In a putative class action alleging widespread copyright infringement commenced in December 2015 against Spotify, Plaintiff, the lead singer for the bands Cracker and Camper Van Beethoven, recently moved pursuant to Federal Rule of Civil Procedure 26(d) to monitor — and possibly prevent — Spotify USA, Inc. (“Spotify”) from engaging in communications with individuals who fall within the Complaint’s definition of class members. Lowery v. Spotify USA, Inc. The communications at issue concern Spotify’s estimated $30 million settlement with the National Music Publishers Association (“NMPA”), which is not a party to the litigation. The dispute raises an interesting question regarding the appropriate role for the court to play in refereeing class action settlement politics when class counsel has extra-judicial competition in seeking to represent the class.
The litigation alleges that Spotify infringed putative class members’ mechanical rights for registered musical compositions by unlawfully reproducing and distributing copyrighted musical compositions to its users through music streaming and other services without payment or notice. Amended Complaint ¶2. Plaintiff seeks to certify a class of “[a]ll owners of mechanical distribution and reproduction rights in musical compositions registered under United States federal law, which compositions were reproduced or distributed by Spotify first obtaining a voluntary or compulsory license, since December 28, 2012.” Id. ¶42. In other words, Plaintiff seeks to represent certain copyright holders whom Spotify may not have adequately compensated or obtained licenses from when it streamed their songs.
Spotify dealt a major blow to the future of Plaintiff’s class action when it announced in March that it had reached a settlement with the NMPA, a trade organization representing many of the same individuals Plaintiff seeks to represent in his class. Plaintiff now seeks to insert himself into that settlement by suggesting something nefarious has transpired in the exchange between Spotify and the NMPA, whom Plaintiff accuses of “acting in concert with Spotify” to consummate the settlement. And though Plaintiff admits he personally had not seen any of the communications (at least as of the time he moved for relief), he wasted no time accusing Spotify of using “slanted communications” and “disparaging remarks” on the basis of news reports, and suggesting that Spotify was misleading class members as a result of Spotify’s obvious interest in promoting the NMPA settlement over the Lowery lawsuit — a notable accusation, considering Plaintiff’s and his counsel’s own obvious bias in favor of convincing putative class members to refuse the NMPA settlement in favor of pursuing continued litigation.
The news reports attached to Plaintiff’s motion do not appear to include any misleading statements toward putative class members. To the contrary, in one of the articles, Spotify’s CEO is clear to point out that “anyone who does not opt in to our settlement is free to pursue their right in any way that they chose, including class action. Each right owner should make the decision that is the best for them about their own rights. This settlement — and this is very important — does not compromise anyone’s right who does not opt in.” Docket 46-1, Exhibit D, page 108. And another article includes statements from Plaintiffs’ counsel warning of the consequences of the NMPA settlement. Id. Exhibit E, page 111. Ironically, Plaintiff’s chief concern regarding these communications appears to be a statement made—not by Spotify, but by the NMPA — in response to certain public statements made by Plaintiff’s counsel encouraging opt out from the NMPA settlement. Moreover, none of the authority relied on by Plaintiffs addresses the unique factual scenario here: the putative class members essentially have dual representation from their trade association in trying to resolve the dispute, and the complained-of statements were issued not by the defendant but by the competing representative, who is not before the Court. Certainly, it is these kinds of situations which generally can be avoided through coordination and consolidation of putative class actions and the appointment of lead counsel. But in this case, the NMPA settlement negotiations began prior to the lawsuit being filed and did not arise out of a pending litigation. So at present, no court has jurisdiction over the NMPA or its attempts to reach resolution with Spotify. Plaintiff apparently seeks to deal with this issue by targeting its proposed order not just at Spotify, but also those “acting in concert or participation with Spotify” (see Docket 46-2), presumably including the NMPA, despite the obvious fact that Spotify and the NMPA reached the settlement from opposite sides of the bargaining table.
Even if we assume that the NMPA’s statements rise to the level of threatening a “serious abuse” needed to prevent “serious misconduct” that is necessary under the First Amendment jurisprudence to curb such statements, can or should the Court prevent the NMPA of such conduct by issuing an Order against Spotify, which is not accused of the same conduct? That strikes us an overreach of the judiciary’s power pursuant to FRCP 23(d). Add that under the present circumstances, the NMPA’s statements don’t appear to rise to such level but are instead consistent with the court’s goal in bringing parties to resolution rather than extending litigation, and we think this round should go to Spotify. Stay tuned…