SoundExchange, Inc. v. Sirius XM Radio Inc.

Filing 33

MEMORANDUM OPINION and ORDER that Defendant's Motion (Dkt. 16) is DENIED IN PART and GRANTED IN PART (See Order for further details). Signed by District Judge Patricia Tolliver Giles on 7/15/2024. (Sbro, )

IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF VIRGINIA
Alexandria Division

SOUNDEXCHANGE, INC.,

Plaintif,f
V.

SliaUS XM RADIO, INC.,

Defendant.

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Case No. l:23-cv-1083 (PTG/JFA)

MEMORANDUM OPINION AND ORDER

This matter comes before the Court on Defendant Sirius XM Radio Inc.’s Motion to

Dismiss, or in the alternative. Motion to Transfer (“Motion”). Dkt. 16. On August 16, 2023,
SoundExchange, Inc. filed this action contending that Defendant underpaid royalties under the

Copyright Act. Dkt. 1 (“Compl.”). Defendant seeks to dismiss the Complaint for lack of personal
jurisdiction and, consequently, improper venue pursuant to Federal Rules of Civil Procedure

12(b)(2) and 12(b)(3). Dkt. 16 at 1. In the alternative. Defendant has moved to have this case
transferred to the Southern District of New York or

the District of Columbia pursuant to 28 U.S.C.

§ 1404(a). Id. For the reasons that follow. Defendant’s Motion will be granted in part and denied
in part.
Factual Background

Sirius XM, a Delaware corporation with its principal place of business in New York,
provides the only satellite digital audio radio service (“SDARS”) in the United States. Dkt. 1

(“Compl.”) TITI2,15. The Copyright Act grants Sirius XM a statutory license to digitally broadcast
copyrighted sound recordings. 17 U.S.C. §§ 112,114(d)(2); Compl. K 4. The license allows Sirius
XM to digitally transmit, nationwide, any sound recording that has ever been commercially

released to its 34 million paying subscribers without fear of infringing copyrights. Compl.

4.

However, Sirius XM must pay royalties for the use of copyright owners’ original content. Id.
Under the Act, Sirius XM must pay these royalties to SoundExchange. Id. The Copyright Royalty
Board (“CRB”) designated SoundExchange as the sole entity in the United States to collect digital
performance royalties and distribute them to artists and copyright owners. Id. ^ 14. Pursuant to
regulations implemented under the Copyright Act, SoundExchange is authorized to administer the
statutory license, collect and distribute royalties, and enforce the terms of the license. Id. (citing
U.S.C. § 114(e)(1), (g)(3); 37 C.F.R. §§ 380.4, 380.7, 382.1). The amount of money Sirius XM

must pay to SoundExchange for operating its SOARS is calculated “as a percentage of its ‘Gross
Revenues,’ a term defined in 37 C.F.R. § 382.22.

Id. ^ 65. For the period of January 1, 2018 to

December 31, 2027, the statutory royalty rate for SOARS is 15.5% of Sirius XM’s Gross
Revenues. Id. 125.

In recent years, Sirius XM expanded its business to include a webcasting service that
transmits audio over the internet to different devices

via streaming. Id. ^ 3. Sirius XM is one of

several companies offering webcasting services in the country. See id.

44. SoundExchange

argues that, in an effort to advance its economic interests, Sirius XM now sells its SOARS to its
subscribers only as a part of a product bundle that also includes its webcasting service. Id. ^ 6.
SoundExchange alleges that on October 11, 2021, Sirius XM notified the organization that
beginning with its October 15, 2021 royalty payment, Sirius XM would begin to exclude at least
17.8% of its SOARS Gross Revenue as attributable to its webcasting service. Id. K 33. Whereas

' 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).
2

royalty payments for the SDARS are based on gross revenues, royalties for webcasting are
calculated on a per-performance basis which, at least for the year 2023, were set at a rate of $0.0030

per performance for subscription services and $0.0024 for non-subscription services. Id. ^ 28.
According to SoundExchange, while regulations under the Copyright Act permit Sirius
XM to exclude from the SDARS revenue base any revenue generated from webcasting, this

exclusion rule simply serves to prevent double counting of revenue on which Sirius XM already
paid a royalty amount. Id. f 7. SoundExchange argues that in violation of these regulations, Sirius
XM is inflating the value of its webcasting service to circumvent the amount of money it owes in
royalties under the SDARS.

