SA Music LLC v. Apple, Inc

• Court: District Court, N.D. California
• Decided: June 2, 2022
• Docket: 3:20-cv-02146
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 SA MUSIC LLC, et al., Case No. 3:20-cv-02146-WHO Re: Dkt. Nos. 176, 182 Plaintiffs, 8 Case No. 3:20-cv-02794-WHO v. Re: Dkt. Nos. 176, 182 9 Case No. 3:20-cv-02965-WHO 10 APPLE, INC, et al., Re: Dkt. Nos. 161, 167 Defendants. 11 ORDER ON (1) MOTION FOR LEAVE TO FILE A MOTION FOR 12 RECONSIDERATION, (2) MOTION TO CERTIFY FOR INTERLOCUTORY 13 APPEAL, AND (3) CONSOLIDATION FOR TRIAL 14

15 I recently ruled on the parties’ motions for partial summary judgment in these related 16 copyright suits. As relevant here, I granted defendant Apple, Inc.’s (“Apple”) motion for 17 summary judgment that its alleged infringement was not willful and denied the plaintiffs’ motion 18 for summary judgment that it was. The plaintiffs move for leave to file a motion for 19 reconsideration of the willfulness determination and about my determination that they had not 20 demonstrated ownership as a matter of law of several of the subject compositions. In the 21 alternative, they move to certify the willfulness determination for appeal. Both motions are 22 DENIED. And, with the cases moving forward in this court as is, I will CONSOLIDATE them 23 for trial.1 24 I. MOTION FOR LEAVE TO FILE A MOTION FOR RECONSIDERATION 25 The plaintiffs move for leave to file a motion to reconsider several aspects of the Prior 26 Order. In particular, they challenge the determination on willfulness and the ownership of seven 27 1 of the recordings at issue. 2 Civil Local Rule 7-9 governs motions for reconsideration of interlocutory orders prior to 3 “the entry of a judgment adjudicating all of the claims and the rights and liabilities of all the 4 parties in a case.” Civ. L. R. 7-9(a). Under that rule, “any party may make a motion before a 5 Judge requesting that the Judge grant the party leave to file a motion for reconsideration of any 6 interlocutory order on any ground set forth in Civil L.R. 7-9(b). No party may notice a motion for 7 reconsideration without first obtaining leave of Court to file the motion.” Id. Under Rule 7-9(b),

8 The moving party must specifically show reasonable diligence in bringing the motion and one of the following: (1) That at the time of the motion for leave, a material difference in 9 fact or law exists from that which was presented to the Court before entry of the interlocutory order for which reconsideration is sought. The party also must show that in 10 the exercise of reasonable diligence the party applying for reconsideration did not know 11 such fact or law at the time of the interlocutory order; or (2) The emergence of new material facts or a change of law occurring after the time of such order; or (3) A manifest 12 failure by the Court to consider material facts or dispositive legal arguments which were presented to the Court before such interlocutory order. 13 Id. 7-9(b). 14 Even if a motion for leave to file a motion to reconsider does not satisfy Rule 7-9, district 15 courts have the inherent authority to modify interlocutory orders prior to entry of final judgment. 16 Amarel v. Connell, 102 F.3d 1494 (9th Cir. 1996), as amended (Jan. 15, 1997). But generally, 17 “[r]econsideration is appropriate if the district court (1) is presented with newly discovered 18 evidence, (2) committed clear error or the initial decision was manifestly unjust, or (3) if there is 19 an intervening change in controlling law” and any other circumstances warranting reconsideration 20 would be “highly unusual.” Sch. Dist. No. 1J, Multnomah Cty., Or. v. ACandS, Inc., 5 F.3d 1255, 21 1263 (9th Cir. 1993). 22 A. Willfulness 23 The plaintiffs first argue that the determination about willfulness in the Prior Order should 24 be reconsidered due to failure to consider (1) “facts properly” and (2) legal arguments. See 25 Motion for Leave to File a Motion to Reconsider (“Recon. Mot.”) [Dkt. No. 182] 3–20. 26 i. Issues of Fact 27 Most of the plaintiffs’ factual argument is improper for a motion of this sort; it is an 1 attempt to relitigate the summary judgment dispute due to disagreement with my analysis and 2 outcome. Although the plaintiffs attempt to frame their argument as a “failure to consider” 3 evidence, all of the things they point to are things the Prior Order did consider. To take one 4 example, the plaintiffs argue that the plaintiffs submitted takedown notices and that “[t]he Court 5 failed to properly consider that evidence.” Id. 3. But the Prior Order did consider that evidence. 