spotify vs lowery
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8/17/2019 Spotify vs Lowery
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SPOTIFY’S CORRECTED MEMORANDUM IN OPPOSITION TO MOTION FOR CORRECTIVE ACTIONCASE NO. 2:15-CV-09929-BRO-RAO
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MAYER BROWN LLPJOHN NADOLENCO (SBN 181128)
jnadolenco@mayerbrown.comEUGENE VOLOKH (SBN 194464)evolokh@mayerbrown.com350 South Grand Avenue, 25th Floor
Los Angeles, California 90071-1503Telephone: (213) 229-9500Facsimile: (213) 625-0248
A. JOHN P. MANCINI (admitted pro hac vice) jmancini@mayerbrown.comALLISON LEVINE STILLMAN (admitted prohac vice)astillman@mayerbrown.com1221 Avenue of the Americas
New York, New York 10020-1001Telephone: (212) 506-2295Facsimile: (212) 849-5895
ARCHIS A. PARASHARAMI (admitted prohac vice)aparasharami@mayerbrown.comDANIEL E. JONES (admitted pro hac vice)djones@mayerbrown.com1999 K Street, N.W.Washington, D.C. 20006-1101Telephone: (202) 263-3328Facsimile: (202) 263-5328
Attorneys for Defendant SPOTIFY USA INC.
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
DAVID LOWERY, VICTOR KRUMMENACHER, GREGLISHER, and DAVIDFARAGHER, individually and on
behalf of himself and all otherssimilarly situated,
Plaintiffs,
vs.
SPOTIFY USA INC., a Delawarecorporation,
Defendant.
Case No. 2:15-cv-09929-BRO-RAO
DEFENDANT SPOTIFY USA INC.’SCORRECTED MEMORANDUM OFPOINTS AND AUTHORITIES INOPPOSITION TO PLAINTIFFS’
MOTION FOR CORRECTIVEACTION TO PREVENTMISREPRESENTATIONS TOPUTATIVE CLASS MEMBERS
Date: May 16, 2016Time: 1:30 pmJudge: Hon. Beverly Reid O’Connell
Case 2:15-cv-09929-BRO-RAO Document 55 Filed 04/26/16 Page 1 of 23 Page ID #:1484
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TABLE OF CONTENTS
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SPOTIFY’S CORRECTED MEMORANDUM IN OPPOSITION TO MOTION FOR CORRECTIVE ACTIONCASE NO. 2:15-CV-09929-BRO-RAO
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TABLE OF AUTHORITIES....................................................................................ii
INTRODUCTION .................................................................................................... 1
BACKGROUND ...................................................................................................... 3ARGUMENT............................................................................................................6
I. Plaintiffs Filed This Motion Despite Spotify’s Willingness ToProvide Them With Most Of The Communications In Spotify’sPossession That They Have Requested ............................................... 6
II. Plaintiffs Improperly Seek Relief Directed At, And Based OnThe Alleged Conduct Of, The NMPA, Which Is Not A Party ToThis Litigation......................................................................................7
III. Plaintiffs’ Demand To Review And Approve FutureCommunications By Spotify Violates The First Amendment...........10
A. Plaintiffs Allege No Improper Communications BySpotify...................................................................................... 12
B. Spotify’s Communications With Publishers RegardingThe NMPA Agreement Have Been Extremely Limited And Are Not Coercive.............................................................14
CONCLUSION....................................................................................................... 17
Case 2:15-cv-09929-BRO-RAO Document 55 Filed 04/26/16 Page 2 of 23 Page ID #:1485
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TABLE OF AUTHORITIES
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SPOTIFY’S CORRECTED MEMORANDUM IN OPPOSITION TO MOTION FOR CORRECTIVE ACTIONCASE NO. 2:15-CV-09929-BRO-RAO
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Cases Alcatel-Lucent USA v. Dugdale Commc’ns,
2009 WL 3346784 (C.D. Cal. Oct. 13, 2009) .................................................. 6, 7
Alemite Mfg. Corp. v. Staff ,42 F.2d 832 (2d Cir. 1930) ...................................................................................7
Applegate v. Kokor ,2015 WL 7007997 (E.D. Cal. Nov. 12, 2015) ..................................................... 7
Babbitt v. Albertson’s Inc.,1993 WL 128089 (N.D. Cal. Jan. 28, 1993) ......................................................11
Bryant v. Gallagher ,
2014 WL 1276475 (E.D. Cal. Mar. 27, 2014) ...................................................10 Burrell v. Crown Cent. Petroleum, Inc.,
176 F.R.D. 239 (E.D. Tex. 1997).......................................................................15
Camp v. Alexander ,300 F.R.D. 617 (N.D. Cal. 2014) ....................................................................... 16
