Case 2:15-cv-09929-BRO-RAO Document 53 Filed 04/25/16 Page 1 of 15 Page ID #:1390

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HENRY GRADSTEIN (89747)

hgradstein@gradstein.com
MARYANN R. MARZANO (96867)
mmarzano@gradstein.com
DANIEL B. LIFSCHITZ (285068)
dlifschitz@gradstein.com
GRADSTEIN & MARZANO, P.C.
6310 San Vicente Blvd., Suite 510
Los Angeles, California 90048
Telephone: 323-776-3100
MARC M. SELTZER (54534)
mseltzer@susmangodfrey.com
STEVEN G. SKLAVER (237612)
ssklaver@susmangodfrey.com
KALPANA D. SRINIVASAN (237460)
ksrinivasan@susmangodfrey.com
KRYSTA KAUBLE PACHMAN (280951)
kpachman@susmangodfrey.com
SUSMAN GODFREY L.L.P.
1901 Avenue of the Stars, Suite 950
Los Angeles, CA 90067-6029
Telephone: (310) 789-3100
Facsimile: (310) 789-3150
(See Signature Page for Additional Counsel
For Plaintiffs)
Attorneys for Plaintiffs Melissa Ferrick and Jaco Pastorius, Inc.

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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WESTERN DIVISION

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MELISSA FERRICK, individually and

doing business as Nine Two One Music
and Right On Records/Publishing; JACO
PASTORIUS, INC., and on behalf of all
others similarly situated

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v.

Plaintiffs,

SPOTIFY USA INC., a Delaware

corporation,

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Defendant.

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4280327v1/015144

Case No. 16-CV-180-BRO (RAOx)

PLAINTIFFS MELLISSA
FERRICK AND JACO
PASTORIUS, INC.S OPPOSITION
TO CROSS-MOTION OF
PLAINTIFFS LOWERY, ET AL.
TO CONSOLIDATE RELATED
CASES AND APPOINT INTERIM
LEAD COUNSEL
Date : May 16, 2016
Time : 1:30 p.m.
Crtrm : 14

Case 2:15-cv-09929-BRO-RAO Document 53 Filed 04/25/16 Page 2 of 15 Page ID #:1391

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DAVID LOWERY, VICTOR

KRUMMENACHER, GREG LISHER,
and DAVID FARAGHER, individually
and on behalf of himself and all others
similarly situated,

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v.

Plaintiff,

SPOTIFY USA INC., a Delaware

corporation,

Defendant.

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Case No. 15-cv-09929-BRO (RAOx)

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TABLE OF CONTENTS

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I.

INTRODUCTION .............................................................................................................. 1

II.

BACKGROUND ................................................................................................................ 4

III.

SUSMAN GODFREY AND GRADSTEIN & MARZANO ARE BEST ABLE

TO REPRESENT THE INTERESTS OF THE CLASS ..................................................... 6

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A.

Susman Godfrey and Gradstein & Marzano have extensive experience

representing plaintiffs in class action litigation ...................................................... 6

B.

Susman Godfrey and Gradstein & Marzano have thoroughly

investigated the claims in the Complaint ................................................................ 7

C.

Susman Godfrey and Gradstein & Marzano have the resources to best
represent the interests of the class ........................................................................... 9

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IV.

CONCLUSION ................................................................................................................. 11

