Flo & Eddie - CD Ca - Third 26 (F) Joint Report PDF

Case 2:13-cv-05693-PSG-RZ Document 266 Filed 12/14/15 Page 1 of 25 Page ID #:6706
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HENRY GRADSTEIN (S.B. #89747)

hgradstein@gradstein.com
MARYANN R. MARZANO (S.B. #96867)
mmarzano@gradstein.com
HARVEY GELLER (S.B. #123107)
hgeller@gradstein.com
GRADSTEIN & MARZANO, P.C.
6310 San Vicente Blvd., Suite 510
Los Angeles, CA 90048
Telephone: (310) 776-3100
Facsimile: (323) 931-4990
Attorneys for Plaintiff
Flo & Eddie, Inc.
DANIEL M. PETROCELLI (S.B. #97802)
dpetrocelli@omm.com
DAVID MARROSO (S.B. #211655)
dmarroso@omm.com
DREW E. BREUDER (S.B. #198466)
dbreuder@omm.com
CASSANDRA L. SETO (S.B. #246608)
cseto@omm.com
OMELVENY & MYERS LLP
1999 Avenue of the Stars, Suite 700
Los Angeles, CA 90067-6035
Telephone: (310) 553-6700
Facsimile: (310) 246-6779
Attorneys for Defendant
Sirius XM Radio Inc.
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UNITED STATES DISTRICT COURT
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CENTRAL DISTRICT OF CALIFORNIA
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FLO & EDDIE, INC., a California

corporation, individually and on behalf
of all others similarly situated,
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Plaintiff,
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Case No. 13-CV-5693 PSG (RZx)

PARTIES THIRD
SUPPLEMENTAL RULE 26(F)
JOINT CASE MANAGEMENT
STATEMENT
v.
SIRIUS XM RADIO INC., a Delaware
corporation, and DOES 1 through 10,
Defendants.
Hon. Philip S. Gutierrez

Hearing Date:
Hearing Time:
Courtroom:
December 21, 2015

2:30 p.m.
880
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RULE 26(F) JOINT REPORT
CASE NO. 13-CV-5693 PSG (RZX)
Pursuant to Federal Rule of Civil Procedure 26(f) and the Courts 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,
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without a license or authorization, was reproducing, distributing, and performing
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those recordings as part of its satellite and internet radio services. Flo & Eddie
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alleged claims for violation of Cal. Civ. Code 980(a)(2), misappropriation, unfair
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competition under Cal. Bus. & Prof. Code 17200 and common law, and
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conversion, and sought damages, restitution, and injunctive relief on behalf of itself
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and the putative class.
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After removing the case to federal court on August 8, 2013, Sirius XM filed
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motions in October 2013 to transfer venue to New York and stay the case pending
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resolution of its transfer request, both of which the Court denied on December 3,
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2013. On February 12, 2014, Sirius XM filed a motion to strike Flo & Eddies
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class action allegations, which the Court denied on March 18, 2014. Sirius XM
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requested bifurcation of discovery to allow for early summary judgment on
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liability, which the Court granted on March 25, 2014, deferring damages and class
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certification discovery and ordering that liability discovery be completed by July
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14, 2014.
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On June 9, 2014, Flo & Eddie filed a motion for summary judgment as to
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liability on all causes of action. On September 22, 2014, the Court granted that
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motion in part, affirming liability for public performance but finding triable issues
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of fact with respect to reproduction. Sirius XM thereafter filed motions to either

