Cortes-Ramos v. Martin-Morales , 894 F.3d 55 ( 2018 )

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.
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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.
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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
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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).
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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
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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.
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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
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"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
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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
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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
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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.
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