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TABLE OF AUTHORITIES

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Cases

Anderson v. United States,

612 F.2d 1112 (9th Cir. 1979) .............................................................................. 9

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Biondi v. Scrushy,
820 A.2d 1148 (Del. Ch. 2003) ............................................................................. 8
Four In One Co., Inc. v. SK Foods,
2009 WL 747160 (E.D. Cal. 2009) ..................................................................... 10
In re Mun. Derivatives Antitrust Litig.,
252 F.R.D. 184 (S.D.N.Y. 2008) ......................................................................... 10
In re Processed Egg Products Antitrust Litig.,
302 F.R.D. 339 (E.D. Pa. 2014) ............................................................................ 6
Mendoza v. Casa de Cambio Delgado, Inc.,
No. 07CV2579(HB), 2008 WL 3399067 (S.D.N.Y. Aug. 12, 2008) ................... 6
Michelle v. Arctic Zero, Inc.,
No. 12CV2063-GPC NLS, 2013 WL 791145 (S.D. Cal. Mar. 1, 2013) ............ 8
Nowak v. Ford Motor Co.,
240 F.R.D. 355 (E.D. Mich. 2006) ............................................................... 3, 5, 8
Parkinson v. Hyundai Motor Am.,
Case No. CV 06-2553-AHS(MLGX), 2006 WL 2289801 (C.D. Cal. Aug. 7,
2006) ........................................................................................................................ 9
Wiener v. Dannon Co.,
255 F.R.D. 658 (C.D. Cal. 2009) .......................................................................... 7
Statutes
17 U.S.C. 301............................................................................................................ 9
Rules
Fed. R. Civ. P. 23 ........................................................................................................ 2
Fed. R. Civ. P. 23(g) .......................................................................................... passim
Fed. R. Civ. P. 23(g)(2) .......................................................................................... 2, 4
Fed. R. Civ. P. 23(g)(4) .............................................................................................. 2
Fed. R. Civ. P. 42(a) ............................................................................................... 7, 9

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I.

INTRODUCTION

Pending before this Court are two competing motions consisting of

alternative proposals for interim leadership in this class action. The first motion

was filed on April 4, 2016 and seeks appointment of two firms Susman Godfrey

L.L.P. (Susman) and Gradstein & Marzano, P.C. (G&M) as interim class

counsel for the class pursuant to Federal Rule of Civil Procedure 23(g). The

Susman/G&M proposed team would bring forward as interim lead counsel the

firms who have extensive and far-reaching experience in the underlying substantive

area of copyright infringement. And the proposed structure includes the only firms

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which have ever run a class action on behalf of plaintiffs, and the only firms which

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have been appointed by a Court as class counsel.

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Representing a plaintiff class is an area in which Susman/G&M has a

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demonstrated record of achieving real benefit for class members and leading some

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of the largest and most significant cases. For example, in the landmark Toyota

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MDL, where Judge Selna appointed Susman Godfrey co-lead sua sponte and

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affirmed that appointment after over 50 firms applied, the Court commented: Class

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counsel has consistently demonstrated extraordinary skill and effort. In re Toyota

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Motor Corp. Unintended Acceleration Mktg. Sales Practices, & Prods. Liab. Litig.,

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Case No. CV 10-ML-2151 (C.D. Cal.), Dkt. No. 3933 at 12. Judge McMahon in

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the Southern District of New York recently praised court appointed sole-lead

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counsel Susman Godfrey for achieving the best settlement pound for pound for the

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class that Ive ever seen. Fleisher, et al. v. Phoenix Life Ins. Co., Case No. CV 11-

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8405 (S.D.N.Y.) (Sept. 9, 2015 Tr. at 3). Judge Gutierrez appointed G&M as class

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counsel in that Courts ground-breaking class certification order on behalf of certain

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owners of sound recordings fixed prior to February 15, 1972 exploited by Sirius

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XM in Flo & Eddie, Inc. v. Sirius XM Radio, Inc., Case No. CV 13-5693.

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As its cross-motion implicitly recognizes, the Michelman & Robinson

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(M&R) firms experience lies in defending class actions rather than representing
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and advocating for a class of injured plaintiffs.

See, e.g., Cross-Motion at 3

(arguing that M&R has unsurpassed experience with class actions as defense

counsel); id. at 15 (emphasizing cases in which M&R has defeated certification

and obtained dismissal of class actions). According to its application, M&R has:

never before been appointed as class counsel,

never served on an executive committee, steering committee, or any other

facet of a leadership structure of complex class action, and

never litigated a class action on behalf of a plaintiff.

This case and the numerous absent class members affected by it are entitled

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to representation by firms with established and extensive experience in both the

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underlying legal area of copyright law and in representing plaintiffs through the

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procedural mechanism of a class action. Although M&R states that when

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appropriate it will try to call upon Susman/G&M to advise it how to best handle

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a plaintiff side class action, see Cross-Motion at 2 n.1, that only underscores why

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Susman/G&M should be lead counsel, not the other way around.

