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7/23/2019 Flo & Eddie - CD Ca - third 26(f) joint report.pdf
http://slidepdf.com/reader/full/flo-eddie-cd-ca-third-26f-joint-reportpdf 1/25
RULE 26(F) JOINT REPORT
CASE NO. 13-CV-5693 PSG (RZX)
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HENRY GRADSTEIN S.B. #[email protected]
MARYANN R. MARZANO (S.B. #96867)[email protected]
HARVEY GELLER (S.B. #123107)[email protected]
GRADSTEIN & MARZANO, P.C.6310 San Vicente Blvd., Suite 510Los Angeles, CA 90048Telephone: (310) 776-3100Facsimile: (323) 931-4990
Attorneys for PlaintiffFlo & Eddie, Inc.
DANIEL M. PETROCELLI (S.B. #97802)[email protected]
DAVID MARROSO (S.B. #211655)[email protected]
DREW E. BREUDER (S.B. #198466)[email protected]
CASSANDRA L. SETO (S.B. #246608)[email protected]
O’MELVENY & MYERS LLP1999 Avenue of the Stars, Suite 700Los Angeles, CA 90067-6035Telephone: (310) 553-6700Facsimile: (310) 246-6779
Attorneys for DefendantSirius XM Radio Inc.
UNITED STATES DISTRICT COURTCENTRAL DISTRICT OF CALIFORNIA
FLO & EDDIE, INC., a Ca orn acorporation, individually and on behalfof all others similarly situated,
Plaintiff,
v.
SIRIUS XM RADIO INC., a Delawarecorporation, and DOES 1 through 10,
Defendants.
Case No. 13-CV-5693 PSG RZx
PARTIES’ THIRDSUPPLEMENTAL RULE 26(F)JOINT CASE MANAGEMENTSTATEMENT
Hon. Philip S. Gutierrez
Hearing Date: December 21, 2015Hearing Time: 2:30 p.m.Courtroom: 880
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RULE 26(F) JOINT REPORT
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Pursuant to Federal Rule of Civil Procedure 26(f) and the Court’s November
16, 2015 order, Dkt. 262, plaintiff Flo & Eddie, Inc. (“Flo & Eddie”) and defendant
Sirius XM Radio Inc. (“Sirius XM”), by and through their respective counsel of
record, respectfully submit this Third Supplemental Rule 26(f) Joint Case
Management Statement following a conference of counsel on November 30, 2015.
I. PROCEDURAL HISTORY
On August 1, 2013, Flo & Eddie filed suit against Sirius XM in Los Angeles
Superior Court, alleging on behalf of itself and a putative class of owners of pre-
1972 recordings (i.e., recordings fixed prior to February 15, 1972) that Sirius XM,
without a license or authorization, was reproducing, distributing, and performing
those recordings as part of its satellite and internet radio services. Flo & Eddie
alleged claims for violation of Cal. Civ. Code § 980(a)(2), misappropriation, unfair
competition under Cal. Bus. & Prof. Code § 17200 and common law, and
conversion, and sought damages, restitution, and injunctive relief on behalf of itself
and the putative class.
After removing the case to federal court on August 8, 2013, Sirius XM filed
motions in October 2013 to transfer venue to New York and stay the case pending
resolution of its transfer request, both of which the Court denied on December 3,
2013. On February 12, 2014, Sirius XM filed a motion to strike Flo & Eddie’s
class action allegations, which the Court denied on March 18, 2014. Sirius XM
requested bifurcation of discovery to allow for early summary judgment on
liability, which the Court granted on March 25, 2014, deferring damages and class
certification discovery and ordering that liability discovery be completed by July
14, 2014.
On June 9, 2014, Flo & Eddie filed a motion for summary judgment as to
liability on all causes of action. On September 22, 2014, the Court granted that
motion in part, affirming liability for public performance but finding triable issues
of fact with respect to reproduction. Sirius XM thereafter filed motions to either
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certify it for interlocutory appeal or reconsider the summary judgment order, which
the Court respectively denied on November 20, 2014 and February 19, 2015.
On October 21, 2014, the Court issued a scheduling order requiring that class
certification and damages discovery be completed by February 27, 2015, and that
Flo & Eddie file its motion for class certification by March 16, 2015. On March
16, 2015, Flo & Eddie filed its motion for class certification, which the Court
granted on May 27, 2015.
On June 2, 2015, Sirius XM filed an ex parte application to stay this action
pending resolution of its Rule 23(f) petition to the Ninth Circuit challenging the
class certification order, or in the alternative, to modify the scheduling order to
allow sufficient time for the class notice and opt-out process as well as limited post-
certification discovery. Dkt. 228. Flo & Eddie opposed Sirius XM’s application,
but agreed that some modification of the scheduling order was necessary to allow
sufficient time for the class notice and opt-out process. Dkt. 230.
On June 8, 2015, the Court granted Sirius XM’s application to stay, vacating
all pre-trial and trial dates and issuing a stay pending resolution of Sirius XM’s
Rule 23(f) petition. Dkt. 237. On June 10, 2015, Sirius XM filed its Rule 23(f)
petition. On August 10, 2015, the Ninth Circuit denied Sirius XM’s Rule 23(f)
petition. On August 24, 2015, Sirius XM filed a petition for rehearing or
reconsideration en banc with the Ninth Circuit. On September 1, 2015, the Court
issued an order setting a scheduling conference for October 5, 2015. On September
4, 2015, Sirius XM requested that the Court extend its stay of the current
proceedings until resolution of its en banc petition, which the Court granted on
September 8, 2015. On November 10, 2015, the Ninth Circuit denied Sirius XM’s
en banc petition.
On November 25, 2015, Sirius XM filed a motion to continue the stay issued
on June 8, 2015 pending resolution of the appeal filed by Pandora Media, Inc.