Castaneda v. Burger King,2009 WL 2382688 (N.D. Cal. July 31, 2009)....................................................11
Chase Nat’l Bank v. City of Norwalk ,
291 U.S. 431 (1934) ............................................................................................. 9
Deutsche Int’l 1 v. E1 Trade Int’l,2006 WL 6106246 (C.D. Cal. Jan. 4, 2006)......................................................... 7
Gerlach v. Wells Fargo & Co.,2006 WL 824652 (N.D. Cal. Mar. 28, 2006).....................................................11
Gonzales v. Valenzuela,2002 WL 34700599 (C.D. Cal Oct. 7, 2002) ....................................................... 7
Gulf Oil Co. v. Bernard ,452 U.S. 89 (1981) ...................................................................................2, 11, 17
Hansberry v. Lee,311 U.S. 32 (1940) ............................................................................................... 8
Hernandez v. Best Buy Stores, L.P.,2015 WL 7176352 (S.D. Cal. Nov. 13, 2015) ...................................................11
Case 2:15-cv-09929-BRO-RAO Document 55 Filed 04/26/16 Page 3 of 23 Page ID #:1486
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SPOTIFY’S CORRECTED MEMORANDUM IN OPPOSITION TO MOTION FOR CORRECTIVE ACTIONCASE NO. 2:15-CV-09929-BRO-RAO
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Jenifer v. Delaware Solid Waste Auth.,1999 WL 117762 (D. Del. Feb. 25, 1999) ......................................................... 15
Keystone Tobacco Co., Inc. v. U.S. Tobacco Co.,238 F. Supp. 2d 151 (D.D.C. 2002) ...................................................................15
Kleiner v. First National Bank ,751 F.2d 1193 (11th Cir. 1985)....................................................................16, 17
In re McKesson HBOC, Inc. Securities Litigation,126 F. Supp. 2d 1239 (N.D. Cal. 2000) ............................................................... 9
Microsystems Software, Inc. v. Scandinavia Online AB,226 F.3d 35 (1st Cir. 2000) ..................................................................................9
New York v. Operation Rescue Nat’l,80 F.3d 64 (2d Cir. 1996) ..................................................................................... 7
Parks v. Eastwood Ins. Servs., Inc.,235 F. Supp. 2d 1082 (C.D. Cal. 2002)....................................................2, 11, 13
Quezada v. Schneider Logistics Transloading & Distribution,2013 WL 1296761 (C.D. Cal. Mar. 25, 2013) ................................................... 16
Singer v. Live Nation Worldwide,2012 WL 123146 (C.D. Cal. Jan. 13, 2012).........................................................7
Talamantes v. PPG Indus., Inc.,2014 WL 4145405 (N.D. Cal. Aug. 21, 2014)...................................................11
Talavera v. Leprino Foods Co.,2016 WL 880550 (E.D. Cal. Mar. 8, 2016) .......................................................16
Valdovinos v. County of Los Angeles,2008 WL 2872648 (C.D. Cal. Jul. 23, 2008) ....................................................... 7
Weight Watchers of Phila., Inc. v. Weight Watchers Int’l, Inc.,455 F.2d 770 (2d Cir. 1972) ...............................................................................12
Wright v. Adventures Rolling Cross Country, Inc.,
2012 WL 2239797 (N.D. Cal. June 15, 2012) ...................................................16
Zenith Radio Corp. v. Hazeltine Research, Inc.,395 U.S. 100 (1969) ............................................................................................. 8
Zepeda v. I.N.S.,753 F.2d 719 (9th Cir. 1983) ................................................................................7
Case 2:15-cv-09929-BRO-RAO Document 55 Filed 04/26/16 Page 4 of 23 Page ID #:1487
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8/17/2019 Spotify vs Lowery
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8/17/2019 Spotify vs Lowery
6/23
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SPOTIFY’S CORRECTED MEMORANDUM IN OPPOSITION TO MOTION FOR CORRECTIVE ACTIONCASE NO. 2:15-CV-09929-BRO-RAO
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INTRODUCTION
Plaintiffs’ motion is long on speculation but falls short on the merits. As an
initial matter, Plaintiffs fail to mention that Spotify has agreed to disclose to them
both the agreement it has reached with the National Music Publishers’ Association
(“NMPA”) as well as communications with NMPA members1
regarding the
NMPA Agreement that are in Spotify’s possession—subject only to the basic
protections and processes of a protective order. But rather than see that common-
sense proposal through, Plaintiffs rushed to filed this motion.
