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HENRY GRADSTEIN (S.B. #89747)
hgradstein@gradstein.com
MARYANN R. MARZANO (S.B. #96867)
mmarzano@gradstein.com
HARVEY GELLER (S.B. #123107)
hgeller@gradstein.com
GRADSTEIN & MARZANO, P.C.
6310 San Vicente Blvd., Suite 510
Los Angeles, CA 90048
Telephone: (310) 776-3100
Facsimile: (323) 931-4990
Attorneys for Plaintiff
Flo & Eddie, Inc.
DANIEL M. PETROCELLI (S.B. #97802)
dpetrocelli@omm.com
DAVID MARROSO (S.B. #211655)
dmarroso@omm.com
DREW E. BREUDER (S.B. #198466)
dbreuder@omm.com
CASSANDRA L. SETO (S.B. #246608)
cseto@omm.com
O’MELVENY & MYERS LLP
1999 Avenue of the Stars, Suite 700
Los Angeles, CA 90067-6035
Telephone: (310) 553-6700
Facsimile: (310) 246-6779
Attorneys for Defendant
Sirius XM Radio Inc.

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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FLO & EDDIE, INC., a California
corporation, individually and on behalf
of all others similarly situated,

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Plaintiff,

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Case No. 13-CV-5693 PSG (RZx)
PARTIES’ THIRD
SUPPLEMENTAL RULE 26(F)
JOINT CASE MANAGEMENT
STATEMENT

v.
SIRIUS XM RADIO INC., a Delaware
corporation, and DOES 1 through 10,
Defendants.

Hon. Philip S. Gutierrez
Hearing Date:
Hearing Time:
Courtroom:

December 21, 2015
2:30 p.m.
880

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RULE 26(F) JOINT REPORT
CASE NO. 13-CV-5693 PSG (RZX)

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Pursuant to Federal Rule of Civil Procedure 26(f) and the Court’s November

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16, 2015 order, Dkt. 262, plaintiff Flo & Eddie, Inc. (“Flo & Eddie”) and defendant

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Sirius XM Radio Inc. (“Sirius XM”), by and through their respective counsel of

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record, respectfully submit this Third Supplemental Rule 26(f) Joint Case

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Management Statement following a conference of counsel on November 30, 2015.

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I.

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PROCEDURAL HISTORY
On August 1, 2013, Flo & Eddie filed suit against Sirius XM in Los Angeles

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Superior Court, alleging on behalf of itself and a putative class of owners of pre-

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1972 recordings (i.e., recordings fixed prior to February 15, 1972) that Sirius XM,

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without a license or authorization, was reproducing, distributing, and performing

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those recordings as part of its satellite and internet radio services. Flo & Eddie

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alleged claims for violation of Cal. Civ. Code § 980(a)(2), misappropriation, unfair

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competition under Cal. Bus. & Prof. Code § 17200 and common law, and

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conversion, and sought damages, restitution, and injunctive relief on behalf of itself

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and the putative class.

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After removing the case to federal court on August 8, 2013, Sirius XM filed

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motions in October 2013 to transfer venue to New York and stay the case pending

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resolution of its transfer request, both of which the Court denied on December 3,

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2013. On February 12, 2014, Sirius XM filed a motion to strike Flo & Eddie’s

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class action allegations, which the Court denied on March 18, 2014. Sirius XM

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requested bifurcation of discovery to allow for early summary judgment on

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liability, which the Court granted on March 25, 2014, deferring damages and class

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certification discovery and ordering that liability discovery be completed by July

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14, 2014.

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On June 9, 2014, Flo & Eddie filed a motion for summary judgment as to

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liability on all causes of action. On September 22, 2014, the Court granted that

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motion in part, affirming liability for public performance but finding triable issues

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of fact with respect to reproduction. Sirius XM thereafter filed motions to either
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certify it for interlocutory appeal or reconsider the summary judgment order, which

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the Court respectively denied on November 20, 2014 and February 19, 2015.

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On October 21, 2014, the Court issued a scheduling order requiring that class

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certification and damages discovery be completed by February 27, 2015, and that

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Flo & Eddie file its motion for class certification by March 16, 2015. On March

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16, 2015, Flo & Eddie filed its motion for class certification, which the Court

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granted on May 27, 2015.

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On June 2, 2015, Sirius XM filed an ex parte application to stay this action

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pending resolution of its Rule 23(f) petition to the Ninth Circuit challenging the

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class certification order, or in the alternative, to modify the scheduling order to

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allow sufficient time for the class notice and opt-out process as well as limited post-

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certification discovery. Dkt. 228. Flo & Eddie opposed Sirius XM’s application,

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but agreed that some modification of the scheduling order was necessary to allow

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sufficient time for the class notice and opt-out process. Dkt. 230.

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On June 8, 2015, the Court granted Sirius XM’s application to stay, vacating

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all pre-trial and trial dates and issuing a stay pending resolution of Sirius XM’s

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Rule 23(f) petition. Dkt. 237. On June 10, 2015, Sirius XM filed its Rule 23(f)

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petition. On August 10, 2015, the Ninth Circuit denied Sirius XM’s Rule 23(f)

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petition. On August 24, 2015, Sirius XM filed a petition for rehearing or

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reconsideration en banc with the Ninth Circuit. On September 1, 2015, the Court

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issued an order setting a scheduling conference for October 5, 2015. On September

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4, 2015, Sirius XM requested that the Court extend its stay of the current

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proceedings until resolution of its en banc petition, which the Court granted on

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September 8, 2015. On November 10, 2015, the Ninth Circuit denied Sirius XM’s

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en banc petition.

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On November 25, 2015, Sirius XM filed a motion to continue the stay issued

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on June 8, 2015 pending resolution of the appeal filed by Pandora Media, Inc.

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(“Pandora”) of this Court’s February 23, 2015 order denying its anti-SLAPP
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motion. Flo & Eddie, Inc. v. Pandora Media, Inc., 2015 U.S. Dist. LEXIS 70551

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(C.D. Cal. Feb. 23, 2015). That motion is set for hearing on January 25, 2016.

