Flo & Eddie, SiriusXM Propose Up to $99 Million Settlement of Pre-1972 Performance Royalties Suit
SiriusXM agreed to pay at least $25 million as part of a proposed settlement of Flo & Eddie’s class-action lawsuit against the streaming service, the musicians said Monday in a filing with U.S. District Court in Los Angeles. The group, owners of The Turtles' “Happy Together” and the band's other music, sought compensation for performances of the Turtles' pre-1972 recordings. The Los Angeles federal court ruled in 2014 that California’s copyright laws allow a pre-’72 performance right (see 1410060047). As expected (see 1611280052), the proposed settlement (in Pacer) doesn’t preclude either Flo & Eddie or Sirius from continuing to pursue related cases currently on hold in the U.S. courts of appeals for the 2nd and 11th circuits. Flo & Eddie claimed in those lawsuits that common law statutes in Florida and New York allow a performance right on pre-’72 recordings.
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The proposed settlement sets Sirius’ monetary compensation to Flo & Eddie and the owners of other pre-’72 recordings in the class-action suit at $25 million, but the total settlement figure could rise to as much as $99 million depending on future outcomes, the band said in its motion. Compensation could rise to $40 million depending on the outcome of the Florida and New York cases, along with a possible appeal of Sirius’ liability to the 9th U.S. Circuit Court of Appeals. “By any measure, that compensation by itself is an excellent result,” Flo & Eddie said in the motion.
The proposed accord also includes a 10-year license for Sirius in which the streaming service would agree to a 5.5 percent royalty payment. The license, which would expire in January 2028, would be worth $45 million-$59 million depending on the outcome of the cases in California, Florida and New York, Flo & Eddie said. If Sirius prevails in its appeals “based on the question of whether it would violate the Commerce Clause of the United States Constitution to apply a state-law right to control and/or demand compensation for the public performance of Pre-1972 Sound Recordings, Sirius XM will not be required to make any prospective royalty payments, but the Settlement Class will keep all royalties previously paid,” said the musicians.
Flo & Eddie attorney Henry Gradstein said his clients stayed "the course over three grueling years of litigation on behalf of all members of the class, because they believed in what was right.” Sirius didn’t comment. District Judge Philip Gutierrez set a Jan. 30 hearing on the proposed settlement.
The proposal is an excellent result for Flo & Eddie and “shows the importance of staying the course,” said music industry attorney Chris Castle in an interview. He said ABKCO Music & Records, Capitol Records, Sony Music Entertainment, UMG Recordings and Warner Music Group quickly settled their own suit against Sirius over unpaid pre-’72 performance royalties for $210 million while Flo & Eddie held out (see 1506260048). “It says a lot that Flo & Eddie were willing to tough it out through years of brutal litigation and managed to pull this off,” Castle said. The proposed base compensation by itself is important, and the proposed 10-year license could be “pretty lucrative," he said.
The provision in the pact that preserves both sides’ right to continue pursuing the Florida and New York is important, though it doesn’t automatically signal those cases will continue to judgment, Castle and others said. The Florida and New York supreme courts are reviewing Flo & Eddie’s suits from the 2nd and 11th circuits to determine whether common law in those states recognizes a pre-’72 performance right (see 1608050059). Sirius may have agreed to the provision because it’s “hopeful it will prevail in the 2nd and 11th circuits,” said Digital Media Association General Counsel Greg Barnes in an interview. “They’re trying to leave themselves room for that possibility.”
Sirius may be banking on its belief the Florida and New York cases are weaker because they’re only based on common law, while in California there was an actual “statute at play,” Barnes said. “No matter what anybody says, the judges [reviewing the Florida and New York cases] are going to take a look” at the proposed settlement, Castle said. If Gutierrez approves, Sirius will “have to take a look at where they are going or just settle” those cases as well, Castle said. The settlement also should get the House Judiciary Committee’s attention given the notice that the push for a national pre-’72 performance right has gotten via the Fair Play Fair Pay Act (HR-1733), Castle said: It “makes sense to fix this once and for all.”