Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_00-md-01369/USCOURTS-cand-3_00-md-01369-0/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 28:1338 Copyright Infringement

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UNITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

UNITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

UNITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

IN RE NAPSTER, INC. COPYRIGHT 

LITIGATION

 

JERRY LEIBER; MIKE STOLLER; FRANK MUSIC

CORPORATION; and PEER INTERNATIONAL

MUSIC CORPORATION, 

Plaintiffs,

v.

BERTELSMANN AG; BERTELSMANN, INC.; and

BeMUSIC, INC.,

Defendants.

 /

No. C MDL-00-1369 MHP

(No. C 04-1671 MHP)

MEMORANDUM & ORDER

Re: Motion for Class Certification

This action arises from the litigation involving the alleged copyright infringement of Napster, Inc. and

its customers. On April 25, 2003, plaintiffs Jerry Leiber, Mike Stoller, Frank Music Corporation, and Peer

International Music Corporation (collectively “plaintiffs”) filed an action in the United States District Court

for the Southern District of New York. In their complaint, plaintiffs alleged that defendants Bertelsmann

AG, Bertelsmann, Inc., and BeMusic, Inc. (collectively “Bertelsmann”) engaged in contributory and

vicarious copyright infringement by virtue of their investment in and control of Napster. That action was

subsequently transferred to this court for coordinated pretrial proceedings pursuant to 28 U.S.C. § 1407. 

Plaintiffs now seek certification of a class of music publisher-principals of The Harry Fox Agency, Inc. (“the

Fox Agency”) that own or control at least one copyrighted musical work that has without their permission

been made available through the Napster service on or after October 30, 2000. Having considered the

parties’ arguments and for the reasons set forth below, the court enters the following memorandum and

order. 

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BACKGROUND

Plaintiffs Jerry Leiber and Mike Stoller are professional song writers and music publishers. Pls.’

Am. Compl. ¶ 11. Plaintiffs Frank Music Corporation and Peer International Corporation (“PIC”) are

copyright owners engaged in the business of music publishing, whereby they license copyrighted musical

works for reproduction as phonorecords. Id. ¶¶ 12-13. The licensees of Frank Music and PIC distribute

these phonorecords via the Internet as well as through traditional media such as compact disks and cassette

tapes. Id. ¶ 10. Each of the named plaintiffs have appointed the Fox Agency to serve as their nonexclusive agent for licensing their copyrighted works and collecting copyright royalties. Eastman Decl. ¶ 3. 

The Fox Agency acts in that capacity for approximately 27,000 music publishers who collectively own and

control more than 2.5 million copyrighted musical works. Pls.’ Am. Compl. ¶ 10. 

The instant action is part of the consolidated multidistrict litigation (“MDL”) proceedings arising

from alleged acts of direct copyright infringement committed by the users of the “peer-to-peer” file-sharing

network operated by Napster, Inc., which in turn gave rise to allegations of contributory and vicarious

copyright infringement against Napster. These proceedings ultimately led this court to preliminarily enjoin

Napster from facilitating its users’ attempts to engage in the unauthorized reproduction and distribution of

certain copyrighted musical compositions and sound recordings. See A&M Records, Inc. v. Napster, Inc.

(“Napster III”), No. C MDL-00-1369 MHP, 2001 WL 227083 (N.D. Cal. Mar. 5, 2001) (Patel, C.J.). 

In July 2001, Napster ceased operations in order to comply with the court’s order. 

Napster subsequently sought bankruptcy protection and is no longer party to the consolidated

MDL proceedings that bear its name. The proceedings continue, however, with various plaintiffs taking aim

at still-solvent entities that invested in Napster before it ceased operations. Among those former Napster

investors is Bertelsmann, a media conglomerate with interests in the fields of television and radio, publishing,

online media, and music distribution. Pls.’ Am. Compl. ¶ 14. Like three of the named plaintiffs in the

instant action, Bertelsmann, through its BMG subsidiary, participated as a plaintiff in the MDL proceedings

against Napster. However, prior to the shut-down of the Napster network, in approximately September

2000, Bertelsmann allegedly approached Napster and proposed to form a “strategic partnership” for the

purpose of distributing musical compositions and sound recordings via the Internet. Id. ¶ 39. Bertelsmann

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subsequently invested a total of $85 million in Napster, id. ¶ 43, and, according to plaintiffs, participated

directly in strategic decisions that led Napster to continue enabling its customers to commit copyright

infringement, id. ¶¶ 41-42. Plaintiffs now contend that by virtue of its investment in Napster and

participation in making such strategic decisions, Bertelsmann is contributorily and vicariously liable for the

acts of copyright infringement committed by users of the Napster network. In addition, in their November

30, 2004 proffer regarding their theory of direct infringement, plaintiffs asserted that Bertelsmann is

secondarily liable for Napster’s own acts of direct copyright infringement arising from the indexing of the

copyrighted musical works available on the Napster network. Pls.’ Statement Re Theory of Infringement at

5.

On April 25, 2003, plaintiffs filed a complaint in the United States District Court for the Southern

District of New York, asserting causes of action for vicarious and contributory copyright infringement

against each of the named defendants. On April 28, 2004, that action was transferred to this court for

coordinated pretrial proceedings. See 28 U.S.C. § 1407. Now before the court is plaintiffs’ motion for

class certification pursuant to Federal Rule of Civil Procedure 26.

