Eight Mile Style, LLC et al v. Apple Computer, Incorporated

Filing 89

TRANSCRIPT of Motion Hearing held on 06/12/2008. (Court Reporter/Transcriber: Marie Metcalf) (Number of Pages: 43) Redaction Request due 10/16/2008. Redacted Transcript Deadline set for 10/27/2008. Release of Transcript Restriction set for 12/24/2008. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date, the transcript is publicly available. (Metcalf, M)

Eight Mile Style, LLC et al v. Apple Computer, Incorporated

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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION EIGHT MILE STYLE, L.L.C., et al, Plaintiffs, Case No. 07-CV-13164

APPLY COMPUTER, INC., et al, Defendants./ PLAINTIFFS' MOTION TO COMPEL DISCOVERY BEFORE THE HONORABLE DONALD A. SCHEER United States Magistrate Judge 648 U.S. Courthouse 231 West Lafayette Detroit, Michigan 48226 (Thursday, June 12, 2008)

12 APPEARANCES: 13 14 15 16 17 TRANSCRIBED BY: 18 19 20 21 22 23 24 25 MARIE METCALF, CSMR, CVR, CM Official Court Reporter 267 U.S. Courthouse 231 W. Lafayette Detroit, Michigan 48226 [phone] HOWARD HERTZ, ESQUIRE RICHARD S. BUSCH, ESQUIRE Appearing on behalf of the Plaintiffs. DANIEL D. QUICK, ESQUIRE KELLY M. KLAUS, ESQUIRE Appearing on behalf of the Defendants.

Dockets.Justia.com

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TABLE OF CONTENTS

Proceedings - Thursday, June 12, 2008

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 seated. defendants.

Detroit, Michigan Thursday, June 12, 2008 At about 3:04 p.m. * * * Please rise.

DEPUTY COURT CLERK:

United States District Court for the Eastern District of Michigan is now in session, the Honorable Donald A. Scheer, United States Magistrate Judge, presiding. The Court calls case number 07-13164, Eight Mile Style vs. Apple Computer. THE COURT: MR. KLAUS: MR. BUSCH: THE COURT: Good afternoon. Good afternoon, Your Honor. Good afternoon, Your Honor. Will counsel please state

appearances for the record? MR. BUSCH: Eight Mile Style. MR. HERTZ: Eight Mile Style. MR. KLAUS: the defendants. MR. QUICK: Dan Quick for the Kelly Klaus, on behalf of Howard Hertz, on behalf of Richard Busch, on behalf of

THE COURT:

Thank you.

Please be

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We are here pursuant to an order of reference from Judge Taylor for consideration of Plaintiff's Motion to Compel Discovery. I've looked at

the motion, response and the list of unresolved issues. Has anything additional been resolved since the delay of the hearing? MR. BUSCH: Yes, Your Honor, we have

resolved a few of the issues and we have not resolved several of the issues. And if it would be all right

with Your Honor, I can just go through and -- on behalf of the plaintiffs and go through our points and take it one by one. THE COURT: MR. KLAUS: Any objection, Mr. Klaus? No, Your Honor. I think

that -- I believe that just as a supplement to what Mr. Busch has said, I think we have remaining between us three live issues that were identified and ensconced in the statement and then we've also got an issue that we've been discussing with respect to one of the 130(b)(6) notices that was mentioned at the end. we may want to take that up separately. But I think there are -- there are two deponents and one interrogatory that I think we've got by my count. MR. BUSCH: I'm not certain that's And

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right.

I'd just like to go through it one by one and

make sure -THE COURT: MR. BUSCH: You may proceed. Thank you, Your Honor. And

I've got the list of unresolved issues documented in front of me and I'll just take it point by point with respect to that. THE COURT: MR. BUSCH: Thank you. Your Honor, I think it's

important -- just a very bit of background, just so that Your Honor understands the nature of the case a little bit and the issues that we are disputing. Essentially, Your Honor, this case involves the contention of Eight Mile Style that Apple has not obtained what is called a mechanical license, which allowed its compositions to be sold on I-Tunes from Eight Mile Style. Aftermath, which is part of Universal, intervened in the case on the grounds that a sister company of Eight Mile Style called FBT Productions, which has rights in what's called the master recording. recording is the sound, the tape, the recording. composition is the underlying musical work. have a contract with FBT. And in that contract there's what's called Master The

That they

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a controlled composition clause, and that under the controlled composition clause, it had the right to make the master and the composition available to Apple and Apple did not have to get a direct license from Eight Mile Style. It is Eight Mile Style's position that that controlled composition clause does not apply to Apple or to licenses, does not give Universal the right to license the composition to Apple. And it is Eight

Mile Style's position that there is no separate license that Universal or Aftermath could have used to pass through the right to use the composition to Apple. Rather, Apple had to get a separate license directly from Eight Mile Style. So that's the dispute. On the one hand,

Universal says, "We have the control of what's called the controlled composition clause and we're allowed to make use of that to make the songs available to Apple without Apple having to come to you, Eight Mile Style." And it's our position that that controlled composition clause does not apply and that Apple had to get a license directly from us. So that's the dispute in the case and that gives rise to many of the discovery issues that we'll be talking about here today.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 so state.

