Case 1:16-cv-08412-AJN Document 208 Filed 09/12/17 Page 1 of 9

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
1:16-cv-08412 (AJN)

MELISSA FERRICK, et al.,
Plaintiff,

SEPTEMBER 12, 2017

SPOTIFY USA INC., et al.,
Defendant.

OBJECTIONS TO PROPOSED CLASS ACTION SETTLEMENT AGREEMENT AND
NOTICE OF INTENT TO APPEAR
Pursuant to the Court’s Order Granting Plaintiffs’ Unopposed Motion for Preliminary
Approval of Settlement (Dkt. # 177), the Settlement Class Members identified in Exhibit A
annexed hereto, and each of them (collectively, the “Objectors”), by their attorneys Donahue
Fitzgerald LLP and Pullman & Comley LLC, respectfully submit these Objections to the
proposed class action settlement reached in Ferrick et al. v. Spotify USA Inc. et al., No. 1:16- cv8412 (AJN).
Counsel for Objectors hereby give notice that counsel will appear on behalf of Objectors
at the December 1, 2017, Fairness Hearing.
I.

PRELIMINARY STATEMENT
The Settlement Agreement1 is procedurally and substantively unfair to Settlement Class

Members because it prevents meaningful participation by rights holders and offers them an
unfair dollar amount in light of Spotify’s ongoing, willful copyright infringement of their works.
The Objectors are songwriters and other owners of copyrighted works that are the subject
of the Settlement Agreement. Each Objector is a member of the Settlement Class. Each Objector
1

Capitalized terms not otherwise defined have the meanings set forth in the Settlement Agreement. Dkt. # 176-3
(“Settlement Agreement” or “Settlement”).

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has attempted to opt out of the Settlement Class, but has not been able to comply fully with the
directions given in the long-form Notice of Settlement because of each Objector’s inability to
provide an exhaustive list of copyright registration numbers for the works being opted out of the
settlement as provided in the long-form Notice of Pendency of Class Action.2
OBJECTIONS
I.

LEGAL STANDARD
Under Rule 23(e)(2) of the Federal Rules of Civil Procedure, a court may approve a class

action settlement “only . . . on finding that [the agreement] is fair, reasonable and adequate.” Fed.
R. Civ. P. 23(e)(2). The “fair, reasonable and adequate” standard effectively requires parties to
show that a settlement agreement is both procedurally and substantively fair. See Charron v.
Wiener, 731 F.3d 241, 247 (2d Cir. 2013) (citations omitted).
II.

THE SETTLEMENT AGREEMENT SHOULD NOT BE APPROVED BECAUSE
IT IS PROCEDURALLY UNFAIR
The Settlement Agreement is procedurally unfair because it is not the result of arm’s-

length, good faith negotiation between class counsel and Spotify, but instead a collusive effort
that does not adequately protect the critical interests of the class. See Fed. R. Civ. P. 23(a)(4)
(requiring that class representatives “fairly and adequately protect the interests of the class”); see
2

An ambiguity exists between the long form Notice of Pendency of Class Action, Proposed Settlement and Hearing
(the “Long Form Notice”) and the Court’s Preliminary Approval Order, Dkt. # 177. The Long Form Notice states
that claimants seeking to opt out of the Settlement Class must include “the copyright registration numbers for your
musical compositions that you are excluding from the settlement” (Long Form Notice at 5, item 13), suggesting that
claimants may exclude themselves from the settlement for some compositions but remain in the Settlement Class for
others. However the Preliminary Approval Order states that to be considered valid, a Request for Exclusion must
contain “the U.S. copyright registration number (or copyright registration application number) for each copyrighted
musical composition owned in whole or in part by the Settlement Class Member.” Dkt # 177 (Preliminary Approval
Order) at 7 ¶ 16. The Order further provides that only those compositions for which a copyright registration number
is provided may be validly excluded. Id. ¶17. However, the Order does not explicitly state that Settlement Class
Members who do not provide copyright registration numbers remain in the Settlement Class as to any work for
which a registration number is not provided. Read together, paragraphs 16 and 17 of the Order suggest that members
of the Settlement Class should exclude themselves entirely or not at all, and may not elect to exclude themselves for
some compositions but remain in the Settlement Class for others.