LEGAL STANDARD

A party seeking to certify a class must satisfy the four prerequisites enumerated in Federal Rule of

Civil Procedure 23(a), as well as at least one of the requirements of Rule 23(b). Under Rule 23(a), the

party seeking class certification must establish: (1) that the class is so large that joinder of all members is

impracticable (i.e., numerosity); (2) that there are one or more questions of law or fact common to the class

(i.e., commonality); (3) that the named parties’ claims are typical of the class (i.e., typicality); and (4) that

the class representatives will fairly and adequately protect the interests of other members of the class (i.e.,

adequacy of representation). Fed. R. Civ. P. 23(a). In addition, the party seeking certification must

comply with Rule 23(b), which requires a showing that the action is maintainable under Rule 23(b)(1), (2),

or (3). See Fed. R. Civ. P. 23(b). 

A party seeking an award of monetary damages must generally proceed under paragraph (3) of

Rule 23(b). See, e.g., Ticor Title Ins. Co. v. Brown, 511 U.S. 117, 121 (1994). Rule 23(b)(3) permits

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certification of such a “damages class” only if the court “finds that the questions of law or fact common to

the members of the class predominate over any questions affecting only individual members.” Fed. R. Civ.

P. 23(b)(3). This “predominance” inquiry “tests whether proposed classes are sufficiently cohesive to

warrant adjudication by representation.” Local Joint Executive Bd. of Culinary/Bartender Trust Fund v.

Las Vegas Sands, Inc., 244 F.3d 1152, 1162 (9th Cir.) (quoting Amchem Prods., Inc. v. Windsor, 521

U.S. 591, 623 (1997)), cert. denied, 534 U.S. 973 (2001). In addition, Rule 23(b)(3) requires the party

seeking certification to show that “a class action is superior to other available methods for the fair and

efficient adjudication of the controversy.” Fed. R. Civ. P. 23(b)(3). 

The party seeking class certification bears the burden of establishing that the requirements of Rules

23(a) and 23(b) have been met. See Zinser v. Accufix Research Instit., Inc., 253 F.3d 1180, 1188 (9th

Cir.), amended by 273 F.3d 1266 (9th Cir. 2001); Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th

Cir. 1992). However, in adjudicating a motion for class certification, the court accepts the allegations in the

plaintiff’s complaint as true so long those allegations are sufficiently specific to permit an informed

assessment as to whether the requirements of Rule 23 have been satisfied. See Blackie v. Barrack, 524

F.2d 891, 901 n.17 (9th Cir. 1975), cert. denied, 429 U.S. 816 (1976). The merits of the class

members’ substantive claims are generally irrelevant to this inquiry. Eisen v. Carlisle & Jacquelin, 417 U.S.

156, 177-78 (1974); Moore v. Hughes Helicopters, Inc., 708 F.2d 475, 480 (9th Cir. 1983). 

 

DISCUSSION

Plaintiffs move to certify a class of music publisher-principals of the Fox Agency that own or

control at least one copyrighted musical work that has without their permission been made available through

the Napster service on or after October 30, 2000. Because they seek money damages under the

Copyright Act, 17 U.S.C. § 101 et seq., plaintiffs must satisfy the requirements of Rule 23(a) and Rule

23(b)(3) in order to prevail on their motion.

 I. Rule 23(a)

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As noted above, a party seeking class certification must allege sufficient facts to establish that the

numerosity, commonality, typicality, and adequacy of representation requirements of Federal Rule of Civil

Procedure 23(a) have been met. The court address each of these requirement below.

 A. Numerosity

The first requirement of Rule 23(a) is that the members of a class must be “so numerous that joinder

of all members is impracticable.” Fed. R. Civ. P. 23(a)(1). As a general rule, classes that include more

than forty members satisfy the numerosity requirement. See 5 James W. Moore et al., Moore’s Federal

Practice § 23.22[1][b] (3d ed. 2004). Although a plaintiff seeking class certification need not identity each

class member individually, see Freedman v. Louisiana-Pac. Corp., 922 F. Supp. 377, 398 (D. Or. 1996),

“mere speculation” as to the number of parties involved is not sufficient to satisfy the numerosity

requirement. Roe v. Town of Highland, 909 F.2d 1097, 1100 n.4 (7th Cir. 1990) (quoting 7A Charles

Allen Wright et al., Federal Practice and Procedure § 1762 (2d ed. 1986)). 

Here, the Fox Agency represents more than 27,000 music publishers. In addition, plaintiffs submit

evidence that prior to the shut-down of the its file-sharing network, Napster was provided with notices

identifying more than 90,000 copyright musical works owned by approximately 4,000 music publishers

represented by the Fox Agency. Johnson Decl., Exh. B. These allegations are more than sufficient to

satisfy the numerosity requirement of Rule 23(a)(1).

B. Commonality

The second prerequisite of Rule 23(a) requires the party seeking class certification to show that

there are questions of law or fact common to the class. Fed. R. Civ. P. 23(a)(2). Rule 23(a)(2) does not

mandate that each member of the class be identically situated. Hanlon v. Chrysler Corp., 150 F.3d 1011,

1019 (9th Cir. 1998). Rather, the rule merely requires that there be substantial questions of law or fact

common to each of the class member’s claims. See Harris v. Palm Spring Alpine Estates, Inc., 329 F.2d

909, 914 (9th Cir. 1964) (citation omitted). For example, “[t]he existence of shared legal issues with

divergent factual predicates is sufficient, as is a common core of salient facts coupled with disparate legal

remedies within the class.” Hanlon, 150 F.3d at 1019.