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
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class certification order, or in the alternative, to modify the scheduling order to
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allow sufficient time for the class notice and opt-out process as well as limited post-
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certification discovery. Dkt. 228. Flo & Eddie opposed Sirius XMs application,
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but agreed that some modification of the scheduling order was necessary to allow
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sufficient time for the class notice and opt-out process. Dkt. 230.
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On June 8, 2015, the Court granted Sirius XMs application to stay, vacating
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all pre-trial and trial dates and issuing a stay pending resolution of Sirius XMs
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Rule 23(f) petition. Dkt. 237. On June 10, 2015, Sirius XM filed its Rule 23(f)
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petition. On August 10, 2015, the Ninth Circuit denied Sirius XMs Rule 23(f)
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petition. On August 24, 2015, Sirius XM filed a petition for rehearing or
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reconsideration en banc with the Ninth Circuit. On September 1, 2015, the Court
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issued an order setting a scheduling conference for October 5, 2015. On September
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4, 2015, Sirius XM requested that the Court extend its stay of the current
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proceedings until resolution of its en banc petition, which the Court granted on
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September 8, 2015. On November 10, 2015, the Ninth Circuit denied Sirius XMs
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en banc petition.
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On November 25, 2015, Sirius XM filed a motion to continue the stay issued
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on June 8, 2015 pending resolution of the appeal filed by Pandora Media, Inc.
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(Pandora) of this Courts 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 Circuits 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.
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A.
Flo & Eddies Position
Flo & Eddie believes that the pending stay greatly impacted Sirius XMs
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motivation to address this case as a certified class action. Separate and apart from
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its settlement with the major record companies on June 17, 2015, Sirius XM has
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used the stay as a cover in order to attempt to settle with class members
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individually rather than as a group. It is for this reason that the prior attempts at
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settlement (both of which occurred during the pendency of the stay) were not
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successful. Accordingly, Flo & Eddie believes that once the stay is lifted and
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proper discovery is completed of Sirius XMs improper settlement activities and
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conduct during the stay, then a settlement conference before a Magistrate Judge in
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the Central District may prove effective.
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B.
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Sirius XM does not believe that further settlement discussions would be
Sirius XMs Position
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productive at this time, given that the parties private mediation in June 2015 and
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Eleventh Circuit settlement conference in October 2015 were both unsuccessful.
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Given the pending appellate proceedings in the Second, Ninth, and Eleventh
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Circuits, and the impending February 2, 2016 oral argument in the Second Circuit,
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appellate guidance on the performance right and Commerce Clause issues, which
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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 & Eddies
statements above, which are factually and legally inaccurate.1
III.
DISCOVERY
According to the Courts 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.
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1.
Flo & Eddie is Entitled To Further Discovery.
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Immediately upon the May 27, 2015 certification of the class, Sirius XM
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sought and received a stay of this action (which has now been in effect for over
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seven months) in order to petition the Ninth Circuit under Rule 23(f) for permission
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to pursue an interlocutory appeal of the class certification order. That stay was
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further extended when Sirius XM sought en banc review of the Ninth Circuits one
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sentence discretionary refusal to allow that appeal. During the stay, Sirius XM has
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not only continued to infringe the pre-1972 recordings owned by the class (for
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which only it possesses the data that is necessary to calculate the damages resulting
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from that infringement) but has also attempted to use the stay to undermine the
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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 XMs positions to Flo & Eddie on December 7, 2015. Sirius
XM did not receive Flo & Eddies positions and revisionswhich amounted to
twelve additional pagesuntil December 11, 2015, one business day before this
joint statement was due. Flo & Eddies 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 & Eddies arguments and therefore
requests 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 Natl 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):
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Hernandez v. Vitamin Shoppe Industries Inc., 174 Cal. App. 4th 1441, 1459-60
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(2009). Sirius XMs settlement communications and the agreements they procured
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through those communications raise a host of other legal and procedural issues that
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require discovery in order to determine the need for, and scope of, curative
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measures and remedies.
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In light of what has transpired over the last seven months and in order to
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update the damages calculations in this case, with the permission of the Court, Flo
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& Eddie intends to pursue discovery (both by requiring supplementation of prior
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discovery responses pursuant to Rule 26(e) 2 and by serving new discovery where
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appropriate) with respect to the following categories:
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1. Financial and usage information regarding Sirius XMs exploitation of
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pre-1972 recordings in California from and after Sirius XMs last
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supplementation of this information. This discovery is necessary to bring
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the damages calculation up to date with actual rather than estimated data.
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2. Agreements and licenses entered into by Sirius XM from and after May
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SiriusXMs 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 XMs 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
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to claim that those recordings are no longer part of this litigation.

4. From and after May 27, 2015, communications between Sirius XM and
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members of the class concerning this litigation, settlement of the claims in
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this litigation, and licensing of pre-1972 recordings. This discovery is
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necessary to determine the scope and effect of Sirius XMs improper
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communications and the extent to which Sirius XM has attempted to
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mislead or coerce class members into opting out of the certified class, as
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such activities constitute clear harm to the parties and the processes of the
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court. Zarate v. Younglove, 86 F.R.D. 80, 101 (C.D. Cal. 1980). Sirius
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XMs claims of mediation privilege with respect to some of those
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communications are premature and, in any event, overbroad and not a
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basis to foreclose this discovery.
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Flo & Eddie estimates that this discovery can be completed within ninety
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days, provided that any necessary resolution of discovery disputes including
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motions to compel are not included within that time period.
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2.
Sirius XM Is Not Entitled To The Post-Certification

