Professional Documents
Culture Documents
#:20380
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Plaintiffs,
v.
SIRIUS XM RADIO INC., a Delaware
corporation, and DOES 1 through 10,
Defendants.
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SIRIUS XMS MEM. OF
CONTENTIONS OF FACT & LAW
TABLE OF CONTENTS
Page
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I.
INTRODUCTION ........................................................................................... 1
II.
A.
B.
C.
D.
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III.
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B.
C.
IV.
DAMAGES ................................................................................................... 17
V.
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VI.
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A.
B.
C.
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i
TABLE OF AUTHORITIES
Page(s)
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Cases
ABS Entmt, Inc. v. CBS Corp.,
2016 WL 4259846 (C.D. Cal. May 30, 2016)................................................... 2, 8
A&M Records, Inc. v. Heilman,
75 Cal. App. 3d 554 (1977) ................................................................................. 19
City Sols., Inc. v. Clear Channel Commns,
365 F.3d 835 (9th Cir. 2004) ............................................................................... 22
Cmty. Assisting Recovery, Inc. v. Aegis Sec. Ins. Co.,
92 Cal. App. 4th 886 (2001) .................................................................................. 6
Durell v. Sharp Healthcare,
183 Cal. App. 4th 1350 (2010) .............................................................................. 5
Fabricon Prods. v. United Cal. Bank,
264 Cal. App. 2d 113 (1968) ............................................................................... 15
Grisham v. Philip Morris, Inc.,
2009 WL 9102320 (C.D. Cal. Dec. 3, 2009) ...................................................... 23
Hodge v. Super. Ct.,
145 Cal. App. 4th 278 (2006) .............................................................................. 23
In re First Alliance Mortg. Co.,
2003 WL 21530096 (C.D. Cal. June 16, 2003)..................................................... 4
Integrated Sports Media, Inc. v. Mendez,
2014 WL 3728594 (N.D. Cal. July 28, 2014) ............................................... 18, 19
J&J Sports Prods., Inc. v. Medina,
2014 WL 641919 (E.D. Cal. Feb. 18, 2014) ...................................................... 19
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Lee v. Hanley,
61 Cal. 4th 1225 (2015) ......................................................................................... 7
Lopez v. Larson,
91 Cal. App. 3d 383 (1979) ................................................................................. 16
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TABLE OF AUTHORITIES
(continued)
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TABLE OF AUTHORITIES
(continued)
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Page(s)
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Other Authorities
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Judicial Council of California Civil Jury Instructions (2015) 3931 ................... 16, 23
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Memorandum of Contentions of Fact and Law pursuant to Local Rule 16-4 and this
I.
INTRODUCTION
Flo & Eddie filed this lawsuit in August 2013 seeking to establish, for the
first time in history, that California law grants owners of sound recordings fixed
prior to 1972 a right to control and demand compensation for performances of those
recordings after they have been sold to the public. The Court resolved that issue of
first impression in September 2014, ruling that California Civil Code Section 980
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that Sirius XM was liable to Flo & Eddie for performing its pre-1972 recordings
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without authorization. The Court subsequently granted Flo & Eddies motion for
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2016. The Court has not yet determined Sirius XMs liability as to absent class
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members. Sirius XM contends that trial in this case will involve a determination of
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those recordings by Sirius XM during the relevant period, and (3) resulting harm.
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Sirius XM will challenge those claims and assert defenses on various grounds.
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For example, Sirius XM will contest ownership on the grounds that class
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members cannot establish chain of title or ownership of recordings that (1) are
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owned by record companies with whom Sirius XM has written license and
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settlement agreements or record companies who opted out of the class in this case,
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(2) were re-mastered after 1972 and constitute post-1972 derivative works pursuant
SIRIUS XMS MEM. OF
CONTENTIONS OF FACT & LAW
to ABS Entmt, Inc. v. CBS Corp., 2016 WL 4259846 (C.D. Cal. May 30, 2016), or
(3) have been abandoned and are now in the public domain.
Sirius XM will also prove that class members authorized it to perform their
pre-1972 recordings. For more than a decade, Sirius XM has openly and
contrary, many class membersincluding Flo & Eddiewanted and even actively
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promote their music. The reason is clear: class members benefited from Sirius
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XMs airplay through increased record sales and artist exposure. This and similar
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evidence negates plaintiffs claims of liability and damages and supports Sirius
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XMs defenses.
