Rick Nelson - Motion For Approval
Rick Nelson - Motion For Approval
Rick Nelson - Motion For Approval
Plaintiff,
v.
Defendant.
TABLE OF CONTENTS
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TABLE OF AUTHORITIES
Cases
Cotton v. Hinton
559 F.2d 1326 (5th Cir. 1977) .......................................................................................... 12
In re AmBase Corp.
1995 WL 619856 (S.D.N.Y. Oct. 23, 1995) ..................................................................... 13
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In re Union Carbide
718 F. Supp. 1099 (S.D.N.Y. 1989).................................................................................. 14
iii
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Milstein v. Huck
600 F. Supp. 254 (E.D.N.Y. 1984) ..................................................................................... 8
Strougo v. Bassini
258 F. Supp. 2d 254 (S.D.N.Y. 2003)............................................................................. 5, 9
Weinberge v. Kendrick
689 F.2d 61 (2d Cir. 1982)............................................................................................... 13
Rules
Statutes
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Other Authorities
Alba Conte & Herbert Newberg, Newberg on Class Actions § 11.28 (3d ed. 1992) ..................... 7
Alba Conte & Herbert Newberg, Newberg on Class Actions § 11.45 (4th ed. 2002) .................... 9
Alba Conte & Herbert Newberg, Newberg on Class Actions § 4.21 (3d ed. 1992) ..................... 18
Alba Conte & Herbert Newberg, Newberg on Class Actions § 4.25 (3d ed. 1992) ..................... 18
Alba Conte & Herbert Newberg, Newberg on Class Actions § 8.2 (4th ed. 2002) ...................... 20
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I. INTRODUCTION
This class action lawsuit challenges the legality of Defendant Sony Music
Entertainment’s (“Sony” or “Defendant”) practice of how it calculates and pays royalties on the
foreign streaming revenues generated by Class Members who did not have express language
regarding the calculation of streaming royalties in their contracts. Plaintiff The Rick Nelson
Company, LLC (“Plaintiff”) alleged that Sony improperly reduced the foreign streaming
royalties for Class Members’ musical works through the assessment of an “intercompany
charge” on the streaming revenues collected by Sony’s foreign affiliates and subsidiaries.
Once this lawsuit was filed, Plaintiff and Sony recognized the tremendous risks and costs
associated with protracted class action litigation, and agreed to explore the possibility of
settlement. Over the next eighteen months, the parties engaged in an intensive arm’s length
settlement process which included numerous conferences (including one with the parties’
experts), two separate all-day mediations with two different and highly seasoned mediators, and
the exchange of legal and factual information necessary to assess the strengths and weaknesses
This process has resulted in a class action settlement which provides substantial relief to
Class Members1 and satisfies the standard for preliminary approval pursuant to Federal Rule of
Civil Procedure (“Rule”) 23. The Settlement calls for the creation of a $12.7 million common
fund which will be paid or credited on a pro rata basis to the royalty accounts of Class Members
who file claims, which amount is a substantial portion of the royalties at issue in the case.
1
The parties have executed a “Stipulation and Agreement of Settlement” (“Settlement
Agreement”), which is attached as Exhibit “A” to the supporting Declaration of Jeffrey A.
Koncius (“Koncius Decl.”). Koncius Decl. ¶ 3. All capitalized terms used in this brief are
intended to have the definitions set forth in the Settlement Agreement unless otherwise stated.
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Additionally, the Settlement also requires Sony to increase by 36% the amount of royalties
calculated on foreign streaming revenues in the future for all Class Members’ qualifying
recordings (the “Additional Royalty”) without the need to file claims or any temporal limitations.
Plaintiff expects that the value for this prospective relief to be many millions of dollars and in
excess of the common fund, since streaming is now the most dominant form of music
distribution available. Thus, the Settlement provides substantial and significant relief to Class
Members, while eliminating the risk, expense, and uncertainty associated with protracted,
As set forth in this Motion, it is submitted that the Settlement is an exceptional result
which satisfies the permissible standard for preliminary approval. The Settlement Class satisfies
the requirement of Rule 23 and should be certified for settlement purposes. The proposed notice
plan is robust, provides direct notice to Class Members where possible, and constitutes the best
notice practicable. The Court should therefore grant preliminary approval to the Settlement and
issue a schedule for granting final approval after notice is given to the Class.
Nelson, who released over 30 albums during his storied career, including chart-topping hits such
as “Poor Little Fool” and “Travelin’ Man.” Plaintiff filed this class action lawsuit on September
25, 2018, in the Southern District of New York against Sony. The Complaint alleged causes of
action for breach of contract and unjust enrichment. (ECF No. 1.) The core claims in the
Complaint center on Sony’s practices regarding the calculation and payment of foreign streaming
royalties to so called “legacy artists” who do not have express provisions in their contracts
relating to the calculation of such royalties. Specifically, Plaintiff alleged that Sony was
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improperly assessing an intercompany charge in order to reduce the amount of foreign streaming
revenue that was accounted for and therefore the corresponding royalties paid to these artists.