(“Pandora”) of this Court’s February 23, 2015 order denying its anti-SLAPP
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motion. Flo & Eddie, Inc. v. Pandora Media, Inc., 2015 U.S. Dist. LEXIS 70551
(C.D. Cal. Feb. 23, 2015). That motion is set for hearing on January 25, 2016.
II.
SETTLEMENT
The parties participated in a private mediation on June 12, 2015 and a
settlement conference with the Eleventh Circuit’s Mediation Center on October 6,
2015, neither of which resulted in a resolution of the parties’ dispute. The parties
disagree as to whether additional settlement discussions would be productive at this
time.
A. Flo & Eddie’s Position
Flo & Eddie believes that the pending stay greatly impacted Sirius XM’s
motivation to address this case as a certified class action. Separate and apart from
its settlement with the major record companies on June 17, 2015, Sirius XM has
used the stay as a cover in order to attempt to settle with class members
individually rather than as a group. It is for this reason that the prior attempts at
settlement (both of which occurred during the pendency of the stay) were not
successful. Accordingly, Flo & Eddie believes that once the stay is lifted and
proper discovery is completed of Sirius XM’s improper settlement activities and
conduct during the stay, then a settlement conference before a Magistrate Judge in
the Central District may prove effective.
B. Sirius XM’s Position
Sirius XM does not believe that further settlement discussions would be
productive at this time, given that the parties’ private mediation in June 2015 and
Eleventh Circuit settlement conference in October 2015 were both unsuccessful.
Given the pending appellate proceedings in the Second, Ninth, and Eleventh
Circuits, and the impending February 2, 2016 oral argument in the Second Circuit,
appellate guidance on the performance right and Commerce Clause issues, which
will be extremely helpful in informing the parties on their respective positions, is
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forthcoming. See Dkt. 264 at 3-5. Sirius XM disagrees with Flo & Eddie’s
statements above, which are factually and legally inaccurate.1
III.
DISCOVERY
According to the Court’s March 25, 2014 and October 21, 2014 scheduling
orders, the cut-off for liability discovery passed on July 14, 2014, the cut-off for
class certification and damages discovery passed on February 27, 2015, and the cut-
off for expert discovery passed on April 30, 2015. Dkt. 58; Dkt. 126. The parties
disagree as to whether and what additional discovery is warranted.
A. Flo & Eddie’s Position
1.
Flo & Eddie is Entitled To Further Discovery.
Immediately upon the May 27, 2015 certification of the class, Sirius XM
sought and received a stay of this action (which has now been in effect for over
seven months) in order to petition the Ninth Circuit under Rule 23(f) for permission
to pursue an interlocutory appeal of the class certification order. That stay was
further extended when Sirius XM sought en banc review of the Ninth Circuit’s one
sentence discretionary refusal to allow that appeal. During the stay, Sirius XM has
not only continued to infringe the pre-1972 recordings owned by the class (for
which only it possesses the data that is necessary to calculate the damages resulting
from that infringement) but has also attempted to use the stay to undermine the
1 After counsel for the parties participated in a meet and confer conference call on
November 30, 2015, Sirius XM circulated a draft of this joint statement containing background and Sirius XM’s positions to Flo & Eddie on December 7, 2015. Sirius
XM did not receive Flo & Eddie’s positions and revisions—which amounted totwelve additional pages—until December 11, 2015, one business day before this joint statement was due. Flo & Eddie’s position contains extensive legal arguments
that are both inappropriate for a Rule 26(f) joint report and exceed the parties’discussions during the November 30, 2015 conference. Sirius XM has not had a
full opportunity to respond to the entirety of Flo & Eddie’s arguments and thereforerequests complete briefing and reserves the right to respond further to the
arguments made in this joint report.
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certified class by negotiating individual settlements of the claims in this action with
class members (even beyond the major record companies) in order to procure their
opt-out once the stay is lifted.
In having these discussions and in consummating these settlements, Sirius
XM ignored the law, as well as the role of class counsel and the Court. Once the
class was certified, Sirius XM, its executives, and its lawyers ceased to be permitted
to have direct communications with class members regarding this litigation.
Kleiner v. First Nat’l Bank of Atlanta, 751 F.2d 1193, 1206-07 (11th Cir. 1985);
Resnick v. American Dental Assn., 95 F.R.D. 372, 378-79 (N.D. Ill. 1982):
Hernandez v. Vitamin Shoppe Industries Inc., 174 Cal. App. 4th 1441, 1459-60
(2009). Sirius XM’s settlement communications and the agreements they procured
through those communications raise a host of other legal and procedural issues that
require discovery in order to determine the need for, and scope of, curative
measures and remedies.
In light of what has transpired over the last seven months and in order to
update the damages calculations in this case, with the permission of the Court, Flo
& Eddie intends to pursue discovery (both by requiring supplementation of prior
discovery responses pursuant to Rule 26(e)2 and by serving new discovery where
appropriate) with respect to the following categories:
1. Financial and usage information regarding Sirius XM’s exploitation of
pre-1972 recordings in California from and after Sirius XM’s last
supplementation of this information. This discovery is necessary to bring
the damages calculation up to date with actual rather than estimated data.
2.
Agreements and licenses entered into by Sirius XM from and after May
2 SiriusXM’s obligation to supplement its prior responses continues automatically
beyond the prior discovery cut-off date. Woods v. Google, Inc., 2014 U.S. Dist.LEXIS 44894, *12-13 (N.D. Cal. Mar. 28, 2014); Villescas v. Dotson, 2015 U.S.
Dist. LEXIS 68641, *4 n.1 (E.D. Cal. May 27, 2015).
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27, 2015 that grant it any rights to use or exploit pre-1972 recordings.