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appropriate measure of damages. Given the nature of both the property right and
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infringement alleged here, Sirius XM contends that California law allows only for
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damages in the form of lost licensing royalties (if any). Sirius XM has filed a
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gross revenue without deduction of costson the ground that it is inconsistent with
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position that the Court has ruled that plaintiffs damages modeland only
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in limine to preclude Sirius XM from contesting their model and presenting its own.
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(2) damages accruing in the two years before plaintiffs complaint was filed, as a
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claims, and (3) assertion of plaintiffs damages model under their statutory unfair
Depending on the Courts disposition of these motions, the jury may be asked to
II.
A.
On August 1, 2013, Flo & Eddie filed a putative class action complaint
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asserting that California Civil Code Section 980(a)(2) (Section 980) and
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The complaint asserted three causes of action, styled as (1) Violation of California
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Civil Code 980(a)(2) and Common Law Misappropriation, (2) Statutory and
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On June 9, 2014, prior to seeking class certification, Flo & Eddie moved for
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summary judgment on liability. Doc. 69-1. On September 22, 2014, the Court
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granted partial summary judgment on Flo & Eddies performance claims, holding
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that Section 980 grants pre-1972 recording owners a performance right and that
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Sirius XM was liable to Flo & Eddie for playing Flo & Eddies recordings
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without authorization. Docs. 117, 175 at 1. The Court declined to grant summary
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judgment on Flo & Eddies reproduction claims, ruling that those claims turn on
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disputed factual issues. Doc. 117 at 12. Plaintiffs now have abandoned those
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On May 27, 2015, the Court granted Flo & Eddies motion for class
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Court has not determined Sirius XMs liability as to any class member other than
of Sirius XM on plaintiffs common law unfair competition claim and request for
punitive damages. Doc. 411. The Court recognized that the central issue in this
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unavailable as a matter of law. Id. at 3 & n.1 (noting that the rationale behind not
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allowing punitive damages in cases of first impression is that the requisite intent or
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no right or duty has been recognized) (quoting In re First Alliance Mortg. Co.,
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2003 WL 21530096, at *10 (C.D. Cal. June 16, 2003)). The Court denied Sirius
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XMs request for summary judgment on disgorgement on the ground that Flo &
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Eddie is not seeking disgorgement. Id. at 6. After that ruling, plaintiffs submitted a
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supplemental damages report confirming the sole measure of damages they seek is
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B.
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and Common Law Misappropriation: Plaintiffs allege that Section 980 grants
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Business and Professions Code Section 17200 (Section 17200). Id. 24-28. As
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noted below, this is an equitable claim that would be tried to the Court after any
own use and financial gain, and thereby converted plaintiffs ownership rights in
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(2)
(3)
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(4)
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See U.S. Golf Assn. v. Arroyo Software Corp., 69 Cal. App. 4th 607, 618 (1999)
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(citations omitted).
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liability under the unlawful prong of Section 17200, a plaintiff must prove the
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following elements:
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See Durell v. Sharp Healthcare, 183 Cal. App. 4th 1350, 1361 (2010) (An
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unlawful business practice under Business and Professions Code section 17200 is
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an act or practice, committed pursuant to business activity, that is at the same time
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(1)
(2)
to consumers.
See Cmty. Assisting Recovery, Inc. v. Aegis Sec. Ins. Co., 92 Cal. App. 4th 886, 894
(2001).
As to both prongs, equitable relief will only be awarded under Section 17200
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and (2) that loss resulted from the unfair competition. See Cal. Bus. & Prof. Code
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17203 (The court may make such orders or judgments as may be necessary to
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prevent the use or employment by any person of any practice which constitutes
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any person in interest any money or property, real or personal, which may have
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(1)
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(2)
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property by:
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(a)
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(b)
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(c)
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(d)
destroying it, or
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(e)
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(3)
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(4)
(5)
1225, 1240 (2015) (The elements of a conversion claim are: (1) the plaintiffs
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plaintiffs cannot meet their burden to establish class-wide liability on this cause of
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action. Among other reasons, many class members (a) cannot prove ownership of
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recordings, and/or (c) suffered no harm. Key evidence on these points includes, but
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Ownership.