6 See Prior Order 13–16. The plaintiffs just disagree with the analysis—perhaps that is why they 7 couch their language as a failure to “properly” consider—which is an improper use of a motion 8 like this. See Civ. L.R. 7-9(b). Indeed, most of the plaintiffs’ argument is the same in substance 9 of what I considered and rejected at summary judgment, which is also improper. See Civ. L.R. 7- 10 9(c) (“No motion for leave to file a motion for reconsideration may repeat any oral or written 11 argument made by the applying party in support of or in opposition to the interlocutory order 12 which the party now seeks to have reconsidered. Any party who violates this restriction shall be 13 subject to appropriate sanctions.”). 14 For the same reasons, I reject the plaintiffs’ argument that the “chains of title are not 15 complicated,” that the “size of the iTunes Store is not relevant,” that the compositions here are 16 “iconic and well-known,” and that holding otherwise resolved factual inferences in Apple’s favor. 17 Recon. Mot. 12–13. The Prior Order adequately addressed those issues. Prior Order 10 18 (discussing chains of title and the size of the store), 16 (discussing argument about well-known 19 works).2 20 Nor did I grant summary judgment based on the plaintiffs’ failure to produce information 21 that Apple shielded with privilege objections. See Recon Mot. 5 (so arguing). In essence, the 22 plaintiffs argue that Apple shielded whether the rates of takedown notices were abnormal and I 23 faulted the plaintiffs for not producing that evidence. Id. A fair reading of the Prior Order shows 24 otherwise. The only privileged information I discussed was Apple employees’ discussions with 25

26 2 The plaintiffs appear to argue, as I understand it, that when I described “compositions” at various places rather than “recordings,” it made a difference to the substantive analysis. Recon. Mot. 6–7. 27 As everyone agrees, the rights at issue here are to the compositions and they are embodied in 1 legal counsel about takedown notices; as I explained, “[m]y decision is not based on any 2 interactions with Apple’s counsel, nor do I grant it based on a lack of evidence that Apple is 3 shielding behind a privilege.” Prior Order 14 n.8. The plaintiffs need not have relied on those 4 privileged communications to meet their burden to show genuine disputes of material fact. They 5 attempt to show otherwise through citations of deposition testimony to which Apple objected, but 6 every one of them was about conversations with legal counsel, not about raw numbers. See 7 Recon. Mot. 4–5. The plaintiffs have not, for instance, pointed to an interrogatory requesting 8 these numbers themselves that was objected to on privilege grounds. And, in all events, this issue 9 was one aspect of one consideration among many about why the plaintiffs had not met their 10 burden just on this specific matter. See Prior Order 13–15. 11 The plaintiffs also take issue with the Prior Order’s analysis of the “exclusive CPA list.” 12 Their point, though, is not material. The thrust of that portion of the Order was that the plaintiffs 13 relied on the statistics from that function to show willfulness and I explained why that evidence 14 did not defeat Apple’s motion for summary judgment. See Prior Order 16–17. It is immaterial 15 whether artists “link themselves” to distributors or whether Apple does so, see Recon Mot. 10 16 (objecting on this basis), for purposes of that analysis. The core point is the same: it does not 17 transform Apple’s reliance on contractual representations and its notice-and-takedown system into 18 unreasonable reliance. See Prior Order 16–17. And although the plaintiffs object that the Prior 19 Order “never mentioned or considered” the number of tracks hidden by the program, see Recon 20 Mot. 11, that was precisely what it considered, see Prior Order 16–17. 