Id. ^ 8.

SoundExchange further contends that by bundling its

webcasting service with its SDARS, Sirius XM has been able to “grossly underpay the royalties
that it owes” by unreasonably characterizing revenue generated from the “bundled product as

‘webcasting revenue' that in actuality is ‘SDARS revenue.

Id. Tf 6. SoundExchange argues that

this method of calculating royalties is unreasonable given the fact that in recent years (due to the

stark competition in webcasting services), Sirius XM has been forced to decrease the price of its

webcasting only packages while simultaneously increasing the price of its bundle packages, which
is the only way that customers can access the SDARS. Id. fl 45^6. SoundExchange alleges that.
to date, Sirius XM has unjustifiably withheld more than $ 150 million in royalties under its SDARS

statutory license. Id. ^ 8. Accordingly, SoundExchange has sued Sirius XM, accusing it of
underpaying royalty amounts in violation of 37 C.F.R. § 382.21(a) and 17 U.S.C. § 114(f)(1)(B).
Id.

63-67.

SoundExchange also accuses Sirius XM of violating 37 C.F.R. §§ 380.6(g) and 382.7(g)
by failing to remit the amount of royalties an independent auditor determined Sirius XM underpaid
to artists and copyright owners.

Id.

68-72.

3

Regulations under the Copyright Act allow

SoundExchange to have an independent auditor determine whether Sirius XM has properly paid
royalties that it owes; and if the auditor determines that the corporation has underpaid royalties,
then Sirius XM must remit the amount of underpaid royalties to SoundExchange. M ^ 11 (citing
37 C.F.R. §§ 380.6, 382.7).

SoundExchange alleges that pursuant to these regulations, in

September 2022, Adeptus Partners, LLC ('‘Adeptus”) completed an audit of Sirius XM’s royalty
payments for the 2018 calendar year and determined that Sirius XM has underpaid its royalties by
millions of dollars. Id. ^ 12. SoundExchange asserts that, to date, Sirius XM acknowledges only

3% of the amount of money Adeptus claims it owes and refuses to pay the rest. Id. ^ 62.
SoundExchange filed its Complaint on August 16, 2023.

Compl.

In the Complaint,

SoundExchange asserted the following basis for this Court’s exercise of basis personal
jurisdiction:

This Court has personal jurisdiction over Sirius XM pursuant to Va. Code Ann. §
with Virginia, including
regularly transacting business in Virginia, contracting to supply services in
Virginia, and deriving substantial revenue from operations in Virginia.
8.01-328.1 because Sirius XM has substantial contacts

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.
Id.

18. On September 22, 2023, Sirius XM moved to dismiss this civil action for lack of personal

jurisdiction, or in the alternative, to have this case transferred to the Southern District of New York
or the District Court for the District of Columbia

Dkts. 16, 17.

for convenience and in the interest of justice. See

On October 26, 2023, the Court heard argument on Sirius XM’s Motion. See Dkt.

28. This matter is now ripe for resolution.

4

Legal Standard
A.