This discovery is necessary with respect to the damages calculation as
well as to determine the extent to which Sirius XM’s actions have been
improper and affected the current composition of the class.
3. The identification of pre-1972 recordings for which Sirius XM claims that
it possesses the right to use or exploit in California. Sirius XM claims to
have negotiated rights – either by license or release – to a significant
number of pre-1972 recordings. An identification of those recordings (as
well as who owns them) by Sirius XM is necessary if Sirius XM intends
to claim that those recordings are no longer part of this litigation.
4.
From and after May 27, 2015, communications between Sirius XM and
members of the class concerning this litigation, settlement of the claims in
this litigation, and licensing of pre-1972 recordings. This discovery is
necessary to determine the scope and effect of Sirius XM’s improper
communications and the extent to which Sirius XM has attempted to
mislead or coerce class members into opting out of the certified class, as
such activities constitute clear harm to the parties and the processes of the
court. Zarate v. Younglove, 86 F.R.D. 80, 101 (C.D. Cal. 1980). Sirius
XM’s claims of mediation privilege with respect to some of those
communications are premature and, in any event, overbroad and not a
basis to foreclose this discovery.
Flo & Eddie estimates that this discovery can be completed within ninety
days, provided that any necessary resolution of discovery disputes including
motions to compel are not included within that time period.
2. Sirius XM Is Not Entitled To The Post-CertificationDiscovery It Seeks.
Although Sirius XM strains to justify the two bases upon which it claims
entitlement to post-certification discovery, in each case, it is merely asking this
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Court for a “do over” to correct previous tactical decisions it made.
First, Sirius XM argues that it requires discovery from “a sampling of absent
class members” in order to resurrect various affirmative defenses (authorization,
waiver, estoppel, and laches) that it either lost on summary judgment or testified
away in depositions. Indeed, Sirius XM failed to raise authorization, waiver, or
estoppel in opposing Flo & Eddie’s motion for summary judgment, and the Court
definitively ruled that laches “is unavailable to Sirius XM in this action.” (Dkt. 117
p. 15) Sirius XM fared no better when it attempted to belatedly raise its waived
defenses while opposing class certification: the Court dismissed Sirius XM’s
authorization and estoppel defenses based upon Sirius XM’s binding admissions
“that its decision to perform pre-1972 recordings without first seeking licenses or
paying royalties was based on its interpretation of the applicable law… not an
understanding that owners had already impliedly authorized performance.” (Dkt.
225, pp. 18-19) These admissions also foreclose any discovery regarding waiver.
Moreover, if Sirius XM had actually relied on any alleged waivers, it most certainly
would already have that information, obviating the need for discovery.
Second, Sirius XM argues that it requires discovery to verify that various
commercial services that collect ownership information for pre-1972 recordings
“actually possess complete and accurate ownership information.” The time for
Sirius XM to pursue this inquiry was before class certification discovery cut-off on
February 27, 2015. However, as Flo & Eddie explained when Sirius XM first tried
to reopen this issue in May 2015 (Dkt. 215), Sirius XM made the strategic decision
not to pursue discovery regarding the identification of owners of pre-1972
recordings because it wanted to blind itself to that knowledge so that it could persist
in arguing that there was no reliable method available for ascertaining these owners
Obviously, pursuing discovery on that issue prior to class certification had the very
real potential to undermine Sirius XM’s representations, and so it forfeited the
opportunity in a gambit to defeat class certification. Its subsequent failure to defeat
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certification does not constitute good cause to reopen closed discovery that Sirius
XM purposely chose not to pursue when it actually had the opportunity.
Ultimately, neither of Sirius XM’s requests satisfy the requirements
justifying its request to conduct post-certification discovery. Sirius XM’s intent to
depose absent class members is solely intended to prop up affirmative defenses that
would remove the deponents from the class definition and therefore “reduce the
size of the class,” violating the first factor of the Court’s inquiry. McPhail v. First
Command Fin. Planning, Inc., 251 F.R.D. 514, 517 (S.D. Cal. 2008). Additionally,
Sirius XM has failed to establish that any of the foregoing discovery is necessary,
since its asserted defenses are categorically unavailable to it and ownership is not
an issue in this case unless and until competing claims arise.3 Finally, it is beyond
cavil that Sirius XM would know if it possessed any of the affirmative defenses it
seeks to depose absent class members over. Indeed, how could Sirius XM rely on a
waiver, estoppel, authorization, or license that it knew nothing about? Sirius XM
makes no effort to explain because in no sense are these serious inquiries. They are
merely an attempt to harass and intimidate members of the certified class.4
3 Indeed, there is no real dispute that Sirius XM owns none of the pre-1972
recordings it exploits and relied on no authorizations in deciding to exploit them,
rendering every single exploitation infringing as a matter of law. Thus, no amount
of discovery as to ownership issues can possibly dispel its liability. Moreover, because Sirius XM is only liable for the number of infringing acts it committed,
regardless of how many parties claim the resulting damages, there is no risk ofoverclaiming or exposure to excessive damages to concern Sirius XM.
4 Although Sirius XM makes a passing reference to a third basis for discovery –
“issues related to Flo & Eddie’s disgorgement theory” – it never explain who this
discovery would be directed at, what it would entail, why it is necessary, or evenhow it would be relevant given that Flo & Eddie seeks damages as defined by the
California Court of Appeals, not disgorgement. (Dkt. 230, pp. 13-14)
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B. Sirius XM’s Position
1. Sirius XM Is Entitled To Post-Certification Discovery.
As Sirius XM explained in the prior briefing on its ex parte application to
stay or modify the scheduling order, see Dkt. 232 at 2-7; Dkt. 264 at 7-9, Sirius XM
intends to seek limited post-certification discovery from a sampling of absent class
members and from third parties SoundExchange, Music Reports, Inc. (“MRI”), and
Evan M. Greenspan, Inc. (“Greenspan”). Sirius XM is prepared to discuss its
proposed discovery plan at the December 21, 2015 status conference or in briefing,
and summarizes it only briefly here.