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II.

SETTLEMENT

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The parties participated in a private mediation on June 12, 2015 and a

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settlement conference with the Eleventh Circuit’s Mediation Center on October 6,

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2015, neither of which resulted in a resolution of the parties’ dispute. The parties

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disagree as to whether additional settlement discussions would be productive at this

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time.

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A.

Flo & Eddie’s Position

Flo & Eddie believes that the pending stay greatly impacted Sirius XM’s

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motivation to address this case as a certified class action. Separate and apart from

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its settlement with the major record companies on June 17, 2015, Sirius XM has

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used the stay as a cover in order to attempt to settle with class members

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individually rather than as a group. It is for this reason that the prior attempts at

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settlement (both of which occurred during the pendency of the stay) were not

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successful. Accordingly, Flo & Eddie believes that once the stay is lifted and

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proper discovery is completed of Sirius XM’s improper settlement activities and

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conduct during the stay, then a settlement conference before a Magistrate Judge in

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the Central District may prove effective.

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B.

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Sirius XM does not believe that further settlement discussions would be

Sirius XM’s Position

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productive at this time, given that the parties’ private mediation in June 2015 and

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Eleventh Circuit settlement conference in October 2015 were both unsuccessful.

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Given the pending appellate proceedings in the Second, Ninth, and Eleventh

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Circuits, and the impending February 2, 2016 oral argument in the Second Circuit,

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appellate guidance on the performance right and Commerce Clause issues, which

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will be extremely helpful in informing the parties on their respective positions, is

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forthcoming. See Dkt. 264 at 3-5. Sirius XM disagrees with Flo & Eddie’s

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statements above, which are factually and legally inaccurate.1

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III.

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DISCOVERY
According to the Court’s March 25, 2014 and October 21, 2014 scheduling

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orders, the cut-off for liability discovery passed on July 14, 2014, the cut-off for

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class certification and damages discovery passed on February 27, 2015, and the cut-

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off for expert discovery passed on April 30, 2015. Dkt. 58; Dkt. 126. The parties

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disagree as to whether and what additional discovery is warranted.

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A.

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Flo & Eddie’s Position
1.

Flo & Eddie is Entitled To Further Discovery.

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Immediately upon the May 27, 2015 certification of the class, Sirius XM

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sought and received a stay of this action (which has now been in effect for over

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seven months) in order to petition the Ninth Circuit under Rule 23(f) for permission

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to pursue an interlocutory appeal of the class certification order. That stay was

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further extended when Sirius XM sought en banc review of the Ninth Circuit’s one

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sentence discretionary refusal to allow that appeal. During the stay, Sirius XM has

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not only continued to infringe the pre-1972 recordings owned by the class (for

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which only it possesses the data that is necessary to calculate the damages resulting

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from that infringement) but has also attempted to use the stay to undermine the

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After counsel for the parties participated in a meet and confer conference call on
November 30, 2015, Sirius XM circulated a draft of this joint statement containing
background and Sirius XM’s positions to Flo & Eddie on December 7, 2015. Sirius
XM did not receive Flo & Eddie’s positions and revisions—which amounted to
twelve additional pages—until December 11, 2015, one business day before this
joint statement was due. Flo & Eddie’s position contains extensive legal arguments
that are both inappropriate for a Rule 26(f) joint report and exceed the parties’
discussions during the November 30, 2015 conference. Sirius XM has not had a
full opportunity to respond to the entirety of Flo & Eddie’s arguments and therefore
requests complete briefing and reserves the right to respond further to the
arguments made in this joint report.
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certified class by negotiating individual settlements of the claims in this action with

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class members (even beyond the major record companies) in order to procure their

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opt-out once the stay is lifted.

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In having these discussions and in consummating these settlements, Sirius

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XM ignored the law, as well as the role of class counsel and the Court. Once the

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class was certified, Sirius XM, its executives, and its lawyers ceased to be permitted

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to have direct communications with class members regarding this litigation.

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Kleiner v. First Nat’l Bank of Atlanta, 751 F.2d 1193, 1206-07 (11th Cir. 1985);

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Resnick v. American Dental Assn., 95 F.R.D. 372, 378-79 (N.D. Ill. 1982):

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Hernandez v. Vitamin Shoppe Industries Inc., 174 Cal. App. 4th 1441, 1459-60

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(2009). Sirius XM’s settlement communications and the agreements they procured

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through those communications raise a host of other legal and procedural issues that

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require discovery in order to determine the need for, and scope of, curative

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measures and remedies.

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In light of what has transpired over the last seven months and in order to

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update the damages calculations in this case, with the permission of the Court, Flo

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& Eddie intends to pursue discovery (both by requiring supplementation of prior

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discovery responses pursuant to Rule 26(e) 2 and by serving new discovery where

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appropriate) with respect to the following categories:

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1. Financial and usage information regarding Sirius XM’s exploitation of

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pre-1972 recordings in California from and after Sirius XM’s last

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supplementation of this information. This discovery is necessary to bring

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the damages calculation up to date with actual rather than estimated data.

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2. Agreements and licenses entered into by Sirius XM from and after May

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SiriusXM’s obligation to supplement its prior responses continues automatically
beyond the prior discovery cut-off date. Woods v. Google, Inc., 2014 U.S. Dist.
LEXIS 44894, *12-13 (N.D. Cal. Mar. 28, 2014); Villescas v. Dotson, 2015 U.S.
Dist. LEXIS 68641, *4 n.1 (E.D. Cal. May 27, 2015).
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27, 2015 that grant it any rights to use or exploit pre-1972 recordings.

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This discovery is necessary with respect to the damages calculation as

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well as to determine the extent to which Sirius XM’s actions have been

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improper and affected the current composition of the class.