Dismissal Under Rule 12(b)(2) for Lack of Jurisdiction
Under Fed. R. Civ. P. 12(b)(2), “a defendant must affirmatively raise a personal jurisdiction

challenge, but the plaintiff bears the burden of demonstrating personal jurisdiction at every stage
following such a challenge.” Grayson v. Anderson, 816 F.3d 262, 267 (4th Cir. 2016). When the
court conducts an evidentiary hearing, the plaintiff must establish that personal jurisdiction is
proper by a preponderance of the evidence. Id. at 268 (“[A]n ‘evidentiary hearing’ requires only
that the district court afford the parties a fair opportunity to present both the relevant jurisdictional

evidence and their legal arguments.”). If, in the absence of an evidentiary hearing, the district
court reviews “only the parties’ motion papers, affidavits attached to the motion, supporting legal
memoranda, and the allegations in the complaint,” then the plaintiff need only make aprima facie

showing of personal jurisdiction to survive a motion to dismiss under Rule 12(b)(2). Id. “[T]he
court must construe all relevant pleading allegations in the light most favorable to the plaintiff,

assume credibility, and draw the most favorable inferences for the existence of jurisdiction.
Combs V. Bakker, 886 F.2d 673, 676 (4th Cir. 1989).
B.

Transfer of Venue Pursuant to 28 U.S.C. §1404(a)^

For the convenience of parties and witnesses, in the interest of justice, a district court may

transfer any civil action to any other district or division where it might have been brought[.]” 28

^ 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
filed on opposition to Plaintiffs Motion for Leave. Dkt. 32. Although Plaintiffs proposed
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).
5

U.S.C. § 1404(a).

[I]n considering whether to transfer venue, a district court must make two

inquiries: (1) whether the claims might have been brought in the transferee forum, and (2) whether
the interest of justice and convenience of the parties and witnesses justify transfer to that forum.
Koh V. Microtek Ini 7, Inc., 250 F. Supp. 2d 627, 630 (E.D. Va. 2003). The party seeking transfer

generally “bears the burden of proving ‘that the circumstances of the case are strongly in favor of
transfer.

Heinz Kettler GMBH & Co. v. Razor USA, LLC, 750 F. Supp. 2d 660, 667 (E.D. Va.

2010) (citation omitted).

However, “the ultimate decision [of whether to transfer a case] is

committed to the sound discretion of the district court.

Pragmatus AV, LLC v. Facebook, Inc.,

769 F. Supp. 2d 991, 994 (E.D. Va. 2011); see also In re Ralston Purina Co., 726 F.2d 1002, 1005
(4th Cir. 1984).
Analysis
I.

This Court Has Specific Personal Jurisdiction over Defendant Sirius XM
A court may exercise personal jurisdiction over a defendant only if “(1) such jurisdiction

is authorized by the long-arm statute of the state in which the district court sits; and (2) application
of the relevant long-arm statute is consistent with the Due Process Clause.

Universal Leather,

LLC V. Koro Ar, S.A., 773 F.3d 553, 558 (4th Cir. 2014). Virginia’s long-arm statute permits

personal jurisdiction to the fullest extent allowed by due process. See Va. Code Ann. § 8.01-328.1;
CFA Inst. V. Inst, of Chartered Fin. Analysis ofIndia, 551 F.3d 285,293 (4th Cir. 2009). “Because
Virginia’s long-arm statute is intended to extend personal jurisdiction to the extent permissible
under the due process clause, the statutoiy inquiry merges with the constitutional inquiry.”
Consulting Eng'rs Corp. v. Geometric Ltd., 561 F.3d 273, 277 (4th Cir. 2009).
Specific personal jurisdiction over a defendant can be exercised where the defendant has
“purposefully established minimum contacts in the forum State” such “that [it] should reasonably

6

anticipate being haled into court there.

5^3

Burger King Corp. v. Rudzewncz, 471 U.S. 462, 474

(1985) (internal quotation marks and citations omitted). The Fourth Circuit has synthesized the
due process requirements for asserting specific personal jurisdiction in a three-part test in which a
court considers “(1) the extent to which the defendant 'purposefully availed’ itself of the privilege

of conducting activities in the State; (2) whether the plaintiffs’ claims arise out of those activities
directed at the State; and (3) whether the exercise of personal jurisdiction would be constitutionally
reasonable.