Sirius XM’s initial proposal is to select 15-20 absent class members from
SoundExchange’s list of 273 purported owners of pre-1972 recordings, which Flo
& Eddie previously presented to the Court as an accurate but non-exhaustive list of
class members. Dkt. 182; Dkt. 186 ¶¶ 2-6. Sirius XM would depose the selected
class members about their personal knowledge on limited topics, such as their
ownership of the recording at issue; knowledge that their recording has been
performed, and steps taken to seek payment or stop such performances; and
statements or conduct manifesting a license or consent to Sirius XM’s
performances. The depositions would be limited to four hours, although Sirius XM
reserves its right to seek additional time, and additional discovery, upon a showing
of good cause.
Sirius XM also intends to seek limited discovery from third parties
SoundExchange, MRI, and Greenspan concerning ownership issues that first arose
in class certification briefing (and after the close of discovery). Ownership is a
threshold liability issue that each class member bears the burden of establishing. In
granting class certification, the Court relied on Flo & Eddie’s assertions that these
third parties could “assist in identifying owners of the pre-1972 recordings at issue”
and that MRI has a “‘song-by-song’ ownership database covering ‘virtually all of
the commercially significant music in existence.’” Dkt. 225 at 10; Dkt. 200 at 6.
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But Flo & Eddie’s assertions have never been tested, and given the importance of
ownership in this case, discovery is essential to verify whether these third parties
actually possess complete and accurate ownership information—particularly since
MRI itself has conceded that ownership information “is highly dynamic” and “it is
simply impossible to maintain a ‘phone book’ of definitive copyright ownership
information at a single point in time.” Dkt. 204-55, 204-59.
Flo & Eddie does not have a valid basis to oppose this limited discovery.
Sirius XM has a due process right to discovery necessary to defend itself at trial,
including discovery concerning whether SoundExchange, MRI, and Greenspan
have complete and reliable records evidencing ownership of pre-1972 recordings;
issues of authorization, waiver, estoppel, and laches as to absent class members;
and issues related to Flo & Eddie’s disgorgement theory—the sole basis on which it
seeks class damages, as disclosed for the first time in class certification briefing.
See In re Nat’l W. Life Ins. Deferred Annuities Lit., 2010 WL 4809330, at *3 (S.D.
Cal. Nov. 19, 2010) (“[T]he Court is unwilling to deny Defendants the opportunity
to meaningfully defend themselves.”), aff’d in part and overruled in part , 2011 WL
3438186 (S.D. Cal. Jan. 19, 2011) (reaffirming decision to permit post-certification
discovery of absent class members); Town of New Castle v. Yonkers Contracting
Co., 1991 WL 159848, at *1 (S.D.N.Y. 1991) (post-certification discovery
warranted where it would be “helpful to the proper presentation and correct
adjudication of the principal suit.”); WILLIAM B. R UBENSTEIN, NEWBERG ON CLASS
ACTIONS § 9:11 (5th ed. 2015) (noting, with respect to absent class member
discovery, that “a defendant has a due process right to so defend itself and should
not be unfairly prejudiced by being unable to develop its case”).
Although the Court ruled that Sirius XM cannot litigate its defenses as to Flo
& Eddie, this does not, and cannot, preclude Sirius XM from litigating its
defenses—let alone predicate liability issues, such as ownership and
authorization—as to absent class members. See Wright v. Schock , 742 F.2d 541,
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544 (9th Cir. 1984). As the Court acknowledged in its class certification order,
Sirius XM has never had the opportunity to litigate these issues with respect to
absent class members. Dkt. 225 at 16-19. Indeed, Flo & Eddie has itself
acknowledged that some post-certification discovery is warranted. See Dkt. 228-1
(Flo & Eddie agreeing to provide additional discovery “if a class is certified”).
Moreover, the Court’s summary judgment order did not hold that Sirius
XM’s equitable defense of laches is wholly unavailable, as Flo & Eddie suggests.
Flo & Eddie moved for summary judgment on liability, not damages. While the
Court held that laches could not bar Flo & Eddie’s claims in their entirety, Dkt. 117
at 15, the Court has never addressed whether laches bars the equitable remedy of
disgorgement Flo & Eddie seeks—and it does, as Sirius XM will explain in its
forthcoming summary judgment motion.5 Supra Part IV.B.2.
In addition, courts frequently allow post-certification discovery where:
“(1) the discovery is not designed to take undue advantage of class members or to
reduce the size of the class; (2) the discovery is necessary; (3) responding to the
discovery requests would not require the assistance of counsel or other technical
advice; and (4) the discovery seeks information that is not already known by the
proponent.” Nat’l W., 2010 WL 4809330, at *2; Dkt. 232 at 6-7 (collecting cases).
As to the first factor, Sirius XM’s proposed discovery is narrowly tailored in terms
of the number of absent class members (15-20 of thousands), the grounds to be
covered (narrow, focused topics), and the burden (subject- and time-confined
depositions). Given these limits, Flo & Eddie’s argument that the proposed
discovery is designed to reduce the class size defies credibility.
5 Flo & Eddie argues in the footnote above that it seeks legal damages rather thanequitable disgorgement. Flo & Eddie seeks recovery of Sirius XM’s profits
(without deduction of costs). The law is very clear that where, as here, a plaintiff
seeks recovery of defendant’s gains (rather than restoration of plaintiff’s losses),that is an equitable remedy regardless of how the plaintiff characterizes it. Meister
v. Mensinger , 230 Cal. App. 4th 381, 396-98 (2014).
