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U.S. v. AMERICAN SOCIETY OF COMPOSERS

United States District Court, S.D. New York


UNITED STATES OF AMERICA, Plaintiff,
v.
AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, et al., Defendants. In the Matter of the Applications of MUZAK, LLC, et al. and DMX MUSIC, INC., et al., Applicants, For the Determination of Reasonable Licensing Fees.

The opinion of the court was delivered by: WILLIAM CONNER, Senior District Judge

OPINION AND ORDER

Applicants Muzak, LLC and DMX Music, Inc. (collectively "applicants") move for certification to appeal this Court's Opinions and Orders (the "Orders") in United States v. Am. Soc'y of Composers, Authors & Publishers (Applications of Muzak, LLC & DMX Music, Inc.), dated March 17, 2004 and July 2, 2004, and published respectively at 309 F. Supp. 2d 566 and 323 F. Supp. 2d 588. Applicants seek certification of the Orders: (1) as a partial final judgment pursuant to FED.R. CIV. P. 54(b); or (2) pursuant to 28 U.S.C. § 1292(b), allowing them to seek an interlocutory appeal pursuant to FED.R.APP.P. 5(a). For the reasons set forth herein, we deny applicants' motion for certification in its entirety.

BACKGROUND

  In the March 17 Order, familiarity with which is presumed, this Court concluded:

For all of the foregoing reasons, we conclude that a music publisher's catalog is not a "segment" for purposes of "per-segment" licensing under AFJ2 section VII and that ASCAP is, therefore, not required to issue to applicants a catalog-based license limited to those publishers' catalogs that are not otherwise directly licensed. We also conclude, however, that the existence of such direct licensing relationships may and will be considered by this Court in a rate court proceeding under AFJ2 section IX in determining whether ASCAP has met its burden of proving the reasonableness of the blanket licensing fee it seeks or, in the event that ASCAP fails to meet that burden, in the Court's calculation of a reasonable fee based on all the evidence.
309 F.Supp.2d at 581 (emphasis added). Thereafter, applicants moved for clarification of that Order because the parties disagreed about whether the above-emphasized language requires a blanket license fee structure that is adjustable during the license term to afford applicants the benefit of direct licensing arrangements that they may enter into during the license term. In the July 2 Order, we granted applicants' motion for clarification, but concluded that under the March 17 Order, the Court "need consider only those direct licensing relationships already in existence at the time of trial in determining a reasonable blanket licensing fee," and that the "Order does not contemplate a blanket license fee mechanism that provides credits or discounts for direct licensing arrangements that applicants may enter into during the term of the license." 323 F.Supp.2d at 592-93.

  Applicants now desire an immediate appeal of these Orders to the United States Court of Appeals for the Second Circuit. Accordingly, applicants move for their certification as: (1) a final judgment pursuant to FED.R.CIV.P. 54(b); or (2) for an interlocutory appeal pursuant to 28 U.S.C. § 1292(b).

  DISCUSSION

  I. Certification as a Final Judgment Pursuant to Fed.R.Civ. P. 54(b)

  Ordinarily, under 28 U.S.C. § 1291, the federal courts of appeal generally have appellate jurisdiction only over final judgments of district courts that "conclusively determine[] all of the rights of the parties to the litigation." See, e.g., O'Bert v. Vargo, 331 F.3d 29, 40 (2d Cir. 2003). Applicants, however, seek certification of the Orders as a final judgment pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, which allows for the entry of an appealable partial final judgment and provides in relevant part:

When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. Id. The Second Circuit has, however, cautioned that "[t]he matter of whether to direct the entry of a partial final judgment in advance of the final adjudication of all of the claims in the suit must be considered in light of the goal of judicial economy as served by the `historic federal policy against piecemeal appeals.'" O'Bert, 331 F.3d at 40-41 (quoting Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 8 (1980)). Indeed, "[r]espect for that policy requires that the court's power to enter a final judgment before the entire case is concluded, in order to permit an aggrieved party to take an immediate appeal, be exercised sparingly." O'Bert, 331 F.3d at 41. The district court's decision to certify a partial final judgment is reviewed for abuse of discretion, and we are obligated to accompany any order granting certification with a non-conclusory, "reasoned, even if brief, explanation" of that conclusion. Id.
  Applicants argue that Rule 54(b) certification is appropriate pursuant to United States v. Broad. Music, Inc. (Application of AEI), 275 F.3d 168 (2d Cir. 2001) (hereinafter "AEI"), and United States v. Am. Soc'y of Composers, Authors & Publishers (Application of Turner Broad. Sys., Inc.), 782 F. Supp. 778 (S.D.N.Y. 1991) (hereinafter "Turner"). (Applicants Mem. Supp. Mot. Cert. at 5-7.) ASCAP argues, however, that certification pursuant to Rule 54(b) is inappropriate because there is only one claim for relief in this rate court proceeding. (ASCAP Mem. Opp. Mot. Cert. at 3-4.) ASCAP further argues that both AEI and Turner are distinguishable from the present case. We deny applicants' motion for certification of the Orders as a final judgment pursuant to Rule 54(b).

