Case 1:23-cv-01083-PTG-WBP Document 33 Filed 07/15/24 Page 1 of 17 PageID# 225
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`IN THE UNITED STATES DISTRICT COURT FOR THE
`EASTERN DISTRICT OF VIRGINIA
`Alexandria Division
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`Case No. l:23-cv-1083 (PTG/JFA)
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`SOUNDEXCHANGE, INC.,
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`Plaintif,f
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`V.
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`SliaUS XM RADIO, INC.,
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`Defendant.
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`MEMORANDUM OPINION AND ORDER
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`This matter comes before the Court on Defendant Sirius XM Radio Inc.’s Motion to
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`Dismiss, or in the alternative. Motion to Transfer (“Motion”).
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`Dkt. 16. On August 16, 2023,
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`SoundExchange, Inc. filed this action contending that Defendant underpaid royalties under the
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`Copyright Act. Dkt. 1 (“Compl.”). Defendant seeks to dismiss the Complaint for lack of personal
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`jurisdiction and, consequently, improper venue pursuant to Federal Rules of Civil Procedure
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`12(b)(2) and 12(b)(3). Dkt. 16 at 1.
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`In the alternative. Defendant has moved to have this case
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`transferred to the Southern District of New York or the District of Columbia pursuant to 28 U.S.C.
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`§ 1404(a). Id. For the reasons that follow. Defendant’s Motion will be granted in part and denied
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`in part.
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`Factual Background
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`Sirius XM, a Delaware corporation with its principal place of business in New York,
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`provides the only satellite digital audio radio service (“SDARS”) in the United States.
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`Dkt. 1
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`(“Compl.”) TITI2,15. The Copyright Act grants Sirius XM a statutory license to digitally broadcast
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`copyrighted sound recordings. 17 U.S.C. §§ 112,114(d)(2); Compl. K 4. The license allows Sirius
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`XM to digitally transmit, nationwide, any sound recording that has ever been commercially
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`Case 1:23-cv-01083-PTG-WBP Document 33 Filed 07/15/24 Page 2 of 17 PageID# 226
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`released to its 34 million paying subscribers without fear of infringing copyrights. Compl.
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`4.
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`However, Sirius XM must pay royalties for the use of copyright owners’ original content.
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`Id.
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`Under the Act, Sirius XM must pay these royalties to SoundExchange. Id. The Copyright Royalty
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`Board (“CRB”) designated SoundExchange as the sole entity in the United States to collect digital
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`performance royalties and distribute them to artists and copyright owners. Id. ^ 14. Pursuant to
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`regulations implemented under the Copyright Act, SoundExchange is authorized to administer the
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`statutory license, collect and distribute royalties, and enforce the terms of the license. Id. (citing
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`U.S.C. § 114(e)(1), (g)(3); 37 C.F.R. §§ 380.4, 380.7, 382.1). The amount of money Sirius XM
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`must pay to SoundExchange for operating its SOARS is calculated “as a percentage of its ‘Gross
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`Revenues,’ a term defined in 37 C.F.R. § 382.22.
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`Id. ^ 65. For the period of January 1, 2018 to
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`December 31, 2027, the statutory royalty rate for SOARS is 15.5% of Sirius XM’s Gross
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`Revenues. Id. 125.
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`In recent years, Sirius XM expanded its business to include a webcasting service that
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`transmits audio over the internet to different devices via streaming. Id. ^ 3.
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`Sirius XM is one of
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`several companies offering webcasting services in the country. See id.
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`44. SoundExchange
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`argues that, in an effort to advance its economic interests, Sirius XM now sells its SOARS to its
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`subscribers only as a part of a product bundle that also includes its webcasting service. Id. ^ 6.
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`SoundExchange alleges that on October 11, 2021, Sirius XM notified the organization that
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`beginning with its October 15, 2021 royalty payment, Sirius XM would begin to exclude at least
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`17.8% of its SOARS Gross Revenue as attributable to its webcasting service. Id. K 33. Whereas
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`' The regulation defines “Gross Revenues” as including subscription revenue from U.S.
`subscribers for the SOARS; advertising revenue or any other money Sirius XM receives from
`sponsors through the operation of its SOARS; and any revenue that Sirius XM is entitled to but
`that is paid to a parent, wholly-owned subsidiary, or division of the corporation. See 37 C.F.R. §
`382.22(a).