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recording owners with whom Sirius XM has written direct licenses, and
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to own are in fact owned by the Capitol Records plaintiffs, Sirius XMs
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including, for example, testimony from class member Codigo that there
are constant conflicts between labels and Codigo has been involved in
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re-mastered after 1972 and constitute post-1972 derivative works that are
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recordings that have been abandoned and/or are in the public domain. For
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Entertainment and former class member David Freeman that certain pre-
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without permission.
Documents and testimony showing that class members cannot establish
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Authorization/Consent.
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Music Programming, Sirius XM) that, inter alia, Sirius XM and its
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In light of the recent ruling in CBS, 2016 WL 4259846, plaintiffs cannot satisfy
their burden to establish ownership of pre-1972 recordings performed by Sirius XM
to the extent those recordings were re-mastered after 1972 and contain original,
post-1972 content. Sirius XM will address this point in its forthcoming opposition
to plaintiffs Motion in Limine No. 7.
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recording owners for more than a decadeand never hid that fact. Mr.
Blatter will also testify that before this lawsuit, no class member ever
Testimony of Flo & Eddie principals Mark Volman and Howard Kaylan
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that for nearly 50 years, Flo & Eddie has known that AM/FM radio
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paying royalties, and that Flo & Eddie has known the same about Sirius
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Testimony of class members who claim to have known they had a right to
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example, Sirius XM will present testimony that Codigo has been aware of
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Fuel2000 will testify that it has been aware of Sirius XMs performances
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for 5-10 years, and supposedly knew that it had a performance right, but
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take just a few examples, Freeman will testify that he knows many Sirius
recordings to play all the time, and has no objection to Sirius XMs
several Sirius XM DJs and regularly sends them recordings to play; Rural
Rhythm will testify that it has provided Sirius XM with copies of its
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Records will testify that it sent copies of albums to Sirius XM DJs with
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the intention that they be played; and VP Records will testify that it has
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XM, during which their pre-1972 recordings (and others) were performed,
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No Harm.
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Testimony of Mr. Volman and Mr. Kaylan that they are unable to identify
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any lost sale, diminished license fee, or other economic harm as a result of
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Sirius XMs use of their recordings, and that Sirius XMs airplay has
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Rhythm, that they benefitted from Sirius XMs performances in the form
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at trial will show, plaintiffs cannot meet their burden to establish class-wide
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liability on this cause of action. Among other reasons, many class members (a)
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of their pre-1972 recordings, and/or (c) did not lose money or property (and,
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to the unfair prong, the challenged does not offend established public policy and
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recognized, no one knew that California law provides pre-1972 recording owners a
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performance until its September 2014 ruling. Doc. 411 at 3-6; see also Doc. 234 at
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Ownership.
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Authorization/Consent.
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No Loss of Money/Property.
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plaintiffs cannot meet their burden to establish class-wide liability on this cause of
action. Among other reasons, many class members (a) cannot prove ownership of
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recordings, (c) suffered no harm, and/or (d) Sirius XM did not interfere with any
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class members property rights. Key evidence on these points includes, but is not
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limited to:
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Ownership.
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Authorization/Consent.
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No Harm.
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Rhythm, that they benefitted from Sirius XMs performances in the form
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Testimony of Flo & Eddie principals Mark Volman and Howard Kaylan
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III.
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decades-long delay in asserting their putative rights was neither reasonable nor
excusable, and has prejudiced Sirius XM. See generally Doc. 38 37.
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waived any right to control performances of their pre-1972 recordings by, for
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are barred from challenging its performances of their pre-1972 recordings given
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that Sirius XM has openly and continuously performed those recordings for more
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than a decade, plaintiffs have been aware of those performances, and plaintiffs
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plaintiffs First and Third Causes of Action are governed by California Civil
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Procedure Code Section 339, which provides a two-year statute of limitation and
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limits plaintiffs recovery (if any) to damages accruing on or after August 1, 2011.
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Cal. Bus. & Prof. Code 17208, but Section 17200 only provides for restitution of
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monetary losses, and plaintiffs damages model neither measures nor seeks
that plaintiffs failed to take reasonable measures to avoid the harm alleged, and that
benefits of airplay and the unique exposure of the works to a national audience on
satellite radio, each of which drives record sales and increases artist exposure. See
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B.