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3. The identification of pre-1972 recordings for which Sirius XM claims that

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it possesses the right to use or exploit in California. Sirius XM claims to

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have negotiated rights – either by license or release – to a significant

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number of pre-1972 recordings. An identification of those recordings (as

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well as who owns them) by Sirius XM is necessary if Sirius XM intends

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to claim that those recordings are no longer part of this litigation.
4. From and after May 27, 2015, communications between Sirius XM and

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members of the class concerning this litigation, settlement of the claims in

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this litigation, and licensing of pre-1972 recordings. This discovery is

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necessary to determine the scope and effect of Sirius XM’s improper

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communications and the extent to which Sirius XM has attempted to

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mislead or coerce class members into opting out of the certified class, as

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such activities constitute clear harm to the parties and the processes of the

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court. Zarate v. Younglove, 86 F.R.D. 80, 101 (C.D. Cal. 1980). Sirius

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XM’s claims of mediation privilege with respect to some of those

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communications are premature and, in any event, overbroad and not a

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basis to foreclose this discovery.

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Flo & Eddie estimates that this discovery can be completed within ninety

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days, provided that any necessary resolution of discovery disputes including

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motions to compel are not included within that time period.

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2.

Sirius XM Is Not Entitled To The Post-Certification
Discovery It Seeks.

Although Sirius XM strains to justify the two bases upon which it claims
entitlement to post-certification discovery, in each case, it is merely asking this
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Court for a “do over” to correct previous tactical decisions it made.
First, Sirius XM argues that it requires discovery from “a sampling of absent

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class members” in order to resurrect various affirmative defenses (authorization,

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waiver, estoppel, and laches) that it either lost on summary judgment or testified

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away in depositions. Indeed, Sirius XM failed to raise authorization, waiver, or

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estoppel in opposing Flo & Eddie’s motion for summary judgment, and the Court

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definitively ruled that laches “is unavailable to Sirius XM in this action.” (Dkt. 117,

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p. 15) Sirius XM fared no better when it attempted to belatedly raise its waived

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defenses while opposing class certification: the Court dismissed Sirius XM’s

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authorization and estoppel defenses based upon Sirius XM’s binding admissions

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“that its decision to perform pre-1972 recordings without first seeking licenses or

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paying royalties was based on its interpretation of the applicable law… not an

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understanding that owners had already impliedly authorized performance.” (Dkt.

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225, pp. 18-19) These admissions also foreclose any discovery regarding waiver.

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Moreover, if Sirius XM had actually relied on any alleged waivers, it most certainly

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would already have that information, obviating the need for discovery.

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Second, Sirius XM argues that it requires discovery to verify that various

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commercial services that collect ownership information for pre-1972 recordings

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“actually possess complete and accurate ownership information.” The time for

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Sirius XM to pursue this inquiry was before class certification discovery cut-off on

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February 27, 2015. However, as Flo & Eddie explained when Sirius XM first tried

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to reopen this issue in May 2015 (Dkt. 215), Sirius XM made the strategic decision

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not to pursue discovery regarding the identification of owners of pre-1972

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recordings because it wanted to blind itself to that knowledge so that it could persist

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in arguing that there was no reliable method available for ascertaining these owners.

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Obviously, pursuing discovery on that issue prior to class certification had the very

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real potential to undermine Sirius XM’s representations, and so it forfeited the

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opportunity in a gambit to defeat class certification. Its subsequent failure to defeat
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certification does not constitute good cause to reopen closed discovery that Sirius

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XM purposely chose not to pursue when it actually had the opportunity.

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Ultimately, neither of Sirius XM’s requests satisfy the requirements

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justifying its request to conduct post-certification discovery. Sirius XM’s intent to

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depose absent class members is solely intended to prop up affirmative defenses that

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would remove the deponents from the class definition and therefore “reduce the

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size of the class,” violating the first factor of the Court’s inquiry. McPhail v. First

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Command Fin. Planning, Inc., 251 F.R.D. 514, 517 (S.D. Cal. 2008). Additionally,

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Sirius XM has failed to establish that any of the foregoing discovery is necessary,

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since its asserted defenses are categorically unavailable to it and ownership is not

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an issue in this case unless and until competing claims arise.3 Finally, it is beyond

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cavil that Sirius XM would know if it possessed any of the affirmative defenses it

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seeks to depose absent class members over. Indeed, how could Sirius XM rely on a

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waiver, estoppel, authorization, or license that it knew nothing about? Sirius XM

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makes no effort to explain because in no sense are these serious inquiries. They are

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merely an attempt to harass and intimidate members of the certified class.4

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Indeed, there is no real dispute that Sirius XM owns none of the pre-1972
recordings it exploits and relied on no authorizations in deciding to exploit them,
rendering every single exploitation infringing as a matter of law. Thus, no amount
of discovery as to ownership issues can possibly dispel its liability. Moreover,
because Sirius XM is only liable for the number of infringing acts it committed,
regardless of how many parties claim the resulting damages, there is no risk of
overclaiming or exposure to excessive damages to concern Sirius XM.

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Although Sirius XM makes a passing reference to a third basis for discovery –
“issues related to Flo & Eddie’s disgorgement theory” – it never explain who this
discovery would be directed at, what it would entail, why it is necessary, or even
how it would be relevant given that Flo & Eddie seeks damages as defined by the
California Court of Appeals, not disgorgement. (Dkt. 230, pp. 13-14)
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B.

Sirius XM’s Position
1.

Sirius XM Is Entitled To Post-Certification Discovery.

As Sirius XM explained in the prior briefing on its ex parte application to

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stay or modify the scheduling order, see Dkt. 232 at 2-7; Dkt. 264 at 7-9, Sirius XM

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intends to seek limited post-certification discovery from a sampling of absent class

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members and from third parties SoundExchange, Music Reports, Inc. (“MRI”), and

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Evan M. Greenspan, Inc. (“Greenspan”). Sirius XM is prepared to discuss its

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proposed discovery plan at the December 21, 2015 status conference or in briefing,

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and summarizes it only briefly here.