Discovery 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 & Eddies 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 XMs
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authorization and estoppel defenses based upon Sirius XMs binding admissions
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that its decision to perform pre-1972 recordings without first seeking licenses or
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paying royalties was based on its interpretation of the applicable law not an
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understanding that owners had already impliedly authorized performance. (Dkt.
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225, pp. 18-19) These admissions also foreclose any discovery regarding waiver.
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Moreover, if Sirius XM had actually relied on any alleged waivers, it most certainly
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would already have that information, obviating the need for discovery.
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Second, Sirius XM argues that it requires discovery to verify that various
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commercial services that collect ownership information for pre-1972 recordings
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actually possess complete and accurate ownership information. The time for
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Sirius XM to pursue this inquiry was before class certification discovery cut-off on
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February 27, 2015. However, as Flo & Eddie explained when Sirius XM first tried
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to reopen this issue in May 2015 (Dkt. 215), Sirius XM made the strategic decision
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not to pursue discovery regarding the identification of owners of pre-1972
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recordings because it wanted to blind itself to that knowledge so that it could persist
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in arguing that there was no reliable method available for ascertaining these owners.
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Obviously, pursuing discovery on that issue prior to class certification had the very
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real potential to undermine Sirius XMs representations, and so it forfeited the
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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 XMs requests satisfy the requirements
justifying its request to conduct post-certification discovery. Sirius XMs 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 Courts 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,
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since its asserted defenses are categorically unavailable to it and ownership is not
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an issue in this case unless and until competing claims arise.3 Finally, it is beyond
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cavil that Sirius XM would know if it possessed any of the affirmative defenses it
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seeks to depose absent class members over. Indeed, how could Sirius XM rely on a
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waiver, estoppel, authorization, or license that it knew nothing about? Sirius XM
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makes no effort to explain because in no sense are these serious inquiries. They are
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merely an attempt to harass and intimidate members of the certified class.4
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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 of
overclaiming or exposure to excessive damages to concern Sirius XM.
Although Sirius XM makes a passing reference to a third basis for discovery