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(1)
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(2)
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(3)
prejudice to defendant.
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See Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 997 (9th Cir. 2006).
Second Affirmative DefenseWaiver: To establish the affirmative
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its natural import, is so inconsistent with the intent to enforce the right in question
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as to induce a reasonable belief that such right has been relinquished. See Rubin
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v. L.A. Fed. Sav. & Loan Assn, 159 Cal. App. 3d 292, 298 (1984) (citation
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omitted).
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(1)
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(2)
plaintiff must intend that his conduct shall be acted upon, or must so
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act that defendant had the right to believe that it was so intended;
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(4)
See Ware Supply Co. v. Sacramento Sav. & Loan Assn, 246 Cal. App. 2d 398, 407
(1966).
Fourth Affirmative DefenseImplied License: To establish the
affirmative defense of implied license, a defendant must prove the following
elements:
(1)
(2)
See Zellers v. State, 134 Cal. App. 2d 270, 273-74 (1955) (An implied license is
one which is presumed to have been given from the words, acts or passive
acquiescence of the party authorized to give it.).
Fifth Affirmative DefenseStatute of Limitation: To establish the
affirmative defense of statute of limitations, a defendant must prove that plaintiffs
alleged harm occurred before the applicable statute of limitation. Compare Judicial
Council of California Civil Jury Instructions (2015) 338 (Affirmative Defense
Statute of Limitations). Here, California Code of Civil Procedure Section 339 bars
damages for injuries occurring on or before August 1, 2011 as to plaintiffs
misappropriation and conversion claims, see Fabricon Prods. v. United Cal. Bank,
264 Cal. App. 2d 113, 117 (1968) (claim for conversion of intangible property
rights subject to Section 339); and California Business and Professions Code
Section 17208 bars damages for injuries occurring on or before August 1, 2009 as
to plaintiffs Section 17200 claim.
Sixth Affirmative DefenseMitigation of Damages: To establish the
affirmative defense of mitigation of damages, defendant must prove either
(a) plaintiff could have avoided the harm asserted with reasonable efforts or
expenditures; or (b) defendant conferred a special benefit to plaintiff. See Judicial
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(Property Damage)); Lopez v. Larson, 91 Cal. App. 3d 383, 403 (1979) (It is no
doubt true that plaintiff had a duty to mitigate damages by accepting other available
employment; however, in the event of trial, defendant would have borne the burden
of proving that the claimed damages were avoidable.); see also Turpin v. Sortini,
31 Cal. 3d 220, 236-37(1982) ([w]hen the defendant's tortious conduct has caused
harm to the plaintiff ... and in so doing has conferred a special benefit to the interest
of the plaintiff that was harmed, the value of the benefit conferred is considered in
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C.
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class members delayed in asserting their purported rights, and that delay was not
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reasonable or excusable and prejudiced Sirius XM. Key evidence on these points
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Financial Officer, Sirius XM) that, inter alia, Sirius XM invested billions
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plaintiffs waived any right to control performances of their pre-1972 recordings by,
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for example, soliciting Sirius XM to perform those recordings and failing to object
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to Sirius XMs performances. Key evidence on these points includes, but is not
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limited to:
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plaintiffs are barred from challenging Sirius XMs performances of their pre-1972
recordings given that Sirius XM has openly and continuously performed those
recordings for more than a decade, plaintiffs have been aware of those
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Testimony of Flo & Eddie principals Mark Volman and Howard Kaylan
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including David Freeman, Curb Records, and Rural Rhythm, that they
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trial will show, damages accruing before August 1, 2011 are barred by the
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applicable statute of limitation. Key evidence includes, but is not limited to:
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trial will show, plaintiffs failed to take reasonable measures to avoid the harm
promotional benefits of airplay and the unique exposure of the works to a national
audience on satellite radio, which drive record sales and increases artist exposure.
Testimony of Flo & Eddie principals Mark Volman and Howard Kaylan
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including David Freeman, Curb Records, and Rural Rhythm, that they
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IV.
DAMAGES
The parties have a dispute concerning the applicable measure of damages at
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trial, and both have filed motions in limine on this issue. California law is clear that
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the damages for plaintiffs causes of action must be calculated by reference to the
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recordings) at the time it was used. See Cal. Civ. Code 3336, 3333.