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In the instant action, the claims of each member of the class fundamentally arise from the same

factual predicate: namely, that Napster users infringed the class member’s exclusive rights in one or more

copyrighted musical compositions and that Bertelsmann is secondarily liable for those acts of direct

infringement by virtue of its investment in Napster and its control of the Napster network.1 From this

common factual predicate flows a number of subsidiary issues that plaintiffs identify as common to the class,

including: (1) whether Bertelsmann materially contributed to the unauthorized reproduction and distribution

of copyrighted musical works; (2) whether Bertelsmann had actual or constructive knowledge of the acts of

direct infringement alleged in the complaint; (3) whether Bertelsmann had the right and ability to supervise

or control the Napster service; (4) whether Bertelsmann had a direct financial interest in the allegedly

infringing activity; and (5) whether Bertelsmann’s conduct amounted to willful copyright infringement.

Bertelsmann characterizes matters surrounding its knowledge of the Napster users’ directly

infringing conduct and the willfulness of its alleged acts of secondary infringement as individual issues that

require a case-by-case inquiry into each allegation of direct infringement. However, as the Ninth Circuit

observed in A&M Records, Inc. v. Napster, Inc. (“Napster II”), 239 F.3d 1004 (9th Cir. 2001),

Napster’s own liability for its users infringement turned on whether the company: (1) received “reasonable

knowledge of specific infringing files with copyrighted musical compositions and sound recordings”; (2)

knew or should have that such files were available on the Napster system; and (3) failed to act “to prevent

viral distribution of the works.” Id. at 1027 (citation omitted). Assuming arguendo that Bertelsmann can

be held liable for Napster’s failure to act to prevent distribution of copyrighted works by its users—a legal

question that is also common to the class—Bertelsmann’s knowledge of the availability of specific infringing

works is at least arguably established by the July 12, 2001 notice of infringement that Napster received

from plaintiffs Leiber, Stoller, and Frank Music, which listed over 90,000 copyrighted musical works that

were allegedly owned by members of the proposed class. Johnson Decl., Exh. B. Thus, far from

counseling against class treatment of plaintiffs’ claims, the “knowledge” and “willfulness” inquiries give rise

to a number of common issues of law and fact that support certification of the plaintiff class. The court

therefore concludes that the commonality requirement of Rule 23(a)(2) is satisfied by the allegations in

plaintiffs’ complaint.

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C. Typicality

The third prerequisite of Rule 23(a) requires the party seeking class certification to show that the

claims of the representative plaintiffs are typical of the claims of the absent class members. Fed. R. Civ. P.

23(a)(3). Under Rule 23(a)(3)’s “permissive standards,” representative claims are “typical” if they are

“reasonably co-extensive with those of absent class members.” Hanlon,150 F.3d at 1020. Nonetheless,

the class representatives must at a minimum “be part of the class and possess the same interest and suffer

the same injury as the [other] class members.” General Tel. Co. of the Southwest v. Falcon, 457 U.S.

147, 156 (1982) (citations and internal quotation marks omitted). 

Here, each of the four named plaintiffs owns copyrighted musical compositions that were allegedly

made available on the Napster network without their consent. Two of the plaintiffs are professional

composers and two are music publishers who license the reproduction and distribution of copyrighted

musical works, and all four named plaintiffs are represented by the Fox Agency. Thus, each of the class

representatives is a member of the class. Moreover, like the absent class members, the named plaintiffs

allege that they own the exclusive rights to reproduce and distribute copyrighted musical compositions, that

those rights were infringed by users of the Napster network, and that Bertelsmann is contributorily and

vicariously liable for those acts of direct infringement. Accordingly, plaintiffs’ interests and injuries are

typical of those suffered by other class members. The court therefore concludes that plaintiffs satisfy the

typicality requirement of Rule 23(b)(3).

D. Adequacy of Representation

The final prerequisite of Rule 23(a) requires that the named plaintiffs must fairly and adequately

protect the interests of the class. Fed. R. Civ. P. 23(a)(4). This requirement arises from constitutional due

process considerations, which dictate that absent class members “be afforded adequate representation

before entry of a judgment which binds them.” Hanlon, 150 F.3d at 1020 (citing Hansberry v. Lee, 311

U.S. 32, 42-43 (1940)). Thus, to ensure adequacy of representation, a court entertaining a motion for

class certification must consider (1) whether there are any conflicts of interest between the named plaintiffs

or their counsel and the absent class members and (2) whether the representatives of the class “will

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prosecute the action vigorously on behalf of the class.” Id. (citing Lerwill v. Inflight Motion Pictures, Inc.,

582 F.2d 507, 512 (9th Cir. 1978)).

Here, the named plaintiffs are “substantial independent songwriters and music publishers” who are

principals of the Harry Fox Agency. Pls.’ Mem. P. & A. at 12. As owners of a significant corpus of

copyrighted musical compositions, plaintiffs’ interests in prosecuting this action include protecting the

royalties that they earn from the reproduction and distribution of their copyrighted works and obtaining

compensation for the unauthorized use of those works by Napster’s customers. It is fair to assume that

these interests are widely shared by other copyright owners. Plaintiffs also point out that the class for which

they seek certification is limited to copyright owners who have retained the Fox Agency as their common

licensing and collection agent and have thus shown an interest in earning royalties from licensing their

copyrights. Accordingly, the court concludes that the named plaintiffs’ interest are aligned with those of the

class.