>51

ALS Scan, Inc., 293 F.3d at 712 (cleaned up) (quoting Christian Sci. Bd. ofDirs. of

First Church of Christ, Scientist v. Nolan, 259 F.3d 209, 216 (4th Cir. 2001)).
Here, Sirius XM concedes that it has purposefully availed itself of the privilege of

conducting business in Virginia by way of delivering satellite radio and webcasting services to its

subscribers in Virginia."* Dkt. 17 at 11. However, Defendant maintains that the other two prongs
of the personal jurisdiction inquiry are not satisfied in this case to establish that the exercise of
personal jurisdiction is consistent with either Virginia’s long-arm statute or the Due Process
Clause. See id. at 10-11. For the reasons that follow, the Court disagrees.
A.

Plaintiffs Claims Against Defendant Arise from Defendant's In-State Activities

Virginia’s long-arm statute provides, in relevant part, that a court “may exercise personal
jurisdiction over a person ... as to a cause of action arising from the person[].. . [tjransacting any

^ 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).

"* 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.
7

business in this Commonwealth[;]

[cjontracting to supply services or things in this

Commonwealth[;] or causing tortious injury in this Commonwealth by an act or omission outside
this Commonwealth if [the person] regularly does or solicits business, or engages in any other

persistent course of conduct, or derives substantial revenue from goods used or consumed or
services rendered, in this Commonwealth[.]” Va. Code Ann. §§ 8.01-328.1(A)(1), (A)(2), (A)(4).

Virginia courts have held that the phrase “arising from” in Section 8.01-328.1 “requir[es] that there
be a causal link between the acts relied on for personal jurisdiction and the claims detailed in the

complaint.” Selke v. Gennanwnngs GmbH, 261 F. Supp. 3d 645, 656 (E.D. Va. 2017) (first citing
Chedid v. Boardwalk Regency Corp., 756 F. Supp. 941, 943 (E.D. Va. 1991); then citing Verosol
B..V V. Hunter Douglas, Inc., 806 F. Supp. 582, 589 (E.D. Va. 1992)).

However, the causation

contemplated by the statute requires more than bare ‘but for' causation; instead, the connection
between forum contacts and the cause of action must

rise to the level of legal or proximate

causation.” Id. (citing Chedid, 756 F. Supp. at 943). The Fourth Circuit has further articulated the
“arising from” (or out of) prong of the personal jurisdiction inquiry, holding that the prong is
satisfied when the defendant's activities “in the forum

state is ‘the genesis of [the] dispute’” such

that these in-state activities ‘“form[] a central part of [the plaintiffs] claims.

UMG Recordings,

Inc. V. Kurbanov, 963 F.3d 344, 354-55 (4th Cir. 2020) (quoting Tire Eng'g & Distrib., LLC v.

Shandong Linglong Rubber Co., 682 F.3d 292, 303, 306 (4th Cir. 2012)).
The parties in this case offer different viewpoints on the true nature of the Complaint and
whether Plaintiffs claims arise from Defendants contacts

with the forum state. Defendant argues

that Plaintiffs claims are “premised on national-level business decisions and conduct that occurred
exclusively in other states.

Dkt. 17 at 12 (citing Medina v. Melon One, Inc., No. 18-cv-1603,

2019 WL 13252421, at *2 (E.D. Va. Jun. 10, 2019)). Defendant contends that while it may be

8

true that Sirius XM’s in-state commercial activities include providing revenue-generating

subscription services to its Virginia customers, at the heart of the Complaint is a dispute over

Sirius XM’s revenue apportionment and royalty calculations
Defendant’s New York

headquarters—and

“royalties paid

●which

were

on nationwide

decided

in

sales (here,

subscriptions).” Id. at 13-14. Thus, according to Defendant, because Plaintiffs claims could exist
independent of Sirius XM’s Virginia sales and customers, these claims only have an attenuated
relation to, rather than arise from, Defendant’s contacts with the forum state. Id. at 14.