issues related to Flo & Eddies disgorgement theory it never explain who this
discovery would be directed at, what it would entail, why it is necessary, or even
how 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 XMs 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.
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Sirius XMs initial proposal is to select 15-20 absent class members from
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SoundExchanges list of 273 purported owners of pre-1972 recordings, which Flo
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& Eddie previously presented to the Court as an accurate but non-exhaustive list of
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class members. Dkt. 182; Dkt. 186 2-6. Sirius XM would depose the selected
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class members about their personal knowledge on limited topics, such as their
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ownership of the recording at issue; knowledge that their recording has been
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performed, and steps taken to seek payment or stop such performances; and
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statements or conduct manifesting a license or consent to Sirius XMs
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performances. The depositions would be limited to four hours, although Sirius XM
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reserves its right to seek additional time, and additional discovery, upon a showing
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of good cause.
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Sirius XM also intends to seek limited discovery from third parties
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SoundExchange, MRI, and Greenspan concerning ownership issues that first arose
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in class certification briefing (and after the close of discovery). Ownership is a
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threshold liability issue that each class member bears the burden of establishing. In
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granting class certification, the Court relied on Flo & Eddies assertions that these
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third parties could assist in identifying owners of the pre-1972 recordings at issue
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and that MRI has a song-by-song ownership database covering virtually all of
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the commercially significant music in existence. Dkt. 225 at 10; Dkt. 200 at 6.
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But Flo & Eddies 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 informationparticularly 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
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have complete and reliable records evidencing ownership of pre-1972 recordings;
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issues of authorization, waiver, estoppel, and laches as to absent class members;
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and issues related to Flo & Eddies disgorgement theorythe sole basis on which it
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seeks class damages, as disclosed for the first time in class certification briefing.
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See In re Natl W. Life Ins. Deferred Annuities Lit., 2010 WL 4809330, at *3 (S.D.
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Cal. Nov. 19, 2010) ([T]he Court is unwilling to deny Defendants the opportunity
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to meaningfully defend themselves.), affd in part and overruled in part, 2011 WL
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3438186 (S.D. Cal. Jan. 19, 2011) (reaffirming decision to permit post-certification
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discovery of absent class members); Town of New Castle v. Yonkers Contracting
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Co., 1991 WL 159848, at *1 (S.D.N.Y. 1991) (post-certification discovery
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warranted where it would be helpful to the proper presentation and correct
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adjudication of the principal suit.); WILLIAM B. RUBENSTEIN, NEWBERG ON CLASS
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ACTIONS 9:11 (5th ed. 2015) (noting, with respect to absent class member
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discovery, that a defendant has a due process right to so defend itself and should
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not be unfairly prejudiced by being unable to develop its case).
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Although the Court ruled that Sirius XM cannot litigate its defenses as to Flo
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& Eddie, this does not, and cannot, preclude Sirius XM from litigating its
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defenseslet alone predicate liability issues, such as ownership and
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authorizationas 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 Courts summary judgment order did not hold that Sirius
XMs 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 & Eddies claims in their entirety, Dkt. 117
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at 15, the Court has never addressed whether laches bars the equitable remedy of
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disgorgement Flo & Eddie seeksand it does, as Sirius XM will explain in its
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forthcoming summary judgment motion.5 Supra Part IV.B.2.
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In addition, courts frequently allow post-certification discovery where:
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(1) the discovery is not designed to take undue advantage of class members or to
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reduce the size of the class; (2) the discovery is necessary; (3) responding to the
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discovery requests would not require the assistance of counsel or other technical
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advice; and (4) the discovery seeks information that is not already known by the
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proponent. Natl W., 2010 WL 4809330, at *2; Dkt. 232 at 6-7 (collecting cases).
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As to the first factor, Sirius XMs proposed discovery is narrowly tailored in terms
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of the number of absent class members (15-20 of thousands), the grounds to be
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covered (narrow, focused topics), and the burden (subject- and time-confined
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depositions). Given these limits, Flo & Eddies argument that the proposed
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discovery is designed to reduce the class size defies credibility.
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Flo & Eddie argues in the footnote above that it seeks legal damages rather than
equitable disgorgement. Flo & Eddie seeks recovery of Sirius XMs profits
(without deduction of costs). The law is very clear that where, as here, a plaintiff
seeks recovery of defendants gains (rather than restoration of plaintiffs 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 XMs 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
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having class counsel present for the class members depositions). See Natl W.,
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2010 WL 4809330, at *2 (depositions [would] not require assistance because the
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deponents [could] testify based on their personal knowledge). The Court itself
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recognized that owners will have personal knowledge as to whether they
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authorized or licensed Sirius XM to perform their recordings. Dkt. 225 at 11.
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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
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to Rule 26(e), the additional discovery Flo & Eddie proposes above is overbroad
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and amounts to a transparent attempt to obtain discovery it should have sought
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before the discovery cut-off. Sirius XM agrees to supplement prior damages
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discovery so that Flo & Eddie can update its prior calculations. Sirius XM also
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agrees to produce any licenses for the use of pre-1972 recordings it has entered into
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after April 14, 2015the last date Sirius XM produced such documents.
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Sirius XM objects, however, to any additional discoveryincluding
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discovery into the settlement of a lawsuit brought in Los Angeles Superior Court by
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Capitol Records, LLC, Sony Music Entertainment, UMG Recordings, Inc., Warner
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Music Group Corporation, and ABKCO Music & Records, Inc. (the Capitol
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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), affd,
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

XMs Direct License Negotiations With Recording Owners.
In connection with Sirius XMs pending motion to continue the stay issued
on June 8, 2015, Flo & Eddie has asserted that direct license negotiations between
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Sirius XM employees and recording ownerswhich have been ongoing for many
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yearsare barred by the ethical rules and that the stay should be lifted so Flo &
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Eddie can challenge those communications. Dkt. 264 at 13-16. During the parties
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November 30, 2015 meet and confer concerning this report, Flo & Eddie indicated
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that it would seek discovery concerning Sirius XMs communications with
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recording owners, and file a motion for a protective order barring future
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communications and a motion seeking to unwind any agreements between Sirius
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XM and recording ownersincluding the June 17, 2015 Capitol Records
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settlement.
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As set forth in Sirius XMs motion to continue the stay, see id., and in the
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prior briefing on Flo & Eddies unsuccessful ex parte application to lift the stay so
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it could challenge the Capitol Records settlement, see Dkts. 241, 245, 247, 248, Flo
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& Eddies assertions are factually and legally inaccurate, and nothing more than a
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strategic ploy to avoid a further stay and extract unwarranted attorneys fees. There
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have been no improper communications between Sirius XM and putative class
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members, and thus there is no basis for Flo & Eddie to seek discovery or challenge
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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.
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MOTIONS
A.

