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Rock River Communications, Inc v. Universal Music Group

April 27, 2011


The opinion of the court was delivered by: Christina A. Snyder United States District Judge



Plaintiff Rock River Communications, Inc. is a producer, seller, and distributor of music records. Fourth Amended Complaint ("FAC") ¶ 4. In 2006, plaintiff created certain "remixed" recordings of reggae music originally recorded by Bob Marley and the Wailers between 1969 and 1972 ("the Recordings"). FAC ¶¶ 11. Plaintiff acquired licenses for the Recordings from a company called San Juan Music ("San Juan"). FAC ¶ 13. San Juan allegedly possessed a non-exclusive license for the Recordings that it had acquired from Lee Perry, the original producer of the Recordings. FAC ¶ 12.

Defendant Universal Music Group, Inc., is the owner of Island Records. FAC ¶ 10. Bob Marley recorded for Island Records between 1973 and his death in 1981, and defendant, through Island Records, controls the rights to a large percentage of Marley's recordings Id. Defendant allegedly acquired a non-exclusive interest in the Recordings through its acquisition of Polygram Group Canada and Sanctuary Records, both of which allegedly possessed non-exclusive rights to the Recordings. FAC ¶¶ 15, 16. Defendant also acquired an allegedly exclusive interest in the Recordings pursuant to a license from a company known as JAD.*fn1 FAC ¶ 17. In October 2007, defendant sent "cease and desist" letters to several distributors of plaintiff's remixed recordings, including some internet-based distributors, asserting that it had exclusive rights to the Recordings and threatening copyright infringement actions. FAC ¶ 28. Due to these threats, the distributors stopped distributing plaintiff's recordings. FAC ¶ 30.

On January 31, 2008, plaintiff filed a complaint claiming that defendant's conduct in sending "cease and desist" letters violated Section 2 of the Sherman Act, 15 U.S.C. § 2, and tortiously interfered with plaintiff's prospective business advantage. After defendant filed a motion to dismiss, plaintiff filed its first amended complaint. On August 25, 2008, this Court granted in part and denied in part defendant's motion to dismiss plaintiff's first amended complaint with leave to amend. On September 15, 2008, plaintiff filed its second amended complaint. On December 22, 2008, the Court granted defendant's motion to dismiss with leave to amend. The Court further granted plaintiff 60 days within which to conduct discovery.

On April 2, 2009, plaintiff filed its third amended complaint alleging claims against defendant for (1) attempting to monopolize the reggae genre of sound recordings in the United States in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2; (2) restraining trade and threatening to create a monopoly in the reggae genre sound recordings market in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18; (3) intentional interference with prospective economic advantage; and (4) knowingly and materially misrepresenting that plaintiff's album infringed defendant's copyright, in violation of the Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. § 512(f).

On October 16, 2009, plaintiff filed a motion for leave to file a fourth amended complaint, and on November 16, 2009, the Court granted plaintiff's motion. Thereafter plaintiff filed its fourth amended complaint against defendants UMG Inc., UMG Recordings, and UMGI, againalleging claims for (1) attempting to monopolize the reggae genre of sound recordings in the United States in violation of Section 2 of the Sherman Act; (2) restraining trade and threatening to create a monopoly in the reggae genre sound recordings market in violation of Section 7 of the Clayton Act; (3) intentional interference with prospective economic advantage; and (4) knowingly and materially misrepresenting that plaintiff's album infringed defendants' copyright, in violation of the DMCA.

On December 21, 2010, plaintiff filed the instant motion for summary adjudication as to defendants' Noerr-Pennington and California litigation privilege affirmative defenses. On January 20, 2011, defendants filed an opposition to plaintiff's motion. On January 31, 2011, plaintiff filed a reply in support of its motion. On December 21, 2010, defendants filed the instant motion for summary judgment as to the entire action. On January 19, 2011, plaintiff filed an opposition to defendants' motion. On January 31, 2011, defendants filed a reply in support of their motion. A hearing was held on March 14, 2011. Plaintiff filed a supplemental brief on March 15, 2011. Defendants filed a response to plaintiff's supplemental brief on March 17, 2011. On April 11, 2011, plaintiff filed a notice of a decision that it believed the Court might find persuasive. On April 14, 2011, defendants filed a response to the notice of decision. Having carefully considered the pleadings, all of the filings and submissions of the parties and the parties' oral arguments, the Court finds and concludes as follows.