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Sirius XM’s initial proposal is to select 15-20 absent class members from

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SoundExchange’s list of 273 purported owners of pre-1972 recordings, which Flo

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& Eddie previously presented to the Court as an accurate but non-exhaustive list of

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class members. Dkt. 182; Dkt. 186 ¶¶ 2-6. Sirius XM would depose the selected

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class members about their personal knowledge on limited topics, such as their

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ownership of the recording at issue; knowledge that their recording has been

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performed, and steps taken to seek payment or stop such performances; and

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statements or conduct manifesting a license or consent to Sirius XM’s

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performances. The depositions would be limited to four hours, although Sirius XM

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reserves its right to seek additional time, and additional discovery, upon a showing

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of good cause.

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Sirius XM also intends to seek limited discovery from third parties

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SoundExchange, MRI, and Greenspan concerning ownership issues that first arose

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in class certification briefing (and after the close of discovery). Ownership is a

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threshold liability issue that each class member bears the burden of establishing. In

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granting class certification, the Court relied on Flo & Eddie’s assertions that these

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third parties could “assist in identifying owners of the pre-1972 recordings at issue”

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and that MRI has a “‘song-by-song’ ownership database covering ‘virtually all of

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the commercially significant music in existence.’” Dkt. 225 at 10; Dkt. 200 at 6.
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But Flo & Eddie’s assertions have never been tested, and given the importance of

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ownership in this case, discovery is essential to verify whether these third parties

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actually possess complete and accurate ownership information—particularly since

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MRI itself has conceded that ownership information “is highly dynamic” and “it is

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simply impossible to maintain a ‘phone book’ of definitive copyright ownership

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information at a single point in time.” Dkt. 204-55, 204-59.

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Flo & Eddie does not have a valid basis to oppose this limited discovery.

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Sirius XM has a due process right to discovery necessary to defend itself at trial,

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including discovery concerning whether SoundExchange, MRI, and Greenspan

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have complete and reliable records evidencing ownership of pre-1972 recordings;

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issues of authorization, waiver, estoppel, and laches as to absent class members;

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and issues related to Flo & Eddie’s disgorgement theory—the sole basis on which it

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seeks class damages, as disclosed for the first time in class certification briefing.

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See In re Nat’l W. Life Ins. Deferred Annuities Lit., 2010 WL 4809330, at *3 (S.D.

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Cal. Nov. 19, 2010) (“[T]he Court is unwilling to deny Defendants the opportunity

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to meaningfully defend themselves.”), aff’d in part and overruled in part, 2011 WL

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3438186 (S.D. Cal. Jan. 19, 2011) (reaffirming decision to permit post-certification

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discovery of absent class members); Town of New Castle v. Yonkers Contracting

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Co., 1991 WL 159848, at *1 (S.D.N.Y. 1991) (post-certification discovery

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warranted where it would be “helpful to the proper presentation and correct

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adjudication of the principal suit.”); WILLIAM B. RUBENSTEIN, NEWBERG ON CLASS

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ACTIONS § 9:11 (5th ed. 2015) (noting, with respect to absent class member

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discovery, that “a defendant has a due process right to so defend itself and should

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not be unfairly prejudiced by being unable to develop its case”).

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Although the Court ruled that Sirius XM cannot litigate its defenses as to Flo

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& Eddie, this does not, and cannot, preclude Sirius XM from litigating its

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defenses—let alone predicate liability issues, such as ownership and

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authorization—as to absent class members. See Wright v. Schock, 742 F.2d 541,
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544 (9th Cir. 1984). As the Court acknowledged in its class certification order,

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Sirius XM has never had the opportunity to litigate these issues with respect to

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absent class members. Dkt. 225 at 16-19. Indeed, Flo & Eddie has itself

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acknowledged that some post-certification discovery is warranted. See Dkt. 228-1

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(Flo & Eddie agreeing to provide additional discovery “if a class is certified”).

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Moreover, the Court’s summary judgment order did not hold that Sirius

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XM’s equitable defense of laches is wholly unavailable, as Flo & Eddie suggests.

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Flo & Eddie moved for summary judgment on liability, not damages. While the

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Court held that laches could not bar Flo & Eddie’s claims in their entirety, Dkt. 117

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at 15, the Court has never addressed whether laches bars the equitable remedy of

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disgorgement Flo & Eddie seeks—and it does, as Sirius XM will explain in its

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forthcoming summary judgment motion.5 Supra Part IV.B.2.

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In addition, courts frequently allow post-certification discovery where:

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“(1) the discovery is not designed to take undue advantage of class members or to

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reduce the size of the class; (2) the discovery is necessary; (3) responding to the

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discovery requests would not require the assistance of counsel or other technical

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advice; and (4) the discovery seeks information that is not already known by the

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proponent.” Nat’l W., 2010 WL 4809330, at *2; Dkt. 232 at 6-7 (collecting cases).

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As to the first factor, Sirius XM’s proposed discovery is narrowly tailored in terms

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of the number of absent class members (15-20 of thousands), the grounds to be

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covered (narrow, focused topics), and the burden (subject- and time-confined

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depositions). Given these limits, Flo & Eddie’s argument that the proposed

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discovery is designed to reduce the class size defies credibility.

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Flo & Eddie argues in the footnote above that it seeks legal damages rather than
equitable disgorgement. Flo & Eddie seeks recovery of Sirius XM’s profits
(without deduction of costs). The law is very clear that where, as here, a plaintiff
seeks recovery of defendant’s gains (rather than restoration of plaintiff’s losses),
that is an equitable remedy regardless of how the plaintiff characterizes it. Meister
v. Mensinger, 230 Cal. App. 4th 381, 396-98 (2014).
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1

As to the second and fourth factors, this discovery is “necessary” because it

2

seeks information that is only in possession of absent class members. Moreover,

3

discovery concerning ownership and authorization is directly relevant to liability

4

and damages. As the Court has acknowledged, any class member that is unable to

5

establish ownership, or that authorized use of its recording, must be excluded from

6

the class, which in turn reduces plaintiffs’ remedy (if any). See Dkt. 225 at 20.

