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

• Decision Date: 14 November 2014
• Docket Number: No. 13 Civ. 5784CM.,13 Civ. 5784CM.
• Citation: 62 F.Supp.3d 325,113 U.S.P.Q.2d 1285
• Parties: FLO & EDDIE, INC., Plaintiff, v. SIRIUS XM RADIO, INC., and Does 1–10, Defendants.
• Court: U.S. District Court — Southern District of New York

62 F.Supp.3d 325

113 U.S.P.Q.2d 1285

FLO & EDDIE, INC., Plaintiff

v.SIRIUS XM RADIO, INC., and Does 1–10, Defendants.

No. 13 Civ. 5784CM.

United States District Court, S.D. New York.

Signed Nov. 14, 2014.

Robert L. Rimberg, Joel Steven Schneck, Goldberg & Rimberg, PLLC, Kristen Leigh Nelson, Schwartz & Perry, New York, NY, Evan S. Cohen, Los Angeles, CA, Harvey Wayne Geller, Larry Steven Castruita, Maryann Rose Marzano, Robert Edward Allen, Henry D. Gradstein, Gradstein & Marzano, P.C., Rajika Lynn Shah, Schwarcz, Rimberg, Boyd & Rader, LLP, Los Angeles, CA, Kathryn Lee Crawford, Schwarcz Rimberg Boyd & Rader, LLP, New York, CA, for Plaintiff.

Benjamin Ely Marks, Bruce S. Meyer, John Ryan Gerba, Todd Daniel Larson, Weil, Gotshal & Manges LLP, Marc Joseph Pensabene, O'Melveny & Myers LLP, Michael Stewart Oberman Kramer Levin Naftalis & Frankel, LLP, New York, NY, Daniel M. Petrocelli, Robert M. Schwartz, Victor Jih, O'Melveny & Myers, LLP, Los Angeles, CA, for Defendants.

MEMORANDUM DECISION AND ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

McMAHON, District Judge:

Plaintiff Flo & Eddie, Inc. (“Flo and Eddie”) brings this putative class action suit against Defendant Sirius XM Radio, Inc. (“Sirius”). The complaint alleges that Sirius committed common law copyright infringement and engaged in unfair competition by publicly performing sound recordings owned by Flo and Eddie, and by reproducing those recordings in aid of its performances. Before the Court is Docket # 46, Sirius's motion for summary judgment. For the reasons stated below, the motion is DENIED.

Furthermore, it appears to the Court that there are no disputed issues of material fact as to liability. Sirius is therefore ORDERED to show cause by December 5, 2014, why summary judgment should not be entered in favor of Flo and Eddie as to liability only. See Fed.R.Civ.P. 56(f)(1).

BACKGROUND

I. Factual Background

A. The Parties

Flo and Eddie is a California corporation, wholly owned by its principals, Mark Volman (“Volman”) and Howard Kaylan (“Kaylan”). (Sirius 56.1 Statement ¶¶ 1–2; Volman Decl. ¶ 1.) Volman and Kaylan are two of the original members of The Turtles (“the Turtles”), a 1960s rock group whose hits included “Happy Together” and a cover of Bob Dylan's “It Ain't Me Babe.” (Sirius 56.1 Statement ¶ 16; Flo and Eddie 56.1 Statement ¶¶ 2–3.)

Master recordings of the Turtles' performances-all of which were made prior to February 15, 1972 were originally held by White Whale Records. (Sirius 56.1 Statement ¶¶ 1, 17; Flo and Eddie 56.1 Statement ¶¶ 3, 5; Volman Decl. ¶ 2.) White Whale transferred those recordings to the Turtles' members as part of a legal settlement. (Sirius 56.1 Statement ¶ 18; Flo and Eddie 56.1 Statement ¶ 5.) Volman and Kaylan purchased the remaining Turtles' members' interests in the recordings, and ultimately transferred all ownership interests in the recordings to Flo and Eddie. (Sirius 56.1 Statement ¶¶ 19–20; Flo and Eddie 56.1 Statement ¶¶ 6–7.)

