Flo & Eddie, Inc. v. Pandora Media, Inc.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
FLO & EDDIE, INC., a No. 15-55287
California corporation,
individually and on behalf of D.C. No.
all others similarly situated, 2:14-cv-07648-PSG-RZ
Plaintiff-Appellee,
v. ORDER REQUESTING
CERTIFICATION TO
PANDORA MEDIA, INc., a THE CALIFORNIA
Delaware corporation, SUPREME COURT
Defendant-Appellant.
Filed March 15, 2017
Before: Stephen Reinhardt and Richard A. Paez, Circuit
Judges, and Paul L. Friedman,* District Judge.
Order
*
The Honorable Paul L. Friedman, United States District Judge for
the District of Columbia, sitting by designation.
2 FLO & EDDIE, INC. V. PANDORA MEDIA, INC.
SUMMARY**
Certification to California Supreme Court
The panel certified the following questions of state law to
the California Supreme Court:
1. Under section 980(a)(2) of the California Civil Code,
do copyright owners of pre-1972 sound recordings
that were sold to the public before 1982 possess an
exclusive right of public performance?
2. If not, does California’s common law of property or
tort otherwise grant copyright owners of pre-1972
sound recordings an exclusive right of public
performance?
ORDER
We certify the questions set forth in Part II of this order
to the California Supreme Court. All further proceedings in
this case are stayed pending final action by the California
Supreme Court, and this case is withdrawn from submission
until further order of this court.
I. Administrative Information
We provide the following information in accordance with
Rule 8.548(b)(1) of the California Rules of Court.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
FLO & EDDIE, INC. V. PANDORA MEDIA, INC. 3
The caption of this case is:
No. 15-55287
Flo & Eddie, Inc.,
Plaintiff and Appellee,
v.
Pandora Media, Inc.,
Defendant and Appellant.
The names and addresses of counsel are:
For Plaintiff-Appellee Flo & Eddie: Henry Gradstein,
Maryann R. Marzano, Harvey Geller, Daniel B. Lifschitz,
Gradstein & Marzano, P.C., 6310 San Vicente Boulevard,
Suite 510, Los Angeles, California, 90048.
For Defendant-Appellant Pandora Media: James K.
Lynch, Andrew M. Gass, Latham & Watkins LLP, 505
Montgomery Street, Suite 2000, San Francisco, California,
94111; Gregory G. Garre, Jonathan Y. Ellis, Latham &
Watkins LLP, 555 Eleventh Street, NW, Suite 1000,
Washington, D.C., 20004.
II. Certified Questions
Pursuant to Rule 8.548(b)(2) of the California Rules of
Court, we respectfully request the Supreme Court of
California to decide the certified questions presented below.
There is no controlling precedent regarding the certified
4 FLO & EDDIE, INC. V. PANDORA MEDIA, INC.
questions, the answers to which will determine the outcome
of this appeal, dispose of Flo & Eddie’s underlying claims,
and resolve an important area of California state law. The
questions certified are as follows:
1. Under section 980(a)(2) of the California Civil Code,
do copyright owners of pre-1972 sound recordings
that were sold to the public before 1982 possess an
exclusive right of public performance?
2. If not, does California’s common law of property or
tort otherwise grant copyright owners of pre-1972
sound recordings an exclusive right of public
performance?
III. Statement of Facts
Appellee Flo & Eddie is a corporation created by two
founding members of The Turtles, a 1960s folk rock band
best known for the hit song “Happy Together.” Flo & Eddie
allegedly acquired the rights to a number of The Turtles’ pre-
1972 sound recordings, which it has licensed to music, film,
and internet companies for various uses.
Appellant Pandora is an online radio service that allows
users to stream music on internet-connected devices,
including, until recently, The Turtles’ music. Pandora has not
paid Flo & Eddie for the public performance1 of its sound
1
California courts have not defined “public performance.” Under
current federal law, public performance means “to perform or display [a
recording] at a place open to the public or at any place where a substantial
number of persons outside of a normal circle of a family and its social
acquaintances is gathered,” or “to transmit or otherwise communicate a
FLO & EDDIE, INC. V. PANDORA MEDIA, INC. 5
recordings, nor does it generally do so for performers of pre-
1972 sound recordings.
