Court Opinion

ID: 4447811
Source: CourtListenerOpinion
Date Created: 2019-10-17 21:00:21.669611+00
Date Added: 2024-06-11T14:44:58.889301
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       OCT 17 2019
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

FLO & EDDIE, INC., a California                No. 15-55287
corporation, individually and on behalf of all
others similarly situated,                     D.C. No.
                                               2:14-cv-07648-PSG-RZ
                 Plaintiff-Appellee,

 v.                                             MEMORANDUM*

PANDORA MEDIA, LLC, a Delaware
corporation,

                Defendant-Appellant.

                   Appeal from the United States District Court
                       for the Central District of California
                   Philip S. Gutierrez, District Judge, Presiding

                     Argued and Submitted December 8, 2016
                       Submission Vacated March 15, 2017
                         Re-submitted October 17, 2019
                              Pasadena, California

Before: WARDLAW ** and PAEZ, Circuit Judges, and FRIEDMAN,*** District

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
              This case was submitted to a panel that included Judge Stephen R.
Reinhardt. Following Judge Reinhardt’s death, Judge Wardlaw was drawn by lot
to replace him. Ninth Circuit General Order 3.2.h. Judge Wardlaw has read the
briefs, reviewed the record, and listened to oral argument.
      ***
             The Honorable Paul L. Friedman, United States District Judge for the
Judge.

      In this case, we previously certified two questions to the California Supreme

Court. See Flo & Eddie, Inc. v. Pandora Media, Inc., 851 F.3d 950 (9th Cir.

2017). In May 2019, the California Supreme Court dismissed consideration of the

certified questions. For the reasons explained below, we vacate the district court’s

order and remand for further proceedings.

      The present litigation arises out of Pandora’s streaming of music owned by

Flo & Eddie, a corporation controlled by two founding members of the 1960s folk

rock band, The Turtles. Flo & Eddie brought an action under California copyright

and consumer protection law alleging that Pandora owed royalties for its streaming

of The Turtles’ music. Pandora subsequently filed a motion to strike Flo &

Eddie’s claims pursuant to California’s anti-SLAPP statute. The district court

denied Pandora’s anti-SLAPP motion—reasoning that although Pandora’s conduct

was protected, Flo & Eddie had a reasonable probability of prevailing on its state

copyright claim—and Pandora timely appealed.

      In a March 2017 order, we certified two questions to the California Supreme

Court concerning issues of first impression under California state law. The court

granted our request and ordered the parties to brief the issues. But, before the

California Supreme Court could answer the certified questions, Congress passed

District of Columbia, sitting by designation.

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the Orrin G. Hatch-Bob Goodlatte Music Modernization Act (“the MMA”), which

preempts any state law claim arising before the passage of the Act from the digital

audio transmission of a pre-1972 song if the transmitting party meets certain

conditions, including paying statutory royalties. See 17 U.S.C. § 1401(e).

Following enactment of the MMA, the California Supreme Court requested

supplemental briefing on whether the enactment of the MMA rendered it

unnecessary to resolve the state law certified questions. After the filing of the

supplemental briefs, the California Supreme Court dismissed the certified

questions and returned the case to this court. Upon our request, the parties filed

supplemental briefs addressing the effect of the MMA on the probability of Flo &

Eddie prevailing on its claims, which in turn informs the analysis of Pandora’s

anti-SLAPP motion.

      The MMA preempts common-law copyright claims arising from the use of

pre-1972 recordings that occurs on or after the date of the MMA's enactment. See

17 U.S.C. § 301(c). In addition, section 1401(e) of the MMA provides a

preemption defense to similar claims arising from a transmission or reproduction,

made before the date of the MMA’s enactment, of a pre-1972 recording if the

transmission or reproduction would have satisfied statutory licensing requirements

under section 114(d)(1)–(2), or 112(e)(1), respectively, and, within 270 days after

the enactment of the MMA, the transmitting entity pays statutory royalties for the

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use of the recordings occurring during the three-year period prior to the date of

enactment and provides notice of the use of the recordings. See 17 U.S.C. §

1401(e)(1)(A)–(B).

      To be eligible for the statutory licensing regime under section 114(d), the

transmitter must not be part of an “interactive service,” among other things. 17

U.S.C. § 114(d)(2)(A). Eligibility for statutory licensing under section 112(e)

requires meeting a different set of criteria, including that the phonorecord in

question be “destroyed within six 6 months from the date the sound recording was

first transmitted to the public using the phonorecord[,]” unless it is used

exclusively for archival preservation. See 17 U.S.C. § 112(e)(1)(C).