Sirius is a Delaware corporation engaged in the satellite radio business. (Sirius 56.1 Statement ¶ 3.) Sirius provides digital audio content to its subscribers, who pay a periodic fee. (Geller Decl., Ex. 6.) Subscribers can receive audio content in several ways. Many subscribers—a majority according to Sirius—use special digital radios installed in their vehicles. (Sirius 56.1 Statement 15; Smith Decl. ¶ 4.) Other subscribers stream the same programming over the internet to a computer or mobile device. (Sirius 56.1 Statement ¶ 6; Flo and Eddie 56.1 Statement ¶ 14; Smith Decl. ¶ 6; see Smith 2/11/14 Dep. Tr. at 194:22–25.) Some users receive Sirius's music programming through Dish Network set-top boxes. (Sirius 56.1 Statement ¶ 6; Flo and Eddie 56.1 Statement ¶ 3; Smith Decl. ¶ 6; Smith 2/11/14 Dep. Tr. at 224:22–226:5.) Businesses can also receive music broadcasts to play in their retail establishments through Sirius's “Business Establishment Service.” (Sirius 56.1 Statement ¶ 6; Smith Decl. ¶ 6.)

Sirius offers a diverse set of programming including talk radio, live sports coverage, and music. (Sirius 56.1 Statement ¶ 4.) Music programming is featured on dozens of Sirius channels. (Geller Decl., Ex. 7.) Many of those channels—for example “60s on 6” or “70s on 7”—broadcast pre–1972 sound recordings. (Flo and Eddie 56.1 Statement ¶ 13.) Some of those channels have broadcast Turtles sound recordings. (See, e.g., Sirius 56.1 Statement ¶¶ 21–22; Smith Decl. ¶¶ 12–13.) Both Sirius subscribers and users those who receive Sirius content through Dish Network set-top boxes can listen to programming that features pre–1972 sound recordings. (Smith 2/11/14 Dep. Tr. at 226:6–18.)

Sirius acknowledges that it “perform[s]” sound recordings, including pre–1972 sound recordings, by broadcasting them over its satellite radio network and streaming them over the internet. (Smith 3/12/14 Dep. Tr. at 96:21–97:15.) The pre–1972 sound recordings Sirius has performed include Turtles recordings. (Smith 3/12/14 Dep. Tr. at 104:8–105:9.) Sirius does not currently know how many pre–1972 recordings it has performed, or how many times it has performed Turtles recordings. (Smith 3/12/14 Dep. Tr. at 97:16–25, 105:11–22.)

B. Sirius's Operations

To understand Flo and Eddie's claims, one has to understand a bit about the technical aspects of Sirius's operations. Sirius stores its permanent digital music library on three databases, named “Prophet,” “Dalet 5.1,” and “Dalet Plus.” (Sirius 56.1 Statement ¶¶ 24–26; Smith Decl. ¶ 17; Smith 2/11/14 Dep. Tr. at 154:2–8.) The Prophet database is located in New York City, and the two Dalet databases are located in Washington, D.C. (Sirius 56.1 Statement ¶¶ 25–26; Smith Decl. ¶¶ 18–19.) Sirius maintains onsite backup copies of each database, as well as off-site disaster recovery copies of the Prophet database in New Jersey, and of the Dalet databases in Georgia. (Sirius 56.1 Statement ¶ ¶ 25–26; Flo and Eddie 56.1 Statement ¶ 18; Smith Decl. ¶¶ 18–19; Smith 2/11/14 Dep. Tr. at 154:11–155:23, 156:15–157:7.)