1.
Contemplated Motions.
Flo & Eddie anticipates that the discovery regarding Sirius XMs 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
10
motion for protective order under Fed. R. Civ. P. 23(d) prohibiting improper
11
contact and communication with class members and for curative relief. In addition,
12
as set forth in the ex parte application filed by Flo & Eddie on July 8, 2015, Flo &
13
Eddie intends to file additional motions based on the common fund and substantial
14
benefit doctrines. Flo & Eddie also anticipates that discovery related motions may
15
be necessary. Finally, Flo & Eddie is anticipating filing motions in limine,
16
including motions to bar: (1) in whole or in part the expert testimony of Elliot
17
Goldman and Keith Ugone; and (2) any testimony or argument by Sirius XM
18
regarding its state of mind as it is now barred pursuant to United States v. Bilzerian,
19
926 F.2d 1285, 1292 (2d Cir. 1991), Kaiser Found. Health Plan, Inc. v. Abbott
20
Labs., Inc., 552 F.3d 1033, 1042 (9th Cir. 2009), and Chevron Corp. v. Pennzoil
21
Co., 974 F.2d 1156, 1162 (9th Cir. 1992).
22
23
2.
Pending Motions.
The only pending motion is Sirius XMs motion for a stay, which is now the
24
fifth different ex parte application and/or motion it has filed in this action
25
requesting indeterminate stays. Having now run out of gas at the Ninth Circuit with
26
respect to its meritless Rule 23(f) petition (including making the extraordinary
27
request for en banc review of the Ninth Circuits one sentence discretionary order
28
denying the original petition), Sirius XM now seeks another indeterminate stay
- 14 -

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, Pandoras
appeal will be dispositive of the issues in this case, therefore justifying another
several year delay in these proceedings. While Flo & Eddies opposition to Sirius
XMs 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
10
11
five other reasons why a further stay is inappropriate.

First, contrary to Sirius XMs contention, the appeal filed by Pandora will
12
not affect this Courts liability ruling against Sirius XM. Indeed, regardless of the
13
outcome of Pandoras appeal, Sirius XM is now collaterally estopped by Judge
14
Mary Strobels October 14, 2014 ruling in Capitol Records LLC et al. v. Sirius XM
15
Radio Inc., No. BC-520981 (Super. Ct. L.A. County) from contending that Civ.
16
Code 980(a)(2) does not provide owners of pre-1972 recordings with an exclusive
17
right of public performance. On June 17, 2015, Sirius XM purported to settle the
18
Capitol Records action after having lost its petitions to reconsider the existence of a
19
public performance right before the California Court of Appeals on February 23,
20
2015 and the California Supreme Court on April 29, 2015. Because Sirius XM
21
agreed to a stipulated dismissal of Capitol Records, Judge Strobels adverse ruling
22
against it is now final and bars Sirius XM from challenging it in this Court. Ross v.
23
International Bhd. of Elec. Workers, 634 F.2d 453, 457 n.6 (9th Cir. 1980) (holding
24
that the doctrine of collateral estoppel bars a party from relitigating
25
an issue identical to one he has previously litigated to a determination on its merits
26
in another action.); see also Hernandez v. City of Pomona, 46 Cal. 4th 501, 511
27
(2009) (For purposes of collateral estoppel, an issue was actually litigated in a
28
prior proceeding if it was properly raised, submitted for determination, and

- 15 -

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
XMs 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 Circuits ruling will have no bearing on this case if it
affirms the denial of Pandoras motion to strike based on Pandoras failure to
satisfy the first prong of the anti-SLAPP analysis. Pursuant to that prong, it is
10
Pandoras burden to show that Flo & Eddies claims arise from protected activity
11
and that its conduct was taken in furtherance of the exercise of...the constitutional
12
right of free speech in connection with a public issue or an issue of public interest.
13
Cal. Civ. Code 425.16(e)(4). An affirmance based on Pandoras failure to satisfy
14
the first prong will render any stay in this action meaningless.
15
Third, because Flo & Eddies burden with respect to Pandoras motion to
16
strike is simply to demonstrate a probability of prevailing on the challenged
17
claims, Mindys Cosmetics, Inc. v. Dakar, 611 F.3d 590, 595 (9th Cir. 2010), an
18
affirmance by the Ninth Circuit that does no more than conclude that Flo & Eddie
19
has satisfied its burden may result in an opinion that is something less than a full
20
legal analysis. Thus, a narrow ruling by the Ninth Circuit based on the specific
21
language of the second prong will also render any stay in this action meaningless.
22
Fourth, the class will be severely prejudiced by a continued stay. Although
23
this case has now been certified for seven months, the class still has not even
24
received formal notice of this action or of its rights. It is time to move the class
25
process along, particularly given the unethical and illegal conduct that Sirius XM
26
has engaged in throughout the stay. Leaving aside Sirius XMs settlement with the
27
major labels (which was raised previously by Flo & Eddie in an ex parte
28
application), despite being advised in writing on June 26, 2015 that it was not
- 16 -