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`2
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`Case 1:23-cv-01083-PTG-WBP Document 33 Filed 07/15/24 Page 3 of 17 PageID# 227
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`royalty payments for the SDARS are based on gross revenues, royalties for webcasting are
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`calculated on a per-performance basis which, at least for the year 2023, were set at a rate of $0.0030
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`per performance for subscription services and $0.0024 for non-subscription services. Id. ^ 28.
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`According to SoundExchange, while regulations under the Copyright Act permit Sirius
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`XM to exclude from the SDARS revenue base any revenue generated from webcasting, this
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`exclusion rule simply serves to prevent double counting of revenue on which Sirius XM already
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`paid a royalty amount. Id. f 7. SoundExchange argues that in violation of these regulations, Sirius
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`XM is inflating the value of its webcasting service to circumvent the amount of money it owes in
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`royalties under the SDARS. Id. ^ 8.
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`SoundExchange further contends that by bundling its
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`webcasting service with its SDARS, Sirius XM has been able to “grossly underpay the royalties
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`that it owes” by unreasonably characterizing revenue generated from the “bundled product as
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`‘webcasting revenue' that in actuality is ‘SDARS revenue.
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`Id. Tf 6. SoundExchange argues that
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`this method of calculating royalties is unreasonable given the fact that in recent years (due to the
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`stark competition in webcasting services), Sirius XM has been forced to decrease the price of its
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`webcasting only packages while simultaneously increasing the price of its bundle packages, which
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`is the only way that customers can access the SDARS. Id. fl 45^6. SoundExchange alleges that.
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`to date, Sirius XM has unjustifiably withheld more than $ 150 million in royalties under its SDARS
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`statutory license.
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`Id. ^ 8.
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`Accordingly, SoundExchange has sued Sirius XM, accusing it of
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`underpaying royalty amounts in violation of 37 C.F.R. § 382.21(a) and 17 U.S.C. § 114(f)(1)(B).
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`Id.
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`63-67.
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`SoundExchange also accuses Sirius XM of violating 37 C.F.R. §§ 380.6(g) and 382.7(g)
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`by failing to remit the amount of royalties an independent auditor determined Sirius XM underpaid
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`to artists and copyright owners.
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`Id.
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`68-72.
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`Regulations under the Copyright Act allow
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`SoundExchange to have an independent auditor determine whether Sirius XM has properly paid
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`royalties that it owes; and if the auditor determines that the corporation has underpaid royalties,
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`then Sirius XM must remit the amount of underpaid royalties to SoundExchange. M ^ 11 (citing
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`37 C.F.R. §§ 380.6, 382.7).
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`SoundExchange alleges that pursuant to these regulations, in
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`September 2022, Adeptus Partners, LLC ('‘Adeptus”) completed an audit of Sirius XM’s royalty
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`payments for the 2018 calendar year and determined that Sirius XM has underpaid its royalties by
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`millions of dollars. Id. ^ 12. SoundExchange asserts that, to date, Sirius XM acknowledges only
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`3% of the amount of money Adeptus claims it owes and refuses to pay the rest.
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`Id. ^ 62.
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`SoundExchange filed its Complaint on August 16, 2023.
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`Compl.
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`In the Complaint,
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`SoundExchange asserted
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`the following basis for this Court’s exercise of basis personal
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`jurisdiction:
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`This Court has personal jurisdiction over Sirius XM pursuant to Va. Code Ann. §
`8.01-328.1 because Sirius XM has substantial contacts with Virginia, including
`regularly transacting business in Virginia, contracting to supply services in
`Virginia,
`and
`deriving
`substantial
`revenue
`from
`operations
`in
`Virginia.
`Specifically, Sirius XM has thousands of customers in Virginia to whom it sells
`and delivers its SOARS and its webcasting services on a subscription basis and
`generates revenue on which Sirius XM owes royalties to SoundExchange. Sirius
`XM has used servers in Virginia to deliver its webcasting service to customers in
`Virginia. Sirius XM also seeks out customers in Virginia including via marketing,
`advertising, and commercial arrangements directed toward Virginia customers. ...