On October 1, 2014, Flo & Eddie filed an action2 for
damages against Pandora for publicly performing The
Turtles’ pre-1972 sound recordings on its services without
paying royalties. Flo & Eddie alleged that these sound
recordings were protected under section 980(a)(2) of the
California Civil Code, as well as the state’s common law.
Originally enacted in 1872, and amended in 1947 and
1982, section 980 has undergone, at times, substantial
revision that may bear on the merits of Flo & Eddie’s claims.
performance or display of the work to . . . the public, by means of any
device or process, whether the members of the public capable of receiving
the performance or display receive it in the same place or in separate
places and at the same time or at different times.” 17 U.S.C. § 101.
2
Prior to filing this case, Flo & Eddie filed similar actions against
online radio service Sirius XM in federal court in California, see Flo &
Eddie Inc. v. Sirius XM Radio Inc., No. CV 13-5693 PSG (RZx), 2014
WL 4725382 (C.D. Cal. Sept. 22, 2014); in New York, see Flo & Eddie,
Inc. v. Sirius XM Radio, Inc., 821 F.3d 265 (2d Cir. 2016); and in Florida,
see Flo & Eddie, Inc. v. Sirius XM Radio, Inc., 827 F.3d 1016 (11th Cir.
2016). Sirius XM appealed adverse rulings in both the New York and
Florida cases, after which the Second and Eleventh Circuits certified
questions of state law to the New York Court of Appeals and Florida
Supreme Court, respectively. The New York Court of Appeals recently
answered the certified question, holding that New York’s common law of
copyright does not recognize an exclusive right of public performance for
copyright holders. See Flo & Eddie, Inc. v. Sirius XM Radio, Inc., No.
172, 2016 WL 7349183 (N.Y. Dec. 20, 2016). As a result, the Second
Circuit reversed the district court’s order denying summary judgment to
Sirius XM and directed the district court to grant summary judgment and
dismiss the case with prejudice. Flo & Eddie, Inc. v. Sirius XM Radio,
Inc., No. 15-1164-CV, 2017 WL 629261, at *2 (2d Cir. Feb. 16, 2017).
6 FLO & EDDIE, INC. V. PANDORA MEDIA, INC.
We therefore briefly summarize the evolution of state and
related federal law, as relevant to the parties’ arguments.
A.
At the time The Turtles were recording and releasing
music in the 1960s, section 980(a) codified what was known
as “common law copyright.” It granted the “author or
proprietor of any composition in letters or art . . . an exclusive
ownership in the representation or expression thereof as
against all persons except” cover artists. Cal. Civ. Code
§ 980(a) (1949). At the same time, section 983(a) of the
California Civil Code divested any common law rights once
“the owner of a composition in letters or arts publishe[d] it.”
Cal. Civ. Code § 983(a) (1949). Upon publication, “the same
[could] be used in any manner by any person, without
responsibility to the owner, insofar as the law of this State is
concerned.” Id.
The California legislature originally adopted this language
in 1947, seemingly “to remove ambiguities in the State law
and to bring the California statute into accord with federal
law and judicial precedent within and without California.”
Memorandum from Beach Vasey, Legislative Sec’y, State of
Cal., to Governor Earl Warren (July 3, 1947) (emphasis
added). The “federal law” in force at time of adoption and
through the 1960s was the Copyright Act of 1909, which, like
the California copyright statutes, did not expressly mention
sound recordings.
Rather, the 1909 Act differentiated between unpublished
and published works. Unpublished works were left to the
protection of the common law, unless registered for federal
protection. See Twin Books Corp. v. Walt Disney Co., 83
FLO & EDDIE, INC. V. PANDORA MEDIA, INC. 7
F.3d 1162, 1165 (9th Cir. 1996) (“Under the 1909 Act, an
unpublished work was protected by state common law
copyright from the moment of its creation until it was either
published or until it received protection under the federal
copyright scheme.”). Upon publication with proper copyright
notice, federal protection automatically attached and common
law protection terminated. Works that were published
without proper copyright notice irrevocably entered into the
public domain. See Batjac Prods. Inc. v. GoodTimes Home
Video Corp., 160 F.3d 1223, 1226 (9th Cir. 1998) (explaining
that, under the 1909 Act, “[s]tate ‘common law’ protection
attached upon creation of the work and ended with
publication of the work. Once published, the only protection
available was federal statutory copyright. Publication of a
work with proper notice secured the statutory copyright.”).
