The $210 million settlement that record giants made with SiriusXM over the use of sound recordings created before 1972 is being challenged as improper.
On Wednesday, attorneys for Flo & Eddie of The Turtles came forward in California federal court to demand an injunction that would stop the satellite radio giant from paying the money to ABKCO Music & Records, Capitol Records, Sony Music Entertainment, UMG Recordings and Warner Music Group. Instead, a judge is being asked to issue an order that the money be paid into an interest-bearing account under the court’s control and direction.
“We have great respect for the Turtles and the work they have done to help secure payment for pre-’72 recordings,” responds an RIAA spokesperson. “They rightly trumpeted the recent settlement with Sirius XM as a significant step forward. However, their application is without merit and could force the delay of long-awaited payments to artists and labels who created iconic music for generations of fans.”
Flo & Eddie, represented by Henry Gradstein and others at Gradstein & Marzano, filed the first breakthrough case over the issue of the public performance of pre-72 recordings, which don’t fall under federal copyright protection. A proposed class action lawsuit filed in August 2013 asked to hold SiriusXM liable for misappropriating the recordings under California state law. The following year, the judge ruled in their favor in a head-turning decision that opened discussion about who else — Pandora? Terrestrial radio operators? — might be at fault for using older songs.
After Flo & Eddie filed their lawsuit, members of the Recording Industry Association of America followed with their own lawsuit against SiriusXM and got a similarly favorable ruling.
In court papers filed yesterday, Gradstein calls this latter lawsuit the “Coattail Action,” and says it’s now become the vehicle for a “brazen attempt to disrupt and interfere with the class action process.”
Specifically, Gradstein objects to being explicitly excluded from a mediation that included SiriusXM’s attorneys, representatives from the major labels and the RIAA. He tells the judge it’s a direct violation of California’s rules of professional conduct. He adds that the participants in the secret mediation came to a settlement that not only included pre-72 recordings that the major labels own, but also settled claims over recordings that the labels “control or otherwise have the right to contract with.”
“In other words, Sirius XM and the Major Labels purported to settle claims for the use of pre-1972 recordings owned by other Class members, and by doing so usurped the role of the Court and Class Counsel,” he writes.
Sirius XM’s motivation for coming to a deal with the RIAA is pegged as “fracturing the Class, destroying the leverage of the absent Class members to obtain a settlement on similar terms, and preventing Class Counsel from receiving a fee.”
Indeed, as part of the motion for an injunction, Gradstein is looking to preserve a portion of the settlement money for his firm’s legal fees. He feels entitled to such money because the major labels are said to have done “nothing” — even making an “an ill-conceived strategic blunder that nearly resulted in a disastrous ruling for the owners of pre-1972 recordings” (a nod to this) — while Flo & Eddie’s lawyers were doing the heavy lifting. “Yet, to obtain the benefit of that work without paying for it (and, thus, reaping where they have not sown), the Major Labels entered into a settlement that compensates them and excludes Class Counsel,” says the injunction motion.
Now feeling usurped, with possible questions hanging about the breadth of the settlement (and who is getting paid), U.S. District Judge Philip Gutierrez will have to decide what to do with the $210 million. He will also be responding to a demand to permit discovery about the circumstances of the settlement and bar SiriusXM from having communications with any of the RIAA members.