Flo & Eddie, Inc. v. Sirius XM Radio, Inc.

• Decision Date: 13 April 2016
• Docket Number: Docket No. 15–1164–cv.
• Citation: 118 U.S.P.Q.2d 1388,821 F.3d 265
• Parties: FLO & EDDIE, INC., a California Corporation, individually and on behalf of all others similarly situated, Plaintiff–Appellee, v. SIRIUS XM RADIO, INC., a Delaware Corporation, Defendant–Appellant, Does, 1 through 10, Defendants.
• Court: U.S. Court of Appeals — Second Circuit

821 F.3d 265

118 U.S.P.Q.2d 1388

FLO & EDDIE, INC., a California Corporation, individually and on behalf of all others similarly situated, Plaintiff–Appellee

v. SIRIUS XM RADIO, INC., a Delaware Corporation, Defendant–AppellantDoes, 1 through 10, Defendants.

Docket No. 15–1164–cv.

United States Court of Appeals, Second Circuit.

Argued: Feb. 2, 2016.

Decided: April 13, 2016.

Harvey Geller (Henry Gradstein, Maryann R. Marzano, on the brief), Gradstein & Marzano, P.C., Los Angeles, CA; (Evan S. Cohen, Esq., on the brief), Los Angeles, CA; for Plaintiff–Appellee.

Daniel M. Petrocelli (Cassandra L. Seto, on the brief), O'Melveny & Myers LLP, Los Angeles, CA; (Jonathan D. Hacker, on the brief), O'Melveny & Myers LLP, Washington, DC; for Defendant–Appellant.

Brandon Butler, American University Washington College of Law, Washington, DC, for Amici Curiae Law Professors Gary Pulsinelli, Julie Ross, and Peter Jaszi, in support of Defendant–Appellant.

Eugene Volokh, UCLA School of Law, Los Angeles, CA, for Amici Curiae Howard Abrams, Brandon Butler, Michael Carrier, Michael Carroll, Ralph Clifford, Brian Frye, William Gallagher, Eric Goldman, James Grimmelmann, Yvette Liebesman, Brian Love, Tyler Ochoa, David Olson, David Post, Michael Risch, Matthew Sag, Rebecca Tushnet, and David Welkowitz, in support of Defendant–Appellant.

Mitchell Stoltz, Vera Ranieri, Electronic Frontier Foundation, San Francisco, CA, for Amicus Curiae Electronic Frontier Foundation, in support of Defendant–Appellant.

R. Bruce Rich, Benjamin E. Marks, Gregory Silbert, Todd Larson, Kami Lizarraga, Weil, Gotshal & Manges LLP, New York, NY, for Amicus Curiae Pandora Media, Inc., in support of Defendant–Appellant.

Raza Panjwani, John Bergmayer, Public Knowledge, Washington, DC, for Amicus Curiae Public Knowledge, in support of Defendant–Appellant.

Stephen B. Kinnaird, Paul Hastings LLP, Washington, DC; Rick Kaplan, National Association of Broadcasters, Washington, DC; for Amicus Curiae National Association of Broadcasters, in support of Defendant–Appellant.

Adam R. Bialek, Stephen J. Barrett, Wilson Elser Moskowitz Edelman & Dicker LLP, New York, NY; David L. Donovan, New York State Broadcasters Association, Inc.; for Amicus Curiae New York State Broadcasters Association, Inc., in support of Defendant–Appellant.

Before: CALABRESI, CHIN, CARNEY, Circuit Judges.

CALABRESI

, Circuit Judge:

This case presents a significant and unresolved issue of New York copyright law: Is there a right of public performance for creators of sound recordings under New York law and, if so, what is the nature and scope of that right? Because this question is important, its answer is unclear, and its resolution controls the present appeal, we reserve decision and certify this question to the New York Court of Appeals.

BACKGROUND

Plaintiff–Appellee Flo & Eddie, Inc. (“Appellee”) is a California corporation that asserts that it owns the recordings of “The Turtles,” a well-known rock band with a string of hits in the 1960s, most notably “Happy Together.” Appellee, which is controlled by two of the band's founding members, acquired the rights to The Turtles' recordings in 1971 and continues to market the recordings in a variety of ways, including by licensing the rights to make and sell records and by licensing the use of the recordings in other media.

Defendant–Appellant Sirius XM Radio, Inc. (“Appellant”) is a Delaware corporation that is the largest radio and internet-radio broadcaster in the United States, with a subscriber base of more than 25 million individuals. Appellant broadcasts music directly to its own subscribers as well as through third parties. These broadcasts include sound recordings created before February 15, 1972. See 17 U.S.C. § 301(c)

. Among them are recordings allegedly belonging to Appellee. Appellant has not compensated Appellee for the use of these pre–1972 recordings, nor has Appellee granted Appellant a license to use them.

