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Class Action by Artists Against Distributor For Accountings Under Direct Deal With SiriusXM

January 18, 2017 Comments off

The string trio Time for Three and S’More Entertainment filed a class action yesterday (Jan 17) in New York federal district court against “Defendants Entertainment One GP LLC and Entertainment One U.S. LP, doing business as E1 Entertainment and/or Koch Entertainment LP” for a variety of claims relating to the defendant’s direct deal with SiriusXM.

The class action complaint describes the suit:

4. In violation of the Class Member Contracts, Defendants entered into secret negotiations and agreements with satellite radio provider Sirius XM Radio (“Sirius XM”), for the exploitation of Plaintiffs’ and the Class Members’ intellectual property. Defendants have systematically failed to account for any revenue, or pay any portion of the revenue generated from the exploitation of the Class Members’ Musical Works on Sirius XM under this agreement.

5. Plaintiffs bring this nationwide class action on behalf of themselves and similarly situated Class Members arising from Defendants’ failure to properly account for and pay revenues generated for the distribution of the Class Members’ Musical Works on Sirius XM and other digital satellite radio providers. Plaintiffs bring claims including for breach of contract, breach of the implied covenant of good faith and fair dealing, an accounting, and declaratory relief. Plaintiffs seek monetary damages, injunctive, and/or declaratory relief on behalf of themselves and others similarly situated against Defendants’ for their willful violation of the Agreements….

B. Defendants’ Secretly Withheld Revenues From Sirius XM in Violation of the Contracts Resulting in Substantial Damages to the Class Members

24. Pursuant to the 1995 Digital Performance Right in Sound Recordings Act, and the 1998 Digital Millennium Copyright Act, artists, songwriters, and masters holders are legally entitled to receive royalties for digital performances of Musical Works on DEMD, including on Sirius XM. In the absence of a direct contractual agreement between the digital transmission entities (e.g. Sirius XM) and a record company, these DEMD royalties are determined based on federally-approved statutory license rates. By law DEMD royalties generated pursuant to a statutory license—absent an agreement between the parties—are collected on behalf of and distributed to rights holders by the independent non-profit organization, SoundExchange, Inc. (“SoundExchange”).

25. When digital transmission providers contract directly with record companies for DEMD rights, such royalties are paid at contractually negotiated rates, and the obligation to collect, account for and pay such revenues to artists and musicians falls on the record company, instead of SoundExchange.

26. In this case, Defendants secretly negotiated and entered into an agreement for Sirius XM to distribute the Musical Works of Plaintiffs and the Class Members. Defendants had a legal obligation under the Agreements with Plaintiffs and other Class Members to properly and accurately account for and pay the revenue received by Defendants to Plaintiffs and Class Members. On information and belief, rather than fulfilling their contractual obligations, Defendants have systematically, knowingly, and intentionally withheld and failed to account for and pay for revenue generated from Sirius XM Plaintiffs and other Class Members.

27.  As a result of Defendants’ conduct, the revenue that Defendants have collected from Sirius XM is never reported, and is never subject to potential remittance to Plaintiffs and the Class Members. Instead, these revenues have been wrongfully retained by Defendants outright.

28. Defendants have engaged in this conduct even though they have no contractual or legal right to do so. It is currently unknown whether there are entities other than Sirius XM from whom Defendants are collecting DEMD revenue, without reporting and paying such revenues to Plaintiffs and the Class Members.

29. Defendants are wrongfully retaining monies that are owed to Plaintiffs and the Class Members. On information and belief, Defendants could easily account for and pay the money owed to Plaintiffs and the Class Members, as required by the Agreements.

Read the class action filing here.

This will be one to keep an eye on.  The lawyers filing the complaint on behalf of the potential class include some familiar names and are:

REESE LLP

Michael R. Reese
George V. Granade
100 West 93rd Street, 16th Floor
New York, New York 10025
Telephone: (212) 643-0500
Facsimile: (212) 253-4272
Email: mreese@reesellp.com
ggranade@reesellp.com

JOHNSON & JOHNSON LLP

Neville L. Johnson
Douglas L. Johnson
Jordanna G. Thigpen
439 N. Canon Dr. Suite 200
Beverly Hills, California 90210 T: (310) 975-1080
F: (310) 975-1095
Email: njohnson@jjllplaw.com
djohnson@jjllplaw.com
jthigpen@jjllplaw.com

PEARSON, SIMON & WARSHAW, LLP

Clifford H. Pearson
Daniel L. Warshaw
Bobby Pouya
15165 Ventura Boulevard, Suite 400
Sherman Oaks, California 91403
Telephone: (818) 788-8300
Facsimile: (818) 788-8104
Email: cpearson@pswlaw.com
dwarshaw@pswlaw.com
bpouya@pswlaw.com

Timing is Everything: Sirius May be Barred from Appealing California Loss to Turtles #irespectmusic

November 15, 2014 1 comment

Rut ro.  For those of you following along, remember that Flo & Eddie won a tremendous victory against SiriusXM on a motion for summary judgement in federal court before U.S. District Judge Philip Gutierrez in California in a putative class action on behalf of all pre-72 recordings.