7

As to the third factor, Sirius XM’s discovery is narrowly tailored to focus on

8

information within the “personal knowledge” of the absent class members, and thus

9

will not require assistance of counsel (although Sirius XM has no objection to

10

having class counsel present for the class members’ depositions). See Nat’l W.,

11

2010 WL 4809330, at *2 (“depositions [would] not require assistance because the

12

deponents [could] testify based on their personal knowledge”). The Court itself

13

recognized that “owners will have personal knowledge as to whether they

14

authorized or licensed Sirius XM to perform their recordings.” Dkt. 225 at 11.

15
16
17

2.

Sirius XM Is Willing To Supplement Prior Discovery Pursuant
To Rule 26(e)

While Sirius XM has no objection to supplementing prior discovery pursuant

18

to Rule 26(e), the additional discovery Flo & Eddie proposes above is overbroad

19

and amounts to a transparent attempt to obtain discovery it should have sought

20

before the discovery cut-off. Sirius XM agrees to supplement prior damages

21

discovery so that Flo & Eddie can update its prior calculations. Sirius XM also

22

agrees to produce any licenses for the use of pre-1972 recordings it has entered into

23

after April 14, 2015—the last date Sirius XM produced such documents.

24

Sirius XM objects, however, to any additional discovery—including

25

discovery into the settlement of a lawsuit brought in Los Angeles Superior Court by

26

Capitol Records, LLC, Sony Music Entertainment, UMG Recordings, Inc., Warner

27

Music Group Corporation, and ABKCO Music & Records, Inc. (the “Capitol

28

Records settlement”). The law is clear that settlement documents and
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1

communications are privileged and not discoverable. See Folb v. Motion Picture

2

Indus. Pension & Health Plans, 16 F. Supp. 2d 1164, 1180 (C.D. Cal. 1998), aff’d,

3

216 F.3d 1082 (9th Cir. 2000) (denying discovery and confirming “communications

4

in preparation for and during the course of a mediation with a neutral must be

5

protected”); Dkt. 247 at 23:21-24:14.

6

3.

7

Flo & Eddie Is Not Entitled To Discovery Concerning Sirius
XM’s Direct License Negotiations With Recording Owners.

8

In connection with Sirius XM’s pending motion to continue the stay issued

9

on June 8, 2015, Flo & Eddie has asserted that direct license negotiations between

10

Sirius XM employees and recording owners—which have been ongoing for many

11

years—are barred by the ethical rules and that the stay should be lifted so Flo &

12

Eddie can challenge those communications. Dkt. 264 at 13-16. During the parties’

13

November 30, 2015 meet and confer concerning this report, Flo & Eddie indicated

14

that it would seek discovery concerning Sirius XM’s communications with

15

recording owners, and file a motion for a protective order barring future

16

communications and a motion seeking to “unwind” any agreements between Sirius

17

XM and recording owners—including the June 17, 2015 Capitol Records

18

settlement.

19

As set forth in Sirius XM’s motion to continue the stay, see id., and in the

20

prior briefing on Flo & Eddie’s unsuccessful ex parte application to lift the stay so

21

it could challenge the Capitol Records settlement, see Dkts. 241, 245, 247, 248, Flo

22

& Eddie’s assertions are factually and legally inaccurate, and nothing more than a

23

strategic ploy to avoid a further stay and extract unwarranted attorneys’ fees. There

24

have been no improper communications between Sirius XM and putative class

25

members, and thus there is no basis for Flo & Eddie to seek discovery or challenge

26

these communications.

27
28
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1

In any event, if Flo & Eddie wishes to seek discovery beyond the

2

supplementation of prior discovery pursuant to Rule 26(e) discussed above, Sirius

3

XM requests further briefing to fully address the issues for the Court.

4

IV.

5
6
7

MOTIONS
A.

Flo & Eddie’s Position
1.

Contemplated Motions.

Flo & Eddie anticipates that the discovery regarding Sirius XM’s contact

8

with class members regarding this litigation, as well as its attempts to settle with

9

those class members, will potentially result in a number of motions, including a

10

motion for protective order under Fed. R. Civ. P. 23(d) prohibiting improper

11

contact and communication with class members and for curative relief. In addition,

12

as set forth in the ex parte application filed by Flo & Eddie on July 8, 2015, Flo &

13

Eddie intends to file additional motions based on the common fund and substantial

14

benefit doctrines. Flo & Eddie also anticipates that discovery related motions may

15

be necessary. Finally, Flo & Eddie is anticipating filing motions in limine,

16

including motions to bar: (1) in whole or in part the “expert” testimony of Elliot

17

Goldman and Keith Ugone; and (2) any testimony or argument by Sirius XM

18

regarding its state of mind as it is now barred pursuant to United States v. Bilzerian,

19

926 F.2d 1285, 1292 (2d Cir. 1991), Kaiser Found. Health Plan, Inc. v. Abbott

20

Labs., Inc., 552 F.3d 1033, 1042 (9th Cir. 2009), and Chevron Corp. v. Pennzoil

21

Co., 974 F.2d 1156, 1162 (9th Cir. 1992).

22
23

2.

Pending Motions.

The only pending motion is Sirius XM’s motion for a stay, which is now the

24

fifth different ex parte application and/or motion it has filed in this action

25

requesting indeterminate stays. Having now run out of gas at the Ninth Circuit with

26

respect to its meritless Rule 23(f) petition (including making the extraordinary

27

request for en banc review of the Ninth Circuit’s one sentence discretionary order

28

denying the original petition), Sirius XM now seeks another indeterminate stay
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1

until such time as Pandora exhausts its appeal to the Ninth Circuit of the February

2

23, 2015 order denying its anti-SLAPP motion. According to Sirius XM, Pandora’s

3

appeal will be dispositive of the issues in this case, therefore justifying another

4

several year delay in these proceedings. While Flo & Eddie’s opposition to Sirius

5

XM’s motion is not due until January 4, 2016, for purposes of this Scheduling

6

Conference, it is important for the Court to understand why a further stay is

7

unwarranted. Besides the fact that Sirius XM cannot even make a threshold

8

showing that the balance of hardships tips in favor of a stay, Adams v. Target Corp.,

9

2014 U.S. Dist. LEXIS 151154, *2-5 (C.D. Cal. Mar. 3, 2014), there are at least

10
11

five other reasons why a further stay is inappropriate.
First, contrary to Sirius XM’s contention, the appeal filed by Pandora will

12

not affect this Court’s liability ruling against Sirius XM. Indeed, regardless of the

13

outcome of Pandora’s appeal, Sirius XM is now collaterally estopped by Judge

14

Mary Strobel’s October 14, 2014 ruling in Capitol Records LLC et al. v. Sirius XM

15

Radio Inc., No. BC-520981 (Super. Ct. L.A. County) from contending that Civ.