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As to the second and fourth factors, this discovery is “necessary” because it
seeks information that is only in possession of absent class members. Moreover,
discovery concerning ownership and authorization is directly relevant to liability
and damages. As the Court has acknowledged, any class member that is unable to
establish ownership, or that authorized use of its recording, must be excluded from
the class, which in turn reduces plaintiffs’ remedy (if any). See Dkt. 225 at 20.
As to the third factor, Sirius XM’s discovery is narrowly tailored to focus on
information within the “personal knowledge” of the absent class members, and thus
will not require assistance of counsel (although Sirius XM has no objection to
having class counsel present for the class members’ depositions). See Nat’l W.,
2010 WL 4809330, at *2 (“depositions [would] not require assistance because the
deponents [could] testify based on their personal knowledge”). The Court itself
recognized that “owners will have personal knowledge as to whether they
authorized or licensed Sirius XM to perform their recordings.” Dkt. 225 at 11.
2. Sirius XM Is Willing To Supplement Prior Discovery Pursuant
To Rule 26(e)
While Sirius XM has no objection to supplementing prior discovery pursuant
to Rule 26(e), the additional discovery Flo & Eddie proposes above is overbroad
and amounts to a transparent attempt to obtain discovery it should have sought
before the discovery cut-off. Sirius XM agrees to supplement prior damages
discovery so that Flo & Eddie can update its prior calculations. Sirius XM also
agrees to produce any licenses for the use of pre-1972 recordings it has entered into
after April 14, 2015—the last date Sirius XM produced such documents.
Sirius XM objects, however, to any additional discovery—including
discovery into the settlement of a lawsuit brought in Los Angeles Superior Court by
Capitol Records, LLC, Sony Music Entertainment, UMG Recordings, Inc., Warner
Music Group Corporation, and ABKCO Music & Records, Inc. (the “Capitol
Records settlement”). The law is clear that settlement documents and
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communications are privileged and not discoverable. See Folb v. Motion Picture
Indus. Pension & Health Plans, 16 F. Supp. 2d 1164, 1180 (C.D. Cal. 1998), aff’d ,
216 F.3d 1082 (9th Cir. 2000) (denying discovery and confirming “communications
in preparation for and during the course of a mediation with a neutral must be
protected”); Dkt. 247 at 23:21-24:14.
3. Flo & Eddie Is Not Entitled To Discovery Concerning Sirius
XM’s Direct License Negotiations With Recording Owners.
In connection with Sirius XM’s pending motion to continue the stay issued
on June 8, 2015, Flo & Eddie has asserted that direct license negotiations between
Sirius XM employees and recording owners—which have been ongoing for many
years—are barred by the ethical rules and that the stay should be lifted so Flo &
Eddie can challenge those communications. Dkt. 264 at 13-16. During the parties’
November 30, 2015 meet and confer concerning this report, Flo & Eddie indicated
that it would seek discovery concerning Sirius XM’s communications with
recording owners, and file a motion for a protective order barring future
communications and a motion seeking to “unwind” any agreements between Sirius
XM and recording owners—including the June 17, 2015 Capitol Records
settlement.
As set forth in Sirius XM’s motion to continue the stay, see id., and in the
prior briefing on Flo & Eddie’s unsuccessful ex parte application to lift the stay so
it could challenge the Capitol Records settlement, see Dkts. 241, 245, 247, 248, Flo
& Eddie’s assertions are factually and legally inaccurate, and nothing more than a
strategic ploy to avoid a further stay and extract unwarranted attorneys’ fees. There
have been no improper communications between Sirius XM and putative class
members, and thus there is no basis for Flo & Eddie to seek discovery or challenge
these communications.
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In any event, if Flo & Eddie wishes to seek discovery beyond the
supplementation of prior discovery pursuant to Rule 26(e) discussed above, Sirius
XM requests further briefing to fully address the issues for the Court.
IV.
MOTIONS
A.
Flo & Eddie’s Position
1. Contemplated Motions.
Flo & Eddie anticipates that the discovery regarding Sirius XM’s contact
with class members regarding this litigation, as well as its attempts to settle with
those class members, will potentially result in a number of motions, including a
motion for protective order under Fed. R. Civ. P. 23(d) prohibiting improper
contact and communication with class members and for curative relief. In addition,
as set forth in the ex parte application filed by Flo & Eddie on July 8, 2015, Flo &
Eddie intends to file additional motions based on the common fund and substantial
benefit doctrines. Flo & Eddie also anticipates that discovery related motions may
be necessary. Finally, Flo & Eddie is anticipating filing motions in limine,
including motions to bar: (1) in whole or in part the “expert” testimony of Elliot
Goldman and Keith Ugone; and (2) any testimony or argument by Sirius XM
regarding its state of mind as it is now barred pursuant to United States v. Bilzerian,
926 F.2d 1285, 1292 (2d Cir. 1991), Kaiser Found. Health Plan, Inc. v. Abbott
Labs., Inc., 552 F.3d 1033, 1042 (9th Cir. 2009), and Chevron Corp. v. Pennzoil
Co., 974 F.2d 1156, 1162 (9th Cir. 1992).
2. Pending Motions.
The only pending motion is Sirius XM’s motion for a stay, which is now the
fifth different ex parte application and/or motion it has filed in this action
requesting indeterminate stays. Having now run out of gas at the Ninth Circuit with
respect to its meritless Rule 23(f) petition (including making the extraordinary
request for en banc review of the Ninth Circuit’s one sentence discretionary order
denying the original petition), Sirius XM now seeks another indeterminate stay
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until such time as Pandora exhausts its appeal to the Ninth Circuit of the February
23, 2015 order denying its anti-SLAPP motion. According to Sirius XM, Pandora’s
appeal will be dispositive of the issues in this case, therefore justifying another
several year delay in these proceedings. While Flo & Eddie’s opposition to Sirius
XM’s motion is not due until January 4, 2016, for purposes of this Scheduling
Conference, it is important for the Court to understand why a further stay is
unwarranted. Besides the fact that Sirius XM cannot even make a threshold
showing that the balance of hardships tips in favor of a stay, Adams v. Target Corp
2014 U.S. Dist. LEXIS 151154, *2-5 (C.D. Cal. Mar. 3, 2014), there are at least
five other reasons why a further stay is inappropriate.