Item number six, Interrogatory Number Six, asks Apple to disclose what the basis is for their belief that they have the right to basically make the composition available without obtaining a license from Eight Mile Style. And it is our position that Apple should The defendants have objected to answering that

interrogatory, but Apple should be required to say whether they have a license from Universal or Aftermath. They can either say, "Look, we have a license for the publishing from Aftermath or from Universal, and where they sub-licensed it to us, Apple." Or they can say, "We're just a reseller. We're a seller of music and we don't need a license. We

got the right to reproduce the master recording, and as a result of that, we don't need a license because we're just a reseller of goods." Because one of their positions in another case is that they're just a reseller of the music and they're not a licensee. So we want to know, is your

basis for making these compositions available, is it based upon your status as a licensee or are you saying you don't need a license, one or the other. The defendants are refusing to answer that question or saying they answered it in connection with

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another interrogatory, which we believe evades the point. And we just want a direct answer to that question. that item still remains open between the parties. THE COURT: MR. KLAUS: Thank you. Mr. Klaus? Just And

Thank you, Your Honor.

briefly, on the background of the case, in terms of what the dispute is between the parties, we think it's important to note that there's -- the defendants actually have a -- filed a Summary Judgment Motion that is before Judge Taylor. There is an opposition brief

that is due from plaintiffs in a couple of weeks. But the argument that is made by the defendant is not simply that there was a controlled composition clause. In fact, the controlled composition

clause was not just by this company called FBT, which is owned by exactly the same -- the same individuals who own the plaintiff Eight Mile Style in this case. But was a controlled composition clause executed by the artist himself, who was -- who has admitted by the plaintiffs to be an author of the compositions and who, therefore, have the right to do it, and that is Marshall Mathers or Eminem. express controlled composition clause. So there is an There have been

individual agreements that the plaintiffs in the case have executed with respect to these compositions, which

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it's our position, even if the first express authorization didn't grant the right, these would have. And the third is, that there's also a doctrine in copyright law called implied license, that says that, where, as here, you have a party that has stood by and has accepted royalty payments for years. The songs that are at issue here have been disseminated over the I-Tunes service, which is very well known, for years, going back to 2003, that if a party acts in accordance with the belief that there is in fact a license and accepts money for it, that there is a license implied as a matter of law. So there are multiple

grounds on which we've moved for summary judgment and that is pending. With respect to Interrogatory Number Six, the first thing that I would say in response to Mr. Busch is, he said that what his question was was, "Why is it that you, Apple, believe you don't need to have a license from us?" That is not the interrogatory that Mr. Busch actually drafted. The interrogatory that he

actually drafted and served, and that we objected to, had to do with the basis for your belief that Apple has the right to synchronize with images the Eminem compositions. Synchronizing with images is a particular right under the

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copyright act and that is not at issue in the complaint. Transmit, which is not a defined term, but appears to be the same thing as publically perform or broadcast, also is not at issue in the complaint, because that's not what Apple does, or we produce lyrics of the Eminem compositions. It's undisputed that I-Tunes

doesn't reproduce lyrics, and so that particular right isn't at issue. And what we had said to Mr. Busch during the meet and confer was, "That's not the interrogatory that you drafted. The interrogatory that you drafted

doesn't have anything to do with the allegations that are in the complaint." And if he'd wanted to draft a new interrogatory, it was his burden to go and draft -- to go and draft one that was more clear. The other thing is, he did say that we've pointed to -- in terms of what the answer is here, there is another interrogatory, it was number four in our response, which deal with -- which are set forth at tab A of the motion, which gets at exactly the thing that I think he says he's trying to get to with respect to this interrogatory, "Explain the basis for your belief that Universal had the authority to

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license, authorize or otherwise grant Apple the right to reproduce, distribute and sell downloads of the sound recordings." And what's stated is, by Apple, is that "Our agreements provide that we are a reseller. Our agreements provide

that we are a reseller and we rely on the label, in this case, Universal, to be responsible for obtaining what are called the mechanical rights to the composition." There is no great mystery here as to what the nature of the arrangement is or why it is that we contend that Apple has the right to resell the sound recordings with the compositions. MR. BUSCH: respond briefly? THE COURT: MR. BUSCH: You may. First of all, our Your Honor, if I may just

Interrogatory Number Six was drafted very broadly to cover every possible item that Apple might be doing, and transmit was a broad way of saying, to make available for digital download. That's why we have the

right to "synchronize images, transmit, publically perform, or reproduce lyrics of the Eminem compositions." It was drafted broadly to encompass

every possible thing that Apple did.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 take that.