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 XMs settlement entreaties is
10
manifest and so too is the prejudice to the entire class, particularly given that it is
11
doubtful Sirius XM has also been advising these class members that it has already
12
been found liable and that these class members are entitled to significant damages.
13
Despite the clear legal prohibition against communicating with class
14
members about this litigation, Sirius XM claims that its discussions with class
15
members are nevertheless proper because it has been having direct license
16
negotiations between Sirius XM employees and record ownersfor many years
17
and that it is merely conducting business negotiations, (Motion for Stay 2:21-22,
18
16:10-16) However, as the Court knows, until Flo & Eddie filed its motion for
19
class certification, Sirius XM readily admitted that it never licensed any pre-1972
20
recordings and never sought to do so. (Dkt. 225, p. 18) Thus, to the extent that
21
Sirius XM is now trying to give the impression that there were so-called multi-year
22
discussions taking place with respect to pre-1972 recordings, it is creating a
23
patently false record. Moreover, the Sirius XM employees that Sirius XM is
24
vaguely referring to are its lawyers and employees working at the behest of those
25
lawyers the exact people who are ethically barred from having those discussions.
26
What Sirius XM has ignored is that, under the law, the moment that the class in this
27
case was certified, whatever discussions Sirius XM was having (or wanted to have)
28
with class members regarding settlement of their pre-1972 recordings had to stop
- 17 -

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
10
failed arguments from its Rule 23(f) petition, none of which have merit. While
11
Sirius XM continues to pretend that the issue of self-identification in a class action
12
is a categorical one, and that the Ninth Circuits pending decision in Jones is poised
13
to resolve it, neither assertion is true. In consumer class actions, whether self-
14
identification is a permissible method of ascertaining class membership turns on
15
whether the facts of the case render it a reliable method for doing so. See Brown v.
16
Hain Celestial Group, Inc., 2014 U.S. Dist. LEXIS 162038, *26 (N.D. Cal. Nov.
17
18, 2014). Indeed, that is the exact basis upon which the District Court in
18
Jones declined to find the class before it ascertainable, noting that it is hard to
19
imagine that [putative class members] would be able to remember which particular
20
Hunt's products they purchased from 2008 to the present, and whether those
21
products bore the challenged label statements. Jones v. ConAgra Foods, Inc.,
22
2014 U.S. Dist. LEXIS 81292, *34-36 (N.D. Cal. June 13, 2014). The facts
23
of Jones are in no way similar to the facts of this case, and Sirius XM does not
24
claim otherwise. Accordingly, there is no indicia that Jones will have any bearing
25
on these proceedings whatsoever particularly given that [i]n the end this question
26
is not [even] dispositive, because a lack of ascertainability alone will generally not
27
scuttle class certification. Id. at *38 (quotes and internal citation omitted).
28
For the reasons set forth above (and others), Sirius XMs motion is without
- 18 -

merit and is simply part of its goal of prejudicing the class by delaying the
resolution of this case.
3
4
B.
Sirius XMs 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 Pandoras 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
10
all performances of that recording. In both cases, the Court held that California
11
Civil Code Section 980(a)(2) provides such a right. The Courts ruling in the
12
Pandora case is currently on appeal, and if the Ninth Circuit reverses, that would
13
compel judgment for Sirius XM in this case and eliminate the need for further
14
proceedings. Sirius XM believes that a stay would be the most efficient and
15
sensible approach. See Leyva v. Certified Grocers of Cal., 593 F.2d 857, 863 (9th
16
Cir. 1979) (stay warranted where resolution of related appeal could be case-
17
dispositive); Landis v. N. Am. Co., 299 U.S. 248, 256 (1936) (need for stay
18
particularly strong where, as here, case presents novel problems of far-reaching
19
importance to the parties and the public). Sirius XMs motion will be fully briefed
20
on January 11, 2016, and a hearing is scheduled for January 25, 2016.
21
Flo & Eddies inclusion of four pages of substantive argument opposing
22
Sirius XMs motion to stay in this Rule 26(f) report is wholly inappropriate. Sirius
23
XM disagrees with Flo & Eddies arguments, which are inaccurate. For example,
24
Flo & Eddies argument that the Ninth Circuits reversal of the performance-right
25
ruling in Pandora would have no impact on this case because the Capitol Records
26
settlement resulted in a stipulated dismissal of that case is plainly false. The effect
27
of the stipulated dismissal in the Capitol Records case is to bar the plaintiffs in that
28
case from re-litigating the same claims and issues against Sirius XM. That
- 19 -