`SoundExchange’s claims in suit arise, in part, from these contacts, and potentially
`others, that Sirius XM has with Virginia.
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`Id.
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`18. On September 22, 2023, Sirius XM moved to dismiss this civil action for lack of personal
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`jurisdiction, or in the alternative, to have this case transferred to the Southern District of New York
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`or the District Court for the District of Columbia for convenience and in the interest of justice. See
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`Dkts. 16, 17. On October 26, 2023, the Court heard argument on Sirius XM’s Motion. See Dkt.
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`28. This matter is now ripe for resolution.
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`4
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`Case 1:23-cv-01083-PTG-WBP Document 33 Filed 07/15/24 Page 5 of 17 PageID# 229
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`A.
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`Dismissal Under Rule 12(b)(2) for Lack of Jurisdiction
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`Legal Standard
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`Under Fed. R. Civ. P. 12(b)(2), “a defendant must affirmatively raise a personal jurisdiction
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`challenge, but the plaintiff bears the burden of demonstrating personal jurisdiction at every stage
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`following such a challenge.” Grayson v. Anderson, 816 F.3d 262, 267 (4th Cir. 2016). When the
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`court conducts an evidentiary hearing, the plaintiff must establish that personal jurisdiction is
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`proper by a preponderance of the evidence. Id. at 268 (“[A]n ‘evidentiary hearing’ requires only
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`that the district court afford the parties a fair opportunity to present both the relevant jurisdictional
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`evidence and their legal arguments.”).
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`If, in the absence of an evidentiary hearing, the district
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`court reviews “only the parties’ motion papers, affidavits attached to the motion, supporting legal
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`memoranda, and the allegations in the complaint,” then the plaintiff need only make aprima facie
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`showing of personal jurisdiction to survive a motion to dismiss under Rule 12(b)(2). Id.
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`“[T]he
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`court must construe all relevant pleading allegations in the light most favorable to the plaintiff,
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`assume credibility, and draw the most favorable inferences for the existence of jurisdiction.
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`Combs V. Bakker, 886 F.2d 673, 676 (4th Cir. 1989).
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`B.
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`Transfer of Venue Pursuant to 28 U.S.C. §1404(a)^
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`For the convenience of parties and witnesses, in the interest of justice, a district court may
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`transfer any civil action to any other district or division where it might have been brought[.]” 28
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`^ On April 29, 2024, Plaintiff filed a Motion for Leave to File a Notice of Supplemental Authority
`(“Motion for Leave”). Dkt. 30. In the Motion for Leave, Plaintiff seeks permission to file a notice
`of supplemental authority, contending a recent decision from the United States District Court for
`the Western District of North Carolina further clarifies “the proper standard of review for a motion
`to transfer in the Fourth Circuit.” Id.; see also Dkt. 30-1 at 1 (citing Doe v. Univ. ofN. Carolina
`No. 1:23-cv-00041,2024 WL 925549 (W.D.N.C. Mar. 4,2024)). On May 1,2024, Defendant
`Dkt. 32.
`Although Plaintiffs proposed
`filed on opposition to Plaintiffs Motion for Leave.
`supplemental authority does not aid the Court in its consideration of the instant matter, the Court
`will nevertheless grant Plaintiffs Motion for Leave (Dkt. 30).
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`5
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`Case 1:23-cv-01083-PTG-WBP Document 33 Filed 07/15/24 Page 6 of 17 PageID# 230
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`U.S.C. § 1404(a).
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`[I]n considering whether to transfer venue, a district court must make two
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`inquiries: (1) whether the claims might have been brought in the transferee forum, and (2) whether
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`the interest of justice and convenience of the parties and witnesses justify transfer to that forum.
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`Koh V. Microtek Ini 7, Inc., 250 F. Supp. 2d 627, 630 (E.D. Va. 2003). The party seeking transfer
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`generally “bears the burden of proving ‘that the circumstances of the case are strongly in favor of
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`transfer.
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`Heinz Kettler GMBH & Co. v. Razor USA, LLC, 750 F. Supp. 2d 660, 667 (E.D. Va.
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`2010) (citation omitted).
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`However, “the ultimate decision [of whether to transfer a case] is
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`committed to the sound discretion of the district court.