  Assuming without deciding that the form of the blanket license and the fee computation are separate "claims" in this rate court proceeding,*fn1 and that the Orders therefore could constitute a partial final judgment under Rule 54(b), we nevertheless conclude that the present case is not an appropriate candidate for certification under that "sparingly exercised" Rule. Although Rule 54(b) certification was granted in the similar cases of AEI and Turner, those cases are factually and procedurally distinct from the present case. For example, in Turner, Judge Dolinger concluded that the applicants' entitlement to through-to-the-viewer and per-program licenses constituted a claim separate from the underlying fee determination. 782 F. Supp. at 818; see also supra note 1. He then held that certification for immediate appeal was appropriate because: (1) the parties could not engage in meaningful negotiations without a final determination of the form of the licenses; and (2) it would potentially waste the court's time to determine a reasonable fee for a license that the Second Circuit might ultimately conclude ASCAP was not required to issue to applicants. Id. at 818-19. He concluded that "there is no just reason to delay entry of a judgment directing ASCAP to offer through-to-the-viewer and per-program licenses to the applicants if they wish them." Id. at 819.

  Judge Dolinger's Rule 54(b) determination in Turner was driven by his desire to avoid wasting judicial resources. This concern is, however, not an issue in the present case because, as ASCAP points out, barring settlement, this Court will not be relieved of its obligation of determining a reasonable blanket license fee, taking into account factors that include the existence of direct licensing arrangements entered into by applicants.*fn2 (ASCAP Mem. Opp. Mot. Cert. at 6.) Computation of this fee is necessary regardless of the Orders' fate before the Second Circuit, and the trial will therefore not be rendered meaningless even if the Orders do not survive appellate scrutiny. More specifically, if the Second Circuit holds that the Orders improperly denied applicants a mechanism or formula that reduces the blanket license fee as a result of direct licensing arrangements entered into during the license term, any formula ordered by that court still must be applied to a baseline reasonable blanket license fee, which this Court must determine regardless of whether an appeal pursuant to Rule 54(b) is permitted.*fn3 An immediate appeal will not, therefore, preserve the scarce judicial resources of the White Plains federal courthouse, and might in fact waste resources at the appellate level because the Second Circuit would, in addition to hearing the immediate appeal of the Orders, then have to hear a subsequent appeal from this Court's judgment following the trial.*fn4 See Unicredito Italiano SPA v. J.P. Morgan Chase Bank, 288 F. Supp. 2d 485, 506 (S.D.N.Y. 2003) (noting that "judicial economy will best be served if multiple appellate panels do not have to familiarize themselves with this case in piecemeal appeals"). Accordingly, we decline to certify the Orders as a final judgment pursuant to Rule 54(b).

  II. Certification for an Interlocutory Appeal Pursuant to 28 U.S.C. § 1292(b)

  Applicants also seek certification of the Orders for an interlocutory appeal pursuant to 28 U.S.C. § 1292(b), which provides:

When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order. The Court of Appeals which would have jurisdiction of an appeal of such action may thereupon, in its discretion, permit an appeal to be taken from such order, if application is made to it within ten days after the entry of the order: Provided, however, that application for an appeal hereunder shall not stay proceedings in the district court unless the district judge or the Court of Appeals or a judge thereof shall so order.
We agree with the parties on the undisputed point that the Orders constitute a "controlling question of law as to which there is substantial ground for difference of opinion."*fn5 (Applicants Mem. Supp. Mot. Cert. at 13-14; ASCAP Mem. Opp. Mot. Cert. at 10-12.) Whether to certify an interlocutory appeal pursuant to § 1292(b) lies within the discretion of this Court. Blech Secs. Litig., 2003 WL 134988, at *1; see also Primavera Familienstifung v. Askin, 139 F. Supp. 2d 567, 574 (S.D.N.Y. 2001). Nevertheless, "the Second Circuit has repeatedly `urged the district courts to exercise great care in making a § 1292(b) certification.'" German v. Fed. Home Loan Mortgage Corp., 896 F. Supp. 1385, 1398 (S.D.N.Y. 1995) (citing Westwood Pharms., Inc. v. Nat'l Fuel Gas Dist. Corp., 964 F.2d 85, 89 (2d Cir. 1992). Indeed, "[c]ertification is limited to extraordinary cases where appellate review might avoid protracted and expensive litigation. It is not intended as a vehicle to provide early review of difficult rulings in hard cases." German, 896 F. Supp. at 1398.

  We conclude that certification of an interlocutory appeal will not "materially advance the ultimate termination of the litigation" in this case. This proceeding is presently set for a trial in January 2005 that will ascertain a baseline reasonable fee for a blanket license. As discussed previously in the Rule 54(b) context, see supra Part I., a trial to determine that baseline fee is necessary, regardless of what the Second Circuit ultimately decides. Certification of an interlocutory appeal would probably delay that trial for at least a year and possibly much more. There would almost certainly be a second appeal from this Court's judgment following that trial, and final resolution of the issues would be over three years away. For these reasons, we are loath to depart from the sound and well-established policy of avoiding piecemeal appeals as embodied in the final judgment rule, and deny applicants' motion for certification of an interlocutory appeal pursuant to § 1292(b). CONCLUSION

  For all of the foregoing reasons, we deny applicants Muzak, LLC and DMX Music, Inc.'s motion for certification of this Court's Opinions and Orders dated March 17, 2004 and July 2, 2004: (1) as a partial final judgment pursuant to FED. R. CIV. P. 54(b); or (2) pursuant to 28 U.S.C. § 1292(b), allowing them to seek an interlocutory appeal pursuant to FED. R. APP. P. 5(a).

  SO ORDERED.


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