In opposition, Plaintiff asserts that its claims against Defendant for alleged violations of
the Copyright Act do, in fact, arise from Defendant’s in-state activities. According to Plaintiff,
Sirius XM, through its commercial activities, generates millions of dollars in revenue each month
from its approximately one million Virginian subscribers alone. Dkt. 24 at 3. Plaintiff maintains

that because Sirius XM generates revenue from the forum state and has a legal obligation to
appropriately calculate a portion of this revenue as royalty payment to artists and rightsholders,

including to at least 5,000 individuals in Virginia, Defendant’s contacts with the forum state form
the genesis of the Complaint. See id. at 5-7,11. Plaintiff argues that the mere fact that Defendant
engages in the same conduct in other states besides Virginia does not, and should not, defeat this
Court’s exercise of personal jurisdiction. Id. at 9.

In considering the parties’ arguments and the relevant legal authority, the Court finds that
Plaintiffs claims arise from Defendant’s contacts with

Virginia. In particular, the Court finds the

Selke decision on point. 261 F. Supp. 3d 645. In Selke, the plaintiffs sued three airlines over the

deaths of the plaintiffs’ family members resulting from a plane crash in the French Alps. Id. at
649, 651. One of the defending airlines moved to dismiss the plaintiffs’ complaint for lack of

personal jurisdiction, arguing, at least in part, that the plaintiffs’ cause of action arose from the

9

plane crash and not the defendant’s contacts in Virginia. Id. at 656. The court disagreed, finding
instead that the defendant’s business activity of authorizing one of the other defending airlines to
sell plane tickets to citizens in the forum state gave rise to the plaintiffs’ cause of action. Id. at

657. Specifically, the court found that the selling of these tickets, which led to the decedents
obtaining passage to the plane that crashed, formed the catalyst of the plaintiffs cause of action.
Id. According to the court, the plane crash did not “sever the causal nexus between the act of
selling the tickets and [the pjlaintiffs’ cause of action,” and it was the selling of the tickets that

was the proximate cause of the plaintiffs’ claim. Id.
Here, in this instant action, Defendant maintains that it cannot be said that Defendant’s

contacts with Virginia are the cause of Plaintiffs suit because Sirius XM’s methodology for
apportioning its revenue was developed in its corporate headquarters in New York, and not in the
forum state. See Dkt. 25 at 4.

To an extent, the Court agrees with Defendant that Plaintiffs

Complaint is based on a dispute over Defendant’s revenue apportionment methodology. However,
the Court finds that, like the plane crash in Selke, Defendant’s methodology is better understood
as the but-for causation of Plaintiffs causes of action.

In contrast, the revenue that Defendant

generates, at least in part, through its in-state activities is the proximate cause of Plaintiff s claims
and establishes, for personal jurisdiction purposes, that such claims arise from Defendant’s
contacts with the forum state.

Plaintiff alleges, and Defendant does not dispute, that Sirius XM’s business contacts with
Virginia include the continuous and systematic act of providing SDARS and webcasting services
to in-state residents from whom Defendant generates revenue. See Dkt. 24 at 12-13. Under federal

law, Defendant must apportion a certain amount of this revenue to pay royalties that Plaintiff then
distributes to artists and copyright owners around the country, including those who reside in

10

Virginia. Plaintiffs Complaint challenges Defendant’s apportionment of revenue derived from

the royalty-generating services that Defendant purposefully directs to the forum state.

Thus,

without the revenue that Defendant has derived through its provision of royalty-generating services
to its customers in Virginia and elsewhere, there would be no actualization of Defendant’s revenue

apportionment methodology. Considered in this light, the methodology is the but-for cause of
Plaintiffs claims, but like the selling of the plane ticket in Sdke, Defendant’s revenue-generating
activities in the forum state form the catalyst or proximate cause of Plaintiff s claims. Accordingly,
the Court finds that Plaintiffs claims arise from Defendant’s in-forum business activities and the

second prong of the personal jurisdiction analysis is satisfied.
The instant case is also analogous to the Fourth Circuit’s decision in UMG Recordings,
which further supports finding that the second prong of the personal jurisdiction inquiry is satisfied
here. See 963 F.3d 344.