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To support its first ever class counsel appointment, M&R advances a series

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of arguments that do not bear on the proper inquiry under Rule 23 when

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considering class counsel appointment. First, M&R emphasizes the qualifications

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of one of its named plaintiffs, David Lowery, and suggests he prefers M&R over

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Susman/G&M, after interviewing both. Cross-Motion at 1-2, 4, 19-20. Rule 23(g),

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however, addresses the appointment of interim lead counsel, not plaintiff. There is

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no question that all competing counsels plaintiffs are adequate class

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representatives, but the issue before the Court under Rule 23(g)(4) is which counsel

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will best represent the interests of the entire class, not any particular plaintiff. If

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more than one adequate applicant seeks appointment, the court must appoint the

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applicant best able to represent the interests of the class. Fed. R. Civ. P. 23(g)(2).

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Second, M&R notes that it was the first to file an action against Spotify by

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a mere 11 days, but [w]hether someone was first to file by itself has little to do
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with who is the best qualified to lead the case, and does not satisfy the requirements

of Rule 23(g). Nowak v. Ford Motor Co., 240 F.R.D. 355, 365 (E.D. Mich. 2006).

Consideration as to the best appointment of class counsel involves more than who

raced to the courthouse first to get on file. G&M has been investigating and

researching the allegations and legal theories in this case for years, long before

M&R. In 2013, G&M filed a novel, individual case on behalf of a songwriter and

copyright owner against MediaNet Digital. See Aimee Mann v. Medianet Digital,

Inc., Case No. CV 13-05269-GHK (FFMx) (the 2013 Action). For the Courts

convenience, a copy of G&Ms 2013 Action (without exhibits) is attached to this

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opposition as Exhibit 1.

See also id. (Dkt. 13, First Amended Complaint).

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MediaNet is a distributor of streaming music, online radio, and music downloads to

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companies like MTV, Yahoo Music, Time Warner Cable, and others. See also id.,

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Nov. 27, 2013 Order (Dkt. 20) at 1. G&Ms 2013 Action alleged violations of the

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Copyright Act for the digital music services failure to pay mechanical rights

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which is the core set of allegations at issue here, and which eventually led to this

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litigation. The case was resolved on confidential terms in 2015. Id. (Dkt. 46-48).

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Later that year, it was widely reported in the press that Spotify was in a dispute

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with Victory Records over Spotifys failure to pay mechanical royalties. See, e.g.,

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Rolling Stone Magazine, Oct. 20, 2015, Spotify Drops Victory Records Catalog

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Over Disputed Royalties.1 G&M had numerous meetings and telephone calls with

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catalogue owners and their representatives to discuss filing a class action, and, as

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M&R acknowledges, met with Mr. Lowery as well. Mr. Lowery, in turn, then had

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a conversation with M&R who rushed to file its action first.

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Third, M&R has pledged to donate 10% of any fees it recovers to an

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unspecified charity that supports starving artists, subject to approval of the court.

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That, too, is not a factor under Rule 23(g). While it is laudable when anyone

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chooses to donate money to charity, and the lawyers at Susman/G&M certainly do

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http://www.rollingstone.com/music/news/spotify-drops-victory-records-catalog-over-disputed-royalties-20151020

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that privately with their own compensation from whatever the source, it is not and

should not be a factor for determining the best qualified class counsel. In this

situation, when the Court is selecting who should be lead counsel for the class,

M&Rs proposal provides no benefit to the class and could undermine the incentive

to represent the class adequately. The reason a Court awards fees to lawyers in a

class action on a contingency basis is to incentivize the lawyers to litigate

vigorously for the class. Charitable motive notwithstanding, a pledge to donate fees

paid for by the class is not relevant to whether M&R is the best firm to represent

the interests of the class.

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Susman/G&M respectfully request appointment as interim lead counsel to

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give all absent class members the plaintiff-side class action experience, skill, and

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attention that this case deserves, and because Susman/G&M are best able to

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represent the interests of the class. Fed. R. Civ. P. 23(g)(2).

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II.

BACKGROUND

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Susman Godfrey and Gradstein & Marzano have a proven track record of

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success in plaintiff-side class action litigation and music industry litigation. From

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the historic settlement in In re Toyota Motor Corp. Unintended Acceleration

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Marketing Sales Practices, and Product Liability Litigation to achieving the

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landmark certification and music-related intellectual property rulings in Flo &

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Eddie, Inc. v. Sirius XM Radio, Inc., Case No. CV 13-05693-PSG (RZx) action here

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in the Central District of California, Susman Godfrey and Gradstein & Marzano are

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veteran plaintiff-side litigators in the field.