In connection with our meet and confer, that is where I told -- because Mr. Klaus had some objections to things that he said were not part of this case. I pointed to the transmit language and I said,

"Look, if you will just answer the question about -explain the basis for Apple's belief that Apple has the right to make these songs available for permanent download, the compositions, I will be satisfied with that and I would not require answers on the other items that you say are not part of this case." So I've agreed to do that. I've agreed to

And Aftermath's answer is not Apple's answer.

And I would like Apple to answer the question specifically on what basis. If they want to say that

they are simply a reseller and they don't need a license, let them say that. If they believe they have a

sublicense from Universal or Aftermath, they can say that too. It's a very simple, straightforward interrogatory

and we'd ask that it be answered. THE COURT: So you have employed in your

rebuttal the formulation, "make available for permanent download." Is that construction included in the

language employed in Interrogatory Number Four, as Mr. Klaus suggests? MR. BUSCH: Interrogatory Number Four to

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Aftermath -- Interrogatory Number Four to Aftermath says, "Please explain the basis for your believe that Universal," which is defined as part of Aftermath, "has the authority to license, authorize or otherwise grant to Apple the right to reproduce, distribute and sell downloads of sound recordings." So it relates to sound recordings as opposed to compositions. issue. So again, we would be more than satisfied with an answer to the question, "On what basis Apple claims to have the right to make available for download or sell downloads that contain the Eminem compositions?" MR. KLAUS: The only thing that I would This gets to the compositions that are at

point out is that Interrogatory Number Four, Mr. Busch suggested that this was limited to the authorization for sound recordings. What it actually says is, "Sound It's the

recordings of the Eminem composition."

composition -- there are two separate -- and the reason for the confusion, Your Honor, is -- in case either one of us is not clear, every song, every popular song has

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two separate copyrights bound up within it. actual recording, one in the composition. case deals with the composition rights. THE COURT:

One in the

And this

But Interrogatory Four, as I

read it, deals with sound recordings. MR. KLAUS: It says it's sound

recordings of the compositions, which is -THE COURT: far as I'm concerned. Which is sound recordings as

So the question that the

plaintiff now wants answered is not asked. MR. BUSCH: Number Six. Oh, it is, in Interrogatory

That's the one that we're talking about, They pointed to

is Interrogatory Number Six.

Interrogatory Number Four and are saying, "Well, we answered it through Interrogatory Number Four." THE COURT: Which word or phrase in

Interrogatory Number Six is the functional equivalent of your formulation, quote, make available for permanent download? MR. BUSCH: THE COURT: your equivalence? MR. BUSCH: Because they are -- what is "Transmit," Your Honor. And what is the basis for

happening is that Apple is transmitting to the public the compositions for purposes of permanent downloads.

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That's the transmission that is occurring.

And that's

why we drafted it as broadly as possible, to encompass every potential act that Apple did, inclusive of the transmission. THE COURT: afternoon. MR. KLAUS: The only thing I would say It's going to be a long

on the transmission issue, we've been meeting and conferring on the -- we first met and conferred on these several months ago, Your Honor. It was the first

time that I -- the first time that I heard Mr. Busch say that "transmit" in the sentence was the same as "make available for download," was this afternoon, a few hours before this hearing. It was never said to me

during the meet and confer process, that "transmit" covered "make available for download." MR. BUSCH: It just wasn't.

Your Honor, we did say, and

Mr. Hertz was on the phone call with us, when we first had a meet and confer, and we absolutely did say that. MR. KLAUS: And I would just say, Your

Honor, in response, that the best -- the indication that it wasn't is if you look through the Motion to Compel paper and the -- and even the statement of unresolved issues, that argument isn't made anywhere. THE COURT: I'm going to grant the

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motion and direct that an answer be provided, responding to Interrogatory Number Six as it relates to the right to make available for permanent download of the composition. MR. BUSCH: Thank you, Your Honor.

We have resolved point number 16, and as to Interrogatory Number 18, Apple has agreed to provide information to us for purposes of a deposition that we will be taking of Mr. Eddie Q (sic). has been resolved. As to Aftermath, we have -- in our meet and confer process, we have narrowed the issue -- we have narrowed the issue to -- we have narrowed the issue in the meet and confer process to obtaining from Aftermath an answer as to whether they have a license from some other third party, a co-publisher of Eight Mile Style, that would allow them to make the compositions available to Apple through that agreement. provide us with that information. THE COURT: MR. KLAUS: Is that correct? With respect to Apple, there They have agreed to So as to Apple, it

is a separate agreement for purposes of resolving this that Mr. Busch and I have laid forth. With respect to

this Interrogatory Number 18 and Request For Production Number Six, which we'll get to momentarily, yes. With

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respect to Aftermath it said that we have produced one agreement with a -- with the clause that I referred to earlier with respect to Eminem. If there are any other

co-authors that we're going to rely on, we're going to provide that information and produce the agreements to Mr. Busch. THE COURT: plaintiff? MR. BUSCH: Co-authors or book That satisfies the

publishers, just to make it clear. THE COURT: resolved. MR. BUSCH: Interrogatory Number 19, I Thank you. Eighteen is

believe Mr. Klaus said his client would provide a supplemental response. MR. KLAUS: Correct. This is directed

solely to Apple, as Number 19.