On September 3, 2013, Appellee brought suit against Appellant in the Southern District of New York on behalf of itself and a class of owners of pre–1972 recordings, asserting claims for common-law copyright infringement and unfair competition under New York law. In particular, Appellee alleged that Appellant infringed Appellee's copyright in The Turtles' recordings by broadcasting and making internal reproductions of the recordings (e.g., library, buffer and cache copes) to facilitate its broadcasts. Appellee simultaneously filed parallel class actions against Appellant in California on August 1, 2013, and in Florida on September 3, 2013, alleging state copyright claims based on California and Florida law, respectively. See Flo & Eddie Inc. v. Sirius XM Radio Inc., No. CV 13–5693 PSG, 2014 WL 4725382 (C.D.Cal. Sept. 22, 2014)

; Flo & Eddie, Inc. v. Sirius XM Radio, Inc., No. 13–cv–23182, 2015 WL 3852692 (S.D.Fla. June 22, 2015), appeal filed (11th Cir. July 10, 2015).¹

On May 30, 2014, Appellant moved for summary judgment on two grounds. First, Appellant contended that there is no public-performance right in pre–1972 recordings under New York copyright law, and that its internal reproductions of these recordings were permissible fair use. Second, Appellant argued that a state-law public performance right, if recognized, would be barred by the dormant Commerce Clause. On November 14, 2014, the District Court (McMahon, J. ) denied this motion. Flo & Eddie, Inc. v. Sirius XM Radio, Inc., 62 F.Supp.3d 325, 330 (S.D.N.Y.2014)

. On the first issue, the Court concluded that New York does afford a common-law right of public performance to copyright holders, and that Appellant's internal reproductions were correspondingly not fair use. Id. at 344–46. On the second issue, the Court found that the recognition of a performance right did not implicate the dormant Commerce Clause because such a right was not a “regulation” of commerce under Sherlock v. Alling, 93 U.S. (3 Otto) 99, 23 L.Ed. 819 (1876). Id. at 353.

Soon after, Appellant, with new counsel, filed a motion for reconsideration of the November 14, 2014 order and, in the alternative, requested that the District Court certify its summary-judgment order for interlocutory appeal. The District Court denied Appellant's motion for reconsideration, Flo & Eddie, Inc. v. Sirius XM Radio, Inc., No. 13–cv–5784, 2014 WL 7178134 (S.D.N.Y. Dec. 12, 2014)

, but certified its summary-judgment and reconsideration orders for interlocutory appeal, Flo & Eddie, Inc. v. Sirius XM Radio, Inc., No. 13–cv–5784, 2015 WL 585641 (S.D.N.Y. Feb. 10, 2015).

Appellant then petitioned us to permit the interlocutory appeal, which we did. Flo & Eddie, Inc. v. Sirius XM Radio, Inc., No. 15–cv–497, 2015 WL 3478159 (2d Cir. May. 27, 2015)

.

DISCUSSION

We review de novo the District Court's denial of Appellant's motion for summary judgment, construing the evidence in the light most favorable to Appellant and drawing all reasonable inferences in its favor. Gary Friedrich Enters., LLC v. Marvel Characters, Inc., 716 F.3d 302, 312 (2d Cir.2013)

. We review the District Court's denial of Appellant's motion for reconsideration de novo as well. Bayerische Landesbank, N.Y. Branch v. Aladdin Capital Mgmt. LLC, 692 F.3d 42, 52 n. 3 (2d Cir.2012).

A.

In 1971, Congress amended the Copyright Act to grant limited copyright protection to sound recordings fixed on or after February 15, 1972, while expressly preserving state-law property rights in sound recordings fixed before that date. See 17 U.S.C. § 301(c)

. Later, Congress created an exclusive performance right in post–1972 sound recordings performed by digital audio transmission. See 17 U.S.C. § 106(6). Performances of post–1972 sound recordings transmitted by other means, such as AM/FM radio, still do not enjoy federal copyright protection. Because Appellee's recordings were fixed before February 15, 1972, they are protected, if at all, by state copyright law. While New York provides no statutory protection to owners of pre–1972 sound recordings, New York common law does provide certain rights to copyright holders in these recordings. See

Capitol Records, Inc. v. Naxos of Am., Inc., 4 N.Y.3d 540, 563, 797 N.Y.S.2d 352, 830 N.E.2d 250 (2005) (Naxos II ). As a result, the issue before us is whether New York common law affords copyright holders the right to control the performance of sound recordings as part of their copyright ownership.

The New York Court of Appeals has not ruled on whether such a right exists. Appellee contends that New York common law affords it a right of public performance, which Appellant violated when it broadcast Appellee's recordings without a license. Appellant, conversely, argues that no such right exists. Siding with Appellee, the District Court concluded that “general principles of common law copyright dictate that public performance rights in pre–1972 sound recordings do exist.” Flo & Eddie, 62 F.Supp.3d at 344

.²

With no clear guidance from the New York Court of Appeals, we are in doubt as to whether New York common law affords Appellee a right to prohibit Appellant from broadcasting the sound recordings in question.³ In such circumstances, we may certify the unresolved, determinative question to New York's highest court. See 2d Cir. Local R. 27.2; Schoenefeld v. New York, 748 F.3d 464, 470 (2d Cir.2014)

. In deciding whether to certify, we consider three factors:

(1) whether the New York Court of Appeals has addressed the issue and, if not, whether the decisions of other New York courts permit us to predict how the Court of Appeals would resolve it; (2) whether the question is of importance to the state and may require value judgments and public policy choices; and (3) whether the certified question is determinative of a claim before us.

Pasternack v. Lab. Corp. of Am. Holdings, 807 F.3d 14, 19 (2d Cir.2015)

(quoting Osterweil v. Bartlett, 706 F.3d 139, 142 (2d Cir.2013) ).

Certification is clearly appropriate in the case before us. First, the Court of Appeals has not addressed...