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 & Eddies arguments in its reply in
support of its motion to stay.
10
2.
11
Anticipated Dispositive Motions
Sirius XM intends to file a motion for summary judgment challenging the
12
viability of Flo & Eddies disgorgement theory. Flo & Eddie emphasized its
13
request for compensatory damages when it moved for summary judgment on
14
liability, see Dkt. 111 at 9, but in an effort to avoid individualized damages
15
inquiries, Flo & Eddie abandoned that theory in class certification briefing in favor
16
of disgorgement. See Dkt. 180 at 11 n.4, 18; Dkt. 185 (Wallace Decl.) 9.
17
Disgorgement is an equitable remedy that is unavailable where, as here, the
18
defendant is not a conscious wrongdoer. See, e.g., Meister, 230 Cal. App. 4th at
19
398 (the object of the disgorgement remedy [is] to eliminate the possibility of
20
profit from conscious wrongdoing). There is no evidence of conscious
21
wrongdoing by Sirius XMnor can there be, since as the Court has acknowledged,
22
nobody knew about the [performance] right until [the Court] said there was a
23
right. Dkt. 234 at 26:6-10. Likewise, punitive damages are unavailable where, as
24
here, the key issue is one of first impression. Morgan Guar. Trust Co. v. Am.
25
Sav. & Loan Assn, 804 F.2d 1487, 1500 (9th Cir. 1986).
26
Depending on what class discovery revealsfor example, that there is no
27
reliable way to identify pre-1972 recording owners or that individualized issues
28
concerning ownership and authorization predominate over any common issues

- 20 -

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 affidavitsthe
very process Flo & Eddie proposed in this case. See Dkt. 225 at 15 (agreeing to Flo
& Eddies 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 plaintiffs motion for class certification on
10
the ground that the putative class was not ascertainable, and self-identifying
11
affidavits were not an objective, reliable way to ascertain class membership. The
12
ConAgra appeal has been fully briefed and should be resolved early next year.
13
Appeal No. 14-16327 (9th Cir.). If the Ninth Circuit affirms the district courts
14
ruling, its decision may warrant decertification of the class in this case.
15
Aside from dispositive motions, Sirius XM anticipates motion practice
16
concerning the issues addressed in Part III, as well as motions in limine.
17
V.
18
CLASS NOTICE AND OPT-OUT PROCESS

The parties agree on the basic process and outstanding tasks, though they
19
disagree as to scheduling issues. Because the case was stayed before a class notice
20
plan could be agreed upon or implemented, the parties must still meet and confer on
21
the notice plan. That notice plan may include some or all of the following: (1) the
22
notices form and content, (2) how or where class notice will be published, (3) who
23
will receive it, (4) how interested parties can present objections, and (5) how the
24
opt-out process will function and how long it will last. See Judges Class Action
25
Notice and Claims Process Checklist 4 (2010). After the parties have met and
26
conferred, Flo & Eddie will prepare a proposed class notice plan and circulate it to
27
Sirius XM for objections. If the parties are unable to reach agreement, Flo & Eddie
28
will file a motion for approval of its class notice plan. Following the Courts ruling
- 21 -

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 monthslargely 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.
9
10
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.
11
A.
Flo & Eddies Proposal
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Event
Flo & Eddies Proposal
Parties meet and confer

regarding notice plan,
exchange drafts and/or
objections to the proposed
plan
January 15, 2016
Flo & Eddie to submit

agreed upon plan and
notice to the Court or file
its motion for approval of
the plan and notice
January 25, 2015
Hearing date for approval

of plan and notice
February 22, 2016 6
Cut-Off Date for Flo &

Eddie Discovery cutoff
March 21, 2016
26
27
28
The ruling on Flo & Eddies motion for approval of the class notice and plan will
set the distribution date and the opt-out period.
- 22 -