And what I said was

that Apple would respond supplemental responses. THE COURT: MR. BUSCH: requests now, Your Honor. Nineteen is resolved. We're up to the document And as to the Document

Request, Number Six, I believe we have the same agreement as to Document Request Number Six, as we did to Interrogatory Number 18. MR. KLAUS: That's correct.

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THE COURT: MR. BUSCH:

Six is resolved. Number seven has been

MR. KLAUS:

Yes, Number Seven has been

I believe plaintiffs have said they're not

-- they're not continuing with Number Seven. THE COURT: MR. BUSCH: Seven is resolved. Number 13 has been resolved

MR. KLAUS:

Yes.

Number 13 was resolved

at the same time as Number Seven. THE COURT: MR. BUSCH: Thirteen is resolved. That brings us to discovery The defendants -- as

related to damages, Your Honor.

to Number 26, I'm sorry, Apple has indicated they have no such documents, and with that representation, it has been resolved, so we would just ask that they make that representation on the record. MR. KLAUS: I think actually with

respect to -- with respect to Number 26, this I think is the -- this was the flip side of our resolution with respect to Interrogatory Number 18, as to Apple. There

is -- I think the response that we have provided, which is that Apple doesn't have any direct agreements for the compositions, remains our answer. There is an

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outstanding issue with respect to Apple having agreements with music companies that are owned by some recording artists that will be covered at a 30(b)(6)deposition that we had discussed, because I think that's the resolution with respect to both that Interrogatory and Request for Production 26. MR. BUSCH: Just stated my way to make

sure that Mr. Klaus and I are speaking the same language, what Apple has said to us is they have no specific mechanical licenses with third parties. However, they may have -- or they do have agreements with artists, and to the extent that would encompass a mechanical license, they will provide us with samples of those and we will be able to question a witness, simply Mr. Q about it at his deposition. representation, it's resolved. MR. KLAUS: THE COURT: Resolved. Resolved, Number 26. And with that

That brings us up to discovery related to damages. MR. BUSCH: And the defendants had a And we have

motion to bifurcate that we have opposed.

agreed to short-circuit this to hold off on the disputes we have on this pending the resolution of the motion to bifurcate, and we have agreed that once the

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motion to bifurcate is resolved, if the Court approves this structure, that we would be able to meet and confer on these discovery requests relating to damages and either reach a resolution or come to the Court. And whatever the Court decides as far as the breadth of the discovery, we would be allowed to take depositions or discovery related to damages at the appropriate time following the bifurcation decision. THE COURT: MR. KLAUS: to do. THE COURT: deposition disputes. MR. BUSCH: Yes, sir. And the first That takes us up to Sounds like a deal. That's what we have decided

deposition dispute we have relates to -- it's the same thing, it's Leo Ferrante and Tim Hernandez. The issues Mr.

are relatively similar here, and that is this.

Ferrante -- let's do a -- let's start with -- let's start with the deposition of Eddie Q actually. the deposition of Eddie Q, that matter has been resolved on the following terms. They will make Eddie The As to

Q available for a deposition on June the 20th. deposition will take place at Apple.

It will last the

afternoon, one to five, for four hours of deposition time. Mr. Q will answer the questions relating to

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these other agreements that we have -- among other topics, the item on the agreements with the artists. We will agree that as far as the financial issues relating to Apple and a witness that relates to the financial issues, that we will also put that off pending the motion for bifurcation resolution and hopefully be able to resolve the -- a deposition of Apple on financial matters at the same time that we meet and confer on a witness for Aftermath on financial matters. And we will not require any other witness from Apple besides Mr. Q and the financial person. MR. KLAUS: And I think that fairly The one -- the

summarizes the agreement that we have.

caveat being a financial -- somebody to speak about the financial information at issue, if and when we get to damages discovery. MR. BUSCH: THE COURT: MR. BUSCH: Yes. Eddie Q is resolved. Now, that brings us to Leo That's last.

Ferrante and Tim Hernandez.

As far as Mr. Ferrante and Mr. Hernandez are concerned, they were members of Universal's copyright department at relevant times in this process. both identified in discovery, either through correspondence that was produced or through interrogatory They were

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responses as people with information or knowledge. Mr. Ferrante, some of his correspondence was produced. I believe Mr. Hernandez, his name was

identified specifically, although in response to the question -- let me back up one second if I can, Your Honor. One of the issues in this case is, did Eight Mile Style object to the making available of its compositions on I-Tunes? Did it advise Universal that it That is a key

objected and would not sign licenses. issue in this case.

