WILLIAMS v. WARNER MUSIC GROUP CORPORATION 10 (2021)

United States Court of Appeals, Ninth Circuit.2021-05-17No. No. 20-55419

Summary · law.co

Holding. The court affirmed the district court's denial of class certification for lack of typicality and its refusal to extend the pre-certification discovery period.

Recording artists Leonard Williams and his production company appealed a district court's denial of class certification in a dispute with Warner Bros. Records over digital streaming royalty calculations. The artists sought to represent a class claiming that Warner Bros. underpaid them by using only a portion of foreign streaming revenue in royalty computations. The appellate court examined whether the named plaintiffs satisfied the typicality requirement under Federal Rule of Civil Procedure 23(a)(3), which demands that class representatives' claims be typical of the broader class.

The court found the district court did not abuse its discretion in denying certification. The named plaintiffs were atypical for two reasons: first, their contracts fell into a subclass requiring proof of an implied contract to pay streaming royalties—a more complex legal question than applied to other subclasses—which risked diverting attention from the other subclasses' claims; and second, the plaintiffs themselves would likely receive no damages even if they prevailed because of substantial unrecouped balances on their accounts that they would probably never recoup before copyright expiration. Additionally, the court found no abuse of discretion in the discovery timeline, noting that although six weeks was a tight deadline, the plaintiffs failed to request an extension.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether named plaintiffs satisfied Rule 23(a)(3) typicality requirement when subject to unique contractual defenses
Whether implied contract liability applied only to a specific subclass, creating atypical claims for named plaintiffs
Whether named plaintiffs would receive no actual damages despite potential liability theories
Whether district court abused discretion in pre-certification discovery timeline absent a motion to extend

Procedural posture

The appellate court reviewed for abuse of discretion the district court's order denying class certification based on lack of typicality and the discovery timeline allowed for pre-certification discovery.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

MEMORANDUM **

Plaintiffs Leonard Williams and The Lenny Williams Production Company (“LWPC”) (collectively, “Plaintiffs”) timely appeal from the district courts order denying class certification for lack of typicality in this Class Action Fairness Act suit. 28 U.S.C. § 1332(d)(2). Plaintiffs allege that Warner Bros. Records, Inc. (“Warner Bros.”) underpaid the putative class of recording artists by calculating their digital streaming royalty payments using only a portion of the companys foreign streaming revenue.

Plaintiffs also appeal the amount of time that the district court allowed for pre-certification class discovery. Reviewing both issues for abuse of discretion, we affirm. Parra v. Bashas’, Inc., 536 F. 3d 975, 977 (9th Cir. 2008) (providing standard of review for denial of class certification); GCB Commcns, Inc. v. U.S. South Commcns, Inc., 650 F.3d 1257, 1262 (9th Cir. 2011) (providing standard of review for district court case management decisions).

1. The district courts finding that Plaintiffs could not satisfy Fed. R. Civ. P. 23(a)(3)’s typicality requirement, which requires that the class representative(s) have claims or defenses that are typical of the class in order to obtain class certification, did not constitute an abuse of discretion. Although typicality is a permissive standard, the district court reasonably concluded that named Plaintiffs were atypical because two unique defenses applied to their specific claims. See Hanon v. Dataproducts Corp., 976 F. 2d 497, 508 (9th Cir. 1992) (“[A] named plaintiffs motion for class certification should be denied if ‘there is a danger that absent class members will suffer if their representative is preoccupied with defenses unique to it.’ ”) (quoting Gary Plastic Packaging Corp., 903 F.2d 176, 180 (2d Cir. 1990)).

First, Plaintiffs asked the district court to certify one broad class with three subclasses: (1) artists whose contracts provide for streaming royalties at a 50% royalty rate of Warner Bros.’ net receipts; (2) artists whose contracts do not expressly provide for streaming royalties and contain a general licensing provision at a royalty rate of 50% of Warner Bros.’ net receipts; and (3) artists whose contracts do not provide for streaming royalties or contain a general licensing provision. But Plaintiffs, as well as an indeterminate number of other artists, fell only into Subclass 3. In order to determine whether the artists in that subclass were entitled to streaming royalties, the district court would have needed to determine whether an implied contract to pay such royalties existed between all the members of that subclass and Warner Bros. The district court reasonably concluded that the more challenging question of implied contract, applicable only to contracts for Subclass 3, would overwhelm the straightforward interpretive questions applicable to the contracts for Subclasses 1 and 2.

Second, Plaintiffs were atypical class members because they apparently would not be entitled to damages. Even if the district court found that an implied contract to pay streaming royalties between Plaintiffs and Warner Bros. existed, Plaintiffs would not have been eligible to receive any royalty payments of any kind because of the considerable unrecouped balance on their Warner Bros. account. Furthermore, it was very unlikely that Plaintiffs would recoup that outstanding balance and become eligible to receive royalties before the copyright protection for their musical compositions expired. Unlike other putative class members whose accounts were recouped or who would likely become recouped before the expiration of their intellectual property rights, Plaintiffs have little prospect of any direct harm.

2. The district court did not abuse its discretion by declining to extend the pre-certification class discovery period because Plaintiffs did not file a motion to extend discovery. See Davidson v. OReilly Auto Enterprises, LLC, 968 F.3d 955, 962-63 (9th Cir. 2020) (“The question whether a district court abuses its discretion by setting deadlines or limiting pre-certification discovery is inherently fact intensive and must be decided based on the facts of each case.”). The courts deadline was not generous. Considering the number of putative class members and contracts at issue, providing Plaintiffs less than six weeks to conduct class discovery and move for class certification was an exacting demand, no matter their diligence. But we have carefully studied the complex procedural history and other relevant factors, and we find no abuse of discretion. For example, after the district court reopened the case in December 2019, Plaintiffs failed to file a motion to extend either the deadline for class discovery or the deadline to file a motion for class certification.

AFFIRMED.

FOOTNOTES

. The district court dismissed all claims against Warner Music Group Corp. before the decision on class certification.