After Plaintiffs served Sony with the Complaint, the parties sought to resolve the matter
through settlement. Over the next several months, the parties debated the strength of the
operative claims and colorable defenses in the case. Plaintiff maintained that Sony had a legal
obligation to pay royalties on foreign streaming revenues to Class Members and did not have a
right to deduct intercompany charges from the “at source” streaming revenues collected by its
foreign subsidiaries and affiliates. Plaintiff also stressed that this case satisfied the requirement
for class certification and could be maintained as a class action lawsuit. Sony maintained (and
continues to maintain) that, among other things, Sony has accounted correctly for royalties on
foreign streaming; Plaintiff has not identified any contractual provision that requires Sony to
account for royalties on foreign streaming “at-source”; and that, in the absence of contrary
contractual language, New York law expressly permits Sony to pay royalties on foreign
exploitations based on the amounts Sony receives from its affiliated foreign licensees and not
based on the licensees’ “at-source” streaming revenues. Moreover, Sony argued that any
obligation to pay arising from the parties’ course of dealing would be limited to the amounts and
percentages already paid by Sony. Sony also argued its potential defenses to class certification.
After spending many months engaged in this process, the parties were unable to reach a
settlement on their own, and agreed they needed the assistance of an experienced mediator in
order to break the impasse. In fact, they ultimately needed the assistance of two mediators:
David Heubener of JAMS on October 29, 2019 (with two of Plaintiff’s principals in attendance)
and Hon. Louis Meisinger (Ret.) of Signature Resolution on January 22, 2020. Although neither
full-day mediation resulted in a settlement, the parties were able to make continuous progress
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and, with the assistance of Judge Meisinger in the weeks following the second mediation,
The parties filed their initial notice with the Court reflecting the likely settlement of the
case on March 19, 2020. (ECF No. 26.) During the next several months the parties continued
their settlement discussions which required the filing of multiple extensions of time to file the
settlement documents and this Motion for Preliminary Approval. (See ECF Nos. 33, 42, 44, 48.)
The parties eventually negotiated the terms of the final settlement documents, which required
settlement fund of $12.7 million to the Settlement Class. See Settlement Agreement ¶¶ 10, 20(a).
This represents an approximately 36% uplift on the total foreign streaming royalties credited by
Sony between July 1, 2015, and June 30, 2019, to Class Members. The common fund is intended
to compensate the Settlement Class for claims for retrospective damages and will be distributed
on a pro rata basis to Class Members who file claims, in the form of credits or payment to their
royalty accounts. Further, Class Members will receive the benefit of prospective relief as Sony
will increase all Class Members’ foreign streaming royalties for qualifying recordings going
forward by 36%. Settlement Agreement ¶¶ 11, 20(b). This increase in the calculation and amount
of foreign streaming royalties will provide significant relief to Class Members, and could very
well result in even greater benefits than the $12.7 million being made available by Sony in the
common fund.
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Subject to the approval and direction of the Court, the common fund Settlement proceeds
will be used to: (1) pay costs related to notice, administration, and distribution of the Settlement;
(2) pay or credit the royalty accounts of eligible Class Members in accordance with the terms of
the Settlement Agreement; (3) pay attorneys’ fees, costs and expenses to Counsel for the
Settlement Class, that may be awarded by the Court; and (4) pay a service award to the named
Plaintiff.
Rule 23(e) requires judicial approval for any compromise of claims on a class basis.
While approval of a proposed settlement is a matter within the discretion of the district court,2
public policy strongly favors pretrial settlement of class action lawsuits. See Strougo v. Bassini,
258 F. Supp. 2d 254, 257 (S.D.N.Y. 2003); see also In re Warner Chilcott Ltd. Sec. Litig., No. 06
Civ. 11515 (WHP), 2008 WL 5110904, at *1 (S.D.N.Y. Nov. 20, 2008) (“The settlement of
The issue now before the Court is whether the Settlement is within the range of what
might later be found to be fair, reasonable, and adequate, such that notice of the proposed
Settlement should be given to Class Members and a hearing scheduled to consider final approval
of the Settlement. See Prudential, 163 F.R.D. at 210 (“At this stage of the proceeding, the Court
need only find that the proposed settlement fits ‘within the range of possible approval.’”)
(citation omitted); In re Traffic Exec. Ass’n, 627 F.2d 631, 634 (2d Cir. 1980) (finding that to
grant preliminary approval, the court need only find that there is “‘probable cause’ to submit the
[settlement] to Class Members and hold a full-scale hearing as to its fairness.”); In re NASDAQ
Market-Makers Antitrust Litig., 176 F.R.D. 99, 102 (S.D.N.Y. 1997) (“Preliminary approval of a
2
See, e.g., In re Prudential Sec. Inc. Ltd. P’ships Litig., 163 F.R.D. 200, 209 (S.D.N.Y. 1995).
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proposed settlement is the first in a two-step process required before a class action may be
settled.”). “Once preliminary approval is bestowed, the second step of the process ensues: notice
is given to the Class Members of a hearing, at which time Class Members and the settling parties
may be heard with respect to final court approval.” See NASDAQ, 176 F.R.D. at 102. Preliminary
the product of serious, informed, non-collusive negotiations, has no obvious deficiencies, does
not improperly grant preferential treatment to class representatives or segments of the class and
falls within the reasonable range of possible approval.” See id. (citing Manual for Complex
Litigation (Third) § 30.41 (1995)); see also In re Gilat Satellite Networks, Ltd., No. 02 Civ.