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Defendant Spotify, Inc.s (Defendant) misconduct became publicly known

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when Audiam, a technology company that specializes in tracking down unpaid

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royalties online, began matching master recording royalty payment statements

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against music publishing payment statements. Though M&Rs application takes

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sole credit for investigating the allegations at issue, in fact, M&R cited an article in

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its Complaint that highlighted Audiams investigation into how songwriters were
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being underpaid by Spotifys streaming services. See Dkt. 1 24. After this

information became publicly available, Susman/G&M conducted a thorough

investigation into Spotifys misconduct.

participants to gain a broader understanding of Spotifys business model and

uncovered a wealth of information that was not previously publicly known. For

example, Susman/G&M learned that Spotify outsourced its licensing and

accounting obligations to the Harry Fox Agency (HFA), a music publishing

rights organization that was ill-equipped to obtain licenses for all of the songs

embodied in the phonorecords distributed by Spotify. See Ferrick, Dkt. 39 6.

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Neither Spotify nor HFA directly licensed or timely issued notices of intent for

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many of the musical compositions embodied in phonorecords that Spotify was

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reproducing and distributing on a daily basis as part of the Service. Id. This

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information is critical to understanding how Defendant failed to obtain licenses and

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the scope of their infringement.

Susman/G&M interviewed industry

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Susman/G&M have vigorously prosecuted the case for the reasons already

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articulated in its opening motion, as a result of G&Ms work in the 2013 Action,

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and by, inter alia,

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serving jurisdictional discovery and negotiating with Spotify as to the

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scope of that discovery, in order for the class to be in the best position

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possible to respond to Spotifys anticipated motions to dismiss, transfer,

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and strike the class action allegations, and

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Bringing order and structure to these actions by:

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o filing the only notice of related case bringing to the Courts

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attention that the Ferrick action and Lowery action were pending in

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different courts. Dkt. 6 (filed Jan. 8, 2016). Counsel for Lowery

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failed to take that basic step in its action, despite the continuing

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duty requirements of L.R. 83-1.3.3;

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o filing the first and only request for a status conference and proposed

agenda to address consolidation and appointment of interim class

counsel. Dkt. 21 & 32 (filed Feb. 18 & 29, 2016); and

o filing the first motion to consolidate and appoint interim class

counsel, Dkt. 47 (filed April 4, 2016), seeking to ensure interim

class counsel file a consolidated complaint and handled the briefing

on Spotifys motion to dismiss, transfer, and/or strike class

allegations so the Court would not receive competing briefing on

duplicative motions, as would otherwise have occurred in the

absence of the motion.

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III.

SUSMAN GODFREY AND GRADSTEIN & MARZANO ARE BEST

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ABLE TO REPRESENT THE INTERESTS OF THE CLASS

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A.

Susman Godfrey and Gradstein & Marzano have extensive

experience representing plaintiffs in class action litigation

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Susman Godfrey and Gradstein & Marzano are uniquely equipped to serve as

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class counsel because both firms have significant experience representing plaintiffs

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in class action litigation, in contrast with representing defendants in class action

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litigation.

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experience in handling class actions, other complex litigation, and claims of the

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type asserted in the action. Other courts have considered whether a law firm

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applying to be lead counsel has litigated similar cases on behalf of plaintiffs. See

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Mendoza v. Casa de Cambio Delgado, Inc., No. 07CV2579(HB), 2008 WL

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3399067, at *7 (S.D.N.Y. Aug. 12, 2008) (finding class counsel to be adequate and

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granting motion for class certification); In re Processed Egg Products Antitrust

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Litig., 302 F.R.D. 339, 350 (E.D. Pa. 2014) (considering that counsel was a well-

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respected law firms in the plaintiffs class action bar in evaluating the 23(g)

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factors). See also Wiener v. Dannon Co., 255 F.R.D. 658, 672 (C.D. Cal. 2009)

Rule 23(g) recognizes the importance of considering counsel's

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(focusing on the firms experience in litigating consumer class actions when

analyzing 23(g) factors).

Susman Godfrey and Gradstein & Marzanos experience is detailed in the

Motion to Consolidate Relates Cases Pursuant to Fed. R. Civ. P. 42(a) and to

Appoint Interim Co-Lead Class Counsel Pursuant to Fed. R. Civ. P. 23(g). See

Ferrick, Dkt. 48. Both Susman Godfrey and Gradstein & Marzano have a wealth of

experience in litigating class actions on behalf of plaintiffs and are best equipped to

provide the class with the best possible representation to further the interests of the

class.