21 The Prior Order did, however, make one misstatement of fact that I will correct here. The 22 Prior Order (correctly) explained why the fact that Apple did not institute more rigorous 23 backgrounds checks on iTunes Store distributors did not negate summary judgment of non- 24 willfulness. See Prior Order 12–13. In a concluding sentence, I wrote that “Apple was not 25 willfully infringing merely because it did not exhaustively background check the hundreds of 26 thousands of uploaders on its store.” Id. The plaintiffs object to that figure because the real 27 number was never placed into the summary-judgment record and is, they surmise, likely quite a bit 1 into the record, but the Prior Order should not have equated them with the number of accounts 2 authorized to upload. The substantive point of that analysis, however, remains unchanged. What 3 is relevant is not the precise number of accounts, it is the size of the store. That incorrect sentence 4 could, to make the same point, have read, “Apple was not willfully infringing merely because it 5 did not exhaustively background check the many accounts uploading hundreds of millions of 6 compositions per month to its store.” In the version of the order I issue with redactions removed, 7 see Dkt. No. 190, I will exercise my discretion to modify the order to that limited extent.3 See City 8 of Los Angeles, Harbor Div. v. Santa Monica Baykeeper, 254 F.3d 882, 889 (9th Cir. 2001) (“[A]s 9 long as a district court has jurisdiction over the case, then it possesses the inherent procedural 10 power to reconsider, rescind, or modify an interlocutory order for cause seen by it to be 11 sufficient.”). 12 ii. Issues of Law 13 Most of the plaintiffs’ legal grounds for reconsideration are, again, attempts to relitigate 14 what was already litigated. Contrary to the plaintiffs’ arguments, see Recon. Mot. 13–19, the 15 Prior Order adequately explained that it faithfully applied, and did not conflict with, the Ninth 16 Circuit’s decisions in VHT, Inc. v. Zillow Grp., Inc., 918 F.3d 723 (9th Cir. 2019), Ventura 17 Content, Ltd. v. Motherless, Inc., 885 F.3d 597, 614 (9th Cir. 2018), and Unicolors, Inc. v. Urban 18 Outfitters, Inc., 853 F.3d 980, 991 (9th Cir. 2017). There is no need to further address here why 19 those decisions do not compel a different conclusion. 20 Nor did the Prior Order heighten the willfulness standard by omitting reckless disregard, as 21 the plaintiffs argue. See Recon. Mot. 13–19. To the extent they read a few stray phrases to omit 22 recklessness as a sufficient mens rea, the Prior Order made clear that either knowledge, reckless 23 disregard, or willful blindness was sufficient to show willfulness. See Prior Order 7 (laying out 24 willfulness standard); see also id. 7–20 (applying that standard to the facts). 25 I also reject the plaintiffs’ argument that “[m]ost critically, the Order conflicts with the 26 Ninth Circuit’s decision in Greg Young Publishing, Inc. v. Zazzle, Inc., 785 Fed. Appx. 417 (9th 27 1 Cir. 2019).” Recon. Mot. 14. That case is consistent with the Prior Order. There, the Ninth 2 Circuit explained (citing Unicolors) that “[r]ecklessness can constitute willful infringement, and 3 can be established by an infringer’s knowing reliance on obviously insufficient oversight 4 mechanisms.” Zazzle, 785 F. App’x at 418. For the reasons explained in the Prior Order, Apple’s 5 oversight mechanisms were not “obviously insufficient” and it did not “knowing[ly] rel[y]” on 6 them despite any such insufficiency. (In fact, those mechanisms contained a straightforward way 7 to challenge infringing content, a way the plaintiffs did not make use of.) Unlike in Zazzle, Apple 8 has not “relied on a user-certification process it knew produced false certifications,” id., and, 9 anyway, it put in place a system to prevent sales of unauthorized material (a system the plaintiffs 10 never used). 11 B. Ownership 12 The plaintiffs also challenge the Prior Order’s analysis of ownership of seven of the 13 copyrights. Recon. Mot. 20–21. 14 Their argument about six of the compositions4 is that the purported previous owners have 15 never disputed that the rights transferred to the plaintiffs (and, when it comes to three, that any 16 such claim would be time-barred). But as the Prior Order explained, the silence of alleged 17 previous owners is still not sufficient to show a transfer of ownership as a matter of law—the 18 plaintiffs had to introduce evidence of ownership to meet their burden, not just the suggestion that 19 parties not represented in the suit have not spoken up. See Prior Order 31. 20 On the seventh composition5, I explained that “the plaintiffs do not point to any 21 termination sent to Mills, they point to a termination notice sent to a company called Belwin 22 Willis Publishing by Harold Arlen. See Dkt. No. 134-2 at 151–53. So there is no evidence that, if 23 Mills had the rights to it, they were terminated.” Prior Order 31. The plaintiffs now argue that 24 they “did provide this evidence” and cite a declaration that Mills merged with Belwin to form 25