The Settlement here has none of the “obvious defects” typically screened for by courts,
attorneys.” Chin v. RCN Corp., No. 08-7349, 2010 WL 1257586, at *2 (S.D.N.Y. Mar. 12, 2010)
(quoting Manual for Complex Litigation (Third) § 30.41 (1995)). The Settlement itself is not
contingent upon approval of attorneys’ fees or any service awards to the Class representative.
See Settlement Agreement ¶ 18. The Court will separately and independently determine the
appropriate amount of fees, costs, and expenses to award to Class Counsel and any award to the
Class representative. Moreover, the pro rata allocation of the Settlement fund will treat Class
Members fairly. Accordingly, the Settlement treats all members of the Class equally, and there
counsel well-informed regarding the circumstances of the litigation and the strengths and
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fairness.” In re PaineWebber Ltd., P’ships Litig., 171 F.R.D. 104, 125 (S.D.N.Y. 1997), aff’d,
117 F.3d 721 (2d Cir. 1997). The supporting opinion of experienced counsel is entitled to
considerable weight in a court’s evaluation of a proposed settlement. See In re Michael Milken &
Assoc. Sec. Litig., 150 F.R.D. 57, 66 (S.D.N.Y. 1993); see also Reed v. General Motors Corp.,
703 F.2d 170, 175 (5th Cir. 1983) (“[T]he value of the assessment of able counsel negotiating at
arm’s length cannot be gainsaid. Lawyers know their strengths and they know where the bones
are buried.”). Courts generally presume that settlement negotiations were conducted in good faith
and that the resulting agreement was reached without collusion, absent evidence to the contrary.
Alba Conte & Herbert Newberg, Newberg on Class Actions § 11.28, at 11-59 (3d ed. 1992)
(counsel are “not expected to prove the negative proposition of a noncollusive agreement”).
As detailed in this Motion and the supporting declarations, the settlement negotiations
were extensive and highly adversarial in nature. Koncius Decl. ¶ 5; See also Declaration of
6-7. As a result, the settlement process took well over a year to complete, during which time the
parties held dozens of conferences and completed two full-day mediations with two different
mediators. Id. There was no collusion with respect to the Settlement. During these protracted
negotiations, Plaintiff requested and received information from Sony related to its practices
regarding the payment of foreign streaming royalties to Class Members and the amount of
foreign streaming royalties at issue in the litigation. Koncius Decl. ¶ 6. The parties also
exchanged their views of the strengths and weaknesses of their claims and defenses, which
allowed Plaintiff and Class Counsel to assess the substantial benefits against the risks and
expense of continuing to litigate this case. Id. ¶ 7. Plaintiff and Class Counsel also retained
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professional auditors as litigation consultants to assist in the evaluation of the case and the
Settlement before it was finalized. Id. ¶ 8. After evaluating these factors, Class Counsel relied on
their considerable experience in complex class action lawsuits to recommend the Settlement.
“strong initial presumption of fairness.” See In re PaineWebber Pshps. Litig., 171 F.R.D. at 125.
Even when considered against the more exacting standard for determining the fairness of
a settlement at final approval, the Settlement here is shown to be fair, reasonable, and adequate.
The Second Circuit has identified nine factors relevant to approval of a class action settlement:
(1) the complexity, expense and likely duration of the litigation, (2) the reaction
of the class to the settlement[3], (3) the stage of the proceedings and the amount of
discovery completed, (4) the risks of establishing liability, (5) the risks of
establishing damages, (6) the risks of maintaining the class action through the
trial, (7) the ability of the defendants to withstand a greater judgment,[4] (8) the
range of reasonableness of the settlement fund in light of the best possible
recovery, [and] (9) the range of reasonableness of the settlement fund to a
possible recovery in light of all the attendant risks of litigation.
Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974) (internal citations omitted),
abrogated on other grounds by Goldberger v. Integrated Res., Inc., 209 F.3d 43 (2d Cir. 2000).
As discussed below, a review of the key factors support preliminary approval of the Settlement.
“The expense and possible duration of the litigation are major factors to be considered in
evaluating the reasonableness of [a] settlement.” Milstein v. Huck, 600 F. Supp. 254, 267
(E.D.N.Y. 1984). This case involves many intricate legal issues relating to complex recording
3
This brief does not discuss the reaction of the Class to the Settlement since notice has not been
sent.
4
Plaintiff cannot, and does not, argue here that Sony is unable to satisfy a judgment greater than
the value of the Settlement.