In response to an interrogatory that was served on us by Aftermath, which asked us to identify who we made objections to, we answered that interrogatory by saying that we made objections to various people in the copyright department, including, but not limited to -and we identified five or six people. During discovery in this case, we've taken the deposition of several people from the copyright department of Universal, Pat Blair, who was the head of the department and Chad Gary, who was in the department at the relevant time, as well as Todd Douglas. Mr. Ferrante and Mr. Hernandez no longer work for Universal. Universal. They are not within the control of

Mr. Ferrante resides in New York and Mr.

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Hernandez, I believe resides in Nashville, Tennessee. During the course -- discovery was original scheduled to end in this case on June the 2nd. Before the deposition of Pat Blair, which was occurring -- which occurred in the last week and-a-half or so, we spoke on the record about depositions that needed to be completed. And we agreed to extend the taking of

discovery through the end of June for purposes of completing depositions. During the conversation that occurred, I neglected to mention Ferrante and Hernandez. And we then

went back after the deposition and we were talking about it. And almost within the -- it was like a Thursday or The following week, at the beginning of the

Friday.

week, I e-mailed Mr. Pomerantz, Mr. Klaus' partner, and I said, "We forgot to mention Ferrante and Hernandez. still need to depose those two people as well." And Mr. Pomerantz, who is Mr. Klaus' partner, said, "Well, you didn't mention it at the deposition, so my view of it is that it's -- you don't get to do it." Mr. Ferrante and Mr. Hernandez are essential to the case because they have knowledge about Eight Mile's objections. Mr. Ferrante does have We

knowledge about the practice in the copyright department

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at Universal concerning sending out separate digital licenses, and we want the chance to depose them. Mr. Ferrante, I will say -- and this will -- some of this will be illuminated further when we talk about Aftermath's -- the 30(b)(6) Notice of Deposition of Aftermath. But Mr. Ferrante is in New York and we are

actually going to New York next week for the deposition of Mark Levinson, who is Eight Mile's lawyer. We have

subpoenaed Mr. Ferrante for a deposition that morning, the same morning. noon. Mr. Levinson is going to be deposed at

We subpoenaed Mr. Ferrante for a deposition at

9:00 on that morning, the same day, at the same location, so there's no prejudice. We're going to be there anyways

and we would ask that we be allowed to take that deposition. There will be no extra cost, nothing. And then as far as Mr. Hernandez is concerned, he's in Nashville, and we would ask that we be allowed to take his deposition as well. MR. KLAUS: in response. A couple of points to make

One is, the plaintiff in this case has

already taken ten depositions -- has already reached the limit of the number of depositions that it's entitled to take, exclusive of the 30(b)(6) depositions that we haven't gotten to. We've said we're not

objecting on the ten -- we're not objecting on the ten

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depo, with respect to the 30(b)(6), but the plaintiff had the opportunity to take ten depositions. As was stated by Mr. Busch, three of those depositions were of people from the Universal copyright department covering exactly the same issues that he says he wants to now depose Mr. Ferrante and Mr. Hernandez on. Ms. Blair, who he mentioned as being the head of the department, there was a suggestion that the testimony of these individuals might be somewhat more favorable because they no longer work for Universal. Blair no longer works for Universal. And Mr. Busch Ms.

subpoenaed her and was able to take her deposition. There was also a suggestion that the omission of Mr. Ferrante and Mr. Hernandez was somehow inadvertent, because it was not mentioned at the start of Pat Blair's deposition. And I have excerpts from -- I They weren't mentioned

don't think there's any dispute.

as somebody that the plaintiff was reserving its right to depose at the deposition, but there wasn't just a -- it wasn't just a five-minute discussion there, where the parties set forth their understanding of what the limited extension of the discovery cut-off in the case would be. The parties also filed a stipulation regarding the extension of the discovery. And the

stipulation, which has not been entered, but which was --

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or I'm sorry.

There was nothing -- Judge Taylor has not But the stipulation refers to the

signed the order yet.

agreement, and it says, "It is stipulated and agreed the discovery deadline shall be extended to June 27th from June 2nd to allow the parties to conduct the depositions identified on the record at the deposition of Patricia Blair in this case taken on May 29, 2008." And therefore, if there was -- there was another chance for reflection before the stipulation to say, "Oh, yeah, I forgot." Our position is there had been more than enough depositions in this case. There had been

depositions of -- the depositions that Mr. Busch wants to take here is to go over ground that he's already gone over with three witnesses from the same department. There's been no proffer as to what these individuals would say which would establish any sort of good cause for relief from Rule 30's ten deposition limit, which there hasn't been a motion filed to, or for relief from the stipulation that Mr. Busch himself entered into. And

so we would -- and so we oppose the request to take these two additional depositions.

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THE COURT: MR. BUSCH:

Rebuttal? Your Honor, very briefly.