26 4 As Long As I Live, Kickin’ The Gong Around, Minnie the Moocher’s Weddin’ Day, Happy As the Day is Long, Raisin’ the Rent, and Stormy Weather. 27 1 Belwin-Mills. Id. They did include in their exhibits a declaration that appears to support the 2 existence of that merger. But neither their motion nor their reply brief raised this as an argument. 3 At summary judgment, district courts do not “scour the record in search of” facts; we rely on 4 parties to “identify with reasonable particularity the evidence” in support of their positions. 5 Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996) (internal quotation marks and alteration 6 omitted). Cf. United States v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991) (“Judges are not like 7 pigs, hunting for truffles buried in [records].”). That is all the truer when it comes to the summary 8 judgment motions here, which generated thousands of pages of records about the complicated 9 chains of title to dozens of compositions. The plaintiffs’ failure to raise this at the time also 10 deprived Apple of a fair opportunity to respond. They will have to present this evidence to the 11 jury at trial if Apple does not concede the point. 12 The motion for leave to file a motion to reconsider is DENIED. 13 II. MOTION TO CERTIFY FOR INTERLOCUTORY APPEAL 14 The plaintiffs move to certify my order on summary judgment for interlocutory appeal. 15 See Motion to Certify a Question for Appeal (“Appeal Mot.”) [Dkt. No. 176].6 16 Under 28 U.S.C. § 1292(b), “[w]hen a district judge, in making in a civil action an order 17 not otherwise appealable under this section, shall be of the opinion that such order involves a 18 controlling question of law as to which there is substantial ground for difference of opinion and 19 that an immediate appeal from the order may materially advance the ultimate termination of the 20 litigation, he shall so state in writing in such order.” Then, the court of appeals may either permit 21 the appeal or not. See 28 U.S.C. § 1292(b). Each of these requirements—(1) a controlling 22 question of law, (2) substantial grounds for difference of opinion, and (3) materially advancing the 23 termination of the litigation—must be met to certify a question for interlocutory appeal. See 24 ICTSI Oregon, Inc. v. Int’l Longshore & Warehouse Union, 22 F.4th 1125, 1130 (9th Cir. 2022). 25 Here, the test for interlocutory appeal is not satisfied. First, there is no “controlling 26 question of law” that the plaintiffs have identified that is appropriate to send to the Ninth Circuit 27 1 now. The plaintiffs’ motion was murky about what legal issue is allegedly at play, it just argued 2 that “the Orders deciding that Apple’s infringements were non-willful as a matter of law patently 3 involve a controlling question of law because they materially affect the damages available to 4 Plaintiffs at trial (reduce them by eighty percent) and deprive Plaintiffs of a jury trial on the 5 question of whether Apple’s continued sale of the Distributors’ sound recordings despite actual 6 knowledge of unrebutted takedown notices covering thousands of tracks was a substantial and 7 unjustified risk of copyright infringement known to Apple.” Appeal Mot. 5. But the willfulness 8 determination in the Prior Order was just an application of settled law to these particular facts, not 9 the sort of decision amenable to fast-tracked appellate review. Much of their motion, again, was 10 an attempt to relitigate what occurred at summary judgment. 11 Perhaps recognizing this, and in response to Apple’s argument that they had not identified 12 an issue of law, the plaintiffs pointed to two in their reply brief. See Reply ISO Mot. (“Appeal 13 Reply”) [Dkt. No. 188]. The first is “[w]hether the Court applied the correct standard for 14 recklessness when it held that as a matter of law, in order to have the requisite reckless state of 15 mind for willfulness, a store owner must actually know or disregard ‘an almost certain fact that 16 [the Defendant Distributors’] entire catalogs were infringing.’” Id. (citing Prior Order 15). The 17 plaintiffs mischaracterize the Prior Order. The portion the plaintiffs reference was, in context, 18 responding to a particular piece of evidence the plaintiffs introduced to attempt to show 19 willfulness. The plaintiffs’ theory depended on it being sufficiently obvious that the Distributor 20 Defendants were serial infringers; in support, they argued that various notices that specific works 21 were subject to copyright could show this—the Order therefore discussed the defendants’ “entire 22 catalogues.” Consequently, that portion of the Order just made the point several times that these 23 individual notices did not overcome the blanket rights representations that Apple required. Fairly 24 read, the Prior Order did not hold or imply that willfulness about an entire catalogue would have 25 any relevance outside of that narrow argument. And the “actually know or disregard” language is 26 just the standard willfulness mens rea. See, e.g., Louis Vuitton Malletier, S.A. v. Akanoc Sols., 27 Inc., 658 F.3d 936, 944 (9th Cir. 2011). 