In UMG Recordings, the Fourth Circuit reversed a decision to dismiss a

case for lack of personal jurisdiction involving a foreign defendant, who operated two websites.
entirely from Russia, through which users obtained copy-infringing sound recordings. Id. at 349.

The Fourth Circuit recognized that the plaintiffs’ claims of copyright infringement were not just
limited to the defendant’s activities in Virginia, but instead spanned the entire country.
Nevertheless, the Court found that the claims arose out of the defendant’s in-state activities

because a large number of Virginian visitors (who made up only 2% of the websites’ global
visitors) used the defendant’s websites, the defendant was aware of this, and the defendant was
able to sell these visitors’ data to advertisers to generate a profit. Id. at 354-55. Accordingly, the
Court found that there was an affiliation between defendant’s

contacts in Virginia and the

underlying controversy and that the defendant’s contacts formed the genesis of the dispute. Id. at
355.

11

Like the UMG Recordings defendant, Sirius XM has purposefully directed its revenue¬

generating services at the forum state, and through its business activities, Sirius XM derives a
profit from in-state residents who pay monthly subscriptions to access these services. Virginia
subscribers account for approximately 3% of Sirius XM’s 34 million total subscribers. See Dkt.
17 at 23.

According to Plaintiff, the amount of revenue Sirius XM generates from Virginia

subscribers alone is substantial and could amount to

Dkt. 24 at 3.

approximately $14-24 million per month.

As noted earlier. Plaintiff alleges that Defendant has grossly and unreasonably

apportioned its total gross revenue as revenue derived from its webcasting service, instead of the
SDARS, to reduce the amount of royalties Defendant must pay to both Virginian and nonVirginian artists and copyright owners alike. See id. at 3-4, 6-7. This total revenue undoubtedly
includes the revenue generated from the forum state. Thus, the Court finds that, like in UMG

Recordings, there is an affiliation between Defendant’s in-state activities, and the underlying
controversy and these activities form the genesis of Plaintiffs Complaint, satisfying the second
prong required to establish personal jurisdiction.
Defendant tries to distinguish UMG Recordings on the grounds that unlike this instant

action, UMG Recordings involved an actual claim of copyright infringement and not merely a
dispute over compliance with copyright regulations.

Dkt. 25 at 3-4. The Court does not find that

this distinction is significant to the analysis. While it is true that this instant action does not involve
a claim of copyright infringement, the Court nevertheless finds that under both Virginia’s longarm statute and the Due Process Clause, the underlying controversy in this case does arise from
Defendant’s contacts with the forum state.

The Court is also not persuaded by Defendant’s reliance on Matlin v. Spin Master Corp.,
921 F.3d 701 (7th Cir. 2019), and Worldwide Subsidy Group, LLC v. Federation International de

12

Football Ass’n, 2014 WL 12631652 (C.D. Cal. June 9, 2014), in support of its claim that

Defendant’s contacts with Virginia do not form the genesis of Plaintiff s Complaint. See Dkt. 17
at 12-14. While both cases involved disputes over royalty payments, and the respective court in
each case dismissed the action for lack of personal jurisdiction, the Court finds that the two cases

are easily distinguishable from the instant action. For instance, the Matlin plaintiffs invocation

of personal jurisdiction was predominately based on a single online purchase of the alleged
royalty-generating product that the plaintiffs’ attorney made in an impermissible attempt to
establish jurisdiction. 921 F.3d at 707. In contrast, in this case, Defendant’s in-state activities
involve the continuous and systematic act of providing SDARS and webcasting services to in-state
residents from whom Defendant generates revenue.