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B.

Susman Godfrey and Gradstein & Marzano have thoroughly

investigated the claims in the Complaint

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Susman/G&M have invested substantial time and effort into researching the

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claims, analyzing Spotify, and determining the scope of the infringing conduct at

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issue. Before the first complaint was filed, counsel interviewed numerous industry

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participants to confirm the theory of the case, develop the allegations, and

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understand the industry. Indeed, the investigation went beyond the information that

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was published in publicly available articles and unearthed the role of HFA in

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Defendants misconduct. Defendant outsourced its licensing and accounting

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obligations to HFA, which failed to license or issue timely notices of intent for the

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musical records that that Spotify was reproducing and distributing on a daily basis

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as part of the Service. See Ferrick, Dkt. 39 6. Given that Defendants actions

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alleged in this case pertains to its reproduction and distribution of music without a

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license, this information is critical to understanding Defendants wrongdoing.

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Susman/G&M have continued their investigation since the cases were filed. They

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have worked and consulted with a leading expert to study class member

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compensation and possible methods and data sources for assessing Spotifys

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conduct and damages.

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Susman/G&M also have engaged Defendant in all steps required under the

Federal Rules of Civil Procedure, Local Rules, and Standing Orders of this Court.

They already served discovery on Spotify, began negotiations on an operative

protective order to govern production of documents in the action, and took the first

steps in the related actions by requesting a status conference and scheduling order

to bring efficiency to the matters.

Counsel for Lowery argue in their motion they should be appointed lead

counsel because they were the first to file a complaint. Courts within the Ninth

Circuit have acknowledged the question of who was first to file should only be

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considered when the factors for class counsel do not tilt heavily in either direction

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and there is a need for an objective tie-breaker. See Michelle v. Arctic Zero, Inc.,

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No. 12CV2063-GPC NLS, 2013 WL 791145, at *2 (S.D. Cal. Mar. 1, 2013)

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(noting that the question of which law firm was first to file was not a relevant factor

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in selecting class counsel because one firm was better equipped to serve as class

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counsel). See also Biondi v. Scrushy , 820 A.2d 1148, 1159 (Del. Ch. 2003)

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(noting that the mere fact that a lawyer filed first for a representative client is

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scant evidence of his adequacy and may, in fact, support the contrary

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inference.); Nowak v. Ford Motor Co., 240 F.R.D. 355, 365 (E.D. Mich. 2006)

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([w]hether someone was first to file by itself has little to do with who is the best

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qualified to lead the case, and ... [t]o hold otherwise would further encourage a

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rush to the courthouse in ... class action cases).

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M&R also cites in support of its motion the request in its complaint for a

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mandatory injunction requiring that Spotify pay for the services of a third party

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auditor to identify the owners of Works at issue. Cross-Motion at 10. Rather than

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supporting their appointment, this request actually undermines their motion because

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it endangers classwide claims. According to M&R, it is unable to identify class

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members without obtaining a Court order requiring Spotify to pay for and hire an

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auditor to do so. That is not a prayer for relief that experienced, plaintiff-side class
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action counsel would allege. See also Anderson v. United States, 612 F.2d 1112,

1115 (9th Cir. 1979) (mandatory injunctions generally are not granted unless

extreme or very serious damage will result and are not issued in doubtful cases or

where the injury complained of is capable of compensation in damages.)

(quotations omitted) The Susman/G&M complaint takes a different approach,

consistent with the results of the pre- and post-filing work that Susman/G&M

conducted. See, e.g., Ferrick, et al. Amended Complaint 25 (class members can

be readily located).

In a hurry to file preemptively, M&Rs original complaint in Lowery also

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alleged a state law claim for unfair business practices under Cal. Civil Code

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17200. Susman/G&M raised in its notice of related cases that the claim under

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California state law was preempted under 17 U.S.C. 301. (Ferrick Dkt. 6, filed

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1/8/16). Only after Susman/G&M raised this issue did M&R file a stipulation to

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dismiss the state law claim. (Lowery Dkt. 22, filed 2/12/16).

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C.