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also Charron, 731 F.3d at 247. As a result, the Settlement Agreement is not only inadequately
protective, but it is overbroad in violation of Rule 23 and the Due Process Clause of the U.S.
Constitution.
The Settlement Agreement is procedurally unfair in that it requires Settlement Class
Members to provide the copyright registration numbers of compositions that they own in order to
exclude themselves from the settlement. In the music industry, copyright registration numbers
are not normally used as identifiers in the normal course of administering and tracking musical
compositions. Declaration of Randall D. Wixen, filed concurrently herewith (“Wixen Decl.”)
¶ 13. Indeed, Spotify itself does not use copyright registration numbers to track streams. Id. ¶ 12.
Most artist composers engage a music publishing company to administer their copyright holdings,
which are cataloged and tracked not by the copyright registration number, but by other industry
standard numbers such as the International Standard Recording Code (ISRC) number, the
International Standard Work Code (ISWC), or by unique identifying numbers assigned to the
work by performing rights organizations or other royalty agents. Id. ¶¶ 13, 18. Defendant Spotify
clearly recognizes this practice, since it has agreed as part of the Settlement to provide a database
by which Settlement Class Members may search by track title or input an ISRC number or
Spotify track number, and through that number auto-populate track-specific data into an online
Claim Form. Settlement Agreement ¶ 3.2(d)(v)-(vi).3
Requiring individual Settlement Class Members to provide copyright registration
numbers in order to exclude themselves from the Settlement is economically and practically
prohibitive for the vast majority of songwriters who, as is typical in the industry, rely on music
publishers and other agents to administer their copyrights under a system that does not use
3

However, even this Track Database is not available to Class Members who wish to exclude themselves; it will only
be made available for Settlement Class Members who wish to opt into the Settlement Agreement. Id. ¶¶ 1.56, 3.2(c),
3.2(d)(vi).

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copyright registration numbers in the ordinary course of business. Wixen Decl., ¶¶ 8, 13. Further,
it is no easy matter for a songwriter to obtain copyright registration number information,
especially for compositions registered prior to 1978. The Copyright Office does not provide a
publicly searchable online database of copyright registrations issued before 1978, and therefore
someone who needs to look up a copyright registration number must either travel to Washington,
D.C. and search through 45 million copyright cards, or pay a Copyright Office researcher a
minimum of $400 to look up the information. Id. ¶ 16. 4 Depending on the number of works
owned by a particular Settlement Class Member, the cost of locating the copyright records may
be prohibitive, and, in many cases, will exceed the amount of remuneration the copyright holder
would receive under the Settlement. Id. ¶ 14. Moreover, the time required to complete the
research is likely to exceed the limited amount of time afforded Settlement Class Members to file
claims, and for the Objectors has already exceeded the time afforded them to exclude themselves.
Id. ¶ 15.5
The Settlement Agreement is also procedurally unfair in that it bars Settlement Class
Members from employing agents and delegates such as music publishers from filing Requests
for Exclusion or claim forms on behalf of their composer clients. See Wixen Decl. ¶ 7 (citing
Dkt. # 176-3 (Settlement Agreement) at 61 ¶ 13.6). Since most songwriters delegate
4

Spotify is well aware of the specific difficulty of identifying class members who own pre-1978 works. In fact, in
the Settlement Agreement, Spotify has agreed to create an entire “Copyright Data Sharing Committee” to discuss
“digitization of pre-1978 U.S. Copyright Records for free use by the public.” Settlement Agreement ¶¶ 7.1-7.2.

5

Wixen Music Publishing, Inc., a music publishing house that administers and tracks rights for over 2,000
songwriters, including the Objectors, hired a team of researchers and data entry specialists to work non-stop for
more than a month merely to identify and match the ISRC with the copyright registration number for each of the
copyrighted works owned by its clients. Wixen Decl., ¶ 15. In four weeks, Wixen has been able to obtain
approximately 12,000 relevant copyright registration numbers from the more than the 60,000 compositions it
represents. Id. The allotted 75 days (from June 28, 2017 to September 12, 2017) is insufficient for rights owners to
exclude themselves given the painstaking task of matching ISRCs with copyright numbers. Externalizing the cost of
this data problem by putting it on publishers like Wixen is unreasonable, and may preclude identification of a
multitude of compositions, especially for publishers like Wixen who have large catalogs. For many smaller rights
holders, this is an administrative and cost prohibitive challenge that will likely prevent many from participating at all
in the Settlement Agreement, whether by opting in or out. See Wixen Decl. ¶ 14.