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As set forth in Sirius XMs Motion in Limine No. 1 (Doc. 464), the proper
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measure of damages is a reasonable license fee, which accurately accounts for the
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value that a willing buyer would have paid for a non-exclusive performance
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right. See Williams v. Weisser, 273 Cal. App. 2d 726, 743 (1969) (awarding
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3728594, at *5 (N.D. Cal. July 28, 2014) (damages for conversion and
distribution rights for sporting event is measured by denial of the license fee to
which [plaintiff] would otherwise have been entitled); J&J Sports Prods., Inc. v.
Medina, 2014 WL 641919, at *4-5 (E.D. Cal. Feb. 18, 2014) (conversion of
as Defendants).
Plaintiffs contend that the proper measure of damages is Sirius XMs gross
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Heilman, 75 Cal. App. 3d 554 (1977), and Lone Ranger Television, Inc. v. Program
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Radio Corp., 740 F.2d 718 (9th Cir. 1984), but those cases only allowed such a
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recovery given their unusual facts. In Heilman, the court specifically discussed that
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the defendant failed to prove its expenses due to inaccurate and incomplete
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books, a reference that would make no sense if the appropriate form of damages
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forbid deduction of costs. 75 Cal. App. 3d at 570 n.11. And in Lone Ranger, the
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support in California law under the facts of this case. At most, plaintiffs may seek
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to measure damages by reference to Sirius XMs net profits, but only upon an
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to and would have made those same profits had Sirius XM not converted or
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misappropriated their property. See Lueter v. State of Cal., 94 Cal. App. 4th 1285,
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1301-02 (2002); Newhart v. Pierce, 254 Cal. App. 2d 783, 794 (1967). Plaintiffs
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have made no such showing, nor can they. No logical reason exists to use Sirius
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XMs gross revenue (or even its net profits) as a measuring stick for plaintiffs
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damages because such revenue and profits do not reasonably measure the value of
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the performance rights allegedly taken from plaintiffs. See Tyrone Pac. Intl Inc. v.
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the date of the Courts summary judgment ruling, which established, for
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the first time, that pre-1972 recording owners have a right under
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UMG Recordings, Inc., Warner Music Group Corp., and ABKCO Music
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& Records, Inc. (the Major Labels) and Sirius XMs direct license
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settlement and Direct Licenses, and (3) the terms of and amounts payable
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agreements and royalty rates specified in those agreements (if any) for
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448.
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did not comply with the requirements of the approved class notice
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Expert discovery has not yet closed, and the parties are continuing to
exchange objections and meet and confer concerning exhibits, witnesses, and
deposition testimony.
VI.
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the Court. There may be additional issues for the Court to resolve after the trial,
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A.
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Sirius XM identifies below the causes of action and affirmative defenses that
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are triable to the jury. Plaintiffs entitlement to legal damages, see Judicial Council
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Liability Contested), and the appropriate amount of damages (if any), see Open
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Text S.A. v. Box, Inc., 2015 WL 466815, at *2 (N.D. Cal. Jan. 28, 2015), would also
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Clear Channel Commns, 365 F.3d 835, 842 (9th Cir. 2004).
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Smithwick v. Pac. Elec. Ry. Co., 206 Cal. 291, 301 (1929).
Sirius XMs Fifth Affirmative Defense of Statute of Limitation, see
3, 2009).
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B.
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Sirius XM identifies below the cause of action and affirmative defense that
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may be triable to the Court after the jury trial. Any equitable remedies sought by
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see Hodge v. Super. Court, 145 Cal. App. 4th 278, 285-87 (2006).
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Mfg. Corp. v. CTS Cement Mfg. Corp., 856 F. Supp. 2d 1136, 1151 (C.D.
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Cal. 2012).
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C.
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As to all issues triable to a jury, plaintiffs made a timely demand on July 31,
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2013, see Doc. 1-1 at 13; and Sirius XM made a timely demand on November 18,
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IX.
fees against Sirius XM. Doc. 180 at 20 ([N]one of the claims at issue permit an
award of attorneys fees.); see Doc. No. 225 at 24 (Class Certification Order)
(noting that [a]ttorneys fees are unavailable in this case). Class counsel have
indicated that they will seek attorneys fees based on any class damages award
X.
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claims). Sirius XM hereby requests that, if plaintiffs do not formally dismiss those
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