April 21, 2016
Cut-Off Date for Flo &

Eddie Motions to Compel
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
5
6
7
8
9
10
11
12
13
B.
Sirius XMs Proposal
Event
Sirius XMs Proposal
Parties meet and confer

regarding notice plan
18 days after scheduling conference

(January 8, 2016)
Plaintiff circulates
notice plan
21 days after meet and confer

(January 29, 2016)
Sirius XMs 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 XMs objections

(February 19, 2016)
Hearing regarding
notice plan
28 days after plaintiffs 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)
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
- 23 -

Dispositive motions cutoff

(June 21, 2016)
Motion in limine cutoff

(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
2
3
4
5
6
7
8
9
10
11
12
DATED:
December 14, 2015
13
GRADSTEIN & MARZANO, P.C.

By: /s/ Harvey Geller
Harvey Geller
Attorneys for Plaintiff
Flo & Eddie, Inc.
14
15
16
17
18
19
20
21
DATED:
December 14, 2015
OMELVENY & MYERS LLP

By: /s/ Daniel M. Petrocelli
Daniel M. Petrocelli
Attorneys for Defendant
Sirius XM Radio Inc.
22
23
24
25
26
27
28
- 24 -


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Case 2:13-cv-05693-PSG-RZ Document 266 Filed 12/14/15 Page 1 of 25 Page ID #:6706

HENRY GRADSTEIN (S.B. #89747)

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

FLO & EDDIE, INC., a California

Case No. 13-CV-5693 PSG (RZx)

Hon. Philip S. Gutierrez

December 21, 2015

Case 2:13-cv-05693-PSG-RZ Document 266 Filed 12/14/15 Page 2 of 25 Page ID #:6707

Management Statement following a conference of counsel on November 30, 2015.

without a license or authorization, was reproducing, distributing, and performing

and the putative class.

requested bifurcation of discovery to allow for early summary judgment on

certification discovery and ordering that liability discovery be completed by July

of fact with respect to reproduction. Sirius XM thereafter filed motions to either

Case 2:13-cv-05693-PSG-RZ Document 266 Filed 12/14/15 Page 3 of 25 Page ID #:6708

granted on May 27, 2015.

On June 2, 2015, Sirius XM filed an ex parte application to stay this action

class certification order, or in the alternative, to modify the scheduling order to

petition. On August 24, 2015, Sirius XM filed a petition for rehearing or

issued an order setting a scheduling conference for October 5, 2015. On September

RULE 26(F) JOINT REPORT

Case 2:13-cv-05693-PSG-RZ Document 266 Filed 12/14/15 Page 4 of 25 Page ID #:6709

The parties participated in a private mediation on June 12, 2015 and a

settlement conference with the Eleventh Circuits Mediation Center on October 6,

disagree as to whether additional settlement discussions would be productive at this

Flo & Eddies Position

proper discovery is completed of Sirius XMs improper settlement activities and

the Central District may prove effective.

Sirius XM does not believe that further settlement discussions would be

Sirius XMs Position

Eleventh Circuit settlement conference in October 2015 were both unsuccessful.

will be extremely helpful in informing the parties on their respective positions, is

RULE 26(F) JOINT REPORT

Case 2:13-cv-05693-PSG-RZ Document 266 Filed 12/14/15 Page 5 of 25 Page ID #:6710

statements above, which are factually and legally inaccurate.1

disagree as to whether and what additional discovery is warranted.

Flo & Eddies Position

Flo & Eddie is Entitled To Further Discovery.

RULE 26(F) JOINT REPORT

Case 2:13-cv-05693-PSG-RZ Document 266 Filed 12/14/15 Page 6 of 25 Page ID #:6711

opt-out once the stay is lifted.

In having these discussions and in consummating these settlements, Sirius

to have direct communications with class members regarding this litigation.

measures and remedies.

& Eddie intends to pursue discovery (both by requiring supplementation of prior

appropriate) with respect to the following categories:

1. Financial and usage information regarding Sirius XMs exploitation of

pre-1972 recordings in California from and after Sirius XMs last

supplementation of this information. This discovery is necessary to bring

SiriusXMs obligation to supplement its prior responses continues automatically

RULE 26(F) JOINT REPORT

Case 2:13-cv-05693-PSG-RZ Document 266 Filed 12/14/15 Page 7 of 25 Page ID #:6712

This discovery is necessary with respect to the damages calculation as

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.

members of the class concerning this litigation, settlement of the claims in