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`NOT FOR PUBLICATION
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`UNITED STATES DISTRICT COURT
`DISTRICT OF NEW JERSEY
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`ARTHUR SHERIDAN, an individual, and
`BARBARA SHERIDAN, an individual,
`individually and on behalf of all others
`similarly situated,
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`Plaintiffs,
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`OPINION
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`v.
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`Civ. No. 15-cv-7574 (WHW)(CLW)
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`1HEARTMEDIA, 1NC., a Delaware
`corporation,
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`Defendant.
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`Walls, Senior District Judge
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`In this putative class action, the owners of sound recordings made before 1972 bring
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`copyright infringement and unjust enrichment claims under New Jersey law against Defendant
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`iHeartMedia for broadcasting their recordings without receiving authorization or compensating
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`the recordings’ owners. Defendant moves to stay this case pending the resolution of three similar
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`actions currently before the United States Courts of Appeals for the Second, Ninth, and Eleventh
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`Circuits. This case is related to another case Plaintiffs have filed in this court against defendants
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`Sirius XM Radio, Inc. and Pandora Media, Inc. See Sheridan v. Sirius XM Radio, Inc. et al, No.
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`15-cv-7576 (D.N.J. filed Oct. 19, 2015). Sirius XM Radio and Pandora have also requested a
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`stay pending the Second, Ninth, and Eleventh Circuits’ rulings. Decided without oral argument
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`under Fed. R. Civ. P. 78(a), Defendant iHeartMedia’s motion is granted.
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`BACKGROUND
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`For the purposes of this opinion, the Court assumes the truth of the following allegations
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`in the complaint. ECF No. 1.
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`I.
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`The Parties
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`Plaintiffs Arthur and Barbara Sheridan are citizens of Illinois who own the intellectual
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`property and contract rights to master sound recordings created in the 1 950s and 1 960s, when
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`Arthur Sheridan owned and operated record companies specializing in doo-wop, jazz, and
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`rhythm and blues music (the “Pre-1972 Recordings”). Id. ¶J 2, 11-12, 15. As the owners of these
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`Pre-1972 Recordings, Plaintiffs market the Recordings and receive revenue from third parties in
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`exchange for licenses to publicly perform them. id. ¶ 18-19.
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`Defendant iHeartMedia, Inc., which operates under the name “iHeartRadio,” id. ¶ 24, is a
`Delaware corporation with its principal place of business in Texas. Id. ¶J 13, 24. iHeartMedia
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`owns “hundreds” of terrestrial (AM and FM) radio stations, streams the broadcasts of these
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`stations on the internet, and also offers internet radio services to the public in the form of free,
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`non-subscription, customizable music streaming “stations.” Id. ¶J 24-25. iHeartMedia generates
`revenue in part by selling advertising on its terrestrial and online radio stations. Id. ¶ 32.
`iHeartMedia regularly broadcasts the Plaintiffs’ Pre-1972 Recordings on its terrestrial and online
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`radio stations, which reach listeners throughout the United States, including in New Jersey. Id. ¶
`31-33. illeartMedia makes reproductions of these Recordings for the purposes of “archiving,
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`advertising, buffering, streaming, and otherwise maintaining, accessing, and performing” them,
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`Id. ¶ 28, but has not licensed the Recordings from Plaintiffs or paid them royalties to broadcast or
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`reproduce the Recordings. Id. ¶ 34.
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`II.
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`Federal and state copyright protection of sound recordings
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`The federal Copyright Act grants the owner of copyrights in sound recordings the
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`exclusive right to authorize the reproduction, distribution of copies, and performance of the
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`recordings “by means of a digital audio transformation.” 17 U.S.C. § 106. Federal law “provides
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`an automatic license and royalty rate for digital public performances of sound recordings created
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`on or afier February 15, 1972,” ECF No. ¶ 21 (citing 17 U.S.C. § 112(e), 1 14(d)(2), (f), (g)(2)),
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`but this system does not extend any copyright protections to the owners of rights in recordings
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`created before February 15, 1972. Id.; see also 17 U.S.C. § 301(c).’
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`The Copyright Act preempts state common law protections for copyrighted works but
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`does not preempt the state regulation of Pre-1972 Recordings. ECF No. 1 ¶ 4; 17 U.S.C. §
`301(a), (c). Plaintiffs allege that New Jersey “state law prohibits the unauthorized reproduction
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`and performance of pre-1972 sound recordings.” ECF No. 1 ¶ 1. Defendant, however, claims that
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`until a “recent wave of litigation,” no court had recognized “anything close” to such a protection
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`since 1937, and that it is a “100-year-old practice of the broadcasting industry” to reproduce and
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`perform Pre-1972 Recordings without receiving authorization or paying royalties to the
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`Recording owners. Def. Mot. Stay, ECF No. 8 at 1, 5 (citing Waring v. WDAS Broad. Station,
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`Inc., 194 A. 631 (Pa. 1937)).