The content of the three databases overlaps imperfectly. (Smith 2/11/14 Dep. Tr. at 156:7–14.) Some recordings may be stored on all three databases. Other recordings might be stored only on Prophet, while others may be stored only on the Dalet databases. (Smith 2/11/14 Dep. Tr. at 75:12–76:13.) Each database stores copies of pre–1972 recordings. (Smith 2/11/14 Dep. Tr. at 159:24–160:9; Smith 3/12/14 Dep. Tr. at 38:6–40:6.) At least 18,000 such copies are stored on the Prophet database, and at least 24,000 are stored on each of the Dalet databases. (Flo and Eddie 56.1 Statement ¶ 17; Smith 3/12/14 Dep. Tr. at 40:8–42:15, 43:15–44:19; see Smith 3/12/14 Dep. Tr. at 61:19–62:11.) The Prophet database in New York contains 14 Turtles recordings, while the Dalet databases in Washington, D.C., contain 71 such recordings. (Sirius 56.1 Statement ¶¶ 29–30; see Flo and Eddie 56.1 Statement ¶ 16; Smith Decl. ¶¶ 23–24.) The backup and disaster recovery databases, like the Dalet and Prophet databases also contain pre–1972 recordings. (Smith 2/11/14 Dep. Tr. at 73:9–24.)

In addition to its three main databases, Sirius stores subsets of its music library on smaller databases at off-site locations. (Sirius 56.1 Statement ¶ 33; Flo and Eddie 56.1 Statement ¶ 18; Smith Decl. ¶ 27.) Specifically, Sirius maintains recordings from the Prophet database on smaller databases in Nashville, Orlando, and Boston. (Smith 2/11/14 Dep. Tr. at 158:17–21, 159:6–9.) Recordings from the Dalet databases reside on databases in Cleveland, Austin, and Los Angeles. (Sirius 56.1 Statement ¶ 33; Smith 2/11/14 Dep. Tr. at 158:22–159:5.) These smaller databases are used to produce on-location shows tailored to a particular musical style or on-air talent. (Smith 2/11/14 Dep. Tr. at 158:17–159:9, 163:4–21.) Some of these databases contain pre–1972 recordings, and the Cleveland database contains at least one Turtles recording. (Sirius 56.1 Statement ¶ 33; Smith 2/11/14 Dep. Tr. at 160:9–161:25, 162:25–163:3, 164:12–23; Smith 3/12/14 Dep. Tr. at 51:11–54:4.)

Sirius has also copied some recordings to a database that it transferred to Omnifone, a UK-based firm that operates the My SXM service, described below. (Sirius 56.1 Statement ¶ 35; Flo and Eddie 56.1 Statement ¶ 29; Smith 2/11/14 Dep. Tr. at 33:25–34:16, 165:4–11; Smith 3/12/14 Dep. Tr. at 107:15–21.) Although the parties agree that Omnifone continues to possess those copies, Sirius claims that Omnifone can use them only for a very limited purpose: to provide the customized My SXM service. (Sirius 56.1 Statement ¶ 35; Smith 2/11/14 Dep. Tr. at 35:9–25.) The database transferred to Omnifone contains pre–1972 recordings, including Turtles recordings. (Sirius 56.1 Statement ¶ 35; Smith Decl. ¶¶ 27, 29; Smith 2/11/14 Dep. Tr. at 165:7–15; Smith 3/12/14 Dep. Tr. at 54:22–55:14.)

Several hours before Sirius plays a sound recording on one of its programs, it creates an additional copy of the recording on its “play-out server.” (Sirius 56.1 Statement ¶ 37; Flo and Eddie 56.1 Statement ¶ 20; Smith Decl. ¶ 31; Smith 2/11/14 Dep. Tr. at 19:5–16.) Content is broadcast directly from the play-out server; the copy ensures a smooth broadcast even if there is a network disruption. (Sirius 56.1 Statement ¶ 37; Smith Decl. ¶ 31; see Smith 2/11/14 Dep. Tr. at 114:15–116:16.) The copy on the play-out server is deleted once a recording is broadcast. (Sirius 56.1 Statement ¶ 37; Smith Decl. ¶ 31.) Each time a recording is performed, a new copy is created on the play-out server. (Smith 2/11/14 Dep. Tr. at 117:9–11; Smith 3/12/14 Dep. Tr. at 89:2–7.) Because Sirius has performed pre–1972 recordings, including Turtles recordings, it has necessarily copied those recordings to its play-out server-many times, in fact. (Smith 3/12/14 Dep. Tr. at 88:2– 20, 91:5–16.) But Sirius does not know how many copies of those recordings have been made on its play out server (Smith 3/12/14 Dep. Tr. at 89:8–91:4.)

To deliver...