Sirius XM Lawyers' Blunder in Pre-1972 Recordings Case

Soon after swooping in to represent Sirius XM Radio in potentially industry-shaking copyright litigation, O'Melveny & Myers suffered a nasty setback when a judge ruled that newly cited precedent trumpeted by the firm had been overruled 60 years ago.

In a scathing order issued in December, U.S. District Judge Colleen McMahon in the U.S. District Court for the Southern District of New York ruled she hadn't erred when she failed to apply RCA Manufacturing Co. v. Whiteman, 114 F.2d 86 (2d Cir. 1940), in concluding in November that Sirius must pay royalties to broadcast pre-Feb. 15, 1972 sound recordings. “The only clear error in this case is O'Melveny's,” Judge McMahon wrote. She also blasted the law firm for “deliberately missing the point” and “doing nothing but raise red herrings” since making its initial appearance in the case in November. (The order is available online at http://bit.ly/13KkiUJ.)

This ruling stems from the New York federal lawsuit in which the two founding members of the 1960s rock band The Turtles allege that Sirius infringed on the group's rights under state common law copyright by playing its songs without permission. Flo & Eddie Inc. v. Sirius XM Radio Inc., 13-5784. Federal copyright law doesn't govern sound recordings made prior to Feb. 15, 1972, and Sirius has argued in its defense that New York law also doesn't cover public performance rights for pre-1972 sound recordings.

District Judge McMahon sided with The Turtles' founders in a Nov. 14 ruling that sent shockwaves throughout the music and recording worlds. The owners of pre-1972 sound recordings do indeed have performance rights to their songs under common law copyright, Judge McMahon ruled, and Sirius therefore infringed the band members' copyrights when it broadcast their songs to subscribers. Sirius responded by dropping its lawyers at Weil, Gotshal & Manges; Sheppard, Mullin, Richter & Hampton; and Kramer Levin Naftalis & Frankel, who had suffered a series of losses for Sirius in litigations in California and New York regarding the pre-1972 recordings.

Sirius's new lawyers at O'Melveny, led by partner Daniel Petrocelli, moved quickly to try to undo the damage. In a motion for reconsideration filed in December, they argued that both their predecessors and the judge had neglected to consider Whiteman, a decision authored by Judge Learned Hand for the U.S. Court of Appeals for the Second Circuit way back in 1940. Whiteman completely undermined The Turtles' case, the O'Melveny lawyers maintained, because it established that New York doesn't recognize a public performance right as part of the common law copyright in sound recordings.

Judge McMahon was sufficiently impressed by what Sirius unearthed that she ordered further briefing on Whiteman 's impact. But she wasn't at all impressed by what she learned. Not only did she rule that she disagreed with O'Melveny's interpretation of the decision, but she wrote that “so does every other court and authority that has considered the issue.”

Her major sting, however, came more than halfway through her opinion. As The Turtles' attorneys pointed out in a December 10 brief, Whiteman was overturned by the Second Circuit just a few years after it was issued. “Even if Whiteman stood for the proposition that Sirius asserts ' and it does not ' Sirius's motion for reconsideration fails for a second reason: Whiteman has been overruled, so it stands for nothing at all,” the federal judge ruled.

Harry Geller and Henry Gradstein of the Los Angeles-based firm Gradstein & Marzano, who represent The Turtles' founders, said they were surprised by O'Melveny's apparent blunder, but added: “At some point Sirius XM will decide the issue is not their lawyers, but their failure to comply with the law,” Geller said.

O'Melveny attorneys Petrocelli and Marc Pensabene didn't respond to a request for comment.

In addition to their motion for reconsideration, Sirius's lawyers have asked the court certify an interlocutory appeal. Judge McMahon said she would wait to decide about the appeal until she first addresses outstanding motions on why she shouldn't enter judgment against Sirius on liability.

In a similar case pending in the Southern District of Florida, O'Melveny has notified the Florida court of Judge McMahon's order, noting that it was relevant to a summary judgment motion before that court. Flo & Eddie Inc. v. Sirius XM Radio Inc., 2013cv23182 (S.D.Fla. 2014).

Lisa Shuchman is a Reporter for Corporate Counsel magazine, an ALM sibling of Entertainment Law & Finance.

