Flo and Eddie's Next Victim: Pandora

Anti-SLAPP defense gets farther than expected, but fails in the end ... this time.

In the continuing saga of Flo and Eddie vs. The Digital World, we have a twist. Sure, Flo and Eddie won again - it's not that much of a twist. But the adversary this time - that would be Pandora - came up with a new response, and it didn't go down without a fight.

If you're unfamiliar with the New Litigation Adventures of Older Rock and Rollers, check out my previous posts on the efforts of some , um, let's just say "more mature" rock artists looking for royalties for the digital public performance of pre-1972 sound recordings. If you're one of our regular readers, you'll know that the score to this point is:

Plaintiff Recording Artists or Record Labels: 3

Defendant Sirius XM: 0

The latest case pitted Pandora against Flo and Eddie, in front of U.S. District Judge Phillip Gutierrez in the Central District of California. Since F&E had already won one case in the same court before the same judge, Pandora was obviously looking at long odds. But that didn't stop it from pulling out a couple of novel arguments.

Its main argument was that Flo and Eddie's lawsuit should be dismissed because it violated the California "Anti-SLAPP" Act. For those of you not in the know, in this context "SLAPP" stands for "Strategic Lawsuit Against Public Participation". A "SLAPP" is a frivolous lawsuit filed simply to harass the defendant into silence or inaction. Such suits tend to be filed by "Big Guys" looking to squelch "Little Guys" unable or unwilling to go through the expense of a trial against deep-pocketed opponents. Example: a suit filed by Daniel Snyder, owner of Washington's NFL franchise, against a local D.C. "alt-weekly" newspaper when the paper made fun of him.

Recognizing the unfairness (not to mention obvious impropriety) of such things, almost 30 states have enacted "Anti-SLAPP" statutes looking to discourage SLAPP suits. They take various forms, but generally they permit a defendant to get a SLAPP suit dismissed early in the litigation process, thereby reducing the financial impact of having to take the case all the way through a trial. Some statutes even allow a successful defendant to recover damages, possibly even triple damages.

Full disclosure: I'm on the board of a group called the "Public Participation Project", a coalition of businesses and individuals working to pass federal and state anti-SLAPP legislation. It also seeks to educate the public regarding SLAPPs and the consequences of these types of destructive lawsuits. So I'm a fan of Anti-SLAPP arguments.

But even I raised an eyebrow when Pandora invoked California's Anti-SLAPP law.

Turns out I was right: Judge Gutierrez rejected Pandora's argument. But I was wrong because he found the argument a lot more credible than I'd foreseen.

Resolving an Anti-SLAPP argument in California is a two-step process. The defendant claiming that a suit is SLAPP must first show that the defendant's conduct - the conduct that is the target of the alleged SLAPP - was "in furtherance of the exercise of the constitutional right " of free speech in connection with a public issue or an issue of public interest." If the defendant successfully meets that burden, Step Two kicks in: The case will be dismissed unless the plaintiff can come demonstrate that it will probably prevail on the merits.

Pandora argued that it was exercising the constitutional right of streaming which, supposedly, is "a public issue or issue of public interest". Flo and Eddie responded that streaming isn't really a constitutional right when it involves infringement of copyright. But Judge Gutierrez agreed with Pandora: its streaming activity was "conduct in furtherance of Pandora's right to free speech in connection with an issue of public importance". (Interestingly, on this point Flo and Eddie argued only that Pandora was not engaging in constitutionally protected conduct; they did not argue that the streaming of old music - their music - was not an "issue of public importance". By arguing that the public interest is served because the playing of sound recordings is culturally valuable to society, Pandora effectively blocked any counter-argument from Flo and Eddie. What were they going to say in response - "no, you're wrong, our songs are mindless drivel with no socially redeeming value or importance whatsoever"?)

The first element of California's Anti-SLAPP having been satisfied, the parties moved on to the question of the probability of Flo and Eddie's success on the merits. Since they had already won a very similar case before Judge Gutierrez, Flo and Eddie's chances looked good. But reaching into its bag of novel arguments, Pandora came up with perhaps the only argument available: that Judge Gutierrez's earlier decision had been wrong.

Pandora relied on a very complex argument. It involved a close reading of various California statutes, including particularly a section providing that, once a song is sold to the public, it is "published", at which point state copyright protection ceases to exist because that is when the federal law recognized copyright protection in the given work. Judge Gutierrez somewhat succinctly summarized this argument as follows:

Sound recordings were not afforded federal protection until the 1976 Copyright Act. Thus, Pandora explains that when The Turtles sold their recordings to the public in the 1960s, their California copyright protection expired and these sound recordings dropped into the public domain. Pandora does not limit its argument to public performance rights. When The Turtles placed an album on a music store shelf in the 1960s, the public could freely copy, distribute, and perform those sound recordings, so far as California copyright law was concerned.

Not surprisingly, Judge Gutierrez wasn't ready to conclude that he had been wrong, even if he hadn't addressed this particular argument in his earlier decision. Looking at that argument now, though, he wasn't impressed: "Pandora's theory results in an impotent law that protects only the tiniest class of sound recordings." Even Pandora itself could only "brainstorm" one example of an item that might fit in the "niche class" of pre-1972 recordings that might still be entitled to copyright protection: recordings of never-released historic live performances." To Judge Gutierrez, it was impossible that the California legislature would have written its laws in a way that covered just this tiny sliver of the sound recording universe. Further, reading the law this way would ignore California's "common law", i.e., law derived from judicial precedents, which maintains property rights in these sound recordings.

So change that "3-0" to "4-0" for Flo and Eddie. But maybe put an asterisk by the "4", or at least just use a pencil, not a Sharpie. After all, Pandora still has two bites at the apple in this case alone. They have appealed the rejection of their Anti-SLAPP argument to the United States Court of Appeals for the Ninth Circuit; a decision there could be issued late this year or early 2016. And the proceedings before Judge Gutierrez will continue, where Pandora can file a "regular" motion to dismiss, raising more extensive or different arguments, to the extent any new legal theories or facts can be generated.

As always, stay tuned.