On the record we talked about the fact that neither side -- or I made clear that the other side would not be raising the ten deposition limit. We agreed that

the depositions would go forward and that we would extend the deadline. And now, in addition to that, Your Honor, we'll get to this in a second, but on Aftermath, which is the defendant in this case, we served a 30(b)(6) notice a long time ago for various -- very important topics that I'll get to in a moment that relate to some of these issues, and they still have not designated a witness. And now they want additional time to designate witnesses and have agreed or have suggested or we discussed, I should say, postponing our response to summary judgment until mid-July, so that they can figure out who their witnesses are going to be in connection with our 30(b)(6) notice. So I guess my point is that there's -since there is absolutely no prejudice to taking these depositions, and since by their own request they want to postpone identifying who their witnesses will be on very important topics that we'll get to in a moment, there's absolutely no prejudice to not allowing these depositions

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to go forward.

And they are essential to the case,

because as third parties who are no longer associated with Universal, we feel like they will be more likely to tell the truth, I would say. MR. KLAUS: First of all, the agreement

with respect to the ten deposition limit, carved out the 30(b)(6)s, but it was reached with respect to other individuals in the case. The second is, is obviously there's expense and inconvenience, certainly of traveling to Nashville for a deposition of Mr. Hernandez, and there's additional expense in terms of preparing for a deposition of another witness. And what we still haven't seen in the statement of undisputed issues or any other statement, is any indication of why it is that there's a belief that Mr. Ferrante will have information that other individuals in the case have not. Mr. Busch just said, "He's a former employee, and we therefore think that he will be more forthcoming." Patricia Blair is a former employee. He

took her deposition and now wants to take another one from somebody who reported to her. And we don't see the

need to do it, and particularly not where the parties had already entered into not just a stipulation at a

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deposition, but a subsequent stipulation saying that identified the universe of potential opponents. MR. BUSCH: Since Mr. Klaus has baited

me on saying he wanted a proffer on Mr. Ferrante and Mr. Hernandez, if Your Honor would like one, I would be happy to give it. THE COURT: No, in light of the rule --

in light of the fact that the ten deposition limit is reached and no motion to exceed the limit was filed, I'm disinclined to just grant carte blanche. On the other hand, you're going to be in New York. You've already deposed three members of I can't imagine that the

copyright department.

preparation for Ferrante is going to -- going to be that unduly burdensome. I'm going to grant the motion in

part, and allow the deposition of Ferrante on the New York date that's already been set, a three-hour deposition. And the deposition for Hernandez is not granted, short of a motion to exceed the time and a showing of cause why it wasn't taken care of earlier in the case. MR. BUSCH: Honor. MR. KLAUS: I want to add -- I can talk Yes, sir. Thank you, Your

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about this with Mr. Busch afterwards, but at the risk of pushing this, we had also -- there were some documents that were produced by the plaintiffs in the case after the deadline and Mr. Busch had agreed to make Mr. Martin available for deposition the same day in New York. If it would be possible for the Ferrate

deposition and the Martin depositions to be two hours each in the morning, then the Levinson four hours in the afternoon? MR. BUSCH: Honor. THE COURT: MR. KLAUS: MR. BUSCH: Two hours. Thank you, Your Honor. That brings us to the And it also brings us to That's fine with me, Your

30(b)(6) notice of Aftermath.

the other summary judgment, the summary judgment schedule. Right now, Your Honor, we have stipulated,

although the Court has not entered it yet, changing the response date for our motion for summary judgment -- or for their motion for summary judgment to the 24th of June. And speaking to Mr. Klaus today, there is a concern that Mr. Klaus has identified, that he can not get witnesses that would be responsive to some of these topics in sufficient time that we can take their

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deposition and be able to incorporate any testimony into our response for summary judgment. And one topic in particular is very important. Your Honor, with respect to Subject Matter

Number Two, Subject Matter Number Two is, "Whether the mechanical license signed by Joel Martin for the song "Lose Yourself" was ever countersigned by UMG or otherwise approved and whether it is now in effect." A bit of background on that is very important, Your Honor. Remember, it is the position of Universal in this

case that the controlled composition clause in a recording agreement that FBT, which is also owned by Mr. Martin and Eminem, gives them the right to exploit these compositions through digital download. position in this case. Shortly after the original FBT agreement with Aftermath was entered into in 1998, there were no permanent downloads in 1998. There was no I-Tunes, there That's their

was no commercially viable, lawful, permanent download service where these downloads were a means of distribution or licensing of the compositions for sale. In 2002, when permanent downloads began to

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be a means to license and sell compositions and sound recordings, Universal had the controlled composition clause that they thought that it applied to digital downloads. However, they contacted Mr. Martin, and they

asked him to sign a digital download license specifically for "Lose Yourself," the song "Lose Yourself." There was a negotiation that took place after Mr. Martin received that license request. ultimately agreed that Mr. Martin would sign the requested license based upon a two-year term, a right to terminate and other conditions. It drafted a license, a It was

negotiated license, not the license that Universal sent, but a negotiated license that had a two-year term, and a right to terminate and several other conditions within it. Our position is that if the controlled composition clause at issue in this case actually granted digital distribution rights, the right to license these songs for digital downloads, there would be no need for them to have entered into this license with a two-year term. The testimony of both Ms. Blair and Mr. Martin was -- and Ms. Blair was the head of the copyright department who negotiated this, was that the parties agreed this would be a trial process for digital

