11:49am PT by Eriq Gardner
Songwriters Say They Have Standing to Sue the Justice Department Over Consent Decrees
Assuming Jeff Sessions is confirmed by the U.S. Senate to lead the Justice Department during Donald Trump's presidency, he'll likely have higher priorities than a massive dispute with the music industry over licensing rules. Nevertheless, as the Justice Department defends Trump's executive order on immigration and may soon be in court to oppose resistance to changes to environmental and financial regulations, Sessions will inherit a pending case involving songwriters. On Tuesday, plaintiffs in this case told a DC Circuit judge they have sufficient standing and concrete injuries to bring constitutional claims over the Justice Department's latest interpretation of consent decrees stretching back decades.
In 1941, in the midst of an antitrust investigation, the Justice Department entered into consent decrees with ASCAP and BMI that governed the licensing of public performance rights of songwriters, composers and music publishers. Thanks to the agreement, a New York federal court continues to be an arbiter of such matters as licensing rates and terms when the parties go head-to-head on adjustments every few years. Many in the song business believe that the rules are outdated in the digital age, but last August, after a big review, the Justice Department decided not to rip up the consent decrees.
Instead, the Justice Department angered ASCAP, BMI and their constituents by taking the position that 100 percent licensing, or "full-works licensing," is required under the consent decree. Meaning that any party that controls a part of a composition can issue a license for the use of the whole composition. Stated another way, a user of music doesn't have to worry how parts of a composition might be controlled by different entities.
It often takes many songwriters to create a composition and the intricate relationships are spelled out in contracts. So when word got out that the Justice Department was taking this position, one executive called it "a clusterf— of epic proportions," with warnings of administrative mayhem and the possibility that certain groups of songwriters might no longer be able to collaborate with each other.
ASCAP and BMI are obviously fighting the Justice Department in court over this, but there's another lawsuit out there on this topic that deserves attention, not merely because it involves a high-stakes controversy in music, but also because it tackles questions about who can bring claims over executive branch decision-making under the U.S. Constitution and the Administrative Procedure Act. Based on Trump's first few weeks in office, this area of law is likely going to be one of the most explosive topics in court over the next few years.
On Sept. 13, 2016, the Justice Department was sued by the Songwriters of North America as well as Michelle Lewis (who has written songs for Cher, Hillary Duff and Katherine McPhee), Thomas Kelly (Cyndi Lauper's "True Colors," The Divinyls' "I Touch Myself," Madonna's "Like a Virgin") and Pamela Sheyne (Christina Aguilera's “Genie in a Bottle").
"In this action, plaintiffs challenge a sweeping pronouncement by the Department of Justice Antitrust Division, rendered without proper authority or due process of law, that will limit and undermine the creative and economic activities of every songwriter and composer in the United States, as well as songwriters and composers abroad," stated the complaint.
On Nov. 18, the Justice Department, then being led by Loretta Lynch, demanded dismissal (see here) and told the judge that its August pronouncement merely expressed its view of what's required under the consent decrees and that interpretation and enforcement would be controlled by the New York federal court overseeing the ASCAP and BMI cases.
There also was this argument:
"There is no basis for a standalone lawsuit challenging an agency’s litigation position in another case, and the plaintiffs’ claims should be dismissed. The plaintiffs cannot meet the jurisdictional requirements of standing and ripeness because they do not allege any injury they have suffered or will suffer because of the Statement. The Statement only lays out what the Department believes is required under the consent decrees; it does not change the terms of the consent decrees or have any effect separate from the consent decrees. ... Even if the Court had jurisdiction, the Court should abstain from exercising jurisdiction because the plaintiffs are essentially asking the Court to determine the meaning of the ASCAP and BMI consent decrees."
On Tuesday, the plaintiffs' attorney Gerard Fox hit back with an opposition brief.
"Although Antitrust pretends otherwise, calling the new rule a 'clarification,' the Determination recognizes that songwriters as well as PROs will need significant time to implement the new rule, and that the rule will require wholesale renegotiations of the many songwriting agreements undergirding the efficient operation of the music-licensing marketplace," states the brief.
The plaintiffs blast the Justice Department's "misdirection," saying that ASCAP nor BMI actually own copyrights and they are the real "parties of interest" being harmed.
"Plaintiffs raise claims that cut to the core of what we hold out to be our democratic values: the rights to freedom of speech, freedom of association, freedom to own and control one's intellectual property, and freedom from government interference with their most intimate creative relationships," continues the brief. "And while it might suit Antitrust’s rewriting of history in this case to reframe it as one concerning the interests of the ASCAP and BMI — sophisticated businesses with which Antitrust has had a relationship for years — plaintiffs are, or represent, the smallest of small-business owners in America. These are individual men and women who may well be composing music or lyrics at the kitchen table while they wait for their kids' school bus or in the evening after everyone else has gone to sleep."
The brief (read here in full) then addresses why plaintiffs believe they have properly stated a procedural-due-process claim and why what the Justice Department put out last August represents a reviewable agency action or rule.
The Justice Department has suggested these songwriters might attempt to intervene in the ASCAP and BMI cases, but the plaintiffs doubt whether civil procedure or statute allows them to do so and argue their constitutional and APA claims are "very different" from the antitrust issues involved in the litigation determining what the consent decree requires.
The pending matter is before DC District judge Tanya Chutkan.