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`Importantly, sound recordings are considered distinct from “musical works,” i.e., musical notes
`and lyrics. See White-Smith Music Pub. Co. V. Apollo Co., 209 U.S. 1(1908). The Copyright Act
`gives owners of musical works the exclusive right to authorize all public performances and
`displays of musical works without limiting its protection to performances “by means of a digital
`audio transmission,” 17 U.S.C. § 106, and protects musical works created before 1972. For a
`detailed history of the 1971 amendment to the Copyright Act that first extended federal copyright
`protection to sound recordings, see Def. Mot. Dismiss, ECF No. 9 at 2-5.
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`III.
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`The pending “Flo & Eddie” cases
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`The “recent wave of litigation” began in 2013, when plaintiff Flo & Eddie, Inc., the
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`owner of the master Pre-1972 Recording for the song “Happy Together” by the rock band the
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`Turtles, filed putative class actions against online broadcaster Sirius XM Radio, Inc. in the
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`Central District of California, Southern District of New York, and Southern District of Florida.
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`See Flo & Eddie, Inc. v. Sirius XMRadio, Inc., No. 13-cv-5963, ECF No. 1 (C.D. Cal. Aug. 6,
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`2013); Flo & Eddie, Inc. v. Sirius XliRadio, Inc., No. 13-cv-5784, ECF No. 1 (S.D.N.Y. Aug.
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`16, 2013) (“Flo & Eddie New York”); Flo & Eddie, Inc. v. Sirius XIi’IRadio, Inc., No. 13-cv-
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`23 182, ECF No. 1 (S.D. Fla. Sept. 3,2013) (“Flo & Eddie Florida”). In 2014, Flo & Eddie filed
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`another action in the Central District of California against online broadcaster Pandora Media,
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`Inc. See Flo & Eddie, Inc. v. Pandora Media, Inc., No. 14-cv-7648 (C.D. Cal. Oct. 2, 2014)
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`(“Fto & Eddie California”). The actions assert copyright infringement and unjust enrichment
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`claims against the defendants under New York, Florida, and California law, respectively, for
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`broadcasting and reproducing Pre-1972 Recordings without the authorization of the Recording
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`owners. See ECF No. 8 at 1.
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`Courts have reached differing conclusions about Flo & Eddie’s claims under the laws of
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`the various states. The Southern District of New York denied Sirius XM Radio’s motion for
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`summary judgment and found, on an issue of first impression, that New York common law
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`provides Pre-1972 Recording owners with the exclusive rights to reproduce and publicly perform
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`their Recordings. Flo & Eddie, Inc. v. Sirius XlvlRadio, Inc., 62 F. Supp. 3d 325, 338 (S.D.N.Y.
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`2014), appeal pending, No. 15-1164 (2d Cir.). The Central District of California granted
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`summary judgment against Sirius XM Radio and denied a motion to dismiss filed by Pandora,
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`finding that a California statute governing Pre-1972 Recordings provides owners with the
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`exclusive right to publicly perform, but not to reproduce, their Recordings. flo & Eddie, Inc. v.
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`Pandora Media, Inc., 2015 U.S. Dist. LEXIS 70551, at *18.. 29 (C.D. Cal. Feb. 23, 2015),
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`appeal pending, No. 15-55287 (9th Cir.); Flo & Eddie, Inc. v. Sirius X?vlRadio, Inc., 2014 U.S.
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`Dist. LEXIS 139053, at *627 (C.D. Cal. Sept. 22, 2014). The Southern District of Florida,
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`however, granted summary judgment for Sirius XM Radio. The court held that that Florida
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`common law does not provide Pre-1972 Recording owners with exclusive rights to public
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`performance of their Recordings and that the “buffer” copies of Recordings alleged in the
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`complaint do not constitute unlawful reproductions, and declined to hold whether Florida
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`common law provides Pre-1972 Recording owners with exclusive rights to reproduce their
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`Recordings. Flo & Eddie, Inc. v. Sirius XM Radio, inc., 2015 WL 3852692, at *5..6 (S.D. Fla.