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administration of their copyright rights to these administrators, the administrators are far more
likely to have access to the copyright registration information demanded, as well as the financial
resources to research the information. Wixen Decl. ¶¶ 8-9. Requiring a Settlement Class Member
to provide detailed information that it does not have and would have to incur considerable
expense to obtain in order to exclude itself from the settlement makes as little sense as barring
the Settlement Class Members’ delegate, who is more likely to have the required information,
from supplying it on behalf of the Settlement Class Member. Both restrictions are artificial,
appear to be designed to defeat Settlement Class Members’ exclusion rights, and violate the
requirement of procedural fairness set forth in Charron.
III.

THE SETTLEMENT AGREEMENT SHOULD NOT BE APPROVED BECAUSE
IT IS SUBSTANTIVELY UNFAIR
The Settlement Agreement is also substantively unfair.
The language of the Settlement Agreement at paragraph 4.1 suggests that Settlement

Class Members will be forced to license their works to Spotify on a prospective basis. It does not
allow Settlement Class Members to collect their settlement payment and walk away. If this is
correct, Spotify has been given the retroactive right to obtain compulsory licenses and pay the
statutory rate moving forward. This is contrary to the provisions of the Copyright Act, where the
failure to timely acquire a compulsory license “forecloses the possibility of a compulsory license
and, in the absence of a negotiated license, renders the making and distribution of phonorecords
actionable as acts of infringement under section 501 [of the Copyright Act] and fully subject to
the remedies provided by sections 502 through 506 and 509.” 17 U.S.C. § 115(b)(2). See also
Leo Feist, Inc. v. Apollo Records, N. Y. Corp., 300 F. Supp. 32, 42-43 (S.D.N.Y. 1969) (“Since
the notice provisions are the ‘keystone’ of the mandatory licensing scheme under the Copyright
Law, violations should be dealt with strictly.”), aff'd, 418 F.2d 1249 (2d Cir. 1969). Further, if

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Spotify breaches the terms of the license, the rights-holder can never terminate the license as the
Settlement Agreement grants Spotify the right to obtain perpetual compulsory licenses. See
Settlement Agreement ¶ 4.1.
With this Settlement Agreement, Spotify will actually benefit from its infringement.
Spotify will not need to (i) gather the copyright registration information itself to identify and pay
rights holders, (ii) provide the names of the songs it believes to have infringed prior to the opt
out date, (iii) negotiate direct licenses with rights holders, nor (iv) worry about faults or problems
in its future licensing system because participating class members may not sue. See Settlement
Agreement ¶¶ 17.1-17.5 (“Releases”). The result is an end run around both the existing
compulsory licensing system and arm’s-length license negotiations, to create a retroactive
compulsory copyright system for compositions at a bargain rate.
Objectors as a group constitute more than five hundred members of the Settlement Class.
As a group, they assert that the Settlement Agreement is substantively unfair because the
$43 million Settlement Fund, of which at least one-third is intended to go not to the class but
instead to class counsel as attorneys’ fees (see Settlement Agreement ¶15.1), is grossly
insufficient both in light of Spotify’s ability to withstand a greater judgment and the best possible
recovery in this case.
More specifically, the Settlement Agreement is unfair because it could pay as little as
$3.82 for each composition whose copyright Spotify infringed. From the Settlement Fund of $43
million, about $28.7 million will remain after the proposed payment of class counsel’s attorney’s
fees. According to its own publicity, Spotify has about 30 million songs.6 If as few as onequarter of those songs, 7.5 million, were unlicensed then, taking the $28.7 million left in the

6

https://press.spotify.com/us/about (Accessed Sep. 8, 2017).