First, contrary to Sirius XM’s contention, the appeal filed by Pandora will
not affect this Court’s liability ruling against Sirius XM. Indeed, regardless of the
outcome of Pandora’s appeal, Sirius XM is now collaterally estopped by Judge
Mary Strobel’s October 14, 2014 ruling in Capitol Records LLC et al. v. Sirius XM
Radio Inc., No. BC-520981 (Super. Ct. L.A. County) from contending that Civ.
Code §980(a)(2) does not provide owners of pre-1972 recordings with an exclusive
right of public performance. On June 17, 2015, Sirius XM purported to settle the
Capitol Records action after having lost its petitions to reconsider the existence of a
public performance right before the California Court of Appeals on February 23,
2015 and the California Supreme Court on April 29, 2015. Because Sirius XM
agreed to a stipulated dismissal of Capitol Records, Judge Strobel’s adverse ruling
against it is now final and bars Sirius XM from challenging it in this Court. Ross v.
International Bhd. of Elec. Workers, 634 F.2d 453, 457 n.6 (9th Cir. 1980) (holding
that the doctrine of collateral estoppel “bars a party from relitigating
an issue identical to one he has previously litigated to a determination on its merits
in another action.”); see also Hernandez v. City of Pomona, 46 Cal. 4th 501, 511
(2009) (“For purposes of collateral estoppel, an issue was actually litigated in a
prior proceeding if it was properly raised, submitted for determination, and
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determined in that proceeding.”); Green v. Ancora-Citronelle Corp., 577 F.2d 1380
1383-84 (9th Cir. 1978) (holding stipulation of settlement by parties in state court
constituted final judgment on the merits for collateral estoppel purposes). Sirius
XM’s argument that settlement does not ordinarily trigger collateral estoppel only
applies when the issues being settled have not actually been litigated. See Rice v.
Crow, 81 Cal. App. 4th 725, 735 (2000). In Capitol Records, they were.
Second , the Ninth Circuit’s ruling will have no bearing on this case if it
affirms the denial of Pandora’s motion to strike based on Pandora’s failure to
satisfy the first prong of the anti-SLAPP analysis. Pursuant to that prong, it is
Pandora’s burden to show that Flo & Eddie’s claims arise from protected activity
and that its conduct was taken “in furtherance of the exercise of...the constitutional
right of free speech in connection with a public issue or an issue of public interest.”
Cal. Civ. Code §425.16(e)(4). An affirmance based on Pandora’s failure to satisfy
the first prong will render any stay in this action meaningless.
Third , because Flo & Eddie’s burden with respect to Pandora’s motion to
strike is simply to “demonstrate a probability of prevailing on the challenged
claims,” Mindys Cosmetics, Inc. v. Dakar , 611 F.3d 590, 595 (9th Cir. 2010), an
affirmance by the Ninth Circuit that does no more than conclude that Flo & Eddie
has satisfied its burden may result in an opinion that is something less than a full
legal analysis. Thus, a narrow ruling by the Ninth Circuit based on the specific
language of the second prong will also render any stay in this action meaningless.
Fourth, the class will be severely prejudiced by a continued stay. Although
this case has now been certified for seven months, the class still has not even
received formal notice of this action or of its rights. It is time to move the class
process along, particularly given the unethical and illegal conduct that Sirius XM
has engaged in throughout the stay. Leaving aside Sirius XM’s settlement with the
major labels (which was raised previously by Flo & Eddie in an ex parte
application), despite being advised in writing on June 26, 2015 that it was not
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permitted to have direct settlement discussions with class members, counsel for Flo
& Eddie has recently learned that Sirius XM (both through its in-house legal
counsel and executive management) has in fact continued doing exactly that in
order to persuade class members to settle the claims at issue in this litigation,
execute releases “arising out of or relating to the use, distribution, copying and/or
public performance of Pre-72 Recording [s],” and opt out of the class “[i]n the cases
titled Flo & Eddie, Inc. v. Sirius XM Radio Inc. et al.” In other words, Sirius XM is
having the exact communications that the law does not allow. The prejudice to the
class members who have fallen victim to Sirius XM’s settlement entreaties is
manifest and so too is the prejudice to the entire class, particularly given that it is
doubtful Sirius XM has also been advising these class members that it has already
been found liable and that these class members are entitled to significant damages.
Despite the clear legal prohibition against communicating with class
members about this litigation, Sirius XM claims that its discussions with class
members are nevertheless proper because it has been having “direct license
negotiations between Sirius XM employees and record owners…for many years”
and that it is merely conducting “business negotiations,” (Motion for Stay 2:21-22,
16:10-16) However, as the Court knows, until Flo & Eddie filed its motion for
class certification, Sirius XM readily admitted that it never licensed any pre-1972
recordings and never sought to do so. (Dkt. 225, p. 18) Thus, to the extent that
Sirius XM is now trying to give the impression that there were so-called multi-year
discussions taking place with respect to pre-1972 recordings, it is creating a
patently false record. Moreover, the “Sirius XM employees” that Sirius XM is
vaguely referring to are its lawyers and employees working at the behest of those
lawyers – the exact people who are ethically barred from having those discussions.