The 1947 amendments to California’s copyright statutes
therefore reflected this schema by divesting common law
copyright protection at the point of publication. Cal. Civ.
Code § 983(a) (1949).
In 1978, however, this schema changed. Congress
overhauled federal copyright law. Rather than limiting
federal copyright protection only to works that were
published with proper notice, the Federal Copyright Act of
19763 expanded federal protection to any works fixed in a
tangible medium of expression—thereby preempting
common law protection for fixed, but still unpublished works.
See Federal Copyright Act of 1976, Pub. L. No. 94-553,
§ 102(a), 90 Stat. 2541, 2592 (1976); Batjac Prods., 160 F.3d
at 1226 (“Under the 1976 Act, unpublished works lost their
common law protection but gained statutory protection.”).
3
The 1976 Act became effective on January 1, 1978. 17 U.S.C.
§ 301(a).
8 FLO & EDDIE, INC. V. PANDORA MEDIA, INC.
The 1976 Act expressly exempted pre-1972 sound
recordings from this new federal protection, however. 17
U.S.C. § 301(c). Instead, the 1976 Act left the common law
in place to protect pre-1972 sound recordings. Id. (“With
respect to sound recordings fixed before February 15, 1972,
any rights or remedies under the common law or statutes of
any State shall not be annulled or limited by this title until
February 15, 2067.”).
In response, the California legislature repealed the
divestiture-by-publication rule of section 983 and again
amended section 980(a), dividing it into two subsections.
Since then, section 980(a)(2) has granted the “author of . . . a
sound recording initially fixed prior to February 15, 1972 . . .
an exclusive ownership therein until February 15, 2047, as
against all persons except” cover artists.4 Cal. Civ. Code
§ 980(a)(2). Whether section 980(a)(2) or California
4
Specifically, section 980(a)(2) grants “exclusive ownership” as
against all persons except
one who independently makes or duplicates another
sound recording that does not directly or indirectly
recapture the actual sounds fixed in such prior sound
recording, but consists entirely of an independent
fixation of other sounds, even though such sounds
imitate or simulate the sounds contained in the prior
sound recording.
Cal. Civ. Code § 980(a)(2). In Sirius, the district court interpreted this
language as an exception for artists creating “covers,” defined as
“recording the song with new instruments.” Flo & Eddie, 2014 WL
4725382, at *5 (“In other words, ownership of a sound recording does not
include the exclusive right to make ‘covers’ (i.e., recording the song with
new instruments) . . . so long as they produce the sounds independently
rather than recapture the actual sounds in the copyrighted recording.”).
FLO & EDDIE, INC. V. PANDORA MEDIA, INC. 9
common law extend an exclusive right of public performance
to owners of pre-1972 sound recordings is the subject of this
lawsuit.
B.
After Flo & Eddie filed the present lawsuit, Pandora filed
a motion to strike under California’s statute against “strategic
litigation against public participation,” or SLAPP.5 Pandora
argued that section 980(a)(2) does not even apply to The
Turtles’ recordings since, under section 983(a), those
recordings entered the public domain at the point of
publication back in the 1960s. Relying on the legislative
5
“The analysis of an anti-SLAPP motion . . . involves two steps.
First, the court decides whether the defendant has made a threshold
showing that the challenged cause of action is one ‘arising from’ protected
activity. If the court finds such a showing has been made, it then must
consider whether the plaintiff has demonstrated a probability of prevailing
on the claim.” Oasis W. Realty, LLC v. Goldman, 250 P.3d 1115, 1120
(2011) (internal quotation marks and citation omitted); see also Hilton v.
Hallmark Cards, 599 F.3d 894, 901–02 (9th Cir. 2010). “To satisfy the
second prong, . . . . the plaintiff ‘must demonstrate that the complaint is
both legally sufficient and supported by a sufficient prima facie showing
of facts to sustain a favorable judgment if the evidence submitted by the
plaintiff is credited.’” Oasis, 250 P.3d at 1120. Here, the parties relied
solely on the factual allegations in the complaint. Thus, the issues are
presented as pure questions of law, and are therefore particularly suited for
certification.