Summary judgment is appropriate where "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The moving party has the initial burden of identifying relevant portions of the record that demonstrate the absence of a fact or facts necessary for one or more essential elements of each cause of action upon which the moving party seeks judgment. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

If the moving party meets its initial burden, the opposing party must then set out specific facts showing a genuine issue for trial in order to defeat the motion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); see also Fed. R. Civ. P. 56(c), (e). The nonmoving party must not simply rely on the pleadings and must do more than make "conclusory allegations [in] an affidavit." Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888 (1990); see also Celotex, 477 U.S. at 324. Summary judgment must be granted for the moving party if the nonmoving party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322; see also Abromson v. Am. Pac. Corp., 114 F.3d 898, 902 (9th Cir. 1997).

In light of the facts presented by the nonmoving party, along with any undisputed facts, the Court must decide whether the moving party is entitled to judgment as a matter of law. See T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 631 & n.3 (9th Cir. 1987). When deciding a motion for summary judgment, "the inferences to be drawn from the underlying facts . . . must be viewed in the light most favorable to the party opposing the motion." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citation omitted); Valley Nat'l Bank of Ariz. v. A.E. Rouse & Co., 121 F.3d 1332, 1335 (9th Cir. 1997). Summary judgment for the moving party is proper when a rational trier of fact would not be able to find for the nonmoving party on the claims at issue. See Matsushita, 475 U.S. at 587.


A. Plaintiff's Motion for Summary Adjudication as to Defenses

Plaintiff's motion requests that the Court find "that UMG is not entitled to either a Noerr-Pennington or California litigation privilege defense." Mot. at 2. Plaintiff asserts that defendants are not entitled to assert these defenses because the communications in question were not made in connection with litigation, and therefore are not "petitioning activity" as required under both doctrines. "There never was any actual litigation, nor did UMG intend to engage in any litigation with respect to its allegedly exclusive license." Id. at 13.

With respect to the Noerr-Pennington defense, plaintiff asserts that "a cease and desist letter directed to a private party is not a petition and not automatically entitled to immunity." Id. at 7, citing EcoDisc Tech. AG v. DVD Format/Logo Licensing Corp., 711 F. Supp. 2d 1074, 1082 (C.D. Cal. 2010). Plaintiff argues that to trigger the doctrine, such letters must be "sufficiently related to petitioning activity." Mot. at 8, citing Sosa v. DirectTV, Inc., 437 F. 3d 923, 933 (9th Cir. 2006). "Consequently . . . . 'without contemplation of litigation,' a demand letter on its own would not be entitled to immunity." Mot. at 9, citing Cal. Pharmacy Mgmt.,LLC, v. Zenith Insur. Co., 669 F. Supp. 2d 1152, 1168 (C.D. Cal. 2009). "In this case, UMG's lack of intent to engage in litigation is evidenced by the fact that UMG never commenced any litigation to enforce its alleged exclusive license over the disputed Marley recordings. (See Cox Depo. at 149:15-150:5). Moreover, there is not a shred of evidence in the record that UMG ever seriously contemplated suing over Rock River's album, or had even gone through the basic process of obtaining the authorization to do so. (See id. at 148:23-149:14)." Mot. at 10. Plaintiff urges the Court to find that the communications were not prelitigation demand letters, but "other forms of threats or harassment," and therefore not protected by Noerr-Pennington, consistent with ICANN Transparency, Inc. v. VeriSign, Inc., 611 F. 3d 495, 505-506 (9th Cir. 2010), and Theme Promotions, Inc. v. News Am. Mktg. FSI, 546 F. 3d 991, 1007-08 (9th Cir. 2008). Id. at 10-11.

