Opinion ID: 802159
Heading Depth: 2
Heading Rank: 1

Heading: The AFJ2

Text: ASCAP contends that a rate structure with an adjustable carve-out conflicts with the AFJ2. ASCAP argues, inter alia, that by defining certain licenses and not defining a blanket license with an adjustable carve-out, the AFJ2 excludes the latter. The ASCAP rate court rejected this argument. Consent decrees are construed basically as contracts. AEI, 275 F.3d at 175 (internal citations and quotation marks omitted). When the language of a consent decree is unambiguous, deference is paid to the plain meaning of the decree's language. Id. The decree's scope must be discerned within its four corners, and not with respect to what might satisfy one of the parties' purposes. Id. When the language of a decree is ambiguous, however, a court may consider, inter alia, extrinsic evidence to determine the parties' intent, including the purpose of the provision and the overall context of the decree. Id. We -28- review the district court's interpretation of a consent decree de novo and its factual findings for clear error. Id. The AFJ2 defines four types of licenses: blanket, per-program, per-segment, and through-to-the-audience licenses. See supra note 3 and accompanying text. In addition, section V of the AFJ2 discusses Through-to-theAudience Licenses, section VI discusses Licensing, and section VII discusses Per-Program and Per-Segment Licenses. See AFJ2 §§ V, VI, VII. Section VII(C) provides: Nothing in th[e AFJ2] shall prevent ASCAP and any music user from agreeing on any other form of license. AFJ2, § VII(C). Thus, although the AFJ2 defines types of licenses that ASCAP could provide to DMX, on its face, the AFJ2 plainly permits other forms of licenses and does not preclude blanket licenses with adjustable carve-outs. Although we did not expressly address this issue in AEI, BMI raised a similar argument in that case. AEI, 275 F.3d at 176. There, we explained that a request for a blanket license subject to a carve-out constitutes a -29- request not for a new type of license, but for a blanket license with a different fee basis, over which the district court has rate-setting authority and which [the PRO] must offer. Id. at 171, 175-77; see also United States v. ASCAP, 309 F. Supp. 2d 566, 581 (S.D.N.Y. 2004) (Muzak) (concluding that the present AFJ2 may be construed to permit the issuance of a blanket license with a fee structure that reflects direct licensing arrangements previously entered into by applicants and the existence of such direct licensing relationships may and will be considered by this Court in a rate court proceeding). We rejected the contention, then advanced by BMI, that the BMI Decree applie[d] only to those licenses specifically mentioned in the BMI Decree, and to the traditional blanket license with its traditional per premise fee structure. AEI, 275 F.3d at 176. Our reasoning in AEI applies with equal force here. Accordingly, the district court correctly rejected ASCAP's contention that the AFJ2 does not permit a rate -30- structure that features an adjustable carve-out. As the ASCAP rate court correctly determined: [The AFJ2] is an antitrust consent decree providing a mechanism for the setting of reasonable license fees in a unique market in which ASCAP indisputably exercises market power. While ASCAP may be unwilling to offer a blanket license with a carve-out for a direct licensing program, the terms of AFJ2, the decisions interpreting and applying AFJ2, and the record evidence from this trial each indicate that such a license is appropriate and justified here. ASCAP, 756 F. Supp. 2d at 541. We thus hold that the AFJ2 permits blanket licenses subject to carve-outs to account for direct licensing, and we reject ASCAP's claim that a blanket license with an adjustable carve-out conflicts with the AJF2.