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downloads that would only be for this one particular song. UMG never -- or we don't have a returned, signed copy of that mechanical license. UMG then sent us

over the course of the next several years, requests for permanent download licenses that Mr. Martin never signed, never executed. This is -- if Universal did in fact sign

this "Lose Yourself" license and if Universal believes it's now in effect, that would, in our view, be strong evidence that they understood that the controlled composition clause did not implicate digital rights. So we need a witness in responding to summary judgment to testify about (a), whether the song, "Lose Yourself" was -- the mechanical license signed by Mr. Martin was ever signed by UMG. No one who we've

deposed so far knows whether it was otherwise approved by Universal. No one who we've testified knows -- who's

testified so far knows, and whether Universal believes it's now in effect. Again, no one who has testified on

behalf of Universal has said they have any knowledge on that whatsoever. Mr. Klaus offered to search to see whether they could locate a countersigned "Lose Yourself" mechanical license. Of course, our position would be

this litigation has been going on for months now, if not

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longer, and they should have produced it originally and they should have looked for it originally. But the point

is, is that we need a witness on this, and it is absolutely essential to have that in order for us to respond to summary judgment. So what I would ask, Your Honor, is that either Mr. Klaus be compelled to produce a witness to us almost immediately on these topics and the other topics that we have been discussing here today, some of them we've agreed not to require a witness, some they've agreed to produce a witness. it. We're still taking about

Or we would ask that our -- the time for our

response to the Motion For Summary Judgment be extended. And Mr. Klaus has said he would agree to that, so that we can get a witness on this topic, which is essential, and any other topic that the parties agree or the Court orders a witness be produced. MR. KLAUS: Your Honor, first of all, I

disagree with a great deal of the information that Mr. Busch just said about the import of the "Lose Yourself" license, about the plausibility of there being a test case when Eminem compositions have been obviously available on I-Tunes for many years, or his representations about Ms. Blair saying that there was an express agreement that there was a test case.

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The problem with what Mr. Busch has done with respect to topic number two, and with respect to the entire Aftermath 30(b)(6), is that he has plucked something out of something that we are in the middle of meeting and conferring on. There are ten separate And what

requests for topics in the Aftermath 30(b)(6).

I proposed to Mr. Busch today -- I heard what he has said about his summary judgment, he -- the reason that the summary judgment date was continued to June 24th was on Mr. Busch's motion for an extension of time to have it moved to the 24th. What I said to him is that with respect to topic number two and with respect to a-half dozen other topics as to which he thinks we still have a dispute and which he and I started our meet and confer and actually discussing the scope of the issues this afternoon after the deposition that we took this morning, is that we agreed to an expedited time frame for -- including the meet and confer, staking out our positions, and to the extent there is an issue that we need to submit to Your Honor for resolution, that we identify it in a statement of unresolved issues. It is a short document that

doesn't have to be a full-blown motion, that we can do it in a format that we hope we could get a resolution on if it's convenient to the Court, either without the need for

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us to come here for hearing in person or without the need for a hearing, and that we would then be agreeable to an acceptable extension of his time to respond to the summary judgment motion. THE COURT: This is the date set for the

hearing on the motion and you've had chances to meet and confer. Why is it that -- if you haven't reached

an agreement, why should I believe you're going to reach an agreement? MR. KLAUS: The reason for it is, Your

Honor, is that the Aftermath 30(b)(6), there's nothing about it in the motion to compel papers. Our We did

objections to this were served on May the 30th.

not -- we did not start discussing the meet and confer in terms of putting together the list of unresolved issues, until Monday night. We continued to work

through the interrogatories and the request for production, almost all of which we've actually reached an agreement and we've come to a resolution on. Mr. Busch and I started talking about the Aftermath 30(b)(6) depositions this afternoon. I think

that there's reason to believe that we would reach resolution on it, Your Honor. And if we didn't, there

would at least be the opportunity for each party to put in some form of a written statement which says, "Here's

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our positon as to this request," instead of going through them point by point, where there may be no need for the Court's resolution. MR. BUSCH: Your Honor, I think there's

one or two things I have to clear up here, but I don't want to leave the Court with the idea that I waited until this afternoon -- or the parties waited until this afternoon to discuss this. We served this

30(b)(6) notice on the defendants in the middle of May. They served their objections on May the 30th. I have been out in California with Mr. Pomerantz, which is Mr. Klaus' partner, for depositions throughout the second half of the month of May, and then the first week of June. There were several occasions

when I asked Mr. Pomerantz, we were planning on discussing this and the other topics that ultimately became the Motion to Compel, following our depositions, and each time -- and I don't want to put this entirely on Mr. Pomerantz, but each time, after his witness was deposed, it was late in the day, and he decided, "Let's not have the conversation. Let's do it some other time."