Nor can it be seriously disputed that plaintiffs and their counsel will vigorously prosecute this action. 

Indeed, having participated in the proceedings before this court that ultimately led to Napster’s demise,

class counsel and three of the named plaintiffs have already demonstrated their willingness and ability to do

exactly that. Class counsel also attests to its long history of representing the Fox Agency and other music

publishers in litigation, legislative matters, and proceedings before the United States Copyright Office. See

generally Ramos Decl. ¶¶ 2-9. Based on these submissions and its own experience with the named

plaintiffs and their counsel, the court has no reason to doubt that the interests of the class will be vigorously

represented. 

Beyond using its opposition to this motion as a sounding board to vent its frustration with ongoing

discovery disputes—which the court has already addressed and need not revisit here—Bertelsmann’s

primary objection to the adequacy of representation provided by the class representatives and their counsel

focuses on the named plaintiffs’ ignorance of the details of both the initial round of Napster litigation and the

ongoing proceedings related to the instant action. For example, Bertelsmann notes that upon being

deposed prior to the filing of this motion, Jerry Leiber could not remember that he was a named plaintiff in

the original action against Napster. Leiber Dep. at 15-17. Bertelsmann also notes that Mike Stoller

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testified that he could not recall reviewing the complaint before the instant action was filed. Stoller Dep. at

5-6. Extrapolating from these admissions, Bertelsmann paints a picture of attorney-driven litigation that

puts the interests of absent class members at risk.

Of course, Bertelsmann’s characterization of the relationship between lead plaintiffs and their

attorneys is transparently self-serving. It may be true that class counsel’s efforts to keep their clients

informed leaves something to be desired. However, the Ninth Circuit has made clear that the adequacy of

representation inquiry focuses on the potential for conflicts of interest between class representatives and

counsel on the one hand and absent members of the class on the other. See Linney v. Cellular Alaska

P’ship, 151 F.3d 1234, 1239 (9th Cir. 1998) (quoting Brown v. Ticor Title Ins. Co., 982 F.2d 386, 390

(9th Cir. 1992)) (“Adequate representation as required by . . . Rule 23(a)(4) depends on the qualifications

of counsel for the representatives, an absence of antagonism, a sharing of interests between representatives

and absentees, and the unlikelihood that the suit is collusive.”) (internal quotation marks omitted). There is

no suggestion here that the absent members of the class do not share the named plaintiffs’ interest in holding

Bertelsmann liable for the alleged acts of copyright infringement committed by Napster users. In the

absence of any evidence of such a conflict of interest, the court finds Bertelsmann’s concerns about the

adequacy of representation to be not only self-serving, but also misplaced.

In any event, it is neither unusual nor necessarily unwise for lay plaintiffs involved in complex civil

disputes to defer to counsel’s expert judgment on matters of legal strategy and litigation tactics. See, e.g., 

In re Select Comfort Corp. Sec. Litig., 202 F.R.D. 598, 609 (D. Minn. 2001) (observing, in the context of

a securities class action, that “[c]lass representatives in complex cases are not required to have [a] detailed

level of firsthand knowledge of [the] facts or law” at issue in the case) (citations omitted); see also In re

Linerboard Antitrust Litig., 203 F.R.D. 197, 213 (E.D. Pa. 2001) (making the same observation with

respect to an antitrust class action) (citations omitted), aff’d, 305 F.3d 145 (3d Cir. 2002), cert. denied,

Gaylord Container Corp. v. Garrett Paper, Inc., 538 U.S. 977 (2003). Nothing in the record here

suggests that the degree of deference that the named plaintiffs have conferred upon counsel falls so far

outside the bounds of an ordinary attorney-client relationship that it would have the effect of depriving the

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absent class members of adequate representation.2 The court therefore concludes that the named plaintiffs

and their counsel satisfy the adequacy requirement of Rule 23(a)(4). 

II. Rule 23(b)(3)

In addition to meeting the conditions imposed by Rule 23(a), a party seeking certification of a

“damages” class also bears the burden of establishing the predominance of common questions of law or

fact and the superiority of a class action relative to “other available methods for the fair and efficient

adjudication of the controversy.” Fed. R. Civ. P. 23(b)(3). The court addresses these “predominance”

and “superiority” requirements below.

A. Predominance

The first requirement for certifying a class pursuant to Rule 23(b)(3) states that “questions of law or

fact common to the members of the class predominate over any questions affecting only individual

members.” Fed. R. Civ. P. 23(b)(3). This “predominance” inquiry “focuses on the relationship between

the common and individual issues.” Culinary/Bartender Trust Fund, 244 F.3d at 1162. Consequently, the

presence of common issues of fact or law sufficient to satisfy the requirements of Rule 23(a)(2) is not by

itself sufficient to show that those common issues predominate. Hanlon, 150 F.3d at 1022. Nonetheless,

“[w]hen common questions present a significant aspect of the case and they can be resolved for all

members of the class in a single adjudication, there is clear justification for handling the dispute on a

representative rather than on an individual basis.” Id. (citing 7A Wright et al., supra, § 1779); see also

Culinary/Bartender Trust Fund, 244 F.3d at 1162.