16

Code §980(a)(2) does not provide owners of pre-1972 recordings with an exclusive

17

right of public performance. On June 17, 2015, Sirius XM purported to settle the

18

Capitol Records action after having lost its petitions to reconsider the existence of a

19

public performance right before the California Court of Appeals on February 23,

20

2015 and the California Supreme Court on April 29, 2015. Because Sirius XM

21

agreed to a stipulated dismissal of Capitol Records, Judge Strobel’s adverse ruling

22

against it is now final and bars Sirius XM from challenging it in this Court. Ross v.

23

International Bhd. of Elec. Workers, 634 F.2d 453, 457 n.6 (9th Cir. 1980) (holding

24

that the doctrine of collateral estoppel “bars a party from relitigating

25

an issue identical to one he has previously litigated to a determination on its merits

26

in another action.”); see also Hernandez v. City of Pomona, 46 Cal. 4th 501, 511

27

(2009) (“For purposes of collateral estoppel, an issue was actually litigated in a

28

prior proceeding if it was properly raised, submitted for determination, and
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1

determined in that proceeding.”); Green v. Ancora-Citronelle Corp., 577 F.2d 1380,

2

1383-84 (9th Cir. 1978) (holding stipulation of settlement by parties in state court

3

constituted final judgment on the merits for collateral estoppel purposes). Sirius

4

XM’s argument that settlement does not ordinarily trigger collateral estoppel only

5

applies when the issues being settled have not actually been litigated. See Rice v.

6

Crow, 81 Cal. App. 4th 725, 735 (2000). In Capitol Records, they were.

7

Second, the Ninth Circuit’s ruling will have no bearing on this case if it

8

affirms the denial of Pandora’s motion to strike based on Pandora’s failure to

9

satisfy the first prong of the anti-SLAPP analysis. Pursuant to that prong, it is

10

Pandora’s burden to show that Flo & Eddie’s claims arise from protected activity

11

and that its conduct was taken “in furtherance of the exercise of...the constitutional

12

right of free speech in connection with a public issue or an issue of public interest.”

13

Cal. Civ. Code §425.16(e)(4). An affirmance based on Pandora’s failure to satisfy

14

the first prong will render any stay in this action meaningless.

15

Third, because Flo & Eddie’s burden with respect to Pandora’s motion to

16

strike is simply to “demonstrate a probability of prevailing on the challenged

17

claims,” Mindys Cosmetics, Inc. v. Dakar, 611 F.3d 590, 595 (9th Cir. 2010), an

18

affirmance by the Ninth Circuit that does no more than conclude that Flo & Eddie

19

has satisfied its burden may result in an opinion that is something less than a full

20

legal analysis. Thus, a narrow ruling by the Ninth Circuit based on the specific

21

language of the second prong will also render any stay in this action meaningless.

22

Fourth, the class will be severely prejudiced by a continued stay. Although

23

this case has now been certified for seven months, the class still has not even

24

received formal notice of this action or of its rights. It is time to move the class

25

process along, particularly given the unethical and illegal conduct that Sirius XM

26

has engaged in throughout the stay. Leaving aside Sirius XM’s settlement with the

27

major labels (which was raised previously by Flo & Eddie in an ex parte

28

application), despite being advised in writing on June 26, 2015 that it was not
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1

permitted to have direct settlement discussions with class members, counsel for Flo

2

& Eddie has recently learned that Sirius XM (both through its in-house legal

3

counsel and executive management) has in fact continued doing exactly that in

4

order to persuade class members to settle the claims at issue in this litigation,

5

execute releases “arising out of or relating to the use, distribution, copying and/or

6

public performance of Pre-72 Recording [s],” and opt out of the class “[i]n the cases

7

titled Flo & Eddie, Inc. v. Sirius XM Radio Inc. et al.” In other words, Sirius XM is

8

having the exact communications that the law does not allow. The prejudice to the

9

class members who have fallen victim to Sirius XM’s settlement entreaties is

10

manifest and so too is the prejudice to the entire class, particularly given that it is

11

doubtful Sirius XM has also been advising these class members that it has already

12

been found liable and that these class members are entitled to significant damages.

13

Despite the clear legal prohibition against communicating with class

14

members about this litigation, Sirius XM claims that its discussions with class

15

members are nevertheless proper because it has been having “direct license

16

negotiations between Sirius XM employees and record owners…for many years”

17

and that it is merely conducting “business negotiations,” (Motion for Stay 2:21-22,

18

16:10-16) However, as the Court knows, until Flo & Eddie filed its motion for

19

class certification, Sirius XM readily admitted that it never licensed any pre-1972

20

recordings and never sought to do so. (Dkt. 225, p. 18) Thus, to the extent that

21

Sirius XM is now trying to give the impression that there were so-called multi-year

22

discussions taking place with respect to pre-1972 recordings, it is creating a

23

patently false record. Moreover, the “Sirius XM employees” that Sirius XM is

24

vaguely referring to are its lawyers and employees working at the behest of those

25

lawyers – the exact people who are ethically barred from having those discussions.