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`Pragmatus AV, LLC v. Facebook, Inc.,
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`769 F. Supp. 2d 991, 994 (E.D. Va. 2011); see also In re Ralston Purina Co., 726 F.2d 1002, 1005
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`(4th Cir. 1984).
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`Analysis
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`I.
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`This Court Has Specific Personal Jurisdiction over Defendant Sirius XM
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`A court may exercise personal jurisdiction over a defendant only if “(1) such jurisdiction
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`is authorized by the long-arm statute of the state in which the district court sits; and (2) application
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`of the relevant long-arm statute is consistent with the Due Process Clause.
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`Universal Leather,
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`LLC V. Koro Ar, S.A., 773 F.3d 553, 558 (4th Cir. 2014).
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`Virginia’s long-arm statute permits
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`personal jurisdiction to the fullest extent allowed by due process. See Va. Code Ann. § 8.01-328.1;
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`CFA Inst. V. Inst, of Chartered Fin. Analysis ofIndia, 551 F.3d 285,293 (4th Cir. 2009). “Because
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`Virginia’s long-arm statute is intended to extend personal jurisdiction to the extent permissible
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`under the due process clause, the statutoiy inquiry merges with the constitutional inquiry.”
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`Consulting Eng'rs Corp. v. Geometric Ltd., 561 F.3d 273, 277 (4th Cir. 2009).
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`Specific personal jurisdiction over a defendant can be exercised where the defendant has
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`“purposefully established minimum contacts in the forum State” such “that [it] should reasonably
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`Case 1:23-cv-01083-PTG-WBP Document 33 Filed 07/15/24 Page 7 of 17 PageID# 231
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`anticipate being haled into court there.
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`5^3 Burger King Corp. v. Rudzewncz, 471 U.S. 462, 474
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`(1985) (internal quotation marks and citations omitted). The Fourth Circuit has synthesized the
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`due process requirements for asserting specific personal jurisdiction in a three-part test in which a
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`court considers “(1) the extent to which the defendant 'purposefully availed’ itself of the privilege
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`of conducting activities in the State; (2) whether the plaintiffs’ claims arise out of those activities
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`directed at the State; and (3) whether the exercise of personal jurisdiction would be constitutionally
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`reasonable. >51
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`ALS Scan, Inc., 293 F.3d at 712 (cleaned up) (quoting Christian Sci. Bd. ofDirs. of
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`First Church of Christ, Scientist v. Nolan, 259 F.3d 209, 216 (4th Cir. 2001)).
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`Here, Sirius XM concedes that it has purposefully availed itself of the privilege of
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`conducting business in Virginia by way of delivering satellite radio and webcasting services to its
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`subscribers in Virginia."* Dkt. 17 at 11. However, Defendant maintains that the other two prongs
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`of the personal jurisdiction inquiry are not satisfied in this case to establish that the exercise of
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`personal jurisdiction is consistent with either Virginia’s long-arm statute or the Due Process
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`Clause. See id. at 10-11. For the reasons that follow, the Court disagrees.
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`A.
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`Plaintiffs Claims Against Defendant Arise from Defendant's In-State Activities
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`Virginia’s long-arm statute provides, in relevant part, that a court “may exercise personal
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`jurisdiction over a person ... as to a cause of action arising from the person[].. . [tjransacting any
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`^ Generally, personal jurisdiction under the Due Process Clause can exist as either general or
`specific jurisdiction. ALS Scan, Inc. v. Digit. Serv. Consultants, Inc., 293 F.3d 707, 711 (4th Cir.
`2002).
`The parties in this case agree that there is no general jurisdiction over Sirius XM in
`Virginia; instead, they dispute whether this Court has specific jurisdiction over Defendant. See
`Dkt. 17 at 17 (“There is no general personal jurisdiction over Sirius XM[.]”); Dkt. 24 at 4 (Plaintiff
`contends that this Court has specific, not general, jurisdiction over Defendant).
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`"* Plaintiff argues that Defendant’s contacts with Virginia are not just limited to providing satellite
`and webcasting services to its subscribers in the forum state, but they also include Sirius XM’s
`collection of fees (which generates revenue) from its subscribers in Virginia as well as Defendant’s
`underpayment of royalties to Virginian artists and rightsholders. Dkt. 24 at 7.
