemplated are the co-sponsors of the contest and the

contest entrants.       Id.   Thus, the natural reading of the provision

as a whole is that the exception applies to only those "parties"

whose disputes the arbitration provision covers, as it would be

strained to conclude the drafters intended to specially carve out

an exception for only those particular, expressly-listed parties

from a general requirement to arbitrate that the drafters intended

to apply to a broader class.

             That the arbitration provision appears, at least by

implication, to exclude Martin from its reach is significant.        One

presumes that the drafters knew how to refer to Martin if they

wished.   After all, Martin is seemingly referenced in a different

provision in the contest rules, where they refer to "a Sony Music

                                    - 10 -
international     recording         artist     ('Superstar')."          And    that

reference, because it is not in the arbitration provision itself,

suggests, per Mowbray, that Martin was not an intended third-party

beneficiary of the parties' agreement to arbitrate.

            The same is also true of the references to Martin that

appear in a release and affidavit of contest eligibility that were

each executed by Cortés-Ramos before a notary and that Cortés-

Ramos returned to Sony after he was informed that he was a finalist

in the contest.       Even if the documents containing them were, as

Martin contends, "expressly made a part of and/or supplemented the

Contest Rules," those references would suggest that Martin may not

invoke the arbitration provision precisely because there are many

references to him outside of it.

            Mowbray     did   also     consider      the    argument    that   the

relationship between the plaintiffs and the defendants -- namely,

that "the defendants below exercised supervisory powers [over the

plaintiffs' accounts] and stood in a 'central position' between

plaintiffs and the clearing house," -- was so tight that it would

be   reasonable   to    infer   that     the    drafters     intended    for   the

arbitration provisions to benefit the defendants.                  Mowbray, 795
F.2d at 1117.     But, Mowbray concluded, based on the language of

the agreement as a whole, that the close nature of the relationship

of   the   defendants   to    the    parties    to   that   agreement    did   not

                                      - 11 -
necessitate finding such an intent on the part of the plaintiffs

and the clearing house.      Id.

            For   similar   reasons,   Martin's    argument   that   he   is

entitled to invoke the arbitration provision in this case because

he   "was   intrinsically    linked    to"   the   contest    fails.      A

consideration of the agreement to arbitrate as a whole -- given

the exception to the arbitration provision we have described and

the references to Martin that appear outside that provision -- does

not reveal the requisite intent by the parties to that agreement

to so benefit him with the kind of "special clarity" that we

require.    McCarthy, 22 F.3d at 362.

                                    III.

            Accordingly, the order to dismiss Cortés-Ramos' claims

is reversed.

                                   - 12 -