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contracts and their interpretation in light of decades of performance thereunder. The costs and
risks associated with litigating to a verdict, not to mention through any related appeals, would
have been high, and the process would require extensive time and resources. This is especially
true in this case, which is at the pleading stage and would thus require Plaintiff to withstand
motion(s) to dismiss and summary judgment, obtain class certification, and prevail at trial before
obtaining a favorable judgment. Even in the event that the Class could recover a larger award
after a trial, the additional delay through trial, post-trial motions, and the appellate process could
deny the Class (which has many elderly members) any recovery for years, further reducing its
value. And, because this litigation would have placed burdens on both parties and the Court, this
factor militates in favor of the Settlement. Hicks v. Morgan Stanley & Co., No. 01 Civ. 10071
(RJH), 2005 WL 2757792, at *6 (S.D.N.Y. Oct. 24, 2005) (“Further litigation would necessarily
involve further costs [and] justice may be best served with a fair settlement today as opposed to
an uncertain future settlement or trial of the action.”); Strougo, 258 F. Supp. 2d at 261 (“even if a
shareholder or class member was willing to assume all the risks of pursuing the actions through
further litigation…the passage of time would introduce yet more risks…and would, in light of
the time value of money, make future recoveries less valuable than this current recovery”).
evidence to enable the court to analyze intelligently the contested questions of fact. It is clear that
the court need not possess evidence to decide the merits of the issue, because the compromise is
proposed in order to avoid further litigation.” Alba Conte & Herbert Newberg, Newberg on Class
Actions § 11.45 (4th ed. 2002). By the time the Settlement was reached here, Class Counsel had
more than sufficient knowledge of the merits of the claims alleged in the litigation and the
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defenses that would be asserted. Class Counsel are intimately familiar with the factual and legal
issues and the ever-changing legal landscape surrounding the claims at issue in this litigation.
While the case was settled at an early junction, a substantial portion of the parties’ early
(1) the strength of their claims and defenses; (2) information regarding Sony’s relevant payment
practices; and, (3) the amount at issue in this litigation. Koncius Decl. ¶ 7. Class Counsel also
retained professional auditors as litigation consultants to assist in the evaluation of the case and
the Settlement before it was finalized. Id. ¶ 8. As a result of these efforts, Class Counsel were
well informed of the strengths and weaknesses of Plaintiff’s claims and Defendant’s defenses,
which permitted them to fully consider and evaluate the fairness of the Settlement to the Class.
See Teachers’ Ret. Sys. of La. v. A.C.L.N., Ltd., No. 01 Civ. 11814 (MP), 2004 WL 1087261, at
*3 (S.D.N.Y. May 14, 2004) (finding action had advanced to stage where parties “‘have a clear
view of the strengths and weaknesses of their cases.’”); McKenzie Constr. Inc. v. Maynard, 758
F.2d 97, 101-2 (3d Cir. 1985) (“[A] prompt and efficient attorney who achieves a fair settlement
without litigation serves both his client and the interests of justice.”). In the context of a complex
class action, early settlement has far reaching benefits in the judicial system. Maley v. Del Global
In assessing a proposed settlement, the Court should balance the benefits afforded the
Class, including the immediacy and certainty of a recovery, against the continuing risks of
litigation. See Grinnell, 495 F.2d at 463. While Class Counsel believe that Plaintiff’s claims are
meritorious, there are substantial risks to achieving a better result for the Class through continued
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litigation. Namely, Sony has maintained that it is not liable because, among other reasons, it has
accounted correctly for royalties on foreign streaming; Plaintiff has not identified any contractual
provision that requires Sony to account for royalties on foreign streaming “at-source”; and that,
in the absence of contrary contractual language, New York law expressly permits Sony to pay
royalties on foreign exploitations based on the amounts Sony receives from its affiliated foreign
licensees and not based on the licensees’ “at-source.” Moreover, Sony maintains that if its
obligation to pay such royalties arises from implied terms and course of dealing, it is not required
to pay additional streaming royalties to Class Members beyond what it has already paid. Sony
would likely make additional attacks on the Class Members’ claims, including any potentially
Moreover, while Class Counsel believe that a class would be certified even over
Defendant’s objections, there is always a risk that Defendant would successfully oppose class
certification. See Frank v. Eastman Kodak Co., 228 F.R.D. 174, 186 (W.D.N.Y. 2005) (noting
that “[w]hile plaintiffs might indeed prevail [on a motion for class certification], the risk that the
case might not be certified is not illusory”). In attempting to defeat class certification, Sony
would point to, among other things, variations in contract terms among legacy artists and the
inability to ascertain what may have been represented when they signed their contracts as long as
50 years ago (in some cases). Even if the Class were certified by the Court, Defendant could
have then appealed the certification decision under Fed. R. Civ. P. 23(f), and/or argued for
209, 214 (S.D.N.Y. 1992) (“Even if certified, the class would face the risk of decertification.”).
In short, the substantial risks of establishing liability and damages and prevailing at trial
strongly support approval of the Settlement. Protracted litigation carries inherent risks that would
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necessarily have delayed and endangered Class Members’ recovery. The Settlement provides
substantial relief to Class Members without further delay. Notwithstanding the confidence of
Class Counsel in the merits of the Plaintiff’s claims, Class Counsel are cognizant that significant
obstacles existed at each stage of motion practice and trial. Although Plaintiff and Class Counsel
would have obviously sought more damages in any trial than the amount of the Settlement, the
value of the Settlement constitutes a substantial recovery under all of the circumstances.
The adequacy of a settlement must be judged “not in comparison with the possible
recovery in the best of all possible worlds, but rather in light of the strengths and weaknesses of
plaintiffs’ case.” In re “Agent Orange” Prod. Liab. Litig., 597 F. Supp. 740, 762 (E.D.N.Y.