In this action, a host of factual and legal issues arising from Bertelsmann’s investment in Napster are

common to the copyright infringement claims of each member of the class. These issues include both the

legal questions raised by plaintiffs’ claim that Bertelsmann is liable for secondary copyright infringement by

virtue of its investment in Napster and its control of the Napster network, as well as questions of fact such

as the extent of control that Bertelsmann exercised over the Napster network and Bertelsmann’s

knowledge of the infringing activities of Napster users.3 Not surprisingly, Bertelsmann downplays these

areas of commonality among the class members’ claims and focuses on other issues where some form of

individualized inquiry will undoubtedly be required. In particular, Bertelsmann points out that plaintiffs bear

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the burden of proving ownership and registration of each of the allegedly infringed musical compositions,

showing that each of those works was distributed via the Napster network, and establishing their right to

collect actual or statutory damages under the Copyright Act. See 17 U.S.C. § 411(a) (stating that, subject

to several exceptions that are not relevant here, “no action for infringement of the copyright in any . . . work

shall be instituted until registration of the copyright claim has been made in accordance with this title”); 17

U.S.C. § 501(b) (“The legal or beneficial owner of an exclusive right under a copyright is entitled, subject

to the requirements of [17 U.S.C. § 411], to institute an action for any infringement of that particular right

committed while he or she is the owner of it.”); 17 U.S.C. § 504 (discussing burden of proof with respect

to actual damages and willful infringement). 

In Bertelsmann’s view, the presence of these individual issues precludes class certification. 

However, the court finds Bertelsmann’s understanding of the predominance requirement to be unduly

restrictive. To establish predominance of common issues, a party seeking class certification is not required

to show that the legal and factual issues raised by the claims of each class member are identical. Rather, the

predominance inquiry focuses on whether the proposed class is “sufficiently cohesive to warrant

adjudication by representation.” Culinary/Bartender Trust Fund, 244 F.3d at 1162 (quoting Amchem, 521

U.S. at 623). Among the considerations that are central to this inquiry is “the notion that the adjudication of

common issues will help achieve judicial economy.” Zinser, 253 F.3d at 1189 (quoting Valentino v.

Carter-Wallace, Inc., 97 F.3d 1227, 1234 (9th Cir. 1996)). Here, while it is true that proof of ownership,

registration, and actual damages ultimately requires a work-by-work inquiry, viewing these determinations

as purely “individual issues” ignores the fact that the claims of every member of the class are uniformly

premised upon the uploading or downloading of a copyrighted work by Napster users. This shared factual

predicate in turn gives rise to a host of common legal issues concerning Bertelsmann’s involvement in the

operation of the Napster network. There can be no serious dispute that these issues are sufficiently

“significant” to warrant adjudication of the parties’ dispute on a representative rather than individual basis,

accord Culinary/Bartender Trust Fund, 244 F.3d at 1162, nor is there any question that considerations of

judicial economy heavily favor litigating these common issues once, as part of a single class action, rather

than rehashing the same questions of law and fact in each of what could likely amount to thousands of

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individual lawsuits.4 The court therefore finds that the predominance requirement of Rule 23(b)(3) has been

satisfied.

B. Superiority

The final prerequisite for certification of a “damages” class under Rule 23(b)(3) requires the plaintiff

to show that a class action is superior to other methods available for the adjudication of the parties’ dispute. 

Fed. R. Civ. P. 23(b)(3). Rule 23(b)(3) provides a non-exhaustive list of factors to consider in determining

superiority, which include: 

(A) the interest of members of the class in individually controlling the prosecution or defense

of separate actions; (B) the extent and nature of any litigation concerning the controversy

already commenced by or against members of the class; (C) the desirability or

undesirability of concentrating the litigation of the claims in the particular forum; [and] (D)

the difficulties likely to be encountered in the management of a class action.

Id. Analysis of these factors requires the court to focus on whether the interests of “efficiency and

economy” would be advanced by class treatment. Zinser, 253 F.3d at 1189 (quoting 7A Wright et al.,

supra, § 1780).

Applying the first of these factors, the interest of members of the class in individually controlling the

prosecution or defense of separate actions, the court finds it unlikely that a significant proportion of the

absent class members would have the ability and desire to pursue individual copyright infringement actions

against Bertelsmann. Even with the incentives to bring such claims that the Copyright Act provides in the

form of statutory damages and attorneys’ fees, see 17 U.S.C. §§ 504(c), 505, it nonetheless remains true

that many small composers individually lack the time, resources, and legal sophistication to enforce their

copyrights. Indeed, the fact that all of the class members have retained the Fox Agency to license their

copyrighted works and collect royalties on their behalf suggests a preference for delegating copyright

licensing and enforcement duties that is inconsistent with a widespread desire on the part of absent class

members to prosecute their claims in individual actions. The court thus finds that the first factor in Rule

23(b)(3) supports a conclusion that a class action is superior to other methods for adjudication of the

parties’ dispute.