Although it is hard to understand why Plaintiffs chose to circumvent a
meaningful negotiation process, their motion for appointment as lead counsel—
filed just hours after this motion—offers some clues. The lead counsel motion
describes this motion at length, specifically asserting that it bolsters their claim to
lead counsel status. See, e.g., Dkt. No. 47, at 11-13.
Any such motivation would be unfortunate, especially given that Spotify had
already agreed to provide much of the information Plaintiffs sought, rendering the
motion unnecessary. Perhaps recognizing this fact, Plaintiffs’ motion sweeps
beyond Spotify to target the NMPA. Indeed, Plaintiffs focus largely on alleged
communications made by the NMPA, not Spotify. E.g., Mot. 7-12. But their
attempt to obtain discovery from and injunctive relief against the NMPA via this
motion is improper for the simple reason that the NMPA is not a party to this
lawsuit. Plaintiffs attempt to bridge that gap by treating Spotify and the NMPA
interchangeably, but these assertions are contrary to common sense as well as the
facts. Spotify and the NMPA are independent and separately-represented entities
who are, after all, counterparties to the NMPA Agreement. What is more, the
adversarial negotiations culminating in the NMPA Agreement began in June 2015
months before this lawsuit was filed. See Decl. of Natalie Margulies ¶¶ 4-6. The
1It is undisputed that only the NMPA’s publisher members are eligible to
participate in the NMPA Agreement. See Mot. 8.
Case 2:15-cv-09929-BRO-RAO Document 55 Filed 04/26/16 Page 6 of 23 Page ID #:1489
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8/17/2019 Spotify vs Lowery
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SPOTIFY’S CORRECTED MEMORANDUM IN OPPOSITION TO MOTION FOR CORRECTIVE ACTIONCASE NO. 2:15-CV-09929-BRO-RAO
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Federal Rules of Civil Procedure foreclose Plaintiffs’ bait and switch: Rule 65
does not authorize the Court to enjoin communications by nonparty NMPA, and if
Plaintiffs wish to acquire any documents that are in NMPA’s possession, their
proper course is to obtain a subpoena under Rule 45.
Finally, although Plaintiffs do not point to a single allegedly improper
communication by Spotify—and Spotify’s communications with the NMPA’s
members about the NMPA Agreement have been exceedingly limited—they urge
the Court to impose a broad prior restraint on any future speech by Spotify
concerning the NMPA Agreement or any settlement. The Court should reject that
request. It is well settled that a defendant’s communications with putative class
members prior to class certification—including communications about potentia
settlements—are not only permitted, but protected by the First Amendment. See
Gulf Oil Co. v. Bernard , 452 U.S. 89 (1981). As the Supreme Court made clear in
Gulf Oil, to withstand First Amendment scrutiny “an order limiting
communications between parties and potential class members” must be “based on a
clear record and specific findings” reflecting “a likelihood of serious abuses”—and
any such order must be narrowly drawn to “limit[] speech as little as possible.” Id
at 101-02, 104. Thus, as Judge Taylor put it in denying an application by plaintiffs
to prevent communications by a defendant, “the Supreme Court has held parties or
their counsel should not be required to obtain prior judicial approval before
communicating in a pre-certification class action, except as needed to prevent
serious misconduct.” Parks v. Eastwood Ins. Servs., Inc., 235 F. Supp. 2d 1082
1084 (C.D. Cal. 2002) (emphasis added) (citing Gulf Oil, 452 U.S. at 94-95, 101-
02). There has been no misconduct at all by Spotify here—much less “serious
misconduct”—and Plaintiffs’ mere speculation and erroneous accusations are no
substitute for the “clear record and specific findings” required for judicia
intervention.