Moreover, an answer to the certified questions in this case would
resolve the merits of Flo & Eddie’s claims alleging violations of an
exclusive right to public performance under both section 980(a)(2) and
California common law. Thus, although the issue before our court is in
the context of an appeal from the denial of an anti-SLAPP motion, a ruling
on the certified questions would not only dispose of the appeal from the
collateral order, but would also resolve the underlying claims.
10 FLO & EDDIE, INC. V. PANDORA MEDIA, INC.
history of section 980, Pandora further argued that the
California legislature in 1982 did not intend to create
protection for sound recordings that had previously entered
the public domain when it adopted section 980(a)(2). Even
if it did, Pandora argued, the legislature did not intend that
protection to include a public performance right.
Flo & Eddie opposed the motion, arguing that the plain
language of section 980 gave it “exclusive ownership” over
The Turtles’ pre-1972 sound recordings, including a public
performance right. Flo & Eddie further argued that the repeal
of section 983 made that provision irrelevant. Even if it had
never been repealed, Flo & Eddie argued, section 983 never
applied to its sound recordings because (1) The Turtles’
records were not “published” for the purposes of California
law, and (2) section 983 applied only to compositions.
The district court rejected Pandora’s arguments and
denied the motion to strike, reasoning that Pandora’s reading
of section 980(a)(2) would lead to absurd results. Flo &
Eddie, Inc. v. Pandora Media, Inc., No. CV 14-7648 PSG
(RZx), 2015 U.S. Dist. LEXIS 70551, at *22–23. The court
ruled that California law had historically protected sound
recordings even after publication via the common law. Id. at
*24–28. Reading that protection into the text of section
980(a)(2), the court concluded that the statute protected
published pre-1972 recordings and granted Flo & Eddie a
property right in the public performance of its sound
recordings. Id. at *27–29. On the basis of that property right,
the district court further held that Flo & Eddie’s claims for
misappropriation, conversion, and unfair competition were
legally sufficient for the purposes of the anti-SLAPP statute.
Id. at *29. Pandora timely appealed. See DC Comics v. Pac.
Pictures Corp., 706 F.3d 1009, 1016 (9th Cir. 2013) (holding
FLO & EDDIE, INC. V. PANDORA MEDIA, INC. 11
that an order denying a special motion to strike under
California’s anti-SLAPP law is immediately appealable in
federal court pursuant to the collateral order doctrine).
IV. The Need for Certification
Certification is warranted if there is no controlling
precedent and the California Supreme Court’s decision could
determine the outcome of a matter pending in our court. See
Cal. R. Ct. 8.548(a). This appeal not only meets both criteria,
but also presents an issue of significant public importance.
Indeed, the “significant and unresolved” nature of the
issue prompted the United States Court of Appeals for the
Second Circuit to certify a similar question to the New York
Court of Appeals in Flo & Eddie’s case against Sirius XM.
Flo & Eddie, 821 F.3d at 267. The Court of Appeals
accepted the certified question, Flo & Eddie, Inc. v. Sirius
XM Radio, Inc., 52 N.E.3d 240 (2016), and resolved it in
view of the fact that its decision could have “extensive and
far-reaching” consequences given the “many competing
interests at stake,” Flo & Eddie, 2016 WL 7349183.6
Faced with “a complete judicial void” in Florida case law,
the United States Court of Appeals for the Eleventh Circuit
likewise certified similar questions to the Florida Supreme
Court in another Flo & Eddie case against Sirius XM. See
Flo & Eddie, Inc. v. Sirius XM Radio, Inc., 827 F.3d 1016,
6
In that case, the court held that copyright holders do not have a right
of public performance under New York common law. Flo & Eddie, 2016
WL 7349183. Accordingly, the Second Circuit directed the district court
to grant summary judgment to Sirius XM and dismiss the case with
prejudice. Flo & Eddie, 2017 WL 629261, at *2.