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`June 22, 2015), appeal pending, No. 15-13 100 (11th Cir.). Appeals of these decisions are
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`pending before the Second, Ninth, and Eleventh Circuits, respectively.
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`IV.
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`The Sheridan actions
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`On October 19, 2015, Plaintiffs Richard and Barbara Sheridan filed the complaint in this
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`action, raising claims under New Jersey common law similar to those asserted by Flo & Eddie
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`under New York, California, and Florida law. In the complaint, brought in federal court under
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`the Class Action Fairness Act of 2005, 28 U.S.C. § 1322(d), because Plaintiffs claim at least one
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`class member is of diverse citizenship from the defendants, there are more than 100 class
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`members, and the aggregate amount in controversy exceeds $5,000,000, ECF No. 1 ¶ 8,
`Plaintiffs allege that “New Jersey common law protects Pre-1972 Recordings from being copied,
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`distributed, or otherwise exploited without license or authorization,” Id. ¶ 23, that iHeartMedia
`infringed New Jersey common law copyrights of Pre-1972 Recording owners and engaged in
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`unfair competition by “duplicating the Pre-1972 Recordings without authorization from Plaintiffs
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`and Class Members, and publicly performing those Recordings to its users for its own gain,” Id.
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`¶ 48, and that iHeartMedia was unjustly enriched by using the Pre-1972 Recordings to sell
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`advertising on its broadcasts. Id. ¶ 52.
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`Plaintiffs have filed eight similar actions in district courts across the country, including
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`the parallel action against Sirius XM Radio and Pandora in this Court.2 The Sheridans’ actions in
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`the Southern District of New York and Central District of California have been stayed pending
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`resolution of the Flo & Eddie cases currently on appeal. ECF No. 8 at 1-2 (citing Sheridan v.
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`SiriusXMRadiolnc.,No. 3:15-cv-04081-VC, ECFNo. 32 (N.D. Cal. Oct. 28, 2015); Sheridan
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`v. Sirius XMRadio, Inc., No. l:15-cv-07056-GHW, ECF No. 33 (S.D.N.Y. Oct. 28, 2015);
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`Sheridan v. iHeartliedia, Inc., No. 1:15-cv-06747-GBD, ECF No. 23 (S.D.N.Y. Oct. 13, 2015),
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`ECF No. 23; Sheridan v. iHeartMedia, Inc., No. 2:15-cv-04067-PSG-GJS, ECF No. 41 (C.D.
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`Cal. Oct. 13, 2015)).
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`V.
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`ifleartMedia’s motion to dismiss and motion to stay
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`On December 29, 2015, iHeartMedia filed a motion to dismiss this action arguing that (a)
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`New Jersey common law does not protect “published” works like those in question here, (b) New
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`Jersey common law does not grant exclusive public performance rights in published sound
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`recordings or bar the reproductions at issue here, and (c) any state law obligation to negotiate
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`licenses to broadcast sound recordings would be preempted by federal law. Def. Mot. Dismiss,
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`ECFNo. 9.
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`2 See also Sheridan v. iHeartMedia, Inc., No. 1:15-cv-09229-JJT-MM (N.D. Ill. filed Oct. 19,
`2015); Sheridan v. Sirius XvIRadio, Inc., No. 1:15-cv-09236-EEB-SC (N.D. Ill, filed Oct. 19,
`2015); Sheridan v. iHeartMedia, Inc., No. 1:15-cv-00160-LJA (M.D. Ga. filed Sept. 30, 2015);
`Sheridan v. Sirius XliRadio, Inc., No. 3:15-cv-04081-VC (N.D. Cal. filed Sept. 8,2015);
`Sheridan v. Sirius XliRadio, Inc., No. l:15-cv-07056-GHW (S.D.N.Y. filed Sept. 8,2015);
`Sheridan v. iHeartliedia, Inc., No. l:l5-cv-06747-GBD-SN (S.D.N.Y. filed Aug. 25, 2015);
`Sheridan v. iHeartMedia, Inc., No. 2:15-cv-04067-PSG-GJS (C.D. Cal. filed May 29, 2015).
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`The same day, iHeartMedia filed a motion to stay this action pending the issuance of final
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`mandates by the Second, Ninth, and Eleventh Circuits in the Flo & Eddie cases. ECF No. 8.
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`iHeartMedia argues that a stay may help simplify issues for this Court, will not impose an undue
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`burden on the Sheridans, and will not unduly delay proceedings or disrupt a case schedule. Id. at
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`2. Alternatively, iHeartMedia requests that the Court issue a stay pending the Second Circuit’s
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`ruling only. Id. at 5-6.