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`7
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`Case 1:23-cv-01083-PTG-WBP Document 33 Filed 07/15/24 Page 8 of 17 PageID# 232
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`business
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`in
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`this Commonwealth[;]
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`[cjontracting
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`to
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`supply
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`services
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`or
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`things
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`in
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`this
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`Commonwealth[;] or causing tortious injury in this Commonwealth by an act or omission outside
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`this Commonwealth if [the person] regularly does or solicits business, or engages in any other
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`persistent course of conduct, or derives substantial revenue from goods used or consumed or
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`services rendered, in this Commonwealth[.]” Va. Code Ann. §§ 8.01-328.1(A)(1), (A)(2), (A)(4).
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`Virginia courts have held that the phrase “arising from” in Section 8.01-328.1 “requir[es] that there
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`be a causal link between the acts relied on for personal jurisdiction and the claims detailed in the
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`complaint.” Selke v. Gennanwnngs GmbH, 261 F. Supp. 3d 645, 656 (E.D. Va. 2017) (first citing
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`Chedid v. Boardwalk Regency Corp., 756 F. Supp. 941, 943 (E.D. Va. 1991); then citing Verosol
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`B..V V. Hunter Douglas, Inc., 806 F. Supp. 582, 589 (E.D. Va. 1992)).
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`However, the causation
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`contemplated by the statute requires more than bare ‘but for' causation; instead, the connection
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`between forum contacts and the cause of action must rise to the level of legal or proximate
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`causation.” Id. (citing Chedid, 756 F. Supp. at 943). The Fourth Circuit has further articulated the
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`“arising from” (or out of) prong of the personal jurisdiction inquiry, holding that the prong is
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`satisfied when the defendant's activities “in the forum state is ‘the genesis of [the] dispute’” such
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`that these in-state activities ‘“form[] a central part of [the plaintiffs] claims.
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`UMG Recordings,
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`Inc. V. Kurbanov, 963 F.3d 344, 354-55 (4th Cir. 2020) (quoting Tire Eng'g & Distrib., LLC v.
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`Shandong Linglong Rubber Co., 682 F.3d 292, 303, 306 (4th Cir. 2012)).
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`The parties in this case offer different viewpoints on the true nature of the Complaint and
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`whether Plaintiffs claims arise from Defendants contacts with the forum state. Defendant argues
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`that Plaintiffs claims are “premised on national-level business decisions and conduct that occurred
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`exclusively in other states.
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`Dkt. 17 at 12 (citing Medina v. Melon One, Inc., No. 18-cv-1603,
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`2019 WL 13252421, at *2 (E.D. Va. Jun. 10, 2019)). Defendant contends that while it may be
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`8
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`Case 1:23-cv-01083-PTG-WBP Document 33 Filed 07/15/24 Page 9 of 17 PageID# 233
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`true that
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`Sirius XM’s in-state commercial activities include providing revenue-generating
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`subscription services to its Virginia customers, at the heart of the Complaint is a dispute over
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`Sirius XM’s revenue apportionment and royalty
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`calculations
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`●which were decided
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`in
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`Defendant’s New York
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`headquarters—and
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`“royalties
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`paid
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`on
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`nationwide
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`sales
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`(here,
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`subscriptions).” Id. at 13-14. Thus, according to Defendant, because Plaintiffs claims could exist
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`independent of Sirius XM’s Virginia sales and customers, these claims only have an attenuated
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`relation to, rather than arise from, Defendant’s contacts with the forum state.
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`Id. at 14.
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`In opposition, Plaintiff asserts that its claims against Defendant for alleged violations of
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`the Copyright Act do, in fact, arise from Defendant’s in-state activities. According to Plaintiff,
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`Sirius XM, through its commercial activities, generates millions of dollars in revenue each month
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`from its approximately one million Virginian subscribers alone. Dkt. 24 at 3. Plaintiff maintains
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`that because Sirius XM generates revenue from the forum state and has a legal obligation to
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`appropriately calculate a portion of this revenue as royalty payment to artists and rightsholders,
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`including to at least 5,000 individuals in Virginia, Defendant’s contacts with the forum state form
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`the genesis of the Complaint. See id. at 5-7,11. Plaintiff argues that the mere fact that Defendant
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`engages in the same conduct in other states besides Virginia does not, and should not, defeat this
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`Court’s exercise of personal jurisdiction. Id. at 9.