What Sirius XM has ignored is that, under the law, the moment that the class in this
case was certified, whatever discussions Sirius XM was having (or wanted to have)
with class members regarding settlement of their pre-1972 recordings had to stop –
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especially where Sirius XM is claiming preexisting business relationships, as those
relationships exacerbate (rather than ameliorate) the potential for mischief. See
Mevorah v. Wells Fargo Home Mortg., Inc., 2005 U.S. Dist. LEXIS 28615, *13
(N.D. Cal. Nov. 17, 2005) (finding that a “[d]efendant's statements also have a
heightened potential for coercion because where the absent class member and the
defendant are involved in an ongoing business relationship … any communications
are more likely to be coercive.”) (quotes and internal citation omitted).
Fifth, to the extent Sirius XM is attempting to rely upon the pending appeal
in Jones v. ConAgra Foods, No. 14-16327 (9th Cir.), it is merely rehashing the
failed arguments from its Rule 23(f) petition, none of which have merit. While
Sirius XM continues to pretend that the issue of self-identification in a class action
is a categorical one, and that the Ninth Circuit’s pending decision in Jones is poised
to resolve it, neither assertion is true. In consumer class actions, whether self-
identification is a permissible method of ascertaining class membership turns on
whether the facts of the case render it a reliable method for doing so. See Brown v.
Hain Celestial Group, Inc., 2014 U.S. Dist. LEXIS 162038, *26 (N.D. Cal. Nov.
18, 2014). Indeed, that is the exact basis upon which the District Court in
Jones declined to find the class before it ascertainable, noting that “it is hard to
imagine that [putative class members] would be able to remember which particular
Hunt's products they purchased from 2008 to the present, and whether those
products bore the challenged label statements.” Jones v. ConAgra Foods, Inc.,
2014 U.S. Dist. LEXIS 81292, *34-36 (N.D. Cal. June 13, 2014). The facts
of Jones are in no way similar to the facts of this case, and Sirius XM does not
claim otherwise. Accordingly, there is no indicia that Jones will have any bearing
on these proceedings whatsoever– particularly given that “[i]n the end this question
is not [even] dispositive, because a lack of ascertainability alone will generally not
scuttle class certification.” Id. at *38 (quotes and internal citation omitted).
For the reasons set forth above (and others), Sirius XM’s motion is without
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merit and is simply part of its goal of prejudicing the class by delaying the
resolution of this case.
B.
Sirius XM’s Position
1. Pending Motions
On November 25, 2015, Sirius XM filed a motion to continue the stay issued
on June 8, 2015 pending resolution of Pandora’s related appeal in Flo & Eddie, Inc.
v. Pandora Media, Inc., Appeal No. 15-55287 (9th Cir.). Dkt. 264. The issue at
the heart of this case and the Pandora case is the same: i.e., whether California law
grants the owner of a pre-1972 recording an absolute and unfettered right to control
all performances of that recording. In both cases, the Court held that California
Civil Code Section 980(a)(2) provides such a right. The Court’s ruling in the
Pandora case is currently on appeal, and if the Ninth Circuit reverses, that would
compel judgment for Sirius XM in this case and eliminate the need for further
proceedings. Sirius XM believes that a stay would be the most efficient and
sensible approach. See Leyva v. Certified Grocers of Cal., 593 F.2d 857, 863 (9th
Cir. 1979) (stay warranted where resolution of related appeal could be case-
dispositive); Landis v. N. Am. Co., 299 U.S. 248, 256 (1936) (need for stay
particularly strong where, as here, case presents “novel problems of far-reaching
importance to the parties and the public”). Sirius XM’s motion will be fully briefed
on January 11, 2016, and a hearing is scheduled for January 25, 2016.
Flo & Eddie’s inclusion of four pages of substantive argument opposing
Sirius XM’s motion to stay in this Rule 26(f) report is wholly inappropriate. Sirius
XM disagrees with Flo & Eddie’s arguments, which are inaccurate. For example,
Flo & Eddie’s argument that the Ninth Circuit’s reversal of the performance-right
ruling in Pandora would have no impact on this case because the Capitol Records
settlement resulted in a stipulated dismissal of that case is plainly false. The effect
of the stipulated dismissal in the Capitol Records case is to bar the plaintiffs in that
case from re-litigating the same claims and issues against Sirius XM. That
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dismissal did not, and could not, represent a concession of liability by Sirius XM.
None of the cases Flo & Eddie cites remotely supports its argument, and the law is
clear that “[a] settlement which avoids trial generally does not constitute actually
litigating any issues and thus prevents application of collateral estoppel.” Rice v.
Crow, 81 Cal. App. 4th 725, 736 (2000). If there were any other rule, the risk of
collateral estoppel “would chill the settlement process.” Cell Therapeutics, Inc. v.
Lash Grp., Inc., 586 F.3d 1204, 1210-12 (9th Cir. 2010).
Sirius XM will more fully respond to Flo & Eddie’s arguments in its reply in
support of its motion to stay.
2. Anticipated Dispositive Motions
Sirius XM intends to file a motion for summary judgment challenging the
viability of Flo & Eddie’s disgorgement theory. Flo & Eddie emphasized its
request for compensatory damages when it moved for summary judgment on
liability, see Dkt. 111 at 9, but in an effort to avoid individualized damages
inquiries, Flo & Eddie abandoned that theory in class certification briefing in favor
of disgorgement. See Dkt. 180 at 11 n.4, 18; Dkt. 185 (Wallace Decl.) ¶ 9.
Disgorgement is an equitable remedy that is unavailable where, as here, the
defendant is not a conscious wrongdoer. See, e.g., Meister , 230 Cal. App. 4th at
398 (“the object of the disgorgement remedy [is] to eliminate the possibility of
profit from conscious wrongdoing”). There is no evidence of conscious
wrongdoing by Sirius XM—nor can there be, since as the Court has acknowledged,
“nobody knew about the [performance] right until [the Court] said there was a
right.” Dkt. 234 at 26:6-10. Likewise, punitive damages are unavailable where, as
here, “the key issue is one of first impression.” Morgan Guar. Trust Co. v. Am.