1984), aff’d, 818 F.2d 145 (2d Cir. Apr. 1987). Moreover, the Court need only determine
whether the Settlement falls within a “‘range of reasonableness.’” PaineWebber, 171 F.R.D. at
130 (citation omitted). When evaluating “the terms of the compromise in relation to the likely
benefits of a successful trial . . . the trial court is entitled to rely upon the judgment of
experienced counsel for the parties.” Cotton v. Hinton, 559 F.2d 1326, 1330 (5th Cir. 1977).
“Indeed, the trial judge, absent fraud, collusion, or the like, should be hesitant to substitute its
Here, the relief the Settlement provides for Class Members is outstanding. Sony has
agreed to create a Settlement Fund of $12.7 million to pay or credit Class Members for past
royalties allegedly underpaid. Based on Class Counsel’s investigation and the information
exchanged by the parties, this amount comprises approximately 36% of all foreign streaming
royalties earned by Class Members from July 1, 2015, through June 30, 2019. The recovery of
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individual Class Members will be equitably calculated based on the percentage of foreign
streaming royalties paid or credited to such Class Members for eligible works, as a proportion of
all foreign streaming royalties paid or credited to all Class Members for all eligible works for the
same period. Therefore, Class Members who file claims to participate in the retrospective relief
fund will receive a larger portion of the fund if their eligible works resulted in greater royalties
Sony will also significantly improve the foreign streaming royalties it credits or pays to
Class Members in the future, by increasing the calculation of relevant foreign streaming royalties
for qualifying recordings by 36%. Given that streaming usage and revenues are continuing to
increase, the value of this prospective relief should amount to many more times the amount of
Courts in this circuit routinely approve recoveries with far less favorable terms. See
Cagan v. Anchor Sav. Bank FSB, 1990 WL 73423, at *12-13 (E.D.N.Y. May 22, 1990)
(approving $2.3 million settlement over objections that “best possible recovery would be
approximately $121 million.”); In re AmBase Corp., 1995 WL 619856, at *2 (S.D.N.Y. Oct. 23,
1995) (approving settlement where class members received 3% to 20% of their losses, calculated
as if all damage issues were resolved in class members’ favor); see also Weinberge v. Kendrick,
689 F.2d 61, 65 (2d Cir. 1982) (class action settlement approved as fair, reasonable, and
adequate even where “it is not disputed that the recovery will be only a negligible percentage of
the losses suffered by the class.”); Grinnell, 495 F.2d at 455 (“The fact that a proposed
settlement may only amount to a fraction of the potential recovery does not, in and of itself,
mean that the proposed settlement is grossly inadequate and should be disapproved.”); In re
Sturm, Ruger, & Co., Inc. Sec. Litig. , in No. 3:09-cv-1293 (VLB), 2012 WL 3589610 *21 (Aug.
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20, 2012) (approving a 3.5% recovery where, “[i]n light of the legal and factual complexity, the
unpredictability of a lengthy trial and the appellate process as discussed above, the settlement
amount is well within the range of reasonableness for similar . . . cases.”) (citing In re China
Sunergy Sec. Litig., No. 07Civ.7895 (DAB), 2011 WL 1899715, at *5 (S.D.N.Y. May 13, 2011)
(noting that “average settlement amounts in securities fraud class actions where investors
sustained losses over the past decade . . . have ranged from 3% to 7% of the class members’
estimated losses”)); In re Union Carbide, 718 F. Supp. 1099, 1103 (S.D.N.Y. 1989)
(acknowledging that “a settlement can be approved even though the benefits amount to a small
percentage of the recovery sought” and that the “essence of settlement is compromise.”).
Here, in light of the novel issues presented, factual and legal complexity entailed in the
prosecution and defense, and the unpredictability associated with class certification proceedings,
a lengthy trial and any appellate proceedings (both under Fed. R. Civ. P. 23(f) and on the merits),
Plaintiff respectfully submits that the result achieved is excellent under all of the circumstances.
As the proposed Settlement meets the requirements for final approval, it clearly is “within
the range” of possible approval, and thus preliminary approval should be granted and the Class
should be notified and given the opportunity to evaluate the terms of the proposed Settlement.
whether the action may be maintained as a class action under Rule 23. See Amchem Prods. v.
Windsor, 521 U.S. 591, 614 (1997). Rule 23(a) sets forth four prerequisites to class certification:
(i) numerosity; (ii) commonality; (iii) typicality; and, (iv) adequacy of representation. In
addition, the Class must meet one of the three requirements of Rule 23(b). See Fed. R. Civ. P. 23.
Here, Plaintiff seeks to certify the following class for settlement purposes:
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All persons and entities who are parties to a “Class Contract” (defined by the
Settlement Agreement as a contract (i) to which SME, or any entity of which
SME is a member or partner and on behalf of which SME pays or credits
royalties, is a party; (ii) that provides for exploitation of Recordings, the
copyrights in which SME owns and/or controls; and (iii) in connection with which
SME paid or credited any royalties for Foreign Streams calculated on a basis
other than Foreign Streams At-Source Revenue during the period from September
25, 2012, through June 30, 2019, or any portion thereof).
Settlement Agreement § 2.
The Settlement Class meets the numerosity, commonality, and typicality standards of
1. Numerosity
The number and location of putative Class Members is such that it is impractical to join
them all in one lawsuit. See Cross v. 21st Century Holding Co., No. 00 Civ. 4333 (MBM), 2004
WL 307306, at *1 (S.D.N.Y. Feb. 18, 2004) (certifying class logically exceeding 100 members).