Sirius appealed the Turtles case.

Also recall that the major labels filed a separate case in California state court before California Superior Court Judge Mary H. Strobel.  The labels essentially won that case when California Judge Strobel followed similar reasoning to federal Judge Gutierrez .  However, the California judge handed down her opinion after Sirius filed its appeal in the federal case applying California law.

So because Sirius lost both cases, the Turtles may be able to stop the Sirius appeal in the band’s federal court case if they can rely on the decision in the major label State court case.

Two parallel cases in two different court systems, both interpreting California law.

Here’s where it gets interesting.

Before federal Judge Gutierrez decided the Turtles federal case, California Judge Strobel in the major label case issued a preliminary ruling that looked like the court was going to rule against the major labels.  Lucky for them, the artists got a favorable decision first, and lucky for everyone except Sirius, the California Judge Strobel in the major label case reversed her preliminary ruling tilting against the labels and adopted federal Judge Gutierrez’s argument as a matter of California law.

But–in its appeal, Sirius is essentially asking the 9th Circuit for rule on what the California law would be–except that after Sirius filed its appeal, we got California Judge Strobel ‘s ruling.  So we now know what the California law is in fact, after the appeal was filed with federal Judge Gutierrez, but before he ruled on the appeal.

Law360 explains further:

“The ‘tentative’ ruling in the [labels’] case which Sirius XM claimed reached an ‘opposite conclusion’ had ceased to be tentative and, more importantly, had ceased to be opposite,” the [Turtles] filing said.

“Sirius XM claimed not to know about the falsity of its representations when it filed its motion. However, even under its own explanation, it knew within minutes of its filing — and it also knew that the false statements were the foundation for its motion,” The Turtles said. “Yet, rather than withdrawing its motion, Sirius XM insisted on proceeding with it even though it had no factual basis and even less of a legal basis”….

To win an immediate appeal of that decision, Sirius is going to have to prove more than just a judicial conflict over the issue. It’ll also have to show that such a move would be likely to speed up the case — another hurdle The Turtles said [in their filing] that Sirius couldn’t meet.

“Although their music is timeless, the artists who created pre-1972 recordings are aging and depend on the royalties from a marketplace that has been ravaged by piracy,” the filing said. “The artists who hope to benefit from this litigation are necessarily going to suffer tremendously from the delay that would result from an interlocutory appeal.”

The split between Judge Gutierrez’s decision and the tentative ruling weeks prior from Judge Strobel was initially a kind of silver lining for Sirius after the sound defeat in federal court. That changed on October 15th, when Judge Strobel heavily cited Judge Gutierrez’s decision in reversing course.

So Sirius may not be able to appeal the ruling against them by Judge Gutierrez and may have to move on to the damages phase of the case.  (Sirius may be able to appeal later on a different basis.)  More intrepid lawyering by Henry Gradstein and Harvey Geller.  And when you find Google Shill Listers referring to Flo & Eddie as “the company that owns the Turtles recordings”, i.e., spinning a holding company solely owned by Mark Volman and Howard Kayman rather than acknowledging an artist victory, you know that artists are winning.

Also realize that Gradstein and Geller also sued Pandora on the same issues in the same federal court where they had just won a favorable ruling from federal Judge Gutierrez.  And it’s all just a brilliant bit of lawyering.

Why is Sirius continuing this scorched earth policy against old guys and dead cats?  Time to settle your case folks.

Also recall that SoundExchange backed the RESPECT Act that will almost certainly be reintroduced in the next Congress (i.e., after Congress returns in January).  The RESPECT Act would fix the pre-72 issue for digital performances.  Sirius and Pandora had both opposed the RESPECT Act on the bizarre grounds that the Congress intended to screw the creators of our legacy of recorded music out of royalties for webcasting and simulcasting.

Of course the most Orwellian part of especially Pandora’s opposition to the RESPECT Act is because they wanted to help artists.  Yes, that’s right.  They wanted to help artists with something called “full federalization”.  Well, they got full federalization alright, just not in the location they were expecting it.

As a great drummer used to say, it’s all in the wrist.

Here are links to the documents:

Turtles Opposition to Sirius Appeal CA 031120007391

Flo Eddie v Pandora

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