Case 2:15-cv-09929-BRO-RAO Document 55 Filed 04/26/16 Page 7 of 23 Page ID #:1490
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8/17/2019 Spotify vs Lowery
8/23
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SPOTIFY’S CORRECTED MEMORANDUM IN OPPOSITION TO MOTION FOR CORRECTIVE ACTIONCASE NO. 2:15-CV-09929-BRO-RAO
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BACKGROUND
Plaintiffs’ description of the events leading up to this motion (see Mot. 4-6)
is misleading and incomplete. According to them, this motion is necessary
because Spotify has not “agreed to provide a copy of the agreement [with the
NMPA] or to disclose the terms or representations being made by” Spotify
regarding the NMPA Agreement. Mot. 1. That is false: As Plaintiffs’ own
submissions show, Spotify has agreed to disclose these documents to Plaintiffs on
the unremarkable condition that the parties first enter into a protective order to
provide basic processes and protections for the disclosure of confidentia
information. Rather than take Spotify up on that offer, Plaintiffs moved the goal-
posts, demanding for the first time shortly before the filing of this motion that
Spotify produce documents in the NMPA’s possession rather than just those in
Spotify’s possession. When Spotify pointed out that it could not produce
documents in a third-party’s possession or control, Plaintiffs then rushed to file,
now claiming that “Spotify . . . refused to cooperate with Plaintiffs in resolving this
issue.” Mot. 3.
The actual timeline of events surrounding the NMPA Agreement and the
parties’ correspondence thus tells a far different story than the one Plaintiffs tell in
their motion. Those events begin well before this lawsuit or the related Ferrick
action were filed: Spotify and the NMPA began arms-length negotiations and
conversations over an agreement regarding potential royalty payments for
unmatched works in June 2015; the parties exchanged proposed terms for an
agreement in November 2015—before Lowery indicated that he was considering
filing a lawsuit. Margulies Decl. ¶¶ 5-6. After several months of negotiation
Spotify and the NMPA reached a final, bilateral agreement in March 2016. Id. ¶ 4
Although the specific terms of the NMPA Agreement are confidential, an overview
of the Agreement was announced to the public in a press release on March 17
2016, jointly issued by the NMPA and Spotify. Id. ¶ 4 & Ex. 1.
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On Thursday, March 24, 2016, a week after that press release, Plaintiffs’
counsel sent Spotify (through its counsel) a letter seeking “a copy of the settlement
agreement between NMPA and Spotify, as well as any notifications that have been
sent to NMPA members (to the extent Spotify possesses them) regarding their
ability to ‘opt-in’ or ‘opt-out’ of the settlement.” Hanna Decl. Ex. F. The letter
(inaccurately) described the NMPA settlement as an “admission of Spotify’s
liability for its infringement of numerous works.” Id. On the same day
presumably recognizing that the NMPA is a separately represented and
independent entity, Plaintiffs’ counsel sent the NMPA a similar letter requesting
the NMPA Agreement and any notifications that have been sent to NMPA
members. Hanna Decl. Ex. G.
The NMPA, through separate outside counsel, sent Plaintiffs a letter the next
day denying their request for documents, pointing out the indisputable facts that
the NMPA is not a party to this case and that Plaintiffs’ counsel does not currently
represent any publishers or songwriters besides the named Plaintiffs. Hanna Decl
Ex. H.
Spotify’s counsel responded to Plaintiffs’ letter on Monday, March 28, 2016
correcting Plaintiffs’ mischaracterization of the NMPA Agreement as an admission
of liability and seeking more information about Plaintiffs’ request. Hanna Decl
Ex. I. Spotify’s counsel offered to “make ourselves available for a meet and
confer” and to “follow up” regarding the “confidentiality obligations to third
parties implicated by your request.” Id.
