Mechanical Licensing Collective v. Spotify USA Inc.

Filing 74

ORDER granting in part and denying in part 70 Motion for Reconsideration. For the reasons stated above, MLC's motion is DENIED IN PART and GRANTED IN PART. The Clerk of Court is respectfully directed to terminate the motion at ECF No. 70, vacate the judgment at ECF No. 62, and reopen the case. Within 21 days of the date of this order, MLC shall file its motion for leave to amend the complaint. (Signed by Judge Analisa Torres on 3/11/2025) (rro)

party can point to controlling decisions or data that the Court overlooked.” Id. (citation omitted);
see also Kolel Beth Yechiel Mechil of Tartikov, Inc. v. YLL Irrevocable Tr., 729 F.3d 99, 104 (2d
Cir. 2013) (explaining that reconsideration should be granted “only when the [movant] identifies
‘an intervening change of controlling law, the availability of new evidence, or the need to correct
a clear error or prevent manifest injustice’” (quoting Virgin Atl. Airways, Ltd. v. Nat’l Mediation
Bd., 956 F.2d 1245, 1255 (2d Cir. 1992))).
“[S]pecial considerations come into play,” however, “[w]hen vacatur is sought in order to
obtain leave to file a[] [first] amended complaint.” Mandala v. NTT Data, Inc., 88 F.4th 353,
361 (2d Cir. 2023). To balance the “liberal spirit” of Federal Rule of Civil Procedure 15, which
provides for leave to amend “when justice so requires,” with the strict finality of Rule 60, which
provides narrow avenues for relief from a final judgment, the Second Circuit has generally
“ensure[d]” that plaintiffs seeking post-judgment leave to amend are given “at least one
opportunity to replead,” so long as there is no “undue delay, bad faith[,] or dilatory motive on the
part of the movant . . . [or] undue prejudice to the opposing party,” and any amendment would
not be futile. Id. at 361–62 (quotations omitted).
ANALYSIS 1
MLC raises four grounds on which the Court should vacate its judgment and reconsider
its dismissal order or, alternatively, vacate the judgment to allow MLC to move to file an
amended complaint.
First, MLC contends that the Court did not consider that Spotify has failed to properly
account for and pay royalties to MLC in connection with Spotify’s Audiobooks Access plan.

The Court presumes familiarity with the facts alleged in the complaint, Compl., ECF No. 1, and the reasoning
supporting the dismissal order, see generally MLC, 2025 WL 328001, and does not repeat them here other than as
necessary.

1

2

Mem. at 2–3. The complaint’s only allegation related to this claim is conclusory, and there are
no facts to support it—particularly, no facts related to Spotify’s reporting and payment of
royalties in connection with its Audiobooks Access plan. See Compl. ¶ 58, ECF No. 1.
Accordingly, the Court was not required to credit the allegation. See Ashcroft v. Iqbal, 556 U.S.
662, 681 (2009). Even if MLC had properly pleaded the claim, MLC likely forfeited it by failing
to raise it in its briefing opposing Spotify’s motion to dismiss. See Colbert v. Rio Tinto PLC,
824 F. App’x 5, 11 (2d Cir. 2020) (explaining that claims not raised by a counseled plaintiff in
opposition to a motion to dismiss may be deemed abandoned provided there is no “manifest
injustice”); e.g., Wilkov v. Ameriprise Fin. Servs., Inc., 753 F. App’x 44, 46 n.1 (2d Cir. 2018).
And, if the claim were not abandoned, the Court would have dismissed it on the merits for lack
of supporting facts. See Iqbal, 556 U.S. at 681.
The Court’s decision not to address MLC’s conclusory claim that it inadvertently or
strategically forfeited does not present the “proverbial rare case” of manifest injustice. Colbert,
824 F. App’x at 11 (quotation omitted). MLC’s request for reconsideration is, therefore, denied.
Nevertheless, because the claim is not demonstrably futile and the Court has a “strong preference
for resolving disputes on the merits” rather than on the technical ground of procedural default,
the Court will allow MLC to seek leave to plead the claim in an amended complaint. Mandala,
88 F.4th at 362 (quotation omitted).
Second, MLC seeks reconsideration based on a theory that it did not raise directly in its
complaint or opposition papers, but which MLC believes could have been inferred from the
complaint: that Spotify has improperly used the price of the Audiobooks Access plan as the
standalone retail price of the non-music component of Premium when calculating the royalties
due in connection with Premium. Mem. at 3–4. “[A] searching review of the complaint,”