With respect to the California litigation privilege under California Civil Code section 47(b), plaintiff contends that to trigger the privilege, defendants' "threats of litigation must have been made in good faith with an actual and serious contemplation of an imminent resort to litigation." Id. at 11. Plaintiff argues that defendant's communications do not meet this standard as a matter of law. "UMG's communications were not made in good faith because there is no evidence that UMG intended to engage in 'imminent' litigation. . . . . Although UMG is aware of a multitude of potential 'infringements' of its 'exclusive' license, UMG has yet to commence any litigation to enforce its rights over the disputed Marley recordings. . . . Instead, UMG used the threat of potential litigation to organize a boycott of Rock River's album and otherwise interfere with Rock River's business relationships." Id. at 12.*fn2

In opposition, defendants argue that, by conflating the requirements under the California litigation privilege and the Noerr-Pennington doctrine, plaintiff improperly shifts the burden on the issue of "sham" litigation to defendants and incorrectly asserts that defendants must demonstrate serious contemplation of litigation to invoke NoerrPennington. "No case imposes on Universal an evidentiary burden to make an initial showing that it 'actually intended' or 'seriously contemplated' litigation in order to invoke Noerr-Pennington immunity. . . . . This Court already has recognized this principle, and has concluded in written orders no fewer than three times that the demand letters on which Plaintiff bases its claims are facially immune . . . . Sosa also makes clear that, because demand letters are facially immune, if a plaintiff contends that these letters reflect nothing more than 'an attempt to interfere directly with the business relationships of another,' . . . the plaintiff's recourse is to prove 'sham.'"*fn3 Opp. at 1. Further, plaintiff argues, "to make out 'sham,' Rock River would have to establish as an initial matter than an effort to prove Universal's rights would have been 'objectively baseless in that no reasonable litigant could realistically expect success on the merits," before a Court would consider defendant's subjective intent. Id. at 3, citing Professional Real Estate Investors, Inc., v. Columbia Pictures Industries, Inc., 508 U.S. 49, 60 (1993) ("PRE"). Moreover, even if the Court were to reach the question of defendants' subjective intent, they argue, it would be "Plaintiff's burden to demonstrate that Universal's intent was improper rather than a genuine effort to assert its exclusive rights, and Plaintiff must meet that burden by clear and convincing evidence." Id. at 5.

With respect to the California litigation privilege, defendants assert that summary adjudication on this issue is improper, because it presents an issue of fact that the jury should decide. Id. at 11. Defendants contend that there is sufficient evidence for a jury to find that "litigation was 'contemplated in good faith and under serious consideration.'" Id. at 10-11. Specifically, defendants argue that the "cease and desist letter to Rock River--which expressly threatens litigation--is itself sufficient evidence to permit a jury [to] find for Universal on this element. . . . . But there obviously is other evidence as well, including documentary evidence that many people connected to the album were certain Universal would sue." Id. at 11.

In reply, plaintiff argues that defendants misconstrue the law, and "seek[] to automatically shift the burden to Rock River to prove that UMG's conduct does not merit Noerr-Pennington protection because the threatened litigation was a 'sham' without first showing that there was in fact any anticipated litigation." Reply at 1. Plaintiff argues that this is incorrect, as "the case law makes clear that before a party can invoke Noerr-Pennington, it must first show that there is some underlying petitioning activity, such as a lawsuit or seriously anticipated litigation." Id. at 3. "The core of UMG's counterargument is that any communication cloaked as a 'cease and desist' letter is inexorably related to petitioning activity and therefore automatically entitled to NoerrPennington protection. This would essentially mean that a defendant could always shift the burdens associated with the doctrine via the 'sham' litigation test to the plaintiff merely by camouflaging its unlawful conduct as a threat of litigation." Id. at 2-3.

With respect to the California litigation privilege, plaintiff argues that defendants fail to put forth any evidence to satisfy the good faith and serious contemplation of litigation requirement. Id. at 6-7. "[T]here is no evidence in the record that UMG ever seriously contemplated commencing any actual litigation regarding its 'exclusive' license against anyone, let alone against the entities to which it sent its alleged 'cease and desist' letters." Id. at 8. First, plaintiff argues, "UMG failed to cite a single case to support its unfounded assertion that a cease and desist letter is facially protected under California law." Id. at 7. Moreover, plaintiff argues, the evidence put forth by defendants regarding "what various third parties may have thought about UMG's communications" is irrelevant. Id. at 8. "[U]nder California law, ...

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