Agency Liability For Lost Images Limited

532

January 22, 2003

Editors note: Given a new New York court decision photographers may have little
recourse if a stock agency loses some of their images. This is good news for agencies and
maybe bad news for photographers. It has always been difficult for photographers to obtain
compensation when their agent is responsible for losing their images (as opposed to a loss
by a customer), but as a result of Adamo v. Corbis it is likely to be even more difficult.
In the following article originally published in the PACA newsletter Nancy E. Wolff, counsel for
PACA, outlines the case and the issues.

New York State Court upholds language in stock industry contract that includes
limitation of liability clause.

Adamo v. Corbis Corp. as successor in interest to The Stock Market Photo Agency of New
York, Supreme Court of the State of New York, County of New York, Index No. 602063/02,
Decision dated 12/02/02, Filed 12/20/02, Justice Richard B. Lowe III

Photographer, Jeff Adamo had a long-term relationship with the photo library The Stock
Market (TSM). He had entered into a serious of successive three-year contracts with TSM.
In 2000, the contract was not renewed. Subsequent to TSM's decision not to renew the
photographer's agreement, Corbis purchased TSM and was responsible for completing the
retrieval of the photographer's outstanding photographs.

According to the contract, TSM was to use reasonable efforts to return Adamo's
photographs. It was agreed that after termination, TSM would have 12 months to return
images within the TSM files in New York, 18 months to retrieve photographs located in
foreign offices and 2 years to return photographs in the possession of clients.

Many returns were made to the photographer during this period using return forms to track
the number of returned photographs. However, after the retrieval period ended, the
photographer brought a breach of contract claim against TSM alleging that TSM violated the
terms of the agreement by failing to return 135 of the approximately 2000 photographic
transparencies submitted, and sought $205,500 in damages or $1500 per transparency.

The contract with TSM contained a limitation of liability clause using language similar to
the model PACA form contributorœs agreement that has been recommended over the years.

TSM shall provide a suitable environment for long-term storage, care, and retrieval
of your images and shall strive to protect and care for your images that are on file with
TSM. However, if there is any damage, theft, or loss of your images, TSM shall not be
liable unless such damage, theft, or loss was a result of TSM's willful or gross
negligence. You agree that in no event shall TSMœs liability exceed one hundred ($100.00)
dollars.

Relying on the language in the contract, I brought a motion on behalf of Corbis
Corporation to dismiss the claim. The court considered the language in the contract as
well as an affidavit of a Corbis employee, stating the steps Corbis undertook to secure
the return of the photographer's work that had been distributed worldwide. The court found
that the steps Corbis took to retrieve the photographs reasonable and successful a
majority of the time. These efforts included searching domestic libraries, searching
international libraries and notifying all worldwide offices of the photographer's
"inactive status" requiring outstanding photographs to be returned. The photographer
offered no statement to controvert Corbis' assertion that these steps were reasonable or
to establish that these efforts were less than the reasonable standard in the photo stock
library industry. The court concluded that it was reasonable to assume that any photograph
that had not been returned after these efforts was "lost". It was apparent to the court
that it considered the return to the photographer to be significant as it emphasized that
only 135 of approximately 2000 had not been returned.

In examining the limited liability language the court stated "This limited liability
clause is accepted throughout the stock photograph industry as standard practice, simply
because over the course of time and shipment all over the globe, the possibility of loss,
theft or damage exists to a large extent."

The court found that the agreement between Corbis (via TSM) and Adamo limited Corbis'
liability to $100 only if Corbis or the TSM was grossly or willfully negligent. Simply
negligence results in no liability. However, the complaint did not allege that TSM or
Corbis was negligent, only that photographs were not returned through reasonable efforts.
Based on evidence of Corbis' efforts to return the photographs, the court held that the
agreement was not breached. Consequently, the court granted the motion to dismiss the
claim with prejudice.

Photo libraries have relied on similar limited liability language over the years in the
event they are unable to retrieve one hundred percent of a contributor's work after the
end of a relationship. However, no court has had the opportunity to review the language
and consider its validity. Since insurance for the full value of transparencies is not
available at any reasonable price, the exposure a library would face in the event of a
claim could be significant if this limited liability language was not found to be valid.
Of course, the photo library must take reasonable steps to return contributors' property,
but as the court noted, the likelihood that some material may be lost or damaged over time
is inevitable.

Finally, this case reinforces the importance of written contracts with all contributors
that contain standard language to protect the photo library from unnecessary risk. Without
a contract that provides for the limited liability in the event of a loss, the photo
library remains vulnerable to claims if property cannot be returned to a contributor at
the end of a relationship.

The decision can be found online at
http://decisions.courts.state.ny.us/fcas/FCAS_docs/2002DEC/30060206320021SCI V.PDF .