There was no response on this issue for eleven days. Then, on April 8, 2016
Plaintiffs’ counsel sent an email expressing the “inten[t] to bring the issue to the
Court’s attention via a motion,” on the apparent belief that Spotify had “declined
[their] request to review” the NMPA Agreement and communications referenced
in their March 24 letter. Hanna Decl. Ex. J, at 128. Spotify’s counsel responded to
that email on the same day, pointing out that Spotify had not declined the request
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but rather wanted more information from Plaintiffs. Id. at 127-28.
After further email exchanges, the parties agreed to a telephonic meet and
confer on April 14 and that the meet and confer would be considered timely for
purposes of filing a motion based on Plaintiffs’ March 24 request for documents
See id. at 122-25. During that meet and confer, as memorialized by an email from
Plaintiffs’ counsel, Plaintiffs’ counsel changed its request from seeking
notifications to NMPA members “to the extent Spotify possesses them” to seeking
“all documents made by either Spotify and/or NMPA to the NMPA members
regarding the agreement reached.” Id. (emphasis added).
Spotify sent back a detailed response the next day (Friday, April 15, 2016)
pointing out that Spotify “has agreed to produce the[] documents” initially
requested by Plaintiffs in their March 24 letter—namely, “the NMPA Agreement
and any notifications that have been sent to NMPA members regarding their ability
to ‘opt in’ or ‘opt out’ of the Agreement ‘to the extent Spotify possesses them’”—
“provided that they are governed by an operative protective order that contains the
protections required under the Agreement.” Id. at 121. As for Plaintiffs’ new
request that Spotify produce documents in NMPA’s possession, Spotify responded
that “it is not appropriate or even practicable for Spotify to agree to produce a third
party’s documents that are not in its own possession, custody or control,” and that
Plaintiffs were free to “seek any documents from the NMPA through the subpoena
procedure.” Id. Spotify agreed “not to object to such a subpoena based on Rule
26(f) requirements,” noting that “that is the most Spotify can commit to do vis-a-
vis third party documents that Spotify does not control.” Id. Spotify made clear
however, that it had not “waived any meet and confer requirements under the local
rules” with respect to Plaintiffs’ new request for third-party documents. Id.
Plaintiffs spurned Spotify’s offer to provide them with the documents that
they had originally requested. It appears that their counsel was determined to get
something on file in this Court in order to buttress their motion for appointment of
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lead interim class counsel, which was filed later the same day. See Dkt. No. 47
Indeed, their motion for appointment of interim class counsel touted the instant
motion as evidence of counsel’s supposed “commitment to protect the putative
class.” Id. at 11-13; see also Hanna Decl., Dkt. No. 47-1, ¶¶ 3-7 & Exs. A-D.
ARGUMENT
I. Plaintiffs Filed This Motion Despite Spotify’s Willingness To ProvideThem With Most Of The Communications In Spotify’s Possession ThatThey Have Requested.
This motion is the result of Plaintiffs’ rush to file in a transparent attempt to
further their bid for lead interim counsel status. As detailed above, Spotify has in
fact agreed to produce to Plaintiffs everything that they were asking for (subject to
a commonplace protective order), with the exception of their new request for
documents in the possession of third-party NMPA. And that new request is legally
improper. See pp. 7-10, infra. Thus, the present motion boils down to a pointless
waste of the Court’s time on an issue that Spotify was prepared to agree upon
Indeed, Spotify is filing the NMPA Agreement under seal along with this
opposition (Decl. of A John P. Mancini Ex. 1), providing the same access to the
Agreement, subject to the protections of confidentiality (if the Court agrees), that
Spotify was willing to provide without any motion practice.
Avoiding burdening the Court and the parties with this kind of unnecessary
motion practice is precisely what this district’s Local Rules are designed to
prevent. As Judge Gutierrez has put it, “[t]he meet and confer requirements of
Local Rule 7-3 are in place for a reason”; if the parties had meaningfully met and
conferred, then a “motion could have been avoided” and “the Court’s valuable time
could have been spared.” Alcatel-Lucent USA v. Dugdale Commc’ns, 2009 WL
3346784, at *4 (C.D. Cal. Oct. 13, 2009).