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`In considering the parties’ arguments and the relevant legal authority, the Court finds that
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`Plaintiffs claims arise from Defendant’s contacts with Virginia. In particular, the Court finds the
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`Selke decision on point. 261 F. Supp. 3d 645. In Selke, the plaintiffs sued three airlines over the
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`deaths of the plaintiffs’ family members resulting from a plane crash in the French Alps. Id. at
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`649, 651. One of the defending airlines moved to dismiss the plaintiffs’ complaint for lack of
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`personal jurisdiction, arguing, at least in part, that the plaintiffs’ cause of action arose from the
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`Case 1:23-cv-01083-PTG-WBP Document 33 Filed 07/15/24 Page 10 of 17 PageID# 234
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`plane crash and not the defendant’s contacts in Virginia. Id. at 656. The court disagreed, finding
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`instead that the defendant’s business activity of authorizing one of the other defending airlines to
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`sell plane tickets to citizens in the forum state gave rise to the plaintiffs’ cause of action.
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`Id. at
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`657.
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`Specifically, the court found that the selling of these tickets, which led to the decedents
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`obtaining passage to the plane that crashed, formed the catalyst of the plaintiffs cause of action.
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`Id. According to the court, the plane crash did not “sever the causal nexus between the act of
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`selling the tickets and [the pjlaintiffs’ cause of action,” and it was the selling of the tickets that
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`was the proximate cause of the plaintiffs’ claim. Id.
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`Here, in this instant action, Defendant maintains that it cannot be said that Defendant’s
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`contacts with Virginia are the cause of Plaintiffs suit because Sirius XM’s methodology for
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`apportioning its revenue was developed in its corporate headquarters in New York, and not in the
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`forum state. See Dkt. 25 at 4. To an extent, the Court agrees with Defendant that Plaintiffs
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`Complaint is based on a dispute over Defendant’s revenue apportionment methodology. However,
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`the Court finds that, like the plane crash in Selke, Defendant’s methodology is better understood
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`as the but-for causation of Plaintiffs causes of action.
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`In contrast, the revenue that Defendant
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`generates, at least in part, through its in-state activities is the proximate cause of Plaintiff s claims
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`and establishes, for personal jurisdiction purposes, that such claims arise from Defendant’s
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`contacts with the forum state.
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`Plaintiff alleges, and Defendant does not dispute, that Sirius XM’s business contacts with
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`Virginia include the continuous and systematic act of providing SDARS and webcasting services
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`to in-state residents from whom Defendant generates revenue. See Dkt. 24 at 12-13. Under federal
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`law, Defendant must apportion a certain amount of this revenue to pay royalties that Plaintiff then
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`distributes to artists and copyright owners around the country, including those who reside in
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`Case 1:23-cv-01083-PTG-WBP Document 33 Filed 07/15/24 Page 11 of 17 PageID# 235
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`Virginia.
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`Plaintiffs Complaint challenges Defendant’s apportionment of revenue derived from
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`the royalty-generating services that Defendant purposefully directs to the forum state.
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`Thus,
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`without the revenue that Defendant has derived through its provision of royalty-generating services
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`to its customers in Virginia and elsewhere, there would be no actualization of Defendant’s revenue
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`apportionment methodology. Considered in this light, the methodology is the but-for cause of
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`Plaintiffs claims, but like the selling of the plane ticket in Sdke, Defendant’s revenue-generating
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`activities in the forum state form the catalyst or proximate cause of Plaintiff s claims. Accordingly,
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`the Court finds that Plaintiffs claims arise from Defendant’s in-forum business activities and the
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`second prong of the personal jurisdiction analysis is satisfied.
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`The instant case is also analogous to the Fourth Circuit’s decision in UMG Recordings,
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`which further supports finding that the second prong of the personal jurisdiction inquiry is satisfied
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`here. See 963 F.3d 344.
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`In UMG Recordings, the Fourth Circuit reversed a decision to dismiss a
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`case for lack of personal jurisdiction involving a foreign defendant, who operated two websites.
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`entirely from Russia, through which users obtained copy-infringing sound recordings. Id. at 349.
