August 02, 2013 8:35am PT by Eriq Gardner
The Turtles Lead Whopping $100 Million Class Action Against SiriusXM (Exclusive)
Enjoy an old rock tune on satellite radio lately? A new proposed class action raises the theory that SiriusXM has infringed millions of these older recordings from thousands of artists. Damages are alleged to be at least $100 million, but for a company that last reported quarterly revenues of $940 million, the attorneys representing the plaintiff believe that damage figure to be on the conservative side.
The lead plaintiffs in the case are Flo & Eddie of The Turtles, the iconic band whose hits include "Happy Together," "It Ain't Me Babe" and "She'd Rather Be With Me."
The band has a history of bringing big cases, but the reason why this lawsuit, filed in L.A. Superior Court, commands notice comes down to the magical number of 1972.
Feb. 15, 1972, is the exact day on which sound recordings began falling under federal copyright protection. For recorded music created before then, the situation is a bit more murky. The question this lawsuit addresses is: What laws cover those recordings?
Every day, SiriusXM transmits thousands of pre-1972 recordings and does so likely with the confidence that §114 of the Copyright Act gives them this authority. That statute carves out limitations on exclusive rights and also sets up the way that owners of recordings get compensated. Currently, the Copyright Royalty Board is the entity that sets statutory royalty rates for satellite radio, and SoundExchange is the entity that collects the royalties to pass along.
But it is the contention of Flo & Eddie, representing themselves and others similarly situated, that federal law can't be relied upon when dealing with pre-'72 music on satellite radio. Here's the complaint, filed on Thursday.
Among the cases that could support this theory is Goldstein v. California, a 1972 U.S. Supreme Court Case dealing with a piracy dispute that gave deference to state laws. The ruling held, "Until and unless Congress takes further action with respect to recordings fixed prior to February 15, 1972, the California statute may be enforced against acts of piracy such as those which occurred in the present case."
In the present action, the plaintiffs assert misappropriation under California law as well as unfair competition and conversion. Those claims were recently tested in favor of record label plaintiffs in a California case against BlueBeat, a website that attempted to use §114 to, among other things, sell 25 cent songs from The Beatles. A judge found BlueBeat liable for misappropriation of pre-'72 recordings.
If there is another reason why Sirius should be concerned that state laws aren't pre-empted by federal statutes that confer upon it distribution rights, a case decided earlier this year by a New York appeals court might give the satellite giant some pause. There, appeals judges held that music streaming site Grooveshark couldn't take advantage of DMCA safe harbors -- another federal law -- to defend against charges of pirating pre-'72 sound recordings. A different jurisdiction, and dealing with digital rather than satellite distribution, but in the wake of that ruling, many legal commentators warned that all hell could break loose when determining liability on older recordings.
Now, The Turtles are stepping up to give Sirius a major challenge.
This isn't the first legal fight for the band.
In 1971, they sued their record label, White Whale, for accounting irregularities, and wound up recovering rights to their original masters. Years later, they brought one of the first "sampling" lawsuits against De La Soul. They've also sued record pirates and brought claims against advertisers for using their voices without authorization in commercials. They are now being represented by Henry Gradstein and other attorneys at Gradstein & Marzano.
Besides hundreds of millions of dollars, the plaintiffs are demanding an injunction against the defendant distributing pre-'72 recordings. The lawsuit could conceivably stop a lot of classic rock and jazz being played on SiriusXM.
We've reached out to Sirius and will update with any comment it has.