Indeed, Plaintiffs have failed to comply not only with the spirit of Local
Rule 7-3’s meet and confer requirement, but also its letter. In particular, Plaintiffs
made their request that Spotify produce documents in NMPA’s possession for the
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first time on April 14, 2016—four days before this motion was filed. As to that
new request—never before made—Spotify’s counsel had not waived Local Rule 7-
3’s mandate that the parties’ conference “shall take place at least ten (10) days
prior to the filing of the motion.” And courts in this district routinely deny motions
when the filing party has not properly met and conferred under Local Rule 7-3.2
This motion should be no exception.
II. Plaintiffs Improperly Seek Relief Directed At, And Based On TheAlleged Conduct Of, The NMPA, Which Is Not A Party To ThisLitigation.
Having no genuine basis for a motion against Spotify, Plaintiffs’ strategy
instead is to treat Spotify and the NMPA interchangeably, and to seek an order
nominally directed at Spotify for injunctive relief and discovery that they could not
obtain with respect to the NMPA.
Plaintiffs’ gambit is contrary to the Federal Rules of Civil Procedure and
common sense. The NMPA, as a nonparty to this litigation, is not subject to any
injunction issued by this Court. Rule 65(d) of the Federal Rules of Civil Procedure
codifies the “well-established principle that, in exercising its equitable powers, a
court ‘cannot lawfully enjoin the world at large.’” New York v. Operation Rescue
Nat’l, 80 F.3d 64, 70 (2d Cir. 1996) (quoting Alemite Mfg. Corp. v. Staff , 42 F.2d
832, 832 (2d Cir. 1930) (Hand, J.)). It is well established that “[a] federal court
may issue an injunction if it has personal jurisdiction over the parties and subject
matter jurisdiction over the claim; it may not attempt to determine the rights of
persons not before the court.” Zepeda v. I.N.S., 753 F.2d 719, 727 (9th Cir. 1983)
(emphasis added); see also, e.g., Applegate v. Kokor , 2015 WL 7007997, at *2
2See, e.g., Singer v. Live Nation Worldwide, 2012 WL 123146, at *2 (C.D
Cal. Jan. 13, 2012); Alcatel-Lucent , 2009 WL 3346784, at *3-4; Valdovinos vCounty of Los Angeles, 2008 WL 2872648, at *2 (C.D. Cal. Jul. 23, 2008)Gonzales v. Valenzuela, 2002 WL 34700599, at *1 (C.D. Cal Oct. 7, 2002)
Deutsche Int’l 1 v. E1 Trade Int’l, 2006 WL 6106246, at *1 (C.D. Cal. Jan. 42006).
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(E.D. Cal. Nov. 12, 2015) (“[A]bsent a substantial relationship, not present here, a
court may not enter an injunction against persons who are not parties to the case
before it.”). That limit makes sense; it is a basic rule of due process that “one is
not bound by a judgment in personam in a litigation in which he is not designated
as a party or to which he has not been made a party by service of process.”
Hansberry v. Lee, 311 U.S. 32, 40 (1940). Accordingly, Rule 65 mandates that an
injunction can bind only a limited universe of entities: (1) the parties; (2) their
“officers, agents, servants, employees, and attorneys”; or (3) those in “active
concert or participation” with them. Fed. R. Civ. P. 65(d)(2); see also Zenith
Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 112 (1969) (“[A] nonparty
with notice cannot be held in contempt until shown to be in concert or
participation.”).