3

however, does not reveal facts sufficient to support the conclusion that Spotify used the price of
Audiobooks Access as the standalone, non-music price component in Premium’s Bundle royalty
formula. Farsura v. QC Terme US Corp., No. 21 Civ. 9030, 2022 WL 16838212, at *3
(S.D.N.Y. Nov. 8, 2022). MLC’s request that the Court reconsider the dismissal order in light of
this claim is, therefore, denied. See Analytical Survs., 684 F.3d at 52. Because the claim is not
demonstrably futile, however, the Court will allow MLC to seek leave to plead the claim in an
amended complaint.
Third, MLC argues that the Court overlooked MLC’s allegations that Spotify repeatedly
certified the accuracy of its prior reporting of Premium as a standalone subscription offering.
Mem. at 5–6. These allegations are sufficient, MLC contends, to demonstrate that Premium is a
standalone subscription offering and not a Bundle. Id. at 8; Reply at 3–4, ECF No. 73.
The Court did not overlook these allegations; it rejected them as irrelevant and
insufficient to establish that Premium is a standalone subscription offering. The fact that
“Spotify did not immediately report Premium as a Bundle to MLC in November 2023 although it
could have, and thus likely paid more in royalties to MLC than it was otherwise required to pay,
does not mean that Spotify’s later decision to reclassify Premium as a Bundle is invalid.” MLC,
2025 WL 328001, at *5. In other words, a music provider’s decision to classify its product as a
standalone subscription offering or a Bundle has no bearing on the Court’s independent analysis
of the legal issue. Although a provider’s over- or under-payment of royalties could bear on the
remedy ordered in a royalty reporting case, it has little relevance to a court’s analysis of the legal
question posed by the regulations: does a product qualify as a Bundle or is it a standalone
subscription offering? Although Providers like Spotify are required to make their reports and
royalty payments to MLC in good faith and to certify the accuracy of their reporting under 37

4

C.F.R. § 210.27(i), any legal conclusion a provider draws in making those reports—including its
decision as to whether to classify the product as a Bundle or a standalone subscription offering—
does not factor into, and cannot supplant, the Court’s analysis of the issue. 2
Accordingly, MLC’s allegations that Spotify reported Premium as a standalone
subscription offering when Premium included fifteen monthly hours of audiobook listening—
i.e., that Spotify likely paid more in royalties than it was otherwise required to pay—do not alter
the Court’s determination that Premium is properly characterized as a Bundle. MLC, 2025 WL
328001, at *5. Because the Court addressed this argument in its dismissal order and MLC has
not identified any controlling law or evidence that the Court overlooked in reaching its
conclusion, MLC’s request for reconsideration of this issue is denied. See Analytical Survs., 684
F.3d at 52.
Fourth, MLC contends that the Court overlooked its arguments and engaged in improper
factfinding when the Court held that the complaint failed to plead facts sufficient to show that
fifteen hours of monthly audiobook listening is of no more than “token value.” Mem. at 6–7; see
MLC, 2025 WL 328.001, at *5–6. The Court considered and rejected these arguments in the
dismissal order, finding that “token value” for purposes of 37 C.F.R. § 385.2 is not limited to the
subjective views of Spotify and its users. See MLC, 2025 WL 328001, at *6 (“MLC cannot
plausibly claim that having access to audiobooks is not something of intrinsic and monetary
value to many, even if only a fraction of Spotify’s millions of Premium subscribers may take
advantage of it.”). MLC’s complaint contains no allegations suggesting that fifteen hours of
audiobook listening per month is something of merely “minimal, perfunctory, symbolic,
inconsequential, or insubstantial value” generally, id. (citation omitted), and MLC does not
To borrow from Spotify’s analogy, a taxpayer’s certified belief that they overpaid their taxes is of no consequence
to a factfinder’s independent analysis of whether the taxpayer did, in fact, overpay. See Opp. at 9–10, ECF No. 72.

2

5

suggest that it is prepared to make such allegations now. Indeed, the Court took judicial notice
of the “obvious” and “generally known” fact that “audiobooks generally are products of value,”
i.e., products that may be found for sale in commercial settings for more than a de minimis price,
and it rejected MLC’s claim of improper factfinding head-on. Id. at *6 n.6. Because the Court
addressed MLC’s arguments in its dismissal order and MLC has not identified any controlling
law or evidence that the Court overlooked in reaching its conclusion, MLC’s request for
reconsideration of this issue, too, is denied.
In sum, the Court denies MLC’s request under Rules 59(e) and 60(b) to reconsider the
dismissal order. The Court will, however, vacate the judgment to allow MLC to seek leave to
file an amended complaint addressing the first and second claims discussed above—that Spotify
has allegedly underpaid the royalties due on the Audiobooks Access plan and improperly
calculated the royalties owed in connection with Premium by relying on Audiobooks Access as
the standalone subscription price of the Bundle’s non-music component.
CONCLUSION
For the reasons stated above, MLC’s motion is DENIED IN PART and GRANTED IN
PART. The Clerk of Court is respectfully directed to terminate the motion at ECF No. 70, vacate
the judgment at ECF No. 62, and reopen the case. Within 21 days of the date of this order, MLC
shall file its motion for leave to amend the complaint. 3
SO ORDERED.
Dated: March 11, 2025
New York, New York

3

MLC need not file a pre-motion letter prior to filing its contemplated motion for leave to amend.

6