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Settlement Fund after attorneys’ fees are paid and dividing that number by 7.5 million songs, the
result is a settlement payment of $3.82 per infringed song. As the Court is well aware, Spotify
faces potential liability of up to $150,000 per infringed composition for willful infringement and
$30,000 for nonwillful infringement, plus attorneys’ fees and costs. While a discount of some
amount is to be reasonably expected as part of a compromise settlement, the discount potentially
afforded Spotify in this case is a 98.7% discount for nonwillful infringement and a discount for
willful infringement so close to 100% as to give Spotify a practical free pass on willful
infringement.
Spotify and class counsel are also colluding to give Settlement Class Members an
unfairly small amount of the real settlement fund. The true amount Spotify is offering to pay to
settle this litigation is $48 million: the $43 million Settlement Fund plus an additional $5 million
payment directly to class counsel. See Settlement Agreement ¶ 15.1. Spotify has agreed not to
contest a request of up to one-third of the $43 million Settlement Fund by class counsel. If the
Court approves this scheme, then Settlement Class Members will receive only $28.67 million, or
less than sixty percent (60%) of the $48 million Spotify is willing to pay, while the class counsel
will receive more than 40%. This amount is inadequate both as a total amount and as a
percentage of the real settlement fund.
Courts determine whether a proposed class action settlement’s terms are fair, adequate,
and reasonable according to the factors set forth in City of Detroit v. Grinnell Corp., 495 F.2d
448 (2d Cir. 1974). These factors are (1) the complexity, expense and likely duration of the
litigation; (2) the reaction of the class; (3) the stage of the proceedings and the amount of
discovery completed; (4) the risks of establishing liability; (5) the risks of establishing damages;
(6) the risks of maintaining the class action through the trial; (7) the ability of the defendant to

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withstand a greater judgment; (8) the range of reasonableness of the settlement fund in light of
the best possible recovery; and (9) the range of reasonableness of the settlement fund to a
possible recovery in light of all the attendant risks of litigation. Id. In assessing the substantive
fairness of the settlement, the Court “must eschew any rubber stamp approval in favor of an
independent evaluation, yet . . . stop short of the detailed and thorough investigation that it would
undertake if it were actually trying the case.” Id. at 462.
In this case, the most critical factors to assess are factors 2 (the reaction of the class), 7
(Spotify’s ability to withstand a greater judgment), and 8 (the range of reasonableness of the
settlement fund in light of the best possible recovery). As a group of over 500 Settlement Class
Members, Objectors represent a nontrivial proportion of the class, and their negative reaction can
be considered a reaction of the class. With a catalog of 30 million songs, 60 million active
subscribers and over $3 billion in annual revenue, 7 Spotify has the resources to withstand a
greater judgment. Finally, a recovery of less than two cents on the dollar for the alleged
infringement is patently insufficient and unreasonable.
COMPLIANCE WITH PARAGRAPH 24 OF THE COURT’S ORDER (DKT. #177)
Each Objector’s name, address, telephone number, email, and list of applicable copyright
registration numbers are attached hereto as Exhibit A. Neither Donahue Fitzgerald LLP nor
Pullman & Comley, LLC have objected to any class action settlement in the previous five years,
and are not aware of any Objector doing so.

7

See supra at Note 6; see also McIntyre, Hugh, “Spotify’s Revenue Spiked In 2016 But Its Losses Rose By A
Greater Margin,” Forbes, June 15, 2017, available at https://www.forbes.com/sites/hughmcintyre/2017/06/15/
spotify-lost-more-than-600-million-from-3-3-billion-in-revenue-in-2016/#2f9d59647008 (accessed Sept. 9, 2017)
(“[T]he popular platform brought in just under $3.3 billion worldwide.”).

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CONCLUSION
For the foregoing reasons, Objectors, and each of them, object to the Proposed
Settlement.
Respectfully submitted,
Dated: September 12, 2017

PULLMAN & COMLEY LLC
By: /s/ James T. Shearin
James T. Shearin, Esq.
Timothy G. Ronan, Esq.
Pullman & Comley, LLC
850 Main Street
Bridgeport, CT 06604
(203) 330-2000
(203) 576-8888 – fax
jtshearin@pullcom.com
tronan@pullcom.com
DONAHUE FITZGERALD LLP
By: /s/ Daniel J. Schacht
Daniel J. Schacht, Esq.
Andrew S. MacKay, Esq.
Donahue Fitzgerald LLP
1999 Harrison Street, 25th Floor
Oakland, CA 94612-3520
(510) 451-3300 / (510) 451-1527 fax
dschacht@donahue.com
amackay@donahue.com
Attorneys for Objectors

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