Then when we -- at the day of Pat Blair's deposition, we identified this 30(b)(6) matter as something that needed resolution and would be resolved today, would be resolved today if the parties could not

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reach a resolution on it. My problem with this is, unlike some of the documents or interrogatories, they can't -- they should have been looking for a witness for these topics for the last month. And if you hear Mr. Klaus, he's just

going to start thinking about who the witness might be and has not offered up who the witness is. They've got

to know who their witness is, who's going to know whether UMG ever countersigned "Lose Yourself." "Lose Yourself" is a huge song. the biggest song from the "Eight Mile" movie. huge song. It was It is a

It is one of the most important documents in They're

this litigation, whether Universal approved it. just starting to look for witnesses now. THE COURT: for that license? MR. BUSCH: the -- yes, we -THE COURT: one? MR. BUSCH: We produced it.

Was there a document request

We produced

You're looking for a signed

Yes, for all licenses they And nothing has been

had, any licenses, everything. produced.

And Mr. Klaus said to me today, "Well, we'll do a double secret look later."

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But the point is, our point is, "Why haven't you looked for it now? Why can't you identify Why are we just

who the witness is going to be now? starting this process?"

I would like them to advise us And we need this

when these witnesses will be available.

information in order to properly respond to the summary judgment. And we would ask that if they can't get a witness to us on these topics that we've agreed to, and I think we will reach resolution on most of these topics that are here, that we be allowed some additional time to respond to summary judgment, which he's agreed to, which he's okay with if the Court is okay with it. THE COURT: Well, I'm not going to touch I

It's not in the motion that's referred to me.

appreciate that you've discussed it and decided that it would be submitted to me, but that's just not how it works. The Magistrate Judge system is subordinate to the District Judge bench. I decide what Judge Taylor

tells me to decide, and the parties can't agree to submit things to me in the absence of a motion and expect me to respond to it. MR. BUSCH: Your Honor, just to make it

very clear, in our stipulation that we filed setting

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this hearing for today and what we've submitted to the Court, this was one of the issues that we actually did submit to the Court. The resolution of 30(b)(6) was

one of the items listed. THE COURT: Well, you meet and confer By way of guidance, I

and see what you can work out.

will say that I have long been and remain a proponent of broad discovery. Absent some good cause why I

should not require you to produce a witness on these subject matters, I'm likely to tell you to do it. So with that in mind, you better get together and talk this thing through. list if you want. You can submit a

If you can't agree on something, I'll So

review it, not likely to call you back for a hearing.

make it good and make it short, because this is not the way these matters are to be addressed. MR. BUSCH: Thank you, Your Honor. The

only thing is, is that on the summary judgment issue, on a response, I'm getting a little bit nervous about that, because right now our request was based upon where we stood a couple of weeks ago, that we be allowed to have until the 24th to respond to their summary judgment motion. our stipulation. That -- and that was part of

That has not been signed yet. I consider it part of the

THE COURT:

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agreement. MR. BUSCH: Okay. So could we -- can we

stipulate, can we submit something to Your Honor if we agree on the dates for these depositions we're talking about and that we needed to respond, a new schedule for our response and their reply? THE COURT: MR. KLAUS: Any objection to that? As I indicated to Your

Honor, we will meet and confer. And just so there is no misunderstanding about this, it's not just a question of -- the question here is not meeting and conferring to figure out the dates for deponents and we haven't had peoples' calendars open. It's that there are issues with respect to the

scope of these -- I take to heart what Your Honor has said about your view of discovery. We'll work often with

Mr. Busch to try to get this issue resolved without the need to have to come back. THE COURT: MR. BUSCH: Very well. And I'm not sure he answered I just want to make

Your Honor's question directly.

sure he doesn't object to extending the -THE COURT: He doesn't. He's already

said he doesn't, and he won't. MR. BUSCH: Okay.

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THE COURT:

There will be an extension. But I'll

If it's not stipulated, I'll take care of it. be very disappointed if that's necessary. MR. BUSCH: THE COURT:

Thank you, Your Honor. Thank you.

Mr. Busch, I'll direct that you prepare an order effectuating my rulings and your stipulations. Exchange it Messrs. Klaus and Quick for any objections as to form. Submit it within five working days. MR. BUSCH: MR. KLAUS: THE COURT: Thank you, Your Honor. Thank you, Your Honor. Thank you.

(At 3:57 p.m., court in recess) * * *

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CERTIFICATION I, Marie J. Metcalf, Official Court Reporter for the United States District Court, Eastern District of Michigan, Southern Division, appointed pursuant to the provisions of Title 28, United States Code, Section 753, do hereby certify that the foregoing is a correct transcript of the proceedings in the above-entitled cause on the date hereinbefore set forth. I do further certify that the foregoing transcript has been prepared by me or under my direction. \s\Marie J. Metcalf Marie J. Metcalf, CSMR-3274, CVR, CM ________ (Date)

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