Argued and Submitted May 9, 2013—Pasadena, California
Appeal from the United States District Court for the Central District of California Christina A. Snyder, District Judge, Presiding D.C. No. 2:08-cv-00635-CAS-AJW
Donald Manwell Falk (argued), Mayer Brown, LLP, Palo Alto, California; Maxwell Blecher and Courtney A. Palko, Blecher & Collins, P.C., Los Angeles, California, for Plaintiff/Appellant/Cross-Appellee.
Kelly M. Klaus (argued), David C. Dinielli and Benjamin J. Maro, Munger, Tolles & Olson LLP, Los Angeles, California, for Defendants/Appellees/Cross-Appellants.
Before: Harry Pregerson and Raymond C. Fisher, Circuit Judges, and Wiley Y. Daniel, District Judge. [*]
California Tort Law
The panel affirmed in part and reversed in part the district court's judgment in favor of the defendants and remanded for trial a case concerning the licensing rights for several musical recordings by Bob Marley and the Wailers.
The panel reversed the district court's grant of summary judgment on a claim for intentional interference with prospective economic advantage under California law, alleging that the defendants inappropriately blocked the plaintiff from distributing its album of Marley remixes by wrongfully threatening to sue the plaintiff's distributors. The panel held that, although there can be no liability for interfering with a business expectancy that is invalid or illegal, the defendant has the burden to prove the invalidity or illegality of the business expectancy as an affirmative defense. The panel held that the defendants could not obtain summary judgment based on holes in the plaintiff's claim to a valid license when the value of the defendants' own licensing rights was equally spotty.
The panel affirmed the district court's holding that triable issues of fact prevented summary adjudication of a Noerr-Pennington defense, under which pre-litigation material is immune from suit unless the threatened lawsuit was a "sham."
The panel also affirmed the district court's ruling that the defendants did not implicitly waive privilege over their attorney-client communications.
FISHER, Circuit Judge:
This case concerns the licensing rights for several early musical recordings by reggae legends Bob Marley and the Wailers. When the music was initially recorded in Jamaica in the 1960s, record keeping was not a primary concern. The absence of legal documentation has led to confusion in the marketplace as to which entities own licensing rights for these recordings.
Defendants Universal Music Group, Inc., UMG Recordings, Inc. and Universal Music Group International, Ltd. (collectively, UMG) successfully invoked this lack of documentation in the district court to obtain summary judgment on plaintiff Rock River Communications, Inc.'s (Rock River) claim for intentional interference with prospective economic advantage. Rock River's lawsuit alleged that UMG inappropriately blocked Rock River from distributing its album of Marley remixes by wrongfully threatening to sue Rock River's distributors. UMG persuaded the district court that unless Rock River had proof that its chain of licensing rights was valid – dating all the way back to the initial musicians and producers – then UMG could not be liable, because there is no liability for interference with an invalid business expectancy.
UMG is only half right. Although there can be no liability for interfering with a business expectancy that is invalid or illegal, the defendant has the burden to prove the invalidity or illegality of the business expectancy. UMG cannot obtain summary judgment based on the holes in Rock River's claim to a valid license when the validity of UMG's own licensing rights is equally spotty. We therefore reverse the grant of summary judgment and remand for trial. We also reject UMG's argument that we should affirm the district court's grant of summary judgment on the alternative basis of Noerr-Pennington immunity.
I. Factual Background
Rock River is a producer, seller and distributor of music records. In 2006, Rock River entered into a licensing agreement with San Juan Music Group, Ltd. (San Juan), whereby San Juan, in exchange for a licensing fee, granted Rock River a nonexclusive license to "sample" or "interpolate" 16 musical recordings (the Recordings) performed by Bob Marley and the Wailers (Marley). San Juan is a music licensing company that, since 1980, has been licensing recordings by Marley through an agreement with Lee Perry, the producer of many of Marley's early recordings.
Rock River invested its time and creativity into creating new remixes of the Recordings (the Remixes), and it registered copyrights for the Remixes. Rock River partnered with an independent record label and created an album called "Roots, Rock, Remixed" that included 12 of the Remixes. Rock River secured digital distribution of the album on iTunes and distribution of physical albums in stores. Rock River also had plans with Relativity Media to use one of the Remixes – a remix of the song "Lively Up Yourself" – in the "Dear John" motion picture and soundtrack. At this time, Rock River was unaware that San Juan's authority to license the Recordings was disputed by any entity.
In October 2007, however, UMG sent a cease-and-desist letter to Rock River claiming that UMG owned exclusive licensing rights to all the Recordings remixed on the album "Roots, Rock, Remixed" and that Rock River therefore could not release its album without a license from UMG. UMG, the largest record company in the world, claimed to have purchased the exclusive licensing rights from a company called JAD Records in 2003. UMG also began calling and sending letters to Rock ...