12 FLO & EDDIE, INC. V. PANDORA MEDIA, INC.
1020 (11th Cir. 2016). The Florida Supreme Court has
accepted the certified questions and set oral argument for
later this year. See Scheduling Order, Flo & Eddie, Inc. v.
Sirius XM Radio, Inc., No. SC16-1161 (Fla. Jan. 30, 2017).
We agree with our sister circuits that certification is the
best way to proceed on these issues, especially in California.
As an incubator of both musical talent and technological
innovation, California has a significant interest in the
appropriate resolution of the certified questions. Resolution
of these questions will likely affect the state and industries
within the state in a variety of ways, and is therefore best left
to the California Supreme Court.
A.
No controlling precedent resolves the certified questions.
Capitol Records, Inc. v. Erickson, 82 Cal. Rptr. 798 (Ct. App.
1969) and A & M Records, Inc. v. Heilman, 142 Cal. Rptr.
390 (Ct. App. 1977) predate the adoption of section
980(a)(2), and therefore cannot aid us in resolving the first
certified question. Erickson and Heilman also address only
common law liability for piracy, the unauthorized duplication
and distribution of sound recordings for profit. Public
performance was not at issue in either case, thereby rendering
them unhelpful in resolving the second certified question as
well. As such, there is no precedent, much less controlling
precedent, from either the California appellate courts or the
California Supreme Court to guide our court’s inquiry.
Flo & Eddie’s central argument is that California’s plain
meaning rule for interpreting statutes resolves the first
certified question. See, e.g., People v. Canty, 90 P.3d 1168,
1172-73 (Cal. 2004). Applying the rule, Flo & Eddie
FLO & EDDIE, INC. V. PANDORA MEDIA, INC. 13
contends that the “exclusive ownership” term in section
980(a)(2) allows copyright owners to exclude all
unauthorized uses, including public performance. But the
statute does not define “exclusive ownership” or
“ownership.” And while undefined terms are given their
ordinary meanings, as appropriate to the context, see
Martinez v. Vaziri, 200 Cal. Rptr. 3d 884, 891 (Ct. App.
2016) (refusing to construe an undefined phrase in isolation
“because as a matter of basic statutory interpretation, the
words must be construed in context”), it could well be said
that the “ordinary meaning” of “exclusive ownership” in the
context of copyright is at the very heart of the dispute in this
case.
That section 980(a)(2) includes an exception for cover
artists does not make the meaning of “exclusive ownership”
plain. The exception only establishes that the “ownership”
rights granted by the statute do not include rights to control
cover artists; it does not establish what “ownership” rights are
included in the first instance. The canons of statutory
interpretation are therefore insufficient to aid in the resolution
of this case, and do not eliminate the need for clear guidance
from California’s highest court.7
7
The only California case that has touched on the issue is Capitol
Records, LLC v. Sirius XM Radio, Inc., No. BC520981, 2014 WL
7150014 (Cal. Super. Ct. Dec. 5, 2014), a Los Angeles County Superior
Court case. Seemingly confirming the lack of sufficient guidance from
California appellate courts, the Capitol Records court issued a tentative
ruling refusing to recognize a public performance right in a jury
instruction only to reverse the ruling after the Central District of California
reached the opposite conclusion in Sirius. The issue was never resolved,
however, as the case later settled.
14 FLO & EDDIE, INC. V. PANDORA MEDIA, INC.
Pandora maintains that Flo & Eddie’s sound recordings
lost state copyright protection upon publication in the 1960s,
and that the 1982 amendment adopting section 980(a)(2) did
not resurrect copyright protection. But this argument depends
on an interpretation of the 1947 versions of sections 980(a)
and 983(a), which have likewise never been considered by the
California Supreme Court. Accordingly, Flo & Eddie cites
only off-point lower court cases and out-of-state authority8
for its counter-argument that the divestiture-by-publication
rule of the 1947 version of section 983(a) did not apply to
sound recordings.9
8
Flo & Eddie cites one case within our circuit, Capital Records, LLC
v. Bluebeat, Inc., 765 F. Supp. 2d 1198 (C.D. Cal. 2010). Otherwise, Flo
& Eddie cites cases from New York, Metro. Opera Ass’n v. Wagner-
Nichols Recorder Corp., 101 N.Y.S.2d 483 (Sup. Ct. 1950); Capitol
Records, Inc. v. Naxos of Am., Inc., 4 N.Y.3d 540 (2005), from Florida,
CBS, Inc. v. Garrod, 622 F. Supp. 532 (M.D. Fla. 1985), from Michigan,
A & M Records, Inc. v. M.V.C. Distrib. Corp., 574 F.2d 312 (6th Cir.