Soon after swooping in to represent Sirius XM Radio in potentially industry-shaking copyright litigation, O'Melveny & Myers suffered a nasty setback when a judge ruled that newly cited precedent trumpeted by the firm had been overruled 60 years ago.

In a scathing order issued in December, U.S. District Judge Colleen McMahon in the U.S. District Court for the Southern District of New York ruled she hadn't erred when she failed to apply RCA Manufacturing Co. v. Whiteman, 114 F.2d 86 (2d Cir. 1940), in concluding in November that Sirius must pay royalties to broadcast pre-Feb. 15, 1972 sound recordings. “The only clear error in this case is O'Melveny's,” Judge McMahon wrote. She also blasted the law firm for “deliberately missing the point” and “doing nothing but raise red herrings” since making its initial appearance in the case in November. (The order is available online at http://bit.ly/13KkiUJ.)

This ruling stems from the New York federal lawsuit in which the two founding members of the 1960s rock band The Turtles allege that Sirius infringed on the group's rights under state common law copyright by playing its songs without permission. Flo & Eddie Inc. v. Sirius XM Radio Inc., 13-5784. Federal copyright law doesn't govern sound recordings made prior to Feb. 15, 1972, and Sirius has argued in its defense that New York law also doesn't cover public performance rights for pre-1972 sound recordings.

District Judge McMahon sided with The Turtles' founders in a Nov. 14 ruling that sent shockwaves throughout the music and recording worlds. The owners of pre-1972 sound recordings do indeed have performance rights to their songs under common law copyright, Judge McMahon ruled, and Sirius therefore infringed the band members' copyrights when it broadcast their songs to subscribers. Sirius responded by dropping its lawyers at Weil, Gotshal & Manges; Sheppard, Mullin, Richter & Hampton; and Kramer Levin Naftalis & Frankel, who had suffered a series of losses for Sirius in litigations in California and New York regarding the pre-1972 recordings.

Sirius's new lawyers at O'Melveny, led by partner Daniel Petrocelli, moved quickly to try to undo the damage. In a motion for reconsideration filed in December, they argued that both their predecessors and the judge had neglected to consider Whiteman, a decision authored by Judge Learned Hand for the U.S. Court of Appeals for the Second Circuit way back in 1940. Whiteman completely undermined The Turtles' case, the O'Melveny lawyers maintained, because it established that New York doesn't recognize a public performance right as part of the common law copyright in sound recordings.

Judge McMahon was sufficiently impressed by what Sirius unearthed that she ordered further briefing on Whiteman 's impact. But she wasn't at all impressed by what she learned. Not only did she rule that she disagreed with O'Melveny's interpretation of the decision, but she wrote that “so does every other court and authority that has considered the issue.”

Her major sting, however, came more than halfway through her opinion. As The Turtles' attorneys pointed out in a December 10 brief, Whiteman was overturned by the Second Circuit just a few years after it was issued. “Even if Whiteman stood for the proposition that Sirius asserts ' and it does not ' Sirius's motion for reconsideration fails for a second reason: Whiteman has been overruled, so it stands for nothing at all,” the federal judge ruled.

Harry Geller and Henry Gradstein of the Los Angeles-based firm Gradstein & Marzano, who represent The Turtles' founders, said they were surprised by O'Melveny's apparent blunder, but added: “At some point Sirius XM will decide the issue is not their lawyers, but their failure to comply with the law,” Geller said.

O'Melveny attorneys Petrocelli and Marc Pensabene didn't respond to a request for comment.

In addition to their motion for reconsideration, Sirius's lawyers have asked the court certify an interlocutory appeal. Judge McMahon said she would wait to decide about the appeal until she first addresses outstanding motions on why she shouldn't enter judgment against Sirius on liability.

In a similar case pending in the Southern District of Florida, O'Melveny has notified the Florida court of Judge McMahon's order, noting that it was relevant to a summary judgment motion before that court. Flo & Eddie Inc. v. Sirius XM Radio Inc., 2013cv23182 (S.D.Fla. 2014).

Lisa Shuchman is a Reporter for Corporate Counsel magazine, an ALM sibling of Entertainment Law & Finance.