Susman Godfrey and Gradstein & Marzano have the resources to

best represent the interests of the class

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Susman/G&M have more experience and greater resources, and are better

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equipped to represent the class. As indicated in the Motion to Consolidate Relates

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Cases Pursuant to Fed. R. Civ. P. 42(a) and to Appoint Interim Co-Lead Class

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Counsel Pursuant to Fed. R. Civ. P. 23(g), Ferrick, Dkt. 48, Susman/G&M have the

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necessary roster of talented attorneys, capable professional staff, and monetary

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resources, to advance the classs interest efficiently and aggressively and to pursue

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all necessary avenues of discovery. Together, Susman/G&M comprise a leadership

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structure equal to the challenges they will face in this litigation, while at the same

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time ensuring that the actions progress in the most efficient and professional

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manner.

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AHS(MLGX), 2006 WL 2289801, at *3 (C.D. Cal. Aug. 7, 2006) (appointing the

See Parkinson v. Hyundai Motor Am., Case No. CV 06-2553-

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firms that collectively, have more experience and greater resources to commit to

representing any class that may be certified).

M&R also contends it is better equipped to serve as lead counsel because

M&R is a single firm. However, given the very substantial law firm and corporate

treasury arrayed against the class, the two firm structure proposed by Susman/G&M

will be best equipped to handle the case. See In re Mun. Derivatives Antitrust

Litig., 252 F.R.D. 184, 187 (S.D.N.Y. 2008) (appointing three firms as lead

counsel, finding that their collective resources would be required to take on

defendants substantial financial and legal resources).

Contrary to M&Rs

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suggestion otherwise, duplication of effort is not a concern when two co-lead firms

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are appointed to serve as class counsel. Four In One Co., Inc. v. SK Foods, 2009

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WL 747160 at *3 (E.D. Cal. 2009) (selecting two co-lead firms as class counsel).

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Susman/G&M have also agreed to assign primary responsibly for specific tasks to a

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specific firm. For example, a single firm will have primary responsibility for

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preparing each brief (or, as appropriate, major sections of a brief), and a single firm

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will be in charge of conducting discovery against a particular third-party witness.

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Susman/G&M will report their time and expenses on a monthly basis to each other,

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and those reports will be detailed in nature in conformance with the practice in

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other class action litigation, such as the Toyota unintended acceleration class action

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litigation mentioned above.

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monthly and strike any duplicative or unnecessary billings.

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also agreed to the following additional measures to ensure the efficient and cost-

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effective prosecution of these actions:

1.

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The firms will review each others time records

Susman/G&M have

As a general rule, only one attorney from a single plaintiffs law

firm will attend fact depositions.

2.

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No more than one lawyer from one of the plaintiffs co-lead law

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firms will attend discovery hearings, except where deemed necessary because of

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special circumstances.
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3.

No more than one lawyer from each co-lead firm will bill for

time to attend significant hearings, such as hearings on motions to dismiss, for class

certification, or summary judgment, except the lawyer taking the lead at the hearing

may also bring a more junior lawyer.

4.

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Generally, no more than one plaintiffs lawyer will participate in

meet and confer sessions with defendant.

These are similar case management billing proposals that Judge Koh adopted

when she appointed Susman Godfrey as co-lead with two other law firms in In re

Animation Workers Antitrust Litigation, Case No. CV 14-4062 (N.D. Cal.), Dkt. 54.

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IV.

CONCLUSION

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For the foregoing reasons, Susman Godfrey and Gradstein & Marzano

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respectfully oppose the cross-motion of Michelman & Robinson for appointment as

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interim class counsel, and respectfully request that the Court appoint Susman

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Godfrey and Gradstein & Marzano as interim class counsel.

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Dated: April 25, 2016

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HENRY GRADSTEIN
MARYANN R. MARZANO
DANIEL LIFSCHITZ
GRADSTEIN & MARZANO, P.C.

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MARC M. SELTZER
STEVEN G. SKLAVER
KALPANA D. SRINIVASAN
KRYSTA KAUBLE PACHMAN
SUSMAN GODFREY L.L.P.

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STEPHEN E. MORRISSEY (187865)

smorrissey@susmangodfrey.com
SUSMAN GODFREY L.L.P.
1201 3rd Avenue, Suite 3800
Seattle, WA 98101
Telephone: (206) 373-7383
Facsimile: (206) 516-3883

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By: /s/ Steven G. Sklaver

Steven G. Sklaver
Attorneys for Plaintiffs Melissa
Ferrick and Jaco Pastorius, Inc.

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4280327v1/015144

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