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`Plaintiffs filed an opposition to Defendant’s motion to stay on february 5, 2016. ECF No.
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`18. Defendant filed a reply brief in further support on february 19, 2016. ECF No. 19.
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`STANDARD OF REVIEW
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`A district court has broad discretion to stay proceedings. Bechtel Corp. v. Laborers ‘mt ‘1
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`Union, 544 f.2d 1207, 1215 (3d Cir. 1976). “The power to stay is incidental to the power
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`inherent in every court to dispose of cases so as to promote their fair and efficient adjudication.”
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`United States v. Breyer, 41 F.3d 884, 893 (3d Cir. 1994) (citing Gold v. Johns-Manville Sales
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`Corp., 723 F.2d 1068, 1077 (3d Cir. 1983)). Courts have considered many factors when ruling
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`on motions for a stay, including “(1) whether a stay will simplify issues and promote judicial
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`economy, (2) the balance of harm to the parties, and (3) the length of the requested stay.” Glades
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`Pharm., LLC v. Call, Inc., 2005 WL 563726 at *8 (E.D. Pa. Mar. 9, 2005); see also Aldshev v.
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`Kapustin, 23 F. Supp. 3d 440, 446 (D.N.J. 2014); Ford Motor Credit Co. v. Chiorazzo, 529 F.
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`Supp. 2d 535, 541-42 (D.N.J 2008).
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`The same day, defendants Sirius XM Radio and Pandora filed motions to stay the parallel
`action against them in this Court pending the Flo & Eddie rulings. 1:1 5-cv-7576, ECF No. 16
`(Sirius Xlvi Radio), ECf NO. 17 (Pandora).
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`DISCUSSION
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`The Court will exercise its discretion to stay this matter because it finds that the requested
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`stay will cause minimal harm to the parties, will be of a short duration, will simplify issues and
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`promote judicial economy.
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`Most importantly, the Court finds that staying this case until the Second, Ninth, and
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`Eleventh Circuits have ruled on related cases will more likely than not simplify the issues
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`presented here and promote judicial economy. While the parties here are not involved in the flo
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`& Eddie cases, the defendants in the Sheridans’ parallel action in this Court, Sirius XM Radio
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`and Pandora, are. See No. 1 5-cv-5756. The Sheridan Plaintiffs and Defendant iHeartMedia are
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`also involved in related actions in the Southern District of New York and the Central District of
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`California that have already been stayed pending resolution of the Flo & Eddie actions.4 Judicial
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`economy weighs in favor of coordinating the schedules of the two cases pending before this
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`Court with each other, the cases between the parties in other districts, and the Flo & Eddie cases
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`involving the same defendants.
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`Additionally, although Plaintiffs are correct that the Flo & Eddie decisions “will not bind
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`this Court or dispose of Plaintiffs’ New Jersey claims” because they involve issues of New York,
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`“Plaintiffs claim that the Northern District of Illinois, where they have also filed actions against
`iHeartMedia, Sirius XM Radio, and Pandora, “summarily rejected” similar requests for stays by
`defendants. ECF No. 18 at 3. Plaintiffs imply that this is significant because, unlike their actions
`in the Southern District of New York and Central District of California, neither the Northern
`District of Illinois actions nor the actions in this Court involve claims under New York,
`California, or Florida law that will be directly addressed by the forthcoming Flo & Eddie
`decisions. Defendant clarifies that, although the Northern District of Illinois did not grant the
`stays, it explained that it would not rule on the pending motions to dismiss until afier the Second
`Circuit published its Flo & Eddie New York decision, indefinitely postponed a case management
`conference, and ordered the parties to file supplemental briefing afier the Fto & Eddie New York
`decision is released. ECF No. 19 at 2 n.2 (citing Sheridan v. iHeartMedia, No. 1:1 5-cv-09229
`(N.D. Iii. Jan. 7, 2016)). A formal stay would coordinate the schedules of this Court’s cases with
`those of the informally stayed Northern District of Illinois cases.
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`California, and Florida state law, ECF No. 18 at 1, a district court may stay a case “to abide the
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`outcome of another which may substantially affect it or be dispositive of the issues.” Bechtel
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`Corp., 544 F.2d at 1216 (emphasis added); see also Leyva v. CertUled Grocers of California,
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`Ltd., 593 F.2d 857, 864-64 (9th Cir. 1979) (The court’s discretionary power to stay a case
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`pending decisions in other proceedings “does not require that the issues in such proceedings are
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`necessarily controlling of the action before the court.”).