As to the second factor in Rule 23(b)(3), the extent and nature of any litigation concerning the

controversy that has been already commenced by members of the class, three of the named plaintiffs and

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their counsel have participated in Napster-related ligation for more than five years with scant involvement of

the absent class members. Their apparently satisfactory representation of the putative class strongly

supports allowing plaintiffs to represent other members of the class formally. With respect to the third

factor, the desirability of concentrating the litigation of the claims in a particular forum, the transfer of the

instant action to this district by the Judicial Panel on Multidistrict Litigation attests to the advantages of

litigating all Napster-related claims in this court. Thus, the third Rule 23(b)(3) factor also favors granting

plaintiffs’ motion.

The final factor set forth in Rule 23(b)(3) directs the court to consider the difficulties likely to be

encountered in the management of a class action. Admittedly, adjudicating the ownership and damages

issues pertaining to tens of thousands of separate copyrighted musical compositions will present logistical

difficulties. However, the Frank Agency’s offer to work closely with the class representatives and class

counsel in shouldering the administrative burden associated with maintaining the class action should reduce,

if not eliminate, any complications that may arise from adjudicating the individual aspects of the class

members’ claims. In any event, the case management problems that may arise upon certification of the

class must be compared to the alternative method of adjudicating the parties’ claims: that is, thousands of

actions by individual class members. Accord Culinary/Bartender Trust Fund, 244 F.3d at 1163 (quoting

7A Wright et al., supra, § 1779) (“If a comparative evaluation of other procedures reveals no other realistic

possibilities, [the] superiority portion of Rule 23(b)(3) has been satisfied.”) (original alterations omitted). 

When viewed from this perspective, a class action is clearly the most efficient and in all likelihood the most

equitable method for resolving the parties’ dispute.

Rather than focusing on the considerations identified in Rule 23(b)(3), Bertelsmann’s analysis of the

“superiority” issue emphasizes the availability of statutory damages and attorneys’ fees under the Copyright

Act as an incentive for individual class members to file their own infringement actions. See 17 U.S.C. §

504(c) (providing for statutory damages ranging from $750 to $150,000 per copyrighted work infringed);

17 U.S.C. § 505 (permitting courts to award attorneys’ fees to the prevailing party in a copyright

infringement action). In support of this position, Bertelsmann cites a number of district court cases that

discourage class certification where members of the putative class could bring individual claims for statutory

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damages. See, e.g., Forman v. Data Transfer, Inc., 164 F.R.D. 400, 405 (E.D. Pa. 1995) (concluding that

class action treatment of claims under the Telephone Consumer Protection Act would be “inconsistent” with

congressional intent in authorizing statutory damages for violations of the Act); Ratner v. Chemical Bank

N.Y. Trust Co., 54 F.R.D. 412, 416 (S.D.N.Y. 1972) (refusing to certify a class seeking statutory

damages under the Truth in Lending Act on the ground that the aggregation of the class members’ claims

would potentially result in a “horrendous, possibly annihilating punishment, unrelated to any damage to the

purported class or to any benefit to the defendant, for what is at most a technical and debatable violation of

the Truth in Lending Act”). 

Of course, this court is not bound by these district court decisions, and nothing in Ninth Circuit

precedent suggests that the availability of statutory damages raises a per se bar to class certification. 

Indeed, the only Ninth Circuit case Bertelsmann can muster in support of its position, Kline v. Coldwell,

Banker & Co., 508 F.2d 226 (9th Cir. 1974), cert. denied, 421 U.S. 963 (1975), is easily distinguished

from the instant action. In Kline, the Ninth Circuit reviewed a district court’s order certifying in part a

defendant class consisting of more than 2,000 real estate brokers who were accused of violations of federal

antitrust law. Id. at 228-29. In concluding that class certification was inappropriate, the court relied heavily

on the fact that each of the 2,000 defendants was potentially jointly and severally liable for treble damages

in the amount of $750 million. Id. at 234. Thus, observing that “[s]uch an award against each of 2,000 real

estate broker defendants would shock the conscience,” the Ninth Circuit reversed the district court’s

judgment that the plaintiffs’ claims were suitable for class action treatment. Id. at 234-35. 

It is unclear what, if any, relevance the holding in Kline has to the instant action, where certification

is sought for a plaintiff class. It is at least arguable that the availability of statutory damages weighs in favor

rather than against class certification under such circumstances. For example, in Six Mexican Workers v.

Arizona Citrus Growers, 904 F.2d 1301 (9th Cir. 1990), the court cited the statutory damages provision of

the Farm Labor Contractor Registration Act as a basis for upholding the district court’s order granting class

certification, reasoning that the ability to litigate damages issues without showing actual harm to each plaintiff

mitigates “concerns . . . about the impermissible circumvention of individual proof requirements.” Id. at

1306. 

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Although the court recognizes that plaintiffs in the instant action have not disclaimed their intention of

seeking actual damages, at the very least Six Mexican Workers suggests that plaintiffs’ prospects for class

certification should not suffer because the Copyright Act provides for statutory damages. This view is

entirely consistent with the plain meaning of Rule 23(b)(3), which eschews any per se rule as to when a

class action is superior to other methods of litigation, as well as with the discretion conferred upon the

district court to determine the propriety of class certification based on the facts and circumstances of a

particular case. See Zinser, 253 F.3d at 1186 (observing that a district court “has broad discretion to

certify a class,” provided that such discretion is “exercised within the framework of Rule 23”) (citing

Doninger v. Pacific Northwest Bell, Inc., 564 F.2d 1304, 1309 (9th Cir. 1977)). To the extent that cases

outside the Ninth Circuit hold otherwise, the court declines to follow them.

