5:36pm PT by Ashley Cullins
Sirius Battle Over Attorney Fees Follows Turtles' Pre-1972 Sound Recordings Settlement
SiriusXM and The Turtles may have settled their dispute on the eve of a California federal trial, but it seems a new fight has emerged over attorneys' fees because of a disagreement over the interpretation of their deal.
The legal battle, which spans three states, arises from the fact that pre-1972 sound recordings aren't protected by federal copyright. Two members of The Turtles, Mark Volman and Howard Kaylan (aka Flo & Eddie), sued under various state laws so they and others like them could be compensated for songs played on stations like SiriusXM Radio's '60s on 6.
Flo & Eddie won summary judgment in California, where a federal judge found Sirius' use of their music violates public performance rights. The trial was set to determine how much the satellite giant should pay in damages, but the parties came up with that figure on their own and settled.
Sirius is set to pay up to $99 million to rightsholders, with the absolute minimum being set at $25 million. How high that number climbs depends on what happens in the 2nd, 9th and 11th Circuits as Sirius challenges its liability. Sirius could pay an additional $15 million more if Flo & Eddie were to prevail on appeals in all three states. On top of that, the proposed settlement also gives Sirius a 10-year license (through 2028) in exchange for royalty payments of up to 5.5 percent — with the exact rate dependent on the appeal outcomes also. Flo & Eddie estimate that license will generate between $45 million to $59 million for class members.
Like the proposed settlement, the amount of fees requested is fluid. The Turtles' legal team from Gradstein & Marzano and Susman Godfrey is asking for 30 percent of the total class settlement amount, plus about $1.5 million in costs and $25,000 each for Flo and Eddie.
Sirius' issue with the request centers on the 2nd Circuit decision that came down in December. That court held that “New York common law does not recognize a right of public performance for creators of pre-1972 sound recordings.” The satellite giant says, under the settlement, that means the amount of future royalties it pays is decreased by two percent and it doesn't immediately owe class members there an extra $5 million.
"Class counsel, however, has taken the remarkable position that Flo & Eddie prevailed on the Performance Right Issue in the New York Court of Appeals — meaning the royalty rate will not be reduced, Sirius XM is required to pay class members an additional $5 million, and class counsel is entitled to increased fees," writes attorney Daniel Petrocelli in response to the motion. "This position is indefensible and reflects an attempt to rewrite and repudiate the Stipulation, in violation of its plain terms and the parties’ extensively documented negotiations."
The Turtles disagree.
"The New York Court of Appeals answer to the certified question regarding New York copyright law was 'no,' but that court did not resolve the broader issue of whether Sirius XM’s public performances of pre-1972 recordings can give rise to liability under New York law," states the reply brief. "Because there is an open question under New York law as to whether Sirius XM was 'entitled' to publicly perform their recordings, Plaintiffs by definition 'prevailed' and are entitled to additional relief under the terms of the Settlement Agreement."
U.S. District Judge Philip Gutierrez granted preliminary approval to the settlement on Friday, but did not address the dispute over who technically prevailed given the New York ruling. A hearing on the motion for attorneys' fees is currently scheduled for mid-March.