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`In this case, judicial economy weighs in favor of letting the several Courts of Appeals
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`“simplify the issues” raised here by Plaintiffs. Akishev, 23 F. Supp. 3d at 446. It appears that the
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`question of whether New Jersey common law grants Plaintiffs exclusive rights over the public
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`performances and the appropriation of profits from Pre-1972 Recordings is one of first
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`impression. Given the lack of New Jersey case law on the issue, it is unsurprising that both
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`parties rely upon the Flo & Eddie district court decisions, including sections interpreting similar
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`state law questions, as persuasive authority in their motion to dismiss briefing. See ECF No. 9 at
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`1, 12, 13 (citing Flo & Eddie New York and Flo & Eddie Florida to make arguments about the
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`established practice of using Pre-1972 Recordings without paying royalties and whether the
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`Court should abstain from extending state common law rights to Plaintiffs under Erie doctrine);
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`Plaintiff Opp. Mot. Dismiss, ECF No. 20 at 4, 13-18, 22 (citing Flo & Eddie California and Flo
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`& Eddie New York to make arguments about whether New Jersey common law protects against
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`appropriation of profits and protects only “unpublished” works, whether iHeartMedia’s
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`reproduction of Pre-1972 Recordings constitutes “fair use” under New Jersey law, whether the
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`“fair use” argument is properly determined at the motion to dismiss stage, and whether the Court
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`should abstain from extending state common law rights to Plaintiffs). The Second, Ninth, and
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`Eleventh Circuit rulings in the Flo & Eddie cases may reverse the holdings that both parties
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`currently cite. Again, while these decisions would not bind this Court, judicial economy favors
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`granting a stay instead of relying on submissions that advance cases which may be overruled.
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`Defendant also notes that, in its Flo & Eddie decision, the Second Circuit will determine
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`whether the Commerce Clause prevents state copyright protection of Pre-1972 Recordings. ECF
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`No. 8 at 6. Plaintiffs argue that Defendants have not raised Commerce Clause arguments in their
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`motions to dismiss, ECF No. 31 at 6, and the Court notes again that the Second Circuit’s ruling
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`will not be binding on this Court. But a potential Second Circuit ruling that state copyright
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`protections of such recordings are prohibited by the Commerce Clause could “substantially
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`affect” this Court’s decision, Bechtel Corp., 544 F.2d at 1216. This further weighs in favor of a
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`stay.
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`The Court also finds that a stay would likely be relatively short. Although the Court
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`caimot predict exactly when the Courts of Appeals will issue their rulings, nor whether they will
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`certify any questions to state courts, as Plaintiffs suggest, ECF No. 18 at 6, all three appeals are
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`moving forward. Briefing has been completed in Flo & Eddie Calfornia, see 15-55287, ECF
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`No. 23 (Pandora opening brief), No. 59 (Flo & Eddie opposition), No. 76 (Pandora reply brief)
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`(9th Cir.), oral argument in Flo & Eddie Florida has tentatively been scheduled for the week of
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`May 16, 2016, see 15-13100, calendar entry Feb. 29, 2016 (11th Cir.), and the Second Circuit
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`has heard oral argument in flo & Eddie New York on February 2, 2016. No. 15-cv-1164, ECF
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`No. 182 (2d Cir.).
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`Finally, a stay would cause minimal harm to the parties. Plaintiffs acknowledge that a
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`stay would not present a tactical disadvantage to them, ECF No. 18 at 6. In fact, they have agreed
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`to stays in several of their related cases against iHeartMedia. ECF No. 8 at 1-2. Plaintiffs argue
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`that iHeartMedia has not met its burden to demonstrate that it would be prejudiced if the Court
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`does not issue a stay. ECF No. 18 at 6 (citing Akishev, 23 F. Supp. 3d at 446, Nussbaum v.
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`Diversified Consultants, Inc., 2015 WL 5707147, at *1..2 (D.N.J. Sept. 28, 2015) (recognizing
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`“hardship or inequity for the moving party” if a stay is denied as another factor for courts to
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`consider). The Court agrees that denial would not cause particular hardship or inequity for
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`Defendant. The Court will grant a stay.
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`CONCLUSION
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`Defendant iHeartMedia’s motion for a stay is granted. The Court will stay this action
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`until the release of final decisions from the Second, Ninth, and Eleventh Circuits in the flo &
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`Eddie cases currently pending before them. An
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`DATE:y
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`Senior United States District Court Judge
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`11