Disney Enterprises, Inc. et al v. Hotfile Corp. et al

Filing 168

MEMORANDUM of Law re 162 Plaintiff's MOTION FOR A CASE MANAGEMENT ORDER DEFERRING DAMAGES DISCOVERY re 133 Scheduling Order, Order Referring Case to Mediation, Order Referring Case to Magistrate Judge,,,,,, In Opposition to Plaintiffs' Motion to Defer Damages Discovery by Hotfile Corp.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C)(Munn, Janet)

EXHIBIT B

INDEX NO. 100152/2010

.0
TYLED: NEW YORK COUNTY CLERK 06,(W2T17
NYSCEF

461.1T6v-20427-AJ Document 101-

Entered on FLSD Docket 07A5a9Ari

SUPREME COURT OF TEE STATE OF NEW YORK
COUNTY OF NEW YORK: IA PART 39

x

09/2o10

E-FILE

UMG RECORDINGS, INC.,
Plaintiff,

DECISION/ORDER
Index No. 100152/10

-againstESCAPE MEDIA GROUP, INC.,
Defendant.

x
BARBARA R. KAPNICK, J.:

Plaintiff UMG Recordings, Inc. ("UMG") claims to be the owner
or exclusive United States licensee of the rights in sound
recordings recorded prior to February 15, 1972 of some of the most
popular. and successful recording artists of the 20 th Century,
including Buddy Holly, The Carpenters, Cat Stevens, Chuck Berry,
The Jackson Five, The Mamas and the Papas, Marvin Gaye, The
SUpeemes, The Temptations, and The Who (the "Pre-1972 Recordings").
Defendant Escape Media Group, Inc. ("Escape") owns and operates the
website, www grooveshark . cora .

Plaintiff claims that Escape is reproducing and storing the
Pre-1972 Recordings on its own servers, without UMG's permission,
and distributing copies of the recordings to the users of its
website.

Plaintiff's Complaint seeks injunctive relief, an accounting
and compensatory and punitive damages based on alleged common law

Case 1:11-cv-20427-AJ Document 101-1 Entered on FLSD Docket 07/15/2011 Page 3 of 5

copyright infringement (first cause of action) and unfair
competition (second cause of action).

Plaintiff now moves by letter application for an order: (i)
bifurcating discovery in this case on the ground that the issues
concerning liability and damages are separate and distinct and
involve different witnesses and documents; and (ii) limiting
discovery during the initial phase to a representative list of
plaintiff's alleged copyrighted sound recordings, and permitting
plaintiff to prove its standing to bring this action based on that
representative sample. 1 Plaintiff asserts that this schedule will
facilitate the filing of early dispositive motions with respect to
the core issue in this case, and then would provide a meaningful
opportunity to explore settlement or prepare for the next phase of
the case.

Defendant opposes plaintiff's request,

claiming that

bifurcation would unduly prejudice it and would artificially
disrupt a ruling with respect to the totality of the action.
Specifically, defendant claims that without discovery from
plaintiff regarding various aspects of the copyrighted works,

1
To establish a claim of copyright infringement,
plaintiff must establish (1) ownership of a valid copyright, and
(2) unauthorized copying of the musical works. See, Arista
Records LLC v Usenet.corn, Inc., 663 FSupp 124 (SDNY 2009).
2

Case 1:11-cv-20427-AJ Document 101-1 Entered on FLSD Docket 07/15/2011 Page 4 of 5

including ownership, use and revenue associated with the works
beyond the representative sample proposed by plaintiff, defendant
will be unable to adequately raise its affirmative defenses with
respect to any other works, or formulate any settlement position.
It is established that disclosure provisions are to be
liberally construed and a trial court is afforded broad
discretion in managing disclosure (see Kavanagh v. Ogden
Allied Maintenance Corp., 92 N.Y.2d 852, 954, 683
N.Y.S.2d 156, 705 N.E.2d 1197 [1998]). In the exercise of
this discretion, competing interests concerning the need
for such discovery must be balanced "'against any special
burden to be borne by the opposing party'" (id. at 954,
683 N.Y.S.2d 156, 705 N.E,2d 1197, quoting O'Neill v.
Oakgrove Constr., 71 N.Y.2d 521, 529, 528 N.Y.S.2d 1, 523
N.E.wd 277 [1988]). If discovery has been limited to
material and necessary information (see CALR 3101[a]),
the determination will not be distured unless there was
a clear abuse of the trial court's discretion (citations
omitted).

American Association of Bioanalysts v New York State Dept. of
Health, 12 AD3d 868, 869 (3rd Dep't 2004). See also, Don Buchwald
& Associates, Inc. v Marber-Rich,

305 AD2d 338 (1' Dep't 2003).

Based on the papers submitted by counsel for both sides and
the oral argument held on the record on May 12, 2010, this Court
finds that bifurcated discovery on liability and damages in this
case is inappropriate, since the issues involved are all
intertwined and should not be approached on a piecemeal basis.
Either party may make a dispositive motion at the appropriate time,
after complying with the requirements of Rule 24 of § 202.70 of the
3

Case 1:11-cv-20427-AJ Document 101-1 Entered on FLSD Docket 07/15/2011 Page 5 of 5

Uniform Rules for the New York State Trial Courts (Rules of the
Commercial Division of the Supreme Court).

Moreover, this Court finds that discovery should not be
restricted to a representative sample of the Pre-1972 Recordings,
since defendant is entitled to assert specific affirmative defenses
with respect to individual recordings. See, American Association of
Bioanalysts v New York State Dept. of Health,

supra at 869-870. 2

The parties shall enter into a discovery schedule by June 16,
2010 or appear for a conference that morning at 10:00 a.m. with the
Court in Courtroom 208 at 60 Centre Street.

This constitutes the decision and order of this Court.

Date:

June / , 2010
arbara R. Kapnick
J.S.C.

MOW IVICAPIW

2

By the same letter application, plaintiff also sought
an order modifying the parties' Stipulation for the Production
and Exchange of Confidential Information to permit access by
UMG's in-house counsel to certain confidential information
labeled for "Attorneys Eyes Only." That portion of the motion was
granted on the record on May 12, 2010. Defendant may move for
relief from this Order as to a specific document, if it deems it
necessary and appropriate.
4