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`The Fourth Circuit recognized that the plaintiffs’ claims of copyright infringement were not just
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`limited to the defendant’s activities
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`in Virginia, but instead spanned the
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`entire country.
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`Nevertheless, the Court found that the claims arose out of the defendant’s in-state activities
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`because a large number of Virginian visitors (who made up only 2% of the websites’ global
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`visitors) used the defendant’s websites, the defendant was aware of this, and the defendant was
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`able to sell these visitors’ data to advertisers to generate a profit. Id. at 354-55. Accordingly, the
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`Court found that there was an affiliation between defendant’s contacts in Virginia and the
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`underlying controversy and that the defendant’s contacts formed the genesis of the dispute. Id. at
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`355.
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`11
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`Case 1:23-cv-01083-PTG-WBP Document 33 Filed 07/15/24 Page 12 of 17 PageID# 236
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`Like the UMG Recordings defendant, Sirius XM has purposefully directed its revenue¬
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`generating services at the forum state, and through its business activities, Sirius XM derives a
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`profit from in-state residents who pay monthly subscriptions to access these services. Virginia
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`subscribers account for approximately 3% of Sirius XM’s 34 million total subscribers. See Dkt.
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`17 at 23.
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`According to Plaintiff, the amount of revenue Sirius XM generates from Virginia
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`subscribers alone is substantial and could amount to approximately $14-24 million per month.
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`Dkt. 24 at 3. As noted earlier. Plaintiff alleges that Defendant has grossly and unreasonably
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`apportioned its total gross revenue as revenue derived from its webcasting service, instead of the
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`SDARS, to reduce the amount of royalties Defendant must pay to both Virginian and non-
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`Virginian artists and copyright owners alike. See id. at 3-4, 6-7. This total revenue undoubtedly
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`includes the revenue generated from the forum state. Thus, the Court finds that, like in UMG
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`Recordings, there is an affiliation between Defendant’s in-state activities, and the underlying
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`controversy and these activities form the genesis of Plaintiffs Complaint, satisfying the second
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`prong required to establish personal jurisdiction.
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`Defendant tries to distinguish UMG Recordings on the grounds that unlike this instant
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`action, UMG Recordings involved an actual claim of copyright infringement and not merely a
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`dispute over compliance with copyright regulations.
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`Dkt. 25 at 3-4. The Court does not find that
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`this distinction is significant to the analysis. While it is true that this instant action does not involve
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`a claim of copyright infringement, the Court nevertheless finds that under both Virginia’s long-
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`arm statute and the Due Process Clause, the underlying controversy in this case does arise from
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`Defendant’s contacts with the forum state.
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`The Court is also not persuaded by Defendant’s reliance on Matlin v. Spin Master Corp.,
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`921 F.3d 701 (7th Cir. 2019), and Worldwide Subsidy Group, LLC v. Federation International de
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`Case 1:23-cv-01083-PTG-WBP Document 33 Filed 07/15/24 Page 13 of 17 PageID# 237
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`Football Ass’n, 2014 WL 12631652 (C.D. Cal. June 9, 2014), in support of its claim that
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`Defendant’s contacts with Virginia do not form the genesis of Plaintiff s Complaint. See Dkt. 17
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`at 12-14. While both cases involved disputes over royalty payments, and the respective court in
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`each case dismissed the action for lack of personal jurisdiction, the Court finds that the two cases
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`are easily distinguishable from the instant action. For instance, the Matlin plaintiffs invocation
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`of personal jurisdiction was predominately based on a single online purchase of the alleged
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`royalty-generating product that the plaintiffs’ attorney made in an impermissible attempt to
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`establish jurisdiction.
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`921 F.3d at 707.
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`In contrast, in this case, Defendant’s in-state activities
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`involve the continuous and systematic act of providing SDARS and webcasting services to in-state
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`residents from whom Defendant generates revenue.
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`For a similar reason. Worldwide Subsidy
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`Group is also distinguishable because in that case, the in-state activities at issue were five soccer
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`matches. 2014 WL 12631652, at *10. Five soccer matches are a very limited number of contacts
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`with the forum state which is vastly different from the continuous business activities Sirius XM
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`conducts here in Virginia.