That said, the court recognizes that under certain circumstances, large awards of statutory damages

can raise due process concerns. It is now settled law that “grossly excessive” punitive

 damages awards violate the Due Process Clause. State Farm Mut. Auto Ins. Co. v. Campbell, 538 U.S.

408, 416 (2003); BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 562 (1996). In determining whether

punitive damages are excessive, the Supreme Court has identified the ratio between punitive and

compensatory damages as “the most commonly cited indicium of an unreasonable or excessive 

. . . award.” Gore, 517 U.S. at 580 (citations omitted). Extending the reasoning of Gore and its progeny, a

number of courts have recognized that an award of statutory damages may violate due process if the

amount of the award is “out of all reasonable proportion” to the actual harm caused by a defendant’s

conduct. See, e.g., Parker v. Time Warner Entm’t Co., 331 F.3d 13, 22 (2d Cir. 2003); see also In re

Trans Union Corp. Privacy Litig., 211 F.R.D. 328, 350-51 (N.D.Ill. 2002), appeal dismissed, 346 F.3d

734 (7th Cir. 2003) . In addition, some of these courts—most notably the Second Circuit—have also

suggested that these due process considerations are of particular concern in class actions, where the

aggregation of individual claims “may expand the potential statutory damages so far beyond the actual

damages suffered that the statutory damages come to resemble punitive damages.” Parker, 331 F.3d at

22; see also Trans Union, 211 F.R.D. at 350-51 (declining to certify a class on the ground that the

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available statutory damages would be “grossly disproportionate” to any actual harm suffered by the

plaintiffs).

While these cases are doubtlessly correct to note that a punitive and grossly excessive statutory

damages award violates the Due Process Clause, it is far from clear why class actions should be singled out

for heightened scrutiny under such a theory. Indeed, the sum of the actual damages suffered by a class of

plaintiffs will be the same regardless of whether their claims are prosecuted as a single class action or as a

myriad of individual suits. In the absence of any theory to explain why the amount of statutory damages

awarded would expand faster than the size of the class, the assumption that class action treatment

exacerbates concerns about excessive damages awards is either a product of mathematical error or based

on the assumption that defendants who injure large number of individuals are less culpable than those who

spread the effects of their unlawful conduct less widely. While the former could be chalked up to the

mathematical illiteracy of the legal profession, the latter rationale is clearly incompatible with the purpose of

Rule 23, which is in part intended to serve as vehicle for redressing widely dispersed harm that might

otherwise go uncompensated. See, e.g., Moeller v. Taco Bell Corp., 220 F.R.D. 604, 612 (N.D. Cal.

2004) (Jenkins, J.) (quoting Kaplan v. Pomerantz, 131 F.R.D. 118, 122 (N.D. Ill. 1990)) (observing that

“[t]he class action procedure exists, in part, for the benefit of plaintiffs with small claims who could not

otherwise vindicate their rights”). Under either of these premises, the conclusion that class action treatment

might somehow influence the proportionality of a statutory damages award is logically flawed. 

In any event, the excessiveness of statutory damages awards cannot be judged in the abstract. The

factors that the court would consider in making such a determination are similar to the “guideposts” that the

Supreme Court has identified in the context of reviewing the reasonableness of a jury award of punitive

damages. State Farm, 538 U.S. at 418 (citing Gore, 517 U.S. at 575). These include: “(1) the degree of

reprehensibility of the defendant’s misconduct; (2) the disparity between the actual or potential harm

suffered by the plaintiff and the . . . damages award; and (3) the difference between the . . . damages

awarded by the jury and the civil penalties authorized or imposed in comparable cases.” Id. At this stage

of the proceedings, there is simply nothing in the record that would permit the court to apply these “Gore

factors” in an informed manner. Accord DirecTV, Inc. v. Spillman, No. Civ.A.SA-04-82-XR, 2004 WL

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1875045, at *4 (W.D. Tex. Aug. 23, 2004) (observing that concerns regarding excessive statutory

damages raised by the defendant’s motion to dismiss were merely “hypothetical” and thus deferring any

determination as to whether the ratio between actual and statutory damages would be unconstitutionally

disproportionate). Indeed, if made at the class certification stage, such an inquiry would almost inevitably

be speculative, based on a potential statutory maximum award rather than an actual jury verdict. 

Accordingly, the court finds Bertelsmann’s attempt to introduce concerns about excessive statutory

damages into the class certification process to be impracticable as well as logically flawed and therefore

declines to consider such issues at this time. 

Having rejected Bertelsmann’s contention that the availability of statutory damages under the

Copyright Act precludes certification of a class under Rule 23(b)(3), it is apparent that each of the factors

set forth in Rule 23(b)(3) favors certification of the proposed class. The court therefore finds that plaintiffs

have carried their burden of showing that a class action is superior to other methods of adjudicating the

parties’ dispute. 

