Court Slaps Down Arguments by Sirius XM's New Legal Team in N.Y. Flo and Eddie Case

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By Anandashankar Mazumdar

Dec. 16 — The only “clear error” in the context of a motion for reconsideration was on the part of Sirius XM's new counsel, the U.S. District Court for the Southern District of New York ruled Dec. 12 (Flo &Eddie, Inc. v. Sirius XM Radio, Inc., S.D.N.Y., No. 13-05784, 12/12/14).

Denying reconsideration, the court sharply criticized the new legal team from O'Melveny & Myers, accusing the attorneys of deliberately missing the point and laying red herrings before the court.

The result is that the court's prior holding that New York common law creates a public performance right for copyright holders with interest in pre-1972 sound recordings remains intact.

Turtles Hitmakers Pursue Satellite Royalties 

Howard Kaylan, Mark Volman, Al Nichol, Chuck Portz, Don Murray and Jim Tucker formed a surf rock music group called the Crossfires in 1965 in Westchester, Calif. Later, the group changed to folk rock as the Tyrtles.

By the time the group had its first hit with Bob Dylan's composition “It Ain't Me, Babe,” the spelling had been changed to “Turtles.” The group charted almost 20 top-100 singles between 1965 and 1970, including their biggest hit, “Happy Together.”

In 1971, Kaylan and Volman's company, Flo and Eddie Inc., acquired the rights to all the Turtles' original master recordings from White Whale Records and the two bought out the remaining rights from the other Turtles members and transferred them to Flo and Eddie Inc.

In August 2013, Flo and Eddie filed putative class action claims against satellite radio provider Sirius XM in California, New York and Florida, alleging that Sirius had violated the rights of owners in pre-1972 sound recordings under state law by broadcasting them without authorization.

Pre-1972 sound recordings are not governed by federal copyright law and are instead subject to state law, usually common law contract law. In contrast, the federal law does grant rights to the composers of the musical compositions on which such recordings are based.

In September, Judge Philip S. Gutierrez granted summary judgment in the California case, ruling that Sirius XM had engaged in public performances of pre-1972 sound recordings without authorization in violation of Flo and Eddie Inc.'s rights (Flo &Eddie Inc. v. Sirius XM Radio, 2014 BL 266039, 112 U.S.P.Q.2d 1307 (C.D. Cal. 2014).

In the New York proceeding, Judge Colleen McMahon denied Sirius XM's motion for summary judgment, ruling that pre-1972 sound recordings, which are not protected by federal copyright law, are subject to public performance rights under New York common law.

Court Not Impressed by Arguments 

In the week following that ruling, Sirius XM dismissed Weil, Gotshal & Manges LLP as its counsel and retained O'Melveny & Myers LLP. With its new representation, Sirius XM moved for reconsideration of the Nov. 14 order dismissing its summary judgment motion.

The court rejected the new counsel's argument that the court had neglected to consider a 1940 decision, RCA Mfg. Co. v. Whiteman, 114 F.2d 86, 46 U.S.P.Q. 324 (2d Cir. 1940).

“Sirius's new lawyers from O'Melveny & Myers assert that Whiteman is the very case that this Court stated did not exist: a case squarely holding that New York does not recognize any right of public performance in sound recordings that are protected by common law copyright,” the court said. And, Sirius argued, it constituted clear error for the court to have neglected to apply this precedent.

However, the court said, “The only clear error in this case is O'Melveny's.”

First, the court said, O'Melveny was incorrect in stating that Whiteman had held that there was no public performance right in this context.

Second, the court said, even if Whiteman's holding could have been interpreted in the manner that O'Melveny had asserted, the decision had been explicitly overruled in 1955 by Capitol Records v. Mercury Records Corp., 221 F.2d 657, 105 U.S.P.Q. 163 (2d Cir. 1955).

Additionally, the court rejected Sirius XM's motion to reconsider the court's rejection of its Dormant Commerce Clause argument.

Noting that the Dormant Commerce Clause would only apply to state action in the form of regulations, the court said, “Instead of explaining how liability for common law copyright infringement constitutes a regulation, Sirius dodges and misconstrues the issues.”

The court reiterated its conclusion that the common law copyright that Flo and Eddie was asserting was not a regulation subject to the Commerce Clause.

“Protecting Flo and Eddie from the theft of its property is not ‘regulation'; a simple example illustrates the point,” the court said.

Suppose, instead of stealing Flo and Eddie's property rights in the sound recordings, someone stole its company car, which was then used to operate an interstate taxi service. The Dormant Commerce Clause obviously would not bar Flo and Eddie from maintaining an action at common law for conversion of the car. And that would be true even though the action, and the return of the car and the end of the taxi service, would affect interstate commerce. State laws barring theft do not violate the Dormant Commerce Clause.


Communications Act Argument is ‘Red Herring.'

Next, the court rejected the argument that the availability of a public performance right under New York common law was preempted under the Communications Act of 1934, 47 U.S.C. §§307 et seq., because it interfered with the federal regulation of radio broadcasting.

This argument had not been properly preserved for appeal, the court said, but it did not leave it at that.

“But this argument is yet another example of how Sirius' new counsel are deliberately missing the point,” the court said. “Nothing in this Court's Order ‘restricts content' of radio broadcasts. Congress expressly provided that common law copyright would subsist in pre-1972 sound recordings. … The federal government thus recognizes the existence of common law copyright in older sound recordings.”

Whiteman itself noted that common law copyright grants exclusive rights, the court said, and that Flo and Eddie were free to exercise those rights. Such an exercise of rights was not a regulatory action by the State of New York.

“Sirius does nothing but raise red herrings,” the court said, rejecting this line of argument, and emphasizing that the issue in question was whether Sirius XM owed Flo and Eddie royalties, just as it pays royalties for use of post-1972 sound recordings.

Flo and Eddie was represented by Goldberg & Rimberg PLLC, New York. Sirius XM was represented by O'Melveny & Myers LLP, New York.

To contact the reporter on this story: Anandashankar Mazumdar in Washington at

To contact the editor responsible for this story: Tom Taylor at

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