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`In sum, the Court finds that in this case, Plaintiff seeks to challenge (1) Defendant’s
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`apportionment of revenue derived from royalty-generating services that Defendant purposefully
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`directs to the forum state, and (2) Defendant’s alleged underpayment of royalties to individuals
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`entitled to these payments, including those who reside in the forum state. Therefore, Plaintiffs
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`claims arise from Defendant’s in-forum activities. Accordingly, the Court finds that Plaintiff has
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`satisfied the second prong of the personal jurisdiction inquiry.
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`B.
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`The Exercise
`Reasonable
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`of Personal Jurisdiction over Defendant is
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`Constitutionally
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`The final question concerning personal jurisdiction in this case is whether the exercise of
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`jurisdiction over Defendant is constitutionally reasonable.
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`In evaluating this prong, courts
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`Case 1:23-cv-01083-PTG-WBP Document 33 Filed 07/15/24 Page 14 of 17 PageID# 238
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`consider the following factors: ‘'[1] the burden on the defendant[;] [2] the court’s ability to
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`conveniently and efficiently resolve the dispute[;] [3] the interest of the forum state in adjudicating
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`the dispute[;] [4] the plaintiffs interest in obtaining effective relief[;] and [5] the interests of the
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`state in furthering substantive policies.” dmarcian, Inc. v. dmarcian Eiir. BV, 60 F.4th 119, 135
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`(4th Cir. 2022). This prong seeks to ensure that a defendant is not haled into court in the forum
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`state unless it is “reasonably foreseeable that the defendant could be subject to suit there.” CFA
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`Inst., 55i F.3dat296.
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`The Court finds that the exercise of personal jurisdiction over Defendant would be
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`constitutionally reasonable. Here, in support of its Motion, Defendant argues that Washington,
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`D.C. is a convenient forum for this civil action. See Dkt. 17 at 20, 25. Given the close proximity
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`between Defendant’s articulated venue of choice and the instant one, the Court does not find that
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`litigating the case in this venue would unduly burden Defendant or its potential witnesses.
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`Furthermore, the Court finds that because Sirius XM is a large corporation that directs considerable
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`business activities to the forum state, and Defendant admits to enjoying the privileges of
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`conducting business in Virginia,^ it was reasonably foreseeable for Defendant to be haled into
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`court in Virginia. For these reasons, and those discussed above, this Court may exercise personal
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`jurisdiction over Defendant.*^
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`^ Defendant also admits that it has five Virginia-based employees who work at one of its warehouse
`logistic facilities located in the forum state. See Dkt. 17 at 4 n.l.
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`^ Since the Court has personal jurisdiction over Defendant, venue is also proper because under the
`Copyright Act, venue is proper wherever a defendant “may be found.” See 28 U.S.C. § 1400(a).
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`Case 1:23-cv-01083-PTG-WBP Document 33 Filed 07/15/24 Page 15 of 17 PageID# 239
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`II.
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`The Southern District of New York is a More Appropriate and Convenient Venue for
`This Civil Action
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`In the alternative, Defendant argues that even if this Court finds that it has personal
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`jurisdiction over Defendant, the Court should transfer venue to the Southern District of New York
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`or the District of Columbia pursuant to 28 U.S.C. 1404(a). Dkt. 17 at 18.
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`As noted above, “in considering whether to transfer venue, a district court must make two
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`inquiries: (1) whether the claims might have been brought in the transferee forum, and (2) whether
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`the interest of justice and convenience of the parties and witnesses justify transfer to that forum.
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`Koh, 250 F. Supp. 2d at 630. As to the second inquiry, in determining whether the interest of
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`justice and convenience of the parties and witnesses warrants transfer, courts commonly consider;
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`“(1) the weight accorded to plaintiffs choice of venue; (2) witness convenience and access; (3)
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`convenience of the parties; and (4) the interest of justice.” Trs. of the Plumbers & Pipeiftters Nat 7
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`Pension Fund v. PlumbingServs., Inc., 791 F.3d 436, 444 (4th Cir. 2015). Here, the parties do not
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`disagree that this case could have been brought in either New York or Washington, D.C. See Dkt.
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`24 at
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`18; Dkt. 25 at 9.
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`Instead, the parties disagree as to whether, under §
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`1404(a), the
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`circumstances of this case favor transferring the case to another venue in the interest of justice and
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`convenie