For a similar reason. Worldwide Subsidy

Group is also distinguishable because in that case, the in-state activities at issue were five soccer
matches. 2014 WL 12631652, at *10. Five soccer matches are a very limited number of contacts

with the forum state which is vastly different from the continuous business activities Sirius XM
conducts here in Virginia.
In sum, the Court finds that in this case, Plaintiff seeks to challenge (1) Defendant’s

apportionment of revenue derived from royalty-generating services that Defendant purposefully
directs to the forum state, and (2) Defendant’s alleged underpayment of royalties to individuals
entitled to these payments, including those who reside in the forum state. Therefore, Plaintiffs
claims arise from Defendant’s in-forum activities.

Accordingly, the Court finds that Plaintiff has

satisfied the second prong of the personal jurisdiction inquiry.
B.

The Exercise of Personal Jurisdiction over Defendant is Constitutionally
Reasonable

The final question concerning personal jurisdiction in this case is whether the exercise of
jurisdiction over Defendant is constitutionally reasonable.
13

In evaluating this prong, courts

consider the following factors: ‘'[1] the burden on the defendant[;] [2] the court’s ability to

conveniently and efficiently resolve the dispute[;] [3] the interest of the forum state in adjudicating
the dispute[;] [4] the plaintiffs interest in obtaining effective relief[;] and [5] the interests of the
state in furthering substantive policies.” dmarcian, Inc. v. dmarcian Eiir. BV, 60 F.4th 119, 135

(4th Cir. 2022). This prong seeks to ensure that a defendant is not haled into court in the forum
state unless it is “reasonably foreseeable that the defendant could be subject to suit there.” CFA
Inst., 55i F.3dat296.

The Court finds that the exercise of personal jurisdiction over Defendant would be

constitutionally reasonable. Here, in support of its Motion, Defendant argues that Washington,
D.C. is a convenient forum for this civil action. See

Dkt. 17 at 20, 25. Given the close proximity

between Defendant’s articulated venue of choice and the instant one, the Court does not find that

litigating the case in this venue would unduly burden Defendant or its potential witnesses.
Furthermore, the Court finds that because Sirius XM is a large corporation that directs considerable
business activities to the forum state, and Defendant admits to enjoying the privileges of

conducting business in Virginia,^ it was reasonably foreseeable for Defendant to be haled into
court in Virginia. For these reasons, and those discussed above, this Court may exercise personal

jurisdiction over Defendant.*^

^ 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.

^ 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).
14

II.

The Southern District of New York is a More Appropriate and Convenient Venue for
This Civil Action

In the alternative, Defendant argues that even if this Court finds that it has personal

jurisdiction over Defendant, the Court should transfer venue to the Southern District of New York
or the District of Columbia pursuant to 28 U.S.C. 1404(a). Dkt. 17 at 18.
As noted above, “in considering whether to transfer venue, a district court must make two

inquiries: (1) whether the claims might have been brought in the transferee forum, and (2) whether
the interest of justice and convenience of the parties and witnesses justify transfer to that forum.
Koh, 250 F. Supp. 2d at 630. As to the second inquiry, in determining whether the interest of
justice and convenience of the parties and witnesses warrants transfer, courts commonly consider;
“(1) the weight accorded to plaintiffs choice of venue; (2) witness convenience and access; (3)
convenience of the parties; and (4) the interest of justice.” Trs. of the Plumbers & Pipeiftters Nat 7
Pension Fund v. PlumbingServs., Inc., 791 F.3d 436, 444 (4th Cir. 2015). Here, the parties do not

disagree that this case could have been brought in either New York or Washington, D.C. See Dkt.
24 at 18; Dkt. 25 at 9.

Instead, the parties disagree as to whether, under § 1404(a), the

circumstances of this case favor transferring the case to another venue in the interest of justice and
convenience.