III. Summary

In light of the considerations discussed above, the court finds that plaintiffs have satisfied each of the

requirements for maintaining a class action under Rules 23(a) and 23(b) of the Federal Rules of Civil

Procedure.5 Accordingly, the court certifies the proposed class with one minor modification. As noted

above, plaintiffs seek certification of a class of music publisher-principals of the Fox Agency that own or

control at least one copyrighted musical work that has without their permission been made available through

the Napster service on or after October 30, 2000. This definition refers to the class members’ copyright

ownership in the present tense. However, 17 U.S.C. § 501(b) makes clear that a copyright owner may

institute an infringement action only if one of his or her exclusive rights in the copyrighted work was violated

“while he or she [was] the owner of it.” 17 U.S.C. § 501(b); see also ABKCO Music, Inc. v. Harrisongs

Music, Ltd., 944 F.2d 971, 980 (2d Cir. 1991) (citing 3 M. Nimmer, Nimmer on Copyright § 12-02, at

12-29 to -30 (1990)) (noting that “the assignor [of a copyright] retains the right to bring actions accruing

during its ownership of the right, even if the actions are brought subsequent to the assignment”). This rule

implies that the definition of the class must be limited to individuals who owned or controlled the

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copyrighted musical compositions at issue when the alleged acts of infringement occurred. The court

therefore certifies a class consisting of music publisher-principals of the Fox Agency that owned or

controlled at least one copyrighted musical work at the time that it was made available without their

permission through the Napster service on or after October 30, 2000.

CONCLUSION

For the foregoing reasons, the court GRANTS plaintiffs’ motion for class certification. The

certified class consists of all music publisher-principals of The Harry Fox Agency that owned or controlled

at least one copyrighted musical work at the time that it was made available without their permission

through the Napster service on or after October 30, 2000. This class is certified with respect to the claims

asserted in plaintiffs’ complaint: namely, that defendants Bertelsmann AG, Bertelsmann, Inc., and BeMusic,

Inc. are contributorily and vicariously liable for acts of direct copyright infringement committed by Napster

users. The named class representatives are Jerry Leiber, Mike Stoller, Frank Music Corporation, and Peer

International Music Corporation. Pursuant to Federal Rule of Civil Procedure 23(g), the court appoints the

counsel of record for the named plaintiffs to serve as counsel for the class.

IT IS SO ORDERED.

Date: May 31, 2005 

MARILYN HALL PATEL

District Judge

United States District Court

Northern District of California

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1. As noted above, plaintiff’s have also proffered that Napster directly infringed their exclusive rights to

distribute their copyrighted musical compositions by indexing the works that its users uploaded to the

Napster network and that Bertelsmann is contributory and vicarious liability liable for this directly infringing

conduct. Pls.’ Statement Re Theory of Infringement at 5. This assertion similarly gives rise to questions of

law and fact common to the class. 

2. In fact, excerpts of deposition transcripts submitted in the record attest to the fact that the named

plaintiffs are both familiar with the facts giving rise to the class members’ claims and are participating

actively in the prosecution of the instant action. See Eastman Dep. at 68 (testifying to frequent contact with

counsel and an “active interest” in these proceedings); Stoller Dep. at 25 (accurately describing the

investment in Napster that gave rise to plaintiffs’ contributory and vicarious copyright infringement claims

against Bertelsmann); Leiber Dep. at 7 (same). The court finds this testimony persuasive evidence that the

extent of the class representatives’ involvement in these proceedings is adequate to protect the interests of

the absent class members

3. For the reasons stated in the court’s discussion of the commonality requirement of Rule 23(a)(2), the

court rejects Bertelsmann’s contention that its knowledge of the Napster users’ directly infringing conduct is

an individual rather than a common issue.

4. Of course, such a wave of lawsuits would be unlikely to materialize given the burden that maintaining

individual actions would place on the members of the class. This would certainly be one way to further the

interests of judicial economy. However, as the following discussion of Rule 23(b)(3)’s superiority

requirement demonstrates, such an outcome is clearly inconsistent with the purpose of the class action

device.

5. Because the court’s order does not limit the certification of the class to liability issues, it need not

address Bertelsmann’s argument that bifurcation of liability and damages issues would violate the Seventh

Amendment’s prohibition on submitting the same issue for consideration by two separate juries. See Arthur

Young & Co. v. United States Dist. Court, 549 F.2d 686, 692-93 (9th Cir.), cert. denied, 434 U.S. 829

(1977). It is should be noted, however, the Bertelsmann’s effort to inject Seventh Amendment concerns

into the class certification process is premised on its mischaracterization of the secondary liability,

willfulness, and statutory damages inquiries as individual rather than common issues. Bertelsmann is correct

to point out that each of these determinations turns in part on whether it was aware of the acts of direct

infringement allegedly committed by Napster users. However, in light of the notice procedures discussed in

Part I.B, supra, and the fact that each of the alleged acts of direct infringement arose from an identical

factual predicate (i.e., the reproduction or distribution of a copyrighted musical composition by a Napster

user), the inquiry into whether Bertelsmann knew that Napster users were committing copyright

infringement is undoubtedly one in which common questions of law and fact predominate. The court thus

finds it unlikely that individual trials of such issues would be practical or efficient. Accordingly, at this time,

the court has no reason to believe that class action treatment of plaintiffs’ claims will be inconsistent with

preserving the parties’ Seventh Amendment right to a trial by jury. 

ENDNOTES

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