      Whether the MMA applies to and preempts Flo & Eddie’s claims, as Flo &

Eddie note, cannot be answered on the record before us. The resolution of this

issue depends on various unanswered factual questions, including whether (1)

Pandora would have satisfied the specific statutory licensing requirements under

either section 114(d)(2) or 112(e)(1), or been exempt under section 114(d)(1); (2)

the relevant royalty payment was made within 270 days of the enactment of the

MMA; (3) that payment covered all reproductions and transmissions of pre-1972

recordings during the three-year period; (4) Pandora accurately identified all pre-

1972 recordings it reproduced or transmitted during the three-year period; and

finally, whether Pandora provided notice of the use of pre-1972 recordings within

                                           4
270 days of the enactment of the MMA.

      Although Pandora attaches a letter to its supplemental reply brief as

evidence that it made the requisite royalty payment by July 8, 2019, and that it

provided a federally appointed rights clearinghouse with notice of its transmission

of pre-1972 recordings, documents not filed with the district court are not part of

the record on appeal. See Kirshner v. Uniden Corp. of Am., 842 F.2d 1074, 1077

(9th Cir. 1988).

      Pandora urges us to determine whether the district court erred in denying its

motion to strike under California’s anti-SLAPP statute without consideration of the

MMA, but whether the MMA preempts Flo & Eddie’s state-law claims (and, if so,

to what extent it preempts those claims) is closely linked with the merits of those

claims. The scope of the MMA’s preemption clauses and their application here

are, ultimately, questions of first impression, both in this case and in this court.

And although which questions may or may not be taken up and resolved for the

first time on appeal is left to the discretion of appellate courts, see Singleton v.

Wulff, 428 U.S. 106, 121 (1976), “[w]hen faced with a determination of applying a

new legal principle, a standard practice . . . is to remand to the district court for a

decision in the first instance.” Clark v. Chappell, 936 F.3d 944, 971 (9th Cir.

2019) (internal quotations and alterations omitted). See also, e.g., Ctr. for Bio.

Diversity v. U.S. Forest Serv., 925 F.3d 1041, 1052 (9th Cir. 2019) (remanding to

                                            5
the district court for the court to consider the merits of a claim in the first instance,

where the district court improperly determined there was no jurisdiction over the

case); Bethune-Hill v. Va. State Bd. of Elections, 137 S. Ct. 788, 800 (2017)

(remanding to the district court to apply in the first instance the correct legal

standard).

      In addition, MMA preemption is an affirmative defense, and affirmative

defenses are typically not preserved unless they are pleaded in a party’s answer.

See Fed. R. Civ. P. 8(c); Perry v. O’Donnell, 749 F.2d 1346, 1353 (9th Cir. 1984).

Where new, intervening authority creates additional causes of action or affirmative

defenses that may materially alter the course of the litigation, the appropriate

remedy is to remand to the district court to allow the parties to amend their

pleadings in light of that intervening authority. See, e.g., Gonzales v. U.S. Dep’t of

Homeland Sec., 712 F.3d 1271, 1272–73 (9th Cir. 2013) (vacating the district

court’s judgment and remanding for reconsideration of a motion to amend the

complaint in light of a relevant intervening opinion by this court); Doe I v. Nestle

USA, Inc., 766 F.3d 1013, 1026–27 (9th Cir. 2014) (remanding with instructions to

allow plaintiffs to amend their complaint in light of relevant cases decided while an

appeal was pending).

      Given the enactment of the MMA, the district court should address the

above dispositive factual and legal issues in the first instance. On remand, the

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parties and the district court may also address any intervening developments in

California’s anti-SLAPP law. For these reasons, we vacate the district court’s

denial of Pandora’s anti-SLAPP motion, and remand for further proceedings.

      We also GRANT Flo & Eddie, Inc.’s motion to strike the documents

attached to Pandora’s supplemental brief (Dkt. No. 155) because they were not

admitted in the district court and are not part of the record on appeal. Finally, we

GRANT Pandora Media, Inc.’s motion to change its name and accordingly amend

the caption in this case (Dkt. No. 130).

      VACATED and REMANDED.

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