26

What Sirius XM has ignored is that, under the law, the moment that the class in this

27

case was certified, whatever discussions Sirius XM was having (or wanted to have)

28

with class members regarding settlement of their pre-1972 recordings had to stop –
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1

especially where Sirius XM is claiming preexisting business relationships, as those

2

relationships exacerbate (rather than ameliorate) the potential for mischief. See

3

Mevorah v. Wells Fargo Home Mortg., Inc., 2005 U.S. Dist. LEXIS 28615, *13

4

(N.D. Cal. Nov. 17, 2005) (finding that a “[d]efendant's statements also have a

5

heightened potential for coercion because where the absent class member and the

6

defendant are involved in an ongoing business relationship … any communications

7

are more likely to be coercive.”) (quotes and internal citation omitted).

8

Fifth, to the extent Sirius XM is attempting to rely upon the pending appeal

9

in Jones v. ConAgra Foods, No. 14-16327 (9th Cir.), it is merely rehashing the

10

failed arguments from its Rule 23(f) petition, none of which have merit. While

11

Sirius XM continues to pretend that the issue of self-identification in a class action

12

is a categorical one, and that the Ninth Circuit’s pending decision in Jones is poised

13

to resolve it, neither assertion is true. In consumer class actions, whether self-

14

identification is a permissible method of ascertaining class membership turns on

15

whether the facts of the case render it a reliable method for doing so. See Brown v.

16

Hain Celestial Group, Inc., 2014 U.S. Dist. LEXIS 162038, *26 (N.D. Cal. Nov.

17

18, 2014). Indeed, that is the exact basis upon which the District Court in

18

Jones declined to find the class before it ascertainable, noting that “it is hard to

19

imagine that [putative class members] would be able to remember which particular

20

Hunt's products they purchased from 2008 to the present, and whether those

21

products bore the challenged label statements.” Jones v. ConAgra Foods, Inc.,

22

2014 U.S. Dist. LEXIS 81292, *34-36 (N.D. Cal. June 13, 2014). The facts

23

of Jones are in no way similar to the facts of this case, and Sirius XM does not

24

claim otherwise. Accordingly, there is no indicia that Jones will have any bearing

25

on these proceedings whatsoever– particularly given that “[i]n the end this question

26

is not [even] dispositive, because a lack of ascertainability alone will generally not

27

scuttle class certification.” Id. at *38 (quotes and internal citation omitted).

28

For the reasons set forth above (and others), Sirius XM’s motion is without
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1

merit and is simply part of its goal of prejudicing the class by delaying the

2

resolution of this case.

3
4

B.

Sirius XM’s Position
1.

Pending Motions

5

On November 25, 2015, Sirius XM filed a motion to continue the stay issued

6

on June 8, 2015 pending resolution of Pandora’s related appeal in Flo & Eddie, Inc.

7

v. Pandora Media, Inc., Appeal No. 15-55287 (9th Cir.). Dkt. 264. The issue at

8

the heart of this case and the Pandora case is the same: i.e., whether California law

9

grants the owner of a pre-1972 recording an absolute and unfettered right to control

10

all performances of that recording. In both cases, the Court held that California

11

Civil Code Section 980(a)(2) provides such a right. The Court’s ruling in the

12

Pandora case is currently on appeal, and if the Ninth Circuit reverses, that would

13

compel judgment for Sirius XM in this case and eliminate the need for further

14

proceedings. Sirius XM believes that a stay would be the most efficient and

15

sensible approach. See Leyva v. Certified Grocers of Cal., 593 F.2d 857, 863 (9th

16

Cir. 1979) (stay warranted where resolution of related appeal could be case-

17

dispositive); Landis v. N. Am. Co., 299 U.S. 248, 256 (1936) (need for stay

18

particularly strong where, as here, case presents “novel problems of far-reaching

19

importance to the parties and the public”). Sirius XM’s motion will be fully briefed

20

on January 11, 2016, and a hearing is scheduled for January 25, 2016.

21

Flo & Eddie’s inclusion of four pages of substantive argument opposing

22

Sirius XM’s motion to stay in this Rule 26(f) report is wholly inappropriate. Sirius

23

XM disagrees with Flo & Eddie’s arguments, which are inaccurate. For example,

24

Flo & Eddie’s argument that the Ninth Circuit’s reversal of the performance-right

25

ruling in Pandora would have no impact on this case because the Capitol Records

26

settlement resulted in a stipulated dismissal of that case is plainly false. The effect

27

of the stipulated dismissal in the Capitol Records case is to bar the plaintiffs in that

28

case from re-litigating the same claims and issues against Sirius XM. That
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1

dismissal did not, and could not, represent a concession of liability by Sirius XM.

2

None of the cases Flo & Eddie cites remotely supports its argument, and the law is

3

clear that “[a] settlement which avoids trial generally does not constitute actually

4

litigating any issues and thus prevents application of collateral estoppel.” Rice v.

5

Crow, 81 Cal. App. 4th 725, 736 (2000). If there were any other rule, the risk of

6

collateral estoppel “would chill the settlement process.” Cell Therapeutics, Inc. v.

7

Lash Grp., Inc., 586 F.3d 1204, 1210-12 (9th Cir. 2010).

8

Sirius XM will more fully respond to Flo & Eddie’s arguments in its reply in

9

support of its motion to stay.

10

2.

11

Anticipated Dispositive Motions

Sirius XM intends to file a motion for summary judgment challenging the

12

viability of Flo & Eddie’s disgorgement theory. Flo & Eddie emphasized its

13

request for compensatory damages when it moved for summary judgment on

14

liability, see Dkt. 111 at 9, but in an effort to avoid individualized damages

15

inquiries, Flo & Eddie abandoned that theory in class certification briefing in favor

16

of disgorgement. See Dkt. 180 at 11 n.4, 18; Dkt. 185 (Wallace Decl.) ¶ 9.

17

Disgorgement is an equitable remedy that is unavailable where, as here, the

18

defendant is not a conscious wrongdoer. See, e.g., Meister, 230 Cal. App. 4th at

19

398 (“the object of the disgorgement remedy [is] to eliminate the possibility of

20

profit from conscious wrongdoing”). There is no evidence of conscious

21

wrongdoing by Sirius XM—nor can there be, since as the Court has acknowledged,

22

“nobody knew about the [performance] right until [the Court] said there was a

23

right.” Dkt. 234 at 26:6-10. Likewise, punitive damages are unavailable where, as

24

here, “the key issue is one of first impression.” Morgan Guar. Trust Co. v. Am.