1 arguing that a controlling question of law is “[w]hether the Court erred in its holding that Apple’s 2 use of a combination of contractual representations of rights and a notice- and-takedown system is 3 ‘fatal’ to a claim of willful infringement as a matter of law.” Appeal Reply 1. The plaintiffs again 4 mischaracterize the Prior Order in several ways. I did not hold that a combination of rights and a 5 notice-and-takedown system would always demonstrate a lack of willfulness, I held that Apple’s 6 contractual guarantees and takedown system did. And, in fact, not even that: I held that Apple’s 7 reliance on the representations and its notice-and-takedown system plus the enormous number of 8 recordings on the iTunes Store plus the potential complexity of the chains of title to compositions 9 did so. And, still more, all I held was that this met Apple’s initial burden at summary judgment, 10 leaving open the possibility that appropriate evidence could show otherwise. Then I held that the 11 plaintiffs’ particular evidence did not negate Apple’s. 12 The plaintiffs have, consequently, not identified any true question of law, just an 13 application of a settled legal standard to particular facts. None of the plaintiffs’ cases certified a 14 question on facts like these. See, e.g., S.E.C. v. Mercury Interactive, LLC., No. 5:07-CV-02822- 15 JF, 2011 WL 1335733, at *3 (N.D. Cal. Apr. 7, 2011) (granting leave to appeal after novel 16 construction of statutory provision resulting in dismissal of claim); ITC Textile, Ltd. v. Wal-Mart 17 Stores, Inc., No. 208CV07422FMCJCX, 2009 WL 10671458, at *6 (C.D. Cal. Mar. 31, 2009) 18 (granting leave to appeal copyright claim after dismissing a claim in its entirety on contested 19 interpretation of treaties). 20 For the reasons explained, the plaintiffs have identified no controlling question of law that 21 warrants expedited appellate review, which could end the analysis. I also note, however, that the 22 plaintiffs have failed to show that there are substantial grounds for a difference of opinion. I have 23 already explained that none of the Ninth Circuit’s decisions is in tension with mine—indeed, I 24 continue to conclude that the opposite is true. Nor have the plaintiffs identified any non-binding 25 decision that conflicts with mine. And that makes sense because, again, the Prior Order was an 26 application of settled law to specific facts. To get around this, the plaintiffs attempt to show 27 grounds for a difference of opinion by relying on the oral tentative ruling I gave at the hearing, 1 || jury. Tentative rulings are, of course, tentative. They are given to focus the parties on particular 2 || issues. They are not generally the result of a completed deliberative process that results from fully 3 elaborating legal reasoning. The plaintiffs have not pointed to any case in which certification 4 || occurred based on a difference from a tentative to a final opinion. And for good reason. 5 The motion to certify for interlocutory appeal is DENIED. 6 || IN. CONSOLIDATION 7 The plaintiffs previously moved to consolidate these cases for trial and I determined that 8 the issue would be addressed after summary judgment to understand the state of the cases better. 9 See Dkt. No. 100. Now that summary judgment has occurred, I conclude that consolidation is 10 || warranted. These cases share many “common question[s] of law [and] fact.” Fed. R. Civ. P. 11 42(a). Although Apple opposes consolidation, it does not dispute that this test is met. Its primary 12 || concern is that the jury will use evidence from one case to improperly find liability in another. I 5 13 am confident, however, that the parties and I can craft jury instructions to avoid that outcome and 14 || eliminate any prejudice to Apple. Given the heavy overlap between these cases, efficiency and 3 15 || economy gains outweigh Apple’s concerns. a 16 IT IS SO ORDERED. 5 17 || Dated: June 2, 2022

19 . William H. Orrick 20 United States District Judge 21 22 23 24 25 26 27 28