Although this Court, for the reasons explained above, has specific personal jurisdiction
over Defendant, the Court finds that the interests of justice and convenience of the parties and

potential witnesses warrants transferring this case to the Southern District of New York.

First,

the Court finds that Plaintiffs choice to file this civil action in this forum is not entitled to the

substantial weight generally afforded to a plaintiffs choice of forum because SoundExchange is
neither based in the forum state nor does it raise

causes of action that bear a strong relation to this

forum. See JTH Tax, Inc. v. Lee, 482 F. Supp. 2d 731, 736 (E.D. Va. 2007) (explaining that a
15

(p)laintiff s choice of venue is entitled to substantial weight, unless plaintiff chooses a foreign
forum and the cause of action bears little or no relation to that forum.’” (quoting Hanover Ins. Co.
V.

Paint City Contractors, Inc., 299 F. Supp. 2d 554, 556 (E.D. Va. 2004)). Plaintiff, a Delaware

corporation with its principal place of business in the District of Columbia, lacks any direct
relationship to the forum state as it is not based here.
While the Court finds, for personal jurisdiction purposes, that Plaintiffs claims against
Defendant do arise out of Defendant’s activities in

Virginia, the Complaint’s factual allegations

largely stem from events and decisions made in New York. Plaintiffs first cause of action against
Defendant—for alleged underpayment of royalty amounts pursuant to the Copyright Act—is based
on conduct that occurred at Defendant’s New York corporate headquarters, where Sirius XM

developed and applied its royalty apportionment methodology. See generally Compl. at 10-19,
21. Similarly, Plaintiffs second cause of action—failure to remit unpaid royalties found by an

independent auditor—is predicated on a 2022 audit of Defendant’s 2018 royalty payments that
Adeptus, a New York company, performed at Sirius XM’s corporate headquarters. See id. 20-21,
23.

Additionally, the Court finds that consideration of the convenience of the parties and
potential witnesses weigh in favor of transferring this case. First, the Court is doubtful that this
forum is more convenient for either party when neither are domiciled in the forum state and, as

explained above, most of the events and disputed actions underlying the Complaint occurred
elsewhere, primarily in New York. Moreover, while Plaintiff asserts that it anticipates calling as
witnesses individuals who reside in the “DMV,” most of the potential witnesses identified by both
Plaintiff and Defendant are located outside of the forum state. See Dkt. 24 at 20-22; Dkt. 25 at

12. Furthermore, Plaintiff concedes that ‘’most of the fact witnesses will be employes of one of

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the two parties.

Dkt. 25 at 22. This fact undermines Plaintiffs argument that this forum is the

most appropriate venue for this civil action. In short, the Court finds that, taken as a whole, the §
1404(a) factors support transferring this case to the Southern District of New York because the
events and actions underlying the Complaint took place in New York; few, if any, of the potential

key witnesses in this case reside in Virginia; and the parties themselves are not based in the forum

state.^ Accordingly, it is hereby
ORDERED that Defendant’s Motion (Dkt. 16) is DENIED IN PART and GRANTED
IN PART. The Motion is DENIED as to the motion to dismiss for lack of personal jurisdiction

and improper venue. The Motion is GRANTED as to the motion to transfer; it is further
ORDERED that Plaintiffs Motion for Leave to File a Notice of Supplemental Authority

(Dkt. 30) is GRANTED such that Plaintiffs Notice of Supplemental Authority (Dkt. 30-1) is
deemed filed; and it is further
ORDERED that this civil action be and is TRANSFERRED to the Southern District of
New York.

Entered this /5 day of July, 2024.

»

Alexandria, VA

Patricia TolliverGiies
United States District Judge

'' For this reason, the Court will not address either Defendant’s speculative claim that it intends to

implead Adeptus as a third-party defendant or its forum-shopping allegations levied against
Plaintiff. See Dkt. 17 at 26-27; Dkt. 25 at 13.
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