1978), from Wisconsin, Mercury Record Prods. v. Econ. Consultants,
Inc., 218 N.W.2d 705 (Wis. 1974), and from Pennsylvania, Waring v.
WDAS Broadcasting Station, Inc., 194 A. 631 (Pa. 1937).
9
At oral argument, the parties focused on the meaning and impact of
the out-of-state case RCA Mfg. Co. v. Whiteman, 114 F.2d 86 (2d Cir.
1940), and the duo of cases that were purported to “overrule” it: Capitol
Records, Inc. v. Mercury Records, Corp., 221 F.2d 657 (2d Cir. 1955) and
Metro. Opera, 101 N.Y.S.2d 483. In a recent decision, the New York
Court of Appeals decisively resolved the dispute. The court held that
Mercury Records did not overrule the underlying premise of Whiteman,
and held that no right of public performance existed under New York
common law copyright. See Flo & Eddie, 2016 WL 7349183.
FLO & EDDIE, INC. V. PANDORA MEDIA, INC. 15
In Lone Ranger Television, Inc. v. Program Radio Corp.,
740 F.2d 718 (9th Cir. 1984),10 as Pandora points out, we
addressed a similar situation. There, we concluded that
broadcast tapes of the Lone Ranger radio show leased to radio
stations and sold to the public in the 1950s and 1960s had lost
common law or state copyright protection upon general
publication under section 983, despite its later repeal.
Although binding precedent for our court, Lone Ranger was
a case about piracy. It therefore does not help us resolve
whether the California legislature intended to grant a right of
public performance to owners of pre-1972 sound recordings
when it explicitly extended copyright protection to sound
recordings with the adoption of section 980(a)(2) in 1982.
Nor does it resolve whether California’s common law of
copyright guarantees a right of public performance, in
addition to protecting against piracy.
B.
Resolving these questions will dispose of this appeal and
determine the merits of Flo & Eddie’s underlying claims.
The district court concluded that section 980(a)(2) granted
owners of pre-1972 sound recordings a property right in the
public performance of their recordings. On the basis of that
property right, the district court further concluded that Flo &
Eddie’s claims of misappropriation, conversion, and unfair
competition were legally sufficient. If either section
980(a)(2) or California common law does provide an
exclusive right of public performance, the district court’s
ruling must be affirmed, and Flo & Eddie’s claims granted.
10
Our opinion acknowledged that this case was decided after section
980(a)(2) had been enacted and section 983 had been repealed. Lone
Ranger, 740 F.2d at 725.
16 FLO & EDDIE, INC. V. PANDORA MEDIA, INC.
If neither section 980(a)(2) nor California common law
provides such a right, the district court’s ruling must be
reversed, and the underlying claims must be dismissed.
We therefore conclude that this case presents prime
questions for the California Supreme Court to address. See
Cal. R. Ct. 8.548(a). The answers given by the California
Supreme Court will dispose of this appeal currently pending
before the Ninth Circuit. We agree to accept the court’s
answers.
V. Accompanying Materials
The clerk of this court is hereby directed to file in the
California Supreme Court, under official seal of the United
States Court of Appeals for the Ninth Circuit, copies of all
relevant briefs and excerpts of record, and an original and ten
copies of the request with a certification of service on the
parties, pursuant to California Rules of Court 8.548(c), (d).
The panel will only resume control and jurisdiction of this
case upon receiving a decision from the California Supreme
Court or upon that court’s decision to decline to answer the
certified questions. The parties shall file a joint report
informing this court of whether the California Supreme Court
has accepted the certified questions, after that determination
is made. If the California Supreme Court accepts the certified
questions, the parties shall file a joint status report to our
court every six months after the date of acceptance.
IT IS SO ORDERED.