Plaintiffs presumably recognize these principles, because their Proposed
Order parrots the “in concert” language of Rule 65(d)(2). See Dkt. No. 46-2, ¶¶ 1
3. But they have no basis for their repeated assertions that the NMPA “is acting in
concert with Spotify.” Mot. 1, 3, 7; see also, e.g., id. at 2 (asserting that the
NMPA is Spotify’s “partner”); id. at 15 (asserting that the NMPA has made
communications “on behalf of Spotify”). Rather, they simply speculate in a
footnote, without further explanation, that because the NMPA used to own the
Harry Fox Agency, and because the Harry Fox Agency is currently Spotify’s music
licensing agent, the NMPA agreement “could not be the result of a truly
independent, arm’s-length negotiation.” Id. at 2 n.1. They in fact do not even
make that flimsy assertion themselves, but rather attribute it to unspecified and
unsubstantiated “vocal public criticism” about the NMPA Agreement. Id. And
they further suggest that the NMPA Agreement could not be the result of an arms’-
length transaction because it was finalized after this lawsuit was filed. Id. at 1.
Plaintiffs are wrong on all counts. As explained above, the NMPA
Agreement was not a response to this litigation, but rather the product of months of
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conversations and negotiations which had begun by June 2015, several months
before this lawsuit was filed. Margulies Decl. ¶ 5. Indeed, the negotiations were
substantially underway well before December 10, 2015, which was the date on
which Plaintiffs’ counsel sent a letter to Spotify regarding the potential filing of
this suit. Id. For example, Spotify’s records show that by November 2015, Spotify
and the NMPA had exchanged detailed sets of proposed terms for the Agreement
Id. Moreover, these negotiations were conducted at arms’ length. Id. ¶ 6. Each
party was represented separately by counsel throughout the negotiations, during
which many issues were contested, and a number of aspects of the negotiation
were hard-fought and at times contentious. Id.
Accordingly, Plaintiffs’ showing falls far short of the narrow “active concert
or participation” standard codified by Rule 65(d). As the Supreme Court has long
held, the relationship between the party and the nonparty must be “that of associate
or confederate.” Chase Nat’l Bank v. City of Norwalk , 291 U.S. 431, 436-37
(1934); see also Microsystems Software, Inc. v. Scandinavia Online AB, 226 F.3d
35, 43 (1st Cir. 2000) (“[A]ctive concert” requires a “close alliance with the
enjoined defendant”).3 Spotify and the NMPA are counterparties to the NMPA
Agreement, not confederates.
3Plaintiffs cite only In re McKesson HBOC, Inc. Securities Litigation, 126 F
Supp. 2d 1239 (N.D. Cal. 2000) for the proposition that the Court can issue anorder directed at a nonparty like NMPA limiting its communications. Mot. 12-13But in McKesson, a massive consolidated securities class action, the law firms thatthe court enjoined from soliciting putative class members were “firms whose leadcounsel bids had been rejected by the court.” 126 F. Supp. 2d at 1241. In responseto that rejection, the firms then “initiated a solicitation campaign to recruitindividual McKesson shareholders to assert non-class claims,” attempting to poach
plaintiffs from the putative class that they had just lost their bid to represent. IdThus, the law firms already were substantially involved with the litigation, unlikenonparty NMPA here. Moreover, the court in McKesson pointed to specialconcerns under the Private Securities Litigation Reform Act of 1995, such as itsaim of “discourag[ing] attorney-driven litigation.” Id. at 1243. Finally, the courtindicated that it was “particularly disturb[ed]” by “alleged deceptions” made bylawyers, including that “[a]ttorneys have a special obligation not to disguise theiradvertisements as official-sounding notices” (id. at 1244-45 (citing CaliforniaRules of Professional Conduct and related standards)). None of these concernsrelating to lawyers are present here.
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8/17/2019 Spotify vs Lowery
15/23
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SPOTIFY’S CORRECTED MEMORANDUM IN OPPOSITION TO MOTION FOR CORRECTIVE ACTIONCASE NO. 2:15-CV-09929-BRO-RAO
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Finally, because the NMPA is an independent third party, Plaintiffs’ novel
and impractical demand that Spotify produce documents in NMPA’s possession
(see p. 5, supra) necessarily fails as well. The way to obtain discovery from a third
party is through a subpoena under Rule 45. Indeed, courts have made clear that
“[a] Rule 45 subpoena is the only discovery method by which information may be
obtained from a third party.” Bryant v. Gallagher , 2014 WL 1276475, at *2 (E.D
Cal. Mar. 27, 2014) (emphasis added) (collecting cases); see also Fed. R. Civ. P
34(c) (“ As provided in Rule 45, a nonparty may be compelled to produce
documents and tangible things or to permit an inspection.”) (emphasis added)
Plaintiffs have not even attempted to serve and enforce a subpoena here, instead
choosing to make an impossible demand of Spotify and then using Spotify’s
(understandable) inability to agree to that demand as a basis for filing this motion.4