Here, the numerosity standard is satisfied as Sony is one of the largest record labels in the United
There are substantial questions of law and fact common to all Class Members including,
(a) Defendant has withheld international streaming revenue from Plaintiff and
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(e) Class Members are entitled to restitution, and, if so, what is the proper
measure of such;
(g) Plaintiff and Class Members have been damaged by Defendant’s actions
These common questions are susceptible to common answers as this case centers on the
legality of Sony’s class-wide policies regarding the calculation and payment of foreign streaming
royalties to Class Members. These answers, in turn, will determine the measure of damages.
3. Typicality
defenses of the class.” Fed. R. Civ. P. 23(a)(3). Here, Plaintiff’s claims are “typical” of other
Class Members’ claims because they were subjected to a uniform set of policies and a common
course of conduct regarding Sony’s calculation and payment of foreign streaming royalties that
Sony used for legacy artists and legacy contracts. Additionally, Plaintiff and all other Class
Members’ claims are premised on the same legal theories and seek the same relief in the form of
monetary damages and future injunctive relief. Accordingly, the typicality requirement is
satisfied. See In re Host Am. Corp. Sec. Litig., Master File No. 05-CV-1250 (VLB), 2007 WL
3048865, at *5 (D. Conn. Oct. 18, 2007) (Bryant, J.) (finding typicality where plaintiffs alleged
defendants committed the same acts, in the same manner against all class members).
4. Adequacy
The adequacy requirement of Rule 23(a)(4) requires Plaintiff to demonstrate that: (1)
there is no conflict of interest between Plaintiff and the other Class Members; and (2) Class
Counsel are qualified, experienced and capable of conducting the litigation. See In re Global
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Crossing Sec. and ERISA Litig., 225 F.R.D. 436, 453 (S.D.N.Y. 2004). Here, Plaintiff does not
have any claims antagonistic to or in conflict with those of the other Class Members, as Plaintiff
is pursuing the same legal theories as the rest of the Class relating to the same course of conduct.
Plaintiff has further demonstrated it is a willing and suitable class representative, through its
active participation in the litigation. See Declaration of Matthew Nelson ¶¶ 2-5; Declaration of
consumer class actions, have been appointed class counsel in prior cases, and have the resources
necessary to prosecute this action to its conclusion. See Koncius Decl. ¶¶ 10-11; Warshaw Decl.
¶¶ 4-10; Johnson Decl. ¶¶ 3-5. For the same reasons, Plaintiff’s counsel should be appointed as
class counsel. See Fed. R. Civ. P. 23(g)(1) (setting forth requirements for appointment of class
counsel).
Rule 23(b)(3) authorizes class actions to proceed where “questions of law or fact
common to the members of the class predominate over any questions affecting only individual
members, and that a class action is superior to other available methods for fair and efficient
adjudication of the controversy.” Fed. R. Civ. P. 23(b)(3). “The matters pertinent to these
findings include: (A) the class members’ interests in individually controlling the prosecution or
defense of separate actions; (B) the extent and nature of any litigation concerning the controversy
already begun by or against class members; (C) the desirability or undesirability of concentrating
the litigation of the claims in the particular forum; and (D) the likely difficulties in managing a
class action.” Id. “In adding ‘predominance’ and ‘superiority’ to the qualification-for-
certification list, the Advisory Committee sought to cover cases ‘in which a class action would
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achieve the economies of time, effort, and expense, and promote . . . uniformity of decision as to
persons similarly situated, without sacrificing procedural fairness or bringing about other
undesirable results.” In re Lupron Mktg. & Sales Practices Litig., 228 F.R.D. 75, 92 (D. Mass.
2005) (citing AmchemProds., 521 U.S., at 615). Where, as here, a court is deciding certification
in the context of a proposed settlement class, questions regarding the manageability of the case
for trial purposes do not have to be considered. Amchem, 521 U.S. at 619.
“The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently
Amchem, 521 U.S. at 623). “Rule 23(b)(3) does not require that all questions of law or fact be
common; it only requires that the common questions predominate over individual questions.”
Dura-Bilt Corp. v. Chase Manhattan Corp., 89 F.R.D. 87, 93 (S.D.N.Y. 1981) (emphasis added);
see generally Alba Conte & Herbert Newberg, Newberg on Class Actions, §§ 4.21, 4.25 (1992).
In this case, the predominance requirement is satisfied because the claims and defenses
arise from Sony’s common policy of paying Class Members’ foreign streaming royalties based
on less than all their foreign streaming revenues. As alleged in the Complaint, Sony’s common
payment practices have been adopted on a class wide basis and consistently applied to all of the
Class Members without regard to individual differences and determinations. These core facts
give rise to and form Plaintiff’s theory of liability, which seeks recovery of foreign streaming
revenues that Sony has underpaid to Class Members. Thus, Plaintiff’s challenge to the legality of
Defendant’s policy of withholding foreign streaming revenue earned by foreign subsidiaries and
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not only the most desirable, efficient, and convenient mechanism to resolve the Class claims, but
almost certainly the only fair and efficient means available to adjudicate such claims. See, e.g.,
Phillips Co. v. Shutts, 472 U.S. 797, 809 (1985) (“[c]lass actions . . . permit the plaintiffs to pool
claims which would be uneconomical to litigate individually . . . [in such a case,] most of the
plaintiffs would have no realistic day in court if a class action were not available”).