Sav. & Loan Ass’n, 804 F.2d 1487, 1500 (9th Cir. 1986).
Depending on what class discovery reveals—for example, that there is no
reliable way to identify pre-1972 recording owners or that individualized issues
concerning ownership and authorization predominate over any common issues—
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there could be a basis for Sirius XM to file a motion for decertification. See
Westways World Travel, Inc. v. AMR Corp., 2005 WL 6523266, at *6-7 (C.D. Cal.
Feb. 24, 2005) (decertifying class based on new facts developed in post-
certification discovery). In addition, the Ninth Circuit is currently considering
whether class membership may be determined by self-identifying affidavits—the
very process Flo & Eddie proposed in this case. See Dkt. 225 at 15 (agreeing to Flo
& Eddie’s proposal “that ... class members ... establish ownership by affidavit or
declaration”). In Jones v. ConAgra Foods, 2014 WL 2702726, at *8 (N.D. Cal.
June 13, 2014), the district court denied plaintiff’s motion for class certification on
the ground that the putative class was not ascertainable, and self-identifying
affidavits were not “an objective, reliable way to ascertain class membership.” The
ConAgra appeal has been fully briefed and should be resolved early next year.
Appeal No. 14-16327 (9th Cir.). If the Ninth Circuit affirms the district court’s
ruling, its decision may warrant decertification of the class in this case.
Aside from dispositive motions, Sirius XM anticipates motion practice
concerning the issues addressed in Part III, as well as motions in limine.
V.
CLASS NOTICE AND OPT-OUT PROCESS
The parties agree on the basic process and outstanding tasks, though they
disagree as to scheduling issues. Because the case was stayed before a class notice
plan could be agreed upon or implemented, the parties must still meet and confer on
the notice plan. That notice plan may include some or all of the following: (1) the
notice’s form and content, (2) how or where class notice will be published, (3) who
will receive it, (4) how interested parties can present objections, and (5) how the
opt-out process will function and how long it will last. See Judges’ Class Action
Notice and Claims Process Checklist 4 (2010). After the parties have met and
conferred, Flo & Eddie will prepare a proposed class notice plan and circulate it to
Sirius XM for objections. If the parties are unable to reach agreement, Flo & Eddie
will file a motion for approval of its class notice plan. Following the Court’s ruling
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on that motion, class notice will be circulated and an opt-out period will open and
expire.
Flo & Eddie believes that this entire process can be completed within 90 days
of the December 21, 2015 scheduling conference. Sirius XM believes that the
process will take closer to six months—largely because it contends that due process
requires a 60-90 day opt-out period. The parties’ respective scheduling proposals
are set forth in Section VI.
VI. PROPOSED SCHEDULE
The parties were unable to reach agreement on a pre-trial and trial schedule.
The parties’ respective proposals are separately set forth below.
A.
Flo & Eddie’s Proposal
Event Flo & Eddie’s Proposal
Parties meet and conferregarding notice plan,
exchange drafts and/or
objections to the proposed
plan
January 15, 2016
Flo & Eddie to submit
agreed upon plan andnotice to the Court or file
its motion for approval ofthe plan and notice
January 25, 2015
Hearing date for approval
of plan and notice
February 22, 20166
Cut-Off Date for Flo &Eddie Discovery cutoff
March 21, 2016
6 The ruling on Flo & Eddie’s motion for approval of the class notice and plan will
set the distribution date and the opt-out period.
Case 2:13-cv-05693-PSG-RZ Document 266 Filed 12/14/15 Page 23 of 25 Page ID #:6728
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- 23 -RULE 26(F) JOINT REPORT
CASE NO. 13-CV-5693 PSG (RZX)
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Cut-Off Date for Flo &
Eddie Motions to Compel
April 21, 2016
Motions in limine cutoff Pursuant to Standing Order
Final pretrial conference July 11, 2016
Trial date August 8, 2016
Preliminary estimate of
trial length
3-4 court days
B.
Sirius XM’s Proposal
Event Sirius XM’s Proposal
Parties meet and conferregarding notice plan
18 days after scheduling conference(January 8, 2016)
Plaintiff circulatesnotice plan
21 days after meet and confer(January 29, 2016)
Sirius XM’s objections to
notice plan
14 days after plaintiff circulates
notice plan(February 12, 2016)
Plaintiff moves for
approval of notice plan
7 days after Sirius XM’s objections
(February 19, 2016)
Hearing regardingnotice plan
28 days after plaintiff’s motion(March 21, 2016)
Distribution of class notice 7 days after hearing regarding notice plan
(March 28, 2016)
Opt-out period closes 90 days after distribution of class notice(June 27, 2016)
Class discovery cutoff 90 days before trial(June 21, 2016)
Case 2:13-cv-05693-PSG-RZ Document 266 Filed 12/14/15 Page 24 of 25 Page ID #:6729
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Dispositive motions cutoff 90 days before trial
(June 21, 2016)
Motion in limine cutoff 75 days before trial(July 6, 2016)
Final pretrial conference 2 weeks before trial
(September 2, 2016)
Trial date September 19, 2016
Preliminary estimate of
trial length
10-15 court days
DATED: December 14, 2015 GRADSTEIN & MARZANO, P.C.
By: /s/ Harvey Geller
Harvey Geller
Attorneys for Plaintiff
Flo & Eddie, Inc.
DATED: December 14, 2015 O’MELVENY & MYERS LLP
By: /s/ Daniel M. Petrocelli
Daniel M. Petrocelli
Attorneys for DefendantSirius XM Radio Inc.
Case 2:13-cv-05693-PSG-RZ Document 266 Filed 12/14/15 Page 25 of 25 Page ID #:6730