III. Plaintiffs’ Demand To Review And Approve Future CommunicationsBy Spotify Violates The First Amendment.
The final relief that Plaintiffs request in their motion is an order limiting any
future communications by Spotify with putative class members concerning any
alleged settlement with Spotify. Specifically, they demand that “all written
communications concerning a settlement with Spotify must inform putative class
members of: (1) the pendency of this litigation; (2) the nature of the litigation and
the claims; and (3) their right to contact class counsel or any attorney of their
choosing before making a decision as to whether to opt in to any settlement with
Spotify.” Proposed Order ¶ 3. In addition, they demand that any such
communication “be submitted to Plaintiffs’ counsel for their review and approvalat least fourteen (14) days” in advance. Id.4
Plaintiffs complained that they could not serve a subpoena because there hasnot yet been a Rule 26(f) conference. But Spotify agreed to waive any objectionsto a subpoena on that basis. See p. 5, supra; Hanna Decl. Ex. J, at 121Accordingly, Plaintiffs’ excuse is baseless: Rule 26 provides that “[a] party maynot seek discovery from any source before the parties have conferred as required
by Rule 26(f), except . . . when authorized by these rules, by stipulation, or bycourt order.” Fed. R. Civ. P. 26(d)(1) (emphases added).
Case 2:15-cv-09929-BRO-RAO Document 55 Filed 04/26/16 Page 15 of 23 Page ID #:1498
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8/17/2019 Spotify vs Lowery
16/23
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SPOTIFY’S CORRECTED MEMORANDUM IN OPPOSITION TO MOTION FOR CORRECTIVE ACTIONCASE NO. 2:15-CV-09929-BRO-RAO
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Plaintiffs’ request violates Spotify’s First Amendment free-speech rights to
engage in pre-certification communications with putative class members, which
include the right to discuss the possibility of settlement. While Rule 23(d)
authorizes district courts to “enter appropriate orders governing the conduct of
counsel any parties,” the Supreme Court has mandated that any restrictions
imposed on communications with unnamed class members must avoid undue
infringement of the parties’ right to free speech. Gulf Oil, 452 U.S. at 100
Specifically, to withstand First Amendment scrutiny, an order limiting parties
communications with putative class members must “be based on a clear record and
specific findings that reflect a weighing of the need for a limitation and the
potential interference with the rights of the parties.” Id. at 101; see also id. at 104
(recognizing that “the mere possibility of abuses does not justify routine adoption
of a communication ban”). Put another way, “[t]o the extent that the district court
is empowered . . . to restrict certain communications in order to prevent frustration
of the policies of Rule 23, it may not exercise the power without a specific record
showing by the moving party of the particular abuses by which it is threatened .”
Id. at 102 (emphasis added).
Accordingly, federal courts in California have repeatedly held that parties
may communicate with putative class members pre-certification in the absence of a
specific showing of actual or threatened serious abuses, such as deceptive conduct
or coercion. See, e.g., Hernandez v. Best Buy Stores, L.P., 2015 WL 7176352, at
*15 (S.D. Cal. Nov. 13, 2015); Talamantes v. PPG Indus., Inc., 2014 WL
4145405, at *3-5 (N.D. Cal. Aug. 21, 2014); Castaneda v. Burger King, 2009 WL
2382688, at *5-7 (N.D. Cal. July 31, 2009); Gerlach v. Wells Fargo & Co., 2006
WL 824652, at *7 (N.D. Cal. Mar. 28, 2006); Parks, 235 F. Supp. 2d at 1085
Babbitt v. Albertson’s Inc., 1993 WL 128089, at *4 (N.D. Cal. Jan. 28, 1993). As
Judge Friendly put it over four decades ago, “we are unable to perceive any legal
theory that would endow a plaintiff who has brought what would have been a
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