A class action is superior in this case because there are thousands of Class Members,
many of whom likely have relatively small claims, and the class-wide adjudication of their
claims is the most efficient and economical option for the parties and the judiciary. Class
Members likely would be unable or unwilling to shoulder the great expense of litigating the
claims at issue against Defendant given the comparatively small size of each individual Class
Member’s claims. While the damages available to individual Class Members were they to prevail
are not de minimis, for the vast majority of Class Members it will be outweighed by the
significant costs and effort that is necessary to conduct an audit or litigate an individual case
through trial. Moreover, the adjudication of thousands of separate individual actions asserting
identical claims arising from the same course of conduct would be inefficient and place an undue
burden on the federal court system as well as the Defendant. Conversely, this class action
provides a fair, reasonable, and adequate recovery for Class Members without burdening the
Court and the parties with a multiplicity of proceedings. Thus, it is desirable to adjudicate this
In light of the foregoing, all relevant requirements of Rule 23 are satisfied, and the Court
should certify this Class for settlement purposes in connection with the proposed Settlement.
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Rule 23 requires that notice of a settlement be “the best notice that is practicable under
the circumstances, including individual notice to all members who can be identified through
reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B); see also Alba Conte & Herbert Newberg,
Newberg on Class Actions § 8.2 at 162-65 (4th ed. 2002). However, there are no rigid rules to
apply when determining the adequacy of such notice; “the standard for the adequacy of a
settlement notice in a class action under either the Due Process Clause or the Federal Rules is
measured by reasonableness.” Wal-Mart Stores, Inc. v. Visa U.S.A. Inc., 396 F.3d 96, 113-14 (2d
Cir.), cert. denied, 544 U.S. 1044 (2005). Further, it is clearly established that “notice need not
be perfect, but need be only the best notice practicable under the circumstances, and each and
every class member need not receive actual notice, so long as class counsel acted reasonably in
choosing the means likely to inform potential class members.” In re Merrill Lynch Tyco
Research Sec. Litig., 249 F.R.D. 124, 133 (S.D.N.Y. 2008) (citing Weigner v. City of New York,
852 F.2d 646, 649 (2d Cir.1988), cert. denied, 488 U.S. 1005 (1989)).
The proposed Notice program in this case satisfies all of these criteria and is in fact the
best notice practicable, as the proposed Notice: (a) informs Class Members of the substantive
terms of the Settlement; (b) advises Class Members on how to submit a claim (including the
claim deadline for doing so); (c) advises Class Members of their options for opting-out of, or
objecting to, the Settlement; and, (d) explains how to obtain additional information about the
Settlement. See Settlement Agreement Ex. A-1. Moreover, the Notice program was designed and
is being implemented by a leading notice firm, JND Legal Administration. See generally,
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As for the manner of giving notice, virtually all Class Members will receive direct and/or
published notice within 60 days of this Court’s preliminary approval of the Settlement. The
Parties will employ Email Notice for those Class Members for whom Sony maintains valid email
addresses. Settlement Agreement ¶ 14. Where Email Notice is not or cannot be successfully
delivered to a Class Member, the Settlement Administrator will send, via First-Class Mail, the
notice and claim form to those Class Members, using updated mailing address information. Id.
Courts regularly approve such a process. See, e.g., In re Sony SXRD Rear Projection Television
Class Action Litig., 2008 WL 1956267 (S.D.N.Y. May 1, 2008) (email notice to all known
addresses, and a hard copy mailing to persons who did not have an email address on file or
where the email was returned as undeliverable); Browning v. Yahoo! Inc., 2006 WL 3826714
(N.D. Cal. Dec. 27, 2006) (email notice sent to all available addresses, with a hard copy mailing
sent to anyone who did not have an email address on file or where the email was returned as
undeliverable).
These actions alone will ensure the majority of all Class Members will receive direct
notice. However, and in addition, the Settlement Administrator has developed a supplemental
publication notice plan which includes advertisements in: (1) industry print publications
Billboard and Music Connection; (2) the Tennessean the largest daily newspaper in Nashville,
widely known as “Music City”; (3) targeted internet banner advertisement on websites and social
media sites such as the Google Display Network (“GDN”), Facebook and LinkedIn5; and (4)
5
Over 8.3 million impressions behaviorally and contextually targeted to the music and recording
industry will be delivered through GDN (including sites such as RollingStone.com,
Pandora.com, AmericanSongwriter.com); over 1.5 million impressions targeting individuals
interested in pages related to musicians and the Recording Industry Association of America will
be delivered through Facebook; and over 380,000 impressions targeting recording artist and
musician job titles will be delivered through LinkedIn. In addition, an estimated 230,000
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banner notice placements in industry e-Newsletters including Music Connection Weekly Bulletin
e-Newsletter, Digital Music News Daily Snapshot e-Newsletter and Music Radar Dedicated e-Blast,
to provide notice to any Class Members who did not receive direct notice. Intrepido-Bowden
Decl. ¶¶ 25-31. The Settlement Administrator will also create a Settlement Website with online
claim filing and include information about the terms of the Settlement, host all of the relevant
court, settlement and notice documents, and create a toll-free telephone line. Id. ¶ 32. Therefore,
the Court should approve the Notice program and the form and content of the Notices attached to
A. Contents of Notice
The proposed Notices to be sent and the Claim Form are attached to the Settlement
Agreement. The Notices include a summary of settling Parties’ respective litigation positions;
the general terms of the Settlement as set forth in the Settlement Agreement; instructions for how
to opt-out of, or object to, the Settlement; the process and instructions for making a claim; the
amount of requested attorneys’ fees and representative Plaintiff Service Awards; and the date,
time, and place of the Final Fairness Hearing. See Settlement Agreement Exs. A-1, A-3, A-4.