25

Sav. & Loan Ass’n, 804 F.2d 1487, 1500 (9th Cir. 1986).

26

Depending on what class discovery reveals—for example, that there is no

27

reliable way to identify pre-1972 recording owners or that individualized issues

28

concerning ownership and authorization predominate over any common issues—
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1

there could be a basis for Sirius XM to file a motion for decertification. See

2

Westways World Travel, Inc. v. AMR Corp., 2005 WL 6523266, at *6-7 (C.D. Cal.

3

Feb. 24, 2005) (decertifying class based on new facts developed in post-

4

certification discovery). In addition, the Ninth Circuit is currently considering

5

whether class membership may be determined by self-identifying affidavits—the

6

very process Flo & Eddie proposed in this case. See Dkt. 225 at 15 (agreeing to Flo

7

& Eddie’s proposal “that ... class members ... establish ownership by affidavit or

8

declaration”). In Jones v. ConAgra Foods, 2014 WL 2702726, at *8 (N.D. Cal.

9

June 13, 2014), the district court denied plaintiff’s motion for class certification on

10

the ground that the putative class was not ascertainable, and self-identifying

11

affidavits were not “an objective, reliable way to ascertain class membership.” The

12

ConAgra appeal has been fully briefed and should be resolved early next year.

13

Appeal No. 14-16327 (9th Cir.). If the Ninth Circuit affirms the district court’s

14

ruling, its decision may warrant decertification of the class in this case.

15

Aside from dispositive motions, Sirius XM anticipates motion practice

16

concerning the issues addressed in Part III, as well as motions in limine.

17

V.

18

CLASS NOTICE AND OPT-OUT PROCESS
The parties agree on the basic process and outstanding tasks, though they

19

disagree as to scheduling issues. Because the case was stayed before a class notice

20

plan could be agreed upon or implemented, the parties must still meet and confer on

21

the notice plan. That notice plan may include some or all of the following: (1) the

22

notice’s form and content, (2) how or where class notice will be published, (3) who

23

will receive it, (4) how interested parties can present objections, and (5) how the

24

opt-out process will function and how long it will last. See Judges’ Class Action

25

Notice and Claims Process Checklist 4 (2010). After the parties have met and

26

conferred, Flo & Eddie will prepare a proposed class notice plan and circulate it to

27

Sirius XM for objections. If the parties are unable to reach agreement, Flo & Eddie

28

will file a motion for approval of its class notice plan. Following the Court’s ruling
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1

on that motion, class notice will be circulated and an opt-out period will open and

2

expire.

3

Flo & Eddie believes that this entire process can be completed within 90 days

4

of the December 21, 2015 scheduling conference. Sirius XM believes that the

5

process will take closer to six months—largely because it contends that due process

6

requires a 60-90 day opt-out period. The parties’ respective scheduling proposals

7

are set forth in Section VI.

8

VI.

9
10

PROPOSED SCHEDULE
The parties were unable to reach agreement on a pre-trial and trial schedule.

The parties’ respective proposals are separately set forth below.

11

A.

Flo & Eddie’s Proposal

12
13
14
15
16
17
18
19
20
21
22
23
24
25

Event

Flo & Eddie’s Proposal

Parties meet and confer
regarding notice plan,
exchange drafts and/or
objections to the proposed
plan

January 15, 2016

Flo & Eddie to submit
agreed upon plan and
notice to the Court or file
its motion for approval of
the plan and notice

January 25, 2015

Hearing date for approval
of plan and notice

February 22, 2016 6

Cut-Off Date for Flo &
Eddie Discovery cutoff

March 21, 2016

26
27
28

6

The ruling on Flo & Eddie’s motion for approval of the class notice and plan will
set the distribution date and the opt-out period.
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1

April 21, 2016

2

Cut-Off Date for Flo &
Eddie Motions to Compel

3

Motions in limine cutoff

Pursuant to Standing Order

4

Final pretrial conference

July 11, 2016

Trial date

August 8, 2016

Preliminary estimate of
trial length

3-4 court days

5
6
7
8
9
10
11
12
13

B.

Sirius XM’s Proposal

Event

Sirius XM’s Proposal

Parties meet and confer
regarding notice plan

18 days after scheduling conference
(January 8, 2016)

Plaintiff circulates
notice plan

21 days after meet and confer
(January 29, 2016)

Sirius XM’s objections to
notice plan

14 days after plaintiff circulates
notice plan
(February 12, 2016)

Plaintiff moves for
approval of notice plan

7 days after Sirius XM’s objections
(February 19, 2016)

Hearing regarding
notice plan

28 days after plaintiff’s motion
(March 21, 2016)

Distribution of class notice

7 days after hearing regarding notice plan
(March 28, 2016)

Opt-out period closes

90 days after distribution of class notice
(June 27, 2016)

Class discovery cutoff

90 days before trial
(June 21, 2016)

14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
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1

Dispositive motions cutoff

90 days before trial
(June 21, 2016)

Motion in limine cutoff

75 days before trial
(July 6, 2016)

Final pretrial conference

2 weeks before trial
(September 2, 2016)

Trial date

September 19, 2016

Preliminary estimate of
trial length

10-15 court days

2
3
4
5
6
7
8
9
10
11
12

DATED:

December 14, 2015

13

GRADSTEIN & MARZANO, P.C.
By: /s/ Harvey Geller
Harvey Geller
Attorneys for Plaintiff
Flo & Eddie, Inc.

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DATED:

December 14, 2015

O’MELVENY & MYERS LLP
By: /s/ Daniel M. Petrocelli
Daniel M. Petrocelli
Attorneys for Defendant
Sirius XM Radio Inc.

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RULE 26(F) JOINT REPORT
CASE NO. 13-CV-5693 PSG (RZX)