The proposed Notices are more than sufficient because they “fairly apprise the ...
members of the class of the terms of the proposed settlement and of the options that are open to
them in connection with [the] proceedings.” See Maywalt v. Parker & Parsley Petroleum Co., 67
F.3d 1072, 1079 (2nd Cir. 1995) (internal quotations omitted); see also Shutts, 472 U.S. at 812.
The Notices provide Class Members with information on the Class, the purpose and timing of the
fairness hearing, opt-out procedures and deadlines, and the deadline and process for filing
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claims. The Settlement Administrator will provide a telephone number and website that Class
Members may use to the extent they have any questions. Intrepido-Bowden Decl. ¶¶ 32, 33. The
Notices clearly explain that any Class Member who wishes to opt out of the Class must timely
submit written notice clearly manifesting his or her intent to be excluded from the Class to the
designated Post Office box established for such purpose. See Settlement Agreement Exs. A-1, A-
3, A-4. Class Members will be provided with sixty (60) days from the mailing or e-mailing of
notice to submit requests to opt-out. See Settlement Agreement Exs. A-1, A-3, A-4. The Notices
also clearly explain that any Class Member who wishes to object to the Settlement must timely
file a written statement of objection with the Clerk of the Court and the Parties’ counsel. Id. Such
objections must be postmarked no later than sixty (60) days following the mailing of notice. Id.
That is more than sufficient under applicable case law. See Maywalt, 67 F.3d at 1079; Torrisi v.
Tucson Elec. Power Co., 8 F.3d 1370, 1374-75 (9th Cir. 1993).
The last step in the settlement approval process is the final approval hearing at which the
Court may hear all evidence necessary to evaluate the proposed Settlement. Proponents of the
Settlement may offer argument in support of the Settlement’s approval, and members of the
Settlement Class or their counsel may be heard if they so choose. Plaintiff proposes the following
///
///
///
///
///
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DATE EVENT
14 days after preliminary approval Settlement Administrator to provide direct
mail and email notice
30 days after preliminary approval Settlement Administrator to cause the
Publication Notice to appear
53 days after the mailing of Notice Class Counsel shall file a motion for final
approval of the Settlement and all supporting
papers
60 days after the mailing of Notice Last day for Settlement Class Members to:
file claims; request exclusion from the
Settlement Class; object to the Settlement;
and, file notices to appear at the Fairness
Hearing
20 days before the Fairness Hearing Class Counsel shall file with the Court a list
of all persons and entities who have timely
and validly requested exclusion from the
Settlement Class, and Class Counsel and
Defendant may respond to any objections to
the proposed Settlement
At least 250 days after preliminary approval6 Final Fairness Hearing
VIII. CONCLUSION
WHEREFORE, based on the foregoing, Plaintiff respectfully requests that the Court
enter an Order:
6
This period of time between preliminary approval and the Fairness Hearing will allow the
Settlement Administrator, Plaintiff, and Defendant to each satisfy their various pre-hearing
obligations under the Settlement Agreement. Additionally, under the Class Action Fairness Act,
28 U.S.C. § 1715 (“CAFA”), the Court may not issue an order giving final approval of a
proposed settlement earlier than 90 days after the later of the dates on which the appropriate
Federal official and the appropriate State official are served with notice of the proposed
Settlement. Id. at § 1715(d).
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(6) Appointing as Class Counsel Johnson & Johnson, LLP, Pearson, Simon &
Warshaw, LLP, and Kiesel Law LLP; and,
for the Court’s review and consideration. Plaintiff stands ready to provide any additional
materials that the Court may require to consider and preliminarily approve this Settlement.
Jeffrey A. Koncius
Nicole Ramirez (Admitted Pro Hac Vice)
KIESEL LAW LLP
8648 Wilshire Boulevard
Beverly Hills, California 90211-2910
Telephone: (310) 854-4444
Facsimile: (310) 854-0812
koncius@kiesel.law
ramirez@kiesel.law
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Case 1:18-cv-08791-LLS Document 50 Filed 09/04/20 Page 32 of 32
njohnson@jjllplaw.com
djohnson@jjllplaw.com
Laurie Rubinow
James C. Shah
SHEPHERD, FINKELMAN, MILLER
& SHAH, LLP
52 Duane Street, 7th Floor
New York, New York 10007
Telephone: (212) 419-0156
Facsimile: (866) 300-7367
lrubinow@sfmslaw.com
jshah@sfmslaw.com
26